Locke Lord QuickStudy: Florida Supreme Court Resolves Attorney’s Fees Issues

Over the festive holiday period the Florida Supreme Court went on an attorney’s fees “Ham-‎Page” in deciding two cases which address the application of Fla.Stat. 57.105(7) to contractual ‎prevailing party attorney’s fees disputes. The first case was Ham v. Portfolio Recovery ‎Associates, LLC. The second was Page v. Deutsche Bank Trust Company Americas. Both cases ‎have the effect of broadening attorney’s fees liability in the State.‎

By way of background, Fl.Stat. 57.105(7) states: “If a contract contains a provision allowing ‎attorney's fees to a party when he or she is required to take any action to enforce the contract, the ‎court may also allow reasonable attorney's fees to the other party when that party prevails in any ‎action, whether as plaintiff or defendant, with respect to the contract. This subsection applies to ‎any contract entered into on or after October 1, 1988.” The Page dispute addressed the first ‎portion of the statutory language while Ham addressed the second clause. ‎

Page v. Deutsche Bank Trust Company Americas

Page stemmed from a mortgage foreclosure action filed by a bank which was involuntarily ‎dismissed after a non-jury trial because the bank failed to prove it had standing when the lawsuit ‎was initiated. Notably the bank was able to prove it had standing at the trial. After the dismissal, ‎Page petitioned the trial court for an award of prevailing party’s attorney’s fees under the fee ‎provision within the mortgage and Fla.Stat. 57.105(7). The trial court granted the motion and the ‎bank appealed. On appeal the Florida Fourth District Court of Appeals reversed the attorney’s ‎fees award. In so doing the Court held “NO STANDING = NO FEES” and also certified ‎conflict with existing cases to the contrary out of sister appellate jurisdictions. The Florida ‎Supreme Court took jurisdiction of the dispute as a result of the cited conflict and ultimately ‎reversed the Fourth District Court holding that the plain, objective meaning of the statute ‎supports the result that Page should be awarded attorney’s fees. The Florida Supreme Court ‎reasoned the operative statute had two clauses, the first clause required “the existence of a ‎contract that contains a provision allowing for attorney’s fees to a party when he or she is ‎required to take any action to enforce the contract” and the second “requires that the other party ‎must prevail in any action, whether as plaintiff or defendant, with respect to the contract”. The ‎Court further reasoned that the first clause required not only that the contract itself contain a fee ‎provision but also that the parties not be strangers to the agreement. In quashing the Fourth ‎District’s opinion, the Florida Supreme Court indicated that Fla.Stat 57.105(7) does not require ‎mutual enforceability on the day the operative suit was filed and that judicial estoppel would not ‎operate to prevent an award of prevailing party’s attorney’s fees in the present circumstances. To ‎the Florida Supreme Court it was sufficient that the bank and Page were at some uncertain day ‎parties to the mortgage. The Court also noted there was not an adjudication that no contractual ‎relationship between the parties existed nor was there an adjudication that the mortgage did not ‎exist at all. As a result, the Court found an attorney’s fees award was appropriate and quashed the ‎Fourth District Court of Appeal’s opinion to the contrary. This means that attorney’s fees liability ‎is once again a major concern for foreclosing lenders in Florida. ‎

Ham v. Portfolio Recovery Associates, LLC

The Ham case concerned common law account stated actions brought by a collection agency, on ‎behalf of an issuing bank, on credit card accounts against the card holders. In the trial level the ‎case proceeded to a trial where the collection agency failed to offer any evidence to support its ‎complaint and accordingly a final judgment was entered against the agency and in favor of the ‎debtors. The debtors petitioned for prevailing party’s attorney’s fees under Fla.Stat. 57.105(7) ‎but their petition was ultimately denied in the trial level because the stated cause of action was ‎not expressly based upon the contract which contained the attorney’s fees provision. The debtors ‎appealed this denial. On appeal the First District Court of Appeal upheld the trial court’s denial ‎of attorney’s fees because the action did not rely on the contract containing the fee provision. ‎The Florida Supreme Court took jurisdiction of the dispute to resolve a certified conflict on the ‎fees issue between the Florida First and Second District Courts of Appeal. In examining the ‎second clause of Fla.Stat. 57.105(7) the Florida Supreme Court analyzed the phrase “with respect ‎to the contract”. The Florida Supreme Court then broke down the meaning of “with respect to” ‎at length and held that “with respect to” has a broadening effect ensuring that the scope of a ‎provision covers not only its subject but also matters relating to that subject. The Supreme Court ‎cited cases which held the ordinary meaning of the statutory phrase “relating to” is broad and ‎means to stand in some relation; to have bearing or concern; to pertain; refer; to bring into ‎association with or connection with. Bearing these matters in mind the Florida Supreme Court ‎held there was a direct relationship between the credit contracts and the stated claims. Thus, the ‎Court concluded that the unilateral fee provision in the credit card contracts was made reciprocal ‎to the prevailing debtors by operation of the broad wording of Fl.Stat. 57.105(7) even though the ‎pled action was not based on the contract itself. This ruling means it is possible that the loser of a ‎lawsuit may be liable for their opponent’s attorney’s fees even if the suit is only somewhat ‎related to the contract containing an attorney’s fees provision.  ‎

Conclusion

Therefore, in light of both Ham and Page, it will be important for Florida Plaintiffs to ‎appropriately investigate and verify their cause of action, and understand their risks if they fail, ‎prior to filing suit. Further afield, it may be time for the Florida Legislature to review Fla.Stat. ‎‎57.105(7) and amend it to limit its scope and application. ‎