A
recent ruling by a Florida appeals court held that a homeowner successfully fending off a foreclosure action is entitled to clip the losing foreclosing entity for a recovery her attorney’s fees as a prevailing party under
subsection 57.105(7), Florida Statutes (2009), after the lower court granted a motion to dismiss a mortgage foreclosure action and dismissed the case without prejudice. (
Nudel v. Flagstar Bank, FSB, No. 4D10-3001 (Fla. App. 4th DCA, May 18,
2011).(1)
Although the ruling was silent on a sometimes-related point, a court case cited therein briefly addressed the issue regarding the application of a
contingency fee multiplier (in those cases where winning counsel took the case on a pro bono or contingency fee basis) when calculating the amount of the homeowner's legal fee tab that the losing lender will ultimately be stuck with. This multiplier reflects "
a contingency bonus to the basic fee award in cases that the [client]
was unlikely to win, to give lawyers for non-paying clients an incentive to take risky as well as sure cases."(2)
In that case, the court approved the use of a contingency fee multiplier of 2.5 in determining the amount of the homeowner's legal fees that the improperly foreclosing lender was hammered with.
While this point only merited a brief mention in that ruling, I mention it here as a reminder to those private attorneys, non-profit law firms, and others who take, or are considering taking, foreclosure defense cases on a pro bono basis, that a mechanism exists in Florida law (by the way, Florida is not unique in
this(3)) allowing winning counsel, not only to collect legal fees from the foreclosing lender in a successful foreclosure defense (generally based on the number of hours spent on the case multiplied by an hourly rate, subject to court approval), but to enhance the earned legal fee by a contingency fee multiplier, thereby potentially making it worth one's while taking on these types of cases, at least
occasionally.(4)
While not a guarantee to make the winning attorney rich beyond his/her wildest dreams, I'm sure the extra cash will come in
handy.(5)
For the court ruling, see
Bank of New York v. Williams, 979 So.2d 347 (Fla. 1st DCA 2008).
Representing the homeowner in this case was
James A. Kowalski, Jr., Jacksonville, Florida.
(1) See also, Fla. Appeals Court: Homeowner Entitled To Nail Bank For Prevailing Party Legal Fees After Lender Voluntarily Dismissed F'closure Case w/out Prejudice.
(2) The Yale Law Jounal: The Contingency Factor In Attorney Fee Awards.
(3) See, for example:
- Nebraska: Eicher v. Mid America Financial Investment Corp., 270 Neb. 370, 702 N.W.2d 792 (2005), where the Nebraska Supreme Court, in slamming an equity stripping, sale leaseback peddler with a prevailing party attorneys fee award of $378,000 payable to the lawyers representing a dozen homeowners who had their home titles ripped off in a foreclosure rescue scam, applied a multiplier of 1.3 in calculating the award (the foreclosure rescue operator was found to have violated the Nebraska Consumer Protection Act).
- Illinois: Gambino v. Boulevard Mortg. Corp., 398 Ill. App. 3d 21, 922 NE 2d 380 (Ill. App. 1st Dist., 6th Div. 2009) (Appeal denied by Gambino v. Blvd. Mortg. Corp. (W.W. Funding, L.L.C.), 2010 Ill. LEXIS 909 (Ill., May 26, 2010)), where an Illinois Court of Appeals approved use of a contingency multiplier of 3 to the lodestar attorney fee calculation to arrive at a total fee award of $595,574 in a case where an elderly property owner successfully sued in a quiet title / slander of title action in an effort to undo a real estate equity scam perpetrated by his nephew and a gang of others involving a purported sale leaseback (coupled with a repurchase option) of property and the recording of forged land documents. The appeals court noted that the trial judge found the use of a multiplier of 3 to be "imminently reasonable."
- Washington State: Pelascini v. Pace-Knapp, No. 63758-4-I (Wash. Ct. App. Div. 1, Feb. 14, 2011) (Reported at Pelascini v. Pace-Knapp, 2011 Wash. App. LEXIS 422 (Wash. Ct. App., Feb. 14, 2011)), where a Washington State appeals panel awarded $134,425 in attorney fees including a lodestar multiplier of 15 percent to a homeowner who successfully sued after getting ripped off in a sale leaseback, equity stripping racket. The sale leaseback peddlers were found to have violated the state Consumer Protection Act.
