Consumer Finance Litigation

On February 13, 2018, the Florida Supreme Court accepted jurisdiction in an appeal emanating from a hot button issue in contested foreclosures - can the borrower in a foreclosure secure an award of contractual attorney's fees after successfully defending the foreclosure on the basis that the lender lacked standing to enforce the mortgage contract?

Florida law follows the American Rule on attorney's fees, i.e. the loser does not pay the winner's fees, unless there is a basis in contract or statute that provides for fee shifting. The avenue for a borrower to secure attorney's fees in a unsuccessful foreclosure is most often the mortgage's fee shifting provision.

However, where the borrower successfully defends the foreclosure on the grounds that the lender lacks standing to enforce the mortgage, Florida's District Courts of Appeal presently hold that the borrower cannot access the fee shifting clause. As one opinion on the issue states, what is good for the goose is good for the gander. If the lender lacked the necessary privity to enforce the mortgage against the borrower, so too there must be insufficient privity for the borrower to enforce the mortgage (specifically its fee shifting provisions) against the lender.

Debtor's counsel will contend that this result is unfair, because the lender takes the position in every foreclosure that it can enforce the mortgage. Lender's counsel, in turn, point out that the party seeking fees has a burden of proof, and that if the borrower was successful on a standing argument, then the proof has not adequately established that the mortgage can be enforced by, or against the lender. Furthermore, estoppel principals would bar the debtor from taking a position contrary to his successful position that the lender lacked the requisite privity for enforcement of the mortgage.

The case is Marie Ann Glass v. Nationstar Mortgage, LLC, et al., Case no, SC17-1387. The opinion being appealed, which is a must read for lender's counsel, can be found at Nationstar Mortgage LLC v. Glass, 219 So. 3d 896 (Fla. 4th DCA 2017). The opinion in Glass was not the first of its kind, and it relied heavily on the Third DCA in Bank of New York Mellon Trust. Co. v. Fitzgerald, 215 So. 3d 116 (Fla. 3d DCA 2017), which in turn relied on HFC Collection Center, Inc. v. Alexander, 190 So. 3d 1114 (Fla. 5th DCA 2016) and others.

Given the unanimity of the current District Court of Appeal opinion on the issue, it is interesting that the Florida Supreme Court has accepted jurisdiction over Glass. Debtor's counsel will have their work cut out for them, as there is not an abundance of case law supporting the debtor's position and the always available remedy of sanctions motions under Fla. Stat. 57.105(1) would seem to mitigate against the threat of frivolous foreclosures where the filing party lacks standing to proceed. However, the mere fact that the Florida Supreme Court has accepted jurisdiction will give lenders' counsel concern this presently favorable issue in the case law could potentially unravel at the state's highest court.