Is collection of unpaid legal fees governed by the Florida Consumer Collection Protection Act?

Yes, according to a recent First DCA opinion. The issue of whether an attorney’s attempt to collect unpaid legal fees is an act of debt collection, as defined by the FCCPA, was recently addressed in the First District Court of Appeals.

Appellants alleged abusive conduct in a debt collection on behalf of their prior counsel. The lower court dismissed appellant’s counterclaim finding that an attorney seeking fees for past legal services did not fall under the purview of § 599.72, Florida Statutes (2009). More so, the final judgment included an award of attorneys’ fees to be paid equally between appellant and her counsel.  However, the First DCA reversed and remanded the ruling. It held that appellant’s debt to her counsel was a consumer debt because it was an, “obligation of a consumer to pay money arising out of a transaction in which the… services are the subject of the transaction are primarily for personal… purposes…”, § 559.55(1), Florida Statutes (2009).

In May 2006, appellant retained her counsel in a legal matter. Appellant was to pay her attorney $2,500 in advance of any representation. Payment was not made and her counsel subsequently filed a small claims action. Appellant then brought a $15,000 counterclaim against her attorney for a violation of the FCCPA. Appellee moved to dismiss claim, alleging that they were not debt collectors. The circuit court agreed and held that the statute defines debt collectors as, “entities collecting the consumer accounts of others and not creditors collecting their own accounts.” Appelle also moved for sanctions and the court entered an award of attorney’s fees in their favor. The circuit court explained that the appellants knew or should have known that the claim was not supported by Florida case law or Florida statutory law.

However, the first DCA disagreed with the circuit court, specifically relying on the language of  § 559.55 (5) & (6). The language affords a much broader definition of the terms “debt collector” and “creditor”.  Thus, Appellee’s activity was governed by the FCCPA. Therefore, the first DCA reversed the final judgment and the award of attorney’s fees.

Morgan v. Wilkins, et al, Case no.: 1D11-0237

Authored by: Marlowe Fox, Esq.

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Proposal for Settlement does not “cut-off” contractual attorneys’ fees

The issue of whether a valid Proposal for Settlement, served in compliance with Fla. Stat. s 768.79, “cuts-off” a prevailing party’s claim for attorneys’ fees and costs pursuant to a valid contractual provision, was recently visited as an issue of first impression by the First District Court of Appeals in Tierra Holdings, Ltd. v. Mercantile Bank, a Florida banking corporation.
The issue was decided in the negative.
Mercantile originally sued Tierra for breach of contract and unjust enrichment. The parties’ contact had a provision providing that the prevailing party is entitled to recover its attorneys’ fees and costs expended during the litigation. Prior to the matter proceeding to trial, Tierra served Mercantile with a valid and good faith Proposal for Settlement pursuant to Fla. Stat. s 768.79 in the amount of $178,100. Mercantile rejected the offer and later prevailed on its claim for breach of contract and unjust enrichment. However, after appeal, Mercantile lost on its unjust enrichment claim and only recovered a damages award in the amount of $16,232 for its claim of breach of contract – not enough to avoid triggering the statutory fee shift provided by the proposal for settlement. Tierra argued that since Mercantile rejected the bona fide proposal for settlement and then recovered far less than 25% of the amount offered, then their contractual right to attorneys fees should be cut -ff as of the date of the proposal for settlement. Their rationale, supported by previous DCA opinions was that Mercantile failed to technically prevail by beating the amount of the proposal for settlement.
The First DCA rejected this contention, finding that the fee shifting sanction of a rejected proposal for settlement operated independently from a valid contractual provision providing the prevailing party the right to recover its attorneys’ fees. In making this determination, the First DCA strictly construed Fla. Stat. s 768.79 against Tierra (the moving party) and was persuaded by the fact that the statute lacked any express language exhibiting an intent to “cut-off” or otherwise terminate a contractual attorneys’ fee provision.

Tierra Holdings, Ltd. v. Mercantile Bank, a Florida banking corporation

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Foreclosure Sale Upheld

The recent foreclosure epidemic in Florida has resulted in skyrocketing numbers of properties being auctioned off at foreclosure sales. An increasing number of these auctions are being challenged by unsuccessful bidders based on procedural irregularities in the sale process. In Bay County, Florida, a successful bidder at a foreclosure auction is required to immediately tender 5% of the final bid in cash or cashier’s check to the Clerk of Court. In a recent matter; Walter Thomas Jagodinski v. Washington Mututal Bank, the successful bidders deposited the requisite 5% of the purchase price with the clerk by means of a check from their attorneys’ law firm three hours after the sale was complete. The property’s third highest bidder challenged the sale claiming that the three hour delay was a departure from the immediate tender requirement and that a check from a lawfirm was inconsistent with the cash or cashiers check requirement. The Bay County Trial Court agreed with the unsuccessful bidder, vacated the sale, and ordered a new sale to take place. However, the First District Court of Appeals, recently issued its opinion reversing the Trial Court’s ruling and upholding the sale.
The First DCA opined that even if there was a procedural deficiency in the sale, the unsuccessful bidder did not have standing to challenge it. Following the Fourth District Court of Appeals decision in Heilman v. Suburban Coastal Corp, 506 So.2d 1088 (Fla. 4th DCA 1987) , the First DCA stated that a bidder in a foreclosures sale, who is not a party to the foreclosure proceeding, generally only has standing to challenge the validity of a particular bid. In that instance the bidder’s objection is limited to whether the challenged bid exceeds his own and whether payment in accordance with the successful bid is forthcoming. Since the unsuccessful bidder’s challenge was not based on either of these issues, he was deemed to lack standing to challenge the sale and the order of the trial court vacating the sale was reversed with orders for it to be upheld.

