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recognizing the use of the word "shall" in section 57.105, Florida Statutes, "evidences a legislative intention to impose a mandatory penalty"
Summary of this case from Palafox, LLC v. DiazOpinion
No. 2D20-1850
07-07-2021
Luis Tapia SUAREZ and National Packaging, Ltd, Appellants/Cross-Appellees, v. The BANK OF NEW YORK MELLON TRUST CO., Appellee/Cross-Appellant, and City of St. Petersburg ; Geneva Hill; Kathy Hill; Shawn Mechan; US Bank, NA; and US Money Source, Inc., Appellees.
Gabriel Strine of Strine Legal Services, PLLC, Tampa, for Appellants/Cross-Appellees. Sonia Henriques McDowell of Quintairos, Prieto, Wood & Boyer, P.A., Orlando, for Appellee/Cross-Appellant. No appearance for remaining Appellees.
Gabriel Strine of Strine Legal Services, PLLC, Tampa, for Appellants/Cross-Appellees.
Sonia Henriques McDowell of Quintairos, Prieto, Wood & Boyer, P.A., Orlando, for Appellee/Cross-Appellant.
No appearance for remaining Appellees.
BLACK, Judge.
Luis Tapia Suarez and National Packaging Equipment, Ltd., challenge the order denying their motion for attorneys' fees filed pursuant to sections 48.23(3) and 57.105(7), Florida Statutes (2018). The Bank of New York Mellon Trust Company cross-appeals, challenging the order denying its motion for attorney's fees and sanctions filed pursuant to section 57.105(1). For the reasons explained below, we affirm the order denying Mr. Suarez and National Packaging's motion and reverse the order denying the Bank's motion.
We note that a cross-appeal is not appropriate to challenge a final order that is independent of the order on appeal; the Bank should have separately appealed from the order denying its motion for fees. See, e.g. , Webb Gen. Contracting, Inc. v. PDM Hydrostorage, Inc. , 397 So. 2d 1058, 1060 (Fla. 3d DCA 1981) ("It is not the function of a cross-appeal to seek review of a distinct and separate judgment, albeit rendered in the same case below, favorable to the appellant."). However, because the notice of cross-appeal was timely as a notice of appeal from the order denying the Bank's motion, we have jurisdiction and address the merits of the Bank's arguments. See, e.g. , Obregon v. Rosana Corp. , 232 So. 3d 1100, 1104 (Fla. 3d DCA 2017).
Mr. Suarez and National Packaging were the defendants in a foreclosure action brought by the Bank. Neither Mr. Suarez nor National Packaging pleaded for or otherwise asserted entitlement to attorneys' fees in their respective pleadings in that action. However, they filed a motion seeking an award of attorneys' fees on the same day that the foreclosure case was involuntarily dismissed. In that motion, Mr. Suarez and National Packaging cited section 57.105(7) and the terms of the mortgage as the bases for fees. More than a year and a half later, Mr. Suarez and National Packaging filed an amended motion, citing both section 48.23(3) and section 57.105(7).
During the period between the filing of Mr. Suarez and National Packaging's original and amended motions for fees, the Bank filed its motion for attorney's fees and sanctions. In its motion, the Bank cited section 57.105, subsections (1), (2), and (6), and the inequitable conduct doctrine. The Bank alleged, inter alia, that Mr. Suarez, National Packaging, and their counsel knew or should have known that the motion for attorneys' fees was frivolous and that the Bank had complied with the safe harbor provision of the statute, section 57.105(4), by serving Mr. Suarez and National Packaging with the motion for fees at least twenty-one days prior to filing it with the court.
In denying Mr. Suarez and National Packaging's motion, the trial court found that Mr. Suarez and National Packaging were not entitled to fees because they had failed to assert entitlement to fees in any pleading. Although the court made additional findings, the failure to plead entitlement was the primary basis for denying the motion.
Because Mr. Suarez and National Packaging's failure to plead entitlement to fees is dispositive, we address the denial of fees on that basis only. As this issue concerns a question of law, our review is de novo. See Harris v. Bank of N.Y. Mellon , 311 So. 3d 66, 69 (Fla. 2d DCA 2018) ("[W]e review de novo a trial court's final judgment determining entitlement to attorney's fees based on a fee provision in the mortgage and the application of section 57.105(7)." (quoting Bank of N.Y. Mellon Tr. Co., N.A. v. Fitzgerald , 215 So. 3d 116, 118 (Fla. 3d DCA 2017) )).
