Castellanos v. Reverse Mortg. Funding LLC

• Decision Date: 12 May 2021
• Docket Number: No. 3D20-472,3D20-472
• Citation: 320 So.3d 904
• Parties: Orquidea CASTELLANOS, Appellant, v. REVERSE MORTGAGE FUNDING LLC, Appellee.
• Court: Florida District Court of Appeals

320 So.3d 904

Orquidea CASTELLANOS, Appellant,

v.REVERSE MORTGAGE FUNDING LLC, Appellee.

No. 3D20-472

District Court of Appeal of Florida, Third District.

Opinion filed May 12, 2021

Reyes Law Group, and Adrian Reyes, Hialeah, and Dennis A. Donet, Miami, for appellant.

Greenspoon Marder, LLP, and Dariel Abrahamy (Boca Raton), for appellee.

Before EMAS, C.J., and FERNANDEZ and MILLER, JJ.

EMAS, C.J.

INTRODUCTION

Appellant Orquidea Castellanos—the borrower and defendant in this reverse mortgage foreclosure—appeals the trial court's order denying her motion for attorney's fees following her successful defense of the action below. The mortgage at issue contained a unilateral prevailing-party attorney's fee provision in favor of the lender and plaintiff below, Reverse Mortgage Funding, LLC ("the Lender"). The trial court denied Castellanos’ motion for attorney's fees, based on this court's 1992 decision in Suchman Corp. Park, Inc. v. Greenstein, 600 So. 2d 532, 533 (Fla. 3d DCA 1992). In Suchman we held that, because the underlying mortgage was based upon a nonrecourse loan, in which the borrower cannot be personally responsible for the lender's attorney's fees should the lender prevail in its action to foreclose the mortgage, the unilateral attorney's fees provision in the nonrecourse loan cannot be made reciprocal (and a prevailing borrower cannot be awarded attorney's fees) by application of section 57.105(7), Florida Statutes (2019).

We reverse the trial court's order denying Castellanos’ motion for attorney's fees. Further, to the extent Suchman holds that, as a matter of law, the reciprocity provision of section 57.105(7) cannot apply to authorize an award of attorney's fees to a prevailing borrower on an underlying nonrecourse loan, we determine such a holding has been implicitly overruled by the Florida Supreme Court's recent decision in Page v. Deutsche Bank Tr. Co. Ams., 308 So. 3d 953 (Fla. 2020) (holding that a unilateral attorney's fee provision in a note and mortgage was made reciprocal to a borrower under section 57.105(7) when the borrower prevailed in a foreclosure action on its standing defense).¹

Applying the analysis and rationale of Page to the instant case, we conclude that section 57.105(7) is applicable to the attorney's fee provision at issue here, and Castellanos is entitled to an award of attorney's fees as the prevailing party. We remand for the trial court to enter an order granting entitlement to fees under section 57.105(7) and for further proceedings.

FACTS AND ANALYSIS

The Lender filed its foreclosure complaint on May 30, 2019, alleging that the death of Castellanos’ husband triggered the Lender's entitlement to payment in full of the sums secured by the mortgage and foreclosure on the property secured by the reverse mortgage. Ultimately, the trial court granted summary judgment in favor of Castellanos based on this court's decisions in Smith v. Reverse Mortg. Sol., Inc., 200 So. 3d 221 (Fla. 3d DCA 2016) and OneWest Bank v. Palmero, 283 So. 3d 346, 355 (Fla. 3d DCA 2019) (en banc), review granted, SC19-1920 (May 20, 2020) (holding: "[A]s a matter of law, when the surviving spouse signed the mortgage as a borrower, as revealed by an examination of the mortgage itself, the spouse will be treated as a borrower for purposes of the mortgage.")²

During the proceedings below, the Lender asserted that, should it prevail in the action, it was entitled to attorney's fees under Paragraph 20 of the mortgage, which provides:

20. Foreclosure Procedure. If Lender requires immediate payment in full under Paragraph 9, Lender may foreclose this Security Instrument by Judicial Proceedings. Lender shall be entitled to collect all expenses incurred in pursuing the remedies provided in this Paragraph 20, including, but not limited to, reasonable attorneys’ fees and costs of title evidence.

Castellanos also asserted an entitlement to attorney's fees should she prevail in the action below. Her claim for attorney's fees was predicated on section 57.105(7) which provides:

If a 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, the court may also allow reasonable attorney's fees to the other party when that party prevails in any action, whether as plaintiff or defendant, with respect to the contract.

