By Gary Blankenship
Senior Editor
Possible unlicensed practice of law victims do not have to have a Florida Supreme Court finding that a specific individual or a company committed UPL in order to bring a civil suit, but the court must have found that the alleged activity is UPL.
The court made that 6-1 ruling on May 13 in an opinion where it also ordered the Bar “” at the request of one or both parties “” to issue a formal advisory opinion on the underlying unlicensed practice of law question. The court also asked the Bar to amend the rule which prohibits it from offering an advisory UPL opinion while a case is being litigated.
The ruling came in a potential class action lawsuit against two banks that refinanced thousands of mortgages for homeowners. As part of those transactions, the banks used nonlawyer employees to prepare mortgage documents, and in turn the borrowers were charged between $50 and $150 for that work.
The suit claimed that was UPL and the homeowners should be reimbursed.
First the trial court and then the Fourth District Court of Appeal dismissed the suit. The Fourth DCA held that while a private UPL action was allowed, it was premature in this case because the Florida Supreme Court, which has jurisdiction over the practice of law and hence what constitutes UPL, had not specifically held the activity an unlicensed practice.
At oral arguments last February 10, Vess Miller, representing the petitioners, argued that the exclusive right over UPL actions by the court applies only to injunctive actions, not civil actions where parties are seeking damages.
Joseph H. Lang, Jr., representing the banks, Merrill Lynch Credit Corporation and World Savings Bank, FSB, argued the practice was not UPL because the bank employees were preparing the documents for the banks, not the clients. The banks, he said, were only passing on the associated costs to the clients.
The banks also argued that circuit courts lacked jurisdiction to hear claims related to UPL because only The Florida Bar could prosecute such claims.
” Although we use different reasoning, we agree with the Fourth District that the Florida Constitution requires this court exclusively to make that determination [on what is UPL]; therefore the [consolidated] cases should be dismissed,” Justice Ricky Polston wrote for the court majority.
The circuit court hearing the case dismissed it saying the court lacked jurisdiction and finding the Supreme Court did not recognize a private cause of action to recover fees paid for UPL. The Fourth DCA agreed with the dismissal, but said there was a private cause of action as long as there was ” “˜a Supreme Court determination on the unauthorized practice of law [as] a prerequisite.'”
Polston wrote that the court agreed with the lawsuit plaintiffs that nothing in Bar rules prohibits private parties seeking to recover damages in the trial courts for UPL.
” However, we agree with the Fourth District that the complaints should be dismissed for failure to state a cause of action. To state a cause of action for damages under any legal theory that arises from the unauthorized practice of law, we hold that the pleading must state that this court has ruled that the specified conduct at issue constitutes the unauthorized practice of law. . . ,” Polston said for the court. ” Stated another way, a claimant must allege as an essential element of any cause of action premised on the unauthorized practice of law that this Court has ruled the activities are the unauthorized practice of law.”
The opinion also said, ” [I]f the actions complained of have been ruled on by this court, then a plaintiff may be able to state a cause of action with proper pleading, even though the defendant accused of the unauthorized practice of law has not been subject to a Florida Bar proceeding. However, a plaintiff will not be able to state a cause of action premised on the unauthorized practice of law on a case of first impression.”
Polston also noted that there are areas where the court has allowed nonlawyers to practice law, such as property managers filing eviction notices against tenants. If sued for that activity, defendants would be able to seek a stay while getting a Bar advisory opinion or seek a dismissal.
The court ordered a suspension of the rule which prohibits the Bar from issuing advisory opinions while litigation is pending and further directed the Bar ” to propose rule changes according to this opinion.”
That includes, according to a footnote, that ” The Florida Bar shall issue a formal advisory opinion upon the request of a party in the circumstances described herein.”
The Bar was ordered to file an amicus brief in the case and to participate at oral argument. The Bar took the position that a Supreme Court UPL ruling on every individual committing UPL was not necessary before filing a civil case, and would limit the relief available. At oral argument Bar UPL Counsel Lori Holcomb was asked how the UPL advisory opinion process would work in these circumstances.
Chief Justice Peggy Quince and Justices Barbara Pariente, Fred Lewis, Jorge Labarga, and James E.C. Perry concurred in Polston’s opinion. Justice Charles Canady dissented, saying the court wrongly has derived a judicial authority over UPL from its regulatory authority granted in Art. V, Sect. 15, of the Florida Constitution for which there is no parallel in any other area of law.
” In asserting this unique jurisdictional claim, the majority departs from the framework previously established under rule 10-7.1(d)(3) and rule 10-9.1(c) of the Rules Regulating The Florida Bar “” a framework which acknowledges the dichotomy between the regulatory process and judicial proceedings in which private parties seek relief. I would quash the decision of the Fourth District Court of Appeal and remand for further proceedings on the merits of the plaintiffs’ claim of unauthorized practice.”
The court acted in Goldberg v. Merrill Lynch Credit Corp., case no. SC08-1360.
