Remember “NO STANDING = NO ATTORNEY’S FEES”? Well, it no longer stands!

In another of its decisions on the last day of 2020, the Florida Supreme Court weighed in on the issue of an award to a defendant borrower of reciprocal attorney’s fees when a foreclosure action is dismissed for lack of standing. Page v. Deutsche Bank Trust Co., 49 Fla. L. Weekly S3, Case No. SC19-1137 (Fla December 31, 2020).

The Florida Supreme Court addressed a conflict between the First and Second District Courts of Appeal created by the Deutsche Bank Trust v. Page, 274 So. 3d 1116 (Fla 4th DCA 2019). The context is a mortgage foreclosure action in which the plaintiff lender failed to prove standing existed at the start of the litigation. The borrower here, as in the other cases, sought attorney’s fees pursuant to the statutory bilateral application of a contract’s unilateral fee provision:

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.

Section 57.105(7) Fla. Stat. (2019).

The conflict turned upon the District Courts of Appeals’ consideration of whether a contract existed. The Second and Fifth District Courts of Appeal identified in their conflict decisions that a contract existed, but the plaintiff lender failed to prove the contractual relationship existed at the time the litigation commenced. The Fourth District Court of Appeal in its en banc decision unanimously focused on the posture at the time the action was initiated.

The Florida Supreme Court focused on the meaning of the statutory text, without stating it was clear and unambiguous, but not reciting any rules of interpretation. Applying the statute, first, in Page there was no dispute that there was a contract, apparently referring to the note secured by the mortgage, just that the contract did not exist at the initiation of the lawsuit. Second, the statute requires a prevailing party and Page, the defendant borrower, prevailed by successfully defending the action based on the contact.

The Court rejected an alternative theory barring attorney’s fee recovery, judicial estoppel. The Court reasoned that Page only contested the plaintiff lender’s authority at the time the complaint was filed, not that there was never a contract or that after the complaint was filed did the plaintiff not have authority to enforce.

Concluding, the Court rejected the concept that the trial court did not have subject matter jurisdiction, it being asserted that by not having standing the trial court did not have subject matter jurisdiction to award fees after the dismissal. The court reasoned that “…if standing is waivable, then standing is obviously not a ‘component of subject matter jurisdiction.’”

While this decision may be cheered by borrowers’ counsel and lamented by lenders’ counsel, the underlying rational raises a significant question as to where the Court may be heading. Primary among these is whether this decision is a stalking horse for removing the requirement of standing at the beginning of litigation. Though decision is silent on this point; given the Court’s history in the last year or so overturning precedent, this decision’s rational may open the door, whether intentionally or otherwise, to a further challenges to standing.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

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Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2021 Michael J. Gelfand