The Third District Court of Appeal of the State of Florida recently affirmed a final judgment awarding attorney's fees to the borrowers in a mortgage foreclosure action, even though the borrowers failed to raise any request for attorney's fees in their answer and affirmative defenses to the foreclosure complaint.
In so ruling, the Court held that the mortgagee was on notice that the borrowers were seeking to recover their attorney's fees and failed to timely object to the borrowers' failure to plead entitlement.
A copy of the opinion is available at: Link to Opinion
The mortgagee filed a mortgage foreclosure complaint that sought recovery of attorney's fees pursuant to the promissory note. The borrowers answered and raised affirmative defenses, but did not plead entitlement to attorney's fees.
A month later, the borrowers retained counsel, who filed a motion for judgment on the pleadings, which requested attorney's fees and costs in the prayer for relief. Two days later, the borrowers, through counsel, filed a motion for summary judgment, which alleged the mortgagee wrongfully force-placed insurance on their property, thereby creating the "default," and also sought attorney's fees and costs.
The mortgagee responded in opposition to the motion for summary judgment, but did not object for the request for attorney's fees.
After a hearing, the trial court granted the borrowers' motion for summary judgment. The mortgagee moved for rehearing, which the borrowers opposed, again asking for attorney's fees and costs in the "wherefore clause."
While the mortgagee's motion for rehearing was still pending, the borrowers filed a motion for attorney's fees and costs, to which the mortgagee did not respond. The borrowers subsequently filed an amended motion or entitlement to attorney's fees and costs, to which the mortgagee also did not respond.
Following a hearing, the trial court granted the borrowers' amended motion for entitlement to attorney's fees and costs, reserving as to amount.
The borrowers filed their motion to determine the amount of attorney's fees, which the mortgagee opposed, but not on the basis that borrowers were not entitled to fees because they did not plead entitlement in their answers.
The mortgagee objected to entitlement for the first time at the hearing on the motion to determine the amount of attorney's fees, which took place over three years after the trial court entered its order granting the borrowers' entitlement motion.
The trial court reduced the hours and the hourly rate requested by borrowers' counsel, but entered an order awarding $38,730 plus prejudgment interest from the date of the order granting entitlement and denied the bank's motion for rehearing. The mortgagee appealed.
On appeal, the mortgagee argued that the borrowers were not entitled to attorney's fees because they did not plead entitlement in their answer, citing the Florida Supreme Court's 1991 decision in Stockman v. Downs, which held that "a claim for attorney's fees, where based on statute or contract, must be pled, [and] [f]ailure to do so constitutes a waiver of the claim."
The Third District Court of Appeal explained that in Stockman, the Florida Supreme Court's main focus was notice, and set forth two exceptions to the plead or waive rule of entitlement, one of which applied to the case at bar: "Where a party has notice that an opponent claims entitlement to attorney's fees, and by its conduct recognizes or acquiesces to that claim or otherwise fails to object to the failure to plead entitlement, that party waives any objection to the failure to plead a claim for attorney's fees."
The Appellate Court reasoned that although the borrowers did not plead entitlement in their answer, they put the mortgagee on notice "early on in the litigation that they were requesting attorney's fees" beginning with the motion for judgment on the pleadings filed by borrowers' counsel. The Court also noted that this request was repeated in subsequent motions. In addition, the Court noted that mortgagee failed to object to the failure to plead entitlement in response to the mortgagee's motion for summary judgment or respond to the borrowers' two motions for entitlement.
Given the mortgagee's "prolonged silence regarding the defendants' entitled to attorney's fees," the Third District concluded that the mortgagee's objection to entitlement, raised for the first time at the hearing on borrowers' motion to determine amount, was "untimely, and thus [the bank] waived any objection to the defendant's failure to plead entitlement."
Accordingly, the trial court's final judgment awarding attorney's fees to the borrowers was affirmed.
Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Admitted to practice law in Illinois
Alabama | California | Florida | Georgia | Illinois | Indiana | Maryland | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Texas | Washington, DC
NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you.
Our updates and webinar presentations are available on the internet, in searchable format, at:
Financial Services Law Updates
The Consumer Financial Services Blog™