Pleading entitlement to fees was required under all theories raised by Mr. Suarez and National Packaging in their motion. Mr. Suarez and National Packaging's interpretation of and reliance on Ganz v. HZJ, Inc. , 605 So. 2d 871 (Fla. 1992), in support of their argument otherwise is unsound. Mr. Suarez and National Packaging contend that Ganz holds that the pleading requirement of Stockman v. Downs , 573 So. 2d 835 (Fla. 1991), is inapplicable to requests for fees pursuant to section 57.105. However, Mr. Suarez and National Packaging fail to recognize that the holding of Ganz was specific to subsection (1) of section 57.105, Florida Statutes (1991), addressing fees as sanctions where "there was a complete absence of a justiciable issue of either law or fact in the complaint or defense of the losing party," and that Ganz did not reach any conclusion as to what was then subsection (2), addressing contractual fee reciprocity to the prevailing party. See Ganz , 605 So. 2d at 872 & n.1 (quoting § 57.105(1), Fla. Stat. (1991) ); see also Advanced Chiropractic & Rehab. Ctr., Corp. v. United Auto. Ins. , 140 So. 3d 529, 535-36 (Fla. 2014) ("In Ganz , this Court held that a party was not required to plead a claim for attorney's fees under section 57.105(1) , Florida Statutes (1991), which allows fees to be awarded to the prevailing party if the claims or defenses of the opposing party were not supported by law or fact." (emphasis added)).
That Ganz does not apply to reciprocal fee claims pursuant to section 57.105(7) is further demonstrated by the litany of cases applying the pleading requirement of Stockman to section 57.105(7) fee claims, including cases in the foreclosure context. See, e.g. , Bushnell v. Portfolio Recovery Assocs., LLC , 255 So. 3d 473, 477 (Fla. 2d DCA 2018) ("And in their answer to the complaint the defendants' [sic] asserted a claim for attorney's fees under the reciprocity provision of section 57.105(7)[, Florida Statutes (2015),] and the [contract]."); BMR Funding, LLC v. DDR Corp. , 67 So. 3d 1137, 1139 (Fla. 2d DCA 2011) (reversing the final judgment awarding attorney's fees where there had been no pleading in the foreclosure or deficiency action claiming entitlement); Grosso v. HSBC Bank USA, N.A. ex rel. ACE Sec. Corp. , 275 So. 3d 642, 644 (Fla. 4th DCA 2019) ("The homeowner also requested attorney's fees."); Fanelli v. HSBC Bank USA , 170 So. 3d 72, 73 (Fla. 4th DCA 2015) (applying Stockman pleading requirement to section 57.105(7) fees in a foreclosure action); cf. Tunison v. Bank of Am., N.A. , 144 So. 3d 588, 590-91 (Fla. 2d DCA 2014) ("Mr. Tunison's motion to dismiss was not a pleading. Because Mr. Tunison was never required to file an answer to the complaint, he did not waive his claim for attorney's fees. His separate motion for attorney's fees filed within thirty days of [the bank's] dismissal of the action was timely filed." (first citing Green v. Sun Harbor Homeowners' Ass'n , 730 So. 2d 1261, 1263 (Fla. 1998) ; and then citing Nudel v. Flagstar Bank, FSB , 60 So. 3d 1163, 1164 (Fla. 4th DCA 2011) ). The statement in Ganz that "[i]t is extremely difficult, if not impossible, for a party to plead in good faith its entitlement to attorney's fees under section 57.105 before the case is ended" is clearly inapplicable where the basis for fees is a contract. See 605 So. 2d at 872. Succinctly stated, "[t]he [ Stockman ] rule applies ‘in situations where the entitlement to fees and costs existed from the outset based upon a contract or statute which was the subject of the underlying claim or defense.’ " Ocean Bank v. Caribbean Towers Condo. Ass'n , 121 So. 3d 1087, 1090 (Fla. 3d DCA 2013) (quoting Cooper v. Marriott Int'l, Inc. , 16 So. 3d 156, 159 (Fla. 4th DCA 2009) ); see also Advanced Chiropractic & Rehab. Ctr. , 140 So. 3d at 534 ("[A]lthough entitlement to attorney's fees must be adjudicated after resolution of other claims, a claim for attorney's fees based upon a contract or statute is waived unless it is made in the pleadings." (citing Stockman , 573 So. 2d at 837-38 )). Ganz addressed entitlement to fees based on the "inherent nature of the underlying claim or defense" rather than "entitlement to fees based on some event that occurred during the cause of action ." Advanced Chiropractic & Rehab. Ctr. , 140 So. 3d at 536. The basis for Mr. Suarez and National Packaging's motion was known at the outset of the foreclosure action and based upon events occurring during that action. We affirm the order denying Mr. Suarez and National Packaging's motion for attorneys' fees.
Mr. Suarez and National Packaging also cite Harris v. Bank of New York Mellon ex rel. Certificateholders of the CWABS, Inc., Asset-Backed Certificates, Series 2007-9 , 311 So. 3d 66 (Fla. 2d DCA 2018), in support of their arguments. This court's Harris opinion is not relevant to the trial court's denial of fees based on the failure to plead. Harris does not address whether the moving party pleaded entitlement to fees; it addresses only the contractual relationship between the parties and whether lack of standing precludes fees. Although Harris does not state that the homeowner pleaded entitlement to fees, it is clear—based on this court's previous holdings—that in order for this court to reach its conclusion in Harris the homeowner must have done so.
In challenging the denial of its motion for attorneys' fees and sanctions pursuant to section 57.105(1), the Bank contends that Mr. Suarez and National Packaging's counsel knew or should have known that the motion for attorneys' fees was frivolous where neither Mr. Suarez nor National Packaging had pleaded entitlement to fees and thus the existing law did not apply to the material facts.
