       Third District Court of Appeal
                               State of Florida

                           Opinion filed April 18, 2018.
         Not final until disposition of timely filed motion for rehearing.

                               ________________

                               No. 3D14-3114
                          Lower Tribunal No. 10-3055
                             ________________

                            OneWest Bank, FSB,
                                    Appellant,

                                        vs.

                            Luisa Palmero, et al.,
                                    Appellees.


      An Appeal from the Circuit Court for Miami-Dade County, Abby Cynamon,
Judge.

      Burr & Forman LLP and Joshua H. Threadcraft (Birmingham, AL), for
appellant.

      Carrera & Amador, P.A. and Juan M. Carrera, for appellees.

Before EMAS, LOGUE and LUCK, JJ.

      LUCK, J.

      The bank appeals the trial court’s judgment for a surviving spouse in this

reverse mortgage foreclosure case. After the borrower-husband passed away, and
the bank sought to foreclose for non-payment, the trial court concluded that the

surviving spouse was not a borrower under the loan but the bank still could not

foreclose because the federal reverse mortgage statute prohibited foreclosure

against a surviving spouse living in the mortgaged residence.          We agree the

surviving spouse was not a borrower but vacate the judgment and reverse because

the trial court improperly relied on the statute that no one raised as a defense to the

foreclosure action.

                      Factual Background and Procedural History

      In September 2006, Roberto and Luisa Palmero spoke to a reverse mortgage

counselor for an hour and received “information about the implications of and

alternatives to a reverse mortgage.” In a session tailored to their unique financial

circumstances, the counselor spoke to the Palmeros about the impact of the reverse

mortgage on their estate and heirs. After the counseling session, the Palmeros

certified that they had discussed the financial implications of, and alternatives to,

the reverse mortgage, and they understood its advantages and disadvantages, the

payment plan, and its costs.

      In December 2006, the Palmeros mortgaged their home to Value Financial

Mortgage Services, Inc. (The reverse mortgage was later assigned to OneWest

Bank.)    As part of the reverse mortgage, the Palmeros executed these five

documents (among some others):



                                          2
      1. The mortgage. In the mortgage, the borrower was defined as “Roberto

Palmero, a married man reserving a life estate unto himself with the ramainderman

[sic] to Luisa Palmero, his wife, Idania Palmero, a single woman and Rene

Palmero, a single man.” In the signature block, it said, “BY SIGNING BELOW,

Borrower accepts and agrees to the terms contained in this Security Instrument and

in any rider(s) executed by Borrower and recorded with it.” Mr. and Mrs. Palmero

signed as the borrower under this sentence.1

      2. The note. The note defined borrower to mean “each person signing at the

end of this Note.” Mr. Palmero was the only person who signed at the end of the

note as the borrower.

      3. The loan application. In the loan application, the property was said to be

in Mr. Palmero’s name. Mr. Palmero was named as the borrower, and he signed as

the borrower. Even though there was a space for a co-borrower, Mrs. Palmero was

not listed as the co-borrower and she did not sign the loan application.

      4. The loan agreement. In the loan agreement, borrower was defined as Mr.

Palmero.    Mr. Palmero, and no one else, signed the loan agreement as the

borrower.




1 The dissenting opinion says we “overlook[ed]” that Mrs. Palmero signed the
mortgage as a borrower. We have not. That fact is in the third paragraph of the
fact section of this opinion, just before this footnote.

                                          3
      5. The non-borrower spouse ownership interest certification. The Palmeros

acknowledged in the non-borrower spouse ownership interest certification that they

were given ample time “prior to the closing of this reverse mortgage loan to

consult with independent legal and tax experts of [their] own choosing regarding

the ownership or vesting of real property that will serve as collateral for the reverse

mortgage loan.” Mr. Palmero signed the certification as the borrower, while Mrs.

Palmero signed as the non-borrower spouse.          In Mrs. Palmero’s portion, she

certified that “should [her] spouse predecease [her] . . . and unless another means

of repayment [was] obtained, the home where [she] reside[s] may need to be sold

to repay Reverse Mortgage debt incurred by [her] spouse. If the home where [she]

reside[s] [was] required to be resold,” Mrs. Palmero agreed she understood “that

[she] may be required to move from [her] residence.”

