Opinion
CASE NO. 18-80569-CIV-COHN/MATTHEWMAN
2019-11-19
Brian P. FFRENCH, Plaintiff, v. Eileen T. FFRENCH, individually and as successor trustee of the purported 2016 Restatement of the Robert N. Ffrench Revocable Trust, Carl A. Cascio, and Michael S. Ffrench, Defendants.
ORDER ADOPTING REPORT OF MAGISTRATE JUDGE
THIS CAUSE is before the Court upon the Report and Recommendation [DE 73] ("Report") submitted by United States Magistrate Judge William Matthewman regarding Defendant Eileen T. Ffrench's Application for Attorneys' Fees [DE 70] ("Motion"). The Court has reviewed the Motion, the Report, and the record in this case, and is otherwise advised in the premises. The Court notes that Defendant did not file objections to the Report, and the deadline for doing so has passed.
In the Report, Judge Matthewman concludes that Defendant's Motion for attorneys' fees related to Plaintiff's unsuccessful appeal of the Court's July 10, 2018 Order dismissing the Complaint for lack of subject matter jurisdiction [DE 64] should be denied because Defendant cannot be considered a prevailing party in that the Court's dismissal was without prejudice and did not reach the merits of Plaintiff's suit. DE 73. The Court agrees with Judge Matthewman's analysis and conclusions and adopts the Report in full.
Accordingly, it is ORDERED AND ADJUDGED as follows:
1. Judge Matthewman's Report and Recommendation [DE 73] is ADOPTED in its entirety.
2. Defendant Eileen T. Ffrench's Application for Attorneys' Fees [DE 70] is hereby DENIED . DONE AND ORDERED in Chambers at Fort Lauderdale, Broward County, Florida, this 19th day of November, 2019.
MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION THAT THE DISTRICT JUDGE DENY DEFENDANT EILEEN T. FFRENCH'S APPLICATION FOR ATTORNEYS' FEES [DE 71]
WILLIAM MATTHEWMAN, United States Magistrate Judge
THIS CAUSE is before the Court on Defendant's Application for Attorneys' Fees. [DE 71]. This matter was referred to the undersigned for report and recommendation by the Honorable United States District Judge James I. Cohn. See DE 72. Defendant originally filed her application for attorneys' fees in the United States Court of Appeals for the Eleventh Circuit while this case was on appeal there. [DE 70, p. 2-18]. Plaintiff objected to Defendant's application. [DE 70, p. 114-127]. Defendant replied to Plaintiff's objection. [DE 70, p. 134-48]. Upon a sua sponte order of the Eleventh Circuit, Defendant's application was transferred to this Court for appropriate disposition. [DE 70, p. 1]. The Court has carefully reviewed the parties' papers and the entire docket. Thus, this matter is ripe for review. For the reasons that follow, the undersigned RECOMMENDS that the District Judge DENY Defendant's Application for Attorneys' Fees [DE 71].
I. Background
This case arises out of a dispute between Plaintiff Brian P. Ffrench and Defendant Eileen T. Ffrench, siblings and surviving children of Robert N. Ffrench. Before his passing, Mr. Ffrench created the Robert N. Ffrench Revocable Trust. However, the siblings apparently disagreed over matters relating to the Trust and Brian and his brother, Robert, brought two actions in Florida state court to determine Mr. Ffrench's capacity and be appointed his plenary guardians. Defendant Carl Cascio, Esq., was the attorney representing Mr. Ffrench in those state court proceedings.
Rather than litigate their claims, the siblings, with Mr. Cascio's consent, entered into a settlement agreement on March 9, 2015 (the "2015 Settlement Agreement"). The 2015 Settlement Agreement stated that Eileen and a Mr. Douglas Hoffman, Esq., were to be appointed guardians of Mr. Ffrench's person while Eileen's brothers Robert and Brian were to be appointed guardians of his property. It also stated, in Paragraph 25, that if any litigation arose "out of or in connection with this Agreement, or the enforcement of any terms in this Agreement," then "the prevailing party shall be entitled to all reasonable attorneys' fees, costs, and expenses for all trials and appeals." [DE 1-4, p. 11]. The Florida state court approved the 2015 Settlement Agreement that same day. [DE 70, p. 131-33].
