Court Opinion

ID: 3201099
Source: CourtListenerOpinion
Date Created: 2016-05-06 13:07:26.841177+00
Date Added: 2024-06-11T07:39:14.491537
License: Public Domain

IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
                                     FIFTH DISTRICT

                                              NOT FINAL UNTIL TIME EXPIRES TO
                                              FILE MOTION FOR REHEARING AND
                                              DISPOSITION THEREOF IF FILED

HFC COLLECTION CENTER, INC.,

       Petitioner,

v.                                                    Case No. 5D15-1177

STEPHANIE ALEXANDER,

       Respondent.

________________________________/

Opinion filed April 22, 2016

Petition for Certiorari Review of Decision
from the Circuit Court for Orange County
Acting in its Appellate Capacity.

Brett H. Burkett, and Thomas Lobello, of
Rolfe & Lobello, P.A., Jacksonville, for
Petitioner.

Taras S. Rudnitsky, of the Rudnitsky Law
Firm, Longwood, Nicholas A. Shannin, of
the Shannin Law Firm, P.A., Orlando, and
James C. Hauser, of Attorney's Fees in
Florida, P.L., Maitland, for Respondent.

EDWARDS, J.

                           ON MOTIONS FOR REHEARING

       We grant in part and deny in part Respondent's motion for rehearing, and

substitute the following opinion in place of our original opinion. We also vacate that
portion of our March 7, 2016 order that denied rehearing.          We deny Respondent's

motions for certification and for rehearing en banc.

       HFC Collection Center, Inc. petitions this court for a second tier writ of certiorari

to quash a final order by the circuit court, sitting in its appellate capacity, affirming the

county court’s award of attorney’s fees in favor of Stephanie Alexander. After ruling that

HFC failed to prove that it was an assignee of a contract and thus had no authority to

sue Alexander, the county court granted Alexander's motion for attorney's fees based

on that same contract. HFC argued below that since the trial court's ruling meant that

no contract existed between HFC and Alexander, there was no basis for awarding fees

to her pursuant to section 57.105(7), Florida Statutes (2012). HFC is correct on that

point; however, that does not complete our analysis. Although the county and circuit

courts applied the wrong law in awarding and upholding attorney's fees in favor of

Alexander, the award may be sustainable under section 57.105(1), Florida Statutes

(2012). Accordingly, we remand this case with instructions to the circuit court to remand

the case back to the county court. The county court may then determine whether

Alexander complied with the safe harbor provisions or, in the alternative, whether that

court wishes to act on its own initiative pursuant to section 57.105(1). If the county

court decides that an award of fees may be appropriate, it should then determine and

make specific findings regarding the criteria set forth in section 57.105(1).

                                 BACKGROUND FACTS

       HFC sued Alexander to collect past due amounts she allegedly owed American

Express pursuant to a credit card agreement. HFC claimed that it was the assignee of

the American Express/Alexander agreement, and was therefore entitled to pursue

                                             2
American Express's collection rights against Alexander. HFC attached copies of the

credit card agreement and the purported assignments of Alexander's account to its

complaint. Based upon its claim that Alexander failed to make timely payments, HFC

demanded judgment for the outstanding past due balance of $8,964.97, plus interest.

The agreement contained a unilateral prevailing party attorney's fees provision in favor

of American Express.

      In her answer, Alexander agreed that she had entered into a written credit card

agreement or contract with American Express, but denied that the copy attached to the

complaint was valid because it did not bear her signature.        Alexander additionally

asserted several affirmative defenses, two of which are relevant.        First, Alexander

claimed that the charges in question were not authorized by her, that she had properly

notified American Express of the unauthorized nature of the charges, and thus did not

owe American Express for those charges. Second, Alexander claimed that HFC lacked

standing to enforce the contract because there were gaps in the chain of assignments,

and the documents attached to the complaint did not show an assignment of her

specific account by American Express.

      At her earliest opportunity, Alexander clearly notified HFC that she was seeking

attorney's fees. Her answer included two different claims for attorney's fees and costs:

(1) a claim pursuant to the terms of the contract and section 57.105(7), which statutorily

transforms the unilateral attorney's fees contract provision into a reciprocal provision;

and (2) a claim pursuant to section 57.105(1)-(4) and the inequitable conduct doctrine.

The second claim was contingent on HFC later asserting that there was no contract

between the parties.

