Court: District Court of Appeal of Florida; April 18, 1983; Florida; State Appellate Court
The appeal involves Andrew J. McKelvey and Irwin Bard contesting a cost judgment against them in their repossession and unlawful detainer lawsuit against Kismet, Inc. The primary legal question is whether the trial court properly awarded attorney's fees and costs after one count of the appellants' complaint was voluntarily dismissed and another was involuntarily dismissed with prejudice before a counterclaim was resolved. The court affirmed the trial court's decision, asserting that it correctly assessed costs at the appropriate procedural point.
The appellants, who sold a restaurant named "Menage," initiated foreclosure proceedings against Kismet after it defaulted on loan payments. After amending their complaint to include an unlawful detainer claim, Kismet counterclaimed and moved for dismissal, which the court granted for the unlawful detainer claim due to insufficient grounds. The appellants' attempts to appeal this dismissal failed, leading them to voluntarily dismiss the foreclosure claim with court permission.
Subsequently, Kismet sought attorney's fees based on a contract provision, which the trial court granted, awarding $12,280.50. The appellants raised three main issues on appeal, arguing against the timing of the fee award, the assessment of costs while litigation was ongoing, and the denial of their motion to amend their complaint. The court combined the first two issues and ruled that Kismet was the prevailing party, affirming that voluntary dismissal terminates an action without prejudice but allows for costs to be awarded in the dismissed action. Florida Rule of Civil Procedure 1.420(d) mandates that costs must be assessed in dismissed actions, indicating that the trial judge cannot postpone cost assessments pending the resolution of related claims.
Rule 1.420(d) mandates that costs be assessed immediately after a dismissal, stipulating that any subsequent lawsuit on the same claim is stayed until all costs from the initial lawsuit are paid. If attorney's fees are included in the costs by contract or statute, they must also be assessed and judgment rendered. Despite paragraph (a)(2) allowing a pending counterclaim to remain for adjudication after the main action's dismissal, costs can still be assessed post-dismissal. In this case, Kismet was deemed the "prevailing party" in the contract dispute because it succeeded in the main action, with Count II dismissed with prejudice and Count I voluntarily dismissed. The existence of a counterclaim does not affect Kismet's prevailing status; even if the appellants were to succeed on the counterclaim, they would still lose the overall case. Therefore, the trial court correctly assessed costs and attorney's fees following the dismissal under Rule 1.420. The appellants' claim that the trial court erred in denying their motion to file an amended complaint was rejected, as a voluntary dismissal terminates the original action and does not allow for its revival. The judgment was affirmed. A dissenting opinion questioned whether the defendant qualified as the prevailing party for attorney's fee purposes when the plaintiffs voluntarily dismissed their complaint, noting that costs incurred in appellate reviews were deemed without merit. The majority based their decision on Rule 1.420(d) for costs but did not find authority for attorney's fees under that rule, relying solely on the contract stipulating that the prevailing party is entitled to reasonable attorney's fees and costs.
A lack of consistency exists in the determination of the prevailing party for the purpose of awarding attorney's fees, with three main interpretations emerging. The predominant view holds that when a contract or statute stipulates attorney's fees for the prevailing party, these fees are treated similarly to costs. Under this interpretation, fees are awarded automatically in situations where costs would be appropriate, such as voluntary dismissals under Florida Rule of Civil Procedure 1.420(d), without requiring a separate determination of whether a party has "prevailed." This approach is exemplified in Gordon v. Warren Heating, Air Conditioning, Inc., where the Fourth District ruled that a defendant is the prevailing party and entitled to fees after a plaintiff voluntarily dismissed a mechanic's lien action. The court's reasoning was aimed at discouraging repeated lawsuits by imposing costs on the party whose claim was dismissed.
However, the analysis in Gordon raises concerns. It liberalizes the interpretation of attorney's fee provisions, which traditionally must be strictly construed as they derogate from common law. This principle is supported by several Florida cases that emphasize the need for a contractual or statutory basis for awarding fees. Additionally, the rationale of discouraging successive lawsuits seems misplaced, given that a second voluntary dismissal of the same claim is treated as an adjudication on the merits under Florida Rule of Civil Procedure 1.420(a)(1).