Eventually, in September 2016, Mr. Ffrench's capacity was restored and Mr. Ffrench restated the Trust (the "2016 Restatement"). Brian and Robert then filed a declaratory judgment action to determine whether their father had the capacity to make financial decisions. But the siblings again entered into another settlement agreement (the "2017 Settlement Agreement") in which they agreed to avoid further litigation. [DE 70, p. 92-103]. The 2017 Settlement Agreement also stated that the parties "preserve[d], without prejudice, all claims, defenses and causes of action arising from the 2015 Settlement Agreement relating to those issues addressed in Paragraphs 10, 12, 18, 20, 21, 25, and 28[.]" [DE 70, p. 96]. Paragraph 25 of the 2015 Settlement Agreement, again, related to the shifting of attorneys' fees related to any litigation between the parties arising out of the 2015 Settlement Agreement. [DE 1-4, p. 11].
Then, on May 2, 2018, Brian initiated the instant action against Eileen, his brother Michael, and Mr. Cascio seeking rescission of the 2016 Restatement and alleging various violations of the 2015 Settlement Agreement. [DE 1].
Brian, however, was careful whom he named as parties in his newly-filed federal court action. He omitted his brother, Robert, from the instant action, representing that Robert had assigned his causes of action to him instead. [DE 1, p. 2 n.1]. Defendants moved to dismiss Brian's suit, arguing that he had intentionally omitted Robert, who lives in Texas along with his brother Michael Ffrench, a named defendant, in an attempt to preserve federal diversity jurisdiction. [DEs 23, 36, 37]. The Honorable United States District Judge James I. Cohn agreed with Defendants, found that Brian had colluded with Robert to preserve federal diversity jurisdiction, and dismissed Brian's complaint for lack of subject matter jurisdiction. [DE 64]. Brian appealed Judge Cohn's decision to the Eleventh Circuit. [DE 65]. And, on August 6, 2019, a three-judge panel of the Eleventh Circuit affirmed Judge Cohn's decision. [DE 69]. The matter was then returned to this Court to determine Eileen's entitlement to attorneys' fees related to Brian's unsuccessful appeal of the district court's decision. [DE 70].
With this background in mind, the Court turns to Eileen's application for attorneys' fees.
II. Entitlement to Attorneys' Fee Award
Eileen contends she is entitled to attorneys' fees related to Brian's unsuccessful appeal of Judge Cohn's decision under Paragraph 25 of the 2015 Settlement Agreement because she was the prevailing party on appeal and Brian's suit against her arose "out of or in connection with" the 2015 Settlement "or the enforcement of" its terms. Brian argues that (1) Eileen was not a prevailing party and (2) Paragraph 25 of the 2015 Settlement Agreement is void after a September 8, 2016, Florida state court order found that Paragraphs 10 and 21 of the 2015 Agreement were void. In his view, "the [c]ourt's voiding of those two paragraphs resulted in the invalidation of the entire 2015 Settlement Agreement, which precludes Eileen's reliance upon Paragraph 25's provision for prevailing party fees." [DE 70, p. 121].
A "prevailing litigant is ordinarily not entitled to collect a reasonable attorneys' fee from the loser." Alyeska Pipeline Serv. Co. v. Wilderness Soc'y , 421 U.S. 240, 247, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975). This so-called "American Rule" can be overcome, however, by "an enforceable contract allocating attorney's fees." Travelers Cas. and Sur. Co. of Am. v. Pacific Gas and Elec. Co. , 549 U.S. 443, 448, 127 S.Ct. 1199, 167 L.Ed.2d 178 (2007).
Federal courts sitting in diversity jurisdiction ordinarily apply the law of the forum state when deciding entitlement to attorneys' fees. See McMahan v. Toto , 256 F.3d 1120, 1132 (11th Cir. 2001). Thus, the instant dispute is governed by Florida law. Under established Florida law, a prevailing party is the one who succeeds "on any significant issue in litigation which achieves some of the benefit the parties sought in bringing suit." Moritz v. Hoyt Enter., Inc. , 604 So.2d 807, 810 (Fla. 1992). This standard looks for "(1) a situation where a party has been awarded by the court at least some relief on the merits of his [or her] claim, or (2) a judicial imprimatur on the change in the legal relationship between the parties." Smalbein v. City of Daytona Beach , 353 F.3d 901, 905 (11th Cir. 2003) ; see also Buckhannon Bd. and Care Home, Inc. v. W. Va. Dep't of Health and Human Servs. , 532 U.S. 598, 605-05, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001).
