Greenspoon Marder Consumer Finance Blog: Florida’s Fourth DCA Awards Borrowers’ Attorney’s Fees Despite Bank’s Claim of Lack of Standing Under the Loan Documents

Consumer Finance Blog May 29, 2019

By Murray B. Silverstein, Esq. & Jacob Boehner, Esq.

Florida’s Fourth District Court of Appeal ruled recently that two homeowners are entitled to their prevailing party attorney’s fees after JP Morgan’s voluntary dismissal of a foreclosure action even though the bank’s standing to enforce the assigned loan documents was never adjudicated. In Venezia v. JP Morgan Mortgage Acquisition Corp., JP Morgan foreclosed against the homeowners based on its holder status of the note, which was endorsed in blank. Though not a party to the original loan documents, the bank alleged it was entitled to its reasonable attorney’s fees under the terms of the note and mortgage. In defense, the homeowners asserted that JP Morgan lacked standing to enforce the loan documents and also asserted entitlement to their own reasonable attorney’s fees.

After JP Morgan voluntarily dismissed its case, without prejudice, the homeowners sought their fees under the reciprocating provision of section 57.105(7), Florida Statutes. JP Morgan opposed the homeowners’ motion, arguing that the homeowners failed to prove that it was a party to the loan documents. The trial court agreed and refused to award the homeowners their fees.

In reversing the trial court, the Fourth District entered its May 22, 2019 opinion, after granting rehearing and replacing its original February 6, 2019 opinion, and relied primarily on its earlier decision in Wells Fargo Bank, N.A. v. Elkind, 254 So. 3d 1153 (Fla. 4th DCA 2018), where the court held that a borrower who raised lack of standing as a defense was entitled to attorney’s fees as the prevailing party after the bank’s voluntary dismissal because standing was not litigated or determined in the trial court. The Court emphasized that JP Morgan alleged entitlement to enforce the loan documents and voluntarily dismissed the case prior to any determination by the trial court that the bank was or was not a party to the loan documents. Based on these facts, and buttressed by recent appellate decisions like Elkind, the Fourth District reversed the trial court and ruled that the homeowners were entitled to their reasonable attorney’s fees. Judge Ciklin, the lone dissenter from the majority opinion, indicated he would have affirmed the trial court because section 57.105, Florida Statutes, required the homeowners to provide proof of standing as a prerequisite to an award of reciprocal attorney’s fees.

In light of the majority’s decision in Venezia, foreclosing lenders must take care to ensure their ability to prove their case prior to filing suit. Otherwise, lenders may be responsible for an award of attorney’s fees following voluntary dismissal—even where borrowers have alleged lack of standing as a defense to foreclosure.

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Greenspoon Marder Consumer Finance Blog: Florida’s Fourth DCA Awards Borrowers’ Attorney’s Fees Despite Bank’s Claim of Lack of Standing Under the Loan Documents

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