Kahama VI, LLC v. HJH, LLC et al

Filing 617

ORDER: Defendant Old Republic's Motion for Award of Attorney's Fees and Related Non-Taxable Expenses 605 is granted as described herein. Defendant Old Republic is entitled to an award of attorney's fees and costs pursuant to se ction 768.79 of the Florida Statutes. Within fourteen (14) days, Defendant Old Republic shall serve Plaintiff with (1) its attorneys' itemized billing entries for the relevant time period (redacted as necessary), (2) its attorneys' hourly rates, and (3) any information necessary to substantiate the amount of costs requested. Within fourteen (14) days of service, the Parties shall meet and confer to see if they can come to an agreement about the fees and costs Defendant Old Republic s hould receive. If the Parties cannot reach a settlement regarding Defendant Old Republic's fees and costs, Defendant Old Republic can renew its Motion for Award of Attorney's Fees and Related Non-Taxable Expenses. At that time, Defendant Old Republic shall file evidentiary submissions in support of its motion. Signed by Judge James S. Moody, Jr. on 2/13/2017. (LN)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
KAHAMA VI, LLC,
Plaintiff,
v.

Case No: 8:11-cv-2029-T-30TBM

HJH, LLC, ROBERT E.W. MCMILLAN,
III , WILLIAM R. RIVEIRO, JOHN
BAHNG, HOWARD S. MARKS, OLD
REPUBLIC NATIONAL TITLE
INSURANCE COMPANY and KEVIN
PATRICK DONAGHY,
Defendants.

ORDER
THIS CAUSE comes before the Court upon Defendant Old Republic's Motion for
Award of Attorney’s Fees and Related Non-Taxable Expenses (Dkt. 605) and Plaintiff
Kahama’s Response and Objection (Dkt. 612). Upon review, the Court finds that
Defendant Old Republic is entitled to reasonable fees and costs.
BACKGROUND
Plaintiff Kahama VI, LLC (“Kahama”) filed this action in 2011. It sought to enforce
a promissory note against a borrower, HJH, LLC (“HJH”), and four individual guarantors.
Kahama requested monetary damages for breach of the promissory note and guaranty
agreements executed by the defendants. (Dkt. 1.)
The promissory note was secured by a parcel of beachfront property owned by HJH,
so Kahama subsequently filed a related action in order to foreclose on the property. That

action stalled in 2013, in part because the City and County asserted an ownership interest
in the property. Old Republic National Title Insurance Company (“Old Republic”), which
underwrote the title insurance policies issued to both HJH (as owner of the property) and
Kahama (as lender), filed a quiet title action against the City and County in state court. Old
Republic retained the attorney who was representing HJH in the foreclosure action to
represent HJH in the quiet title action. Of note, that attorney’s prior firm had acted as the
title insurance agent for the title insurance policies issued to HJH and Kahama.
In July 2013, Kahama amended its complaint to include claims against Old Republic
and the attorney. (Dkt. 72.) It alleged claims including breach of contract, breach of the
covenant of good faith and fair dealing, breach of fiduciary duty, abuse of process, and
unjust enrichment. Generally, Kahama claimed that Old Republic and the attorney (1)
pursued an invalid title claim, (2) used the quiet title action for the fraudulent purpose of
delaying the foreclosure action and thwarting Kahama’s collection efforts against HJH and
the guarantors, and (3) fraudulently obtained and/or transferred settlement proceeds
received from the City in the quiet title action. Kahama requested monetary damages for
these alleged violations.
The Court dismissed many of these claims in September 2013, but it granted leave
for Kahama to amend its pleadings. (Dkt. 135.) Kahama did so in its third and final
amended complaint, which it filed in October 2013. (Dkt. 150.) Kahama alleged that Old
Republic and the other defendants had engaged in negligent misrepresentation, fraudulent
misrepresentation, fraudulent transfer, conspiracy, and breach of contract. These claims
were based on the same allegations described above. Kahama sought monetary damages,

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as well as an injunction prohibiting the defendants from further disposing of the settlement
funds.
The Court dismissed most of Kahama’s claims in December 2013. (Dkt. 203.)
Almost all of the remaining claims were against defendants other than Old Republic, and
the Court adjudicated these claims at a bench trial in November 2014. (Dkt. 423.) After
that trial, only one claim remained—Kahama’s claim against Old Republic for breach of
contract. Kahama sought purely monetary damages for this alleged violation.
Kahama and Old Republic continued to litigate the case. In July 2016, Old Republic
served Kahama with an offer of judgment pursuant to section 768.79 of the Florida
Statutes. Old Republic offered $20,000 to settle “all of the claims” asserted against it.
Kahama did not accept this offer.
In December 2016, the Court granted summary judgment in favor of Old Republic
and dismissed the final breach of contract claim. (Dkt. 601.) By that point in time, Kahama
and Old Republic had engaged in extensive discovery and even filed motions in limine
because they were scheduled to go to trial in January 2017.
Since then, Old Republic has filed two motions to recover its costs and fees. The
first motion sought to recover taxable costs pursuant to Federal Rule of Civil Procedure
54(d)(1). (Dkt. 605.) The Court ruled on that motion in an order dated February 2, 2017.
(Dkt. 615.) The Court awarded Old Republic $26,852.56 in costs for serving subpoenas,
securing witnesses’ attendance at depositions, and obtaining deposition and pretrial hearing
transcripts.