                                            3
       Alexander moved for summary judgment based upon the aforementioned

affirmative defenses. HFC responded to Alexander's motion for summary judgment by

filing affidavits.   The county court determined that HFC's affidavits were insufficient

because the affiant lacked personal knowledge and would not be competent to testify as

to the subject matter in the affidavits. The court additionally held that the subject matter

of the affidavits would not be admissible evidence. Following a hearing, the county

court granted Alexander's motion for summary judgment, finding that HFC lacked

standing because it failed to offer any evidence to prove that it was the real party in

interest by way of assignment. The county court noted that there was a clear break in

the chain of assignments, thus there was no evidence of a valid assignment to HFC.

Furthermore, the evidence did not establish that Alexander's account debt was ever

assigned by American Express.        HFC did not factually dispute either aspect of the

flawed assignments. Thus, HFC was a stranger to the credit card agreement between

American Express and Alexander, and there was no contractual relationship between

HFC and Alexander. HFC did not appeal the summary judgment.

       Alexander then moved for attorney's fees. HFC and Alexander agreed that the

credit card agreement contained a term requiring Alexander, as the cardholder, to pay

all reasonable costs and attorney's fees that may be incurred by American Express.

Both parties agreed that section 57.105(7), Florida Statutes (2014), transforms any such

unilateral contractual attorney's fee provision into a reciprocal obligation whereby the

prevailing party is entitled to recover reasonable fees and costs.            HFC argued

unsuccessfully to the county court that since HFC was adjudicated to be a stranger to

the contract, Alexander could not seek attorney's fees pursuant to its terms. Holding

                                             4
that Alexander was entitled to recover attorney's fees pursuant to the terms of the credit

card agreement and section 57.105(7), the county court awarded her $20,371.65 in

attorney's fees.    The county court did not rule on Alexander's alternative claim for

attorney's fees.

       The circuit court, in its appellate capacity, affirmed the county court's ruling. The

circuit court additionally held that HFC was estopped from challenging the award of

attorney's fees by arguing that no contract existed between it and Alexander. HFC

timely petitioned for second-tier certiorari review to this court.

                                 STANDARD OF REVIEW

       A district court of appeal may review by writ of certiorari "final orders of circuit

courts acting in their review capacity." Fla. R. App. P. 9.030(b)(2)(B). To prevent the

abuse of this procedure as a "second appeal," the standard of review is limited. See

Ivey v. Allstate Ins. Co., 774 So. 2d 679, 682 (Fla. 2000). On certiorari review, the

district court may only determine two issues: (1) whether procedural due process was

afforded; and (2) whether there was a departure from the essential requirements of law.

Id. HFC does not claim that it was denied procedural due process, thus the only issue

before this court is whether the circuit court applied the correct law when it affirmed the

county court’s award of attorney’s fees and costs to Alexander.

                   ABSENCE OF CONTRACT BETWEEN THE PARTIES

       There is no dispute that there was a contract between American Express and

Alexander; however, HFC was adjudicated to be a stranger to that contract. The county

court's determination that HFC was not the assignee of the credit card agreement

between American Express and Alexander means that there was never a contract

                                               5
between HFC and Alexander. In Bank of New York Mellon v. Mestre, 159 So. 3d 953

(Fla. 5th DCA 2015), the bank's attempt to foreclose on a mortgage was halted when

the trial court determined that the signatures on the loan documents were forgeries. 159
So. 3d at 954. Under those circumstances, we held that no legal obligations were ever

created between the parties. Accordingly, the Mestres could not recover attorney's fees

on the basis of the loan documents.       Id. at 956; see also Novastar Mortg., Inc. v.

Strassburger, 855 So. 2d 130, 131 (Fla. 4th DCA 2003) (holding that mortgage could

not serve as basis for award of attorney's fees to person who was not party to

mortgage).

       In Surgical Partners, LLC, v. Choi, 100 So. 3d 1267 (Fla. 4th DCA 2012), the

Fourth District dealt with a situation where there was a signed employment agreement

between the medical association and physician.             The physician avoided the

enforcement of the employment contract by successfully arguing that the agreement

never became effective because of the failure of a condition precedent. 100 So. 3d at

1268. The trial court granted summary judgment in favor of the physician. Id. After the

summary judgment was affirmed on appeal, the physician sought and was awarded

attorney's fees under that same employment agreement. Id. at 1268-69. The Fourth

District reversed, holding that since the contract never became legally effective, it could

not be enforced by either party. Id. at 1269.       "The doctor simply cannot avoid a

liquidated damages provision by claiming the agreement never came into effect or was

unenforceable, and at the same time be entitled to attorney's fees under the same

agreement." Id. at 1268. If there is no contract between the parties, which would entitle

one to recover attorney's fees in the first place, "there is no basis to invoke the

                                            6
compelled mutuality provisions of" section 57.105(7). Fla. Med. Ctr., Inc. v. McCoy, 657
So. 2d 1248, 1252 (Fla. 4th DCA 1995). The same holds true here. Alexander cannot

employ section 57.105(7) as a basis for an attorney's fees award after she proved that

HFC never became a party to the contract. Thus, the circuit court applied the wrong law

when it upheld the county court's award of attorney's fees on that basis.

