Attorney’s Fees in Florida Foreclosure Cases

By Luke Kiel, Esq. and Jennifer Lima-Smith, Esq.

One important consideration for any client is the cost of litigation. How is fees and costs assessed in typical foreclosure actions? How is entitlement determined? As with all litigation matters, careful analysis must be done to determine an answer to this issue. There are several case scenarios which demand scrutiny when it comes to this determination. This article presents several issues which should always be considered and is written with the purpose of shedding some light on those questions.

In short, you and your counsel should try to question the fees sought by:

  1. Asking for a fee breakdown upfront
  2. Scrutinizing the fee breakdown for any duplicate or unnecessary fees
  3. Question the time allotted for certain matters (i.e. does it really take .5 hours to send one email…)
  4. Question the use of paralegal time, associate time, managing partner time, etc…
  5. Review the hourly ‘going rate’ for the jurisdiction
  6. Use common sense and scrutiny to discern whether the fees are genuine & legitimate
  7. Utilize the discovery process to accurately assess the request for fees

Should there be a favorable outcome for the borrower…for example, if the borrower gets a loan modification or, the case settles prior to the final hearing, you would want to resist paying attorney’s fees and argue the case wasn’t dismissed in their favor.

  •  Which party prevailed?

One of the first steps should be to determine which party prevailed in the matter.

Several questions need to be answered, such as: Was the case dismissed and why was it dismissed? Or, was there some other reason the case was dismissed? Was there some sort of settlement? (i.e. short sale, loan modification, reinstatement, payoff, etc.) In a settlement situation, f the attorney’s fees are challenged, you may have to be able to prove there actually was a settlement.

Remember, defendants can be entitled to fees and costs even if the plaintiff voluntarily dismisses the case. This happens even if the plaintiff refiles the case and prevails. See Kelly v. BankUnited, FSB, Case No. 4D14-2359 (Fla. 4th DCA 2015).

However, a court may look behind a voluntary dismissal at the facts of the litigation “to determine whether a party is a ‘substantially’ prevailing party.” Tubbs v. Mechanik Nuccio Hearne &Webster, P.A. 125 So. 3d. 1034, 1041 (Fla. 2d DCA 2013). A defendant is not automatically the prevailing party for the purpose of an attorney’s fee statute when a plaintiff takes a voluntary dismissal. Padow v. Knollwood Club Ass’n, 839 So. 2d. 744 (Fla. 4th DCA 2003). This is why plaintiffs need be ready to prove that the parties settled if the case was voluntarily dismissed due to short sale, loan modification, reinstatement, etc.

Generally, a claim for attorneys’ fees and costs, whether based on statute or contract, must be pled.

See Stockman v. Downs, 573 So. 2d 835 (Fla. 1991). However, if the case is dismissed prior to the pleading stage, fees and costs may be sought so long as the Motion for Attorneys’ Fees (“MFAF”) is timely filed (within 30 days of the dismissal). See Green v. Sun Harbor Homeowners’ Association, Inc., 730 So. 2d 1261 (Fla. 1998).

“[F]or cases that are dismissed before the filing of an answer, a defendant’s claim for attorney fees is to be made either in the defendant’s motion to dismiss or by a separate motion which must be filed within thirty (30) days following a dismissal of the action.” See Nudel v. Flagstar Bank, FSB, 60 So. 3d, 1163 (Fla. 4th DCA 2011). In this case, the Court held that borrower did not waive her entitlement to attorney’s fees because she had not yet filed a responsive pleading and timely sought fees after the dismissal.

  •   Was the request for fees timely?

The bright-line rule is that the motion for attorneys’ fees must be filed within 30 days from the final order (i.e. dismissal) or final judgment. This rule is plainly stated in the Florida Rules of Civil Procedure (Fla. R. Civ. P. 1.525) and supported by case law – see Diaz v. Bowen, 832 So. 2d 200 (Fla. 2d DCA 2002) and Shipley v. Belleair Group, Inc., 759 So.2d 28 (Fla. 2d DCA 2000).

Occasionally, borrowers’ counsel will specifically seek (or try to sneak in) fees incurred while litigating or negotiating the amount of fees/costs to which the Defense is entitled, after entitlement has been stipulated to or granted. However, there is case law to help convince judges that such requests should be denied. See State Farm Fire & Casualty Co. v. Palma, 629 So. 2d 830 (Fla. 1993). The general rule is that attorney’s fees may only be recovered for litigating the issue of entitlement to fees, but not for litigating the amount of fees to be awarded. Cox v. Great American Ins. Co., 88 So.3d 1048 (Fla. 4th DCA 2012). The 4th DCA has ruled that attorney’s fees for litigating the amount of attorney’s fees are not permitted under Fla. R. Civ. P. 1.730(c). Wood v. Haack, 54 So.3d 1082 (Fla. 4th DCA 2011).

The 4th DCA has also specifically ruled that attorney’s fees for litigating the amount of attorney’s fees should be denied if fee entitlement is awarded based on Fla. Stat. 57.105. Nothing in Fla. Stat. 57.105 allows for entitlement of fees incurred litigating the amount of fees to be awarded.

Defense counsel often cite to the case of Waverly at Las Olas Condominium Association, Inc. v. Waverly Las Olas, LLC, 88 So. 3d 386 (Fla. 4th DCA 2012) in support of their claim for entitlement to “fees on fees”. In Waverly, the 4th DCA held that the general rule is inapplicable where the substantive basis for the award is based in contract and the contractual provision authorizing attorney’s fees is broad enough to encompass fees incurred while litigating the amount of fees.

Usually, the language in mortgages gives the lender the right to collect “reasonable attorney’s fees and costs” incurred while pursuing the remedies provided for in the mortgage (i.e. the right to initiate a foreclosure action). Typical mortgages only give the lender the right to attorney’s fees and costs, not borrowers. In Florida, however, borrowers are able to collect attorney’s fees and costs under Fla. Stat. 57.105(7), which provides for reciprocity in the application of attorney’s fee contract provisions.

  •  Should a multiplier be used?

Defense attorneys often seek a lodestar multiplier when motioning the court for attorney’s fees. For example, if an attorney is representing that the time spent litigating the case amounted to $20,000, and she is also seeking a 2.5X multiplier, she is really asking the Court to award $50,000 in attorney’s fees.

There are factors used to determine whether a lodestar multiplier is necessary: whether the relevant market requires a contingency fee multiplier to obtain competent counsel; whether the attorney was able to mitigate the risk of nonpayment in any way; and whether any of the factors set forth in Rowe are applicable (the Rowe factors), especially:

  1. the amount involved,
  2. the results obtained, and
  3.  the type of fee arrangement between the attorney and her client.

See Sun Bank of Ocala v. Ford, 564 So. 2d 1078 (Fla. 1990).

In addition to the above, courts also will scrutinize items which are referred to as “Rowe Factors”:

  1. The time and labor required, the novelty and difficulty of the question involved, and the skill requisite to perform the legal service properly; typically, residential mortgage foreclosure defense is not a novel or difficult issue;
  2. The likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
  3. The fee customarily charged in the locality for similar legal services;
  4. The amount involved and the results obtained;
  5. The time limitations imposed by the client or by the circumstances;
  6. The nature and length of the professional relationship with the client;
  7. The experience, reputation, and ability of the lawyer or lawyers performing the services; and
  8. Whether the fee is fixed or contingent.

See Florida Patient’s Compensation Fund v. Rowe, 742 So. 2d 1145 (Fla. 1985).

For best practice, it is always best to consult with your local foreclosure counsel.