Our Melbourne Foreclosure Attorney, Beau Bowin, has successfully defended countless foreclosure cases in Florida. In most cases, where we are successful in defending the foreclosure, the bank will have to reimburse you for the attorney fees you spent defending the foreclosure. The reason is that the note and mortgage upon which the foreclosure is based contain attorney fees provisions allowing the prevailing party to recover their fees. However, recent case law has held that the homeowner cannot recover fees under the note and mortgage where the homeowner is successsful in showing that the bank did not have the right to enforce the note or mortgage at the inception of the case. The rational is that if the trial court ruled that the mortgage company was not entitled to enforce the note or mortgage, then they are also not bound by the attorney fee provision in those documents. This article explores ways to recover your attorney fees even when the mortgage company was deemed not to have standing to file the foreclosure. One possible way is to claim attorney fees under Florida's lis pendens statute, which authorizes attorney fees to a homeowner for discharging a lis pendens on his/her property. Because the entitlement to fees is determined by statute, it is irrelevant whether the mortgage lender is also a party to the note or mortgage.
The arguments and the law are still evolving. Below is a motion for rehearing we filed after the court denied our request for fees. The Court granted our motion in part. We are currently coordinating the rehearing.
MEMORANDUM IN SUPPORT OF MOTION TO
RECONSIDER ENTITLEMENT TO ATTORNEY FEES AND COSTS
On May 5, 2017, this Court heard argument on the Defendant's motion for attorney fees pursuant Fla. Stat. § 48.23(3), which authorizes the award of attorney fees to a property owner that successfully discharges a lis pendens filed against his/her property. The Court denied the motion in a written order, finding that the statute does not apply to mortgage foreclosures. For the reasons stated below, this Court's holding is in direct conflict with the express language of the statute. The Defendant requests that the Court reconsider its prior order denying the Defendant's entitlement to fees under § 48.23.
As additional grounds for fees, the Defendant cited the attorney fee provision of the Mortgage and Florida's reciprocity statute § 57.105(7). Relying on the recent decision in Bank of N.Y. Mellon Trust Co., N.A. v. Fitzgerald, No. 3D16-981, 2017 WL 815352, (Fla. 3d DCA 2017), which denied attorney fees where the plaintiff was not a party to the mortgage, this Court denied the Defendant's motion. The Defendant(s) believe this Court misapplied
Fitzgerald to the facts of this case, since the Plaintiff was a party to the Mortgage pursuant to an assignment of mortgage filed in this case. For this additional reason, the Defendant asks the Court to reconsider its denial of attorney fees.
A. Pursuant to Florida Statute § 48.23, the Defendant is entitled to recover attorney's fees and costs incurred in dissolving the lis pendens filed in this case. See
S & T Builders v. Globe Properties, Inc.,944 So. 2d 302, 304 (Fla. 2006)
Florida Statute § 48.23(3) provides that "the court shall control and discharge the recorded notice of lis pendens as the court would grant and dissolve injunctions." Because dissolving an injunction authorizes the court to award attorney fees to the prevailing party, section 48.23(3) authorizes an award of attorney fees to the property owner for successfully discharging a lis pendens on his property. See S & T Builders v. Globe Properties, Inc., 944 So. 2d 302, 305 (Fla. 2006) ("Since the attorney's fees incurred in obtaining the dissolution of an injunction are recoverable from a surety bond, we conclude that section 48.23 of the Florida Statutes similarly permits a recovery of the attorney's fees incurred in obtaining a discharge of a lis pendens.");
Abner v. Johnson, 56 So. 3d 137, 139 (Fla. 4th DCA 2011) ("We therefore reverse the trial court's order denying the purchaser attorney's fees under section 48.23. Because the dissolving of a lis pendens operates as an adjudication of its validity,
a property owner should be entitled to attorney's fees whether or not a bond was posted.") (emphasis added);
McMillan/Miami, LLC v. Krystal Capital Managers, LLC, 1 So. 3d 312, 315 (Fla. 3d DCA 2009) ("McMillan/Miami should be allowed to show that Krystal wrongfully filed its notice of lis pendens and that it incurred foreseeable damages in attempting to dissolve the lis pendens so as to be entitled to recover attorney's fees.").
In its order denying the Defendant's entitlement to attorney fees, this Court held that the above statute did not apply to mortgage foreclosures. This finding is in direct conflict with the express language of the statute, which authorizes fees where "the action no longer affects the subject property..." and "applies to all actions now or hereafter pending in any state or federal courts in this state…"
See Fla. Stat. 48.23(3) and (4), respectively (emphasis added).
In the instant case the lis pendens filed in this action will be automatically dissolved and this action will no longer affect the subject property. See Fla. R. Civ. P. § 1.420(f) ("If a notice of lis pendens has been filed in connection with a claim for affirmative relief that is dismissed under this rule, the notice of lis pendens connected with the dismissed claim is automatically dissolved at the same time."). Moreover, a mortgage foreclosure certainly falls within the class of "all actions now or hereafter pending in any state or federal courts in this state…" Pursuant to Fla. Stat. § 48.23 (3) and (4), the Defendant is entitled to recover attorney's fees and costs incurred in dissolving the
lis pendens. Plaintiff received the benefits of section 48.23 when it filed its
lis pendens. Plaintiff must now bear its obligations under the statute, including payment of the Defendant's reasonable attorney fees in having the lis pendens dissolved and this case dismissed.
