EUGENE HAM III, Pеtitioner, vs. PORTFOLIO RECOVERY ASSOCIATES, LLC, Respondent. LAURA FOXHALL, Petitioner, vs. PORTFOLIO RECOVERY ASSOCIATES, LLC, Respondent.
Nos. SC18-2142, SC18-2143
Supreme Court of Florida
December 31, 2020
CANADY, C.J.
In these consolidated cases, we consider whether a unilateral attorney‘s fee provision in a credit card contract is made reciprocal to a debtor under
In Ham, the First District ruled that
Based on our analysis of the text of the statute, we conclude that
BACKGROUND
After purchasing certain consumer debts from GE Capital Retail Bank (the Bank), Portfolio—as assignee of the Bank—filed separate actions against Eugene Ham III and Laura Foxhall (the debtors) in Escambia County Court. Ham, 260 So. 3d at 452. “In each case, Portfolio filed a one-count complaint for common law account stated to collect the balance allegedly owed on a credit card account originating with the Bank.” Id. Portfolio claimed “that each debtor had a revolving credit card account with the Bank,” and “used the account to make purchases [or] cash advances resulting in an unpaid balance.” Id. Portfolio further alleged that “the Bank provided monthly credit card account statements to [each] debtor for the amounts due,” and neither debtor “object[ed] to the account statement[s].” Id. Portfolio sought to recover $819.74 from Ham and $3,934.69 from Foxhall. Id. at 452 n.1. “Portfolio did not reference or attach the credit contracts to the complaints, but instead attached monthly billing statements.” Id. at 455.
The debtors filed answers denying the substantive allegations in the complaints and raising affirmative defenses. Id. at 452. The debtors also requested attorney‘s fees based on the underlying credit card contracts, which
Both cases proceeded to trial, at which the county court determined “that Portfolio failed to offer any admissible evidence to support the complaints.” Id. Accordingly, “the court entered final judgments in favor of the debtors and reserved jurisdiction to address attorney‘s fees and costs.” Id.
The debtors next filed motions for attorney‘s fees, again claiming that the unilateral fee provisions in the credit card contracts were made reciprocal to them under
On appeal, the First District consolidated the cases and affirmed. Id. at 452. The district court acknowledged that Portfolio chose to file an account stated claim, which “is based on ‘the agreement of the parties to pay the amount due upon the accounting, and not any written instrument.’ ” Id. at 454 (quoting Farley v. Chase Bank, U.S.A., 37 So. 3d 936, 937 (Fla. 4th DCA 2010)). Therefore, “[b]ecause the action framed by Portfolio in these cases did not rely on the credit contracts containing the unilateral fee provision,” the First District “conclude[d] that the debtors [were] not entitled to reciprocal fees under
In support of this conclusion, the First District observed that a contrary conclusion “would undermine Portfolio‘s ability to choose its сause of action.” Id.
The court further explained that it had “not overlooked the debtors’ argument that” Portfolio‘s claims were actions “with respect to the contract“—as required under
But the First District distinguished Caufield. Ham, 260 So. 3d at 455. The district court explained that “[t]he tort claim in Caufield required proving the existence and the breach of the contract,” while “[a]n account stated claim... requires no evidence of breach of the contract, and can exist in the absence of any contract at all.” Id.
The First District concluded that “[t]he same reasoning applie[d]” to the case before it. Ham, 260 So. 3d at 456. “Although the debtors would not have credit card debt but for their contracts with the Bank,” the court noted, “Portfolio did not sue under the credit contracts.” Id. Therefore, just as in Tylinski, “there [was] no contractual avenue for recovering attorney‘s fees.” Id. (quoting Tylinski, 90 So. 3d at 872).
