Section 57.105’s New Look: The Florida Legislature Encourages Courts to Sanction Unsupported Claims and Dilatory Actions, Part 1
The Florida Legislature’s recent overhaul of F.S. §57.105 provides courts all over the state with a brand new tool to discourage lazy or unscrupulous litigants (and their legal counsel) from asserting unsupported claims or defenses, or acting in any way to delay civil proceedings. While the language of its predecessor made it the rare case when sanctions were imposed, the new statute alters the applicable standards considerably, and now provides Florida’s courts with substantial authority to sanction litigants—and their attorneys—for taking any unsupported position or action to delay the judicial process. Unlike the prior version of §57.105, the new statute applies to any claim or defense, and to any dilatory action; and it may be raised at any time—even by the court sua sponte. And, unlike “Rule 11” (its federal counterpart), the new §57.105 currently1 provides no “safe harbor” with which challenged litigants and counsel might avoid being sanctioned by simply withdrawing the offending paper or action within a certain period of time.
Since §57.105 has been substantially changed, it is unlikely that prior case law will provide courts or practitioners with much guidance as to what will be expected of them under its demanding new standards. This article reviews the new statute with the aim of offering some direction for bench and bar alike. The authors take a quick look at the language of the new §57.105 and then suggest some possible answers to the myriad questions concerning its substantive and procedural applications. Model forms are provided to assist practitioners and courts in implementing the new statute in practice. Finally, the authors explore the recent decision out of the Fourth District Court of Appeal, the first appellate court in the state to interpret the new law, Forum v. Boca Burger, Inc. , 788 So. 2d 1055 (Fla. 4th DCA 2001).
The New Statute
The new §57.105, which became effective on October 1, 1999,2 provides as follows:
57.105 Attorneys’ fee; sanctions for raising unsupported claims or defenses; damages for delay of litigation—
1) Upon the court’s initiative or motion of any party, the court shall award a reasonable attorney’s fee to be paid to the prevailing party in equal amounts by the losing party or 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 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.
However, the losing party’s attorney is not personally responsible 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. If the court awards attorney’s fees to a claimant pursuant to this subsection the court shall also award prejudgment interest.
(2) Paragraph (1)(b) does not apply 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.
(3) At any time in any civil proceeding or action in which the moving party proves by a preponderance of the evidence that any action taken by the opposing party, including, but not limited to, the filing of any pleading or part thereof, the assertion of or response to any discovery demand, the assertion of any claim or defense, or the response to any request by any other party, was taken primarily for the purpose of unreasonable delay, the court shall award damages to the moving party for its reasonable expenses in obtaining the order, which may include attorney’s fees, and other loss resulting from the improper delay.
(4) The provisions of this section are supplemental to other sanctions or remedies available under law or under court rules.
(5) If a contract contains a provision allowing attorney’s fees to a party when he or she is required to take any action to enforce the contract, the court may also allow reasonable attorney’s fees to the other party when that party prevails in any action, whether as plaintiff or defendant, with respect to the contract. This subsection applies to any contract entered into on or after October 1, 1998.
