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Have you ever received a letter suggesting you are in default ?

Have you ever received a letter from a collection company and/or your banking lender or mortgage servicer suggesting you are in default when you believe you are not? Were you afraid that there was no way to fight back or retain counsel to represent you in a dispute because the expense would be too high?

Well, very recently, the Florida Supreme Court issued two opinions that addressed a contractual prevailing party attorneys’ fees question in favor of the debtors and homeowners (or borrowers). These opinions and clarification of Florida law will continue to provide many consumers and homeowners, that could not otherwise afford a lawyer, access to the court system through contingency fee arrangements.

Here are the nuts and bolts of how it works.

– Whether under a conventional or reverse note and mortgage, the standard terms are almost always written to specify that only the lender, bank, mortgagee, or mortgage servicer can recover their attorneys’ fees if they successfully sue a homeowner, borrower, or mortgagor for defaulting on their note and/or mortgage.

– Similar language regarding costs and fees associated with collection claims are used in contracts with vendors of all kinds, contractors, doctors, or similar services.

– But 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.” (Emphasis added).

In First, Page v. Deutsche Bank Trust Company Americas, 46 Fla. L. Weekly S3 (Fla. Dec. 31, 2020), the Florida Supreme Court approached its analysis of Fla. Stat. 57.105(7) by breaking it into two parts. The first noted there had to be “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,” while the second “requires that the other party ‎must prevail in any action, whether as plaintiff or defendant, with respect to the contract.”

Ultimately, the Florida Supreme Court rejected the Fourth District Court of Appeal’s opinion that a borrower can never recover attorneys’ fees as the prevailing party when a bank files suit before it has standing, or as the Fourth District wrote “NO STANDING = NO FEES”; instead, the Florida Supreme Court said that, based on the facts of this case, it was enough that the borrower and bank were at some point parties to the mortgage, even if not on the exact day that the bank filed suit against the borrower. The Court also held that the theory of judicial estoppel (an equitable doctrine used to prevent litigants from taking totally inconsistent positions in separate judicial proceedings) would not preclude the borrower from their prevailing party’s attorney’s fees, under the facts of this case. Notably, the Court observed that, in this case, there was not a ruling that the bank and borrower were never parties to the contract or that there was no valid mortgage.

In Ham v. Portfolio Recovery ‎Associates, LLC, 46 Fla. L. Weekly S9 (Fla. Dec. 31, 2020), the Florida Supreme Court addressed an “account stated” action brought by a collection company, on behalf of a bank regarding credit card accounts, against the consumer, credit card holders (or a creditor versus an alleged debtor scenario).

At trial, the alleged debtors prevailed, and a final judgment was entered in their favor. However, when the debtors asked the trial court to award them prevailing party attorneys’ fees under Fla. Stat. §57.105(7), their motion was denied based on the trial court’s ruling that the “account stated” action did not, itself, rely on the credit card contracts that contained the fee provisions. While the First District Court of Appeal agreed with the trial court, separately, the Second District held the opposite result based on its reasoning “that the account stated claim and the underlying credit card contract were inextricably intertwined.” Bushnell v. Portfolio Recovery Associates, LLC, 255 So. 3d 473, 477-78 (Fla. 2d DCA 2018).

In resolving the conflict between the First and Second District Courts of Appeal, the Florida Supreme Court focused on the second part of Fla. Stat. §57.105(7), specifically the “with respect ‎to the contract” language.

In a lengthy discussion, the Florida Supreme Court made clear that the meaning of “with respect to” ‎was “necessarily broader than terms such as ‘based on,’ ‘under,’ or ‘pursuant to’ . . . it sweeps more broadly.” Under the facts of this case, the Florida Supreme Court concluded that the alleged debtors, as the prevailing party, were entitled to an attorneys’ fee award because Fla. Stat. §57.105(7) requires the unilateral attorneys’ fee provision in the credit card contracts to be reciprocal, notwithstanding that, under these facts, the “account stated” action was not based on the contract, itself.

Thus, even if a lawsuit is not explicitly filed on the contract containing the relevant clause regarding recovery of attorneys’ fees, itself, a prevailing party may be able to recover their attorney’s fees pursuant to Fla. Stat. §57.105(7) if the action is “with respect to the contract.”


Geoff Stahl is a Florida attorney who handles various litigation matters, including complex civil and commercial litigation, consumer fraud and protection issues, insurance denials (including homeowner’s and health insurance denials) as well as statutory and contractual violations. You can reach Geoff at 561-616-3333 or gstahl@liggiolaw.com.

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