So here is the question: the bank sues you for foreclosure and you win the case because the bank failed to prove standing to enforce the note and mortgage. You have had to pay your foreclosure defense lawyer to defend the case. Should the bank have to reimburse you for your attorney's fees?
I am sure your answer is a resounding "yes!" Well, you will be glad to hear that the Florida Supreme Court just decided that question for us.
In the case of Marie Ann Glass v. Nationstar Mortgage, LLC, the homeowner's Motion to Dismiss With Prejudice was granted. Nationstar appealed the dismissal to the Fourth District Court of Appeal and then Nationstar decided to voluntarily dismiss its own appeal.
Counsel for Mrs. Glass filed a Motion for Appellate Attorney's Fees to recover attorney's fees against Nationstar as she was the prevailing party in the litigation.
The Fourth District denied the Motion for Appellate Attorney's Fees, then granted Glass's Motion for Rehearing En Banc (meaning a review by the full appellate panel) and issued a nearly identical opinion denying the Motion for Appellate Attorney's Fees. This opinion can be read here.
Mrs. Glass's counsel appealed the denial of attorney's fees to the Florida Supreme Court. The Supreme Court agreed to hear the case and on January 4, 2019, issued this opinion.
Remember, most mortgage contracts contain an attorney's fees clause which provides that the lender can recover its attorney's fees in any litigation involving the mortgage contract, including any appellate litigation.
Florida Statute 57.105(7), however, provides: "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."
So under this Florida Statute, the prevailing party in any litigation to enforce the mortgage contract would be entitled to a recovery of attorney's fees.
Recently, the banks have been arguing that in cases where the homeowner wins because the bank failed to prove standing, that the homeowner should not be able to recover his or her attorney's fees. The argument goes like this: "If you win by arguing that the bank could not enforce the contract, then you should not be able to latch onto the attorney's fees provision in that same contract to recover your attorney's fees."
As a foreclosure defense attorney, we have been vigorously challenging the banks on this argument (see my previous article on the Harris case).
In Glass, the Fourth District Court of Appeal agreed with Nationstar's position, ruling that "In a situation such as this, where a party prevails by arguing the plaintiff failed to establish it had the right pursuant to the contract to bring the action, the party cannot simultaneously seek to take advantage of a fee provision in that same contract."
The Florida Supreme Court disagreed and quashed the Fourth District's opinion in Glass. The Supreme Court held that Mrs. Glass was entitled to recover her appellate attorney's fees as the prevailing party.
To put the opinion in a nutshell, the Supreme Court noted the difference between a contract being unenforceable and a case where a contract never existed. Citing the case of Katz v. Van Der Noord (Florida Supreme Court, 1989), the Supreme Court held "that when parties enter into a contract and litigation ensues over that contract, attorney's fees may be recovered under a prevailing-party attorney's fees provision contained therein even though the contract is rescinded or would be unenforceable."
There was no dispute in Glass that there existed a valid mortgage contract. Nationstar simply failed to prove it had the legal authority to enforce the note and mortgage. Therefore, Mrs. Glass was indeed entitled to recover her reasonable attorney's fees as the prevailing party in the litigation.
Glass will surely prove very to be very helpful as we prosecute attorney's fees claims against banks in the future.
In conclusion, I should note that there is a pending Motion for Clarification filed by counsel for Nationstar in Glass, but even if granted, the central holding of Glass will most likely remain undisturbed.
If you are facing foreclosure and have any questions, please feel free to reach out to our firm at 813-260-4883 or via email at firstname.lastname@example.org. Thank you for reading and have a great day.
Ryan C. Torrens, Esq.
Foreclosure defense attorney