Attorney Fee Awards For Successful Foreclosure Defense In Florida

A 1999 court decision by a Florida appeals court illustrates how attorneys representing homeowner/defendants in a foreclosure action can, if successful in their defense, request and may be granted court awarded legal fees, the liability for which will be imposed on the losing foreclosing plaintiff, the mortgage lender.

In that case, Landry v. Countrywide Home Loans, Inc., 731 So. 2d 137; (Fla. 1st DCA 1999), a mortgage lender filed a foreclosure action against homeowners Dale and Ulrike Landry. In response to the lawsuit, the Landrys, through their attorney, filed their answer and affirmative defenses, with attached exhibits. They also requested an award of attorney's fees under the reciprocity provisions of what was then section 57.105(2), and is now section 57.105(7), Florida Statutes. (In this case, the mortgage agreement required the borrower to pay the lender's attorney fee if there was a default and the lender retained an attorney to enforce collection thereof - a requirement that is common in the typical home mortgage). The concluding paragraph of their pleading stated in pertinent part:

• . . . [Landry] respectfully prays . . . for an award of attorneys' fees and costs from Plaintiff pursuant to Section 57.105(2), Fla.Stat. (1995), . . .

After the filing of a motion for summary judgment by the Landrys against the mortgage lender, Countrywide Home Loans, Countrywide filed a voluntary dismissal of the foreclosure action. The trial court then issued an order dismissing the summary judgment motion as moot, granting the Landry's motion to tax costs, but denying their motion for an award of attorney's fees.

The Florida appeals court, in reversing the trial court's denial of the Landry's request for attorneys fees, addressed the "prevailing party" issue in the case where a plaintiff files a voluntary dismissal of a lawsuit, and the entitlement of attorneys fees to a prevailing party defendant. The court made the following observations:

• The general rule is that "when a plaintiff voluntarily dismisses an action, the defendant is the prevailing party." See Thornber v. City of Ft. Walton Beach, 568 So. 2d 914, 919 (Fla. 1990). Further, "it is well established that attorney's fees are properly awarded after a voluntary dismissal where such award is provided for by statute or agreement of the parties." See Century Construction Corp. v. Koss, 559 So. 2d 611, 612 (Fla. 1st DCA 1990), review denied, 574 So. 2d 141 (Fla. 1990). See also Boca Airport, Inc. v. Roll-N-Roaster of Boca, Inc., 690 So. 2d 640, 641 (Fla. 4th DCA 1997), review dism'd, 698 So. 2d 543 (Fla. 1997)("for purposes of a prevailing party attorney's fees statute, a voluntary dismissal by the claimant makes the opposing party a 'prevailing party' as to the issue of entitlement to fees").

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• The trial court's denial of a prevailing party attorney's fee was based, in part, on the court's finding that the decision whether to award an attorney's fee under section 57.102(2) is a matter of discretion. We recognize that section 57.105(2) uses the permissive "may" with regard to the trial court's ability to award a prevailing party attorney's fee. However, we believe the discretion granted by use of "may" pertains to the determination of a prevailing party in an action founded on a contract. See Hutchinson v. Hutchinson, 687 So. 2d 912, 913 (Fla. 4th DCA 1997). Once the prevailing party determination has been made, we believe section 57.105(2) "now mandates that contractual attorney's fees provisions be reciprocal obligations." See Jakobi v. Kings Creek Village Townhouse Ass'n, 665 So. 2d 325, 326 (Fla. 3d DCA 1995). See also Oakwood Plaza, L.P. v. D.O.C. Optics Corp., 708 So. 2d 959, 960 (Fla. 4th DCA), review denied by D.O.C. Optics Corp. v. Oakwood Plaza, L.P., 725 So. 2d 1107 (Fla. 1998)(unless defendant was not the prevailing party due to plaintiff's refiling its action, petitioner entitled to attorney's fees as prevailing party where plaintiff voluntarily dismissed its suit); Lanahan Lumber Company, Inc. v. McDevitt & Street Company, 611 So. 2d 591, 592 n. 1 (Fla. 4th DCA 1993)("The intent of § 57.105(2) is to provide mutuality of attorney's fees as a remedy in contract cases.").

• In the instant case, appellants specifically requested attorney's fees pursuant to section 57.105(2) in their answer to Countrywide's complaint. Countrywide voluntarily dismissed the complaint with no suggestion of any intent to refile the action. By virtue of the voluntary dismissal, appellants are the prevailing parties. n1 See Thornber v. City of Ft. Walton Beach. Pursuant to section 57.105(2), the contractual attorney's fee provisions included in the underlying mortgage note are reciprocal obligations. Therefore, we conclude the trial court abused its discretion in denying appellants' request for attorney's fees.
  
  n1 Moreover, it appears the trial court implicitly recognized appellants' prevailing party status in its award of costs.

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In addition to the ruling that the homeowners were entitled to an attorney fee award, the decision contains some instructive language emphasizing the requirement that a defendant's claim for attorney's fees must be pled, and how an attorney fee entitlement can be deemed waived if not pled properly (see also The Florida Bar Journal: Pleading Requirements for a Claim for Attorneys' Fees (added 9-22-10)).

