DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
DOMENIC GROSSO a/k/a DOMENIC L. GROSSO,
Appellant,
v.
HSBC BANK USA, N.A., AS TRUSTEE ON BEHALF OF ACE
SECURITIES CORP.,
Appellee.
No. 4D17-2874
[February 6, 2019]
Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach County; Susan R. Lubitz, Senior Judge; L.T. Case No. 50-2012-CA-
005882-XXXX-MB.
Michael Vater, Kendrick Almaguer, and Peter Ticktin of The Ticktin Law
Group, PLLC, Deerfield Beach, for appellant.
Kimberly S. Mello and Joseph H. Picone of Greenberg Traurig, P.A.,
Tampa, for appellee.
PER CURIAM.
The homeowner appeals an order denying his motion for attorney’s fees
following the bank’s voluntary dismissal of its foreclosure action. We
reverse because the voluntary dismissal rendered the homeowner the
prevailing party for purposes of attorney’s fees.
HSBC Bank filed a foreclosure complaint against the homeowner,
alleging it was the owner and holder of the note and mortgage. HSBC
further alleged it was entitled to attorney’s fees under the contract. A copy
of the note attached to the complaint listed DB Home Lending LLC as the
lender and the homeowner as the borrower. The note contained a specific
endorsement by DB Home Lending to HSBC.
The homeowner filed an answer and affirmative defenses. In his
affirmative defenses, the homeowner stated that the bank lacked standing,
the bank did not have legal rights to enforce the note and mortgage, and
the endorsement on the note was not valid and authentic. The homeowner
also requested attorney’s fees.
A year after filing the complaint, HSBC voluntarily dismissed the case
without prejudice. The homeowner moved for prevailing party attorney’s
fees under the contract. Specifically, the homeowner alleged in the motion
for attorney’s fees that “[t]he Mortgage that was the subject matter of this
lawsuit provided for costs and expenses if the Note holder was to enforce
the Note” and that section 57.105(7), Florida Statutes, made this provision
applicable to the homeowner. HSBC opposed the motion, arguing that the
homeowner’s lack of standing defense precluded him from recovering fees.
After a hearing, the trial court denied the homeowner’s motion, finding
that he failed to prove that he and HSBC were parties to the contract.
A trial court’s determination of whether a party is entitled to attorney’s
fees based on a fee provision in the mortgage is reviewed de novo. Bank
of N.Y. Mellon Tr. Co., N.A. v. Fitzgerald,
215 So. 3d 116, 118 (Fla. 3d DCA
2017). Section 57.105(7), Florida Statutes, operates to make a unilateral
attorney’s fees provision in a mortgage contract reciprocal. In order for a
prevailing party to avail itself of section 57.105(7), both the movant and
the opponent must be parties to the contract containing the fee provision.
Madl v. Wells Fargo Bank, N.A.,
244 So. 3d 1134, 1138 (Fla. 5th DCA
2017).
In denying the motion for fees, the trial court relied on Florida
Community Bank, N.A. v. Red Road Residential, LLC,
197 So. 3d 1112 (Fla.
3d DCA 2016). In Red Road Residential, the borrower maintained
throughout the litigation, including in sworn discovery, that she never
signed the mortgage. Id. at 1114. Rather than litigating its claim against
the borrower, the bank ultimately dismissed her from the lawsuit with
prejudice. Id. Unlike Red Road Residential, the instant case did not
involve any sworn discovery and the dismissal was without prejudice.
In Glass v. Nationstar Mortgage, LLC, No. SC17-1387,
2019 WL 98152
(Fla. Jan. 4, 2019), the Florida Supreme Court held that a homeowner was
entitled to prevailing party appellate attorney’s fees following the bank’s
voluntary dismissal of its appeal, even though the homeowner had
prevailed in the trial court. The supreme court found that the voluntary
dismissal rendered the homeowner a prevailing party and that the bank
had maintained its right to enforce the contract on appeal until the
dismissal. Although the trial court’s dismissal was based on four possible
grounds, “[e]ven if the trial court’s dismissal was based on lack of standing,
it was not based on a finding that [the bank] did not hold the note but on
a finding that [the bank’s] complaint was legally insufficient for failure to
properly demonstrate the chain of title.” Id. at *4. The supreme court
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recognized that there is a difference between a non-existent contract,
under which a party cannot recover fees, and a contract which is rescinded
or unenforceable, under which a party can recover fees. Because a
contract “clearly existed” in Glass but was merely unenforceable, the
homeowner was entitled to appellate attorney’s fees. Id.
