Fourth District Court of Appeal. Photo: J. Albert Diaz

Legal standing — the issue that once tilted foreclosure cases in the borrowers' favor — is again proving to be problematic for defense lawyers in appellate court.

Wednesday, the Fourth District Court of Appeal issued a single-paragraph decision, reversing an attorney fees award in a case that turned on standing, or legal grounds to participate in a lawsuit.

The order was the latest of at least three rulings that allowed borrowers to prevail over lenders, but not collect attorney fees that would typically go to the prevailing party.

The case pitted homeowner Joselito Martins against plaintiff Nationstar Mortgage LLC. At trial, Martins proved the plaintiff lacked the legal right to bring suit, by establishing that Nationstar was not the holder of the promissory note. He then moved to collect attorney fees under a clause in the mortgage and the reciprocal provision of section 57.105(7) of the Florida Statutes.

Martin County Senior Judge George A. Shahood ruled for the defendant, but a judicial panel overturned that decision, citing case law from an April 2017 ruling in Nationstar Mortgage v. Glass.

“Because '[a] party that prevails on its argument that dismissal is required because the plaintiff lacked standing to sue upon the contract cannot recover fees based upon a provision in that same contract,' we reverse and direct the trial court to vacate the final judgment awarding fees to Mr. Martins,” Fourth DCA Judge Dorian K. Damoorgian wrote in a unanimous decision with Judges Carole Y. Taylor and Melanie G. May.

The judicial panel reversed Shahood and directed the trial court to vacate the final judgment awarding fees to Martins.

Morgan W. Bates and Allison Morat of Pearson Bitman in Maitland represented Nationstar on appeal, while Jeffrey M. Clyman of Steele Law in Hobe Sound was counsel for Martins.

The issue of attorney fees has taken center stage in recent weeks as foreclosure defense attorneys face a Catch-22 scenario: Defendants, who won cases by arguing their lender was not the rightful owner of the real estate debt, are now finding they can't recover fees from financial institution that weren't party to contracts that allow the prevailing side to recoup litigation expenses.

Now, some foreclosure attorneys are saying the recent appellate rulings are a strategy from courts to discourage lawyers from representing homeowners who defaulted on mortgages. They claim courts use their own arguments against them.

One critic, Weston attorney Roy Oppenheim, said judges were sending a message to him and other foreclosure defense lawyers: They may prevail in the courtroom but won't get paid by the opposing side.

“If the courts think that's how they're going to shut down the Roy Oppenheims of the world, they're mistaken,” said Oppenheim, co-founder and senior partner at Oppenheim Law. “They've emboldened us.”

The issue is now before Florida's Supreme Court, which in February accepted discretionary jurisdiction over the precedent-setting Nationstar Mortgage v. Glass case.