Denying homeowners the right to recover attorney fees for successfully defending a foreclosure and discharging a lis pendens would have a chilling effect on homeowners' ability to obtain competent counsel to defend their foreclosure cases. Many attorneys, including undersigned, represent homeowners on a contingency basis, and can only do so with the prospect of recovering fees if successful in their defense. Removing residential foreclosures from the class of defendants protected by § 48.23 would dissuade attorneys from taking cases on a contingency basis and would thus reduce substantially the number of homeowners that could afford competent representation. Section 48.23 could not have been intended to disenfranchise homeowners who are already at a financial disadvantage to the foreclosing plaintiffs.
B. The Defendant is entitled to recover attorneys' fees pursuant to the Mortgage. DistinguishingBank of N.Y. Mellon Trust Co., N.A. v. Fitzgerald, No. 3D16-981, 2017 WL 815352 (Fla. 3d DCA 2017).
Undersigned is aware of recent case law stating that, where the plaintiff is found not to be a party to a mortgage, the defendant is not entitled to recover attorney fees under that mortgage.
See Bank of N.Y. Mellon Trust Co., N.A. v. Fitzgerald, No. 3D16-981, 2017 WL 815352, (Fla. 3d DCA 2017). Plaintiffs' counsel around the state have tried to expand the holding in
Fitzgerald to all cases in which a plaintiff is found to not have standing to enforce the subject
note. This is a misreading of
Fitzgerald. As explained below, where the plaintiff is a party to the mortgage, which is a separate and distinct agreement from the note, the plaintiff is subject to the attorney fee provision of the mortgage regardless of whether the plaintiff also has standing to enforce the note.
A mortgage foreclosure suit is premised on two separate and distinct agreements – a note and a mortgage. The plaintiff could choose to sue solely on the note, without foreclosing the mortgage, or it can choose to sue on the mortgage as well. See Taylor v. Am. Nat. Bank of Pensacola, 63 Fla. 631, 652, 57 So. 678, 685 (Fla. 1912) ("The promise to pay is one distinct agreement, and, if couched in proper terms, is negotiable. The pledge of real estate to secure that promise is another distinct agreement…");
Wells Fargo Bank, N.A. v. Williamson, 199 So.3d 1031, n.1 (Fla. 4th DCA 2016) ("Florida law is well-settled that a note and a mortgage are separate instruments and a party may exercise its rights under one document without barring an action under the other document. Thus, a plaintiff can sue on the note without foreclosing the mortgage, as they are distinct agreements.") (emphasis added) (quotations omitted); Zander v. Cima, 197 So. 3d 1082, 1085 (Fla. 2d DCA 2015) ("A note and a mortgage are distinct agreements, and as such a suit may be brought to recover on the note without foreclosing the mortgage.").
In Fitzgerald, the defendant sought to recover attorneys' fees pursuant to the attorney fee provision
in the mortgage. The plaintiff was not the originator of the loan, so would not have been a party to the mortgage absent an assignment of mortgage from the originator, or by a valid negotiation of the note, in which case the mortgage would have followed the note. Because the trial court found that neither circumstance existed, the
Fitzgerald court held that the plaintiff was not a party
to the mortgage, and there was therefore no contract upon which to base the defendant's claim to attorney fees.
Fitzgerald does not apply where the plaintiff
is a party to the mortgage by way of an assignment of mortgage, even if the plaintiff does not prove its standing to enforce the note. Indeed, this distinction is expressed in
Here, the trial court specifically found that the Bank lacked standing because [t]here was no Assignment of Mortgage, or any other document evidencing a transfer to the [Bank] prior to the institution of the action. The trial court
also found that the note was never negotiated in favor of the Bank, and that the Bank was neither a holder nor non-holder in possession with the rights of a holder. In awarding final judgment to Fitzgerald, the trial court determined that no contract existed between the Bank and Fitzgerald.
Because the trial court found that no contract existed between the parties, which would entitle one to recover attorney's fees in the first place, there is no basis to invoke the compelled mutuality provisions of
Id. at *4 (emphasis added) (quotations omitted).
There are no cases denying a homeowner the right to recover attorney fees under a mortgage where the plaintiff is a party to the mortgage by virtue of an assignment. Because a Mortgage contract exists between the parties in the instant case, and the Plaintiff elected to sue on that Mortgage contract, the Plaintiff is subject to the attorney fee provision of that contract. There is no case to the contrary.
Unlike Fitzgerald, the trial court in this case did not find that the Plaintiff was not a party to the Mortgage, nor did the Defendant make such an argument. Moreover, because the Plaintiff was successful on its motion to substitute based on the assignment, the Plaintiff is judicially estopped from now claiming it is not a party to the Mortgage. The Mortgage entitles the Defendant to recover fees, regardless of whether the Plaintiff proved its entitlement to enforce the Note.
The Defendant is also entitled to prejudgment interest on all amounts awarded for attorney fees and costs from the date this matter is resolved in their favor. Interest accrues from the date the entitlement to attorney's fees is fixed through agreement, arbitration award, or court determination, even though the amount of the award has not yet been determined.
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 Some litigants previously argued that an award of fees was only authorized where that party filing the lis pendens posted a surety bond, and that the recovery of fees was limited to the amount of the bond. The
Abner court makes clear that the property owner is entitled to attorney fees regardless of whether a bond was posted.
See e.g., paragraphs 22 and 24 of the Mortgage.