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Old Republic’s second motion (i.e., the instant motion) requested attorney’s fees
and costs pursuant to section 768.79 of the Florida Statutes. This Order addresses that
motion.
LEGAL STANDARD
Section 768.79 is Florida’s offer of judgment statute. It provides, in relevant part:
In any civil action for damages . . . , if a defendant files an offer of judgment which
is not accepted by the plaintiff within 30 days [and the final judgment is one of no
liability], the defendant shall be entitled to recover reasonable costs and attorney’s
fees incurred . . . from the date of filing of the offer. . .”
Fla. Stat. § 768.79(1). This statute is intended to reduce litigation costs by encouraging
settlement. Kuhajda v. Borden Dairy Co. of Alabama, LLC., 202 So. 3d 391, 395 (Fla.
2016) (internal citations omitted). It acts as a sanction against a party who rejects a
purportedly reasonable settlement offer. Diamond Aircraft Indus., Inc. v. Horowitch, 107
So. 3d 362, 372 (Fla. 2013) (internal citation omitted).
Section 768.79 applies only to civil actions “for damages.” Fla. Stat. § 768.79(1).
The statute applies to claims in which the plaintiff seeks purely monetary relief, but it does
not apply where the plaintiff seeks purely nonmonetary or equitable relief. Diamond
Aircraft, 107 So. 3d at 373 (internal citations omitted). Nor does it apply to claims in which
the plaintiff seeks both monetary and nonmonetary relief. Id. at 374-76. In determining
whether the action is for damages, the Court should “look[] behind the procedural vehicle
used to bring a lawsuit and focus[] on whether the ‘real issue’ in the case is one for
damages.” DiPompeo Const. Corp. v. Kimmel & Assocs., Inc., 916 So. 2d 17, 18 (Fla. Dist.
Ct. App. 2005) (internal citation omitted); see also Diamond Aircraft, 107 So. 3d at 373

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(citing DiPompeo with approval). For example, Florida appellate courts have properly
characterized actions for declaratory judgment as actions for damages when the “real” or
“only” issue was the entitlement to money. See Diamond Aircraft, 107 So. 3d at 373. A
plaintiff’s passing reference to equitable relief in the operative complaint does not compel
the conclusion that section 768.79 is inapplicable. Faith Freight Forwarding Corp. v.
Anias, No. 3D14-2653, 2016 WL 6298616, at *2 (Fla. Dist. Ct. App. Sept. 28, 2016).
Likewise, an action may be considered one for damages when the plaintiff pled equitable
relief but litigated only its monetary damages. MYD Marine Distrib., Inc. v. Int'l Paint Ltd.,
187 So. 3d 1285, 1286-87 (Fla. Dist. Ct. App. 2016), review denied, No. SC16-730, 2016
WL 5416182 (Fla. Sept. 28, 2016); Faith Freight, 2016 WL 6298616, at *2.
If the action was for damages and the defendant meets the other statutory
prerequisites outlined by section 768.79, it is entitled to reasonable costs and fees. Fla. Stat.
§ 768.79. However, a court may deny those costs and fees if it finds that the defendant did
not make its offer of judgment in good faith. Fla. Stat. § 768.79(7). The offeree has the
burden of proving the absence of good faith. Gawtrey v. Hayward, 50 So. 3d 739, 742 (Fla.
Dist. Ct. App. 2010); see also TGI Friday's, Inc. v. Dvorak, 663 So. 2d 606, 612 (Fla.
1995).
DISCUSSION
Kahama argues that Old Republic is not entitled to costs and fees pursuant to section
768.79 for two reasons. First, Kahama argues that this case was not an action for damages
because it requested equitable relief in its Third Amended Complaint. Second, Kahama
argues that Old Republic’s offer of judgment was ambiguous and therefore unenforceable

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because it failed to specify that it would resolve both monetary and nonmonetary claims.
Both of these arguments fail.
i.

This action was for damages.

