Don’t File a Meritless Claim You Know is Meritless (You May be Exposed to a 57.105 Motion)
Florida Statute 57.105 is a statute designed to deter meritless filings:
“The central purpose of section 57.105 is, and always has been, to deter meritless filings and thus streamline the administration and procedure of the courts.” Mullins v. Kennelly, 847 So. 2d 1151, 1154 (Fla. 5th DCA 2003). Subsection (1) of the statute provides:
(1) Upon the court’s initiative or motion of any party, the court shall award a reasonable attorney’s fee, including prejudgment interest, to be paid to the prevailing party in equal amounts by the losing party and the losing party’s attorney on any claim or defense at any time during a civil proceeding or action in which the court finds that the losing party or the losing party’s attorney knew or should have known that a claim or defense when initially presented to the court or at any time before trial:
(a) Was not supported by the material facts necessary to establish the claim or defense; or
(b) Would not be supported by the application of then-existing law to those material facts.
57.105(1), Fla. Stat. (emphasis added).
South Wild Olive, LLC v. Total Maintenance Services, LLC, 49 Fla.L.Weekly D1059a (Fla. 5th DCA 2024).
Frankly, I’m not a fan of what’s commonly known as a 57.105 motion for sanctions and find that certain lawyers use them as a quasi-bullying tactic. And I’m generally not a fan of filing a motion looking to hold another firm liable for fees. I don’t like the karma behind it. With that said, there are always exceptions.
Could the case of South Wild Olive be an exception? Perhaps, and the facts most definitely support the 57.105 motion for sanctions.
In this case, a contractor sued an owner to foreclose on a construction lien and for breach of contract. The problem was the contractor was not licensed under Florida law. Under Florida law:
“As a matter of public policy, contracts entered into on or after October 1, 1990, by an unlicensed contractor shall be unenforceable in law or in equity by the unlicensed contractor.” § 489.128(1), Fla. Stat. (2020). The Fifth District has rejected the notion that an unlicensed contractor can enforce an agreement when the other party knew the contractor was unlicensed. See Earth Trades, Inc. v. T & G Corp., 42 So. 3d 929, 930 (Fla. 5th DCA 2010). This holding was based on the text of section 489.128, which the Legislature amended in 2003 to clarify that a party other than the unlicensed contractor can enforce the agreement. See id.; § 489.128(3), Fla. Stat. (“This section shall not affect the rights of parties other than the unlicensed contractor to enforce contract, lien, or bond remedies.”).
* The Supreme Court of Florida ultimately agreed with the Fifth District’s analysis. See Earth Trades, Inc. v. T & G Corp., 108 So. 3d 580 (Fla. 2013). The Supreme Court held that “[t]he district court in Earth Trades correctly concluded that the defense that parties to a contract are in pari delicto* was not available to the unlicensed contractor governed by section 489.128, Florida Statutes.” Id. at 587. “Thus, even if proven, the other party’s knowledge is insufficient as a matter of law to place the parties in pari delicto.” Id.**
South Wild Olive, supra.
At an evidentiary hearing, the contractor’s counsel knew that licensure was an issue and the contractor was not licensed. Yet, they tried to play “loose and fast” with language when they should have been more prudent. (There is no doubt about this.) The appellate court was not amused:
The bottom line is that Law Firm filed a breach of contract complaint for a contractor it knew to be unlicensed — even though the contract was unenforceable. See § 489.128(1), Fla. Stat. Law Firm compounded this error by filing an answer to Appellant’s counterclaims that relied upon the unlicensed contractor’s subsequent licensure — a complete irrelevancy under the law. See § 489.128(1)(c), Fla. Stat.; Taylor Morrison Servs., Inc., 163 So. 3d at 1289. Based on these circumstances, sanctions were required. See § 57.105(1)(b), Fla. Stat. (providing “the court shall award a reasonable attorney’s fee” to the prevailing party if “the losing party’s attorney knew or should have known that a claim or defense . . . [w]ould not be supported by the application of then-existing law to those material facts” (emphasis added)). Accordingly, the trial court reversibly erred by not awarding fees. See Suarez v. Bank of N.Y. Mellon Tr. Co., 325 So. 3d 205, 209 (Fla. 2d DCA 2021) (reversing the denial of fees in a case where “[a]t a minimum,” counsel “should have known that the existing law precluded” the relief counsel requested, “particularly after being presented with relevant case law” by the opposing party); Wells v. Halmac Dev., Inc., 189 So. 3d 1015, 1022 (Fla. 3d DCA 2016) (reversing the denial of fees where “counsel knew or should have known” that his client had no “reasonable basis in law” to seek the remedy counsel requested and where the trial court’s later determination that “counsel raised a colorable claim was erroneous as a matter of law”).
South Wild Olive, supra.
Lesson learned: First, don’t file meritless filings. (And if you know it’s meritless, you should definitely not proceed with it.) Second, don’t try to be cute and “loose and fast.” No one will be amused. Third, when receiving a 57.105 motion, review it and consider the position raised in the motion to determine whether you need to dismiss, modify, etc . And last, if filing a 57.105 motion, consider whether you want to be that person that develops the reputation of filing as a quasi-bullying tactic or uses them in specific circumstances. The 57.105 motion in South Wild Olive was justified and the unlicensed contractor’s law firm is now going to pay the price.
Please contact David Adelstein at [email protected] or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.
