Deer Valley Realty, Inc. v. SB Hotel Associates, LLC , 190 So. 3d 203 ( 2016 )

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
DEER VALLEY REALTY, INC.,
Appellant,
v.
SB HOTEL ASSOCIATES LLC, a Delaware limited liability company, et
al.,
Appellee.
Nos. 4D14-2051 and 4D15-830
[April 27, 2016]
Consolidated appeals from the Circuit Court for the Seventeenth
Judicial Circuit, Broward County; Jeffrey E. Streitfeld, Judge; L.T. Case
No. 12-10560CACE(07).
Raoul G. Cantero, David P. Draigh and Jesse L. Green of White & Case
LLP, Miami, and Joseph E. Altschul of Joseph E. Altschul, LLC, Pembroke
Pines, for appellant.
Bruce S. Rogow and Tara A. Campion of Bruce S. Rogow, P.A., Fort
Lauderdale, and Herman J. Russomanno, Robert J. Borrello and Herman
J. Russomanno, III of Russomanno & Borrello, P.A., Miami, for appellee.
MAY, J.
A failed real estate investment resulted in an action to recoup monetary
losses. The plaintiff now appeals a judgment for the defendants and a
consequent award of attorney’s fees and costs. Concerning the underlying
trial, the plaintiff argues the trial court erred in: (1) admitting “market
crash” evidence and excluding the plaintiff’s rebuttal evidence; (2)
excluding evidence challenging the credibility of a defense witness; (3)
entering a directed verdict for Trump Florida Management, LLC; and (4)
denying the plaintiff’s motion to amend the complaint to assert a punitive
damages claim.1 The plaintiff also appeals the award of attorney’s fees
1 These same issues were raised in an appeal brought by an unrelated plaintiff
against the same defendants. The cases were tried together, and orally argued
together, but remain independent. See Taglieri v. SB Hotel Assocs. LLC, No.
4D14-1983 (Fla. 4th DCA Apr. 14, 2016).
and costs based on separate proposals for settlement and section
817.41(6), Florida Statutes (2014). We affirm the final judgment and the
cost judgment without further comment. We reverse the final judgment
for attorney’s fees.
The plaintiff’s complaint was based on the “Offering Documents” that
explained Donald Trump’s role in the hotel project, which included a
license to use his name and brand and provided for Trump Florida
Management to act as the initial hotel manager. The Property Report
stated in capital letters that “the condominium shall initially be known as
the Trump International Hotel . . . pursuant to a license agreement with
Donald J. Trump. If that license agreement is terminated, rights to the
Trump name and servicemarks must cease. This may have a negative
impact on the value of your unit.”
The Purchase Agreement and other documents had similar disclosures.
The Purchase Agreement contained the following statement: “Buyer has
not relied upon . . . any representations as to: . . . (f) any particular hotel
affiliation or maintaining any existing hotel affiliation.”
SB Hotel Associates LLC (“SB Hotel”) obtained a temporary certificate
of occupancy in October 2008. A general manager and nine other hotel
executives, selected by Donald Trump, were hired for the hotel opening.
When buyers entered into reservation and purchase agreements in 2005,
the real estate market was at a historic high. By the time the certificate of
occupancy was issued and closings were scheduled in May 2009, the
market had collapsed.
On May 5, 2009, in an effort to ensure compliance with the “Trump
Standard,” Trump Marks Fort Lauderdale LLC (“Trump Marks”), the
licensor under the license agreement, issued a default notice to SB Hotel,
identifying particular issues that Donald Trump believed SB Hotel needed
to address. Trump Marks did not terminate either the license agreement
or hotel management agreement, and did not attempt to remove the Trump
name from the project.
On May 13, 2009, SB Hotel sent a letter to each buyer, which scheduled
a walk through inspection and closing date of May 28, 2009. The letter
advised buyers of the existence of the Trump Marks default notice. It also
advised that “[g]iven the uncharted economic climate that we are adapting
to, and the impact that the economy has had on both the real estate and
hospitality industries, we do not believe that the hotel operation will open
if purchasers have closed on fewer [than] fifty percent (50%) of the units.”
It informed buyers that they would not be permitted to occupy their units
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until the hotel opened.
Of the 170 buyers, only one showed up to close. Not long after, the
lender failed and was seized by the FDIC. The project went into
foreclosure, and SB Hotel’s interest was wiped out.
The plaintiff filed a third amended complaint, alleging counts for
violation of the federal Interstate Land Sales Full Disclosure Act (“ILSA”),
fraud, negligent misrepresentation, fraudulent concealment, and
misleading advertising in violation of section 817.41, Florida Statutes. It
alleged detrimental reliance upon Donald Trump’s statements in his
promotional materials and that it would not have purchased a unit absent
Donald Trump’s presence as the developer.
The jury returned a verdict for the defendants on all counts. The
defendants moved for attorney’s fees and costs pursuant to section
768.79, Florida Statutes; rule 1.442 of the Florida Rules of Civil Procedure;
section 817.41(6), Florida Statutes; and ILSA. The trial court “granted [the
motions] as to entitlement pursuant to and from the date of their August
16, 2013 separate Proposals for Settlement” and “as to entitlement from
December 13, 2013 pursuant to Fla. Stat. § 817.41(6).”2
On appeal, the plaintiff argues the proposals for settlement do not
comply with rule 1.442 and section 768.79, Florida Statutes, because they
fail to state whether attorney’s fees are part of the claim for relief, do not
specify what portion of the proposals would settle a punitive damages
claim, and penalized the plaintiff for failing to anticipate the defendants
would amend their pleadings to include an attorney’s fees claim.
