Court Opinion

ID: 9382460
Source: CourtListenerOpinion
Date Created: 2023-03-27 19:00:41.545961+00
Date Added: 2024-06-11T17:17:39.574829
License: Public Domain

USCA11 Case: 22-11288     Document: 36-1       Date Filed: 03/27/2023    Page: 1 of 10

                                                      [DO NOT PUBLISH]
                                      In the
                 United States Court of Appeals
                          For the Eleventh Circuit

                            ____________________

                                   No. 22-11288
                             Non-Argument Calendar
                            ____________________

        CODEVENTURES, LLC,
        a Florida limited liability company,
                                                         Plaintiff-Appellant,
        versus
        VITAL MOTION INC.,
        a Delaware corporation
        DAVID A. LOVENHEIM,
        an individual,

                                                                Defendants,
USCA11 Case: 22-11288    Document: 36-1     Date Filed: 03/27/2023   Page: 2 of 10

        2                    Opinion of the Court                22-11288

        JAY M. EASTMAN,
        an individual,
        CHRISTIAN TVETENSTRAND,
        an individual,
        TERRY BRADLEY, as surviving spouse and
        representative of David A. Lovenheim,
        ERIK HIESTER,
        an individual,

                                                    Defendants-Appellees.

                           ____________________

                  Appeal from the United States District Court
                      for the Southern District of Florida
                     D.C. Docket No. 1:20-cv-21574-FAM
                           ____________________

        Before JORDAN, BRANCH, and MARCUS, Circuit Judges.
        PER CURIAM:
               CodeVentures, LLC appeals from the district court’s order
        awarding attorney fees in favor of David Lovenheim, Jay Eastman,
        Christian Tvetenstrand, Erik Hiester, and Terry Bradley
USCA11 Case: 22-11288       Document: 36-1      Date Filed: 03/27/2023      Page: 3 of 10

        22-11288                Opinion of the Court                          3

        (collectively, the “O&D Defendants”),1 who are former officers
        and directors of Vital Motion, Inc., a Delaware corporation that
        borrowed $100,000 from CodeVentures and failed to repay the
        note. In the underlying complaint, CodeVentures sued Vital for
        breach of the note (Count I) and sued Vital and the O&D Defend-
        ants on several tort claims, including that they had fraudulently in-
        duced CodeVentures to sign the note (Count II), had aided and
        abetted fraud (Count III), and had conspired to defraud (Count IV)
        (collectively, the “Tort Claims”). Several months after the suit was
        filed, the O&D Defendants served a Proposal for Settlement
        (“PFS”) on CodeVentures, seeking to settle the Tort Claims for
        $100.00, an amount to be apportioned equally among the O&D
        Defendants. CodeVentures did not accept the proposal. Thereaf-
        ter, the district court dismissed two counts against all the defend-
        ants (Counts III and IV), dismissed one count against all but Vital
        and Lovenheim (Count II), granted summary judgment in favor of
        CodeVentures on the count against Vital (Count I), and granted
        CodeVentures’ voluntary motion to dismiss without prejudice the
        remaining count against Vital and Lovenheim (Count II).
              The court then awarded $16,754.60 in attorney fees to the
        O&D Defendants pursuant to Fla. Stat. § 768.70, which authorizes
        the award of reasonable attorney fees to a party whose statutory

        1 Upon the filing of a suggestion of death of David Lovenheim, our Court
        granted the motion to substitute Terry Bradley, Lovenheim’s surviving
        spouse and personal representative, for Lovenheim in this appeal.
USCA11 Case: 22-11288       Document: 36-1        Date Filed: 03/27/2023        Page: 4 of 10

        4                       Opinion of the Court                      22-11288

        settlement proposal is rejected by an opposing party and that party
        ultimately achieves a significantly less favorable result than what
        was offered. On appeal, CodeVentures argues that the district
        court erred in awarding attorney fees to the O&D Defendants be-
        cause CodeVentures’ voluntary dismissal of Lovenheim made it
        impossible for the O&D Defendants to meet the “favorability” re-
        quirement of the Florida statute. After careful review, we affirm.
                                            I.
               We review de novo a district court’s interpretation of a state
        law like Florida’s offer-of-judgment statute. See McMahan v. Toto,
        311 F.3d 1077, 1081 (11th Cir. 2002). We review only for abuse of
        discretion the amount of attorney fees awarded by the district
        court. Id. at 1084.
                                            II.
               Here, the O&D Defendants sought attorney fees under Flor-
        ida’s offer-of-judgment statute, which provides:
              (1) In any civil action for damages filed in the courts of this
                  state, if a defendant files an offer of judgment which is
                  not accepted by the plaintiff within 30 days, the defend-
                  ant shall be entitled to recover reasonable costs and at-
                  torney’s fees incurred . . . from the date of filing of the
                  offer if the judgment is one of no liability . . . . If a plaintiff
                  files a demand for judgment which is not accepted by the
                  defendant within 30 days and the plaintiff recovers a
                  judgment in an amount at least 25 percent greater than
USCA11 Case: 22-11288       Document: 36-1        Date Filed: 03/27/2023      Page: 5 of 10

