Appellate Court Slaps Citibank over Legal Misconduct in Sale Cancellations

The community association attorneys at our firm have seen our share of delay tactics and legal ploys by lenders in the aftermath of the robosigner-fueled faulty foreclosures that clog the courts. However, the opinion filed today by the Third District Court of Appeal has caught our collective attention as one of the most glaring examples of the problems with lenders’ blatant disregard for following the most basic and essential rules of the entire process.

The ruling should prove embarrassing for Citibank, as it paints the picture of a financial institution’s improper attempts to promote its own interests, much to the obvious detriment of a condominium association. In the ruling, the court chronicles a history of disturbing facts about how Citibank managed to maintain a condominium at the Jade Winds Association in an “extended limbo” since April 2009.

The Third District details how Citibank failed to notify the attorneys for the condominium association of its Emergency Motion to Cancel and Reschedule Foreclosure Sale, which Citibank’s attorney presented to the court at the last minute on the date of the sale in October 2010. In addition, Citibank asserted that it needed additional time to determine whether the defendant qualifies for a loan modification, which was completely false and misleading since the condominium association held title to the residence as of August 2009.

bank logo.jpgNotably, the court observes that: “Unfortunately, the irregularities did not end there.” The condominium association filed and won a Motion for Sanctions against Citibank, which also provided that “the court further orders that the sale scheduled for January 4, 2011, SHALL NOT be cancelled.” Appallingly, less than a month after this order on December 30, 2010, Citibank filed a second Motion to Cancel, this time requesting that the sale be postponed until after February 1, 2011, to enable it to complete its review of foreclosure documentation. This second motion omitted the fact that the sale had previously been reset with a court order indicating that it cannot be cancelled. And, true to form, Citibank again failed to mail a copy of the Motion to Cancel Sale to the attorneys for the condominium association.

The appeal comes as a result of Citibank being granted its second sale cancellation based purely upon “affidavit review” without notice to the condominium association. The court found that Citibank clearly failed in its obligation to serve the attorneys for the condominium association with the second motion and notify them of the hearing. Highlighting Citibank’s misconduct, the court observed that “Citibank knew that its actions were inappropriate.” The Third District concluded that “[b]ased on Citibank’s actions, this condominium unit has basically been in extended limbo since April 2009, which is when the final judgment of foreclosure was entered in favor of Citibank. It is time for this condominium unit to be sold.”

In addition to reversing the court order on the second Motion to Cancel and issuing directions to set the foreclosure sale, the opinion also states that “the Division Circuit Court judge and/or Foreclosure Master Calendar judge are free to impose appropriate sanctions against Citibank and/or its counsel based on the aforementioned conduct.”

This decision is emblematic of the severe problems with the banks’ handling of foreclosures in the wake of the meltdown in the housing market. This type of misconduct hinders the recovery in residential real estate that is starting to take hold, and it is our hope that cases such as this will serve to expose banks for their appalling and embarrassing misconduct.