Opinion ID: 1823145
Heading Depth: 2
Heading Rank: 1

Heading: plain meaning of the statutes

Text: Section 320.27(10)(a), Florida Statutes, requires a motor vehicle dealer to post a surety bond or obtain an irrevocable letter of credit, in the amount of $25,000, as an annual prerequisite to being licensed in Florida. The amount of the bond or letter of credit has not increased for the last fifteen years. [9] The bond or letter of credit is issued in favor of any person in a retail or wholesale transaction who shall suffer any loss as a result of any violation of the conditions hereinabove contained. § 320.27(10)(b), Fla. Stat. (1999) (emphasis added). The phrase hereinabove contained refers to the following statutory language: Surety bonds and irrevocable letters of credit shall be ... conditioned that the motor vehicle dealer shall comply with the conditions of any written contract made by such dealer in connection with the sale or exchange of any motor vehicle and shall not violate any of the provisions of chapter 319 and this chapter [chapter 320] in the conduct of the business for which the dealer is licensed. Id. (emphasis added). The provisions of the surety bonds issued by Aetna in the cases here are those required by section 320.27(10)(b), and the bonds are substantively identical to each other. There is no substantive difference between the terms of this statutory bonding provision and those of section 320.77(11), which were considered, analyzed, and applied by the Marshall court. Section 501.2105(1), Florida Statutes, provides that the prevailing party in civil litigation resulting from a violation of the FDUTPA may recover reasonable attorney's fees and costs as elements of loss from the nonprevailing party in such litigation. Section 501.2105(4), Florida Statutes, provides, Any award of attorney's fees or costs shall become part of the judgment and subject to execution as the law allows. Based on the plain language of sections 320.27(10) and 501.2105, several matters are clear. First, before one may seek recovery under a surety bond or irrevocable letter of credit pursuant to section 320.27(10), a motor vehicle dealer must (1) violate the conditions of a written contract for the sale or exchange of a motor vehicle; or (2) violate any provision contained in chapters 319 or 320 of the Florida Statutes. Second, if the motor vehicle dealer violates a written contract or a statutory provision of chapters 319 or 320, the bond or letter of credit issued pursuant to section 320.27(10) shall cover any loss resulting therefrom. Finally, according to section 501.2105, the prevailing party on a claim under the FDUTPA may recover reasonable attorney's fees and costs as elements of loss from the nonprevailing party. [10] Based on these clear representations of legislative intent from the words utilized, as well as the particular facts of these cases, I conclude that the phrase any loss includes the elements of attorney's fees and costs as provided by statute and included as part of the judgment against a dealer. [11] In Hubbel's case and the Herberts' case, the motor vehicle dealers violated at least one of the conditions set forth in section 320.27(10) and, correspondingly, one of the provisions set forth in the surety bonds issued by Aetna became applicable. Specifically, as established by the trial court's entry of a judgment against the motor vehicle dealer in Hubbel's case, see, e.g., Ellish v. Richard, 622 So.2d 1154, 1155 (Fla. 4th DCA 1993) (recognizing that the party against whom a default judgment is entered admits all well-pleaded factual allegations as true), the dealer failed to refund a deposit to Hubbel in accordance with a written contract executed by the parties, which would constitute a breach of a written contract for the sale or exchange of a motor vehicle. In a similar manner, in the Herberts' case, the trial court specifically found that the dealer failed to comply with the conditions of a written contract for the sale or exchange of a motor vehicle. Tellingly, Aetna has not contested its underlying liability on the bonds issued to the dealers in the cases here, but instead has contested only its liability for the element of attorney's fees. Thus, it is clear that the motor vehicle dealers subject to the judgments violated at least one of the conditions set forth in section 320.27(10), and the bonds issued by Aetna became applicable. [12] Therefore, Aetna should now be required to respond for any loss suffered by Hubbel and the Herberts as a result of the dealers' misconduct. I conclude that, in these cases, the term any loss as utilized in the statute we are considering includes attorney's fees and costs awarded by the trial court in the judgments to both Hubbel and the Herberts because the Legislature has established such items as elements of recoverable loss under these factual circumstances. In Hubbel's case and the Herberts' case, the dealers' misconduct constituted not only a violation of a written contract, but also an unfair and deceptive trade practice as defined by Florida law in violation of the FDUTPA. In such circumstances, when a violation of one of the conditions contained in section 320.27(10) occurs and such conduct is egregious to the extent to be subject to the FDUTPA, and attorney's