Junior Lienholder Not Entitled to Award of Attorney Fees, Says Florida Appellate Court

In an issue of first impression, Florida’s First District Court of Appeal determined that a junior lienholder is not entitled to an award of attorney fees when it prevails upon a lien foreclosure action filed by a construction contractor. See Decks N Such Marine, Inc. v. Daake, 45 Fla. L. Weekly D1168, 2020 WL 2507500 (Fla. 1st DCA May 15, 2020).

In Daake, a contractor sued a homeowner who allegedly failed to pay for construction services. The contractor sought to foreclose on its Claim of Lien. As is common, the contractor named both the homeowner and the homeowner’s mortgage holder as defendants in the lien foreclosure claim. The mortgage holder successfully defended against the lien foreclosure claim. The mortgage holder sought from the trial court, and was awarded, its attorney fees as the prevailing party pursuant to Florida’s lien law, Fla. Stat. § 713.29.

The appellate court reversed the award of attorney fees and held that junior lienholders, such as mortgage holders, are not contemplated by Section 713.29 as a “prevailing party” for the purposes of an attorney fee award. Although the appellate court offered a number of reasons for its conclusion, the final paragraph of the written opinion provides a summary of its rationale, which is largely based upon the statutory language of Section 713.29:

Here, in the underlying lien enforcement action, [the contractor] joined [the mortgage holder] as a junior lienholder due to its recorded mortgage on the subject property. [The contractor] was not enforcing the construction lien against [the mortgage holder] but joining it to the underlying action to ensure determination of superiority of liens or security interests upon a foreclosure sale. Through summary judgment, [the mortgage holder] was subsequently released from the underlying lien enforcement action between [the contractor] and [the homeowner] due to [the contractor’s] untimely filing of a lis pendens. Accordingly, [the mortgage holder] is not “the prevailing party” in the action to enforce the lien.

Id. at *4. Thus, according to this appellate court, a mortgage holder should not expect to obtain an award of attorney fees even if it prevails on a lien foreclosure claim asserted by a contractor seeking to foreclose on a Claim of Lien.

Matthew J. Meyer is a Partner in our Florida office.