       Third District Court of Appeal
                               State of Florida

                         Opinion filed September 2, 2015.
         Not final until disposition of timely filed motion for rehearing.

                               ________________

                                No. 3D14-520
                          Lower Tribunal No. 09-56724
                             ________________


                       Wells Fargo Bank, N.A., etc.,
                           Appellant/Cross-Appellee,

                                        vs.

                            Maria Clavero, et al.,
                          Appellees/Cross-Appellants.


 An Appeal from the Circuit Court for Miami-Dade County, Jacqueline Hogan Scola,
Judge.

      Lerman & Whitebook and Carlos D. Lerman (Hollywood), for
appellant/cross-appellee.

      Nathan Clark, for appellees/cross-appellants.


Before SUAREZ, C.J., and ROTHENBERG and SALTER, JJ.

      SALTER, J.
      This is an appeal and cross-appeal arising from a lender’s 1 attempt to foreclose

a residential mortgage executed by only one of the four owners of the home when

the loan was closed. Applying the legal doctrine of ratification, the trial court entered

a foreclosure judgment against all four of the owners on the basis of an equitable

lien. The trial court stayed enforcement of that judgment, however, as to two of the

owners for as long as the property remains their homestead.

      The successor lender, Wells Fargo as trustee, appealed the stay of

enforcement, while all four owners cross-appealed the entry of the foreclosure

judgment against them.       We affirm in part, reverse in part, and remand for

modification of the final judgment. We do so as a matter of law and based on a

record that is extraordinary—even for the excesses of the Miami residential lending

market at the time. We also do so with deference to the veteran trial judge’s findings

of fact and conscientious efforts to bring some order to a loan closed without regard

to normal underwriting or title examination procedures.

      I.     Factual and Procedural History

      As of 2005, appellees and cross-appellants Elvio and Gliceria Clavero (the

“Parents”) owned a small home in Miami-Dade County that they had purchased over




1
 The original lender was Washington Mutual Bank, not Wells Fargo Bank, N.A., as
Trustee.

                                           2
30 years earlier (the “3789 Property”). In October of that year, they signed and

recorded a quitclaim deed conveying their interests in the 3789 Property to “MARIA

CLAVERO and HUBERT CLAVERO HUSBAND AND WIFE AND ELVIO

CLAVERO and GLICERIA CLAVERO HUSBAND AND WIFE joint tenants with

rights of survivorship [sic].” Hubert Clavero was the Parents’ adult son, and at the

time, Maria Clavero was Hubert’s wife. Hubert and Maria had their own home and

did not live in the 3789 Property.

      Over two months after recordation of the quitclaim deed, Maria signed the

papers for a $201,500.00 mortgage loan on the 3789 Property, in favor of

Washington Mutual Bank. She was identified as the only “Borrower,” and as a

“married woman.” She initialed each page of the promissory note and mortgage.

The other three owners of record did not sign the note or mortgage.

      The Parents received none of the proceeds of the mortgage loan on the 3789

Property, and they never made a payment on the loan. None of the loan proceeds

were invested in or used to pay taxes or other obligations relating to the 3789

Property.

      In mid-2009, Wells Fargo filed a foreclosure complaint alleging a payment

default and breach effective as of February 1, 2009. The complaint identified all

four of the record owners—the Parents, Hubert, and Maria—as defendants. In 2010,




                                         3
Hubert and Maria were divorced; as part of their marital settlement agreement, they

re-conveyed their interests in the 3789 Property to the Parents.

        The foreclosure case proceeded to a bench trial in January 2014. Maria (by

then known as Maria Castellon) testified that the Parents executed the October 2005

quitclaim deed to their home so that Maria could collateralize a loan for another

property that was to be used for a daycare business. She testified, however, that the

Parents held no interest in, and received no financial benefit from, the other property

or the daycare business. She told the Parents that she would be responsible for the

loan.

        Maria testified that she was the only person among the four record owners of

the 3789 Property who had good credit. The Parents testified that they added their

son and Maria to the title for estate planning purposes, but the trial court rejected

that testimony, finding Maria’s testimony credible. No one from Washington

Mutual Bank testified regarding the origination or closing of the loan—or regarding

the startling omission of three of the four owners from the mortgage—but the trial

court observed that “everybody was hoodwinking everybody.”

        Applying the legal principle of ratification, the trial court entered a final

judgment of foreclosure against the 3789 Property, but on the basis of an equitable

lien. The final judgment stayed any sale of the property “until the property is no

longer the homestead of Elvio/Glicera Clavero.” The court also ordered the Parents


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to begin paying their property taxes, and to pay past property taxes to the extent they

are able. Wells Fargo moved for rehearing, and the court amended the final

judgment to require the Parents to report to the court every six months on the

homestead status of the 3789 Property. This appeal and cross-appeal followed.

         II.   Analysis

         As the successor to the loan made by Washington Mutual Bank, Wells Fargo

acquired a promissory note and recorded mortgage executed by only one of the four

titleholders. The record contains no document whereby the Parents subjected their

homestead, the 3789 Property, to that mortgage. Wells Fargo’s ability to force a sale

of the Parents’ homestead property, 2 therefore, turns on the applicability of the

principle of ratification. Ratification of a mortgage by a non-signatory property

owner has been upheld in Florida in two distinct types of cases: (a) when the

nonsignatory owner has received the benefit of the mortgage loan proceeds; or (b)

when the non-signatory owner has authorized an attorney-in-fact to execute the

mortgage on behalf of the owner. We consider these categories in turn.

