A dispute over appellate attorney fees for prevailing borrowers in foreclosure cases is now before the state’s highest court.
At the heart of the issue: Claims by some foreclosure defense attorneys that recent appellate rulings are a strategy from courts to discourage lawyers from representing homeowners who defaulted on their mortgages. The defense attorneys claim courts use their arguments against them to deny motions when they try to recoup fees for defending the suits.
Now it appears the Florida Supreme Court may weigh in. On Tuesday, the high court accepted discretionary jurisdiction over a challenge to a Fourth District Court of Appeal ruling against a homeowner seeking legal fees under the reciprocity provision in state law.
“This is all coming to a head,” said foreclosure defense attorney Roy Oppenheim, whose firm will ask to file an amicus curiae or “friend of the court” brief in the pending case. “The bottom line is this is very complicated, and it’s becoming a major issue.”
The dispute before the Florida Supreme Court pits borrower Marie Ann Glass against Nationstar Mortgage LLC, doing business as Champion Mortgage Co. It came to the high court from the Fourth DCA, where the lender challenged Broward Senior Circuit Judge Joel T. Lazarus’ dismissal with prejudice of its amended foreclosure complaint.
Nationstar sought to foreclose on Glass’ reverse mortgage on claims the borrower defaulted on the contract by failing to meet key requirements — not paying taxes and maintaining homeowner insurance on the property. Glass raised several defenses, including arguments that Nationstar lacked standing to foreclose on her debt and the line of equity from the reverse mortgage should have covered taxes and insurance expenses.
On appeal, Nationstar filed a notice of voluntary dismissal, leaving Glass to claim she was the prevailing party and eligible to recoup appellate legal fees from the financial institution that launched the legal action against her.
Glass argued Florida Statute Section 57.105(7) allowed for reciprocity, permitting borrowers to collect legal fees under contracts that make the provision only for lenders. But the state appellate court ruled against her, finding her own arguments shielded the Nationstar.
“The plain language of Section 57.105(7) has two requirements,” Fourth DCA Judge Jeffrey T. Kuntz wrote in the opinion issued April 12, 2017, with Judges Cory J. Ciklin and Judge Robert M. Gross concurring. “First, the party must have prevailed. Second, the party had to be a party to the contract containing the fee provision.”
By arguing Nationstar lacked standing to foreclose on her debt, Glass suggested the mortgage company was not a party to her loan contract, wiping out her ability to meet the law’s second requirement.
Glass’ court filings suggest the appellate court went too far in finding for Nationstar, which never opposed her request that the plaintiff cover her legal bills.
“The Fourth District denied an unopposed motion for attorneys’ fees,” Glass’ lawyer, Amy L. Fischer of The Cunningham Law Firm on West Palm Beach, told the Daily Business Review.
The issue of attorney fees has taken center stage in recent weeks as foreclosure defense attorneys face a Catch 22-scenario: Defendants won cases by arguing their lender was not the rightful owner of the real estate debt and therefore could not sue to foreclose. But they lost fee requests because appellate panels reasoned that financial institution that weren’t parties had no responsibility to pay the winner’s attorney fees.
Among those speaking out against the appellate rulings is Oppenheim, a Weston attorney representing a couple who, like Glass, unsuccessfully sought appellate attorney fees in a foreclosure case.
“Whenever you’re dealing with attorney fees, it’s a very sensitive issue, so the court should have known that they were going to create a ruckus and a firestorm,” he said. “We’re being told that we shouldn’t be paid for our efforts in … cleaning up the banking mess. The whole thing is incredibly ironic, but it’s a red-hot issue, and that’s why the Supreme Court accepted jurisdiction over it.”
Oppenheim said his firm will appeal to the Florida Supreme Court in hopes the justices will accept the case and consolidate it with Glass.
“The ramifications of this are massive,” said foreclosure defense attorney Jacquelyn Trask of Oppenheim Pilelsky. “Attorneys are fully invested in it.”