ORQUIDEA CASTELLANOS v. REVERSE MORTGAGE FUNDING LLC ( 2021 )


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  •        Third District Court of Appeal
    State of Florida
    Opinion filed May 12, 2021.
    Not final until disposition of timely filed motion for rehearing.
    ________________
    No. 3D20-472
    Lower Tribunal No. 19-13299
    ________________
    Orquidea Castellanos,
    Appellant,
    vs.
    Reverse Mortgage Funding LLC,
    Appellee.
    An Appeal from the Circuit Court for Miami-Dade County, Alan S. Fine,
    Judge.
    Reyes Law Group, and Adrian Reyes and Dennis A. Donet, for
    appellant.
    Greenspoon Marder, LLP, and Dariel Abrahamy (Boca Raton), for
    appellee.
    Before EMAS, C.J., and FERNANDEZ and MILLER, JJ.
    EMAS, C.J.
    INTRODUCTION
    Appellant Orquidea Castellanos—the borrower and defendant in this
    reverse mortgage foreclosure—appeals the trial court’s order denying her
    motion for attorney’s fees following her successful defense of the action
    below.   The mortgage at issue contained a unilateral prevailing-party
    attorney’s fee provision in favor of the lender and plaintiff below, Reverse
    Mortgage Funding, LLC (“the Lender”). The trial court denied Castellanos’
    motion for attorney’s fees, based on this court’s 1992 decision in Suchman
    Corp. Park, Inc. v. Greenstein, 
    600 So. 2d 532
    , 533 (Fla. 3d DCA 1992). In
    Suchman we held that, because the underlying mortgage was based upon
    a nonrecourse loan, in which the borrower cannot be personally responsible
    for the lender’s attorney’s fees should the lender prevail in its action to
    foreclose the mortgage, the unilateral attorney’s fees provision in the
    nonrecourse loan cannot be made reciprocal (and a prevailing borrower
    cannot be awarded attorney’s fees) by application of section 57.105(7),
    Florida Statutes (2019).
    We reverse the trial court’s order denying Castellanos’ motion for
    attorney’s fees. Further, to the extent Suchman holds that, as a matter of
    law, the reciprocity provision of section 57.105(7) cannot apply to authorize
    an award of attorney’s fees to a prevailing borrower on an underlying
    2
    nonrecourse loan, we determine such a holding has been implicitly overruled
    by the Florida Supreme Court’s recent decision in Page v. Deutsche Bank
    Tr. Co. Ams., 
    308 So. 3d 953
     (Fla. 2020) (holding that a unilateral attorney's
    fee provision in a note and mortgage was made reciprocal to a borrower
    under section 57.105(7) when the borrower prevailed in a foreclosure action
    on its standing defense). 1
    Applying the analysis and rationale of Page to the instant case, we
    conclude that section 57.105(7) is applicable to the attorney’s fee provision
    at issue here, and Castellanos is entitled to an award of attorney’s fees as
    the prevailing party. We remand for the trial court to enter an order granting
    entitlement to fees under section 57.105(7) and for further proceedings.
    FACTS AND ANALYSIS
    The Lender filed its foreclosure complaint on May 30, 2019, alleging
    that the death of Castellanos’ husband triggered the Lender’s entitlement to
    1
    In Ham v. Portfolio Recovery Assocs., LLC, 
    308 So. 3d 942
     (Fla. 2020)—
    released the same day as Page—the Florida Supreme Court also analyzed
    the applicability of the reciprocity provision in section 57.105(7). There, the
    Court considered “whether a unilateral attorney's fee provision in a credit
    card contract is made reciprocal to a debtor under section 57.105(7), Florida
    Statutes (2015), when the debtor prevails in an account stated action brought
    to collect unpaid credit card debt.” Id. at 943. In both Page and Ham, the
    Court applied principles of statutory construction to find that the prevailing
    parties in those cases were entitled to attorney’s fees by application of
    section 57.105(7)’s reciprocity provision.