We find instructive Rodriguez v. Wilmington Savings Fund Society, FSB
as Trustee for Stanwich Mortgage Loan Trust A, No. 4D18-310,
2018 WL
6528491 (Fla. 4th DCA Dec. 12, 2018). In that case, a borrower was found
to be entitled to prevailing party fees after the bank’s voluntary dismissal
even though she had challenged the bank’s standing throughout the
lawsuit. This court found that “the parties never litigated the merits of
[the bank’s] standing below, and the trial court never made a finding that
the Borrower was not a party to the note or mortgage.” Id. at *2. Because
the bank voluntarily dismissed the action without the trial court resolving
the standing issue on the merits, the borrower was entitled to fees. Id.
See also Wells Fargo Bank, N.A. v. Elkind,
254 So. 3d 1153, 1154 (Fla. 4th
DCA 2018) (finding borrower who raised lack of standing as affirmative
defense was entitled to prevailing party attorney’s fees following the bank’s
voluntary dismissal because the parties never litigated standing and “the
trial court never made a finding that the bank or the borrower were not
parties to the contract”); Harris v. Bank of N.Y. Mellon, No. 2D17-2555,
2018 WL 6816177, at *4 (Fla. 2d DCA Dec. 28, 2018) (“[P]roof of standing
is not required to establish a contractual relationship between the
parties.”).
In this case, HSBC voluntarily dismissed its complaint, thus rendering
the homeowner the prevailing party for purposes of attorney’s fees.
Notably, the trial court never made a judicial determination that HSBC or
the homeowner was not a party to the contract. Additionally, HSBC
maintained in its complaint a right to enforce the contract. Significantly,
the copy of the note attached to the complaint contained a specific
endorsement by the original lender to HSBC and listed the homeowner as
the borrower. This should be sufficient record evidence to demonstrate
that HSBC and the homeowner were parties to the underlying contract so
as to justify attorney’s fees pursuant to section 57.105(7). See Mihalyi v.
LaSalle Bank, N.A.,
162 So. 3d 113, 115 (Fla. 4th DCA 2014) (implying
that an evidentiary hearing is required for determining the amount of fees,
not for determining entitlement to fees); Hensley v. Eckerhart,
461 U.S.
424, 437 (1983) (“A request for attorney’s fees should not result in a second
major litigation.”).
The cases the dissent relies on are distinguishable, as none involve a
voluntary dismissal without prejudice like the instant case. The dissent
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attempts to distinguish Rodriguez and Elkind by stating that those cases
dealt with judicial estoppel or prevailing parties, and not with the burden
for attorney’s fees. But cases with the same facts should get the same
result. A voluntary dismissal, without a judicial determination, should
allow reliance on the reciprocal attorney’s fees provision of section
57.105(7).
Based on the foregoing authority, the homeowner was entitled to
prevailing party attorney’s fees. We reverse and remand for the trial court
to grant attorney’s fees and determine the reasonableness of the amount
sought.
Reversed and remanded with instructions.
LEVINE and FORST, JJ., concur.
CONNER, J., dissents with opinion.
CONNER, J., dissenting.
I respectfully dissent for two reasons: (1) the trial court properly
determined that no evidence was presented by the homeowner
establishing the homeowner and HSBC were parties to a contract with a
fee provision; and (2) the case law relied upon by the majority is
inapplicable to the specific argument made by HSBC in the trial court,
which the trial court found to be dispositive.
Regarding the case law relied upon by the majority, I disagree that the
recent supreme court opinion in Glass v. Nationstar Mortgage, LLC, No.
SC17-1387,
2019 WL 98152 (Fla. Jan. 4, 2019), controls this case for the
simple reason that Glass addressed an award of appellate attorney’s fees,
whereas, the instant case involves an award of attorney’s fees at the trial
level. More importantly, in Glass, the supreme court did not address the
specific argument raised by HSBC, which the trial court found to be
dispositive. Additionally, our recent opinions in Rodriguez v. Wilmington
Savings Fund Society, FSB as Trustee for Stanwich Mortgage Loan Trust A,
No. 4D18-310,
2018 WL 6528491 (Fla. 4th DCA Dec. 12, 2018) and Wells
Fargo Bank, N.A. v. Elkind,
254 So. 3d 1153 (Fla. 4th DCA 2018), are
likewise inapposite because those opinions address issues concerning
determination of a prevailing party and judicial estoppel, but they do not
address the specific argument raised in the trial court by HSBC as to who
has the burden of proof regarding a contractual relationship.
