I. A primer on 57.105.

Section 57.105, Florida Statutes, provides for the shifting of attorney fees where parties to litigation pursue frivolous claims or defenses. To fully understand the recent AT&T case, it is important to understand the language of the subsections at issue, how the statute operates, and the statute’s purpose:

Section 57.105(1) states:

(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.

(emphasis added).

In turn, section 57.105(3) states in pertinent part:

(3) Notwithstanding subsections (1) and (2), monetary sanctions may not be awarded:

(a) Under paragraph (1)(b) if the court determines that the claim or defense was initially presented to the court as a good faith argument for the extension, modification, or reversal of existing law or the establishment of new law, as it applied to the material facts, with a reasonable expectation of success.

(b) Under paragraph (1)(a) or paragraph (1)(b) against the losing party’s attorney if he or she has acted in good faith, based on the representations of his or her client as to the existence of those material facts.

         Elsewhere in the statute, section 57.105(4) requires the moving party to serve the motion on the nonmoving party – but not file it with the Court – without giving the nonmoving party 21 days to withdraw its allegedly frivolous claim or defense. If the non-moving party withdraws or appropriately corrects the issue within 21 days, the motion is not filed and the offending party is not subject to a potential attorneys’ fee award. If not, the matter proceeds and the non-moving party can be subject to sanctions.

As the Third District previously explained, the purpose of section 57.105 is “to discourage baseless claims, stonewall defenses, and sham appeals by sanctioning those responsible for unnecessary litigation costs.” See e.g. Vissoly v. Sec. Pacific Credit Corp., 768 So.2d 482, 492 (Fla. 3d DCA 2000).

II. The case below.

In this case, the Plaintiff sued AT&T for fraud and FDUTPA violations because Plaintiff claimed that AT&T throttled the data speed on his unlimited data plan. The problem, however, was that Plaintiff never had an unlimited data plan. In response, AT&T answered the complaint and moved for judgment on the pleadings. While the motion was pending, AT&T served Plaintiff with a motion for sanctions under 57.105(1)(a) based on the fact that Plaintiff did not maintain an unlimited data plan, and the motion included a declaration from AT&T in support. However, after receiving the motion, Plaintiff did not withdraw the complaint within the twenty-one-day safe harbor provided by the statute. Instead, the trial court orally granted AT&T’s motion for judgment on the pleadings with prejudice. Before a written order was entered, Plaintiff voluntarily dismissed his suit without prejudice; however, the withdrawal did not moot AT&T’s motion for sanctions.

In defending against the sanctions motion brought under 57.105(1)(a), Plaintiff argued that the good faith exception under 57.105(3)(a) should apply because Plaintiff could have amended its lawsuit to allege that he had a tier data plan that was throttled. AT&T countered that sanctions were still appropriate because the complaint was based on a false assertion of material facts (i.e., the unlimited plan) which 57.105 treats differently than improper applications of the law. Specifically, AT&T argued that the good faith exception found at 57.105(3)(a) does not apply to: i) a false statement of material fact that is not withdrawn in the safe harbor period; or ii) claims that could have been, but were not, asserted.

The lower court denied AT&T’s sanctions motion which led to the appeal before the Third District.

III. The Third DCA’s reversal.

On appeal, the Third District reversed one of the trial court’s rulings but affirmed the other, resulting in Plaintiff and his counsel being stuck with the bill for AT&T’s legal fees.

First, the Third District ruled that the lower court erred in applying the “good faith” safe harbor under section 57.105(3)(a) to AT&T’s sanctions motion because the plain language of the subsection states that it only applies to sanctions motions brought under 57.105(1)(b). In short, the Third District found that AT&T met its burden under 57.105(1)(a) via its uncontested declaration establishing that Plaintiff did not have an unlimited data plan, and consequently the Plaintiff’s claims were not supported by material facts necessary to sustain the claim.

Second, the Third District found that the lower court committed an abuse of discretion in failing to find that, under 57.105(1)(a), Plaintiff and his attorney knew, or should have known, that Plaintiff’s claim was not supported by material facts necessary to establish the claim. Although Plaintiff’s complaint alleged that he was not in possession of his contract, the Third District found that Plaintiff could have confirmed what type of data plan he maintained by reviewing his own billing statements. Additionally, Plaintiff could have confirmed that Plaintiff did not have an unlimited data plan after receiving service of the 57.105 motion during the twenty-one day safe harbor period. Because he did not, the District Court ruled that sanctions were warranted.

The Third District also held that Plaintiff’s counsel could not avoid liability for monetary sanctions under 57.105(3)(b) for acting “in good faith, based on the representations of his or her client as to the existence of those material facts.” The court found that counsel could have and should have confirmed the data plan type prior to filing, or at a minimum after receiving AT&T’s sanctions motion with the declaration. Additionally, the court rejected the lawyer’s reliance on the fact that he did not amend the complaint to allege data throttling under a tiered data plan because he never sought leave to amend.

IV. Post Script.

There are two additional features of this case that are worth noting. First, the Third District panel was comprised of Fourth DCA judges. This happens sometimes when, as here, a party is represented by a former DCA judge. Second, the opinion includes a robust dissent which should be reviewed (and embraced) in spite of the majority decision. The dissent describes the evidentiary burden in 57.105 proceedings and concludes that, unless the non-moving party has agreed, the moving party should be required to present its case through live witnesses. Thus, the dissent argued that AT&T’s written declaration, alone, was not enough to sustain its burden. Adding insult to injury, the dissent observed that the declaration was never moved into evidence at all. However, as the majority observed, the Plaintiff’s lawyer never argued that issue before the trial court and therefore waived it.

Regardless of which side you are on, FIDJ’s seasoned trial and appellate litigators can help you.