Ham v. Portfolio Recovery Assocs., LLC

• Court: Florida Supreme Court
• Writing for the Court: CANADY, C.J.
• Citation: Ham v. Portfolio Recovery Assocs., LLC, 308 So. 3d 942 (Fla. 2020)
• Decision Date: 31 December 2020
• Docket Number: No. SC18-2142,No. SC18-2143,SC18-2142,SC18-2143
• Parties: Eugene HAM III, Petitioner, v. PORTFOLIO RECOVERY ASSOCIATES, LLC, Respondent. Laura Foxhall, Petitioner, v. Portfolio Recovery Associates, LLC, Respondent.

308 So.3d 942

Eugene HAM III, Petitioner,

v.PORTFOLIO RECOVERY ASSOCIATES, LLC, Respondent.

Laura Foxhall, Petitioner,

v.Portfolio Recovery Associates, LLC, Respondent.

No. SC18-2142

No. SC18-2143

Supreme Court of Florida.

December 31, 2020

Robert N. Heath, Jr. of Robert N. Heath, P.A., Pensacola, Florida; and Louis K. Rosenbloum of Louis K. Rosenbloum, P.A., Pensacola, Florida, for Petitioners

Diane G. DeWolf, Katherine E. Giddings, and Nancy M. Wallace of Akerman LLP, Tallahassee, Florida, for Respondent

Janet R. Varnell of Varnell & Warwick, P.A., Lady Lake, Florida; Lynn Drysdale of Jacksonville Area Legal Aid, Inc., Jacksonville, Florida; Craig E. Rothburd of Craig Rothburd, P.A., Tampa, Florida; and Arthur Rubin of We Protect Consumers, P.A., Tampa, Florida, for Amicus Curiae The National Association of Consumer Advocates

Ronald S. Canter of The Law Offices of Ronald S. Canter, LLC, Boca Raton, Florida, for Amici Curiae National Creditors Bar and Association and Florida Creditors Bar Association

Hector E. Lora of Maurice Wutscher LLP, Fort Lauderdale, Florida, for Amicus Curiae Receivables Management Association International, Inc.

CANADY, C.J.

In these consolidated cases, we consider whether a unilateral attorney's fee provision in a credit card contract is made reciprocal to a debtor under section 57.105(7), Florida Statutes (2015), when the debtor prevails in an account stated action brought to collect unpaid credit card debt. We have for review the decision of the First District Court of Appeal in Ham v. Portfolio Recovery Associates, LLC , 260 So. 3d 450 (Fla. 1st DCA 2018), which certified conflict with the decision of the Second District Court of Appeal in Bushnell v. Portfolio Recovery Associates, LLC , 255 So. 3d 473 (Fla. 2d DCA 2018). We have jurisdiction. See art. V, § 3(b)(4), Fla. Const.

In Ham , the First District ruled that section 57.105(7) was inapplicable because the actions for account stated did not rely on the credit card contracts containing the fee provisions. Ham , 260 So. 3d at 455. Accordingly, the district court held that the debtors could not recover attorney's fees. Id. In contrast, the Second District in Bushnell held that the debtor was entitled to attorney's fees under section 57.105(7), reasoning that the account stated claim and the underlying credit card contract were inextricably intertwined. See Bushnell , 255 So. 3d at 477-78.

Based on our analysis of the text of the statute, we conclude that section 57.105(7) allows the debtors to recover reciprocal attorney's fees. Under section 57.105(7) ’s rule of reciprocity, if a contract provides for attorney's fees for a party when that party "is required to take any action to enforce the contract," then attorney's fees are authorized for the other party if "that party prevails in any action ... with respect to the contract." Here, the fees were authorized for the debtors because both conditions required by the statute were met. We approve the result in Bushnell and quash Ham .

BACKGROUND

After purchasing certain consumer debts from GE Capital Retail Bank (the Bank), Portfolio—as assignee of the Bank—filed separate actions against Eugene Ham III and Laura Foxhall (the debtors) in Escambia County Court. Ham , 260 So. 3d at 452. "In each case, Portfolio filed a one-count complaint for common law account stated to collect the balance allegedly owed on a credit card account originating with the Bank." Id. Portfolio claimed "that each debtor had a revolving credit card account with the Bank," and "used the account to make purchases [or] cash advances resulting in an unpaid balance." Id. Portfolio further alleged that "the Bank provided monthly credit card account statements to [each] debtor for the amounts due," and neither debtor "object[ed] to the account statement[s]." Id. Portfolio sought to recover $819.74 from Ham and $3,934.69 from Foxhall. Id. at 452 n.1. "Portfolio did not reference or attach the credit contracts to the complaints, but instead attached monthly billing statements." Id. at 455.