I respectfully submit the case law on the issue of attorney’s fees after a
voluntary dismissal is confusing. In part, this is because appellate courts
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have frequently failed to articulate with precision the distinction in law
between who is a “prevailing party” in litigation and who is a “party” to a
contract. Moreover, standing, in the context of foreclosures, can be
confusing because there are two phases of standing (at the time suit is
filed and at the time of trial), which can be pertinent to determining who
prevails on a legal issue. Additionally, the case law frequently fails to
emphasize that promissory notes are a special specie of contracts,
involving a special set of legal principles. For example, a person who does
not properly obtain ownership a blank indorsed note can enforce it
because he or she is in possession of it. See § 673.3011, Fla. Stat. (2018).
Presumably, enforcement of the note with an attorney fee provision allows
such possessor to also receive attorney’s fees. At first blush, it seems
implausible to say a person who is not in the chain of ownership can be
considered in privity with the maker of the note, however, simple
possession of contract (the blank indorsed note) provides the privity, even
though there is no meeting of the minds. I also submit that much of the
confusion stems from a failure to properly analyze and apply legal
principles regarding judicial estoppel.
The case law regarding entitlement to attorney’s fees after a voluntary
dismissal has properly discerned that in terms of analysis, there is a
difference between cases where the trial court has made evidentiary
determinations regarding standing and cases where such evidentiary
determinations have not been made. See Glass,
2019 WL 98152 at *3
(distinguishing the application of Bank of New York Mellon Trust Co. v.
Fitzgerald,
215 So. 3d 116 (Fla. 3d DCA 2017) to the facts in Glass on the
basis that there was an evidentiary determination in Fitzgerald that the
bank did not prove it was a party to the contract); Rodriguez,
2018 WL
6528491 at *1; Elkind, 254 So. 3d at 1154. However, trial judges are
frequently led down the wrong path by attorneys who fail to recognize the
difference between who is the prevailing party in litigation and who has
the burden of proof for entitlement to fees. More importantly, if a party to
a suit seeks attorney’s fees pursuant to a contract clause, but is not in a
contractual relationship with the opposing party in the suit from whom
fees are sought, it is improper to award attorney’s fees based on the
contract provision. Novastar Mortg., Inc. v. Strassburger,
855 So. 2d 130,
131 (Fla. 4th DCA 2003) (“Because the Strassburgers were not parties to
the mortgage, they were not entitled to recover attorney’s fees under the
mortgage.”); see also Gibson v. Courtois,
539 So. 2d 459, 460 (Fla. 1989)
(determining that the fact that no contract was formed was dispositive on
the issue of fees based on a contract provision); Fitzgerald, 215 So. 3d at
121 (“Because no contract existed between the parties, the trial court erred
in awarding Fitzgerald attorney’s fees pursuant to section 57.105(7)[.]”);
HFC Collection Ctr., Inc. v. Alexander,
190 So. 3d 1114, 1117 (Fla. 5th DCA
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2016) (holding that a party cannot employ section 57.105(7) as a basis for
fees after proving the opposing party never became a party to the contract).
In granting rehearing and denying fees to the homeowner in this case,
the trial court relied upon Judge Scales’s insightful opinion in Florida
Community Bank, N.A. v. Red Road Residential, LLC,
197 So. 3d 1112 (Fla.
3d DCA 2016). There, the bank filed a voluntary dismissal after one of the
defendants, Rios, filed a motion for fees as a sanction under section
57.105(1), Florida Statutes. Id. at 1114. After the voluntary dismissal,
Rios moved for fees under both section 57.105(1) and section 57.105(7)
(the contract reciprocity fee provision). Id. The trial court denied fees
under section 57.105(1), but granted fees under section 57.105(7). Id.
Notably, Judge Scales observed that “[a]s section 57.105(7) plainly
requires, to gain the benefit of its substantive entitlement to prevailing
party fees, the party seeking the benefit of reciprocity must be a party to the
contract containing the fee provision.” Id. at 1115 (emphasis added). After
making the observation, the opinion goes on to explain:
Ada Rios does not appear to contest this proposition. Rather,
in oral argument, she sought to distinguish the reasoning in
Novastar[ v. Strassburger] by arguing that, in Novastar and
other similar cases, the trial court actually adjudicated that
the party seeking fees was not a party to the contract. Ada
Rios points out that, in this case, the Bank voluntarily
dismissed its lawsuit before such an adjudication occurred.
Ada Rios argues that, as the prevailing party (by virtue of the
Bank’s dismissal), she should be the beneficiary of the fact
that her status as a mortgagor specifically was not
adjudicated.
Not surprisingly, the Bank takes the contrary position in the
form of this syllogism: because Ada Rios’s principal defense
was that she was not a party to the mortgage, and because
Ada prevailed, therefore, for the purposes of section 57.105(7),
Ada Rios was not a party to the mortgage.
