The Clerk of Court is Not the Best Bailee for Your Negotiable Instrument, Second DCA Holds

The Second District last week reversed a judgment of foreclosure, holding that Nationstar–the servicer of the loan at issue–could not establish it was the holder or nonholder in possession of a Note via possession by the clerk of court.

Years prior to the suit that led to the opinion in Partridge v. Nationstar Mortgage, LLC, 2D16-3081 (Fla. 2D DCA Aug. 11, 2017), lender Bank of America had filed the original note and mortgage with the trial court in a different foreclosure action.  That action was ultimately dismissed, but the original note and mortgage were left in the circuit court clerk’s possession.

Nationstar then began servicing the loan, and ultimately filed a foreclosure action of its own.  Nationstar did not take possession of the Note, but instead moved the trial court to take judicial notice of the originals and transfer them to the new action.  Ultimately, the trial court entered judgment of foreclosure for Nationstar, and the homeowner appealed.

On appeal, the Second District held that Nationstar had failed to establish standing because it did not show it possessed the original note.  The court rejected Nationstar’s contention that it “was using the clerk [of the court] as bailee to continue possessing the note on its behalf,” holding that Nationstar’s “unilateral decision to leave the original note and mortgage with the trial court does not establish possession of the note.”

This case demonstrates another of the many ways in which lenders and trial courts often misunderstand the issue of standing.  We at DPW Legal regularly handle appeals for homeowners who have found themselves with a foreclosure judgment against them.  If you find yourself in such a scenario, feel free to contact us so we can help you determine whether you might have a basis for appeal.

 

Second DCA holds you can get “fees for fees”—if it is in your contract

Ordinarily, where an attorneys’ fee award is available, a party is entitled to fees for litigating the entitlement to those fees, but not the amount.  The Second District Court of Appeal has now recognized that this rule is not absolute, and the language of an attorney fee provision in a contract can provide for a more extensive award.

In Trial Practices, Inc. v. Hahn Loeser & Parkes, LLP, 2D13-6051 & 2D14-86 (Fla. 2d DCA Apr. 12, 2017), Trial Practices (“TPI”) sued its former client for legal consulting services, claiming entitlement to a percentage of the client’s settlement of a third-party lawsuit.  The client prevailed against TPI, and the judgment was affirmed on appeal.

The client then sought an award of attorneys’ fees pursuant to the Consulting Agreement between himself and TPI.  The Consulting Agreement stated:

[the] prevailing party in any action arising from or relating to this agreement will be entitled to recover all expenses of any nature incurred in any way in connection with the matter, whether incurred before litigation, during litigation, in an appeal, . . . or in connection with enforcement of a judgment, including, but not limited to, attorneys’ and experts’ fees.

The trial court entered an award of fees that included a significant amount “attributed to [the client’s] attorney’s litigation of the issue of the amount of attorneys’ fees and costs.”  On appeal, the Second District held that the language of the “Consulting Agreement” was sufficiently broad to encompass this “fees for fees” award.

The Second District held that this case, in which fees were sought pursuant to contract, is distinguished from cases in which fees were sought pursuant to statute—where “fees for fees” is generally unavailable.  The Court also recognized that Florida law allows parties to “freely contract on the issue of attorney[s’] fees,” and that courts are not permitted to rewrite contracts to relieve parties of their obligations.

The Second District also held that attorneys who testified as fact witnesses in the original trial were entitled to receive reasonable compensation for their assistance, and that the “Consulting Agreement” was sufficiently broad to allow an award of overhead expenses as part of a cost award.  It did reverse, in part, for the trial court to itemize a bulk cost award in the judgment, and determine which costs were taxable and which costs were not taxable; and to change the date from which prejudgment was calculated.

In sum, if a party is seeking an award of attorneys’ fees pursuant to a broad contractual provision, the fee award may encompass not only time spent in litigating entitlement to fees, but also to litigating the amount.

Register Now for Second District eDCA Access

Florida’s Second District Court of Appeal is now accepting registration for its new eDCA system, which will go live for filing on March 1st. If you are a Second District practitioner, be sure to register now, so that you are ready to transition next week. Now is also a good time to update any staff on new procedures, if they (or you) are not familiar with using the eDCA system. As we’ve previously reported, Clerk Mary Beth Kuenzel announced the transition to eDCA earlier this month at the Breakfast with the Second DCA CLE, and things are moving along on the pace she outlined at the breakfast. Be ready!