| Question:
Is Florida's Offer of Judgment Statute preempted by FDCPA? |
| [1] |
Florida Court of Appeal |
| [2] |
Case No. 5D99-253 |
| [3] |
753 So.2d 632, 753 So.2d 632, 2000.FL.0043201 |
| [4] |
February 25, 2000 |
| [5] |
KENNETH M. CLAYTON AND NEAL MCCULLOH, ETC.,
APPELLANTS,
V.
KEVIN E. BRYAN AND RENEE M. BRYAN,
APPELLEES.
|
| [6] |
Kenneth M. Clayton and James E. Olsen of Clayton
& McCulloh, Maitland, for Appellants. Kenneth L. Mann, P.A., Orlando,
for Appellees. |
| [7] |
The opinion of the court was delivered by: Peterson,
J. |
| [8] |
Appeal from the Circuit Court for Orange County, W.
Rogers Turner, Judge. |
| [9] |
Kenneth M. Clayton and Neal McCulloh and their law
firm, Clayton & McCulloh (collectively "C&M;), appeal a
supplemental final judgment denying fees and costs to them as prevailing
defendants after they made an offer of judgment in a case involving the
Federal Fair Debt Collection Protection Act ("FDCPA"), 15 U. S.
C. § 1692. Specifically, this case raises the issue of whether Florida's
offer of judgment statute is preempted by FDCPA. In that we agree with the
trial court that it is preempted, we do not consider whether the trial
court further reasonably concluded that the offer of judgment made by the
prevailing defendants was not made in good faith. |
| [10] |
Kevin E. Bryan and Renee M. Bryan ("the
Bryans"), alleged in their action against C&M;that the latter
violated the FDCPA. The trial court dismissed the action and this court
affirmed that dismissal based on the conclusion that the FDCPA does not
apply to condominium maintenance assessments. Bryan v. Clayton, 698 So. 2d
1236 (Fla. 5th DCA 1997), rev. denied, 707 So. 2d 1123 (Fla. 1998), cert.
denied, 118 S. Ct. 2334 (1998). C&M;thereafter sought an award of its
fees in the trial court. Resisting C&M;s quest for attorney's fees,
the Bryans asserted both that C&M;s offer of judgment had not been
made in good faith and that Florida's offer of judgment statute is
pre-empted by FDCPA's provisions that fees are to be awarded to a
prevailing defendant only when the court expressly finds that the
plaintiff's case was "brought in bad faith and for the purpose of
harassment . . . ." 15 U.S.C. §1692.k(a)(3). |
| [11] |
The Bryans find support for their preemption argument
in Moran v. City of Lakeland, 694 So. 2d 886 (Fla. 2d DCA 1997) and
Colorado v. Golden Concrete Co., 962 P. 2d 919 (Colo. 1998), which
explicitly followed Moran. |
| [12] |
Moran involved a section 1983 federal civil rights
action against the City of Lakeland. The city successfully defended the
claim but was not successful in obtaining attorney's fees sought pursuant
to an offer of judgment. The city appealed and the second district found
that Florida's offer of judgment statute, section 768.79, was preempted by
the federal statute which allowed an award of fees only when the suit was
vexatious or brought to harass or embarrass the defendant. 42 U.S.C. §
1988. We conclude that the federal statute involved in the instant case
similarly preempts an award of fees under the offer of judgment statute. |
| [13] |
C&M;attempts to distinguish the Moran case from
the instant case by arguing that here, the plaintiffs brought both a
federal claim under the FDCPA as well as a state law cause of action under
the Florida Consumer Collection Practices Act ("Florida Act").
C&M;asserts, assuming arguendo that preemption of the offer of
judgment with respect to the federal claim applies, that preemption should
not also apply to the fees incurred in defense of the state law cause of
action. However, the state law cause of action exists only because it is
at least as broad, in its protection to the consumer, as the federal act.