The debtors filed answers denying the substantive allegations in the complaints and raising affirmative defenses. Id. at 452. The debtors also requested attorney's fees based on the underlying credit card contracts, which authorized the Bank to recover costs and fees if required to hire an attorney to collect the account, and section 57.105(7), which makes provision for reciprocal prevailing party fees in certain circumstances if there is a unilateral contractual attorney's fee clause. Id. The attorney's fee provisions in the credit card contracts with both debtors provided for the recovery by the creditor of "collection costs," "including court costs and reasonable attorney's fees" if the creditor used the services of an attorney who was not the creditor's salaried employee for "collect[ing]" the debtor's account.

Both cases proceeded to trial, at which the county court determined "that Portfolio failed to offer any admissible evidence to support the complaints." Id. Accordingly, "the court entered final judgments in favor of the debtors and reserved jurisdiction to address attorney's fees and costs." Id.

The debtors next filed motions for attorney's fees, again claiming that the unilateral fee provisions in the credit card contracts were made reciprocal to them under section 57.105(7). Id. Portfolio opposed the motion for fees, arguing in part that because the complaints were based on account stated rather than breach of contract, the contractual fee provisions were not applicable. Id. at 452-53. The court found in favor of the debtors. Id. at 453. After the court entered its orders granting attorney's fees and costs to the debtors, however, "Portfolio moved for a new trial with respect to the debtors’ entitlement to attorney's fees based on an intervening appellate decision from the" First Judicial Circuit Court for Escambia County: Portfolio Recovery Associates, LLC v. Grunewald , No. 172016AP000024XXXXXX (Fla. 1st Cir. Ct. Apr. 21, 2017). Ham , 260 So. 3d at 453. There, the First Circuit concluded "that section 57.105(7) does not apply in a case in which a creditor proceeds under an account stated cause of action independent of any written credit card agreement the creditor has with a debtor." Id. (citing Grunewald , No. 172016AP000024XXXXXX, at *3-*4). Recognizing Grunewald as binding precedent, the county court granted Portfolio's motions and reversed its prior judgments. Id.

On appeal, the First District consolidated the cases and affirmed. Id. at 452. The district court acknowledged that Portfolio chose to file an account stated claim, which "is based on ‘the agreement of the parties to pay the amount due upon the accounting, and not any written instrument.’ " Id. at 454 (quoting Farley v. Chase Bank, U.S.A. , 37 So. 3d 936, 937 (Fla. 4th DCA 2010) ). Therefore, "[b]ecause the action framed by Portfolio in these cases did not rely on the credit contracts containing the unilateral fee provision," the First District "conclude[d] that the debtors [were] not entitled to reciprocal fees under section 57.105(7) by virtue of those contracts." Id. at 455.

In support of this conclusion, the First District observed that a contrary conclusion "would undermine Portfolio's ability to choose its cause of action." Id. The court stated that Portfolio's choice of an account stated cause of action meant that "had Portfolio prevailed at the trial level, it would not have been entitled to fees under the credit contracts either." Id.

The court further explained that it had "not overlooked the debtors’ argument that" Portfolio's claims were actions "with respect to the contract"—as required under section 57.105(7) —because "the credit contracts [were] inextricably intertwined with the account stated claims." Id. The First District noted that the debtors primarily relied on Caufield v. Cantele , 837 So. 2d 371 (Fla. 2002), in support of their argument. Ham , 260 So. 3d at 455. There, this Court held that the prevailing party in a fraudulent misrepresentation suit was entitled to attorney's fees under a contractual provision awarding fees to the party that succeeded in any litigation "arising out of" the contract. Caufield , 837 So. 2d at 379. The Court concluded that the "misrepresentation would not have occurred" if not for the contract; thus, the two were "inextricably intertwined such that the tort" claim arose out of the contract. Id.

But the First District distinguished Caufield . Ham , 260 So. 3d at 455. The district court explained that "[t]he tort claim in Caufield required proving the existence and the breach of the contract," while "[a]n account stated claim ... requires no evidence of breach of the contract, and can exist in the absence of any contract at all." Id.

Instead, the district court found the facts more analogous to those in Tylinski v. Klein Automotive, Inc. , 90 So. 3d 870 (Fla. 3d DCA 2012). Ham , 260 So. 3d at 455. In Tylinski , a car dealership and buyers entered into two contracts related to the sale of a vehicle: a financing agreement, which contained an attorney's fee provision, and a sales contract, which did not. Tylinski , 90 So. 3d at 871-72. The car dealership subsequently sued the buyers for breach of the sales contract. Id. at 872. The buyers prevailed, but the Third District held that they were not entitled to fees under the provision in the financing agreement and section 57.105(7). Id. at 872-73. Though the buyers argued "that both contracts were relevant because the sale would not have existed but for the financing," Ham , 260 So. 3d at 456 (citing Tylinski , 90 So. 3d at 872 ), the Third District noted that "the dealership sought recovery under the" sales contract instead of the financing agreement, Tylinski , 90 So. 3d at 872. As a consequence, the Third District explained, "there [was] no contractual avenue for recovering attorney's fees." Id.

The First District concluded that "[t]he same reasoning applie[d]" to the case...