Walter Thomas Jagodinski and Wife Donna Sue Sessoms v. Washinton Mutual Bank, et al; Case No.: 1D10-2746

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Cell Phone searches now open game in California

Another interesting and somewhat controversial ruling was recently released by the California Supreme Court, which is inconsistent with similar rulings from other US jurisdictions. The article is linked below. The substance of the ruling was that no warrant was necessary to search an individual’s cell phone following arrest.

California Cell Phone Search

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Jury Verdict Stands in Mayport Real Estate Litigation

A Jacksonville jury initially delivered a verdict in favor of the Plaintiff in this real estate deal gone-awry litigation involving claims of negligent and fraudulent misrepresentations. The jury found that the Seller (defendant) of the Mayport commercial property failed to properly disclose to the buyer (Plaintiff) that a large portion of the property in question (176 x 18 feet) was the subject of a pending boundary dispute with the seller’s neighbor. The jury found that the buyer reasonably relied on the seller’s representations that the neighbor’s claims on the disputed area were completely bogus, despite the fact that the buyer completed its own independent investigation and survey of the property prior to closing. Apparently, the buyer’s survey had failed to reveal the disputed property lines. The buyer did not confirm the veracity of the seller’s neighbor’s claims until after closing and the actual boundaries of the property rendered it wholly unsuitable for the buyer’s business.
Despite the jury verdict in favor of the buyer, the Trial Court entered a judgment in favor of the seller. The Trial Court was persuaded to follow case law from other jurisdictions suggesting that the buyer did not legally rely on the seller’s representations regarding the property boundaries since he had conducted his own independent investigation prior to closing (i.e., the survey). On appeal, the First DCA declined to follow this line of reasoning and remanded with instructions to enter judgment consistent with the jury verdict. The Appellate Court found that the Buyer did in fact receive false information from the seller regarding the actual boundaries and that the seller should not be absolved from liability because the buyer’s reasonable investigation of the property did not discover the misrepresentation.

Specialty Marine & Industrial Supplies, Inc. v. Bahram Venus, et al.

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Nassau Class Action Survives Certification Appeal

The First District Court of Appeal just released its opinion affirming a Nassau County Trial Court’s granting of class certification in two separate separate Jacksonville real estate litigation matters involving the same issue: whether a title insurance underwriters have a duty under Florida law to disclose to prospective homeowners applying for refinancing of existing home mortgages, that they may qualify for discount title insurance rates; known as “reissue rates.”
Under Florida Law (i.e., Fla. Stat. s 627.7825(2) & Fla. Admin. Code r. 69O-186.003(2), if a “previous owner’s policy was issued insuring the seller or the mortgagor in the current transaction” the discounted reissue rate should be applied to the “mortgage policies issued on refinancing of the property insured” by the original policy. In other words, a homeowner who currently holds a bona fide and valid title insurance policy is entitled to a discounted rate on the reissuing of a title policy during a refinance.
The homeowners in these two cases brought civil actions against their respect title insurance companies for failing to advise them of their potential eligibility for the discounted reissue rate. The group of homeowners, finding themselves to be similarly situation and sharing the same substantive issue, petitioned the Nassau County Trial Court to grant them class action certification so that the case could be tried together, which the Trial Court was inclined to grant.
On Appeal, the title insurance companies argument that the homeowners should be denied class certification because the factual circumstances surrounding each individual homeowner’s claim was unique and should therefore be tried separately, was not well received by the First DCA.
In affirming the class certification in favor of the homeowners, the First DCA held that the common question linking the homeowners; whether to duty to determine if the reissue rate applied falls solely on the title insurance companies, required resolution prior to delving into the individual practices of each title insurance agents and the circumstances of each transaction.

