Air Turbine Technology, Inc. v. Atlas Copco AB , 336 F. App'x 986 ( 2009 )

NOTE: This disposition is nonprecedential.
United States Court of Appeals for the Federal Circuit
2008-1290
AIR TURBINE TECHNOLOGY, INC.,
Plaintiff-Appellee,
v.
ATLAS COPCO AB, ATLAS COPCO TOOLS AB,
ATLAS COPCO NORTH AMERICA, INC., and ATLAS COPCO TOOLS, INC.,
Defendants-Appellants.
Richard L. Horn, Akerman Senterfitt, of West Palm Beach, Florida, argued for
plaintiff-appellee.
William P. Atkins, Pillsbury Winthrop Shaw Pittman LLP, of McLean, Virginia,
argued for defendants-appellants. With him on the brief was Benjamin L. Kiersz.
Appealed from: United States District Court for the Southern District of Florida
Judge Kenneth A. Marra
NOTE: This disposition is nonprecedential.
United States Court of Appeals for the Federal Circuit
2008-1290
AIR TURBINE TECHNOLOGY, INC.,
Plaintiff-Appellee,
v.
ATLAS COPCO AB, ATLAS COPCO TOOLS AB,
ATLAS COPCO NORTH AMERICA, INC., and ATLAS COPCO TOOLS, INC.,
Defendants-Appellants.
Appeal from the United States District Court for the Southern District of Florida in case
no. 01-CV-8288, Judge Kenneth A. Marra.
__________________________
DECIDED: April 24, 2009
__________________________
Before SCHALL, PLAGER, and PROST, Circuit Judges.
Opinion for the court filed by Circuit Judge PROST. Dissenting opinion filed by Circuit
Judge PLAGER.
PROST, Circuit Judge.
This is a case of contract interpretation under Florida state law. Air Turbine
Technology (“ATT”) and Atlas Copco AB (“Atlas”) entered into an agreement governed
by the laws of Florida under which Atlas agreed not to practice ATT’s patent, or
introduce certain pencil grinders competing with ATT’s patent. The contract included a
provision (“paragraph 17”) awarding “legal costs and expenses” to the prevailing party in
any litigation arising out of a breach of the contract.
Following the termination of the parties’ business relationship, Atlas introduced a
pencil grinder into the United States market. ATT brought suit against Atlas for breach
of contract, patent infringement, and unfair competition. The United States District
Court for the Southern District of Florida, after a trial, found in favor of Atlas on all
counts. Atlas then sought legal costs and expenses pursuant to paragraph 17 of the
contract. Atlas’s claim for legal costs and expenses included the costs of defending
Atlas from the breach of contract claim, as well as the patent infringement and unfair
competition claims. Atlas’s claim for legal costs and expenses also included attorney’s
fees.
The district court found that paragraph 17 provided for legal costs but not
attorney’s fees for those costs associated with the breach of contract claim but not the
underlying claims of patent infringement and unfair competition. We affirm the district
court’s finding that paragraph 17 provides “legal costs and expenses” only for that
incurred as a result of defending Atlas from the breach of contract claim. We reverse
the district court’s construction of the term “legal costs and expenses” and remand to
the district court with instructions to recalculate the amount of “legal costs and
expenses” to include reasonable attorney’s fees incurred as a result of defending Atlas
from ATT’s breach of contract claims.
I. Jurisdiction
It is first necessary to determine whether the case is properly before this court.
ATT contends that the present appeal is untimely, as it was filed more than ten months
after the district court’s February 27, 2007 opinion construing the phrase “legal costs
and expenses,” and determining that contractually based costs and expenses did not
2008-1290 2
extend to costs and expenses of defending against the patent infringement and unfair
competition claims. The 2007 order, however, did not dispose of the entire controversy
surrounding paragraph 17, as it reserved judgment on the actual amount of the award
granted. The district court decided which kinds of costs to award, and calculated the
amount of those costs, on February 26, 2008. Atlas’s appeal to this court regarding the
district court’s interpretation of paragraph 17 was timely with respect to the 2008 order.
