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On July 12, 2017, Locke Lord was successful in obtaining an order in a Florida trial court denying a borrower’s request for an award of attorneys’ fees following a successful argument that the plaintiff lacked standing to foreclose. The trial court, located in Florida’s Second District, held that a party that prevails on a lack of standing argument cannot recover fees based on a provision in that same contract. The decision is significant because prior to the order no court in Florida’s Second District had denied an award of attorneys’ fees under these circumstances. Assuming that the Second District affirms the order on appeal, the Second District will join Florida’s Third, Fourth and Fifth District Courts of Appeal and the issue will gain further momentum in favor of lenders and servicers. See, Nationstar Mortg. LLC v. Glass, No. 4D15-4561, 2017 WL 2664696, (Fla. 4th DCA, June 21, 2017)(en banc); Bank of N.Y. Mellon Trust Co., N.A. v. Fitzgerald, 215 So. 3d 116, 120 (Fla. 3rd DCA 2017); HFC Collection Ctr., Inc. v. Alexander, 190 So. 3d 1114 (Fla. 5th DCA 2016), review denied, No. SC16-963, 2016 WL 4429698 (Fla. Aug. 22, 2016). If the Second District reverses the decision, the Florida appellate courts will be split, creating an issue ripe for review by the Florida Supreme Court.
Borrowers successful in defending foreclosure cases will continue to seek opinions outside the Third, Fourth and Fifth District Courts of Appeal that conflict with the existing decisions that do not award attorneys’ fees when there is a lack of standing to foreclose. However, the order obtained by Locke Lord out of the Second District will make this endeavor much more difficult. Borrowers will also attempt to become more creative in their attempts to circumvent the existing line of cases barring attorneys’ fees by stipulating to standing at trial but not at case inception. Because the issue directly affects borrowers and their counsels’ ability to collect attorneys’ fees when prevailing on standing grounds – the most common defense to a foreclosure proceeding – this decision could deter similar defenses from being raised in pending and future foreclosure cases. Locke Lord’s Florida mortgage litigation team continues to achieve groundbreaking results for our mortgage industry clients.