        22-11288                 Opinion of the Court                            5

                   the offer, [the plaintiff] shall be entitled to recover rea-
                   sonable costs and attorney’s fees incurred from the date
                   of the filing of the demand. . . .
               (2) . . . . An offer must:
                       (a) Be in writing and state that it is being made pursu-
                       ant to this section.
                       (b) Name the party making it and the party to whom
                       it is being made.
                       (c) State with particularity the amount offered to set-
                       tle a claim for punitive damages, if any.
                       (d) State its total amount.
               The offer shall be construed as including all damages which
               may be awarded in a final judgment.
        Fla. Stat. § 768.79(1)–(2). 2
               In MX Investments, Inc. v. Crawford, 700 So. 2d 640 (Fla.
        1997), the Florida Supreme Court concluded that to be entitled to
        an award of attorney fees under § 768.79 based on a dismissal of the
        case, the dismissal must be with prejudice. Id. at 642. In explaining
        what constitutes a dismissal with prejudice, the court made it clear
        that for purposes of the offer-of-judgment statute, the dismissal
        must represent a judgment of no liability. Id. Thus, an involuntary

        2 We’ve deemed § 768.79 to be substantive for Erie purposes and, therefore,
        it is applicable to this case. See McMahan, 311 F.3d at 1080.
USCA11 Case: 22-11288      Document: 36-1     Date Filed: 03/27/2023     Page: 6 of 10

        6                      Opinion of the Court                22-11288

        dismissal, a dismissal with prejudice, and a second voluntary dis-
        missal (which serves as adjudication on the merits pursuant to Flor-
        ida Rule of Civil Procedure 1.420(a)(1)) all qualify as a basis of an
        award of attorney fees under § 768.79. Smith v. Loews Miami
        Beach Hotel Operating Co., 35 So. 3d 101, 103 (Fla. 3d DCA 2010).
               Then, in Scherer Construction & Engingeering of Central
        Florida, LLC v. Scott Partnership Architecture, Inc., 151 So. 3d 528
        (Fla. 5th DCA 2014), a Florida appellate court examined whether
        the trial court properly awarded fees in connection with both
        counts of a two-count complaint. Id. at 529. There, after the de-
        fendant had served a PFS on the plaintiff, the court granted sum-
        mary judgment in favor of the defendant on one count and the
        plaintiff voluntarily dismissed without prejudice the second count.
        The appellate court said it was improper for the trial court to award
        fees on only the count that was voluntarily dismissed. Id. at 530.
        Importantly, however, the court affirmed the award of fees for the
        count on which the defendant prevailed. Id.
              Here, the district court relied on Scherer’s holding that a
        court may issue an award of fees even if the party seeking costs
        does not meet § 768.79’s favorability requirement on all counts.
        We agree that Scherer applies squarely to this case. Just as in
        Scherer, nearly all of the counts against the O&D Defendants were
        adjudicated on the merits, but a remaining count was voluntarily
        dismissed. So, under the prevailing Florida caselaw, the district
        court was authorized to award fees to the O&D Defendants for the
        counts that were adjudicated on the merits. This situation stands
USCA11 Case: 22-11288      Document: 36-1      Date Filed: 03/27/2023      Page: 7 of 10

        22-11288                Opinion of the Court                         7

        in contrast to those in MX Investments and Smith, the cases
        CodeVentures relies on. Both of those cases involved voluntary
        dismissals of the entire action, and there was no adjudication on
        the merits on any claim. See Smith, 35 So. 3d at 101–03 (holding
        that the defendant not entitled to fees under the offer of judgment
        statute because the plaintiff had filed for a voluntary dismissal with-
        out prejudice, which did not operate as an adjudication on the mer-
        its); MX Invs., 700 So. 2d at 641 (same).
                CodeVentures argues that Scherer is unhelpful because it
        did not explain why a party could be awarded fees if it did not win
        on all counts. 151 So. 3d at 529–30 (holding that “we affirm that
        part of the judgment awarding fees for the defense of the contribu-
        tion count,” the count on which the court had granted summary
        judgment in favor of the defendant). According to CodeVentures,
        Scherer’s holding “encourage[s] the continuation of litigation
        when a plaintiff has already achieved substantial success -- contrary
        to the goals of any system of justice, such as efficiency and proper
        judicial administration.” The O&D Defendants, relying on the dis-
        trict court’s reasoning, counter that if CodeVentures’ position were
        to prevail, “a party could strategically avoid § 768.79’s fee-shifting
        provision by including claims that have minimal potential reward
        and voluntarily dismissing them if other claims are resolved in the
        opposing party’s favor.”
               However, we need not enter into this policy debate. “A fed-
        eral court applying state law is bound to adhere to decisions of the
        state’s intermediate appellate courts” -- absent some persuasive
USCA11 Case: 22-11288      Document: 36-1     Date Filed: 03/27/2023     Page: 8 of 10