fees and costs are established as recoverable losses under that chapter, those fees and costs constitute part of any loss as defined by law and are recoverable by the beneficiary of the bond. The Legislature has established in the FDUTPA that attorney's fees and costs are items of recoverable loss to be included in the judgment when such violations occur. A Colorado court recently addressed a similar issue in Edmonds v. Western Surety Co., 962 P.2d 323 (Colo.Ct.App.1998), in which a consumer sued a motor vehicle dealer because the dealer had issued him a check for $10,400, which had been dishonored twice. See 962 P.2d at 325. The action against the dealer was based upon a statute which permitted recovery of damages for checks not paid upon presentment, and the statute allowed the prevailing party to recover attorney's fees and costs as elements of recoverable loss. See id. at 325, 328. The judgment obtained by the plaintiff against the dealer included attorney's fees and costs, and when the dealer did not satisfy the judgment, the plaintiff sought recovery from the surety company that had issued a $30,000 bond to the dealer under a statute similar to section 320.27(10). See id. at 325. Specifically, the statute stated that the bond was to provide for the reimbursement for `any loss or damage suffered by any retail consumer.' Id. at 328 (quoting section 12-6-111(2)(a), Colorado Revised Statutes (1997)). The trial court did not reach the issue concerning attorney's fees and costs, but the Edmonds court addressed the surety's claim that it was not liable for those elements of loss. See 962 P.2d at 327-28. In finding the surety responsible under the bond for the payment of those portions of the judgment for attorney's fees and costs, the court reasoned: As a general rule, in the absence of a statute, court rule, or private contract to the contrary, attorney fees are not recoverable by the prevailing party in either a contract or tort action. This reasoning is based on the American rule, which requires each party in a lawsuit to bear its own legal expenses. Bernhard v. Farmers Insurance Exchange, 915 P.2d 1285 (Colo.1996). Section 13-21-109, C.R.S.1997, under which Edmonds recovered the judgment against [the motor vehicle dealer], provides that: In any civil action brought under this section, the prevailing party may recover court costs and reasonable attorney fees. This language undoubtedly imposes liability on the maker of a dishonored check for the holder's attorney fees expended in pursuit of the damage award. See The Group, Inc. v. Spanier, [940 P.2d 1120 (Colo.Ct.App. 1997)]. Indeed, the trial court here awarded attorney fees and costs in favor of Edmonds against [the motor vehicle dealer]. However, § 13-21-109 does not address secondary obligations. As noted previously, the bond terms require surety to indemnify Edmonds for any loss suffered, and § 12-6-111(2)(a) states that the purpose of the bond is to provide for the reimbursement for any loss or damage suffered by any retail consumer. It is true, as surety argues, that costs and attorney fees are not ordinarily damages or losses that are suffered as a direct result of the conduct of the principal obligor. See Ferris v. Haymore, [967 F.2d 946 (4th Cir.1992)] (attorney fees and costs recovered against principal obligor not recoverable as loss or damages suffered under bond); Knecht, Inc. v. United Pacific Insurance Co., 860 F.2d 74 (3d Cir.1988) (attorney fees not recoverable on bonds which provide that claimants can sue for sums as may be justly due). However when, as here, a statute expressly authorizes the recovery of attorney fees against the principal obligor on the underlying claim, such sums qualify as a loss suffered within the meaning of the bond terms. Edmonds, 962 P.2d at 328. I agree with the court's analysis in Edmonds and believe it to be sound and reasonable in application. Further, it is well settled in Florida that the liability of a surety is coextensive with that of the principal, see American Home Assurance Co. v. Larkin General Hospital, Ltd., 593 So.2d 195, 198 (Fla.1992) (citing Cone v. Benjamin, 150 Fla. 419, 8 So.2d 476 (1942), and National Union Fire Ins. Co. v. Robuck, 203 So.2d 204 (Fla. 1st DCA 1967)), with the caveat that the surety's liability is limited by the terms of the bond. See American Home, 593 So.2d at 198. Holding Aetna responsible for attorney's fees and costs as part of the judgment based on the specific facts involved in Hubbel's case and the Herberts' case would not be contrary to these well-settled principles of law. The motor vehicle dealers in question here are responsible to Hubbel and the Herberts for payment of attorney's fees and costs under the judgments as provided in section 501.2105, and holding Aetna coextensively responsible for those fees and costs would not violate the terms of the surety bonds or statute because, under the bonds, Aetna is responsible for any loss resulting from the dealers' violations of the conditions enumerated in section 320.27(10). Accordingly, based on the above, I conclude that the plain meaning of sections 320.27(10) and 510.2105 render Aetna responsible for attorney's fees and costs in the cases here. I would approve the decision in Marshall and quash the decisions below. [13]