To read the court decision, see Landry v. Countrywide Home Loans, Inc., 731 So. 2d 137; (Fla. 1st DCA 1999).

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For a case where a prevailing defendant in a Florida foreclosure action successfully availed itself of Florida's offer of judgment statute, section 768.79, to obtain an attorney fee award against an unsuccessful foreclosing plaintiff, see Novastar Mortgage, Inc. v. Strassburger, 855 So. 2d 130 (Fla. 4th DCA 2003). An excerpt from this decision:

• The trial court ruled that this was not a "civil action for damages" under the statute, because it was a foreclosure. Novastar concedes, however, that it was seeking damages in the form of reimbursement for attorney's fees and costs. In addition, the Strassburgers point out that the promissory note secured by the original mortgage had already been paid, and that this lawsuit was only about money. We agree with the Strassburgers that this was in fact an action for damages and that the offer of judgment statute accordingly applies.

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Postscript:

Three quick points to be made:

1) The Landry decision may provide a basis for private attorneys in Florida, who may otherwise be willing to take on a foreclosure defense case on a pro bono basis, to convert a pro bono opportunity into a fee paying, contingency fee case if the case is considered successfully defended for purposes of the "prevailing party" rules.

2) If, as part of defending against a foreclosure action, counterclaims are filed against the foreclosing lender and/or servicer for violation of Federal (ie. Truth In Lending Act - 15 U.S.C. Sec. 1501 et seq., Fair Debt Collection Practices Act - 15 U.S.C. Sec. 1692 et seq., etc.) or state (ie. Florida Deceptive and Unfair Trade Practices Act - F.S. 501.201 et seq.) consumer protection statutes, the points made in this post may be moot inasmuch as these statutes contain their own attorney fee provisions that allow attorney fees to be awarded to a successful plaintiff (in the case of the Federal statutes) or successful party (plaintiff or defendant) in the case of the Florida statute.

Where no counterclaims are filed, say, in a case where the foreclosure defense primarily involves a demand that the foreclosing mortgage lender produce the promissory note and prove that it has legal standing to bring the case, the Landry case could support the proposition that a homeowner in foreclosure may be entitled to an attorney fee award where the court refuses to allow the foreclosing lender to proceed with its case as a result of it being unable to produce or re-establish a lost or destroyed note, or prove that it has legal standing (ie. that it is a "party in interest") to bring the case.

3) A reminder to Florida attorneys on a point indirectly related to this post: The general rule in Florida is that a decision on a particular issue by any Florida intermediate appeals court, unless reversed by the Floida Supreme Court, or absent interdistrict conflict with sister appellate courts, is binding on all trial courts throughout the state.

I mention this only because there is an apparently incorrect belief among more than a few Florida attorneys and trial judges that a Florida state trial court is only bound by decisons of the appeals court having jurisdiction to hear its appeals, and can ignore the decisions of other appeals courts. So, for those cases outside the First District Court of Appeal of Florida (the court deciding Landry), unless there is a conflicting decision from a sister appeals court, a case can legitimately be made that Landry is binding on the trial courts all throughout Florida, and not merely those trial courts within the First District.

For the authority on this point, see Pardo v. State, 596 So. 2d 665 (Fla. 1992), in which the Florida Supreme Court stated:

• Initially, we note that the district court erred in commenting that decisions of other district courts of appeal were not binding on the trial court. This Court has stated that "the decisions of the district courts of appeal represent the law of Florida unless and until they are overruled by this Court." Stanfill v. State, 384 So. 2d 141, 143 (Fla. 1980). Thus, in the absence of interdistrict conflict, district court decisions bind all Florida trial courts. Weiman v. McHaffie, 470 So. 2d 682, 684 (Fla. 1985). The purpose of this rule was explained by the Fourth District in State v. Hayes:

• "The District Courts of Appeal are required to follow Supreme Court decisions. As an adjunct to this rule it is logical and necessary in order to preserve stability and predictability in the law that, likewise, trial courts be required to follow the holdings of higher courts--District Courts of Appeal. The proper hierarchy of decisional holdings would demand that in the event the only case on point on a district level is from a district other than the one in which the trial court is located, the trial court be required to follow that decision. Alternatively, if the district court of the district in which the trial court is located has decided the issue, the trial court is bound to follow it. Contrarily, as between District Courts of Appeal, a sister district's opinion is merely persuasive." 333 So. 2d 51, 53 (Fla. 4th DCA 1976) (footnote and citations omitted).

By the way, the Federal courts, when deciding on issues of Florida substantive (as opposed to procedural) law, are similarly bound by the same requirement. For authority on this point, see McMahan v. Toto, 311 F.3d 1077; (11th Cir. 2002), which is simply one of many cases of the 11th Circuit Federal Court of Appeals (the court having jurisdiction over appeals from the lower Federal courts in Florida) that cite the Florida Supreme Court decision in Pardo for the foregoing proposition.

For an earlier post touching on these points, see Binding Effect Of State Court Decisions On Federal Courts On State Law Issues.