A denial of costs or attorney’s fees under Rule 54 of the Federal Rules of Civil
Procedure is collateral to, and separately appealable from, the merits of an underlying
suit. See Fed. R. App. P. 4. Although Atlas asserted more than one theory under which
it was entitled to attorney’s fees, the decision on appeal to this court is the construction
of the parties’ contractual fee provision clause, and not a Rule 54 motion. See Capital
Asset Research Corp. v. Finnegan, 216 F.3d 1268, 1270 (11th Cir. 2000). The legal
costs and expenses awarded pursuant to the disputed contract was not a final judgment
until the district court’s interpretation of the contract language was applied to Appellant’s
expense reports and the amount of the contractually-based award was calculated. Cf.
Special Devices, Inc., v. OEA, Inc., 269 F.3d 1340, 1341 (Fed. Cir. 2001); Mendenhall
v. Barber-Grene Co., 26 F.3d 1573, 1580 (Fed. Cir. 1994). We find that the district
court’s decision not to include attorney’s fees in the award was not “wholly collateral” to
the merits of the contractually-based claim for legal costs and expenses and therefore
was not immediately appealable. Buchanan v. Stanships, 485 U.S. 265, 268-69 (1988).
The district court’s reservation of judgment on the amount of the contractually-
based award carried with it a reservation of jurisdiction over the district court’s
interpretation of the relevant contract language. To find otherwise would require Atlas
2008-1290 3
to appeal related issues within a single case at different times. Such a piecemeal
appellate review is inconsistent with this court’s limitation of jurisdiction to final
judgments and would undermine judicial economy. See 28 U.S.C. § 1295(a)(1).
II. Standard of Review
Atlas appeals the district court’s denial of its motion for reconsideration, which is
reviewed for abuse of discretion according to the law of the governing regional circuit.
Bd. of Trs. v. Humana Military, 447 F.3d 1370, 1374 (Fed. Cir. 2006); Cliff v. Payco
Gen. Am. Credits, Inc., 363 F.3d 1113, 1121 (11th Cir. 2004). Contract interpretation is
a matter of law reviewed de novo. Lucent Techs., Inc. v. Gateway, Inc., 543 F.3d 710,
717 (Fed. Cir. 2008); see also Gibbs Constr. Co. v. S.L. Page Corp., 755 So. 2d 787,
790 (Fla. Dist. Ct. App. 2000) (finding appropriate de novo review of contractual
interpretation of an attorney fee provision). A district court’s application of contract
interpretation to the facts, in the context of attorney fee provisions, is reviewed for abuse
of discretion or clear error. Davis v. Nat’l Med. Enters., 253 F.3d 1314, 1318-19 (11th
Cir. 2001); Waters v. Intern Precious Metals Corp., 190 F.3d 1291, 1293 (11th Cir.
1999).
III. Award of Contractually-Based Attorney’s Fees
In construing paragraph 17 as not to providing for attorney’s fees, the district
court relied in part on Florida precedent requiring contractual provisions regarding
attorney’s fees to be “strictly construed.” Air Turbine Tech., Inc. v. Atlas Copco AB,
9:01-CV-08288, slip op. at 7-8 (S.D. Fla. Feb. 28, 2007) (citing Pici v. First Union Nat’l
Bank of Fla., 705 So. 2d 50, 51 (Fla. Dist. Ct. App. 1997) (strictly construing the
language of an attorney fee provision to apply only to monetary default); Venetian Cove
2008-1290 4
Club, Inc. v. Venetian Bay Developers, Inc., 411 So. 2d 1323, 1324 (Fla. Dist. Ct. App.
1982) (strictly construing the language of an attorney fee provision to apply only to a
prevailing lessor)). These cases, however, deal with construction of other language in
provisions already determined to provide for attorney’s fees. They do not stand for the
proposition that language allegedly providing for attorney’s fees must be strictly
construed in determining whether it is an attorney fee provision. 1 These decisions do
not speak to the issue of whether the phrase “legal costs and expenses” can be
considered an attorney fee provision.