In its Third Amended Complaint, Kahama requested monetary damages and an
injunction. The injunction related to Kahama’s claim that the defendants fraudulently
transferred the settlement funds from the quiet title action so that Kahama would not
receive any, and it would have prevented the defendants from further disposing of the
funds. Kahama also requested damages as relief for this claim.
Even though an injunction is a form of equitable relief, the fact that Kahama
requested one does not make section 768.79 inapplicable. As discussed above, the Court
should look behind the pleadings to determine what the “real issue” in the case was. If the
case was about the plaintiff’s entitlement to money, then it falls within section 768.79’s
scope. In this case, it is evident that Kahama’s “real” concern was its entitlement to money.
When Kahama initially filed suit, it sought to recover purely monetary damages for
HJH’s breach of the promissory note. When Kahama later expanded the suit to include
claims against Old Republic, it again sought purely monetary damages. It sought damages
for Old Republic’s alleged pursuit of an invalid title claim and use of the quiet title action
to thwart its ability to collect from HJH; it also sought to obtain the settlement funds from
the quiet title action. And in the final iteration of Kahama’s complaint (i.e., the Third
Amended Complaint), Kahama sought almost exclusively monetary damages. Although it
requested both monetary damages and an injunction as relief for the defendants’ allegedly
fraudulent transfer of the settlement funds, the purpose of the injunction was to ensure that

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Kahama could access the funds it was trying to recover as damages. Moreover, by the time
Old Republic made its offer of judgment, the Court had dismissed Kahama’s fraudulent
transfer claim, so the injunction was not at issue.
This case is comparable to two recent cases—MYD Marine and Faith Freight. In
MYD Marine, the plaintiff alleged claims including conspiracy in restraint of trade, and it
sought monetary damages and a permanent injunction barring the defendants “from
continuing to engage in their illegal conspiracy.” 187 So. 3d at 1286. Florida’s Fourth
District Court of Appeal concluded that the “true relief” sought was monetary because the
plaintiff did not actually pursue any nonmonetary relief during the course of the litigation.
Id. at 1287. Likewise, in Faith Freight, Florida’s Third District Court of Appeal affirmed
an award of fees under section 768.79 even though the plaintiff’s complaint referenced
equitable relief. 2016 WL 6298616, at *2. It concluded that damages were the “real issue”
in the case because the parties could not identify any equitable relief that was ever at issue
in the discovery or trial of the case. Id. In this case, Kahama sought an injunction against
Old Republic, but it never litigated whether it was entitled to the injunction because the
Court dismissed Kahama’s fraudulent transfer claim almost immediately after Kahama
alleged it. Over the next few years, Kahama litigated only whether it was entitled to
monetary relief. Like in MYD Marine and Faith Freight, damages were the “real issue” in
this case.
ii.

Old Republic’s offer of judgment was not ambiguous.

Kahama’s argument that Old Republic’s offer was ambiguous fails for similar
reasons. Kahama argues that the offer was ambiguous because it did not specify that it

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would resolve both Kahama’s monetary and nonmonetary claims. An offer is ambiguous
and thereby unenforceable only if the ambiguity reasonably affected the offeree’s decision
to accept the proposal. State Farm Mut. Auto. Ins. Co. v. Nichols, 932 So.2d 1067, 1079
(Fla. 2006). Old Republic’s offer to resolve “all” claims was not ambiguous. Furthermore,
at the time Old Republic made the offer, Kahama had no nonmonetary claims.
Consequently, Old Republic’s omission of the words “nonmonetary claims” should not
have created any confusion or had any bearing on Kahama’s decision to reject the offer.
Old Republic’s offer of judgment met the statutory prerequisites outlined by section
768.79, and Kahama has provided no evidence that Old Republic made its offer in bad
faith. Therefore, Old Republic is entitled to reasonable attorney’s fees and costs incurred
after it made its offer of judgment.
The Court cannot determine the appropriate amount of fees or costs because Old
Republic did not provide any evidence to substantiate its request. For example, Old
Republic did not provide the Court with information regarding it attorneys’ hourly rate,
how many hours its attorneys billed after it made its offer of judgment, or an itemization
of the billed hours. Accordingly, the Court declines to decide the amount of fees or costs
at this time.
It is therefore ORDERED AND ADJUDGED that:
1.

Defendant Old Republic’s Motion for Award of Attorney’s Fees and Related
Non-Taxable Expenses (Dkt. 605) is granted as described herein.

2.

Defendant Old Republic is entitled to an award of attorney’s fees and costs
pursuant to section 768.79 of the Florida Statutes.

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3.

Within fourteen (14) days, Defendant Old Republic shall serve Plaintiff with
(1) its attorneys’ itemized billing entries for the relevant time period
(redacted as necessary), (2) its attorneys’ hourly rates, and (3) any
information necessary to substantiate the amount of costs requested.

4.

Within fourteen (14) days of service, the Parties shall meet and confer to see
if they can come to an agreement about the fees and costs Defendant Old
Republic should receive.

5.

If the Parties cannot reach a settlement regarding Defendant Old Republic’s
fees and costs, Defendant Old Republic can renew its Motion for Award of
Attorney’s Fees and Related Non-Taxable Expenses. At that time, Defendant
Old Republic shall file evidentiary submissions in support of its motion.

DONE and ORDERED in Tampa, Florida, on February 13, 2017.

Copies furnished to:
Counsel/Parties of Record

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