                      ESTOPPEL BARS ALEXANDER, NOT HFC

       As an alternative ground for affirming the county court's award of fees and costs

to Alexander, the circuit court found that HFC, having based its suit on assignment of

the credit card agreement, was estopped from denying the existence and enforceability

of the agreement and its attorney's fees provision.         In reaching this holding, we

conclude that the circuit court applied the wrong law. "In judicial proceedings, a party

simply is not estopped from asserting a later inconsistent position (if that it can be

called), unless the party's initial position was successfully maintained." Leitman v.

Boone, 439 So. 2d 318, 322 (Fla. 3d DCA 1983). "One cannot seriously contend that a

litigant cannot claim there is a contract and say to a court, 'if, however, you find against

me on my claim, then based on that finding, you cannot award attorneys' fees to my

opponent.'" Id. HFC did not successfully maintain that there was a contract between it

and Alexander, and thus HFC is "not estopped from thereafter maintaining that since

there is no contract, no attorneys' fees can be awarded." Id. Here, as in Leitman, it was

the county court, rather than the plaintiff, who found that no contract existed. Therefore,

HFC is "not estopped from relying upon that adverse ruling and asserting any position

consistent with the ruling." Id. "The principle of estoppel is simply inapplicable in this

                                             7
situation. The fact that no contract was formed is dispositive of the issues presented."

Gibson v. Courtois, 539 So. 2d 459, 460 (Fla. 1989).

       It is Alexander, rather than HFC, that has successfully asserted irreconcilably

inconsistent positions in this litigation. Alexander is indeed estopped from relying on the

credit card agreement to recover attorney's fees after she successfully maintained that

HFC was not a party to that agreement. Estoppel would have applied against HFC if it

proved that there was a valid assignment, but lost the case because Alexander proved

she had properly disputed unauthorized credit transactions, and HFC then claimed

there was no contract in order to avoid liability for attorney's fees.       Under these

nonexistent, hypothetical facts, HFC certainly could not avoid payment of attorney's fees

by disavowing the assigned agreement's terms and conditions. See Leitman, 439 So.
3d at 323 (acknowledging similar outcome on similarly hypothetical, nonexistent facts).

       The lower court's reliance upon MCG Financial Services, L.L.C., v. Technogroup,

Inc., 149 So. 3d 118 (Fla. 4th DCA 2014), is misplaced. In MCG, the plaintiff sued

defendants on a written contract that mistakenly referred to a different company and did

not identify or refer to the defendants. 149 So. 3d at 119. The contract was admitted

into evidence without objection and all parties stipulated that the defendants were the

real parties in interest despite not being named in the contract. Id. The defendants

prevailed by proving that they paid all sums due to a collection agency. Id. at 120. After

the plaintiff then obtained new counsel who asserted that defendants could not seek

attorney's fees under that same contract because the defendants were not named in the

contract.   Id. at 120.   The court of appeal found that plaintiff was estopped from

asserting a position inconsistent with what it successfully asserted before, a position

                                            8
which was also inconsistent with the stipulated evidence at trial. Id. at 121.     Here,

Alexander succeeded in proving there was no contract between her and HFC.

Therefore, Alexander, not HFC, is estopped from relying on the contract to obtain an

attorney's fee award.

            ALTERNATIVE BASIS FOR AWARDING ATTORNEY'S FEES

       In her answer, Alexander set forth a contingent claim for attorney's fees as

follows: "To the extent [HFC] later claims there was no contract between the parties or

their assignors, [Alexander] hereby puts [HFC] on notice that [Alexander] will seek

attorney fees pursuant to [sections] 57.105(1)-57.105(4)."     HFC did not respond in

writing to Alexander's motion for attorney's fees. The first time HFC asserted that there

was no contract between the parties was during the hearing on Alexander's motion for

fees. As discussed above, HFC was not estopped from arguing the absence of a

contract.   However, HFC taking the position that there was no contract has

consequences.    When granting Alexander's motion for summary judgment, the trial

court found that there was "absolutely no showing – much less admissible evidence"

that the contract was assigned to one of HFC's predecessor assignees or that HFC

owned Alexander's account. HFC conceded that it was not provided with a list of the

accounts that were transferred to its predecessors.

