Full Opinion

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FOURTH DISTRICT OCWEN LOAN SERVICING, LLC, Appellant, v. CHARLES E. BISHOP, Appellee. No. 4D21-69 [April 6, 2022] Appeal from the Circuit Court for the Seventeenth Judicial Circuit, Broward County; William W. Haury, Jr., Judge; L.T. Case No. CACE17012681. Nicholas S. Agnello of Burr & Forman LLP, Fort Lauderdale, for appellant. Kenneth D. Cooper, Fort Lauderdale, for appellee. ARTAU, J. Appellant, Ocwen Loan Servicing, LLC, is the servicer of a promissory note and mortgage executed by Appellee, Charles E. Bishop, as the borrower of funds secured by his residential property. The servicer appeals from a judgment awarding damages to the borrower on his breach of contract and fraud claims arising from disputed escrow account charges imposed after the borrower failed to provide proof to the servicer that he had procured and was timely paying for insurance on the mortgaged property as the mortgage required. We reverse because the trial court misinterpreted the mortgage provision governing revocation of the escrow waiver and erred in denying the servicer leave to amend its answer to add a potentially dispositive affirmative defense. Misinterpretation of the Mortgage’s Escrow Waiver Provision The mortgage contains an addendum “conditionally” waiving the collection of escrow funds, “subject to” any “[f]ailure of [the] [b]orrower to pay the [e]scrow [i]tems[,]” or failure by the borrower to provide evidence that he paid the required “insurance premiums, and any other escrow items[.]” The addendum provides that non-compliance with the waiver’s conditions could result in the waiver becoming “null and void and of no further effect” at the “[l]ender’s option[.]” The addendum allows for the servicer’s forced placement of insurance on the mortgaged property as a remedy for the borrower’s failure to provide proof of the required insurance. The escrow waiver provided the borrower with the benefit of not having to pay escrow expenses, including property insurance, as part of his monthly mortgage payment, conditioned on his direct procurement and timely payment of those expenses by means other than an escrow account with the servicer. When the borrower failed to respond to two notices from the servicer requesting evidence that the property was insured, the servicer issued a final written notice to the borrower advising him that “[t]hirty days from the date of this letter, we will charge your escrow account $38,692.93 for insurance coverage if you do not provide acceptable proof of coverage before that time.” The notice advised that an escrow account “may be established,” if the borrower did not already have one, and that his monthly mortgage payment “may be increased to include the cost of th[e] policy[.]” (emphasis added). Thirty days later, the servicer placed insurance on the mortgaged property and imposed an escrow account to charge the borrower for the cost of the insurance. Both parties brought summary judgment motions asserting the absence of any facts in dispute and urging the trial court to interpret the escrow waiver provision as a matter of law. The borrower argued that any revocation of the escrow waiver had to be by mutual written agreement and that the notice revoking the waiver was insufficient. The trial court entered partial summary judgment in favor of the borrower’s interpretation of the mortgage. The judicial interpretation of “notes and mortgages are pure questions of law subject to de novo review.” E.g., Bank of N.Y. Mellon v. Withum, 204 So. 3d 136, 137 (Fla. 4th DCA 2016). The borrower’s argument is inconsistent with the plain and unambiguous text of the escrow waiver provision in the mortgage. While the provision does provide that “waiver may only be in writing[,]” it is clear from the immediately preceding sentence that the “writing” requirement corresponds solely to the waiver of escrow funds. The requirement does 2 not apply to the servicer’s ability to revoke the waiver based on the borrower’s non-compliance with the waiver’s conditions. The servicer’s ability to revoke the waiver is instead governed by the last sentence of the provision which states: “Lender may revoke the waiver as to any or all [e]scrow [i]tems at any time by a notice[.]” (emphasis added). Nothing in the mortgage required the revocation to occur by mutual written agreement as the borrower contends. The relevant provision provides only that notice be provided to the borrower of the servicer’s intent to exercise its unilateral option of revoking the escrow waiver when the borrower’s non-compliance supports revocation. The borrower argues that the use of the permissive or contingent term “may” in the notices did not adequately advise him that the escrow waiver would be revoked. The mortgage did not expressly require the inclusion of any specific language to notify the borrower of the servicer’s intent to revoke the escrow waiver for non-compliance. The notices tracked the permissive language of the mortgage and escrow waiver in advising the borrower of the servicer’s available remedies, including revocation of the escrow waiver, for the borrower’s non-compliance with the escrow waiver’s conditions. The use of the term “may” in the servicer’s notices therefore did not undercut the adequacy of notice provided to the borrower of the servicer’s intent to unilaterally revoke the escrow waiver as an available remedy. Cf. Green Tree Servicing, LLC v. Milam, 177 So. 3d 7, 15-16 (Fla. 2d DCA 2015) (where the borrowers’ right to reinstatement was contingent on payment of the amounts due, a notice letter utilizing the contingent term—“may”—“adequately informed the [borrowers] of their right to reinstatement”). Moreover, the mortgage provision requiring that the servicer send notice to the borrower operates as a condition precedent to its right to revoke the escrow waiver. This court has held that “substantial compliance with conditions precedent is all that is required in the foreclosure context.” Ortiz v. PNC Bank, Nat’l Ass’n, 188 So. 3d 923, 925 (Fla. 4th DCA 2016) (citing Green Tree, 177 So. 3d at 13-14). As Green Tree explained, “when the content of a lender’s notice letter is nearly equivalent to or varies in only immaterial respects from what the mortgage