Commonwealth Land Title Insurance company v. Kenneth E. Higgins, et al

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Strict Scrutiny on Award of Attorneys’ Fees

In litigation matters involving multiple claims, parties and courts have often struggled with the issues of who is the real prevailing party? who is entitled to an award of attorneys fees? and for how much? Generally speaking, in Florida, each party to a civil litigation matter is responsible for paying their own attorneys’ fees and costs, unless the basis of the claim involves a contractual provision or specific Florida Statute that expressly allows the prevailing party to recover attorneys’ fees as part of the award.
The Fifth District Court of Appeals in Daytona Beach, Florida, was recently challenged with the issue of determining the sufficiency and fairness of a trial court’s award of attorneys’ fees and costs to successful plaintiffs in an action for unpaid overtime wages under the Fair Labor Standards Act.
In Dr. Gail Van Diepen, P.A. v. Pamela Brown and Karen Romagosa, the plaintiffs sued their former employer for unpaid overtime wages, wrongful discharge, breach of contract, fraud, fraud in the inducement, retaliatory discharge, and negligent misrepresentation. Romagosa and Brown were successful only in their claim for unpaid overtime wages. However, the action for unpaid overtime wages, by Statute, allowed for the prevailing party to recover its attorneys’ fees and costs.
The Fifth DCA initially remanded to the trial court with instructions to award plaintiffs’ only those attorneys’ fees that could be proven to be directly attributable to the claim for unpaid wages and to exclude any fees incurred for time spent prosecuting the unsuccessful claims.
Plaintiffs’ counsel argued that the time spent on litigating the unpaid overtime claims was so intertwined with the unsuccessful claims that they could not be accurately separated, and that they should therefore be entitled to an award of all attorneys’ fees incurred in prosecuting the entire case. Following this argument, the trial court once again returned an unsegregated award of attorneys’ fees for the plaintiffs.
The Fifth DCA determined that the burden was on the Plaintiffs and their counsel to keep accurate and detailed billing records which clearly and unambiguously delineate which claims the time entries relate to. Plaintiff’s failure to do so resulted in the complete denial of an award of any attorneys’ fees.

Dr. Gail Van Diepen, P.A. v. Pamela Brown and Karen Romagosa

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Dept of Agriculture ordered to answer to Exxon Mobile?

In 1992, the Florida Congress enacted Florida Statute 501.160, to prevent businesses from attempting to gouge consumers during the aftermath of natural disasters by arbitrarily raising prices on commodities and consumer products. The law specifically prohibits “dramatic increases in the prices of certain essential commodities” during “certain periods of disaster.” An obvious example that many Florida residents have experienced is price gouging of gasoline prices after hurricanes. An exception to this rule is that businesses may increase product prices which are directly attributable to additional costs or “national or international market trends.”
Exxon Mobile recently petitioned the State of Florida, Department of Agriculture for a declaratory opinion as to whether its policy of relying on the Gulf Coast Regional Platts index as the pricing indicator for its contracts would qualify as a “national or international market trend” since the Platts Index is limited geographically to the Gulf Coast region of the United States.
Initially, the Department of Agriculture refused to respond due to the fact that the answer could affect up to 15 similarly situated businesses also using the index.
However, The First District Court of Appeals in Tallahassee recently released its opinion ordering the Department to answer Exxon’s question.

ExxonMobil Oil, Corp v. State of Florida, Department of Agriculture and Consumer Services

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New weapon against drunk drivers

In a growing number of counties in Florida, just in time for this coming new year’s eve, motorists may be subjected to a new and rapidly growing DUI deterrent described as “No Refusal Checkpoints.”

No Refusal Checkpoints work like the normal DUI checkpoints that are currently used throughout the state. However, the main difference for the “no refusal” is that if a motorists decides to refuse to take a breathalyzer test at a sobriety checkpoint, there will actually be a local Judge on-site that may sign a warrant forcing the motorist to submit to testing. Depending on the circumstances the warrant could require breathalyzer testing or blood sampling.

The goal behind these No Refusal Checkpoints is to detour those accused of DUI to refuse to take the breathalyzer test in hopes that charge would be dismissed or otherwise reduced for lack of evidence.

Critics question whether these potential “on-the-spot warrants” violate an individuals Fourth Amendment which protects against governmental intrusion an individual’s personal life. The issue being whether the refusal to submit to breathalyzer or blood test alone, with no other evidence of intoxication, provides the necessary probable cause for a judge to issue the requisite warrant.

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Right of First Offer Upheld

A right of first offer (also known as a right of first negotiation) is a right created by contract that provides one party with the benefit of being the first party to present an offer to purchase real estate. The seller of real property under a right of first offer has a legal duty to entertain exclusive and reasonable negotiations with the rights holder prior to conducting negotiations with any third parties.
The First District Court recently upheld a corporation’s right of first offer relating to Jacksonville Real Estate. In Smurfit-Stone Container Enterprises, Inc. v. Zion Jacksonville Limited Partnership,et al, the Plaintiff (appellant) Smurfit-Stone sued to have the Duval County Circuit Court declare their right of first offer relating to Jacksonville real estate valid and enforceable and to compel the purchaser of the subject real estate, the City of Jacksonville, to honor the right of first offer by allowing Smurfit-Stone to bid on the property.
The First District Court of Appeal in Tallahassee declined to follow the Trial Court’s determination that the right of first refusal amounted to an unreasonable restraint on the alienabilty of the subject property because the right was unlimited in duration, did not state the express reason for creation, and did not provide for charitable conveyance.
In reversing the Trial Court’s Summary Judgment, The First DCA held that right of first offer did not unreasonably effect the marketability of the subject property, and therefore was not invalid as a matter of law.

Smurfit-Stone Container Enterprises, Inc. v. Zion Jacksonville Limited Partnership,et al

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