Certified Conflict Case—Bushnell
In Bushnell, Portfolio, “as the successor in interest to the original creditor,” brought an account stated cause of action аgainst Katrina Bushnell to recover unpaid credit card debt. Bushnell, 255 So. 3d at 474. After Bushnell filed an answer raising affirmative defenses and asserting entitlement to attorney‘s fees, id., Portfolio voluntarily dismissed the case, id. at 475. Bushnell subsequently moved for attorney‘s fees, based on the credit card contract—which allowed the creditor to recover fees if required to ask an attorney who was not an employee to collect an account—and
The Second District was “not persuaded by Portfolio‘s argument that the application of the inextricably intertwined test to
ANALYSIS
Resolving the certified conflict issue requires us to determine whether the unilateral attorney‘s fee provisions in the credit card contracts are made reciprocal to the debtors under
In interpreting the statute, we follow the “supremacy-of-text principle“—namely, the principle that “[t]he words of a governing text are of paramount concern, and what they convey, in their context, is what the text means.” Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 56 (2012). We also adhere to Justice Joseph Story‘s view that “every word employed in [a legal text] is to be expounded in its plain, obviоus, and common sense, unless the context furnishes some ground to control, qualify, or enlarge it.” Advisory Op. to Governor re Implementation of Amendment 4, the Voting Restoration
We thus recognize that the goal of interpretation is to arrive at a “fair reading” of the text by “determining the application of [the] text to given facts on the basis of how a reasonable reader, fully competent in the language, would have understood the text at the time it was issued.” Scalia & Garner, Reading Law at 33. This requires a methodical and consistent approach involving “faithful reliance upon the natural or reasonable meanings of language” and “choosing always a meaning that the text will sеnsibly bear by the fair use of language.” Frederick J. de Sloovère, Textual Interpretation of Statutes, 11 N.Y.U. L.Q. Rev. 538, 541 (1934), quoted in Scalia & Garner, Reading Law at 34.
Section 57.105(7), Florida Statutes
If a contract contains a provision allowing attorney‘s fees to a party when he or she is required to take any action to enforce the contract, the court may also allow reasonable attorney‘s fees to the other party when that party prevails in any action, whether as plaintiff or defendant, with respect to the contract.
The parties offer competing interpretations of what is required under
Contrasting formulations of the statutory requirements are also found in the decisions below. In both Ham and Bushnell, the district court was presented with a certified question of great public importance that framed the issue as whether an account stated claim is an action “to enforce a contract.” Ham, 260 So. 3d at 453-54; Bushnell, 255 So. 3d at 474. In line with its interpretation of
We conclude that the result reached in Bushnell and sought by the debtors is supported by the text of
Here, both contracts between the creditor and debtors contained provisions granting the creditor the right to recover “collection costs“—“including... attorney‘s fees” if the creditor used the services of an attorney who was not the crеditor‘s salaried employee for “collect[ing]” the debtor‘s account. Such a provision authorizing fees for the use of a lawyer to collect the account of a debtor is “a provision allowing attorney‘s fees to a party when he or she is required to take any action to enforce the contract.”
In accordance with this analysis we thus reject the proposition argued by Portfolio and accepted by the First District that the credit card contract fee provisions did not extend by their plain terms to account stated causes of action. There is no tenable argument that a provision authorizing fees for action to collect a debtor‘s account does not encompass account stated claims.
The only question remaining regarding the proper interpretation of the statute is whether the second element of that statute was met—that is, whether the debtors “prevail[ed] in any action, whether as plaintiff or defendant, with respect to the contract.” Id. Namely, whether the account stated action in which each debtor prevailed was an “action... with respect to the contract.”
The phrase “with respect to” is a longer way of saying “respecting.” Respecting means “with regard or relation to: REGARDING, CONCERNING.” Webster‘s Third New International Dictionary Unabridged 1934 (1993 ed.). The scope of “with respect to” is necessarily broader than terms such as “based on,” “under,” or “pursuant to.” “With respect to” in this context requires a relationship with the contract containing a unilateral fee provision that may be different than and not as immediate as the relationship that would be required if “based on,”
The Supreme Court has recently recognized—in a case involving the interpretation of a provision of the bankruptcy code—that “[u]se of the word ‘respecting’ in a legal context generally has a broadening effect, ensuring that the scope of a provision covers not only its subject but also matters relating to that subject.” Lamar, Archer & Cofrin, LLP v. Appling, 138 S. Ct. 1752, 1760 (2018). The Court held that a statement regarding a single asset is a “statement... ‘respecting’ a debtor‘s financial condition [because] it has a direct relation to or impact on the debtor‘s overall financial status.” Id. at 1761. In reaching this conclusion, the Court rejected an argument—similar to the argument made in the dissent here—that a narrow sense of “respecting” should be employed in interpreting the statutory provision. The Court stated that it found “no basis to conclude... at least in this context, that ‘related to’ has a materially different meaning than ‘about,’ ‘concerning,’ ‘with reference to,’ and ‘as regards’ ” and observed that “[t]he definitions of these words are overlapping and circular, with each one pointing to another in the group.” Id. at 1759; see also Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383 (1992) (holding that “ordinary meaning” of statutory phrase “relating to” “is a broad one—‘to stand in some relation; to have bearing or concern; to pertain; refer; to bring into association with or connection
Although the account stated claims brought by Portfolio perhaps could not fairly be said to be claims brought “based on,” “under,” or “pursuant to” the credit contracts, there is nonetheless a clear and direct relationship between the credit contracts and the account stated claims. As the First District recognized, an essential element of an account stated cause of action is proof of the existence of a business relationship between the parties. Ham, 260 So. 3d at 456; see also Farley, 37 So. 3d at 937 (explaining that prevailing on an account stated claim requires proof of “an agreement between persons who have had previous transactions, fixing the amount due in respect of such transactions, and promising payment” (emphasis added) (quoting Martyn v. Arnold, 18 So. 791, 793 (Fla. 1895))).
