The Fourth District of Florida held that a mortgagor who was awarded attorney’s fees and costs in a foreclosure which was voluntarily dismissed by the foreclosing bank but who failed to disclose the award in his chapter 11 bankruptcy petition was not judicially estopped from later claiming that award.
The mortgagee defendant in Anfriany v. Deutsche Bank National Trust Company, No. 4D16-4182 (Dec. 6, 2017 Fla. 4th DCA) had filed a foreclosure action that it later voluntarily dismissed. The mortgagor sought and was awarded attorney’s fees and costs in the foreclosure, but the court put off setting the amount of fees. Before a determination on the amount of the fees was made, the mortgagor filed for bankruptcy. The mortgagor did not list any assets in the contingent claims category of the petition or otherwise mention the fee award in the petition. His chapter 13 plan was affirmed in 2014.
In October 2015, the mortgagor requested an evidentiary hearing in the state court to determine the amount of the foreclosure attorney fees and costs. The mortgagee moved to vacate the attorney fee award, contending that the award was barred by judicial estoppel because it was a contingent and unliquidated asset that had to be disclosed in the bankruptcy and the mortgagor failed to disclose it. The mortgagor responded that because his debts were not discharged through his bankruptcy, he did not deprive creditors of the right to collect their debts. Thus, his omission was not prejudicial and he was not judicially estopped from claiming the fees. He also argued the omission was unintentional because he did not know the attorney’s fees were considered an asset and his bankruptcy attorney was unaware that the mortgagor had received the award.
The trial court deemed the mortgagor to be judicially estopped from pursing the fee award because he had knowledge of the undisclosed claims. His failure to disclose was therefore not “inadvertent.” Despite agreeing there was no motive for concealment, the court nevertheless granted the mortgagee’s motion to dismiss. Mortgagor appealed.
There were two arguments made on appeal. The first was that the attorney fee award was not the mortgagor’s asset but rather an asset of his attorney. Second, the trial court improperly failed to consider the nature of his bankruptcy filing (i.e., reorganization of debt versus discharge) and that mortgagor’s failure to disclose the fee was inadvertent. The appellate court affirmed without discussing the first argument.
As to the second argument, the appellate court found the trial court erred by failing to properly apply the doctrine of judicial estoppel as it existed under Florida law. Under Florida law, judicial estoppel has an additional element of misleading the other party on a factual matter upon which the other party relied to its detriment. Reversal was warranted on this ground alone. The court also found there can be no estoppel where both parties are in possession of the facts. Because the mortgagee was a creditor in the bankruptcy it was aware of the fee award. Moreover, the record failed to show any prejudice to the mortgagee. This, coupled the finding that mortgagor had no motive to conceal the fee award, the mortgagor made no intentional misleading statement as a means to obtain an unfair advantage. The trial court order was reversed.Download Related Document