      The bank paid Mr. Palmero from May 2007 through July 2008, until he

passed away in August 2008. Under the terms of the mortgage, with the borrower

now deceased, the bank accelerated the loan in November 2008. When Mrs.

Palmero did not pay the balance of the loan, the bank filed a complaint to foreclose

on the home.

      The case proceeded to trial, and after taking testimony and examining the

loan documents, the trial court concluded that Mrs. Palmero was not a borrower.

But the trial court did not enter judgment for the bank because under the federal



                                          4
reverse mortgage statute, 12 U.S.C. § 1715z-20(j), “the repayment of a reverse

mortgage loan is deferred until the death of both the borrowing homeowner and the

homeowner’s spouse.” Judgment was entered for Mrs. Palmero, and the bank has

appealed.

                                 Standard of Review

       “A trial court’s construction of notes and mortgages involves pure questions

of law, and therefore is subject to de novo review.” Smith v. Reverse Mortg. Sols.,

Inc., 200 So. 3d 221, 224 (Fla. 3d DCA 2016).

                                      Discussion

      OneWest contends the trial court erred by relying on the federal reverse

mortgage statute to find for Mrs. Palmero because she did not plead in her answer

that the statute prevented foreclosure and she did not raise the issue at trial. Mrs.

Palmero responds that even without the federal statute, she was a borrower and

could not be foreclosed under the reverse mortgage while she was still alive and

residing in the mortgaged property. The competing arguments raise two questions

for us about the trial court’s final judgment: (1) did the trial court err in relying on

the federal reverse mortgage statute not pleaded as a defense, nor raised at trial, to

find for Mrs. Palmero; and (2) did the trial court err in concluding that Mrs.

Palmero was not a borrower?

                                1. The federal statute.



                                           5
      The trial court concluded that even though Mrs. Palmero was not a borrower

under the mortgage, she was still entitled to judgment because OneWest was

precluded from foreclosing on the home under the federal reverse mortgage statute.

Mrs. Palmero answered the foreclosure complaint with fifteen defenses. While

Mrs. Palmero defended against foreclosure based on other federal statutes, her

answer did not cite or rely on the federal reverse mortgage statute. During trial,

and in the post-trial closing arguments, the federal reverse mortgage statute and

regulations were not relied on by either party as a defense to foreclosure.

      Judge Padovano has succinctly and correctly described the rule for defenses:

      Generally, a defense must be raised in the responsive pleading or it is
      waived. Failure to assert an affirmative defense in the answer
      ordinarily amounts to a waiver of the defense. Because an affirmative
      defense can be waived if not timely raised, the trial judge has no
      authority to reject a claim on the basis of an unstated affirmative
      defense. For example, the trial judge has no authority to reject a claim
      on the ground that the statute of limitations has expired if no party has
      raised the statute as a bar to the claim.

Philip J. Padovano, Florida Civil Practice § 7:26 (2017-2018 ed.) (footnotes

omitted); see also Cong. Park Office Condos II, LLC v. First-Citizens Bank & Tr.

Co., 105 So. 3d 602, 607 (Fla. 4th DCA 2013) (“By failing to properly plead lack

of standing and ‘fraud,’ the borrowers waived their right to assert these affirmative

defenses in response to First-Citizens’ summary judgment motion.”); Langford v.

McCormick, 552 So. 2d 964, 967 (Fla. 1st DCA 1989) (“Appellee did not plead

undue influence as an affirmative defense at any point in the proceedings. He never


                                          6
attempted to amend the pleadings to raise this issue either before or during trial. It

is well settled that an affirmative defense must be pleaded or it is waived.”); Bilow

v. Benoit, 519 So. 2d 1114, 1117 (Fla. 2d DCA 1988) (“This affirmative defense

was waived by Benoit’s failure to plead it, and the trial court erred in relying on the

defense as a basis for its final judgment.”); Dysart v. Hunt, 383 So. 2d 259, 260

(Fla. 3d DCA 1980) (“[A] judgment upon a matter entirely outside of the issues

made by the pleadings cannot stand; and where, as here, an issue was not presented

by the pleadings nor litigated by the parties during the hearing on the pleadings as

made, a decree adjudicating such issue is, at least, voidable on appeal.” (quotation

omitted)).