This court "generally reviews an order denying a motion for attorney's fees and costs under section 57.105(1) for an abuse of discretion, but if the trial court's determination is based on a legal conclusion, such as the interpretation of a statute or contractual provision, a de novo standard applies." Schurr v. Silverio & Hall, P.A. , 290 So. 3d 634, 637 (Fla. 2d DCA 2020) (citing Country Place Cmty. Ass'n v. J.P. Morgan Mortg. Acquisition Corp. , 51 So. 3d 1176, 1179 (Fla. 2d DCA 2010) ). Section 57.105(1) provides that "the court shall award a reasonable attorney's fee" when the statutory criteria are met, and "[i]t has long been recognized that use of the word ‘shall’ ... ‘evidences the legislative intention to impose a mandatory penalty.’ " Morton v. Heathcock , 913 So. 2d 662, 668 (Fla. 3d DCA 2005) (quoting Wright v. Acierno , 437 So. 2d 242, 244 (Fla. 5th DCA 1983) ).
The order denying the Bank's motion for fees did not include findings. However, the court made findings at the hearing, including that Mr. Suarez and National Packaging's motion "was not done in bad faith" and that "they were raising some legitimate issues that needed to be addressed by the [c]ourt." Those findings, however, are not supported by the facts or the law. Under all theories and bases raised in Mr. Suarez and National Packaging's motion the Stockman rule applied and the failure to plead entitlement to fees precluded relief. We see no way to reconcile the court's findings in denying Mr. Suarez and National Packaging's motion—that they were required to have "allege[d] fees and put [the Bank] on notice," that the case law cited by Mr. Suarez and National Packaging were "merely two cases involving frivolous matter[s]," and that this case "was not one of those situations"—with the finding that Mr. Suarez and National Packaging's motion raised legitimate issues. See Davis v. Bailynson , 268 So. 3d 762, 768 (Fla. 4th DCA 2019) ("Unlike its predecessor, the 1999[, and current,] version of the statute no longer requires a party to show a complete absence of a justiciable issue of fact or law, but instead allows recovery of fees for any claims or defenses that are unsupported." (quoting Wendy's of N.E. Fla., Inc. v. Vandergriff , 865 So. 2d 520, 523 (Fla. 1st DCA 2003) )).
There was no argument that Mr. Suarez and National Packaging's claim for fees was "presented to the court as a good faith argument for the extension, modification, or reversal of existing law or the establishment of new law," see § 57.105(3)(a) ; and there was no dispute regarding the material facts, see § 57.105(3)(b). At a minimum, Mr. Suarez and National Packaging's counsel should have known that the existing law precluded fees—particularly after being presented with relevant case law in the Bank's motion, served on Mr. Suarez and National Packaging in compliance with section 57.105(4) prior to filing it with the court. Section 57.105(1) clearly provides that "the court shall award a reasonable attorney's fee" in situations like this one. See Mark W. Rickard, P.A. v. Nature's Sleep Factory Direct, LLC , 261 So. 3d 567, 570 (Fla. 4th DCA 2018) ("Accordingly, as [appellant] timely and properly filed a motion in accordance with section 57.105(4), the trial court lacked discretion to deny this motion beyond the exceptions noted in section 57.105(3) (none of which are applicable here, other than 57.105(3)(c), as discussed above)."). Ignorance of the law is not a basis to deny fees under section 57.105(1). See Maradriaga v. 7-Eleven , 35 So. 3d 109, 110 (Fla. 1st DCA 2010) ("Because Appellant's attorneys' response to this court's show cause order continues to evince ignorance of the rules of appellate procedure and case law, attorneys' fees pursuant to section 57.105, Florida Statutes (2009), are hereby imposed ...."). And even were we to assume that the "mistake in originally filing the motion was innocent," counsel "had no excuse for failing to withdraw it" and certainly no excuse in filing an amended motion after being put on notice by the Bank that it would seek fees and sanctions pursuant to section 57.105(1) based upon the "clear and overwhelming" law. See Paul v. Avrahami , 216 So. 3d 647, 651 (Fla. 4th DCA 2017).
Accordingly, we reverse the denial of the Bank's section 57.105(1) motion for attorney's fees and remand with instructions that the trial court grant the Bank's motion. Because the trial court cannot award attorney's fees against a represented party when the frivolous action is not "supported by the application of then-existing law to th[e] material facts," § 57.105(1)(b), counsel for Mr. Suarez and National Packaging must pay the fees. See Paul , 216 So. 3d at 651 n.3 ; see also Fla. Houndsmen Ass'n v. State , 134 So. 3d 999, 1001 (Fla. 1st DCA 2012) ("Because our decision is based on the lack of legal, rather than factual, merit, only Appellants' attorneys shall be responsible for paying this award.").
The order denying fees to Mr. Suarez and National Packaging is affirmed. The order denying fees to the Bank is reversed and remanded.
VILLANTI and LABRIT, JJ., Concur.