TALLAHASSEE, Fla. (AP) - Judges cannot stop lenders from voluntarily withdrawing mortgage foreclosure cases as a ploy to avoid being penalized for submitting fraudulent documents under current judicial rules, the Florida Supreme Court said on Thursday.
    
The justices, though, asked a court system committee to review the issue and make recommendations on possible rule changes to crack down on fraudulent pleadings in all kinds of civil cases, not just foreclosures.
    
The bursting of the housing bubble resulted in a glut of foreclosures in Florida and other states. Many of those cases, though, were tainted by fraudulent practices such as the "robo-signing" of documents by lenders' employees who had little or no knowledge of what they were signing.
    
Thursday's unanimous ruling came in the case of Palm Beach County resident Roman Pino.
    
His lawyer, Amanda Lundergan, had urged the justices to ban lenders from voluntarily dismissing foreclosure cases to avoid penalties for bogus documents.
    
The high court, though, affirmed an appellate ruling that said judges cannot reinstate lawsuits after plaintiffs have voluntarily dismissed them.
    
The only exception would be when the fraud, if proven, resulted in a plaintiff winning a case, Justice Barbara Pariente wrote for the court.
    
Pino had sought reinstatement of the original foreclosure case filed against him by the Bank of New York Mellon. He then wanted the judge to dismiss it with prejudice. That was after the bank had re-filed the foreclosure but without documents containing allegedly fraudulent information that were submitted in the first case. An order of dismissal with prejudice would have barred the bank from re-filing the case.
    
BNY Mellon's lawyer, Bruce Rogow, had argued the David J. Stern law firm, which represented the bank in the foreclosure case, was to blame for the documents.
    
The Stern firm, which specialized in foreclosures, went out of business in 2011. The Florida Bar, meanwhile, is seeking disciplinary action against Stern for alleged fraudulent documents in 17 cases. Stern's lawyer says he'll fight the grievances.
    
Parties and lawyers also can face other penalties for filing fraudulent documents, Pariente noted. Courts can sanction them if a case is still ongoing. Also, plaintiffs have only "one free dismissal."
    
"If BNY Mellon sought to voluntarily dismiss the foreclosure action again, its dismissal notice would be with prejudice and operate as an adjudication on the merits," Pariente wrote. In that case the judge also could have ordered the bank to pay Pino' costs and possibly attorney fees.
    
BNY Mellon and Pino, though, settled after the 4th District Court of Appeal ruled in favor of the bank but certified the issue to the Supreme Court as a question of great public importance.
    
Both sides then asked the high court to withdraw Pino's appeal, but the justices refused by a 4-3 vote in December 2011. The majority said the case was too important to be dropped.
    
The justices asked the Civil Procedure Rules Committee to consider whether judges should be given explicit sanction authority even if a case is voluntarily dismissed. They also want a recommendation on whether judges should be able to retain jurisdiction to rule on requests for monetary sanctions for abuses committed by either party or if courts should be allowed to include attorney fees in any award when a dismissed case is reinstated.
    
Another option would be to adopt a rule similar to one in the federal court system, which allows judges to impose sanctions.
    
Chief Justice Ricky Polston and Justice Charles Canady concurred with the result of the ruling but did not explain why. Both, though, had voted against hearing the case after the settlement.

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