Section 559.552, Florida Statutes (1997), one of the sections comprising
the Florida Consumer Collection Practices Act, provides: |
| [14] |
Relationship of State and Federal Law.-- |
| [15] |
Nothing in this part shall be construed to limit or
restrict the continued applicability of the Federal Fair Debt Collection
Practices Act to consumer collection practices in this state. This part is
in addition to the requirements and regulations of the federal act. In the
event of any inconsistency of any provision of this part and any provision
of the federal act, the provision which is more protective of consumer or
debtor shall prevail. [Emphasis added]. |
| [16] |
We conclude that the provision of the federal statute
which provides protection to the consumer by limiting the assessment of
attorney's fees against the consumer for bringing an action is a provision
which is "more protective of the consumer or debtor," than the
provision of the Florida Act. If it is more protective, the Florida Act,
by its terms, cedes to the federal act. If the Florida Act is more
protective of the consumer, the Florida Act controls. Either way, the
offer of judgment statute takes the back seat. |
| [17] |
We conclude that the trial court correctly denied an
award of attorney's fees to C&M;based on its finding that the offer of
judgment statute is preempted by the FDCPA. Only where the court expressly
finds that the plaintiff's case was brought in bad faith or for the
purpose of harassment can attorney's fees be awarded against the
unsuccessful plaintiff in an FDCPA action. |
| [18] |
AFFIRMED. |
| [19] |
ANTOON, C.J., concurs |
| [20] |
HARRIS, J., dissents, with opinion. |
| [21] |
HARRIS, J., dissenting. |
| [22] |
Case No: 5D99-253 |
| [23] |
I respectfully dissent. |
| [24] |
The issue in this case is whether the Federal Fair
Debt Collection Protection Act, which provides that the prevailing
defendant is entitled to attorney fees only if the consumer has brought
the action in bad faith or for the purpose of harassment, supercedes
Florida's offer of judgment statute, section 768.79, Fla. Stat. Since I
believe it does not, and since I believe the defendant's offer of
judgment, although conservative, was made in good faith, I would reverse
the trial court. |
| [25] |
Whether a federal law preempts a state law generally
turns on the answers to four questions. *XX1
(1) Is the state law explicitly preempted by the federal act? The answer
here is no. (2) Is the state law implicitly preempted by federal law
because Congress has regulated the entire field? Again, the answer in our
case is no. (3) Is the state law implicitly preempted because compliance
with both the state and federal law is impossible? Once again, the answer
is no. (4) Is the state law implicitly preempted because its enforcement
would create an obstacle to accomplishment and execution of the full
purpose of the federal law? A thousand times, no. |
| [26] |
The purpose of the federal act involved in this
action is to discourage improper debt collections by encouraging wronged
consumers to sue for damages based on non-compliance with the act. The
prevailing plaintiff receives attorney fees. So as to not discourage a
close, but legitimate, action, Congress has provided that even if the
consumer loses, he or she will not be required to pay attorney fees to a
prevailing defendant unless the action was brought in bad faith or for
harassment. Clearly, therefore, if Florida sought to impose a prevailing
party attorney fees provision in an action under the federal law, it would
be preempted. But there is nothing in the federal act, nor is there a
reason within the policy behind the federal act, that would preclude a
state from requiring that all parties in litigation, even if the
litigation involves this federal act, to realistically evaluate their
case, after filing and after appropriate discovery has been completed, and
to accept a settlement offer commensurate with their claim. *XX2
In the case of an award under the offer of judgment statute, defendant is
not awarded attorney fees as the prevailing party. If one accepts an offer
of judgment, clearly he or she has "prevailed" in the action,
not the one who pays the settlement. The purpose of the Florida statute is
not to discourage consumer protection, nor does it. There is no evidence
that the offer of judgment statute has in any way discouraged civil
actions from being filed in this state. Look at the statistics. Its
purpose is to speed the resolution of all actions once filed in order to
reduce the costs of litigation and to relieve court congestion. It is a
good policy and one, I am sure, Congress did not intend to preempt by the
enactment of this federal act. |
| [27] |
Appellant's position is that since the federal law
says a prevailing defendant cannot recover attorney fees unless plaintiff
is shown to have filed the action in bad faith or for harassment, and
since even though defendant prevailed there was no proof of a bad faith
filing, clearly the award of attorney fees is contrary to the federal act.
But the attorney fees are not sought in this case because of a bad faith
filing. They are sought because plaintiff unnecessarily extended the
action once filed, causing greater costs to both litigants while
unnecessarily tying up court facilities and personnel. By making an offer
of judgment, defendant in effect says: |
| [28] |
"Even though I do not believe you will prevail,
I recognize your action was filed in good faith and, therefore, even if my
client prevails on your claim, he will not be entitled to attorney fees.