requires, the letter substantially complies[.]” Green Tree, 177 So. 3d at 14-15. The servicer’s notices in this case well exceeded the substantial compliance standard. The notices adequately informed the borrower of the consequences of failing to provide acceptable proof of insurance 3 coverage on the property, including the available permissive remedy of revocation of the escrow waiver. Accordingly, we reverse the final judgment because the trial court’s misinterpretation of the mortgage’s escrow waiver provision resulted not only in the erroneous entry of partial summary judgment in borrower's favor, but also in a bench trial that was not conducted in accordance with a proper interpretation of the mortgage. Renewed Motion to Add the Class Action Settlement Defense The trial court also erred when it denied the servicer leave to amend its answer to add a potentially dispositive affirmative defense asserting that the borrower’s claims had been released by a prior class action settlement barring claims regarding the forced placement of property insurance on the mortgaged property. The trial court denied the servicer’s initial request for leave to amend the answer to add the defense because the case was set for trial the following month. However, after the trial was continued and reset to a date more than six months later, the servicer filed a renewed motion seeking leave to add the class action settlement defense to its answer, arguing that the borrower would not be prejudiced if leave to amend were granted. The trial court summarily denied the renewed motion and the case proceeded to trial. During the bench trial, the servicer proffered documents related to the class action litigation and its settlement, including an affidavit from the settlement administrator asserting that the borrower was bound by the settlement because he never opted out of the class action litigation after being notified of his membership in the class. A trial court’s ruling on a motion to amend a pleading is reviewed for an abuse of discretion. E.g., Dimick v. Ray, 774 So. 2d 830, 832 (Fla. 4th DCA 2000). Florida Rule of Civil Procedure 1.190 provides that “leave of court” to “amend a pleading” shall “be given freely when justice so requires.” Fla. R. Civ. P. 1.190(a). “Under the rule, a test of prejudice is the primary consideration in determining whether a motion for leave to amend should be granted.” New River Yachting Ctr. v. Bacchiocchi, 407 So. 2d 607, 609 (Fla. 4th DCA 1981). Moreover, “[l]eave to amend should not be denied unless the privilege has been abused or the [pleading] is clearly not amendable.” Id. “It is axiomatic that under Florida law, the trial court must liberally allow amendments to a [pleading] unless the [opposing party] would be ‘prejudiced’ thereby.” Dimick, 774 So. 2d at 833. 4 As this court has explained, a litigant’s “abuse of the amendment process” is not demonstrated where, as “[h]ere, we do not have a virtual endless stream of amendments, all failing to state even a basic cause of action[.]” Dimick, 774 So. 2d at 833. The record in this case does not disclose abuse of the amendment process by the servicer. Cf. Kohn v. City of Miami Beach, 611 So. 2d 538, 539 (Fla. 3d DCA 1992) (“While there is no magical number of amendments which are allowed, we have previously observed that with amendments beyond the third attempt, [denial of a sought amendment] is generally not an abuse of discretion.”). The servicer sought to amend its affirmative defenses only once to add the potentially dispositive class action settlement defense. The servicer timely renewed the request after a continuance of the trial was granted which provided the borrower with more than six months to prepare his case. The borrower was well-aware of the defense by the time the servicer filed its renewed motion because the servicer had asserted the defense in its prior summary judgment motion. Granting the servicer’s renewed motion seeking leave to amend its answer to add the potentially dispositive class action settlement defense would have resulted in no prejudice or surprise to the borrower. See Dimick, 774 So. 2d at 834 (“additional time for preparation will also cure any prejudice resulting to [the opposing party]” and therefore it was an abuse of discretion to deny leave to amend the pleading); Bergeron, 745 So. 2d at 362 (trial court abused discretion in denying leave to add affirmative defense where “granting leave to amend would not have prejudiced [opposing party] because it had actual notice throughout the proceedings” of the defense). The trial court’s denial of the renewed motion therefore amounted to an abuse of discretion. Conclusion The final judgment entered in favor of the borrower is reversed. This cause is remanded to the trial court with directions that the partial summary judgment entered in favor of the borrower be vacated. On remand, the trial court shall enter partial summary judgment in favor of the servicer on the interpretation of the mortgage’s escrow waiver provision consistent with this opinion. The trial court shall also grant the servicer leave to amend its answer to add the potentially dispositive class action settlement defense. We conclude by observing that certain of the borrower’s claimed damages—i.e., those representing his loss of investment profits purportedly caused by the servicer’s actions—appear to have been 5 erroneously awarded as they were too speculative and not demonstrated to have been a foreseeable consequence of the servicer’s claimed breach of the terms of the residential mortgage. As this court explained in Forest’s Mens Shop v. Schmidt, 536 So. 2d 334 (Fla. 4th DCA 1988), “lost future profits based upon a breach of contract or other wrong” must be “a direct result of the defendant’s actions” and be capable of being “established with reasonable certainty.” Id. at 336. Our reversal, however, of the trial court’s final judgment for the reasons set forth in this opinion renders it unnecessary for us to reach either the lost investment profits issue or the separate issue of the failure to prove fraud conceded by the borrower in his brief. Reversed and remanded with instructions. MAY and KLINGENSMITH, JJ., concur. * * * Not final until disposition of timely filed motion for rehearing. 6