      There’s an exception to the general rule where a court may consider an

unpleaded defense that was litigated by the consent of the parties. Padovano,

supra, at § 7:26. But the parties did not consent to use the federal reverse mortgage

statute and regulations as a defense to foreclosure. Mrs. Palmero was required to

raise any federal statutory prohibition against foreclosure in her answer. Because

she didn’t, the issue was waived and the trial court could not rely on the federal

reverse mortgage statute to enter judgment for Mrs. Palmero.2


2 Because we conclude the defense based on the federal reverse mortgage statute
was waived, we express no opinion on the merits of whether the statute prohibits
foreclosing a reverse mortgage on a surviving spouse still living in the mortgaged
residence. That issue undoubtedly will be decided another day when the argument
has been properly preserved.

                                          7
      Despite the fact that the federal statute was not raised by Mrs. Palmero in her

pleadings or as a defense at trial, the dissenting opinion says the statute compels us

to rule for Mrs. Palmero because “it was the Bank itself that required Mrs. Palmero

to sign as a borrower so that the Bank could obtain federal mortgage insurance.

The federal government will not insure this type of loan unless the spouse signs as

a co-borrower.” This statement from the dissenting opinion is flawed for two

reasons.

      First, there was no evidence in the record that the bank required Mrs.

Palmero to sign the mortgage because it wanted the federal government to insure

the loan. The bank’s representative testified at trial, and was asked why the bank

would have a non-borrower spouse sign the mortgage. The representative said this

was the bank’s custom and practice so the non-borrower spouse had the

opportunity within three days of the transaction to cancel it.         Mrs. Palmero

testified, too, and she said nothing about having to sign because of insurance.

      Second, at the time Mrs. Palmero signed the mortgage in 2006, the federal

government was insuring reverse mortgage loans where only one spouse signed as

the mortgagor. See 24 C.F.R. § 206.27(c)(1) (2006) (“The mortgage shall state

that the mortgage balance will be due and payable in full if a mortgagor dies and

the property is not the principal residence of at least one surviving mortgagor, or a

mortgagor conveys all or his or her title in the property and no other mortgagor



                                          8
retains title to the property.”). This has since changed. See U.S. Department of

Housing and Urban Development, Home Equity Conversion Mortgage (HECM)

Program: Non-Borrowing Spouse (2014) (“FHA has, since the inception of the

HECM program, interpreted this provision in its regulations as requiring HECMs

be called due and payable upon the death of the last surviving mortgagor . . . .

FHA continues to believe that its original interpretation gives full force and effect

to the intent of the statute. Nevertheless, recent events have advanced another

possible interpretation . . . .”); Bennett v. Donovan, 4 F. Supp. 3d 5, 15 (D.D.C.

2013) (“HUD violated 12 U.S.C. § 1715z–20(j) when it insured the reverse

mortgages of plaintiffs’ spouses pursuant to agency regulation, which permitted

their loan obligations to come due upon their death regardless of whether their

spouses (plaintiffs) were still alive.”). In 2006, there was no federal-mortgage-

insurance reason for the bank to require Mrs. Palmero to sign the mortgage.

                                   2. Borrower.

      Even so, Mrs. Palmero contends, she was a borrower under the mortgage.

Because the reverse mortgage limited foreclosure to when the property was “not

the principle residence of at least one surviving Borrower,” and Mrs. Palmero was

a surviving borrower still living on the property, the argument goes, foreclosure

was premature and judgment was properly granted for Mrs. Palmero.




                                         9
      As we noted earlier, the Palmeros signed a number of agreements as part of

the reverse mortgage. Reading these documents together, as we must, Sardon

Found. v. New Horizons Serv. Dogs, Inc., 852 So. 2d 416, 420 (Fla. 5th DCA

2003) (“Where other instruments are executed contemporaneously with a mortgage

and are part of the same transaction, the mortgage may be modified by these other

instruments. All the documents should be read together to determine and give

effect to the intention of the parties.”), we agree with the trial court that Mrs.