Therefore, in order to reduce his obligation to me for my attorney fees,
my client hereby offers you the amount he believes you will receive even
if you win." |
| [29] |
"Ah, but if I prove even a technical violation,
I will be entitled to attorney fees." |
| [30] |
"The offer includes your attorney fees through
the date of the offer." |
| [31] |
"Well, I believe it is possible that I can get
more by going to trial so I reject your offer." |
| [32] |
How can an offer to pay a consumer the value of his
claim discourage the filing of consumer actions? Obviously, if the
consumer later recovers less than seventy-five percent of the offer, he or
she will be responsible, under the Florida statute, for the defendant's
attorney fees from the date of the offer. Not because defendant has
prevailed but because plaintiff acted unreasonably in rejecting a
reasonable offer which would have resolved the matter. If the consumer
loses altogether, he will receive no fees for his attorney and will be
responsible for defendant's fees, but only from the date of the offer. If,
on the other hand, he prevails, but for less than the offer, he will be
entitled to his reasonable attorney fees but will suffer an offset in the
amount of the unnecessary fees he caused the defendant to incur. If we
place the Florida statute side-by-side with the federal act, we see that
it is possible to enforce them both and that the enforcement of both will
not discourage good faith consumer actions. |
| [33] |
Concerning the offer itself. These consumers, who had
failed to pay their condominium assessments when due, were contacted by
attorneys representing the condominium association making a demand for
payment pursuant to the condominium documents. The demand included
interest and the cost of making the demand including attorney fees and the
costs of filing a lien. The consumers complained that even though the lien
had been prepared prior to the letter, it had not actually been filed at
that time (although it was subsequently filed) and hence the inclusion of
the costs for its filing in the demand letter violated the Federal Fair
Debt Collection Protection Act. They sued for damages. |
| [34] |
Although defendant believed that an obligation to an
association which has a fiduciary relationship with the obligee is not a
consumer debt within the contemplation of the Federal Fair Debt Collection
Protection Act, and even if it is, that the consumers' damages would be
nominal because the violation, if any, was technical, it offered $625 to
resolve the matter. |
| [35] |
Although this was a low offer, it was not
unreasonable if the defendant believed the action to involve a mere
technical violation of the act. In Farrar v. Hobby, 508 U.S. 103 (1992),
the United States Supreme Court held that even though one who recovers
only nominal damages under the Civil Rights Act is the "prevailing
party" for attorney fees consideration, the degree of the plaintiff's
overall success goes to the reasonableness of the fee award. The court
upheld the reversal of a fee award of $280,000 in fees because, even
though plaintiff "prevailed," a reasonable fee in a case
involving a technical violation amounting to only nominal damages is no
fee at all. The court in Johnson v. Eaton, 80 Fed. 3d 148 (5th Cir. 1996),
applied Farrar to a Federal Fair Debt Collection Protection Act case
stating: "[E]ven if Johnson's reading of the FDCPA was correct and
she was entitled to receive a reasonable attorney's fee for her technical
victory, Farrar makes it clear that a reasonable fee would be $0.00." |
| [36] |
If defendant herein believed that the consumers could
not prove any actual damages flowing from a technical violation of the
act, then it might reasonably anticipate an award of nominal damages
resulting in little or no consumers' attorney fees and, based on that, the
offer made in this case was not made in bad faith. There is no indication
in this record that defendant believed otherwise. |
| |
|
| |
Opinion Footnotes |
| |
|
| [37] |
*XX1
See Sears Roebuck and Co. v. O'Brien, 178 F.3d 962 (8th Cir. 1999).
|
| [38] |
*XX2 Appellee and
the majority rely on Moran v. City of Lakeland, 694 So. 2d 886 (Fla. 2d
DCA 1997). Moran found a conflict between the provisions of section 1983
of the Civil Rights Act, 42 U.S.C. § 1983, and our offer of judgment
statute. I find no conflict. Two separate policies are involved. The
federal act awards a prevailing defendant attorney fees when the plaintiff
has filed, in effect, a frivolous action. The federal act does not address
the failure to settle a non-frivolous action once a reasonable offer has
been made. An offer of judgment assumes that the action is not frivolous
(otherwise defendant would ask for attorney fees under a more appropriate
provision); it merely indicates that defendant believes that he or she
will prevail or, at the very least, will be responsible for an amount less
than the offer. Because under the test stated in the Sears case cited
above, Florida's offer of judgment statute is neither explicitly preempted
by the act nor implicitly preempted by it because Congress has regulated
the entire field, or because compliance with both acts would be possible
or because enforcement of the Florida statute would not defeat the purpose
of the federal law, Florida's offer of judgment statute should be
enforced. |
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