        8                      Opinion of the Court                22-11288

        indication that the state’s highest court would decide the issue oth-
        erwise -- “whether or not the court agrees with the reasoning on
        which the state court’s decision is based or the outcome which the
        decision dictates.” Silverberg v. Paine, Webber, Jackson & Curtis,
        Inc., 710 F.2d 678, 690 (11th Cir. 1983). Scherer has not been over-
        ruled by the Florida Supreme Court and there is no indication that
        the Florida Supreme Court would decide the issue differently.
        Thus, we are bound by Scherer even if we are unimpressed by, or
        even disagree with its reasoning.
               CodeVentures further posits that Scherer is no longer good
        law because in 2013, the Florida Supreme Court amended the gov-
        erning Florida rule to require that “a proposal for settlement must
        resolve all claims between the proponent and the party to whom
        the proposal is made . . . .” In re Amendments to the Fla. Rules of
        Civil Procedure, 131 So. 3d 643, 648 (Fla. 2013) (amending Rule
        1.442(c)(2)(B) to add quoted language). But neither this case nor
        Scherer involve partial proposals for settlement. The O&D De-
        fendants’ PFS was not directed to one or some claims but not oth-
        ers, but rather to “all claims for affirmative relief by CodeVentures
        against the [O&D] Defendants . . . .” As we see it, because the PFSs
        in both this case and Scherer sought to resolve all claims between
        the parties, the 2013 amendments have no effect on Scherer’s hold-
        ing or how it applies here.
              CodeVentures also mentions in passing that the O&D De-
        fendants’ PFS was an invalid “all-or-nothing” offer. But it cites
        nothing for this proposition. In Attorneys’ Title Insurance Fund,
USCA11 Case: 22-11288      Document: 36-1      Date Filed: 03/27/2023      Page: 9 of 10

        22-11288                Opinion of the Court                         9

        Inc. v. Gorka, 36 So. 3d 646 (Fla. 2010), the court addressed the
        standard when there is a PFS made to multiple offerees, not when
        there is a PFS made by multiple offerors. Id. at 649 (“The issue
        presented by the conflicting decisions is whether a joint offer of set-
        tlement or judgment that is conditioned on the mutual acceptance
        of all of the joint offerees is valid and enforceable.”). In the PFS at
        issue in this case, the offer was made only to one party, CodeVen-
        tures, by the five O&D Defendants. CodeVentures has not ex-
        plained why this kind of PFS -- unlike the one in Attorneys’ Title --
        was improper under Florida law. Rather, Florida law only seems
        to say that where there is a PFS made by multiple offerors, the PFS
        must state the amount attributable to each individual offeror. See
        Pratt v. Weiss, 161 So. 3d 1268, 1271 (Fla. 2015) (“This Court has
        held that subdivision (c)(3) of rule 1.442, which requires a joint pro-
        posal to state the amount and terms attributable to each offeror or
        offeree, must be strictly construed because it, as well as the offer of
        judgment statute, is in derogation of the common law rule that
        each party is responsible for its own fees.”). The O&D Defendants’
        PFS provided that “[t]his amount of this joint PFS and its terms are
        apportioned equally among the [O&D] Defendants.” (emphasis
        added). Thus, the O&D Defendants’ PFS met this requirement.
              Finally, CodeVentures argues that the error in allowing the
        O&D Defendants to recover fees for the counts that were adjudi-
        cated on the merits was made clear when the O&D Defendants
        argued that the claims raised by Codeventures were “intertwined”
        so they were entitled to the full fees expended on the case. As the
USCA11 Case: 22-11288     Document: 36-1      Date Filed: 03/27/2023     Page: 10 of 10

        10                     Opinion of the Court                 22-11288

        record reflects, the district court agreed that the claims and the re-
        sultant fees were intertwined based on the O&D Defendants’ ex-
        planation that “[e]ach of the three counts is based on the allegation
        that the [O&D] Defendants fraudulently induced CodeVentures to
        make the bridge loan, or had knowledge of and approved the fraud-
        ulent inducement . . . . [and] CodeVentures expressly re-alleged the
        same factual allegations (paragraphs 1 – 53) in support of each of
        the Tort Claims.” CodeVentures does not appear to dispute that
        the claims were inextricably intertwined; rather it appears to be
        saying, without citing any support under Florida law, that Vital or
        someone else should have paid the full amount of fees instead.
               Accordingly, we affirm the district court’s award of attorney
        fees in favor of the O&D Defendants.
              AFFIRMED.