BDO Seidman v. British Car Auctions, Inc.

Citations: 802 So. 2d 366; 2001 WL 1335013Docket: 4D00-4297

Court: District Court of Appeal of Florida; October 30, 2001; Florida; State Appellate Court

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The case BDO Seidman, LLP v. British Car Auctions, Inc. concerns the applicability of Florida's offer of judgment statute, section 768.79, in a malpractice lawsuit arising from Tennessee law but litigated in Florida. British Car Auctions sued BDO Seidman for professional malpractice, and both parties submitted offers of judgment, which were not accepted. A jury found Seidman negligent, awarding damages of $3,200,662, and British Car received attorney's fees under section 768.79. Seidman appealed, arguing that the suit should be barred by the Tennessee statute of limitations, leading to a reversal in favor of Seidman. After the court's mandate, Seidman sought attorney's fees under section 768.79 but was denied by the trial court, which claimed Tennessee law preempted Florida law on fees. Seidman appealed again, countering British Car's estoppel argument by asserting that neither party suffered prejudice from changing their positions on the applicability of the statute. The court found that section 768.79 is clear and applicable to the case, emphasizing that it should be applied without conflict of laws analysis, as it does not violate constitutional principles and is a matter of legislative intent.

Courts lack veto power and do not regulate state policy but enforce valid laws, only declining to do so if it violates organic law. Choice of law involves public policy decisions, as stated in Restatement (Second) of Conflict of Laws, § 6 (1971). The Florida Supreme Court, in Hartford Accident & Indemnity Co. v. City of Thomasville, noted that the application of comity is case-specific and does not require enforcing another state’s statutes that harm local citizens or contradict public policy. 

Section 768.79 of the Florida Statutes reflects a legislative policy that attorney's fees are recoverable in certain civil actions. This statute applies to "any" civil action for damages, and not applying it would contradict the legislative intent. Courts have not utilized conflict of laws to question the applicability of clear, constitutional statutes. In Weatherby Associates, the court assessed attorney's fees under Florida law despite the case being governed by Connecticut law, emphasizing that local statutes should be applied as intended by the legislature, unless constitutional issues arise. 

The Florida Supreme Court in Bishop v. Florida Specialty Paint Co. supported this view, confirming that section 768.79 applies to all civil actions in Florida courts, aligning with the intent to reduce litigation. Actions for damages under another jurisdiction's law affect Florida's court system similarly to those under Florida law.

The Eleventh Circuit's ruling in McMahan v. Toto, which classified section 768.79 as substantive under Florida conflict of laws principles, is acknowledged as persuasive but not binding. A dissent from this view is expressed, and the court has reversed and remanded the case to award attorney's fees to Seidman based on its section 768.79 offer of judgment. Judge Gross concurs but emphasizes that, despite Tennessee law governing substantive issues, the entitlement to fees is a procedural matter under Florida law, which modifies the American rule on attorney's fees. The distinction arises from the different implications of the terms "substantive" and "procedural" in Florida constitutional law compared to choice of law principles. The Supreme Court's characterization of attorney's fees under section 768.79 as substantive acknowledges legislative authority rather than establishing general equivalency in legal contexts. The commentary highlights the risk of misinterpreting legal terminology across different legal frameworks, reinforcing the need for careful analysis in conflict of laws situations.

The Restatement (Second) of Conflict of Laws has moved away from the terms 'procedural' and 'substantive,' which it views as leading to rigid adherence to precedents without considering the underlying purposes of those classifications. Instead, it emphasizes assessing whether the forum's rule is applicable. Florida upholds the distinction between substantive and procedural matters, determining whether section 768.79 is substantive or procedural based on its own law as the forum state. Typically, courts apply foreign law when it pertains to the substantive aspects affecting the outcome of a case, while procedural matters are governed by forum law. Substantive law concerns rights and duties related to the cause of action, whereas procedural law pertains to the conduct of the suit.

To classify section 768.79, Florida courts often refer to the Restatement's guidelines. This section typically mandates the application of local law regarding litigation procedures, even when resolving other issues with another state's laws. The objectives of section 768.79 focus on enhancing the efficiency of Florida's judicial system by incentivizing settlement among litigants, thereby reducing litigation costs and conserving judicial resources. The statute penalizes parties who do not engage reasonably and in good faith in settlement discussions, promoting early resolution of disputes to alleviate court congestion.

Tennessee's concern does not extend to whether the lawsuit strained Florida's judicial resources. Section 768.79 primarily addresses the functioning of Florida's judicial system. A realistic assessment of the statute of limitations could have promoted early settlement, avoiding an extended trial and appeals. Not applying section 768.79 would unduly burden Florida, allowing out-of-state lawsuits to utilize its resources while Florida cases face penalties under this statute. The statute's broad language applies to any civil action for damages in Florida, without restriction to cases originating there or governed by Florida law.

Two additional factors from the Restatement support the application of section 768.79: it is unlikely the parties considered the statute in their accountant-client relationship, and it does not influence the case's outcome, as it is relevant only post-verdict. This statute is procedural for choice of law, aimed at judicial economy. The case parallels Weatherby Associates, Inc. v. Ballack, where the Florida court awarded attorney's fees under section 57.105(1) despite the employment agreement stipulating Connecticut law. The court deemed the fees procedural for justice and efficiency, rejecting claims that Connecticut law should prevail. Both section 57.105(1) and section 768.79 impose sanctions for inappropriate litigation conduct, analogous to a court's power to sanction bad faith actions.

Numerous legal cases have characterized Florida's offer of judgment statute, section 768.79, as punitive. The intent of this statute, alongside other related statutes, is to alleviate the burden on Florida courts by discouraging frivolous lawsuits and unreasonable claims. British Car references Clayton v. Bryan and Moran v. City of Lakeland as controlling precedents; however, these cases are distinguishable due to their reliance on specific federal attorney’s fee provisions that preempt state law under the supremacy clause. In Moran, the federal statute limits fee recovery to instances where a suit is deemed vexatious or frivolous, aiming to encourage civil rights claims. Similarly, Clayton involves the Federal Fair Debt Collection Practices Act, which restricts fee awards to cases demonstrated to be in bad faith, ensuring protection for debtors. The Eleventh Circuit has ruled that section 768.79 is substantive under Florida's choice of law principles, a conclusion not binding on this court. The Eleventh Circuit's view of the statute as merely a "loser pays" rule undermines its primary objective of promoting reasonable settlements. A plaintiff may incur attorney's fees if their judgment is significantly lower than a defendant's offer. Chief Judge Polen dissents, supporting the trial court’s denial of attorney's fees and advocating that the statute possesses procedural and substantive elements, while agreeing with the majority that section 768.79 is constitutional and that Seidman is not estopped from modifying its stance on the statute's application.

The absence of estoppel does not compel acceptance of Seidman's argument. In Seidman I, both parties agreed that Tennessee law governed the case. Although both sides submitted offers of judgment pursuant to the statute, neither contested in the prior appeal that Tennessee law applied solely to the merits of the case. The trial judge's reasoning, which concluded that Tennessee law lacked a comparable offer of judgment statute and therefore attorney's fees could not be awarded, should be upheld. The dissent notes that Florida's borrowing statute, section 95.10, bars a cause of action in Florida if it is barred in the state of origin due to time lapse. Furthermore, since the underlying cause of action arose in 1992, the 1991 offer of judgment statute is relevant. The dissent cites case law indicating that Florida court rulings on state law may be binding on federal courts, even if they contradict earlier interpretations by the Eleventh Circuit.