A Florida court has ruled in favor of John Gartner Jr. in his dispute with Reverse Mortgage Solutions, Inc., allowing him to recover attorney's fees related to a foreclosure action. The First District Court of Appeal's decision on June 30, 2021, reverses a lower court's ruling that denied Gartner's request for fees incurred while defending against the foreclosure. This ruling is significant as it clarifies the rights of borrowers under non-recourse loans concerning attorney's fees.
The case, docket number 1D20-0772, stems from a foreclosure action initiated by Reverse Mortgage Solutions against Gartner. The court's decision is important for homeowners facing similar situations, as it sets a precedent regarding the recovery of attorney's fees in non-recourse loan agreements.
Background
John Gartner Jr. took out a reverse mortgage on his home in November 2012 through One Reverse Mortgage, LLC. The loan was a non-recourse loan, meaning that if Gartner defaulted, the lender could only recover the debt through the sale of the property, not from Gartner personally. The loan documents included provisions for the lender to recover attorney's fees in the event of a foreclosure.
In May 2017, Reverse Mortgage Solutions filed a foreclosure complaint against Gartner, claiming he failed to pay insurance as required. Gartner did not respond, leading to a default judgment against him. The lender later purchased the property at a foreclosure sale. After realizing the foreclosure had occurred, Gartner sought to set aside the judgment, asserting he had paid the insurance and requesting attorney's fees.
The Ruling
The First District Court of Appeal ruled in favor of Gartner, stating that he was entitled to recover attorney's fees under Florida Statutes Section 57.105. The court noted that the provisions in the loan documents allowed for the recovery of fees, regardless of the non-recourse nature of the loan. Judge Jay wrote, "Gartner was the prevailing party. Consequently, under the express terms of section 57.105(7), Gartner was eligible to recover his attorney's fees, despite the non-recourse nature of the note and mortgage."
The court's decision highlighted the importance of the reciprocity provision in Section 57.105, which allows for the recovery of attorney's fees for the prevailing party in a contract dispute. The ruling reversed the lower court's decision, which had denied Gartner's request for fees based on a prior case, Suchman Corporate Park, Inc. v. Greenstein, which the court found was no longer applicable due to recent changes in the law.
Impact
This ruling has significant implications for homeowners with non-recourse loans in Florida. It clarifies that borrowers can recover attorney's fees even when the loan agreement includes non-recourse provisions. This decision aligns with recent Florida Supreme Court rulings that emphasize the importance of reciprocity in attorney's fee provisions.
As a result of this ruling, homeowners in similar situations may feel more empowered to defend against foreclosure actions, knowing they can seek recovery of their legal costs if they prevail. This case also sets a precedent that could influence future disputes involving attorney's fees in non-recourse loan agreements.
What's Next
The ruling can be appealed, but it is unclear if Reverse Mortgage Solutions will pursue further legal action. Additionally, there may be related cases pending that could further clarify the application of attorney's fees in similar contexts.