Here, Brian's suit was dismissed by Judge Cohn for lack of subject matter jurisdiction. [DE 64]. He appealed that decision and ultimately lost. But Judge Cohn's dismissal was without prejudice to Brian's refiling of the suit in Florida state court. [DE 64, p. 10]. The only issue Judge Cohn decided was whether the court had jurisdiction to hear Brian's suit at all, not whether Brian's claims have merit. And the Eleventh Circuit also did not reach the merits of Brian's suit as the only issue before it on appeal was whether Judge Cohn's dismissal was clearly erroneous. Brian is still free to refile his action in Florida state court. Thus, at this stage of the proceedings, the legal relationship between the parties has not changed whatsoever. Eileen may have prevailed on appeal, but she has not prevailed on the overall litigation between the parties. Thus, the Court finds that, at this stage, Eileen has not prevailed in this litigation and is therefore not entitled to attorneys' fees related to Brian's unsuccessful appeal of the district court's decision.
Both federal and Florida law support the Court's decision. The Supreme Court of the United States "has held that, for a party to be ‘prevailing,’ there must be a ‘judicially sanctioned change in the legal relationship of the parties.’ " Dattner v. Conagra Foods, Inc. , 458 F.3d 98, 101 (2d Cir. 2006) (quoting Buckhannon , 532 U.S. at 605, 121 S.Ct. 1835 ). Dismissals for lack of subject matter jurisdiction, such as Judge Cohn's dismissal or the Eleventh Circuit's affirmation of Judge Cohn's decision, or dismissals without prejudice in general, usually do not qualify parties for prevailing party status. See , e.g. , id. at 103 ; Interim Healthcare Inc. v. Suncoast Loving Care, LLC , No. 18-60766, 2018 WL 6620314, at *3 (S.D. Fla. Nov. 28, 2018) ("Although Defendants prevailed in having the [plaintiff's] breach of contract claims dismissed in the federal court, they have not prevailed in the overall litigation, as those same claims may now be re-filed in the state court."), report and recommendation affirmed and adopted , 2018 WL 6978625 (S.D. Fla. Dec. 28, 2018) ; Szabo Food Servs. Inc. v. Canteen Corp. , 823 F.2d 1073, 1076-77 (7th Cir. 1987) (defendant was not prevailing party where complaint was dismissed without prejudice because the dismissal did "not decide the case on the merits ....The defendant remains at risk"); Keene Corp. v. Cass , 908 F.2d 293, 298 (8th Cir. 1990) (to be a prevailing party, "a party must succeed on some claim or significant issue in the litigation which achieves some benefit the parties sought"). This is because
[s]ometimes victory on a jurisdictional point merely prolongs litigation. A defendant may persuade the court that the plaintiff has sued too soon, or in the wrong court, or failed to jump through a procedural hoop. Then the dispute will continue later, or elsewhere, and it remains to be seen who will prevail. Such a victory is like persuading a judge to deny summary judgment, a step that transfers decision to a jury but does not end the litigation in defendant's favor and therefore does not make it a prevailing party.
Citizens for a Better Environment v. Steel Co. , 230 F.3d 923, 929-30 (7th Cir. 2000)
Turning to Florida law, Florida courts have routinely followed the same principles. Indeed, no less than the Florida Supreme Court has instructed that, absent an express statutory provision to the contrary, a party is considered to be "prevailing" only at the point where "there must be some end to the litigation on the merits so that the court can determine whether the party requesting fees has prevailed." Thornber v. City of Ft. Walton Beach , 568 So.2d 914, 919 (Fla. 1990) ; see also Rural Int'l Bank Ltd. v. Key Financial Investment Grp. LLC , No. 16-22280, 2018 WL 4829217, at *2 (S.D. Fla. Sept. 7, 2018) ("It is undeniable that, when there is a non-merit-based dismissal of a case without prejudice, Florida law does not per se confer prevailing party status on the successful movant."), report and recommendation affirmed and adopted , 2018 WL 4828433 (S.D. Fla. Sept. 27, 2018). Thus, the Florida Supreme Court in Thornber held that prevailing defendants could seek attorneys' fees under a statutory fee shifting provision after the claims against them had been dismissed with prejudice. Id. The dismissal "signal[ed] an end to the litigation" and thus the defendants were considered prevailing parties. Id.
Eileen principally relies on several Florida state court decisions holding that a defendant is a prevailing party where the plaintiff's case is dismissed without prejudice: Henn v. Ultrasmith Racing, LLC , 67 So.3d 444 (Fla. Dist. Ct. App. 2011) ; Valcarcel v. Chase Bank USA N.A. , 54 So.3d 989 (Fla. Dist. Ct. App. 2010) ; Alhambra Homeowners Ass'n, Inc. v. Asad , 943 So.2d 316 (Fla. Dist. Ct. App. 2006) ; and Baratta v. Valley Oak Homeowners' Ass'n , 891 So.2d 1063 (Fla. Dist. Ct. App. 2004). The Court finds each of them inapposite.