Florida law requires provisions for attorney’s fees to “unambiguously state that
intention and clearly identify the matter in which the attorney’s fees are recoverable.”
Sholkoff v. Boca Raton Comm. Hosp., Inc., 693 So. 2d 1114, 1118 (Fla. Dist. Ct. App.
1997) (requiring parties to “manifest in some clear way” an agreement to indemnify for
attorney’s fees through express language evidencing a “meeting of the minds”); see
also Islander Beach Club Condo. v. Skylark Sports, 975 So. 2d 1208, 1211-12 (Fla.
Dist. Ct. App. 2008) (finding unenforceable an attorney fee provision that was entirely
incoherent). The court in Sholkoff explained that the ambiguity requirements were
not so much a matter of strict construction as . . . a rule for resolving
ambiguities. If the agreement is clear, no construction is necessary. If it is
ambiguous, the court will not struggle by construction of the language
employed to infer an intent for fees that has not been clearly expressed;
nor will it allow intentions to indemnify another’s attorney’s fees to be
ambiguously stated and then resolved by the finder of fact.
1
But see Wendell v. Wendell, 852 So. 2d 277, 281-82 (Fla. Dist. Ct. App.
2003) (construing the term “expenses” in the divorce agreement phrase “[e]xpenses for
such mediation or legal action shall be shared equally by the parties” not to include
private attorney’s fees). The court’s construction of the term “expenses” in Wendell was
required by the logical implications of the entire phrase, and does not establish a per se
rule that “legal expenses” can never be construed to include attorney’s fees.
2008-1290 5
Sholkoff, 693 So. 2d at 1118. There is no such struggle here. Although the disputed
language could be subject to two interpretations, the most natural reading of paragraph
17 in light of the evidence of record is one that clearly expresses a mutual intent to
provide for attorney’s fees. The district court’s implication and ATT’s argument that
attorney’s fees can only be provided in contract by use of the exact words “attorney’s
fees,” is not supported by Florida law.
ATT is also incorrect that parol evidence and the parties’ intent is irrelevant to a
proper construction of “legal costs and expenses” as a matter of law. In Zosman v.
Schiffer/Taxis, Inc., 697 So. 2d 1018, 1019 (Fla. Dist. Ct. App. 1997), for example, a
Florida state appellate court considered parol evidence of parties’ intent to construe a
contractual provision for legal costs. The court looked at witness transcript testimony as
well as other contracts between the parties to construe the term “costs.” Florida district
courts have also looked to the intent of the parties in construing contract fee provisions.
See, e.g., Commercial Svc. of Perry v. Campbell, 861 So. 2d 1258, 1261 (Fla. Dist. Ct.
App. 2003) (looking in part to the intent of the parties in construing the term “costs” not
to include attorney’s fees).
In this case, there is no credible dispute that both parties understood and
intended the phrase “legal costs and expenses” to include attorney’s fees. The parties’
conduct before the court and 30(b)(6) witness testimony clearly indicate this mutual
2008-1290 6
understanding. 2 We find that extending “legal costs and expenses” to attorney’s fees is
not an unnatural reading of the plain language of the contract, 3 and that this reading is
ultimately compelled by the parties’ mutual intent in drafting the agreement. The district
court’s finding that paragraph 17 was not an attorney fee provision under strict
construction, and decline to consider parol evidence in that construction, constitutes an
error of law.
IV. Legal Costs and Expenses for Patent Infringement and Unfair Competition
Atlas seeks additional indemnity for legal costs and expenses incurred in
defending itself from claims of patent infringement and unfair competition. It argues that
such claims arise out of the contract because ATT would have to prove patent
infringement and unfair competition in order to prevail on the breach of contract claims.
