Judge is kicked off foreclosure case that morphed into ‘ever-escalating battle’
A Florida appeals court has kicked a judge off a foreclosure case and barred her from considering an order to show cause that alleges perjury by the Bank of New York Mellon and others associated with the case.
The appeals court said the case “began as a straightforward mortgage foreclosure” but “has somehow transformed into an ever-escalating battle that no longer resembles its original form.”
The Daily Business Review has coverage of the Nov. 24 decision by the Third District Court of Appeal in Florida.
The judge removed from the case is Judge Beatrice Butchko of the 11th Judicial Circuit of Florida, who hears cases at the Dade County Courthouse in Miami, according to Law.com.
The case involved Julie Nicolas, who had borrowed $202,500 from the Popular Mortgage Corp. in 2006, according to the appeals court opinion. She stopped making payments by the beginning of 2016. In the meantime, her loan had been transferred several times and was ultimately securitized in a package of loans for sale to investors.
The Bank of New York Mellon became a trustee for the trust that became the owner of the loan during the securitization process. It filed the foreclosure action.
The judge entered a final judgment of foreclosure in October 2020. More than six months later—one day before the foreclosure sale was scheduled to take place—Nicolas filed a motion to set aside the judgment alleging that the trustee’s claim of standing was fraudulent.
The claim was based on a dispute over whether the current loan servicer was Bank of America or Carrington Mortgage Services. A “certified fraud examiner” testified for Nicolas in a subsequent hearing that it was Bank of America, citing a report by Moody’s, the ratings agency for the trust.
But a Carrington Mortgage Services employee and a Bank of America officer maintained that the trust had transferred servicing rights to Carrington Mortgage Services.
Before the judge made factual findings, Nicolas filed an order to show cause why the Bank of New York Mellon, the Bank of America, Carrington Mortgage Services and the lawyer for the Bank of New York Mellon should not be held in criminal contempt for perjury. According to Nicolas, the claim that Carrington was the loan servicer amounted to perjury.
The judge signed an order to show cause that had been prepared by Nicolas’ lawyer.
The appeals court said the order to show cause did not offer any specifics on the alleged perjury.
“It clumps petitioners together without indicating the particular action by each that could give rise to liability for contempt,” the appeals court said.
“For the trial court to escalate this narrow factual dispute to a charge of perjury threatening ‘jail, adjudication [and] probation’ was a gross error,” the appeals court said. “It was exacerbated by the inclusion of the trustee’s lawyer as a defendant-contemnor in these circumstances. It is not a crime for a lawyer to present his or her client’s side of a case. The extraordinary action by the trial court threatens a chilling effect on practitioners that reverberates beyond the boundaries of the instant case.”
The appeals court said it is doubtful whether a factual dispute should ever give rise to a criminal contempt hearing for perjury.
Nicolas was represented Bruce Jacobs of Jacobs Legal. A prior article by the Daily Business Review described him as “a Miami attorney known for his unconventional tactics in his advocacy for homeowners against large institutional banks.”
Jacobs told the Daily Business Review that the appeals decision is an attempt to silence Butchko “for demanding the truth in her courtroom.” Jacobs also said the ruling was also an attempt to silence him after two judges on the appellate panel opinion referred him to the bar for an ethics investigation.
The Daily Business Review covered a referee’s report in the ethics case in the prior Nov. 18 story.
The referee said Jacobs had made comments impugning the integrity of the judiciary. They included claims that the Third District Court of Appeal “cannot issue a ruling with integrity” in one of his cases. He also called appeals judges “traitors to the Constitution” and claimed that the system was “rigged.”
The referee recommended a three-month suspension.