- New Jersey: Rendine v. Pantzer, 661 A.2d 1202 (N.J. 1995), where, in approving a one-third enhancement of the lodestar calculation (ie. a multiplier of 1.333), the New Jersey Supreme Court made this holding on the use of contingency fee enhancements, generally, in state court litigation in New Jersey (bold text is my emphasis):
We hold that the trial court, after having carefully established the amount of the lodestar fee, should consider whether to increase that fee to reflect the risk of nonpayment in all cases in which the attorney's compensation entirely or substantially is contingent on a successful outcome. We understand and carefully have evaluated the various objections advanced to contingency enhancements, including the often-repeated admonition that "[t]hese statues were not designed as a form of economic relief to improve the financial lot of [attorneys]." Dague, supra, 505 U.S. at 563, 112 S.Ct. at 2642, 120 L.Ed.2d at 457 (quoting Delaware Valley I, supra, 478 U.S. at 565, 106 S.Ct. at 3098, 92 L.Ed.2d at 456).
Both as a matter of economic reality and simple fairness, we have concluded that a counsel fee awarded under a fee-shifting statute cannot be "reasonable" unless the lodestar, calculated as if the attorney's compensation were guaranteed irrespective of result, is adjusted to reflect the actual risk that the attorney will not receive payment if the suit does not succeed. The reasoning underlying our holding often has been explained, and most effectively in simple terms. As the late Judge Charles Wyzanski once observed:
No one expects a lawyer to give his services at bargain rates in a civil matter on behalf of a client who is not impecunious. No one expects a lawyer whose compensation is contingent upon his success to charge, when successful, as little as he would charge a client who in advance had agreed to pay for his services, regardless of success.
[Cherner v. Transitron Elec. Corp., 221 F. Supp. 55, 61 (D.Mass. 1963).]
See also Blum, supra, 465 U.S. at 903, 104 S.Ct. at 1551, 79 L.Ed.2d at 905 ("Lawyers operating in the marketplace can be expected to charge a higher hourly rate when their compensation is contingent on success than when they will be promptly paid, irrespective of whether they win or lose.") (Brennan, J., concurring); Berger, supra, 126 U.Pa.L.Rev. at 324-25 ("The experience of the marketplace indicates that lawyers generally will not provide legal representation on a contingent basis unless they receive a premium for taking that risk."); 2 Derfner & Wolf, supra, ¶ 15.01[2][c], at 15-16 ("Most courts realize that where payment of a fee is contingent on success an attorney should receive a larger overall fee than where payment is guaranteed regardless of outcome....") (footnote omitted).
- Texas: Dillard Department Stores, Inc. v. Gonzales, 72 S.W.3d 398 (Tex. App.-El Paso 2002), where, in doubling the attorney's usual rate (ie. a multiplier of 2), a Texas appeals court made the follwing observation on the use of fee enhancement multipliers in Texas litigation (bold text is my emphasis):
Texas courts consistently allow the use of a multiplier based upon the contingent nature of a fee under Texas statutes allowing recovery of attorney's fees. Guity v. C.C.I. Enterprise Co., 54 S.W.3d 526, 529 (Tex.App.-Houston [1st Dist.] 2001, no pet.); Borg-Warner Protective Services v. Flores, 955 S.W.2d 861, 870 (Tex.App.-Corpus Christi 1997, no pet.); Crouch v. Tenneco, 853 S.W.2d 643, 648 (Tex.App.-Waco 1993, writ denied).
Moreover, we note that at least one state court has specifically rejected the U.S. Supreme Court's ban on a contingency multiplier in interpreting its own state anti-discrimination statute. See Rendine v. Pantzer, 276 N.J.Super. 398, 648 A.2d 223, 254 (1994) (holding that trial judge correctly considered contingent nature of fee in doubling the lodestar, rejecting Dague after extensive discussion), aff'd as modified, 141 N.J. 292, 661 A.2d 1202 (1995). Considering this, we cannot find the trial court acted without reference to guiding principles.
(4) The appeals court's brief mention approving the use of the multiplier follows:
(5) For those attorneys, law students, paralegals and other fans of the law who find something counterintuitive about an attorney for a prevailing party being able to score attorney fees from the losing litigant in pro bono cases (I suppose that refering to these cases as contingency fee, rather than pro bono, would be more apt), there's really nothing new about it, believe me. See, for example:
