Court Opinion

ID: 2826183
Source: CourtListenerOpinion
Date Created: 2015-08-11 15:02:57.98349+00
Date Added: 2024-06-11T13:39:31.994234
License: Public Domain

Case: 14-11309    Date Filed: 08/11/2015   Page: 1 of 8

                                                            [DO NOT PUBLISH]

              IN THE UNITED STATES COURT OF APPEALS

                       FOR THE ELEVENTH CIRCUIT
                         ________________________

                               No. 14-11309
                           Non-Argument Calendar
                         ________________________

                     D.C. Docket No. 0:11-cv-62040-WPD

TEC SERV, LLC,
a Florida Limited Liability Company,
JOHN R. TOSCANO, INC.,
a Florida corporation,

                                                              Plaintiffs-Counter
                                                         Defendants-Appellants,

MARILYN TOSCANO,
JOHN TOSCANO,

                                                        Third Party Defendants-
                                                 Counter Defendants-Appellants,

                                       versus

MICHAEL ALAN CRABB,
individually,
A DESIGN AT SUNNINGHILL, INC.,
a Florida corporation,

                                                        Defendants-Third Party
                                                    Plaintiffs-Counter Claimants-
                                                                       Appellees.
               Case: 14-11309     Date Filed: 08/11/2015     Page: 2 of 8

                            ________________________

                    Appeal from the United States District Court
                        for the Southern District of Florida
                          ________________________

                                   (August 11, 2015)

Before MARTIN, ANDERSON and BLACK, Circuit Judges.

PER CURIAM:

      John Toscano and Marilyn Toscano (collectively, the Toscanos) appeal the

district court’s denial of their motion for attorneys’ fees and costs in a civil suit

brought against them in their individual capacities by a former work associate,

Michael Crabb. Upon review, we vacate and remand for further proceedings

consistent with this opinion.

                                  I. BACKGROUND

      To place the current appeal in context, it is first necessary to briefly recount

the procedural history of this case. In 1985, John Toscano formed an engineering

and project management services company, John R. Toscano, Inc. (JRTI). In July

2005, JRTI hired Crabb as an engineer. In 2008, the Toscanos and Crabb formed

another company, Toscano Engineering and Construction Services, LLC (TEC

Serv), to provide engineering contracting services on behalf of large petroleum-

related customers. Pursuant to the TEC Serv Members’ Agreement (the

Agreement), the Toscanos held 52 percent of the membership interest in TEC Serv

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and Crabb owned the remaining 48 percent interest. Crabb served as Vice

President and his duties included the marketing and sale of TEC Serv’s services.

       In July 2011, the Toscanos terminated Crabb’s membership interest and

employment with TEC Serv based on his alleged failure to adhere to company

policies. In September 2011, Crabb filed suit in state court, alleging that the

Toscanos and TEC Serv breached the Agreement and the implied covenant of good

faith and fair dealing by terminating his employment. The Toscanos and TEC Serv

subsequently removed the action to federal court.

       TEC Serv and JRTI then filed a separate sixteen-count suit 1 against Crabb.

Briefly stated, TEC Serv and JRTI alleged that Crabb: (1) breached the terms of a

non-competition clause in the Agreement with his post-termination conduct; and

(2) misappropriated and converted a company laptop and USB drive that contained

confidential information, including trade secrets and project, financial, business,

and employment records.

       Crabb in turn filed a thirteen-count counterclaim and third party complaint

against TEC Serv and JRTI, and he also named the Toscanos as individual

defendants. Crabb largely reiterated the claims from his original state-court

complaint surrounding his termination, namely, breach of the Agreement, breach

1
 In their complaint, TEC Serv and JRTI alleged, inter alia, violations of the Computer Fraud
and Abuse Act (CFAA), 18 U.S.C. § 1030 et seq., the Stored Communications Act, 18 U.S.C.
§ 2701 et seq., the Lanham Act, 15 U.S.C. § 1126, the Florida Deceptive and Unfair Trade
Practices Act, misappropriation of trade secrets, trespass of chattels, conversion, and replevin.
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of the covenant of good faith, fraudulent inducement, and a declaration that the

non-compete clause in the Agreement was void by material breach.

      In a motion for summary judgment, the Toscanos argued they could not be

held individually liable for any purported breach of the Agreement because “any

actions taken by the Toscanos were in their representative capacity and on behalf

of TEC Serv, and not as individuals.” The district court rejected this argument and

concluded that the Toscanos could be held individually liable for the purported

breach because they signed the Agreement in their individual capacities.

      Following a twelve-day bench trial, the district court found in favor of TEC

Serv on its claim that Crabb engaged in conversion when he retained a laptop and a

USB drive and granted the request for replevin of those items. But the court

highlighted that TEC Serv had failed to establish damages. Additionally, the court

noted that TEC Serv’s remaining claims failed, and all of Crabb’s claims were

without merit because he was properly terminated due to his breach of TEC Serv’s

policies. The court observed that “[t]his case is not unlike a divorce case” with

each side accusing the other of wrongdoing, and thus “the outcome to the parties’

disputes should be a wash.”

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       After entry of judgment, TEC Serv, JRTI, and the Toscanos jointly moved 2

for attorneys’ fees and costs based on the terms of the Agreement, which provided,

in pertinent part, that:

       Should it become necessary for any party to institute legal action to
       enforce the terms and conditions of this Agreement, the prevailing
       party or parties shall be awarded a reasonable attorneys’ fee, which
       shall include a reasonable attorneys’ fee for any appellate proceedings
       and expenses, including any accounting expenses and costs.