The New Standard
Unlike its predecessor, which required the movant to establish that a challenged action was completely “frivolous,”3 the new statute has two distinctly separate—and more easily satisfied—standards: 1) a “knew or should have known”4 standard B under §57.105(1), that requires courts to impose sanctions for any claim or defense that the losing party knew or should have known5 was not supported by the facts or law necessary to establish its viability, and 2) a new “unreasonable delay” standard under §57.105(3), that provides for the imposition of sanctions without regard for the substantive merits of a particular pleading or motion, and which applies whenever the court determines that the action was primarily undertaken to cause “unreasonable delay” in the proceedings.6
In essence, the new statute subjects civil litigants to sanctions for asserting any position that does not find substantial support in both fact and law, or for taking any action seen as “intended” to delay the proceeding. In subsection (1), the legislature has heightened (or perhaps reiterated) counsel’s duty of legal and factual diligence.7 While the prior statute limited the court’s power to award fees to only those situations in which the movant was actually able to establish “a complete absence of a justiciable issue of either law or fact” (the so-called “frivolous” action),8 the new standard calls for the imposition of sanctions in any situation where the court finds that the losing attorney or litigant “should have known” that the challenged claim or defense was not “supported” by the facts, or by the application of then-existing law to those facts.9 And, while the old §57.105 required the movant to establish that the entire action was without merit, the new statute can be applied to any individual claim or defense in the proceeding, and a motion for sanctions may be filed at any time.10
The new subsection (1) requires the movant to establish that the offending party either “knew” or “should have known” that the claim or defense being challenged was not founded on fact or the applicable law. As such, §57.105(1) can actually be applied in at least two different situations: 1) where a party (or counsel) has asserted “facts” which cannot be substantiated by the evidence or testimony; or 2) where an otherwise accurate set of facts does not support the particular theory of law to which it is ascribed. Reflecting the Bar’s “ethical” rules, which have almost always required attorneys to conduct a thorough presuit investigation of the facts and law,11 this new statute is certain to encourage civil litigants12 & #x2014;and their counsel—to conduct more intensive investigations and research than have been conducted in the past. These investigations must delve into both the facts and the applicable law for each and every claim (or defense) a party seeks to assert.
Even if the facts and applicable law have been represented correctly, a court may still impose sanctions under §57.105(3) if it finds that the party or lawyer has taken an action for the “primary purpose” of causing “unreasonable delay” to the proceedings.13 this section is obviously intended to discourage the now all-too-common “delay tactics” used by unscrupulous (or lazy) litigants and their counsel. Although the statute does not specify which actions fall within its scope, it is conceivable that sanctionable conduct under this subsection might include tactics like: making unjustified objections at depositions;14 improperly instructing clients not to answer nonprivileged questions;15 filing dilatory motions for protective orders (especially those purposely filed at the last minute);16 setting an unreasonable number of depositions; drafting overbroad discovery requests; interposing unexplained objections to discovery requests;17 providing overbroad or unnecessarily voluminous discovery responses; failing to properly identify discovery responses (or simply responding with a generalized reply, such as “available for inspection and copying upon request,” when a more specific response is appropriate);18 or moving for time extensions to assert claims or defenses without justifiable grounds.19
Quite conceivably, subsection (3) could also be utilized to sanction dilatory “motions to continue” which fail to provide justifiable grounds for the requested continuance, or for overbroad motions to dismiss ( i.e., those which provide no true guidance as to the actual grounds being asserted or have no chance of success), for filing unduly lengthy witness and exhibit lists, or for failing to provide useful addresses for those witnesses.20
It is important to remember that when applying §57.105(3), the court is not to look to the substantive merit of the challenged action, but only to its “primary” purpose, that is, the court is only to determine whether the objectionable action was taken to “unreasonably delay” the proceeding. As with subsection (1), the motion can be made at any time, but unlike subsection (1), subsection (3) appears to require that an evidentiary hearing be held before the court imposes any sanctions.21 When a purposeful delay is found, the statute provides that the court “shall” award the movant attorneys’ fees, reasonable expenses, and any other loss that is compensable.22
Just Who Is Entitled to Move for Sanctions?