The business relationship and the previous transactions between the debtors and the creditor were predicated on the credit card contracts. Without those contracts, there would have been no business relationship or previous transactions. The accounts that the creditor sought to collect came into existence as a result of the operation of those credit card contracts. So it is a fair reading to say that the account stated actions on which the debtors prevailed were actions “with regard or
We are unpersuaded by the dissent‘s contention that we should adopt a narrow reading of “with respect to” that would preclude the award of fees to the debtors. In the context of the reciprocal fee statute—which manifests a purpose to help level the playing field when a contract contains a unilateral attorney‘s fee provision—the capacious phrase “with respect to” would be a very odd choice to signal the cramped meaning urged by the dissent. We do not believe that it is reasonable to conclude that the legislature would have used a term that is generally recognized to have a “broadening effect” to impose the sort of limitations suggested by the dissent when other terms clearly denoting such limitations are readily available. And the rule of “strict construction” advocated by the dissent—whatever its merits—by no means supports an interpretation of a text that is unreasonable in context.
Here, the “strict construction” advocated by the dissent would deny attorney‘s fees to a prevailing debtor in litigation even though the prevailing creditor in the same litigation would be eligible for an award of fees based on the unilateral contract provision. In its wholly implausible argument that the fee provisions in the credit card contracts afforded it no eligibility for fees in its account stated collection actions, the creditor shows a keen awareness of the patent
We also reject the view that allowing the debtors fees somehow precludes Portfolio from choosing its cause of action. Portfolio was free to choose any action that might be available to enforce its rights. The issue of fees is a separate matter that depends on the contractual provision relating to fees and the relationship of the action brought to that contract. Portfolio could by no means after the fact choose a fee provision other than the one in the credit card contracts between the creditor and debtors. And Portfolio had no right to alter the impact of those prоvisions by unilaterally disavowing an intent to rely on them.
Finally, we find neither Caufield nor Tylinski instructive. Caufield considered the scope of a bilateral fee provision and thus has no analysis concerning
CONCLUSION
We conclude that the unilateral fee provisions in the credit card contracts are made reciprocal to the prevailing debtors under
It is so ordered.
POLSTON, LABARGA, LAWSON, and COURIEL, JJ., concur.
MUÑIZ, J., dissents with an opinion.
GROSSHANS, J., did not participate.
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DETERMINED.
MUÑIZ, J., dissenting.
I agree with a great deal of the majority opinion. I agree with its invocation of the “supremacy of text” principle. I agree with its two-step framework for interpreting
“With respect to” is a phrasal preposition, many of which “are symptoms of officialese, bureaucratese, or other types of verbose style.” Bryan A. Garner, Grammar and Usage, in The Chicago Manual of Style para. 5.174, at 280 (17th ed. 2017). Garner recommends replacing such phrases with single-word prepositions if a single word “will do in context.” Id. And he adds: “For example, if about will replace with regard to or in connection with, a judicious editor will inevitably prefer to use the simрler expression.” Id.
Quite reasonably, the majority thus equates “with respect to” with the single word “respecting.” As the majority notes, “respecting” has the following definition: “with regard or relation to: REGARDING, CONCERNING.” Webster‘s Third New International Dictionary Unabridged (1993 ed.).
This review of the relevant dictionary definitions leads to two conclusions. First, the phrase “with respect to” has a range of meanings. The majority equates “with respect to” with “related to,” which is on the broader end of the spectrum of permissible meanings. But there are equally permissible meanings on the narrower end of the spectrum: “regarding” or “about.” Second, and relatedly, the majority‘s interpretation of “with respect to” is a choice, the product of a judgment call made in the face of a vague statutory phrase. The text itself does not compel the majority‘s interpretation of the statute.
This is important, because the majority‘s result in this case is possible only if one reads the statute as using “with respect to” in the broader sense of “related to.” If one instead reads “with respect to” more narrowly as meaning “regarding” or “about,” the case must come out the other way. An ordinary speaker of English would not say that a legal “action” is “about” a contract that makes no appearance in the case.