Palmero was not a borrower. The mortgage defined the borrower as Mr. Palmero,

with a life estate to his wife and children. The note defined Mr. Palmero as the

borrower. The loan agreement also defined Mr. Palmero as the borrower. The

loan application from the closing listed Mr. Palmero as the borrower, and did not

list any co-borrowers. Mrs. Palmero signed a “non-borrower spouse ownership

interest certification” certifying “that should my spouse predecease me . . . and

unless other means of repayment is obtained, the home where I reside may need to

be sold to repay Reverse Mortgage debt incurred by my spouse. If the home where

I reside is required to be resold, I understand that I may be required to move from

my residence.” To the extent there was any confusion or inconsistency in the

mortgage, it was cleared up by the note, loan application, loan agreement, and non-

borrower spouse certification, which unequivocally provided that Mrs. Palmero




                                        10
was not the borrower for the reverse mortgage and defined Mr. Palmero as the

borrower.

       The dissenting opinion relies on our decisions in Smith and Edwards v.

Reverse Mortgage Solutions, Inc., 187 So. 3d 895 (Fla. 3d DCA 2016), but the

loan application, loan agreement, and non-borrower spouse certification

distinguish those cases from this one. In Smith and Edwards, the court had a

limited record, and didn’t have these contemporaneously signed documents, when

it decided that the surviving spouses in those cases were borrowers. In Smith, for

example, there was no transcript of the trial, Smith, 200 So. 3d at 224 (noting “the

absence of a transcript”), no title description, id. at 226 n.8 (“It is not clear from

the record how the subject property was titled at the time the mortgage was

executed by Mr. and Mrs. Smith.”), and no loan application, id. at 223 n.1 (“While

the subject note and mortgage both reference a ‘Loan Agreement’ . . . no Loan

Agreement is contained in the record on appeal.”). Because of this limited record,

the Smith court intentionally limited its discussion to construction of the mortgage.

Id. at 224 (“[T]he issue presented involves . . . judicial construction of the reverse

mortgage . . . .”).

       In Edwards, the record was limited because the defendant defaulted by

failing to appear after service and answer the complaint. Edwards, 187 So. 3d at

896.    There was a nonjury trial, but the defendant was not allowed to testify and



                                         11
was not permitted to assert any defenses. Id. The only loan documents before the

trial court were the mortgage and note. Id. (“The trial court held that [the bank]

was entitled to foreclosure because Mr. Edwards was the only borrower under the

note, and therefore, the only borrower for purposes of the mortgage’s acceleration

provision.”).

      Because our record, unlike in Smith and Edwards, contains other

contemporaneously signed agreements, we are required to read them together. See

Quix Snaxx, Inc. v. Sorensen, 710 So. 2d 152, 153 (Fla. 3d DCA 1998)

(“Documents executed by the same parties, on or near the same time, and

concerning the same transaction or subject matter are generally construed together

as a single contract.”); Citicorp Real Estate, Inc. v. Ameripalms 6B GP, Inc., 633

So. 2d 47, 49 (Fla. 3d DCA 1994) (“The law is well established that two or more

documents executed by the same parties, at or near the same time, and concerning

the same transaction or subject matter are generally construed together as a single

contract.”); Bianchi’s from Roma, Inc. v. Big Five Club, Inc., 630 So. 2d 642, 643

(Fla. 3d DCA 1994) (“[W]e conclude that a release which was signed

simultaneously by the parties with the written agreement sued upon [thereby

requiring that both of these instruments be construed together in determining the

parties’ intent] did not, as a matter of law, extinguish the parties’ obligations to

each other under the written agreement.” (brackets in original)). We have done so



                                        12
not in a lopsided way, as the dissenting opinion suggests, but in a way that is

faithful to the parties’ intent – by reading Mrs. Palmero’s certification that she was

not a borrower plainly to mean that she was not a borrower. See Acceleration Nat.

Serv. Corp. v. Brickell Fin. Servs. Motor Club, Inc., 541 So. 2d 738, 739 (Fla. 3d

DCA 1989) (“[T]he actual language used in the contract is the best evidence of the

intent of the parties, and the plain meaning of that language controls.”).

                                     Conclusion

       We conclude that the trial court erred in granting judgment for Mrs.

Palmero. We reverse the judgment for Mrs. Palmero and remand for the trial court

to enter judgment in favor of the bank.

      Reversed and remanded with instructions.

      EMAS, J., concurs.