A contrasting view held by this district posits that a prevailing party for attorney's fees cannot be established until the litigation concludes. This perspective is illustrated by cases such as Midway Shopping Mall, Inc. v. Airtech Air Conditioning, Inc. and Sharpe v. Ceco Corp., where a party was not deemed prevailing if the resolution was not based on the merits, such as in instances of mootness.
In Steinhardt v. Eastern Shores White House Association, Inc., 413 So.2d 785 (Fla. 3d DCA 1982), it was established that there is no prevailing party for the purpose of awarding attorney's fees in frivolous litigation until the case concludes with a judgment or a dispositive order. The Second District Court also appeared to support this view, as seen in Jackson v. Hatch, 288 So.2d 564 (Fla. 2d DCA 1974), but the ruling in Dolphin Towers Condominium Association v. Del Bene, 388 So.2d 1268 (Fla. 2d DCA 1980) introduced a different perspective. In Executive Centers of America, Inc. v. Durability Seating, Interiors, Inc., 402 So.2d 24 (Fla. 3d DCA 1981), it was argued that penalizing a party with attorney's fees for taking a voluntary dismissal could deter parties from seeking such dismissals. This view aligns with the California Supreme Court’s ruling in International Industries, Inc. v. Olen, 21 Cal.3d 218, which emphasized that parties should bear their own attorney's fees in cases of voluntary dismissal prior to trial to prevent unnecessary litigation.
A third perspective, which serves as a compromise, allows for discretionary attorney's fees to be awarded in extreme circumstances following a voluntary dismissal where the prevailing party is entitled to fees by statute or contract. Dolphin Towers serves as an example, where the Del Benes voluntarily dismissed their case after initiating legal action against a condominium association, which had counterclaimed for fees. Despite the dismissal, the Second District deemed the association a "prevailing party" for attorney's fees under the Condominium Act, highlighting the illogic of recognizing a prevailing party in a dismissed case while the same issues were presented in a new action. The court asserted that awarding fees reflects legislative intent to compensate a defendant who successfully raises affirmative defenses and incurs costs preparing for trial.
The decision addresses the concept of "prevailing party" in the context of awarding attorney's fees, indicating that a party may be considered prevailing even if they lose the case on the merits. This principle is supported by the precedent set in Andersen v. Gold Seal Vineyards, Inc., where attorney's fees were awarded to an out-of-state defendant due to significant expenses incurred during a trial that ended in a voluntary dismissal by the plaintiff. The Washington Supreme Court reasoned that the legislature intended to allow for cost recovery in such situations, especially when the defendant faces substantial burdens, including service of process outside the state.
The court emphasized that it would be unjust to require a defendant to win on the merits to be entitled to attorney's fees in cases of voluntary dismissal. However, in the current situation, the discretion exercised in awarding fees was deemed to have been abused, as there was no substantial trial preparation, no foreign defendant, and insufficient basis to conclude that the plaintiffs' claims lacked merit. The court criticized the ruling for disregarding existing precedents that necessitate a final disposition of the case to determine a prevailing party for attorney's fees under contract.
The document outlines the conflict in case law regarding the awarding of attorney's fees following voluntary dismissals by plaintiffs. Courts in various jurisdictions have used discretion to grant fees when denying such requests would be considered unfair. Specifically, it mentions several counts from a counterclaim: Count I involves federal banking law violations, Count II addresses a contract breach, Count III pertains to fraud and misrepresentation, and Count IV seeks declaratory relief. Notably, Count II's dismissal with prejudice is not under appeal.
The text references several Florida cases establishing the principle that a defendant can be deemed a "prevailing party" and entitled to attorney's fees following a voluntary dismissal, regardless of whether the entitlement arises from statute or contract. For instance, the Dolphin Towers case supports that voluntary dismissals allow for fee recovery if no justiciable issue exists. However, it contrasts this with cases cited by Gordon, which are distinguishable due to differing circumstances, such as involuntary dismissals or specific statutory provisions regarding fees.
The discussion highlights the procedural implications of fee awards, differentiating between costs and attorney's fees, and emphasizes that in contract actions, treating a fee award as costs is improper. Lastly, it refers to a case involving the Florida Department of Health, where attorney's fees were awarded after a voluntary dismissal, noting that the employee effectively prevailed on the merits despite the lack of a formal determination.
