Gartner v. Reverse Mortg. Solutions, Inc.

• Decision Date: 30 June 2021
• Docket Number: No. 1D20-772,1D20-772
• Citation: 322 So.3d 751
• Parties: John GARTNER Jr., Appellant, v. REVERSE MORTGAGE SOLUTIONS, INC., Appellee.
• Court: Florida District Court of Appeals

322 So.3d 751

John GARTNER Jr., Appellant,

v.REVERSE MORTGAGE SOLUTIONS, INC., Appellee.

No. 1D20-772

District Court of Appeal of Florida, First District.

June 30, 2021

Douglas L. Smith and Gregory J. Philo of Burke Blue, P.A., Panama City, for Appellant.

Terrance W. Anderson of Nelson Mullins, Boca Raton, for Appellee.

Jay, J.

This is an appeal from a final order denying Appellant John Gartner Jr.’s motion for an award of attorney's fees incurred from his defense of an underlying foreclosure action. While this appeal was pending, the Florida Supreme Court rendered its decision in Ham v. Portfolio Recovery Associates, LLC , 308 So. 3d 942 (Fla. 2020). We conclude that Ham decisively resolves the issue presented in the instant appeal and, accordingly, we reverse.

I.

In November 2012, Gartner executed a promissory note and reverse mortgage on his home through One Reverse Mortgage, LLC. Pursuant to the terms of the note and mortgage, the loan was a "non-recourse" loan, meaning Gartner would not bear any personal liability upon default on the note. Instead, the lender could only enforce the debt through the sale of the property. Attached to the promissory note was an allonge specifying that the note, "WITHOUT RECOURSE," was payable to Appellee Reverse Mortgage Solutions, Inc. ("Reverse Mortgage").

Both the promissory note and the mortgage contained unilateral provisions for the payment of costs and attorney's fees to the lender. For instance, the note specified that if the lender "required immediate payment-in-full," the debt, as enforced through the sale of the property, "may include costs and expenses including reasonable and customary attorney's fees for enforcing" the note. Likewise, the mortgage provided that should the lender foreclose on the property, it "shall be entitled to collect all expenses incurred ... including, but not limited to, reasonable attorneys’ fees and costs of title evidence."

On May 1, 2017, Reverse Mortgage filed a foreclosure complaint against Gartner alleging that it was accelerating his debt because he had failed to pay insurance as required by the mortgage. It demanded immediate payment in full and asserted that it was "entitled to recover its attorneys’ fees pursuant to the express terms of the note and mortgage." Gartner failed to file an answer, and Reverse Mortgage obtained a clerk's default. Reverse Mortgage submitted a proposed In Rem Final Judgment of Foreclosure, which included a $2150 award of attorney's fees. Following a non-jury trial, the court entered final judgment in favor of Reverse Mortgage, but struck the proposed fee award for lack of supportive proof. The final judgment was recorded in the public records, and Reverse Mortgage filed proof of publication of the Notice of Foreclosure Sale in the local newspaper.

Thereafter, Reverse Mortgage purchased Gartner's property at the foreclosure sale and later filed a Motion to Grant Writ of Possession for [Gartner's] Failure to Vacate the Premises. The trial court granted the motion and entered a Writ of Possession, commanding the sheriff to remove all persons from the property. The next day, Gartner submitted a pro se handwritten letter to the court requesting a stay and asserting that he at no time knew there was a foreclosure on his property. The trial court construed Gartner's letter as a "motion to stay writ of possession" and entered an "Order Staying Writ of Possession and Notice of Hearing."

Once Gartner obtained counsel, he filed a motion to set aside the foreclosure final judgment and foreclosure sale, asserting that Reverse Mortgage had not properly served him with its foreclosure complaint. He maintained he had a meritorious defense—that he had in fact paid the insurance at issue. He also requested an award of attorney's fees and costs.

Reverse Mortgage responded by claiming it had properly served Gartner and that he failed to provide any proof that he had paid the subject insurance. The trial court ultimately ruled against Reverse Mortgage and on May 9, 2018, entered an Order Granting Motion to Set Aside Foreclosure Final Judgment and Foreclosure Sale. It did not, however, address Gartner's request for attorney's fees and costs.

Thereafter, in June, Gartner served his answer and affirmative defenses, again asserting that he had paid the insurance at issue, and, again, requesting that the trial court "award attorney's fees (including a multiplier) to [him] pursuant to the terms of the loan documents and Florida Statutes Section 57.105 (regarding the reciprocal right to contractual attorney's fees)."

