Offer of Judgment directed to a foreclosure deficiency

The Fort Myers lawyers of the Powell Law Firm, in conjunction with appellate support from Brett C. Powell in our Miami office, would like to share a strategy that worked well in a recent foreclosure case.

The Powell Law firm represented a Fort Myers landowner in a foreclosure proceeding. The Fort Myers landowner wanted to consent to the foreclosure judgment, but was concerned about the potential of a deficiency judgment being entered against him personally.  The bank’s lawyer would not “waive the deficiency” even if the Fort Myers landowner consented to the foreclosure judgment. After careful deliberation (and client consent), the Fort Myers lawyers of the Powell Law Firm took the calculated risk of serving the bank with an offer of judgment directed to the deficiency.

An offer of judgment is a written settlement proposal drafted pursuant to Rule 1.442 and section 768.79, that alerts your adversary (the bank in this case) that you are willing to settle the damages portion of the lawsuit by agreeing to a judgment at a stated amount.

Section 768.79 states:

In any civil action for damages filed in the courts of this state, if a defendant files an offer of judgment which is not accepted by the plaintiff within 30 days, the defendant shall be entitled to recover reasonable costs and attorney’s fees incurred by her or him . . . from the date of filing of the offer if the judgment is one of no liability or the judgment obtained by the plaintiff is at least 25 percent less than such offer, and the court shall set off such costs and attorney’s fees against the award.

In this case, we offered $10,000 to settle the deficiency aspect of the case. The bank did not accept our offer, and the property was sold at auction to the bank for the entire judgment amount. The Fort Myers lawyers of the Powell Law Firm then filed a motion for summary judgment on the issue of deficiency arguing that there is no deficiency as a matter of law because the bank bid the entire judgment amount at the foreclosure auction. The trial court agreed, and entered a Final Judgment in favor of the defendant. Then, the Fort Myers lawyers of the Powell Law Firm, filed a motion for attorney fees and costs alleging that such fees and costs were recoverable pursuant to the Offer of Judgment statute. Ultimately, the trial court found that the defendant was entitled to recover his attorney fees and costs for litigating the deficiency aspect of the case.

The strategy used in this case can be employed in a variety of situations. Obviously there are risks associated with serving an offer of judgment, and if you are not a Florida lawyer, you should consult with a Florida Lawyer regarding those potential risks. In addition, it should be noted that this strategy worked well because we had ample evidence that the property’s value was at or above the judgment amount (thus even if the bank didn’t bid the judgment amount, we would still have been prepared to bring a motion alleging “no deficiency.”). We write about this strategy because it is definately a tool to consider in negotiating and/or defending against a deficiency judgment in an appropriate case.

The Powell Law Firm has offices in Fort Myers, Miami, and Key West. We have experience representing lenders and borrowers in mortgage foreclosure proceedings.