Significant Issues Test Applicable to Determine Attorney Fee Entitlement in Lien Foreclosure Actions

Significant Issues Test Applicable to Determine Attorney’s Fees Entitlement Under 713.29, Florida Statute for Lien Foreclosure Actions

FRANK J. TRYTEK, et al., Petitioners, vs. GALE INDUSTRIES, INC., etc., Respondent.

No. SC07-1641
3 So. 3d 1194; 2009 Fla. LEXIS 257; 34 Fla. L. Weekly S 247

” Trial courts are required to apply the significant issues test to evaluate entitlement to prevailing party attorneys’ fees under § 713.29, Fla. Stat. (2005), even when the lienor obtains a judgment on the lien. The award of attorneys’ fees in lien actions has consistently been approached as being tempered by equitable principles. In that regard, when applying the test to the facts of a case, there is no mandatory requirement that the trial court determine that one party is the prevailing party.”

“The notion that equitable principles should apply in determining “prevailing party” attorneys’ fees has been utilized in this Court’s opinions deciding attorneys’ fees in the context of section 713.29. For [*1200] example, in C.U. Associates, Inc. v. R.B. Grove, Inc., 472 So. 2d 1177 (Fla. 1985), the Court examined a case in which a litigant had offered an amount to settle that was equal to the amount recovered. This Court found that “in order [HN8] to be a prevailing party entitled to the award of attorney’s fees pursuant to section 713.29, a litigant must have recovered an amount exceeding that which was earlier offered in settlement of the claim.” Id. at 1179. This Court explained that it based its decision on the purported policy underlying section 713.29…”

What does this mean? Simply put, prevailing party not always party who obtains judgment.

  • To get attorneys fees in lien actions, Court will look at big picture.
  • Prevailing on a lien action is not just “winning” $1, but an amount that demonstrates that the lienor’s amount was reasonable in light of what the Defendant was offering, and the dispute between the parties. Most often times, the dispute is not that the Defendant did not offer to pay but that Defendant did not offer enough, and there is a good-faith dispute. Example at the end of a construction Project the Lienor issue an invoice of $100,000.00 which is for, among other things, work done pursuant to oral changes/additions to the contract. The Owner/Defendant believes that the reasonable value of the work in place (or the remaining payment) should be $50,000.00, and offers $50,000.00 as final payment to lienor. Lienor/Contractor declines, and files a lien for $100,000 and institutes a lawsuit.
  • Possible Outcomes, Lienor recovers:
    • $50,000 or less –  Could the Defendant be entitled to attorneys’ fees? – should be permitted, this outcome maybe authorized by Kelsey v. Metro Constr., 31 So. 3d 252 (Fla. Dist. Ct. App. 3d Dist. 2010).
    • $50,000 or more but less than $100,000.00 –  The Grey Area – Does No-one prevail? In this case, award was for less than Lienor was willing to accept, but more than Defendant offered.  Language above indicates that Lienor would be prevailing party as recovery was made for more than previously offered,  but seems this would be a factual issue to determine reasonability of lienor’s claim
    • More than $100,000.00- Lienor should be prevailing party and should be entitled to attorneys fees.
  • Need to look whether the Contractor is seeking too much money? Did Owner offer reasonable amount as final payment, even if less than demanded?

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