    3
    payment in full of the sums secured by the mortgage and foreclosure on the
    property secured by the reverse mortgage. Ultimately, the trial court granted
    summary judgment in favor of Castellanos based on this court’s decisions in
    Smith v. Reverse Mortg. Sol., Inc., 
    200 So. 3d 221
     (Fla. 3d DCA 2016) and
    OneWest Bank v. Palmero, 
    283 So. 3d 346
    , 355 (Fla. 3d DCA 2019) (en
    banc), review granted, SC19-1920 (May 20, 2020) (holding: “[A]s a matter of
    law, when the surviving spouse signed the mortgage as a borrower, as
    revealed by an examination of the mortgage itself, the spouse will be treated
    as a borrower for purposes of the mortgage.”)2
    During the proceedings below, the Lender asserted that, should it
    prevail in the action, it was entitled to attorney’s fees under Paragraph 20 of
    the mortgage, which provides:
    20. Foreclosure Procedure. If Lender requires immediate
    payment in full under Paragraph 9, Lender may foreclose this
    Security Instrument by Judicial Proceedings. Lender shall be
    entitled to collect all expenses incurred in pursuing the remedies
    provided in this Paragraph 20, including, but not limited to,
    reasonable attorneys’ fees and costs of title evidence.
    Castellanos also asserted an entitlement to attorney’s fees should she
    prevail in the action below. Her claim for attorney’s fees was predicated on
    section 57.105(7) which provides:
    2
    The Lender in the instant case filed its foreclosure complaint approximately
    one month after our decision in Palmero.
    4
    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.
    Section 57.105(7) “amends by statute all contracts with prevailing party
    fee provisions to make them reciprocal.” Levy v. Levy, 
    307 So. 3d 71
    , 74
    (Fla. 3d DCA 2020).
    After prevailing in her defense of the foreclosure action, Castellanos
    moved for an award of attorney’s fees. The Lender opposed the motion,
    contending that, because the Lender would not have been able to seek an
    award of attorney’s fees against Castellanos had the Lender prevailed,
    Castellanos could not utilize section 57.105(7), to obtain an award of
    prevailing party attorney’s fees against the Lender. Because the underlying
    loan was nonrecourse, Castellanos could never have been personally liable
    to the Lender for any award of attorney’s fees to which Lender was entitled.
    Therefore (the Lender’s argument goes) Castellanos is not entitled to
    reciprocity for an award of attorney’s fees against the Lender. The trial court
    agreed and, relying upon our decision in Suchman, denied Castellanos’
    motion for attorney’s fees. This appeal followed.
    Castellanos does not dispute that, by the terms of the mortgage, the
    loan at issue was nonrecourse, and Castellanos could not be held personally
    5
    liable for payment of an attorney’s fee award in favor of the Lender if the
    Lender had prevailed below. 3 The dispute here centers on whether the
    nonrecourse nature of the underlying loan 4 renders inapplicable the
    reciprocity provision of section 57.105(7). In answering that question, we
    3
    The mortgage provides:
    No Deficiency Judgments. Borrower shall have no personal
    liability for payment of the debt secured by this Security
    Instrument. Lender may enforce the debt only through the sale
    of the Property. Lender shall not be permitted to obtain a
    deficiency judgment against Borrower if the Security
    Instrument is foreclosed. If this Security Instrument is
    assigned to the Secretary upon demand by the Secretary,
    Borrower shall not be liable for any difference between the
    mortgage insurance benefits paid to Lender and the outstanding
    indebtedness, including accrued interest, owed by Borrower at
    the time of the assignment.
    Further, the note provides:
    Limitation of Liability
    Borrower shall have no personal liability for payment of the
    debt. Lender shall enforce the debt only through the sale of the
    Property covered by the Security Instrument (“Property”). If
    this Note is assigned to the Secretary, the Borrower shall
    not be liable for any difference between the mortgage
    insurance benefits paid to Lender and the outstanding
    indebtedness, including accrued interest, owed by Borrower
    at the time of the assignment.
