A Florida appeals court has reversed a lower court’s ruling and determined that a consumer is entitled to have his attorney fees covered by a collector that dismissed a collection lawsuit it filed, saying that the collector didn’t assert the choice-of-law provision from the underlying agreement soon enough in the proceedings.
The background: The collector filed a lawsuit against the consumer, seeking to collect an unpaid balance on a credit card account. The consumer responded with an answer, affirmative defenses, and a counterclaim, and asserted a right to recover attorney’s fees under the cardholder agreement and a Florida law which makes one-sided fee provisions reciprocal in each.
- While the collector contested the application of the statute early on, arguing that the case wasn’t based on the agreement but rather on account stated, it didn’t invoke the contract’s Virginia choice-of-law provision until much later, after voluntarily dismissing the case and facing a motion from the consumer seeking fees.
- The trial court ruled the collector needed to cover the consumer’s costs but denied that it needed to pay for the consumer’s attorney’s fees, citing Virginia law, which does not contain a reciprocal attorney fee statute.
The ruling: That was incorrect, the appeals court ruled. The collector waived its ability to rely on the Virginia choice-of-law provision by failing to raise it in its initial pleadings or in response to the consumer’s repeated claims for attorney’s fees, it determined.
- The collector “failed to plead or prove that Virginia law applied when it had opportunities to do so well before the case was dismissed,” the court wrote, adding that “when a party seeks to rely on a choice-of-law provision in a contract, it generally must raise the claim in a pleading.”
- The court also distinguished this case from others where a choice-of-law provision was preserved because the contract formed the basis of the suit and was attached to the complaint. In this case, the collector pursued a theory of account stated and did not rely on or attach the contract initially.
- The appellate court reversed the denial of attorney’s fees and remanded for the trial court to determine the amount to be awarded.