Both subsection (1) and subsection (3) permit a §57.105 motion to be raised by “any party” or “upon the court’s initiative.” The term “party” is to be read expansively in this context, and could very well include a number of persons or entities who are not actually named as parties in the litigation.23
In addition, subsection (1) of the new statute now authorizes the court to determine “on its own motion”24 When a litigant (or counsel) should have known that a particular claim or defense lacked sufficient legal or factual support.25 the statute provides little guidance,26 however, as to how and when a court should act on its own initiative.27 While courts should certainly be encouraged—whenever appropriate—to apply their authority here, a trial judge contemplating sua sponte action may wish to provide potential sanctionees with some sort of due process, perhaps providing the affected parties or counsel with the opportunity to file a written justification for the objectionable conduct ( i.e., to avoid the immediate imposition of sanctions) or otherwise permit them to be heard on the matter.28 Although not required, such precautions could only serve to aid the trial judge (and any reviewing court) in ensuring that all parties have been provided adequate opportunity to be heard and to present argument and testimony, which can then in turn serve as record support for the propriety of the trial court’s ruling.29
In fact, if the court is considering sanctions against litigant and counsel, it might also be a good idea to provide the individual litigant(s) with a separate opportunity to proffer defenses that may be different from, or independent of, those that might be raised by counsel.30 And, wherever appropriate, the trial judge may wish to permit litigants additional time to engage separate counsel for the limited purpose of the §57.105 hearing—even where there may be no actual conflict with the litigant’s present counsel. This is because the application of the statute may work to place the lawyer and litigant in an adversarial position,31 And may in fact impact the attorney-client relationship, affecting privilege and confidentiality. This may require the trial judge to consider an in camera inspection of documents or evidence, or an appointment of a separate special master to review the evidence and determine whether a sanction is appropriate.
When Can the §57.105 Motion be Filed?
In stark contrast to its predecessor, the new statute expressly provides that a party may file a §57.105 motion “ at any time during a civil proceeding or action.”32 In fact, although the statute appears to require the filing of a motion, it does not appear that the motion needs to be made in writing.
Under the prior statute, a prevailing party could only seek sanctions after a final judgment had been issued, and it required the prevailing party to file a formal motion, within a reasonable time.33 the new language of §57.105, however, authorizes the court to impose sanctions at any time during the proceeding—even before trial.34
The language of the new statute suggests that the motion be made when the movant has “prevailed” over an unsupported argument (or proven purposeful delay), but there is nothing in the statute to prevent such a motion from being filed prior to an anticipated victory, or after that victory has been won.35 In fact, it is already apparent that a §57.105 motion can be raised on appeal as well.36
Indeed, after losing on a particular claim or defense at a hearing, the losing party could quite conceivably bring a successful appeal on that issue, and then seek sanctions for the untenable argument proffered by the “initial” winner in the trial court below.37
How Should a Motion for Sanctions Be Raised?
The legislature did not establish the exact procedure to be followed in making a motion under the new §57.105, and the Supreme Court has yet to speak to the issue. Some basic rules, however, would seem to apply. First, the particular format to follow in a §57.105 motion likely would depend on the circumstances of the situation and the severity of the sanction being requested. At the very least, the motion should identify the offending pleading or the particular “action” the movant believes to be sanctionable, and should state those specific grounds which establish how it either lacks the proper support or was intended just for delay. The motion should also identify the specific sanction being sought. In many situations, the judge’s prior participation in the proceedings is likely to provide the bench with full knowledge of the relevant facts, and further inquiry will not be necessary. Each motion should be tailored to the specific facts and circumstances of the case. A form motion is enclosed in the notes to this article.38
A court considering sanctions may wish to issue some sort of “show cause” order ( i.e., identifying the potentially sanctionable conduct, and setting a time for a hearing in that regard—perhaps one which would be analogous to that used in a contempt hearing).39 In this way, the court will be best able to follow the mandate of the new statute, but at the same time provide some notice to the offending party as to its intent to impose sanctions, and offer the sanctionee an opportunity to respond. Any such order should identify the specific pleading or other paper subject to sanctions and set a hearing time to consider any evidence or defenses.40 then, if the court does determine that sanctions should be imposed, it should enter an order that details the separate findings which justify each sanction and identifies under which subsection the sanction is being imposed.41 A model order is included in the notes to this article.42
The Sanctions Available
The new statute authorizes a variety of sanctions, including attorneys’ fees, “reasonable expenses,” and even “damages.”43 Each section has its own remedies and rules of application. Under subsection (1), the court is authorized to award the prevailing party a “reasonable attorney’s fee,” and the fee is to be paid “in equal amounts by the losing party and the losing party’s attorney.” Under subsection (3), sanctions are only available against an “opposing party.” Although the new statute does not prescribe any particular method to determine the amount of such fees, the movant should be expected to make the appropriate allegations and, if necessary, provide supporting evidence in a separate filing. In some cases, a hearing on the amount of the fees may be necessary.44
As mentioned, subsection (3) of the new statute also permits the prevailing party to collect “damages” caused by the “delay,” but it does not specify just what kind of damages might be recoverable. A prevailing party under subsection (3) ( i.e., one proving a “purposeful delay”) is entitled to seek “damages” for the “reasonable expenses” incurred in securing the order. And that section specifically provides the award of damages may include “other loss resulting from the improper delay.”