    4
    A “nonrecourse loan” is “[a] secured loan that allows the lender to attach
    only the collateral, not the borrower's personal assets, if the loan is not
    repaid.” Black's Law Dictionary (11th ed. 2019).
    6
    must necessarily determine whether aspects of our prior opinion in Suchman
    remain viable in light of recent Florida Supreme Court decisions. 5
    In Suchman, 600 So. 2d at 533, we 1) reversed a summary final
    judgment in a mortgage foreclosure action; 2) reversed the trial court’s order
    awarding attorney’s fees; and 3) denied both parties’ motions for entitlement
    to appellate attorney’s fees. As to our ruling on attorney’s fees, we held:
    [T]he order awarding attorney's fees to the appellees is likewise
    reversed, not only because of our previous rulings, but also
    because the underlying note and mortgage, which provide for
    these fees in the event of the mortgagees' success, specifically
    state that these obligations are without recourse against the
    individual plaintiffs who have “no personal liability” under
    either instrument. See Heim v. Kirkland, 
    356 So.2d 850
     (Fla.
    4th DCA 1978). The effect of any eventual award of fees to the
    mortgagees must be limited to an increase in the principal
    amount of any judgment of foreclosure. Moreover, because the
    mortgagors are not individually liable for fees, even if they
    win, they are themselves unable to recover fees, as they
    claim, under section 57.105(2), Florida Statutes (1991) (“If a
    contract contains a provision allowing attorney's fees to a party
    when he 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 ...”) [e.s.]. For these
    reasons, both sides' motions for attorney's fees on this appeal
    are denied.
    5
    We note that, at the time the trial court issued the order on appeal, the
    Florida Supreme Court had not issued its opinion in Page, and the trial court
    quite properly denied Castellanos’ motion for attorney’s fees based upon our
    binding precedent in Suchman Corp. Park, Inc. v. Greenstein, 
    600 So. 2d 532
    , 533 (Fla. 3d DCA 1992). Nevertheless, the parties agree that we must
    apply the law “as it exists at the time of the appeal.” Deutsche Bank Nat'l Tr.
    Co. v. Torres, 
    245 So. 3d 985
    , 986 (Fla. 3d DCA 2018).
    7
    
    Id.
     (Emphasis added.) 6
    Castellanos contends that the Suchman holding cannot survive the
    analysis undertaken by the Florida Supreme Court in its more recent
    decision in Page v. Deutsche Bank Tr. Co. Ams., 
    308 So. 3d 953
     (Fla. 2020).
    We agree.
    In Page, 
    308 So. 3d 954
    , the Supreme Court considered “whether a
    unilateral attorney’s fee provision in a note and mortgage is made reciprocal
    to a borrower under section 57.105(7), Florida Statutes (2019), when the
    borrower prevails in a foreclosure action in which the plaintiff bank
    established standing to enforce the note and mortgage at the time of trial but
    not at the time suit was filed.”
    6
    Castellanos contends that this aspect of Suchman was mere dicta, as this
    court in Suchman reversed the order awarding attorney’s fees as a direct
    consequence of the reversal of the underlying final summary judgment. We
    reject this contention; the law is clear that alternative bases for an appellate
    court’s decision do not render them dicta. See Paterson v. Brafman, 
    530 So. 2d 499
    , 501 n. 4 (Fla. 3d DCA 1988) (holding: “The fact that this was an
    alternative holding of the court does not detract from its binding authority”)
