          DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
                                FOURTH DISTRICT

                              CAN FINANCIAL, LLC,
                                   Appellant,

                                       v.

     DARYL R. KRAZMIEN a/k/a DARYL KRAZMIEN and LAURA KRAZMIEN
                      a/k/a LAURA M. KRAZMIEN,
                                   Appellees.

                                 No. 4D18-356

                                [August 1, 2018]

  Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach   County;     Joseph     Marx,     Judge;     L.T.    Case     No.
502017CA001330XXXXMB-AN.

   Damian G. Waldman of Law Offices of Damian G. Waldman, P.A.,
Largo, for appellant.

    Preston J. Fields, Sr. of Preston J. Fields, P.A., Palm Beach Gardens,
for appellee.

FORST, J.

   Appellant Can Financial, LLC (“Bank”) appeals a final summary
judgment that was entered in favor of Appellee Laura Krazmien
(“Borrower”). The summary judgment was premised on the trial court’s
determination that Bank’s foreclosure complaint against Borrower was
barred by the statute of limitations applicable to foreclosure actions, as
the complaint was filed more than five years after Borrower’s debts were
discharged in bankruptcy. The trial court erred in its application of the
statute of limitations to this case. Thus, we reverse.

                                 Background

   Borrower’s personal debts were discharged in Chapter 7 bankruptcy 1
on August 31, 2009. She made no further payments on her note and
mortgage after the discharge. Bank filed an in rem action for foreclosure

1   11 U.S.C. § 727 (2009).
on February 2, 2017 alleging a February 5, 2012 default on Borrower’s
monthly installments, followed by subsequent defaults as Borrower had
made no payments since January 2012. Borrower answered the complaint
with the affirmative defense that Bank had only five years from the date
that Borrower’s debts were discharged in bankruptcy (August 31, 2009) to
file the complaint, and that Bank failed to do so.

    Borrower relied upon this statute of limitations defense in moving for
summary judgment. In granting the motion, the trial court made the
following findings and conclusions of law: the debt memorialized in the
note and mortgage was discharged in bankruptcy; no subsequent defaults
occurred after the debt was discharged; Bank filed for foreclosure more
than five years later; the foreclosure was barred by the five year statute of
limitations of section 95.11(2)(c), Florida Statutes (2009); and a valid lien
on the property would remain throughout the statute of repose. The order
is before us on appeal.

                                 Analysis

   “The standard of review for a trial court’s ruling on a summary
judgment is de novo.” Cabo Flats Jupiter, LLC v. Dawley, 236 So. 3d 464,
465 (Fla. 4th DCA 2018). Likewise, “[g]enerally, ‘the issue of whether [a]
claim is barred by the statute of limitations is a question of law subject to
de novo review.’” Access Ins. Planners, Inc. v. Gee, 175 So. 3d 921, 924
(Fla. 4th DCA 2015) (second alteration in original) (quoting Beltran v.
Vincent P. Miraglia, M.D., P.A., 125 So. 3d 855, 859 (Fla. 4th DCA 2013)).

   A Chapter 7 “bankruptcy discharge extinguishes only one mode of
enforcing a claim—namely, an action against the debtor in personam—
while leaving intact another—namely, an action against the debtor in rem.”
Johnson v. Home State Bank, 501 U.S. 78, 84 (1991) (discussing 11 U.S.C.
§§ 522(c)(2), 524(a)(1)). “A mortgage is an interest in real property that
secures a creditor’s right to repayment.” Id. at 82. “[A] creditor’s right to
foreclose on the mortgage survives or passes through the bankruptcy.” Id.
at 83.

   Following a bankruptcy discharge, a debtor has “three options with
respect to property subject to a lien or mortgage: (1) surrender the
property; (2) redeem the property; or (3) reaffirm the debt.” Alvarez v. Bank
of Am. Corp., No. 14-CV-60009-KAM, 2015 WL 12670510, at *3 (S.D. Fla.
Apr. 17, 2015) (quoting In re Steinberg, 447 B.R. 355, 357 (Bankr. S.D.
Fla. 2011)).

      When a debtor is unwilling to enter into a reaffirmation

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      agreement and unable to pay off the mortgage, the mortgagee
      may nonetheless determine that it does not wish to obtain its
      collateral or dispossess the debtor. The debtor may continue
      to make periodic mortgage payments in order to discourage
      the mortgagee from foreclosing on the property.            The
      mortgagee may accept such payments and not seek to
      foreclose. Section 524(j) [of the Bankruptcy Code] recognizes
      this possibility and specifically empowers the mortgagee to
      take action to seek or obtain regular mortgage payments, in
      the ordinary course of business, in lieu of pursuing an in rem
      foreclosure.

