Court Opinion

ID: 9489977
Source: CourtListenerOpinion
Date Created: 2023-08-05 13:29:27.977968+00
Date Added: 2024-06-11T17:53:49.837952
License: Public Domain

CUDAHY, Circuit Judge,
dissenting:
The question in this case is one of symmetry.1 Florida law guarantees that contractu*1168al provisions for attorney's fees cannot be one-sided. If a contract entitles one party to attorney’s fees in enforcing the contract, that entitlement must apply to the other party, too, “when that party prevails in any action ... with respect to the contract.” Florida Statutes § 57.105(2). In this case, a party (City National Bank) took an action to enforce a contract against the counter-party (Sheridan), but the Bank lost. The contract would have entitled the Bank to attorney’s fees if it had won. See Mayer v. Spanel Int’l Ltd., 51 F.3d 670 (7th Cir.1995). Under Florida Statutes § 57.105(2), City National Bank must pay the defendant’s attorney’s fees — if the defendant prevailed in an action “with respect to the contract.” It is as if the contract contained a clause reciting the language of Florida Statutes § 57.105(2).
The majority says that this is not an action “with respect to the contract” and hence there can be no recovery. Maj. Op. at 1167.2 Non-dischargeability is a matter of federal law, the majority states rightly. At issue here, however, is the content of a contract, a matter which state law governs. What confuses the issue is that the state law here depends on federal law. Federal law decides whether the debt was dischargeable (it was); and a Florida law consequence (the allocation of attorney’s fees as per the parties’ contract) flows from that determination under federal law. That a particular state law result is predicated on federal law seems no contradiction.
This court’s holding in Mayer dictates this result. Mayer held that an action to deny a discharge was undertaken “in the process of collection” and that a prevailing creditor could recover attorney’s fees based on the debtor’s promise “to reimburse any attorney’s fees that the lender incurred in the process of collection.” Id. at 677. If the action in Mayer was undertaken “in the process of collection,” then so was the action in the instant case. By the same token, the action in Mayer was an “action to enforce the contract” as that language is used in Florida Statutes § 57.105(2). “Collection” is an essential part of enforcement. If a debt cannot be collected, the contract that created it has not been enforced. It follows that, if Mayer involved an action to enforce a contract, the present case (dealing with equivalent facts) must also involve an action both “to enforce a contract” and “with respect to a contract.” Therefore, the fees incurred by the prevailing defendant in the instant action must be governed by the terms of the contract (which include terms incorporated into the contract by operation of Florida Statutes § 57.105(2), as noted above). For these fees, incurred in a federal action, to be covered by the parties’ contract is no different than the coverage of the creditor’s fees provided in Mayer.
*1169The more difficult issue involves the holding of Mayer that in the creditor’s suit the attorney’s fees became a part of the debt and may be collected as part of the undischarged debt under 11 U.S.C. § 523(a)(2). Mayer, 51 F.3d at 677. Obviously, any attorney’s fees incurred by the debtor and chargeable against the creditor do not become a part of the debt. If anything, they are a charge against the debt. In the case before us, presumably, the debt is discharged in bankruptcy and there may be nothing left for the fees to be charged against. They merely become a sum owed by the creditor to the debtor. Admittedly, this is not nearly as neat a solution as would pertain if the creditor prevailed, but I do not believe essentially technical considerations should govern what appears to be a simple case of equity. If this is permitting state law to govern fees in a federal proceeding, so be it. However, I believe state law applies only through its incorporation in the contract. In Mayer, we permitted the contract to allow a prevailing creditor to recover fees. The debtor’s rights should be no different.
I therefore respectfully dissent.

. The puzzle presented by this case has so far resulted in two bankruptcy courts in the Middle District of Florida reaching diametrically opposite results with respect to the same issue. In re Maestrelli, 172. B.R. 368 (Bankr.M.D.Fl.1994), agrees with the majority here. Pichardo v. United Student Aid Funds, Inc., 186 B.R. 279 (Bankr. M.D.Fl.1995), on the other hand, reaches the opposite result and holds that the debtor is entitled to attorney’s fees. Pichardo takes the rather broad-brush view that:
The prevailing Creditor would have been entitled to enforce a provision in the Notes allowing its reasonable attorney’s fees. The opera*1168tion of Florida Statute Section 57.105(2) is consistent with the Bankruptcy Code's fresh start. Therefore, pursuant to Florida Statute Section 57.105(2), the prevailing Debtor's reasonable attorney's fees are due to be awarded.
Id. at 283. I think that we have to probe deeper than this.

. The Bank argues that its action was not one "to enforce the contract" (language also contained in Florida Statutes § 57.105(2)) and hence the statute does not apply. In its view, a bankruptcy non-dischargeability action is a fraud action and is not under Florida law an action to enforce a contract.' City Natl Bank Br. at 11. While the majority opinion does not reach this issue, given its other determinations, I wish to briefly address this argument. Were it the case that’ a non-dischargeability action were not an action to enforce the contract, it would be difficult to see how Mayer v. Spanel Int’l Ltd., 51 F.3d 670 (7th Cir.1995), could have permitted a creditor to recover attorney’s fees in a non-dischargeability action — unless fees are somehow payable in an action to collect a debt but not in one to enforce the contract out of which the debt arose. In any event, while lower Florida courts have found that actions for fraud or fraud in the inducement were not actions to enforce a contract, and therefore could not give rise to attorney’s fees, see Dickson v. Dunn, 399 So.2d 447 (Fla.Dist.Ct.App.1981); Hopps v. Smith, 520 So.2d 673 (Fla.Dist.Ct.App.1988), the Florida Supreme Court has held otherwise.
We hold that when parties enter into a contract and litigation later ensues over that contract, attorney’s fees may be recovered under a prevailing-party attorney’s fee provision contained therein even though the contract is' rescinded or held to be unenforceable.... It would be unjust to preclude the prevailing party to the dispute over the contract which led to its rescission from recovering the very attorney’s fees which were contemplated by that contract.
Katz v. Van Der Noord, 546 So.2d 1047, 1049 (Fla. 1989). I do not believe that state law precludes recovery here.