The Toscanos highlighted that as third-party defendants, they were entitled to fees

and costs because they had prevailed on each of Crabb’s claims against them. The

magistrate judge issued a report and recommendation (R&R), recommending that

the Toscanos’ motion for fees be denied because “[n]o damages were proved by

any party.” The district court adopted the R&R, explaining “Tec Serv et al.” had

succeeded only on a conversion claim and replevin claim, but lost on thirteen other

claims, while Crabb had lost on all his claims. As such, the court concluded that

“there was no ‘prevailing party’ entitled to fees or costs under the Members’

Agreement.” The instant appeal followed. 3

                               II. STANDARD OF REVIEW

2
 Crabb also submitted a motion for attorneys’ fees, but noted that “based on . . . controlling
precedent and the Court’s findings of fact and conclusions of law, neither Plaintiffs nor
Defendant should be awarded their or his attorneys’ fees.”
3
  The parties do not raise any arguments pertaining to the merits of the underlying judgment in
their appellate briefs. As such, the sole issue on appeal is whether the district court erred by
denying the Toscanos’ motion for attorneys’ fees and costs.
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      Under Florida law, “where a contract provides for an award of prevailing

party attorney’s fees, the trial court is without discretion to decline to enforce that

provision.” Lasco Enters., Inc. v. Kohlbrand, 819 So. 2d 821, 826 (Fla. Dist. Ct.

App. 2002). In limited circumstances, however, courts may determine that no

prevailing party exists and may decline to award any fees pursuant to a contractual

provision. Id. at 826-27. We review the factual findings underlying a district

court’s determination regarding prevailing party status for clear error. Church of

Scientology Flag Serv., Org., Inc. v. City of Clearwater, 2 F.3d 1509, 1512-13

(11th Cir. 1993). “Whether the facts as found suffice to render the plaintiff a

‘prevailing party’ is a legal question reviewed de novo.” Id. at 1513.

                                  III. DISCUSSION

      TEC Serv’s Members’ Agreement provides for an award of attorneys’ fees

and costs to the “prevailing party” on any claim brought to “enforce the terms and

conditions” of the Agreement. The Agreement, by its own terms, is governed by

Florida law. The parties do not dispute that Crabb sued the Toscanos, individually,

to enforce the terms and conditions of the Agreement. The only question,

therefore, is whether, under Florida law, the Toscanos would be considered the

prevailing party on Crabb’s claims.

      Under Florida law, the prevailing party for attorneys’ fees is “the party

prevailing on the significant issues in the litigation.” Moritz v. Hoyt Enters., Inc.,

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604 So. 2d 807, 810 (Fla. 1992). Notably, a party need not obtain affirmative relief

to be considered a prevailing party; it is enough that a party successfully defends

against claims brought against it. See Point E. Four Condo. Corp. v. Zevuloni &

Associates, Inc., 50 So. 3d 687, 688 (Fla. Dist. Ct. App. 2010) (“When one party

loses in an action for breach of contract, the adverse party is the prevailing party.”).

      Applying these principles here, the Toscanos are prevailing parties because

Crabb lost all of his claims against them. In fact, the district court specifically

found all of Crabb’s claims failed as a matter of law. Nonetheless, the district

court concluded no party to the litigation—the Toscanos included—qualified as

prevailing parties because, according to the district court, the dispute “ended in a

wash” and “no party obtained any substantial relief.”

      While that may be true with respect to the litigation between TEC Serv and

Crabb, there was no “wash” between the Toscanos and Crabb. See, e.g.,

Schoenlank v. Schoenlank, 128 So. 3d 118, 122 (Fla. Dist. Ct. App. 2013)

(affirming trial court’s decision not to award attorneys’ fees because “[e]ach party

prevailed, and lost, on significant issues” and thus “neither party clearly

prevailed”). Crabb sued the Toscanos in their individual capacities, legally

separate from TEC Serv. See Fla. Stat. § 605.0108(1) (noting that a limited

liability company such as TEC Serv is considered “an entity distinct from its

members”). As third-party defendants, the Toscanos had no role in the litigation

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between TEC Serv and Crabb. Although the Toscanos were listed out as

individual defendants in Crabb’s suit, they did not join TEC Serv’s suit against

Crabb and never filed a counterclaim against Crabb. Cf. AmSouth Bank v. Wynne,

772 So. 2d 574, 575 (Fla. Dist. Ct. App. 2001) (stating if a corporate shareholder

suffers damages “only indirectly . . . as a result of injury to the corporation, the

stockholder does not have a cause of action as an individual”) (citation omitted)).

Accordingly, the district court should have analyzed whether the Toscanos

qualified as prevailing parties separate and apart from whether TEC Serv qualified

as a prevailing party. 4

       Unlike TEC Serv, who won on some issues and lost on others, the Toscanos

prevailed on every claim. Accordingly, the Toscanos were prevailing parties

entitled to attorneys’ fees under the Agreement. We therefore vacate the district

court’s order and remand for the court to determine the amount of expenses and

reasonable attorneys’ fees for the services of the Toscanos’ attorneys in

successfully defending Crabb’s claims for breach of the Agreement.

       VACATED AND REMANDED.

       4
         Notably, in denying the Toscanos’ motion for summary judgment, the district court
highlighted that the Toscanos had signed the Agreement as individuals, and thus could have been
held personally liable for any damages Crabb sustained as a result of their alleged breach. See
Lindon v. Dalton Hotel Corp., 49 So. 3d 299, 304-05 (Fla. Dist. Ct. App. 2010) (holding that if an
individual signs a contract in his or her individual capacity, that individual may be liable for his
or her breach of that contract, even if that agreement also has a corporation as a signatory). For
the same reasons, we believe the Toscanos should be viewed as separate third-party defendants
in an assessment of their entitlement to attorneys’ fees and costs.
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