Florida Law Levels the Playing Field on One-Sided Attorney’s Fee Clauses
Section 57.105(7), Florida Statutes, makes reciprocal all contracts with unilateral attorney’s fee provisions that benefit one party over the other.1 Under the statute, where a contract contains an attorney’s fee provision that benefits only one party to the contract, a court may award attorney’s fees to the other party when that party prevails “in any action, whether plaintiff or defendant, with respect to the contract.”
In 2020, the Florida Supreme Court in Ham v. Portfolio Recovery Assoc., LLC, 308 So.3d 942 (Fla. 2020) and Page v. Deutsche Bank Tr. Co. Ams., 308 So.3d 953 (Fla. 2020) analyzed section 57.105(7) and held that two statutory conditions must be met for reciprocal application of an otherwise unilateral attorney’s fees provision in a contract: (1) the contract must contain a provision awarding attorney’s fees to a party when that party is required to take any action to “enforce the contract,” and (2) the other party must prevail in an action with “respect to the contract.”2
The “enforce the contract” language of the first condition describes what is required of the contract provision—not the claim raised by the plaintiff.3 This is an important distinction and may be determined by simply reviewing the provisions of the contract.4
The second condition—that “the other party must prevail in any action … with respect to the contract”—requires consideration of the claims litigated and a determination of who prevailed on the contract-related claims.5 “With respect to” in this context requires a relationship with the contract containing a unilateral fee provision that may be different than and not as immediate as the relationship that would be required if “based on,” “under,” or “pursuant to” were the operative language.6 “With respect to” is inclusive of those other terms but is broader.7
In Ham, the plaintiff filed actions for common law account stated against two debtors to collect the balance allegedly owned on credit card accounts. The plaintiff did not reference or attach the credit card contracts to the complaints, which provided that only the creditor could recover “collection costs,” including reasonable attorney’s fees. Following trial, the trial court entered judgment for the two debtors because the plaintiff failed to offer admissible evidence to support the complaints. The Florida Supreme Court held that the debtors were entitled to attorney’s fees under section 57.105(7) because: (1) the contracts between the creditor and debtors contained “a provision allowing attorney’s fees to a party when he or she is required to take any action to enforce the contract”; and (2), although the plaintiff’s account stated claims could not fairly be said to be claims brought “based on,” “under,” or “pursuant” to the credit card contracts, there was nonetheless a clear and direct relationship between the credit card contracts and the account stated claims.8
As the decision in Ham demonstrates, even if the party that benefits from the unilateral fee-shifting provision does not rely on the clause when alleging its claims, the other party who prevails in the litigation “with respect to the contract” may still recover its attorney’s fee under section 57.105(7).
The Third District’s decision in Castellanos v. Reverse Mortgage Funding, LLC, 320 So.3d 904 (Fla. 3d DCA 2021) is illustrative. Relying on the Florida Supreme Court’s decisions in Ham and Page, the Third District held that a borrower who prevailed in a mortgage foreclosure action of a non-recourse loan (where the borrower is not personally responsible for the remaining debt or the lender’s attorney’s fees if the collateral’s value is insufficient to cover the loan amount) was nonetheless entitled to an award of her attorney’s fees against the lender pursuant to section 57.105(7) because the mortgage contained a unilateral prevailing party attorney’s fee provision in favor of the lender, despite the fact that the attorney’s fee provision did not authorize the lender to seek an award against the borrower personally.9 The lender’s primary theme opposing the award of attorney’s fees was “you get what you give,” meaning that, because the attorney’s fee provision in the mortgage did not authorize the lender to seek an award of attorney’s fees form the borrower, the reciprocity provision of section 57.105(7) could not apply to authorize the borrower to seek an award of attorney’s fees from the lender. The Third District rejected the lender’s argument because nothing in the plain language of the statute imposes such a requirement as a condition of reciprocity. Instead, the statute creates reciprocity where the “contract contains a provision allowing attorney’s fees to a party when he or she is required to take any action to enforce the contract …”. As stated by the Third District, the statutory language addresses a prevailing party’s ability to recover attorney’s fees, not a losing party’s obligation to pay attorney’s fees.10
1 Castellanos v. Reverse Mortgage Funding, LLC, 320 So.3d 904 (Fla. 3d DCA 2021)
2 Ham v. Portfolio Recovery Assoc., LLC, 308 So.3d 942 (Fla. 2020); Page v. Deutsche Bank Tr. Co. Ams., 308 So.3d 953 (Fla. 2020).
3 Ham, 308 So.3d at 948-49.
4 Id.
5 Id.
6 Id.
7 Id.
8 Id. See also Page, 308 So.3d at 948-49 (mortgagor who prevailed in foreclosure action based on trustee’s lack of standing at the time it filed the action was entitled to attorney’s fees where the mortgage contract contained a unilateral fee provision).
9 The Third District also stated that the decisions in Ham and Page implicitly overruled the Third District’s prior decision in Suchman Corp. Park, Inc. v. Greenstein, 600 So.2d 532, 533 (Fla. 3d DCA 1992) which held that, because an underlying mortgage was based upon a nonrecourse loan, in which the borrower could not be personally responsible for the lenders attorney’s fees should the lender prevail in its action to foreclose the mortgage, the unilateral attorney’s fees provision in the nonrecourse loan could not be made reciprocal (and a prevailing borrower could not be awarded attorney’s fees) by application of Fla. Stat. 57.105(7)(2019)
10 But see Florida Hurricane Protection and Awning, Inc., 43 So.3d 893, 895 (Fla. 4th DCA 2010) (holding homeowner who prevailed in suit against a contractor for breach of contract was not entitled to attorney’s fees pursuant to Fla. Stat. § 57.105(7) where contract provided that “purchaser is responsible for all costs of collection including attorney’s fees, reasoning that reciprocity would allow for homeowner if she prevailed in a collection action brought by the contractor). However, the dissent in Florida Hurricane Protection and Awning, Inc. mirrors the subsequent reasoning of the Florida Supreme Court in Page and Ham with regard to the plain language and effect of section 57.105(7).
