Our contract gives only us the right to fees if we have to enforce it. Can the other side recover fees from us in Florida?
Yes. Fla. Stat. § 57.105(7) makes a one-way contractual fee provision reciprocal by operation of law: if a contract allows attorney's fees to a party when that party is required to take any action to enforce the contract, the court may also allow reasonable fees to the other party when that party prevails in any action, whether as plaintiff or defendant, with respect to the contract. It applies to any contract entered into on or after October 1, 1988. The Florida Supreme Court reads the provision as two conditions (a fee clause triggered by enforcement, and a party prevailing in an action with respect to the contract), and not as a requirement that the winning claim itself be brought on the contract.
The trap
The reciprocity cannot be drafted around by pleading around the contract. In Ham the creditor sued on an account stated rather than on the credit card agreements, and argued that because the complaints were based on account stated rather than breach of contract, the contractual fee provisions were not applicable; the Court still allowed the debtors reciprocal fees because the action was one 'with respect to the contract'. A Florida unilateral fee clause is therefore a two-way clause you wrote for your opponent, and the exposure runs to any prevailing party, plaintiff or defendant. Note this is § 57.105(7), a different rule from the sanctions provision in § 57.105(1)-(4) that shares the section number: (1) splits a fee award between the losing party and its attorney for a claim or defence unsupported by the material facts or by then-existing law, (2) awards expenses for action taken primarily to cause unreasonable delay, (3) carries four exceptions including a good-faith argument to extend or reverse existing law, and (4) requires a sanctions motion to be served and withheld from the court for 21 days so the offending paper can be withdrawn.
10 authorities
- statuteFla. Stat. § 57.105enactment date not established
The words that state the rule
(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 subsection applies to any contract entered into on or after October 1, 1988.
- caseNo. SC18-2142 (Fla. Dec. 31, 2020)Ham v. Portfolio Recovery Associates, LLCFla.decided 2020-12-31
The words that state the rule
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.
- caseNo. SC18-2142 (Fla. Dec. 31, 2020)Ham v. Portfolio Recovery Associates, LLCFla.decided 2020-12-31
The words that state the rule
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.”
- statuteFla. Stat. § 57.105enactment date not established
The words that state the rule
(1) Upon the court’s initiative or motion of any party, the court shall award a reasonable attorney’s fee, including prejudgment interest, to be paid to the prevailing party in equal amounts by the losing party and the losing party’s attorney on any claim or defense at any time during a civil proceeding or action in which the court finds that the losing party or the losing party’s attorney knew or should have known that a claim or defense when initially presented to the court or at any time before trial:(a) Was not supported by the material facts necessary to establish the claim or defense; or (b) Would not be supported by the application of then-existing law to those material facts.
- caseNo. SC18-2142 (Fla. Dec. 31, 2020)Ham v. Portfolio Recovery Associates, LLCFla.decided 2020-12-31
The words that state the rule
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.
- caseNo. SC18-2142 (Fla. Dec. 31, 2020)Ham v. Portfolio Recovery Associates, LLCFla.decided 2020-12-31
The words that state the rule
Here, the fees were authorized for the -2- debtors because both conditions required by the statute were met. We approve the result in Bushnell and quash Ham.
- caseNo. SC18-2142 (Fla. Dec. 31, 2020)Ham v. Portfolio Recovery Associates, LLCFla.decided 2020-12-31
The words that state the rule
The “enforce the contract” language describes what is required of the contractual provision—not of the claim raised by the plaintiff. That portion of the statute is anchored by the phrase “[i]f a contract contains a provision.” It presents a question that can be answered simply by reviewing the provisions of the contract. The “with respect to the contract” language, however, presents a question that requires considering the claims actually litigated and determining the existence of the required relationship between the contract and the litigation in which the other party prevails.
- caseNo. SC18-2142 (Fla. Dec. 31, 2020)Ham v. Portfolio Recovery Associates, LLCFla.decided 2020-12-31
The words that state the rule
Although the account stated claims brought by Portfolio perhaps could not fairly be said to be claims brought “based on,” “under,” or “pursuant to” the credit contracts, there is nonetheless a clear and direct relationship between the credit contracts and the account stated claims.
- caseNo. SC18-2142 (Fla. Dec. 31, 2020)Ham v. Portfolio Recovery Associates, LLCFla.decided 2020-12-31
The words that state the rule
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.
- statuteFla. Stat. § 57.105enactment date not established
The words that state the rule
(2) At any time in any civil proceeding or action in which the moving party proves by a preponderance of the evidence that any action taken by the opposing party, including, but not limited to, the filing of any pleading or part thereof, the assertion of or response to any discovery demand, the assertion of any claim or defense, or the response to any request by any other party, was taken primarily for the purpose of unreasonable delay, the court shall award damages to the moving party for its reasonable expenses incurred in obtaining the order, which may include attorney’s fees, and other loss resulting from the improper delay. (3) Notwithstanding subsections (1) and (2), monetary sanctions may not be awarded:(a) Under paragraph (1)(b) if the court determines that the claim or defense was initially presented to the court as a good faith argument for the extension, modification, or reversal of existing law or the establishment of new law, as it applied to the material facts, with a reasonable expectation of success. (b) Under paragraph (1)(a) or paragraph (1)(b) against the losing party’s attorney if he or she has acted in good faith, based on the representations of his or her client as to the existence of those material facts. (c) Under paragraph (1)(b) against a represented party. (d) On the court’s initiative under subsections (1) and (2) unless sanctions are awarded before a voluntary dismissal or settlement of the claims made by or against the party that is, or whose attorneys are, to be sanctioned. (4) A motion by a party seeking sanctions under this section must be served but may not be filed with or presented to the court unless, within 21 days after service of the motion, the challenged paper, claim, defense, contention, allegation, or denial is not withdrawn or appropriately corrected.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.