Reverse Mortgage filed a Reply and/or Motion to Strike [Gartner's] Affirmative Defenses, which the trial court denied on September 17, 2018. Discovery, an unsuccessful mediation, and incidental filings ensued for almost another year as the case wound its way toward a hearing scheduled for September 4, 2019. Just one week prior to the hearing, however, on August 28, 2019, Reverse Mortgage filed a Notice of Voluntary Dismissal of its Foreclosure Complaint asserting that it was "due to a settlement in th[e] matter."

Gartner subsequently filed a Motion for an Award of Attorney's Fees. He asserted that he was entitled to an award of fees and taxable costs from Reverse Mortgage based on the fees and costs provisions in the loan documents, and on section 57.105, Florida Statutes, as earlier pleaded in his answer and affirmative defenses.

In its response in opposition to Gartner's motion, Reverse Mortgage nowhere cited, discussed, or otherwise acknowledged the above-quoted attorney's fees provisions in the note and mortgage. Instead, it focused only on the non-recourse provisions of those documents. For instance, paragraph 4(C) of the note provides that Gartner "shall have no personal liability for payment of this Note." Reverse Mortgage was limited to "enforc[ing] the debt only through sale of the Property covered by the Security Instrument[.]" The mortgage contained a similar provision. Reverse Mortgage asserted that since it could not recover "any monies" from Gartner in this or in any future action under the note and mortgage—its only relief being "in rem" against the property—Gartner, likewise, should "not be entitled to recover any monies from [Reverse Mortgage]" including attorney's fees. In support of this proposition, Reverse Mortgage relied on the Third District's memorandum opinion in Suchman Corporate Park, Inc. v. Greenstein , 600 So. 2d 532 (Fla. 3d DCA 1992).

In Suchman , the Third District reversed a summary judgment entered in favor of the defendant/mortgagees. It also reversed the award of attorney's fees to the mortgagees, not only because of the reversal of the summary judgment, but also because the underlying note and mortgage—which provided for the fee award—specifically stated that the obligations thereunder were "without recourse" against the individual plaintiffs/mortgagors who had " ‘no personal liability’ under either instrument." Id. at 533. Instead, any eventual award of fees to the mortgagees would be "limited to an increase in the principal amount of any judgment of foreclosure." Id. More to the point, the Third District also ruled that

because the mortgagors [were] not individually liable for fees, even if they [won], they are themselves unable to recover fees, as they claim, under [then numbered] 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 ...").

Id. (emphasis in original).

Here, following a hearing on the matter, the trial court entered its Order Denying Motion for an Award of Attorney's Fees. After reciting the provisions of section 57.105(7), Florida Statutes (2018), the trial court ruled:

Pertinent to the underlying matter are also the provisions of the loan agreement, according to which the Borrower [ ] had no personal liability for payment of the debt secured by the Security Instrument. The Note also provides that the Lender [ ] could enforce the debt only through the sale of the property and was not permitted to obtain a deficiency judgment against the Borrower if the Security Instrument was foreclosed. See ¶ 4(C), Note.

Undeniably, the statute "allows for reciprocity of unilateral prevailing party attorney's fees contractual provisions." Shirley's Pers. Care Servs. of Okeechobee, Inc. v. Boswell , 165 So. 3d 824, 827 (Fla. 4th DCA 2015). However, "[t]his reciprocity is limited to the specific terms of the attorney's fees provision in a contract." Escambia Cty. v. U.I.L. Family Ltd. P'ship , 977 So. 2d 716, 717 (Fla. 1st DCA 2008).

Accordingly, although it is undisputed that the loan agreement provides for the recovery of an award of attorney's fees in the event of Plaintiff's success in a foreclosure action, any potential award of fees to the Plaintiff would be limited to an increase in the principal amount of any judgment of foreclosure. If 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(7). Suchman Corp. Park, Inc. v. Greenstein , 600 So. 2d 532, 533 (Fla. 3d DCA 1992).

In opposition, the Defendant argues that Plaintiff's assessment ignores the fact that if there is equity in the property, any surplus funds to which the Defendant would be otherwise entitled would be reduced by the amount of attorney's fees awarded to the Plaintiff. While this argument is persuasive, this Court is bound to follow the decisions of district courts of appeal that are on point. SeeDawkins, Inc. v. Huff , 836 So. 2d 1062, 1064 (Fla. 5th DCA 2003).

The trial court was not incorrect in deferring to the Third District's decision in Suchman . Understandably, the court may have perceived it was dealing with a novel issue on attorney's fees—we only surmise this, since a transcript of...