Both Henn and Valcarcel indeed involved dismissals without prejudice, like the one at issue here. But in those cases, the trial court dismissed the plaintiff's action without prejudice as a form of sanctions against the plaintiffs for their misconduct. See Henn , 67 So.3d at 445 (holding that "when the court dismisses an action without prejudice as a sanction, the defendant may be deemed a prevailing party"); Valcarcel , 54 So.3d at 990 (noting that "[t]he trial court granted the [defendants'] motion to dismiss as a sanction against Chase"). Here, Brian's action was dismissed for lack of subject matter jurisdiction, not as some form of sanction. Thus, Henn and Valcarcel fail to support Eileen's position.
Asad , too, is factually and procedurally different from the instant action. There, a homeowners' association sued the defendants, alleging violations of the association's declaration of covenants and restrictions. Asad , 943 So.2d at 317. But the association failed to comply with the statutorily-required conditions precedent to filing suit laid out in Fla. Stat. § 720.311 (2004). Id. The defendants moved for summary judgment on that basis, but the association filed a notice of voluntary dismissal without prejudice. Id. at 318. After the court dismissed the association's action, defendants moved for attorneys' fees under Fla. Stat. § 720.305(1), arguing they were a prevailing party as the association had voluntarily dismissed its suit. Id. The trial court agreed, and, on appeal, so did the Fourth District Court of Appeals of Florida. But the appeals court's decision applied Florida case law specific to voluntary dismissals, rather than involuntary dismissals, such as the one at issue here. See, e.g. , Stuart Plaza, Ltd. v. Ail. Coast Dev. Corp. of Martin County , 493 So.2d 1136 (Fla. Dist. Ct. App. 1986) ("Initially, we point out that when a plaintiff takes a voluntary dismissal the defendant is the prevailing party."); Hatch v. Dance , 464 So.2d 713 (Fla. Dist. Ct. App. 1985) (noting that "it is well-established that statutory or contractual provisions providing for an award of attorney's fees to the prevailing party in a litigation encompasses defendants in suits which have been voluntarily dismissed").
Finally, Eileen relies on Baratta . But Baratta , like Asad , is factually distinguishable. There, the plaintiff's action was dismissed for failure to prosecute. Baratta , 891 So.2d at 1064. Here, Brian's suit was dismissed for lack of subject matter jurisdiction, not for lack of prosecution. Again, the focus is on the reason for dismissal.
The distinction between voluntary and involuntary dismissals makes sense. When a plaintiff voluntarily dismisses its action, it has voluntarily chosen to withdraw the suit for whatever reason. But when a plaintiff's action is involuntarily dismissed by a court for lack of subject matter jurisdiction, it is the court that controls the dismissal and the grounds for that dismissal are jurisdictional, rather than merits-based. Thus, courts routinely find that defendants are prevailing parties where plaintiffs voluntarily dismiss their claims, see, e.g. , Asad , 943 So.2d at 318 ; Hatch , 464 So.2d at 713 ; Stuart Plaza , 493 So.2d at 1136, but not where the plaintiff's claim is involuntarily dismissed, see, e.g. , Dattner , 458 F.3d at 103 ; Citizens for a Better Environment , 230 F.3d at 929-30 ; Szabo Food Servs. Inc. , 823 F.2d at 1076-77 ; Cass , 908 F.2d at 298 ; Rural Int'l Bank Ltd. , 2018 WL 4829217, at *2.
Here, Brian's action was dismissed for lack of subject matter jurisdiction after Judge Cohn found, and the Eleventh Circuit affirmed, that he colluded to try and preserve diversity jurisdiction. Brian is free to refile his action in state court and, thus, this is not "a situation where a party has been awarded by the court at least some relief on the merits of his [or her] claim" nor has there yet been "a judicial imprimatur on the change in the legal relationship between the parties." Smalbein , 353 F.3d at 905.
III. Conclusion
In light of the foregoing, the undersigned RECOMMENDS that the District Judge DENY Defendant's Application for Attorneys' Fees [DE 71] as she has failed to establish entitlement to attorneys' fees.
NOTICE OF RIGHT TO OBJECT
A party shall file written objections, if any, to this Report and Recommendation with United States District Judge James I. Cohn within fourteen (14) days of being served with a copy of this Report and Recommendation. See 28 U.S.C. § 636(b)(1)(C). Failure to object to this Report and Recommendation within that time period waives the right to challenge on appeal the District Court's order based on unobjected-to factual and legal conclusions. 11th Cir. R. 3-1.
RESPECTFULLY SUBMITTED in chambers at West Palm Beach, Palm Beach County, Florida, this 4th day of November 2019.