                A.    Receipt of Benefit

         The non-signatory’s receipt of mortgage loan proceeds, or receipt of a benefit

from the application of those funds, may cure the failure to sign the mortgage as a




2
    Art. X, § 4(c), Fla. Const.

                                            5
matter of equitable subrogation, see Palm Beach Sav. & Loan Ass’n v. Fishbein, 619

So. 2d 267 (Fla. 1993), or ratification, see Fleet Fin. & Mortg., Inc., 707 So. 2d 949

(Fla. 4th DCA 1998).

       In the present case, however, neither the Parents nor the 3789 Property

received a financial benefit from the loan proceeds. It is undisputed that all of the

loan proceeds were utilized by the sole signatory to start the day care business. The

Parents were not owners or employees of that business.

        We find no Florida case extending the principle of ratification to a parent’s

expression of a general intention to help a family member secure a loan for purposes

of benefiting the family member. At oral argument, this type of indirect benefit was

advanced by Wells Fargo as a worthy rationale for binding the Parents to the

mortgage loan procured by Maria. We see no legal basis for extending the legal

principle of ratification in such an instance, and on this record. The Washington

Mutual loan circumvented the institutional lending process whereby the property

owners/mortgagors sign documents informing them of the terms of the transaction,

including the amount of the loan procured, federal Truth-in-Lending3 rights, interest

rates, monthly payment amounts, and subjection of the homestead to the mortgage

loan—all in a transaction in which the non-signatory owners themselves and the

mortgaged property have received no benefit.


3
    15 U.S.C. §§ 1601-1665 and 12 C.F.R. §§ 226.1-.1002.

                                          6
      Wells Fargo’s reliance on the case of Citron v. Wachovia Mortgage Corp.,

922 F.Supp. 2d 1309 (M.D. Fla. 2013), is unwarranted. In that case, Mr. Citron was

a Florida-licensed mortgage broker. Mrs. Citron worked with him in a mortgage

company, and the two had brokered some 47 mortgage loans for the lender that

originally loaned money to the Citrons, World Savings. Wachovia Mortgage was

the successor by merger to World Savings. The Citrons obtained hundreds of

thousands of dollars of loan proceeds and invested those funds in a home later

conveyed to their family trust.

      The Citrons sued Wachovia Mortgage in an attempt to rescind the loan for

Truth-in-Lending violations and other alleged defects in the loan documents. The

trial court denied any such relief because (among a number of facts in the record)

the Citrons had received and had not promptly disgorged all of the direct benefits of

the loan. Additionally, the Citrons had made monthly payments on the loan for over

a year after learning of the alleged defects in the loan documents. “Ratification is

conduct that indicates an intention, with full knowledge of the facts, to affirm a

contract which the person did not enter into or which is otherwise void or voidable.”

922 F.Supp. 2d at 1321 (quoting Still v. Polecat Indus., Inc., 683 So. 2d 634 (Fla. 3d

DCA 1996)). In the present case, the Parents neither received loan proceeds, nor

otherwise benefited from the application of those proceeds, nor made any monthly

payments, nor acquired full knowledge of the material details of the mortgage loan.


                                          7
             B.     Attorney-in-Fact

      Section 695.01(1), Florida Statutes (2005), provides protection to creditors

and purchasers who accept a conveyance or lien signed by an attorney-in-fact on

behalf of a property owner (and then recorded), so long as the power of attorney

itself is also recorded before the accrual of rights by “creditors or subsequent

purchasers for a valuable consideration and without notice.” Washington Mutual

Bank could have required, but did not, such a power of attorney as a condition to the

loan. And such a power of attorney is only effectual to the extent of the specific

powers granted. Him v. Firstbank Fla., 89 So. 3d 1126 (Fla. 5th DCA 2012).

        Execution of the mortgage by an agent “previously unauthorized” may also

be subject to ratification in certain instances. Branford State Bank v. Howell Co.,

102 So. 649 (Fla. 1924). In that case, however, the Supreme Court of Florida held:

“No rule of law is better settled than this: That the ratification of the act of an agent

previously unauthorized must, in order to bind the principal, be with full knowledge

of all the material facts.” Id. at 650. In the present case, there was no evidence that

Maria (or anyone else) informed the Parents or Hubert of all of the material facts

relating to the Washington Mutual Bank loan and mortgage.

      III.   Proceedings on Remand

      We affirm the trial court’s findings that (a) Maria Castellon signed the

promissory note, obtained the loan proceeds, and remains liable under the terms of


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the promissory note,4 (b) the defective Washington Mutual Bank promissory note

and mortgage did not subject the Parents’ homestead property to the lien of the

mortgage and to sale, and (c) Wells Fargo does have an equitable lien to the extent

of disbursements for property taxes and reasonable costs of insurance paid by Wells

Fargo during the pendency of the foreclosure action, recoverable when the 3789

Property is no longer the Parents’ homestead.

      We reverse that portion of the final judgment imposing and foreclosing an

equitable lien for the principal or interest on the loan made by Washington Mutual

Bank, with respect to the ownership interest of the Parents in the 3789 Property. On

remand, the trial court should clarify that the Parents and Hubert are not personally

liable for unpaid principal and interest due under the promissory note signed only by

Maria.

      Affirmed in part, reversed in part, and remanded for further proceedings in

accordance with this opinion.




4
   The original promissory note was surrendered by Wells Fargo and marked
“cancelled.” On remand, the trial court should enter a final judgment against Maria
Castellon, individually, for the principal and interest due under the note. The trial
court may also hear and rule upon any motions for attorney’s fees relating to
collection of sums due under the note.

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