Subsection (4) of the new statute also provides that the court may award any “other sanctions or remedies available under law or under court rules.”45 this subsection makes it clear that the intent of the new statute is to expand the scope of sanctionable acts available, and it encourages courts to do so by 1) emphasizing the responsibilities of each litigant and attorney, and 2) by enforcing those obligations through the imposition of the wide array of sanctions now available.
Defenses to §57.105 Sanctions
There are several defenses which can be raised to a motion made under §57.105, and which defenses are applicable will depend on which subsection the particular motion invokes, and whether the potential sanctionee is a party or an attorney. First, of course, any potential sanctionee (be it litigant or attorney) can argue that the motion is unsubstantiated, arguing in essence that it does not put forth sufficient allegations to warrant a hearing or ultimate sanction.
If the motion is properly pled, potential sanctionees can still avoid liability in a number of ways. If the motion is made under §57.105(1), and attacks the substantive merit of a particular legal position taken, the potential sanctionee may be able to avoid liability upon a showing that the otherwise unsupported position of law had actually been: 1) grounded upon a good faith argument for the “extension” or “modification” of the law (or on a request for the creation of new law); and 2) that the plea for a change in the law had a “reasonable” expectation of success.46 this two-part defense is grounded in the pleader’s “good faith” belief, and is to be judged under an “objective” standard, and thus requires a showing that the sanctionee—or more likely the sanctionee’s counsel—possessed a demonstrable “good faith” belief that the argument for changing the law was both reasonable and feasible.47
There is also a “defense” against §57.105 sanctions that is available only to attorneys. Subsection 57.105(1) provides that a losing party’s attorney will not be held personally responsible for a pleading or other paper containing unsubstantiated facts if he or she can demonstrate having acted in “good faith,” in relying on a client’s representation48 as to the existence of those material facts.49 Thus, this subsection provides a “safe harbor” of sorts for the losing party’s attorney
(but not the losing party), if the attorney can establish that the client either lied or was wrong about the critical facts of the case, that he or she acted in “good faith” in relying upon the client’s inaccurate recitation. This defense also requires a showing of “good faith,” and as such, an attorney who seeks to invoke it will likely have to establish that he or she conducted a “reasonable” investigation of the client’s story, or otherwise had good reason to rely upon the client’s representations. Obviously, if the client represented the facts inaccurately and his attorney has to prove his own client was wrong ( i.e., just to avoid sanctions), the case itself might be in jeopardy—not to mention the attorney-client relationship—so being “sanctioned” may be the least of everyone’s problems. Accordingly, lawyers today need to be particularly careful to investigate the underlying facts and supporting documentation for each claim or defense the client’s version of the facts seems to raise, and should verify—through independent sources if possible—the critical facts which support them.50
The language of the new statute thus seems to draw a distinction between the §57.105 motion directed at unsupported “factual” claims, and those which might be directed at unsupported “legal” claims. This “good faith” defense—applicable only to factual representations and presumably available only to attorneys—contrasts starkly with the “good faith” defense of positions of law, which can be utilized by either a litigant or an attorney.51
As subsection (3) establishes an entirely new substantive right, it is not yet clear what “defenses,” if any, can be raised to such a claim. Presumably, in light of the movant’s burden under subsection (3) to prove the purposeful delay by “a preponderance of the evidence,” the challenged party can argue that this burden has not been met. Other than that, there are no known defenses to this motion at this time.
To continue to part 2 of the article, please click here.