Court Slams Foreclosure Defense Attorney For $39K+ For Filing Unsupportable Affirmative Defenses To Improperly Delay Proceedings

A recent ruling by a Florida appeals court appears to be a warning shot to all attorneys involved in foreclosure litigation in Florida (both the plaintiff and defense bars) that they had better get up to speed on the workings of Section 57.105, Florida Statutes,(1) or run the risk getting slammed, as one attorney recently found out.

In it, the 4th District Court of Appeal affirmed a lower court ruling belting a foreclosure defense attorney for $18,682.99 in delay damages for filing affirmative defenses on behalf of a defendant/homeowner in a mortgage foreclosure action that the trial court said were unsupportable by the material facts and were filed primarily for the purpose of unreasonable delay (the $18,682.99 represented the amount of interest that accrued on the borrowers’ note from the day the affirmative defenses were filed and asserted until the day they were stricken).

In addition, the trial court order also awarded the foreclosing lender costs and attorney’s fees in the amount of $20,563.59, and imposed the liability for this entire amount on the foreclosure defense attorney. This portion of the trial court order was not appealed, nor was the trial court’s finding that under the inequitable conduct doctrine, the foreclosure defense attorney is responsible for the full amount of attorney’s fees as opposed to a fifty-fifty split with the borrowers as would normally be required under section 57.105(1).(2)

One interesting point in this case is that the conduct that the attorney was accused of engaging in didn't seem to rise to the level sufficient to register a blip on the 'Richter scale' of bad faith conduct, at least not compared to the kind of crap that the attorneys slaving for the foreclosure mill rackets have been getting away with.(3)

It may be that the foreclosure defense bar can consider what this ruling stands for and incorporate it into their approach in defending their clients (by filing Section 57.105 motions against the foreclosure mills for the crappy paperwork they're submitting to the courts), because it sure as hell looks like the plaintiffs bar has already done so (by the way, the law firm representing the foreclosing lender - at least in this appeal - is not one of the legal lightweights that foreclosure mills generally tend to be; it is a heavyweight firm well known in Florida and well-respected throughout the state).

For the ruling, see Korte v. US Bank National Association, 4D09-4285 (Fla. App. 4th DCA, June 8, 2011).

(1) Section 57.105 was the subject of earlier posts relating to the claim for attorneys fees entitlement when an attorney successfully fends off an attempted foreclosure. See:

• Fla. Appeals Court: Homeowner Entitled To Nail Bank For Prevailing Party Legal Fees After Lender Voluntarily Dismissed F'closure Case w/out Prejudice,
• Fla. Appeals Ct. Nixes Prevailing Party Legal Fee Award In Foreclosure Defense; Failure To Include Request In Pleading Sinks Recovery Attempt,
• Other posts referencing Section 57.105, Florida Statutes.

(2) According to the ruling, the trial court granted the homeowners' motion seeking to have the damages paid solely by the foreclsoure defense attorney (during the litigation, the homeowner in foreclosure hired a new defense attorney) based on the inequitable conduct doctrine. In footnote 2 of its ruling, the appeals court gives this tidbit on the inequitable conduct doctrine:

• "The inequitable conduct doctrine permits the award of attorney's fees where one party has exhibited egregious conduct or acted in bad faith. . . . [T]his doctrine is rarely applicable. It is reserved for those extreme cases where a party acts in bad faith, vexatiously, wantonly, or for oppressive reasons." Bitterman v. Bitterman, 714 So.2d 356, 365 (Fla. 1998) (citations and internal quotation marks omitted).
  
  In Rosenberg v. Gaballa, 1 So.3d 1149 (Fla. 4th DCA 2009), we held that the "inequitable conduct doctrine" was not rendered obsolete by the 1999 amendments to section 57.105. Id. at 1150.

See also, Moakley v. Smallwood, 826 So.2d 221 (Fla. 2002), and these links, for more on Florida's "inequitable conduct doctrine."

(3) According to the appeals court:

• The trial court's order determining U.S. Bank's entitlement to sanctions included the following findings:
  
  The Court further finds that Mr. Korte was not acting in good faith based on representations of his clients since, as to Ms. Rivero, the record before the Court established that Mr. Korte never spoke with her. The record before the Court further established that Mr. Korte made no effort to review the documentation provided by Ms. Brandon which documentation was claimed to be the sole support for the defenses raised.
  
  Finally, as to both Ms. Rivero and Ms. Brandon, the records before the Court established that Mr. Korte never provided either with a copy of the defenses that he filed on their behalf and that upon receipt of the section 57.105 motion filed in this case, Mr. Korte made no efforts to verify with them the accuracy or veracity of the facts asserted in support of the defenses.
  
  These factual findings are sufficient in this case to describe "the specific acts of bad faith conduct that resulted in the unnecessary incurrence of attorneys' fees." See Moakley, 826 So. 2d at 227; cf. Finol v. Finol, 912 So.2d 627 (Fla. 4th DCA 2005) (reversing an award of sanctions based on the trial court's inherent authority because the proceedings and order were inadequate to support the sanctions imposed).