2
ATT contends that Atlas’s quotation of deposition testimony during which
the ATT interpreted the phrase “legal costs and expenses” is out of context and
misleading. We have examined the quotation in the context of the portion of the
transcript provided in the joint appendix. ATT was questioned extensively during oral
argument before this court about the context of the statement as well as what was
meant by it. We find that the statement unequivocally confirms that ATT understood
and intended the phrase “legal costs and expenses” to include attorney’s fees.
3
In an attempt to establish a favorable natural reading of the term “legal
costs and expenses,” ATT points first to an 1885 version of the Florida Constitution
(which has since been revised twice, removing the relevant language). The relevant
language provides for the county to pay the “legal costs and expenses, including the
fees of officers” in criminal cases where the defendant was insolvent or discharged.
Florida courts interpreted that the provision did not provide a right to private attorney
fees. The vast differences in time, context, area of law, and policy considerations make
citation to an obsolete constitutional provision unpersuasive as to the proper
construction of the disputed contract provision. ATT also cites a divorce case in which
the court ordered one party to pay “the necessary legal costs and expenses attendant
on preparing a transcript”, which language was interpreted not to include attorney’s
fees. The construed phrase was qualified with the modifiers “necessary” and “attendant
on preparing a transcript” and is otherwise non-analogous to the present case. Finally,
ATT cites dictionary definitions of the terms “costs” and “expenses” that actually weigh
in favor of construing “expenses” to include attorney’s fees.
2008-1290 7
Atlas would therefore have to defend itself from these claims and incur the costs of that
defense regardless of whether ATT also sought recovery on grounds other than
contract breach.
The logic of Atlas’s argument cuts both ways, however. Had ATT chosen not to
assert the breach of contract claim, Atlas would not have been entitled to any
contractually based costs for defending itself from the patent infringement and unfair
competition claims. Cf. Seifert v. U.S. Home Corp., 750 So. 2d 633, 639 (Fla. 1999).
It was within the discretion of the district court to determine which costs were
attributable to the breach of contract claim, and which were not. Atlas does not dispute
the source of any particular cost, only whether it was appropriate in general to have
discriminated among costs based on source. The district court correctly limited
contractually-based recovery to those costs incurred as a result of defending itself from
the breach of contract claims.
COSTS
Each party shall bear its own cost for this appeal.
2008-1290 8
NOTE: This disposition is nonprecedential.
United States Court of Appeals for the Federal Circuit
2008-1290
AIR TURBINE TECHNOLOGY, INC.,
Plaintiff-Appellee,
v.
ATLAS COPCO AB, ATLAS COPCO TOOLS AB,
ATLAS COPCO NORTH AMERICA, INC., and ATLAS COPCO TOOLS, INC.,
Defendants-Appellants.
Appeal from the United States District Court for the Southern District of Florida in case
no. 01-CV-8288, Judge Kenneth A. Marra.
PLAGER, Circuit Judge, dissenting.
I respectfully dissent.
As the court notes in its opening paragraph, this is a case of contract
interpretation under Florida state law. The district judge in this case has been
interpreting Florida state law for many years; 1 we almost never do. The particular issue
here is how to interpret the Florida cases addressing the question of what it takes to
constitute an enforceable attorney fee provision. The Florida cases, as the majority
grudgingly admits, are strict with regard to what qualifies. See maj. op. at 5-6. The trial
court concluded that the particular language in our case fails to meet the standard
required by the Florida courts. Even if there were any real question about whether the
trial court is correct—and in my view there is not—I would feel it appropriate to defer to
the district judge’s reasoned explanation of what his state’s law requires, and why the
facts in this case do not meet that standard.
Picking at and distinguishing away cases on the basis of their different facts,
without respecting their basic policy point, is not my view of how this case should have
been decided. The district court’s judgment should be affirmed without cavil. I
respectfully dissent from our failure to do so.
1
Judge Marra of the Southern District of Florida has been on the Florida
bench for some thirteen years—first as a state court judge, and for the past seven years
as a federal district judge.
2008-1290 2