BREVARD COUNTY — A Florida homeowner’s claim of “unclean hands” against PNC Bank, National Association was not enough to prevent foreclosure, according to a 5th District Court of Appeal opinion

The case stems from a loan Amy Smith and Duncan Smith took out from the bank’s predecessor National City Mortgage to build a home in Brevard County in 2008. Smith took out two promissory notes for repayment, which had different account numbers, and Smith paid them separately, court records state.

The following year, the original lender of the notes merged with PNC. The Smiths made payments on the first mortgage note, but PNC couldn't find records of the second note so they were unable to make payments. The couple tried to fix the issue but was unsuccessful, and the bank charged off the second note to a third party in 2010, according to court records. The charge off allegedly negatively impacted Smith’s credit score in 2011. The Smiths allegedly tried to contact the bank to fix the issue but did not receive an answer they found acceptable. The following year, the Smiths stopped paying on the first mortgage note in hopes of “getting [Bank’s] attention” and forcing it to respond to the issues with the second loan. 

The bank, however, sent a notice of default on the first mortgage and filed for foreclosure. The Smiths argued the bank acted with “inequitable conduct” and had “unclean hands” in the foreclosure complaint. As a result, the Smiths wanted the trial court to dismiss the case.

The lower court sided with Smith and did not grant the foreclosure. The bank then filed an appeal. The appeals court disagreed with the trial court and said it did not apply the “unclean hands” argument correctly as “the conduct constituting the ‘unclean hands’ must be connected with the matter in litigation and must affect the adverse party.”

It added the “unclean hands” argument was due to how the bank handled the second loan. This didn’t apply to the first loan in which the bank filed the foreclosure.

The appeals court reversed the trial court’s judgment and remanded it back to the lower court to rule in favor of the bank for the foreclosure.

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Fifth District Court of Appeal
300 South Beach Street
Daytona Beach, FL 32114

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