Bank of America, N.A. v. Pate, ___ So. 3d ___, 40 Fla. L. Weekly D663 (Fla. 1st DCA March 16, 2015)
The appellate panel, consisting of Judges Rowe, Osterhaus, and Thomas, issued a per curiam affirmance without opinion. Judge Thomas wrote a specially concurring opinion explaining that the panel was affirming judgment, entered after a bench trial, that denied foreclosure (but granted a deed in lieu of foreclosure), based upon the equitable doctrine of unclean hands, and awarded over $60,000 in compensatory damages and $250,000 in punitive damages to the borrowers’ on their counterclaims for breach of contract and fraud. The borrowers applied for a mortgage and home equity loan so that they could purchase and restore an old home with “historical appeal.” Based upon the appraisal performed by an affiliate, the bank represented that it would issue both loans but, after it issued the mortgage, the bank refused to issue the home equity loan because the appraisal was flawed. As a result, “[the borrowers] were forced to invest all of their saving and much of their own labor in extensive repairs,” and “[t]he record support[ed] the trial court’s conclusion that the Bank acted with reckless disregard constituting intentional misconduct . . . .” The bank compounded its misconduct by failing to use the funds the borrowers had placed in escrow to pay for the borrowers’ homeowners’ insurance. As a result, the borrowers’ policy lapsed for nonpayment, the borrowers were unable to obtain replacement coverage because of the condition of their home, and the bank obtained a force-placed policy that quadrupled their mortgage payments. Although the bank created the problem, it rejected the borrowers’ offer to continue making their original mortgage payments. After the borrowers defaulted, the bank’s agents repeatedly entered their home and attempted to remove the borrowers’ furniture and place locks on their home. On two occasions, the borrowers had to enlist the aid of law enforcement officers, and they “were forced to obtain alternative housing for 28 months, at a cost of thousands of dollars.” The evidence showed that the bank was consciously and recklessly indifferent to the consequences of its actions and that this indifference was the equivalent of an intentional act that violated the rights of the borrowers. “Unclean hands is an equitable defense, akin to fraud, to discourage unlawful activity. . . . The totality of the circumstances established the Bank’s unclean hands, precluding it from benefitting by its actions in a court of equity. Thus, the trial court did not err by denying the foreclosure action” and by entering a mandatory injunction “ordering the Bank to take the necessary measures to correct the [borrowers’] credit histories.”
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