On Friday, the Florida Supreme Court provided its decision in Glass v. Nationstar Mortgage, regarding the entitlement to attorney’s fees when the borrower prevails in litigation.
The Fourth District Court of Appeal had held that where a foreclosure case is dismissed for lack of standing, the borrower may not take advantage of the attorney fee provision of the mortgage to seek fees. The Florida Supreme Court quashed the decision of the Fourth District, and found that the borrower was entitled to attorney’s fees.
The Florida Supreme Court took issue with the Fourth DCA’s opinion, and stated that the facts of the trial court order were misstated. The Florida Supreme Court found that the trial court had dismissed the case based on pleading defects in the Complaint, not based on an express finding that Nationstar was not in privity with the note and mortgage, distinguishing these facts from those in Bank of New York Mellon Trust Co. v. Fitzgerald, 215 So. 3d 116 (Fla. 3d DCA 2017), where there was an express adjudication of a lack of standing between the parties.
While the decision is not positive for foreclosure plaintiffs, the narrow ruling in Glass appears to leave the Fitzgerald decision in place, and could give relief to a foreclosure plaintiff that was unsuccessful because no contractual privity existed between the parties.
An argument can still be made that where there is an adjudication on standing that finds the absence of privity of contract between the lender and the borrower, the borrower cannot turn around and invoke the reciprocity provisions of section 57.105(7). However, the Court referenced that even if the trial court finds the Plaintiff is not the holder, the Court under certain facts or circumstances determined on a case by case basis, may still find that there is privity of contract.“
Plaintiffs, however, must be wary of district court decisions that found that while there was a lack of standing at the inception of a case, the successful borrower may still be able to show privity of contract between the parties and recover fees after dismissal.
The narrow fact pattern and rationale from the Court has led many to speculate this issue will be back in front of the Florida Supreme Court again.
For more information, contact Ben Ewing, Esq.