       Once it received and considered Alexander's motion for summary judgment, HFC

knew or should have known that its claim was not supported by the material facts

necessary to establish its claims. By offering no proof that Alexander's account was

properly assigned, and by later taking the position that there was no contract between

                                           9
the parties in order to defeat Alexander's claim for attorney's fees, HFC essentially

conceded that it had no factual basis for its suit against Alexander.

       There is nothing in the record to suggest, one way or the other, whether

Alexander strictly complied with the safe harbor provision of section 57.105(4), Florida

Statutes (2012), by serving her motion on HFC at least 21 days prior to the hearing.

The primary purpose of the safe harbor letter is to provide the party in receipt of the

letter with the opportunity to withdraw or abandon a frivolous claim before sanctions are

sought. See Maxwell Bldg. Corp. v. Euro Concepts, LLC, 874 So. 2d 709, 711 (Fla. 4th

DCA 2004). On remand, the county court shall consider whether Alexander complied

with the safe harbor provisions.

       It is clear that HFC had significantly more than 21 days to withdraw its baseless

claim, as the trial court found that Alexander provided adequate notice in her answer of

her intention to seek attorney's fees from HFC. Under these specific circumstances, we

find that an award of attorney's fees, should the trial court choose to act on its own

initiative, may be appropriate pursuant to section 57.105(1), even if Alexander had not

complied with the safe harbor provision. The Second District Court of Appeal in Koch v.

Koch, 47 So. 3d 320 (Fla. 2d DCA 2010), held that there is no 21 day safe harbor notice

requirement where fees are imposed on the court's own initiative as a sanction pursuant

to section 57.105(1). 47 So. 3d at 324.           According to Koch "[n]othing in section

57.105(1) states that a court cannot impose sanctions for the same reasons set forth in

a party's failed motion for sanctions." Id. (citing Unifirst Corp. v. City of Jacksonville, 42
So. 3d 247, 248-49 (Fla. 2010)).

                                             10
       The Koch court noted its disagreement with Davidson v. Ramirez, 970 So. 2d
855 (Fla. 3d DCA 2007). 47 So. 3d at 324. In Davidson, the Third District Court of

Appeal held that it was improper for the trial court, on its own initiative, to effectively

adopt the prevailing party's untimely motion for fees because such action would

circumvent the 21 day safe harbor provisions embodied in the statute. 970 So. 2d at

856. We agree with the Second District Court of Appeal's conclusions in Koch. Section

57.105(1) does not contain a 21 day requirement for trial courts acting on their own

initiative, nor does the section prohibit the consideration or adoption of all or part of the

prevailing party's failed motion for fees as justification for sanctioning the losing party.

We also agree with the Koch court that adopting the Davidson "approach would

unreasonably restrict a court's discretion and would not advance the clear purpose of

section 57.105 to reduce frivolous litigation." Koch, 437 So. 3d. at 325.

       The Florida Supreme Court in Boca Burger, Inc. v. Forum, 912 So. 2d 561 (Fla.

2005), stated that an appellate court lacks authority to impose section 57.105(1)

sanctions for conduct occurring in the trial court where the trial court failed to do so

initially. 912 So. 2d at 569. The Boca Burger court indicated that the proper procedure

is to remand to the trial court for its discretionary consideration and possible action. Id.

Here, fees were awarded based upon a contractual and statutory prevailing party basis,

rather than as a sanction. The trial court was not called upon to consider sanctions. If

there will be any fee award as a sanction based upon section 57.105(1), Boca Burger

requires affirmative, discretionary trial court action. The county court must first decide if

it will consider awarding the fees on its own initiative, and then it must make specific

                                             11
findings regarding whether HFC or its counsel knew or should have known that its

claims were not supported by the material facts or applicable law.

       We thus remand to the circuit court with instructions to remand to the county

court. The county court should consider whether Alexander complied with the safe

harbor provision, and if appropriate, determine whether it will act on its own initiative to

consider imposing attorney's fees against HFC if that court makes findings that the

section 57.105(1) criteria are present.

       PETITION GRANTED IN PART AND DENIED IN PART, REMANDED WITH

INSTRUCTIONS.

PALMER and LAMBERT, JJ., concur.

                                            12