Id. at *4 (alteration in original) (quoting In re Steinberg, 447 B.R. at 359).

    In Alvarez, a mortgagor sought to void a mortgage by arguing that her
Chapter 7 bankruptcy charge either extinguished the mortgage or
constituted a default on the entire mortgage, thereby commencing the
statute of limitations, which had expired when she sued. Id. at *1-2. The
court found no legal support for either theory, finding that only her
personal liability was extinguished, not her in rem liability, and that there
was no evidence the mortgagee had accelerated the loan. Id. at *2-3. In
Deutsche Bank Trust Co. Americas v. Nash, 136 So. 3d 1267 (Fla. 2d DCA
2014), the Second District Court of Appeal held similarly, finding the
bankruptcy discharge only extinguished personal liability, not in rem
liability. 2 Id. at 1269.

    Here, Borrower exercised a de facto fourth option by simply ceasing
payments. To the extent the trial court found that no subsequent defaults
occurred after the debt was discharged, it was in error. The terms of the
note and mortgage remained intact, as a bankruptcy discharge
“extinguishes only ‘the personal liability of the debtor.’” Johnson, 501 U.S.
at 83 (quoting 11 U.S.C. § 524(a)(1)). Bank was in no way prejudiced, with
respect to the statute of limitations, by not foreclosing upon Borrower’s
first failure to pay her monthly installment after the discharge. Rather,
“[w]ith each subsequent default, the statute of limitations r[an] from the
date of each new default providing the mortgagee the right, but not the
obligation, to accelerate all sums then due under the note and mortgage.”
Bartram v. U.S. Bank Nat’l Ass’n, 211 So. 3d 1009, 1019 (Fla. 2016).
Because Bank alleged a default date within five years of the date that it
filed its complaint, the trial court erred in finding the action was barred by

2 The discharge order in Nash stated, in relevant part, that “a creditor may have
the right to enforce a valid lien, such as a mortgage or security interest, against
the debtors’ property after the bankruptcy.” Nash, 136 So. 3d at 1269.

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the statute of limitations.

    Borrower cites no authority for the proposition that the bankruptcy
discharge “acted as the acceleration of the debt for foreclosure purposes,”
and we can find none. As noted above, there is similarly no support for
the trial court’s findings that “[n]o subsequent defaults occurred after the
default was discharged” and “[t]he foreclosure action was barred by the
statute of limitations because the foreclosure action was filed more than
five (5) years after the debt was discharged.” These findings are contrary
to Bartram and a myriad of opinions that have followed. See, e.g., U.S.
Bank Nat’l Ass’n for Lehman XS Tr. Mortg. Pass-Through Certificates, Series
2007-16N v. Morelli, No. 3D17-286, 2018 WL 2708699, at *4 (Fla. 3d DCA
June 6, 2018) (“It is now settled law that . . . when a foreclosure complaint
alleges a borrower is in default for any payment due within five years of
the filing of the complaint, the action is not barred by section 95.11(2)(c)
of the Florida Statutes.”); HSBC Bank USA, Nat’l Ass’n for Registered
Holders of Nomura Home Equity Home Loan, Inc. v. Estate of Petercen, 227
So. 3d 640, 643-44 (Fla. 4th DCA 2017) (holding similarly); Desylvester v.
Bank of N.Y. Mellon, 219 So. 3d 1016, 1019-20 (Fla. 2d DCA 2017) (relying
upon Bartram in denying the affirmative defense of statute of limitations,
concluding “the allegations of the complaint in the underlying action that
the borrowers were in a continuing state of default at the time of the filing
of the complaint was sufficient to satisfy the five-year statute of
limitations.”); Forero v. Green Tree Servicing, LLC, 223 So. 3d 440, 445 (Fla.
1st DCA 2017) (relying upon Bartram to conclude “each missed payment
constituted a new default”).

   Thus, the foreclosure complaint, filed within five years of a continuing
default, was not barred by the statute of limitations and Borrower’s
bankruptcy discharge did not affect Bank’s ability to initiate an in rem
foreclosure action. As such, the trial court erred in entering summary
judgment for Borrower.

                                Conclusion

   As Bank’s foreclosure complaint was not barred by the statute of
limitations, we reverse the summary judgment in favor of Borrower and
remand for further proceedings consistent with this opinion.

   Reversed and Remanded.

WARNER and MAY, JJ., concur.



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                      *        *        *

Not final until disposition of timely filed motion for rehearing.




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