The defendants respond that the proposals comply with both the rule
and statute. Statements concerning attorney’s fees and punitive damages
are included in the proposal and no punitive damages claim was pending
at the time the proposals were made. Amending the pleadings to add
statutory claims for prospective attorney’s fees did not impact the
proposals.
We have de novo review of orders awarding “attorney’s fees and costs
pursuant to section 768.79 and rule 1.442.” Pratt v. Weiss, 161 So. 3d
1268, 1271 (Fla. 2015).
2December 13, 2013, was the date the defendants moved to amend their answer
by interlineation to include their claim for attorney’s fees; the motion was
granted.
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Section 768.79 and rule 1.442 control attorney’s fees awards based on
a proposal for settlement. “Both section 768.79 and rule 1.442 are in
derogation of the common law . . . which requires that we strictly construe
both [of them].” Diamond Aircraft Indus., Inc. v. Horowitch, 107 So. 3d 362,
376 (Fla. 2013). “A proposal shall . . . state whether the proposal includes
attorneys’ fees and whether attorneys’ fees are part of the legal
claim.” Fla. R. Civ. P. 1.442(c)(2)(F) (emphasis added).
Horowitch is instructive. In answering a certified question from the
Eleventh Circuit Court of Appeals, our supreme court stated:
[E]ven if section 768.79 applied in this case, Diamond Aircraft
would not be entitled to attorney’s fees under that section
because Diamond Aircraft’s offer of settlement did not strictly
comply with rule 1.442, as it did not state that the proposal
included attorney’s fees and attorney’s fees are part of the
legal claim.
Horowitch, 107 So. 3d at 377 (emphasis added).
Here, paragraph five of the proposals stated:
The claims to be resolved by acceptance of this proposal for
settlement are all claims against Defendant that were raised
in this action or could have been raised in this action by
Plaintiff, and any claims against Plaintiff, that were raised in
this action or could have been raised in this action by
Defendant.
Paragraph seven stated: “This proposal for settlement is inclusive of all
attorney’s fees and costs incurred by Plaintiff or Defendant.”
While the proposals included attorney’s fees, they neglected to include
a statement that “attorney’s fees [were] part of the legal claim.” The
proposals satisfied only half of rule 1.442(c)(2)(F)’s requirements.
Horowitch, 107 So. 3d at 376–78. They were therefore invalid and
unenforceable. The trial court erred in awarding attorney’s fees pursuant
to them. Because we hold the proposals invalid and unenforceable due to
their noncompliance with the rule concerning attorney’s fees, we do not
address the plaintiff’s additional arguments of the proposals’ invalidity
based on their handling of punitive damages and reference to section
817.41(6).
Next, the plaintiff argues the trial court erred in finding the defendants
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are entitled to all of their attorney’s fees under section 817.41(6) because
that section is limited to fees incurred in a misleading advertising claim
and fees related to the other claims should be excluded. Alternatively, the
plaintiff argues that because the court found the defendants are entitled
to fees under section 817.41(6) from December 13, 2013, this Court should
reverse any fee award granted under the proposals for settlement before
then.
“[E]ntitlement to recover fees and costs [is] generally . . . limited to those
fees and costs directly and exclusively related to each claim . . . on which
recovery is allowed . . . .” Black Diamond Props., Inc. v. Haines, 36 So. 3d
819, 822 (Fla. 5th DCA 2010). However, the defendants argue the
attorney’s fees under the section 817.41(6) claim are inextricably
intertwined with the other claims because they were based on the same
facts and alleged wrongs.
“[W]here the claims involve a common core of facts and are based on
related legal theories, a full fee may be awarded unless it can be shown
that the attorneys spent a separate and distinct amount of time on counts
as to which no attorney’s fees were sought.” Anglia Jacs & Co. v. Dubin,
830 So. 2d 169, 172 (Fla. 4th DCA 2002) (internal quotation marks
omitted) (quoting Caplan v. 1616 E. Sunrise Motors, Inc., 522 So. 2d 920,
922 (Fla. 3d DCA 1988)).
“The party seeking fees has the burden to allocate them to the issues
for which fees are awardable or to show that the issues were so intertwined
that allocation is not feasible.” Waverly at Las Olas Condo. Ass’n v.
Waverly Las Olas, LLC, 88 So. 3d 386, 388 (Fla. 4th DCA 2012) (internal
quotation marks omitted) (quoting Chodorow v. Moore, 947 So. 2d 577,
579 (Fla. 4th DCA 2007)).
Because the trial court did not determine whether the claims were
intertwined, we remand the case for that determination and for calculation
of the amount of attorney’s fees based on that determination. We also
direct the court to limit the fees from December 13, 2013, pursuant to its
own order of December 17, 2014.
In conclusion, the proposals for settlement failed to strictly comply with
rule 1.442(c)(2)(F) because they failed to state whether the attorney’s fees
were part of the legal claim. They therefore cannot form a basis for the
attorney’s fees award. While the trial court did not err in awarding fees
under section 817.41(6), those fees are limited to the misleading
advertising claim unless the court determines the claims were intertwined
and to date from December 13, 2013. We affirm the cost judgment.
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Reversed and Remanded.
FORST, J., and SCHER, ROSEMARIE, Associate Judge, concur.
* * *
Not final until disposition of timely filed motion for rehearing.
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