    (citing Clemons v. Flagler Hosp., Inc., 
    385 So. 2d 1134
    , 1136 n. 3 (Fla. 5th
    DCA 1980)). See also Sampson Farm Ltd. P'ship v. Parmenter, 
    238 So. 3d 387
    , 393 n. 7 (Fla. 3d DCA 2018). Moreover, and as noted above, our
    decision in Suchman included a denial of the mortgagers’ motion for
    appellate attorney’s fees on the express (and singular) basis that, because
    the loan was nonrecourse, “the mortgagors are not individually liable for fees,
    [and] even if they win, they are themselves unable to recover fees, as they
    claim, under section 57.105(2) [the predecessor to 57.105(7)].” Suchman,
    600 So. 2d at 533.
    8
    While the strict holding of Page is not directly applicable here, the
    reasoning and analysis relied upon by the Court to reach its decision is both
    applicable and dispositive. Importantly, the Page Court relied primarily on
    the construction of the plain language of section 57.105(7):
    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 provision, the Court explained, creates two “statutory conditions”
    that must be met before an attorney’s fee provision may be applied
    reciprocally: (1) the contract must “contain[] a provision allowing attorney's
    fees to a party when he or she is required to take any action to enforce the
    contract”; and (2) “the other party must prevail[] in any action, whether as
    plaintiff or defendant, with respect to the contract.” Id. at 959 (quotation
    omitted). Because it is undisputed that Castellanos, as the prevailing party
    in the foreclosure action, satisfied the second condition, we focus on the first
    condition—i.e., “what appears in the contract.” Id. at 959. 7
    7
    This is distinguished from the Florida Supreme Court’s decision in Ham,
    308 So. 3d at 948, where the primary consideration was the second
    condition, i.e., whether the debtor’s claim—on which it prevailed against the
    creditor—was one “with respect to the contract.” More specifically, the
    question in Ham was whether the debtor’s common law account stated
    actions were sufficiently related to the contract to require an award of fees
    under the statute. The Court held that they were, finding that the term “‘with
    9
    In analyzing the first statutory condition, the Page Court explained that
    a “failure of proof” of the bank’s right to enforce the contract was “not an
    adjudication that no contractual relationship existed between the parties” or
    that “the contract was nonexistent.” Id. (quotation omitted). Instead, the
    evidence showed a contractual relationship between the parties, and that the
    contract contained the requisite attorney’s fee provision. The Court rejected
    the district court’s reasoning that section 57.105(7) requires “contract
    enforceability by both parties on the day suit is filed” because it “erroneously
    added words to the statute that were not placed there by the Legislature.”
    Id. at 959-60 (quotation omitted). “There is simply no basis in the statutory
    text,” the Court continued, “to conclude that a contract containing the
    requisite provision must be shown to be mutually enforceable on the day suit
    is filed.” Id. at 960.
    As in Page, the underlying mortgage in the instant case contains a
    unilateral attorney’s fees provision in favor of the Lender, should it prevail:
    20. Foreclosure Procedure. If Lender requires immediate
    payment in full under Paragraph 9, Lender may foreclose this
    Security Instrument by Judicial Proceedings. Lender shall be
    entitled to collect all expenses incurred in pursuing the remedies
    respect to’ is necessarily broader” than other terms the legislature could have
    used, e.g., “under,” “based on,” or “pursuant to,” and therefore the statute
    does not require as “immediate” a relationship with the contract to satisfy this
    condition. Id.
    10
    provided in this Paragraph 20, including, but not limited to,
    reasonable attorneys’ fees and costs of title evidence.
    (Emphasis added).
    Paragraph 20 of the mortgage thus satisfies Page’s first condition for
    reciprocity under section 57.105(7), as the 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.” Id. at 959 (quoting section 57.105(7)); see
    also Ham, 308 So. 3d at 948 (explaining that the first condition “presents a
    question that can be answered simply by reviewing the provisions of the
    contract”).
