Defaults and Damages: Where Do Attorney’s Fees Fit In? By: Kelly A. Karstaedt, Esq. and Kristen Sinnott, J.D.

2013 I recently came across a piece of information that I had never heard before in my last four years of litigating creditor’s rights cases. I have been advised that attorneys’ fees can never be granted on a Motion for Final Judgment after Default. Who knew? I have had hundreds of default judgments entered, nearly all of which included attorneys’ fees, without once being told that this practice was incorrect. So is it really incorrect? At a recent hearing on my client’s Motion for Final Judgment after Default here in Duval County, the presiding circuit court judge informed me that attorney’s fees are never granted on a default final judgment. The judge’s reasoning stemmed from the classification of attorneys’ fees as unliquidated damages and I was advised that the fees I was seeking could only be granted on a Motion for Summary Judgment. Then just last week again my request for attorneys’ fees at a hearing on a Motion for Final Judgment of Foreclosure after Default in Baker County was questioned by the judge and I was advised that a Motion for Summary Judgment was more appropriate. I was somewhat perplexed by these statements as this has never been an issue before. The Duval County judge was adamant that there is case law on point with the denial of attorneys’ fees on a default judgment. I decided to investigate this new information and, as you may expect, my research was fruitless. I thereafter thought it would be a great time to freshen up on my knowledge of defaults and damages to find clarity in the judge’s statement. Defaults and default final judgments pre-empt a procrastinating defendant from impeding the establishment of claims against them. Rule 1.500, Florida Rules of Civil Procedure, provides when a party against whom affirmative relief is sought has failed to file or serve any paper, the party seeking relief may have the clerk or the court enter a default against him. Following a default, a default judgment can be entered at any time. Id. An entry of a default results in the defendant admitting liability to the well-pled facts in the complaint, as well as the plaintiff’s entitlement to liquidated damages. Bowman v. Kingsland Development, Inc., 432 So. 2d 660, 662 (Fla. 5th DCA 1983). However, a defaulting party has a due process right requiring fair notice and a real opportunity to be heard before any judgment can be entered for unliquidated damages against them. This simply means that a hearing must be held before a judge can enter a judgment awarding attorneys’ fees. Damages are liquidated if the amount to be awarded can be ascertained by the cause of the action plead, i.e., from a pleaded agreement between the parties, a mathematical calculation, or applicable statutory law. Id. Assuming arguendo, a contract between two parties provides for “reasonable attorney’s fees,” this amount cannot possibly be determined to an exact sum without a factual basis of its accumulation. See Bowman (quoting Mystery Fun House, Inc. v. Magic World, Inc., 417 So. 2d 785 (Fla. 5th DCA 1982) (“When entitlement to attorney’s fees is based on a contractual provision, they are recovered, not as taxable costs but as an element of damages in an action on the contract.”) If it is necessary to determine the amount of damages, the court may conduct hearings as it deems necessary and shall accord a right of trial by jury to those parties who have defaulted. Damages are “unliquidated” if they cannot be ascertained to an exact sum without taking an examination of the facts upon which to base a value judgment. Rich v. Spivey, 922 So. 2d 326 (Fla. 1st DCA 2006) (citing Sec. Bank, N.A. v. BellSouth Adver. & Publ’g Corp., 679 So. 2d 795, 800 (Fla. 3d DCA 1996), approved, 698 So. 2d 254 (Fla. 1997). As one cannot account for charges of services and a reasonable basis for attorney’s fees without a presentation of facts 1

or affidavits providing their truthfulness, every claim of damages for services and attorney’s fees is a claim for unliquidated damages. Id. Thus, a defaulting party has a due process entitlement to notice and an opportunity to be heard as to the presentation and evaluation of evidence necessary to a judicial determination of the amount of unliquidated damages. See Bowman. This notice and hearing requirement must be handled prior to the entry of a default judgment awarding the unliquidated damages concerning attorney’s fees. Id., see also Viets v. American Recruiters Enterprises, Inc., 922 So. 2d 1090, 1095 (Fla. 4th DCA 2006). The filing of any paper entitles defendant to notice of application for default. Clark v. Perlman, 599 So. 2d 710 (Fla. 1st DCA 1992). Attorney’s fees will only be awarded with notice and hearing. See Cellular Warehouse, Inc. v. GH Cellular, LLC, 957 So. 2d 662 (Fla. 3d DCA 2007). A failure to provide this notice and the opportunity to be heard renders a judgment void. Cellular, 967 So. 2d at 666. Rule 1.540(b)(4), Florida Rules of Civil Procedure, provides reprieve from void judgments at any time. Viets, 922 So. 2d at 1095 (reversing default final judgment awarding unliquidated damages where judgment was entered upon just the proposed order being sent by mail to the court; plaintiff denied due process). An error in notice does not void the entire judgment, only the award of unliquidated damages. Bowman, 432 So. 2d at 663.Assuming said notice and hearing is provided, an attorney’s fee award requires a showing of competent and substantial evidence to show reasonableness. 1445 Washington Ltd. Partnership v. Lemontang, 19 So. 3d 1079 (Fla. 3d DCA 2009) (citing Brewer v. Solovsky, 945 So. 2d 610, 611 (Fla. 4th DCA 2006). After examination of Florida case law, it is clear that attorneys’ fees as unliquidated damages may only be awarded pursuant to fair notice and an opportunity for the defaulting party to be heard. This is where my confusion began. Why is a hearing on attorneys’ fees not sufficient to allow entry of a final judgment after default including them? Why must it be a summary judgment motion? A hearing is a hearing is a hearing right? Whether you call it summary judgment or judgment after default, the notice and opportunity to be heard are the same. So where does the distinction arise? If anyone can point me in the direction of this mystery case law supporting the theory that attorneys’ fees cannot be granted in a final judgment after default, this attorney would be greatly appreciative. Otherwise, it is business as usual. Practice Areas: Business Litigation; Creditor’s Rights

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