Regarding whether Ada Rios was a party to the mortgage, we
note that both the Bank and Ada Rios take positions opposite
to the positions they took before the Bank’s voluntary
dismissal of Ada Rios from the lawsuit. While both the Bank
and Ada Rios suggest that the other party should be estopped
from making its respective argument about whether Ada was
a party to the mortgage, we view the case not from the parties’
estoppel perspectives, but from the perspective of burden:
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which party had the threshold burden of establishing whether
Ada Rios was a party to the mortgage?
In our view, in order to avail herself of section 57.105(7)’s
reciprocity, Ada Rios, as the prevailing party and movant
seeking fees under the mortgage’s fee provision, had the
threshold burden to plead and establish that she was a party
to the mortgage containing the fee provision. Ada Rios’s
status as the lawsuit’s prevailing party does not equate to Ada
Rios being a mortgagor under the mortgage so as to trigger
section 57.105(7)’s reciprocity provision.
Id. at 1115-16 (emphases added) (footnote omitted) (citations omitted).
The Third District reversed the order awarding fees and remanded the case
for further proceedings because “[t]he burden lies with the prevailing party
to establish, as a threshold matter, her status as a party to the contract.”
Id. at 1116. I agree with the Third District that in litigation seeking to
enforce a contract (which includes foreclosure cases), establishing one
party as the prevailing party in the suit does not necessarily establish that
the prevailing party is also in a contractual relationship with the opposing
party. See id.
In the trial court below, HSBC consistently argued in opposition to the
homeowner’s motion for fees, as well as in support of its motion for
rehearing, that in order to prove entitlement, the homeowner had the
evidentiary burden of proving not only that the homeowner was the
prevailing party, but also that the homeowner and HSBC were in a
contractual relationship while the foreclosure suit was being litigated. The
trial court granted fees to the homeowner, after initially determining that
Red Road Residential was factually distinguishable from this case. HSBC
moved for rehearing contending the trial court erred in its interpretation
and application of Red Road Residential. After entertaining argument on
the motion for rehearing, the trial court granted rehearing and specifically
set a new evidentiary hearing on the fee motion. At the conclusion of the
new hearing on the fee motion, the trial court found that
the Defendant [(the homeowner)] failed to prove that the
Plaintiff [(HSBC)] and Defendant were parties to the note and
mortgage. The Defendant’s Answer denied paragraphs 3, 4, &
5 of Plaintiff’s Complaint and Defendant’s Affirmative Defense
asserted the Defendant [sic] did not have standing to file the
Complaint. These assertions have not been overcome by
evidence to show the Plaintiff and Defendants were parties to
the Contract.
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My review of the transcript of the hearing confirms that the homeowner
presented no evidence that the homeowner was in a contractual
relationship with HSBC. Thus, it appears the trial court’s finding was
correct that there was no competent substantial evidence to support a
determination that the homeowner and HSBC were parties to a contract
which contained a provision of a fee award. Therefore, I contend that we
have no legal basis to reverse the trial court. I disagree with the majority’s
conclusion that the copy of the note attached to the complaint provided
“sufficient record evidence to demonstrate HSBC and the homeowner were
parties to the underlying contract so as to justify attorney’s fees pursuant
to section 57.105(7).” Although on the issue of entitlement, it is not
uncommon that stipulations, admissions in pleadings, and affidavits are
frequently used, determinations on entitlement are not summary
judgment proceedings, when entitlement is contested. In contested
proceedings on entitlement, evidentiary hearings require proof by
testimony, exhibits, or both.
In addition to arguing the homeowner was not entitled to attorney’s fees
for failure to carry its burden and provide evidence of a contractual
relationship, HSBC made arguments below and on appeal asserting the
homeowner could not make a factual showing of entitlement based on
principles of judicial estoppel. Such arguments were incorrect and
distracting. Trial advocates are to be reminded:
In judicial proceedings, a party simply is not estopped from
asserting a later inconsistent position (if that it can be called),
unless the party’s initial position was successfully
maintained.
Leitman v. Boone,
439 So. 2d 318, 322 (Fla. 3d DCA 1983).
I emphasize that judicial estoppel arguments in these fee cases are
distracting, when the argument is inappropriate, for a reason. I said above
that Elkind was inapposite for the disposition of this case. I was one of
the panel members deciding Elkind. In going back and reviewing our
analysis and the briefs submitted in that case, I now realize that a
somewhat similar argument about the burden of proof in fee cases was
made in Elkind, but the clarity of the argument was lost by infusing it with
arguments about judicial estoppel and not as a stand-alone argument.
For the reasons I have discussed, I would affirm the trial court.
* * *
Not final until disposition of timely filed motion for rehearing.
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