    And as noted earlier, it is undisputed that Castellanos was the
    prevailing party with respect to the contract, and therefore satisfied the
    second condition of entitlement to fees under the reciprocity provision of
    section 57.105(7). Therefore where, as here, the agreement contains a
    provision allowing unilateral attorney’s fees when one party is required to
    take action to enforce the agreement, and the other party to the agreement
    prevails in such action, section 57.105(7) applies to make the unilateral
    provision reciprocal and authorizes an award of attorney’s fees to that
    prevailing party.
    11
    Nevertheless, the Lender’s primary theme, summed up during its
    presentation at oral argument was “you get what you give,” 8 meaning that,
    because the attorney’s fee provision in the mortgage did not authorize the
    Lender to seek an award of attorney’s fees from Castellanos, the reciprocity
    provision of section 57.105 could not apply to authorize Castellanos to seek
    an award of attorney’s fees from the Lender. However, nothing in the plain
    language of the statute imposes such a requirement as a condition of
    reciprocity. Instead, that aspect of section 57.105(7) creates reciprocity
    where the “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. . . .” 9
    8
    This likely refers to a statement of our sister court in Florida Hurricane
    Protection and Awning, Inc. v. Pastina, 
    43 So. 3d 893
    , 895 (Fla. 4th DCA
    2010): “[T]he purpose of the statute is simply to ensure that each party gets
    what it gave: the ability to recover fees in litigation arising under the
    contractual provisions.” (quoting Inland Dredging Co. v. The Panama City
    Port Authority, 
    406 F. Supp. 2d 1277
    , 1283 (N.D. Fla. 2005)). The Lender’s
    reliance is misplaced, however, as it is not the obligation to pay fees, but the
    “ability to recover fees” that is made reciprocal under section 57.105(7).
    9
    Additionally, the Lender conceded at oral argument that if we adopted its
    argument of non-reciprocity, there nevertheless remain circumstances in
    which the Lender could (at least indirectly) collect its prevailing party
    attorney’s fees from Castellanos (e.g., through reinstatement (which,
    pursuant to the mortgage, requires that “costs and reasonable and
    customary attorneys’ fees and expenses properly associated with a
    foreclosure proceeding shall be added to the principal balance”); redemption
    (which, pursuant to section 45.0315, Florida Statutes (2019) requires the
    mortgagor to pay “the reasonable expenses of proceeding to foreclosure
    incurred to the time of tender, including reasonable attorney’s fees of the
    creditor”); or the existence of a surplus following the sale of the property, see
    12
    The statutory language addresses a prevailing party’s ability to recover
    attorney’s fees, not a losing party’s obligation to pay attorney’s fees.
    To deny attorney’s fees to Castellanos in the instant case would be
    contrary to the statute’s plain language and contrary to the “public policy
    consideration underlying” this reciprocity statute, which is “to provide
    mutuality of attorney’s fee remedy in contract cases” and “to level the playing
    field between parties of unequal bargaining power and sophistication.” Port-
    A-Weld, Inc. v. Padula & Wadsworth Const., Inc., 
    984 So. 2d 564
    , 570 (Fla.
    4th DCA 2008) (quoting Walls v. Quick & Reilly, Inc., 
    824 So. 2d 1016
    , 1019
    (Fla. 5th DCA 2002)).
    CONCLUSION
    We therefore reverse the trial court’s order denying Castellanos’
    motion for attorney’s fees, and remand for the trial court to enter an order
    granting entitlement to fees under section 57.105(7) and for further
    proceedings.
    To the extent our decision in Suchman holds that, as a matter of law,
    the reciprocity provision of 57.105(7) cannot apply to authorize an award of
    section 45.032, Florida Statutes (2019)). In contrast, absent reciprocity
    under section 57.105(7), there are no circumstances under which
    Castellanos could indirectly collect an award of prevailing party attorney’s
    fees from the Lender.
    13
    attorney’s fees to a prevailing borrower on an underlying nonrecourse loan,
    we determine such a holding has been implicitly overruled by the Florida
    Supreme Court’s decision in Page.
    Reversed and remanded.
    14