Debt-buyer can be liable to prevailing consumer for attorney’s fees on account stated lawsuit filed over defaulted credit card

In a 2018 case, Florida’s Second District Court of Appeals has held that a consumer who successfully defended a lawsuit filed over a defaulted Amazon.com credit card debt may recover her attorney’s fees from the creditor who did the suing. After retaining an attorney and opposing the debt buyer’s allegations, the debt buyer chose to voluntarily dismiss its lawsuit. As the “prevailing party” in the action, the consumer sought an award of her attorney’s fees and costs from the debt buyer. The trial court denied this request and the consumer appealed.

In an earlier post, I touched on the American Rule, which is the general rule in litigation requiring all parties to bear their own attorney’s fees and costs. This rule applies unless a statute, procedural rule, or contract provides otherwise. In this case, the contractual exception to the American Rule existed, in that the cardmember agreement between the consumer and the creditor behind the Amazon.com credit card provided that the creditor could recover its attorney’s fees as part of its collection costs if it “ask[ed] an attorney who is not our salaried employee to collect your account.” Further, Florida Statutes § 57.105(7) makes contractual provisions that unilaterally provide one side to recover attorney’s fees (as it was here), reciprocal to both sides of the contract.

Thus, the consumer’s argument was that, because the contract provided that the creditor could recover its attorney’s fees, the statute made that contractual right reciprocal to the consumer. For a reason unclear from the opinion, the debt buyer sued the consumer under an “account stated” theory, rather than a “breach of contract” theory. It The trial court hung its hat on this distinction, determining that “an action for account stated is not an action for breach of the contract.” The 2d DCA held that it didn’t make a difference whether the cause of action is one of account stated or breach of contract and reversed the trial court’s denial of the consumer’s motion for fees. In its analysis, the appellate court cited two requirements for application of the reciprocity provision in section 57.105(7):

1. the contract must include a provision allowing attorney’s fees to a party when it is required to take any action to enforce the contract; and
2. the other party seeking fees must “prevail in any action, whether as plaintiff or defendant, with respect to the contract.”

Why is this notable? Suing under a theory of account stated does not typically require there to be a written agreement between the parties. An account stated theory can be brought merely upon allegations that a debtor received an account statement and failed to object to the accounting therein. So, in the absence of a written instrument providing for attorney’s fees, a prevailing party suing under an account stated theory generally cannot recover attorney’s fees.

In this case, the Second DCA held that, regardless of the plaintiff’s cause of action, if the suit is brought to collect amounts due under a written agreement and the defendant prevails, the contractual right to recover fees and the reciprocity provision of 57.105 should apply.

The case referenced in this blog post is Bushnell v. Portfolio Recovery Assocs., LLC, 2018 WL 4374251, 255 So.3d 473 (Fla. 2d DCA 2018).