So which understanding оf “with respect to” correctly captures the meaning of the phrase as it is used in the context of this particular statute? For several
First, understanding “with respect to” as meaning “about” would have the effect of limiting the statute‘s reach to contract actions. And that is as it should be, because at the most basic level, I think a reader of this statute would most naturally see it as applying to contract cases and not to non-contract cases. To my mind, this sentence from the Fourth District captures how an ordinary person would understand the thrust of the statute: “[T]he purpose behind
Second, understanding “with respect to” in its narrower sense preserves a semblance of symmetry within the statute itself. The operative sentence in its entirety reads:
If a contract contains a provision allowing attorney‘s fees to a party when he or she is required to take any action to enforce the contract, the court may also allow reasonable attorney‘s fees to the other party when that party prevails in any action, whether as plaintiff or defendant, with respect to the contract.
This sentence‘s first clausе shows that the Legislature was concerned with contracts that entitle only one party to attorney‘s fees when that party takes “any action to enforce the contract.” The second clause shows that the Legislature addressed this concern by effectively writing into such contracts a provision
But how much broader? It is reasonable to infer that the Legislature used the broader language to err on the side of the non-named party in contract actions that might not involve “enforcement” of the contract (for example, actions to construe or rescind the contract). It is less reasonable to infer that the Legislature would have used the broader language to reach cases in which the contract is not the subject matter of the action at all. This is especially true because the statute gives the unnamed party attorney‘s fee rights not just as a defendant but as a plaintiff as well. Adopting the majority‘s broader understanding of “with respect to” puts the statute‘s two clauses out of balance.
The majority understandably emphasizes that the contractual аttorney‘s fee provision at issue here would have applied to an account stated action had the creditor prevailed. (In these particular cases, of course, under our case law Portfolio could not have recovered fees because they were not pled in the complaints.) But neither the majority nor I read the statute as requiring strict reciprocity; neither of us interprets the “with respect to the contract” clause of the statute as meaning that the unnamed party gets exactly the same attorney‘s fee rights that the named party would have gotten. Depending on the case, sometimes
Third, the narrower reading of the statute is consistent with the longstanding “rule in Florida requir[ing] that statutes awarding attorney‘s fees must be strictly construed.” Gershuny v. Martin McFall Messenger Anesthesia Prof. Ass‘n, 539 So. 2d 1131, 1132 (Fla. 1989). By setting a background principle of interpretation, this canon properly informs the way the Legislature would use and the public would understand a vague phrase in an attorney‘s fee-granting statute. The сanon tells us that, in the specific context of a statutory attorney‘s fee provision, the expected meaning of the vague phrase “with respect to” is the narrower meaning.
Finally, understanding “with respect to” in its narrower sense would allow courts to administer the statute more objectively and thus more predictably. The narrower meaning of “with respect to” yields a bright-line rule: if the contract with the unilateral attorney‘s fee provision makes no appearance in the case, then the case is not an “action with respect to the contract.” By contrast, the majority‘s reading of the phrase introduces unnecessary ambiguity and difficulty of application. Justice Scalia captures the problem in his inimitable style: “[A]s many
Having adopted the “related to” test, the majority applies the test reasonably in this case. But the test itself defies consistent and objective application. What kind of connection between a non-contract action and the “related” contract is sufficient to trigger the statute‘s attorney‘s fee provision? Under the better reading of
For these reasons, I respectfully dissent.
Application for Review of the Decision of the District Court of Appeal—Direct Conflict of Decisions/Certified Direct Conflict of Deсisions
First District—Case Nos. 1D17-3112 and 1D17-3113
(Escambia County)
Robert N. Heath, Jr. of Robert N. Heath, P.A., Pensacola, Florida; and Louis K. Rosenbloum of Louis K. Rosenbloum, P.A., Pensacola, Florida,
for Petitioners
Diane G. DeWolf, Katherine E. Giddings, and Nancy M. Wallace of Akerman LLP, Tallahassee, Florida,
for Respondent
Janet R. Varnell of Varnell & Warwick, P.A., Lady Lake, Florida; Lynn Drysdale of Jacksonville Area Legal Aid, Inc., Jacksonville, Florida; Craig E. Rothburd of Craig Rothburd, P.A., Tampa, Florida; and Arthur Rubin of We Protect Consumers, P.A., Tampa, Florida,
Ronald S. Canter of The Law Offices of Ronald S. Canter, LLC, Boca Raton, Florida,
for Amici Curiae National Creditors Bar and Association and Florida Creditors Bar Association
Hector E. Lora of Maurice Wutscher LLP, Fort Lauderdale, Florida,
for Amicus Curiae Receivables Management Association International, Inc.