Case Law Alerts
Florida district court holds that bank is entitled to prevailing party attorney’s fees under F.S. 718.303(1) in foreclosure action.
In these consolidated cases, Ocean Bank (Bank) appealed two orders that denied its request for attorney’s fees against Caribbean Towers Condominium Association (Association). The Bank claimed attorney’s fees as the prevailing party in disputes over unpaid assessments. The Association responded by arguing that: (a) the trial courts lacked subject matter jurisdiction to grant attorney’s fees, or in the alternative, (b) the Bank was barred from recovering attorney’s fees by the “no pleading, no fees” rule announced in Stockman v. Downs, 573 So.2d 835 (Fla. 1991).
The straightforward facts are the Bank brought foreclosure actions against two unit owners. The Bank named the Association in the suit because the Association had liens for unpaid assessments. The Bank ultimately obtained foreclosure judgments and subsequently purchased the condominium units at foreclosure sales. The dispute underlying the Bank’s claims for attorney’s fees concerned the extent of its liability to the Association for unpaid assessments after purchasing the condominium units at the foreclosure sales.
The Bank argued its liability for condominium assessments is capped by F.S. 718.116(1)(b) at no more than one percent of the original mortgage debt (since this was the lower of the alternative option of 12 months’ maintenance). Despite the statutory cap, the Association issued the Bank certificates of unpaid assessments (for each unit) for 9 and 13 times the statutory maximum. The Association’s repeated demands for payment of liens in excess of the statutory maximum forced the Bank to delay closings on the units to bona fide purchasers for value.
Seeking to bring this issue to a swift and inexpensive conclusion, the Bank filed post-judgment motions against the Association in the foreclosure actions, requesting the application of the statutory cap to the Association’s liens and an award of attorney’s fees pursuant to F.S. 718.303(1), which provides for prevailing party attorney’s fees in disputes between unit owners and associations. Both trial judges ruled for the Bank on the merits. However, both trial judges refused to grant the Bank attorney’s fees, apparently finding the post-judgment procedure was a proper forum to litigate the merits, but not a proper forum to litigate the fee requests.
The Association did not appeal and/or cross-appeal the trial courts’ ruling for the Bank on the merits of the disputed unpaid assessments. Nevertheless, it argued the denials of the requests for attorney’s fees should be upheld on the basis that the trial courts lacked subject matter jurisdiction to entertain the Bank’s post-judgment motions because the substantive motions raised issues not strictly within the four corners of the foreclosure pleadings.
The 3rd DCA declined to rule on the issue of whether the Bank was procedurally barred from requesting post-judgment relief because it held that the Association waived the issue in the unusual posture of this appeal. That is, having accepted the post-judgment process as a proper forum to decide the merits of the disputes over unpaid assessments (by not appealing or cross-appealing the decision by the trial courts), the Association cannot now argue the post-judgment proceedings were an improper forum to award prevailing party attorney’s fees. In enacting F.S. 718.303(1), the legislature clearly intended the prevailing party in disputes between unit owners and condominium associations to be awarded attorney’s fees. Therefore, the Bank was entitled to have its claim litigated in a forum that could both rule on the merits of the claim and award the prevailing party its attorney’s fees.
Finally, the court dismissed the Association’s argument about the “no pleading, no fees” rule announced in Stockman because the rule does not apply “where the entitlement to fees and costs arose during the suit based upon some event which is supplemental to the underlying action.” Cooper v. Marriot Int’l, Inc., 16 So.2 3d 156, 159 (Fla. 4th DCA 2009), review denied, 31 So. 3d 782 (Fla. 2010). In the instant case, the entitlement to fees did not exist from the outset of the Bank’s foreclosure actions against the condominium unit owners. Instead, the dispute over unpaid assessments arose when the Association issued certificates in excess of the statutory cap after the Bank purchased the units at foreclosure sales.
Accordingly, the 3rd DCA concluded the Bank was entitled to its attorney’s fees and costs in successfully prosecuting its claim that the Association’s assessments were capped at the statutory maximums mandated by F.S. 718.116(1)(b) and reversed and remanded the trial courts’ orders for a determination of the amount of the Bank’s fees.
Case Law Alert, 4th Quarter 2013