Securities Fraud Lawyers Blog
Florida has had a Cost Bond requirement since it was a Territory. As discussed in Part 1 of this article, the Cost Bond statute has not changed much, though the practical impact of the Cost Bond requirement has changed significantly. Still, the Cost Bond Statute is a useful tool in protecting Florida residents from lawsuits by non-residents in Florida courts.
Why Florida Lawyers Should Be Familiar With the Florida Cost Bond Statute
1. Chapter 57.011 may be an effective tool to review when your Florida client is sued by a nonresident plaintiff: a non-resident plaintiff’s technical fault may become a substantive motion to dismiss.
Any Florida lawyer whose client is sued by a non-resident plaintiff should verify that the requisite Cost Bond has been filed. When a non-resident Cost Bond is filed in a case the defendant’s attorney should receive some type of Notice of Filing Non-Resident Cost Bond or at least see it on the docket. Some Florida courts offer a form for non-resident plaintiffs to provide the notice. Thus, if no cost bond is filed within thirty days of when a non-resident plaintiff files suit against your client, you should consider using Chapter 57.011 to help protect your client.
To effectively use Chapter 57.011 to protect your client’s interests there are several steps. You should first file and serve a ‘Defendant’s Notice of Filing Cost Bond’ that gives the non-resident plaintiff an opportunity to file the cost bond. Then, if the non-resident plaintiff fails to file a cost bond you can move to dismiss or otherwise hold the non-resident plaintiff’s counsel liable for costs. While Chapter 57.011 permits a motion to dismiss for failure to file the Cost Bond, Florida case law is mixed as to the outcome of such motions. There are a number of Hillsborough and Pinellas court decisions that have granted such motions, even when the non-resident plaintiff is, for example, national banks arguing (most unsuccessfully) that they are governed by federal law and thus state law does not apply to them in this instance.
2. Florida lawyers representing non-resident plaintiffs remain potentially liable for unpaid costs that were assessed against their client.
The Florida lawyer representing a non-resident plaintiff may be personally responsible for costs. This scenario occurs when a non-resident plaintiff fails to file a Cost Bond. In this situation the failure to pay costs assessed against a non-resident plaintiff may result in the non-resident plaintiff’s Florida lawyer being responsible to pay any such costs. The silver lining is that Florida case law limits the non-resident plaintiff’s Florida attorney’s liability for costs to $100.7 Florida courts have limited the liability to non-resident plaintiff’s lawyers reasoning that the cash is the security, not the attorney.
3. Should the amount of the Cost Bond be increased?
The Cost Bond amount has been $100 since Florida’s Territorial Government implemented a non-resident plaintiff cost bond requirement in 1828. Today, $100 typically will not cover the costs that a Florida resident defendant may incur in defending a lawsuit. Thus, it may be time for the Cost Bond requirement to increase.
One hundred dollars today is equivalent to almost $2,500 dollars in 1828. This was a high threshold in an era when Florida judges earned $1,200 per year (and who, by 1847, earned only $2,00011) and the per capita income in the United States was about $101.12 It was likely no mistake that Florida’s Territorial Government decided that a non-resident filing a lawsuit in Florida was to file a cost bond in an amount that was essentially one years’ wages for the average American. While the legislative history, if any, from 1828 is no longer available, based on these numbers, the circumstantial evidence is strong that Florida’s Territorial Government intended the Cost Bond be a significant protection for Florida residents against non-resident litigants.
Today, the value of $100 is different than 1828 and as a result, if the original purpose of the Cost Bond statute was to protect Florida residents then that purpose is no longer being met. At least one Florida court acknowledges that the Cost Bond Statute, “affords prevailing defendants little secured protection as to costs in lawsuits brought by nonresident plaintiffs.”
“The Florida legislature, however, has not seen fit to increase the amount of this bondable protection notwithstanding the ravages of inflation since 1828. Nonetheless, we do not think that this court by judicial fiat should stand the statute on its head and give the defendants greater secured protection than that which the statute plainly affords. Any changes in this respect should be accomplished by the legislature and not by this court.” Opponents of increasing the Cost Bond requirement might argue that a higher cost bond requirement would be a burden on interstate commerce. This argument, depending on the scale of an increase, may not find support in Florida case law. At least one Florida court has considered this issue. “We do not consider this cost bond requirement placed upon a non-resident who uses the courts of this state for collection of a claim to constitute such a burden.” Of course, at some point an increased bond requirement may well become a burden on interstate commerce and encounter resistance from non-resident plaintiffs.
Summary
Florida, even as a Territory, has always been protective of its residents. When it enacted Cost Bond legislation in the early 1800s, the government clearly intended to raise a high hurdle for non-resident plaintiffs to gain access to Florida courts to sue Florida residents. However, this presumed purpose is arguably no longer being addressed because the Cost Bond requirement remains at $100 which, while worth approximately $2,500 in 1828, is worth significantly less today. The erosion of the protection that this author believes was intended by Florida’s territorial and state governments, should be addressed by the legislature to protect Florida residents in the modern age. Of course, increasing the Cost Bond amount must be done after careful consideration to avoid an undue burden on interstate commerce. In any event Florida lawyers can use the Cost Bond Statute to protect their clients by ensuring that non-resident plaintiffs file the requisite cost bond.
Contact A Florida Personal Lawyer
If you have questions regarding cost bonds in Florida, call an experienced Florida Lawyer at Savage, Combs & Villoch, PLLC at 813-200-0013 today!
Bert Savage is the Clinic Director for theTampa campus of Thomas M. Cooley Law School and where he runs the pro-bono clinic and teaches pre-trial skills. His law practice is focused on securities fraud, commercial litigation, and bankruptcy. He can be reached at bert@savagelaw.us or savager@cooley.edu.