Section 57.105(7) "amends by statute all contracts with prevailing party fee provisions to make them reciprocal." Levy v. Levy, 307 So. 3d 71, 74 (Fla. 3d DCA 2020).

After prevailing in her defense of the foreclosure action, Castellanos moved for an award of attorney's fees. The Lender opposed the motion, contending that, because the Lender would not have been able to seek an award of attorney's fees against Castellanos had the Lender prevailed, Castellanos could not utilize section 57.105(7), to obtain an award of prevailing party attorney's fees against the Lender. Because the underlying loan was nonrecourse, Castellanos could never have been personally liable to the Lender for any award of attorney's fees to which Lender was entitled. Therefore (the Lender's argument goes) Castellanos is not entitled to reciprocity for an award of attorney's fees against the Lender. The trial court agreed and, relying upon our decision in Suchman, denied Castellanos’ motion for attorney's fees. This appeal followed.

Castellanos does not dispute that, by the terms of the mortgage, the loan at issue was nonrecourse, and Castellanos could not be held personally liable for payment of an attorney's fee award in favor of the Lender if the Lender had prevailed below.³ The dispute here centers on whether the nonrecourse nature of the underlying loan⁴ renders inapplicable the reciprocity provision of section 57.105(7). In answering that question, we must necessarily determine whether aspects of our prior opinion in Suchman remain viable in light of recent Florida Supreme Court decisions.⁵

In Suchman, 600 So. 2d at 533, we 1) reversed a summary final judgment in a mortgage foreclosure action; 2) reversed the trial court's order awarding attorney's fees; and 3) denied both parties’ motions for entitlement to appellate attorney's fees. As to our ruling on attorney's fees, we held:

[T]he order awarding attorney's fees to the appellees is likewise reversed, not only because of our previous rulings, but also because the underlying note and mortgage , which provide for these fees in the event of the mortgagees' success, specifically state that these obligations are without recourse against the individual plaintiffs who have "no personal liability" under either instrument . See Heim v. Kirkland, 356 So.2d 850 (Fla. 4th DCA 1978). The effect of any eventual award of fees to the mortgagees must be limited to an increase in the principal amount of any judgment of foreclosure. Moreover, because the mortgagors are not individually liable for fees, even if they win, they are themselves unable to recover fees, as they claim, under section 57.105(2), Florida Statutes (1991) ("If a contract contains a provision allowing attorney's fees to a party when he is required to take any action to enforce the contract, the court may also allow reasonable attorney's fees to the other party when that party prevails in any action ...") [e.s.]. For these reasons, both sides' motions for attorney's fees on this appeal are denied.

Id. (Emphasis added.)⁶

Castellanos contends that the Suchman holding cannot survive the analysis undertaken by the Florida Supreme Court in its more recent decision in Page v. Deutsche Bank Tr. Co. Ams., 308 So. 3d 953 (Fla. 2020). We agree.

In Page, 308 So. 3d at 954, the Supreme Court considered "whether a unilateral attorney's fee provision in a note and mortgage is made reciprocal to a borrower under section 57.105(7), Florida Statutes (2019), when the borrower prevails in a foreclosure action in which the plaintiff bank established standing to enforce the note and mortgage at the time of trial but not at the time suit was filed."

While the strict holding of Page is not directly applicable here, the reasoning and analysis relied upon by the Court to reach its decision is both applicable and dispositive. Importantly, the Page Court relied primarily on the construction of the plain language of section 57.105(7) :

If a 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, the court may also allow reasonable attorney's fees to the other party when that party prevails in any action, whether as plaintiff or defendant, with respect to the contract.

This provision, the Court explained, creates two "statutory conditions" that must be met before an attorney's fee provision may be applied reciprocally: (1) the contract must "contain[ ] 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) "the other party must prevail[ ] in any action, whether as plaintiff or defendant, with respect to the contract." Id. at 959 (quotation omitted). Because it is undisputed that Castellanos, as the prevailing party in the foreclosure action, satisfied the second condition, we focus on the first condition—i.e., "what appears in the contract." Id. at 959.⁷

In analyzing the first statutory condition, the Page Court explained that a "failure of proof" of the bank's right to enforce the contract was "not an adjudication that no contractual relationship existed between the parties" or that "the contract was nonexistent." Id. (quotation omitted). Instead, the evidence showed a contractual relationship between the parties, and that the contract contained the requisite attorney's fee provision. The Court rejected the district court's reasoning that section 57.105(7) requires "contract enforceability by both parties on the day suit is filed" because it "erroneously added words to the statute that were not placed there by the Legislature."...