                                          13
3D14-3114 OneWest v. Luisa Palmero
(LOGUE, J. (dissenting)


      The “reverse mortgage” at issue expressly provides it cannot be foreclosed

upon until “the Property is not the principal residence of at least one surviving

Borrower.” It is undisputed that Mrs. Palmero signed the mortgage and continued

to reside in her home after her husband died. The only open question is whether

Mrs. Palmero signed the mortgage as a borrower. I believe the majority overlooks

a simple fact on the face of the mortgage: that Mrs. Palmero did indeed sign as a

borrower. It seems to me the question of whether a person signed a mortgage as a

borrower can be answered by examining only the mortgage itself.

      On the face of the mortgage, immediately above Mrs. Palmero’s signature,

the mortgage states “BY SIGNING BELOW, Borrower accepts and agrees to the

terms contained in this Security Instrument and in any rider(s) executed by



                                       14
Borrower and recorded with it.” The form provides a place for the borrowers to

sign. Mrs. Palmero’s signature appears in exactly that place reserved for the

signature of the borrowers. There is no possible ambiguity in this regard. Were

there any ambiguity, it is surely resolved by the fact that, immediately next to her

signature is the printed word, “Borrower.” Furthermore, this signature, “Luisa

Palmero (Borrower),” is notarized.

      The Bank does not deny these facts because it cannot. Instead, it attempts to

downplay them by purporting to prove by testimony and other documents that the

signature “Luisa Palmero (Borrower)” does not mean Mrs. Palmero signed as a

borrower. The problem with the Bank’s argument is that Mrs. Palmero did not sign

as “Luisa Palmero (Borrower)” as a result of serendipity, mistake, or accident.

Instead, as the repeated references to federal mortgage insurance in the mortgage

clearly indicate, it was the Bank itself that required Mrs. Palmero to sign as a

borrower so that the Bank could obtain federal mortgage insurance. The federal

government will not insure this type of loan unless the spouse signs as a co-

borrower. The purpose of this requirement is to protect the spouse from foreclosure

as long as he or she resides in the home. See 12 U.S.C.A. § 1715z-20 (2017).

      At best, therefore, the Bank’s argument boils down to the proposition that

Mrs. Palmero signed as a borrower for purposes of securing the Bank federal

mortgage insurance, but not for providing Mrs. Palmero the protection from



                                        15
foreclosure. This protection from foreclosure is the very reason why federal law

requires her signature as a condition to obtain federal mortgage insurance. Were

this a case of first impression, I would still decline to lend the imprimatur of our

court to such a lopsided interpretation of a legal document. Indeed, the Bank’s

argument in this regard reminds me of the remark by Lily Tomlin: “No matter how

cynical you become, it’s never enough to keep up.”

      In any event, whatever its theoretical merits, the Bank’s argument in this

regard has already been expressly rejected by this court twice. In Smith v. Reverse

Mortgage Solutions, Inc., 200 So. 3d 221 (Fla. 3d DCA 2016), this court

considered the identical issue when interpreting a spouse’s similar signature on an

identical mortgage. We held that the issue was purely an issue of law to be

determined by examining only the mortgage. As we specifically stated, “the issue

presented involves a pure question of law . . . i.e., judicial construction of the

reverse mortgage to determine whether Mrs. Smith is a ‘Borrower’ as defined in

the reverse mortgage.” Id. at 224. After reviewing the language of the mortgage,

the Florida Constitution, and federal housing statutes, the panel concluded “that, as

a pure question of law, Mrs. Smith was a ‘Borrower’ as that term is contemplated

in Paragraph 9 . . . of the subject reverse mortgage.” Id. at 228.

      Later, our court approved and followed this holding in Edwards v. Reverse

Mortgage Solutions, Inc., 187 So. 3d 895, 897 (Fla. 3d DCA 2016) (adhering to



                                          16
Smith and agreeing that “it would be difficult, if not impossible, for us to construe

[the surviving spouse] as anything other than a ‘Borrower’”).

      Because the mortgage and the nature of the spouse’s signature in this case

are identical to the ones in Smith and Edwards, we are bound by our rather

unremarkable precedent that, as a matter of law, when the surviving spouse signed

the mortgage as a borrower, as revealed by an examination of the mortgage itself,

the spouse will be treated as a borrower for purposes of the mortgage. Smith, 200

So. 3d at 228; Edwards, 187 So. 3d at 897. I therefore respectfully dissent. Mrs.

Palmero is entitled to stay and live in her home.




                                         17
