Opinion
Case No. 6:07-cv-1503-Orl-19KRS (Consolidated with Case No. 6:08-cv-1567-Orl-19KRS).
December 29, 2009
REPORT AND RECOMMENDATION
TO THE UNITED STATES DISTRICT COURT
This cause came on for consideration without oral argument on the following motion filed herein: MOTION: DEFENDANT RICHARD GOBLE'S MOTION FOR ATTORNEYS' FEES AND COSTS (Doc. No. 155) FILED: October 16, 2009
I. PROCEDURAL HISTORY.
Plaintiff Brokerage Computer Systems, Inc. (BCS) was originally a defendant in a case brought by North American Clearing, Inc. (NAC) on September 21, 2007, alleging breach of contract and seeking declaratory relief. Case No. 6:07-cv-1503-Orl-19KRS, Doc. No. 1. The Court stayed the case after NAC became the subject of a bankruptcy liquidation proceeding, and NAC's claims remain stayed. Doc. Nos. 59, 60.Thereafter, on September 11, 2008, BCS filed suit against individual corporate officers of NAC, including Defendant Richard Goble (founder of NAC), alleging breach of contract, conversion, false designation of origin in violation of the Lanham Act, 15 U.S.C. § 1125, and violation of the Florida Deceptive and Unfair Trade Practices Act (FDUTPA). Case No. 6:08-cv-1567-Orl-19KRS, Doc. No. 1. Because both cases arose from the same contract between BCS and NAC, and involved common questions of law and fact, the Court consolidated the two cases.
The stay entered in Case No. 6:07-cv-1503-Orl-19KRS was partially lifted to permit BCS's claims against Goble to go forward in Case No. 6:08-cv-1567-Orl-19KRS. See Case No. 6:07-cv-1503-Orl-19KRS, Doc. No. 63.
On July 24, 2009, Goble filed a motion for summary judgment on all claims brought against him by BCS. Case No. 6:07-cv-1503-Orl-19KRS, Doc. No. 107. On October 5, 2009, the Court granted Goble's summary judgment motion, Doc. No. 152, and judgment was entered in Goble's favor on November 16, 2002, Doc. No. 162. On October 16, 2009, Goble filed the instant motion for attorney's fees and costs. Doc. No. 155. Goble submitted the affidavit of Eric Lee, Esq., who averred that Goble's attorneys expended 226.90 hours of work in this case and incurred $40,748.00 in attorney's fees. Doc. No. 155-3. Goble also submitted the affidavit of expert Paul Lopez, Esq., who averred that Goble's attorneys reasonably expended 216.70 hours in this case for a total of $39,020.00 in attorney's fees. Doc. No. 155-4. The Clerk of Court has already taxed costs against BCS. Doc. No. 46. Therefore, this portion of the motion is moot.
At the time of writing this report, BCS has not responded to Goble's motion and the time for doing so has passed.
II. ANALYSIS.
Under the American Rule, a prevailing party is ordinarily not entitled to recover attorney's fees except by contract or statute. See Alyeska Pipeline Serv. Co. v. Wilderness Society, 421 U.S. 240, 257 (1975); Price v. Tyler, 890 So. 2d 246, 250 (Fla. 2004). Goble asserts that, as the prevailing party in the case brought against him by BCS, he is entitled to an award of attorney's fees under a contract and pursuant to the FDUTPA and Lanham Act.
A. The Contract.
The contract in this case, by its own terms, is governed by Florida law. See Doc. No. 155-2 at 13 ("This Agreement shall be deemed to have been made in, and shall be construed pursuant to, the laws of the State of Florida."). In Florida, the intention of the parties governs the construction of a contract. See Scott v. Prudential Sec., Inc., 141 F.3d 1007, 1012 (11th Cir. 1998) (citing Mayflower Corp. v. Davis, 655 So. 2d 1134, 1137 (Fla. 1st Dist. Ct. App. 1994)). Florida law provides that "[u]nder established principles of contract construction, attorney's fee provisions must be strictly construed, and each claim which purportedly gives rise to a fee should be assessed individually." Bay Lincoln-Mercury-Dodge, Inc. v. Transouth Mortgage Corp., 531 So. 2d 1027, 1027 (Fla. 1st Dist. Ct. App. 1988). "The right to attorney's fees under any contractual provision is limited by the terms of such provision." Id. at 1028.
The Agreement at issue was entered into between BCS, as "Licensor," and Advantage Trading Group, Inc. (NAC's predecessor), as "Licensee," Doc. No. 155-2 at 1. The parties' obligations and promises are described throughout the Agreement as those made by "Licensor" and "Licensee." Id. at 1-16. Section 8.06 of the Agreement provides, "If any legal action . . . is necessary to enforce the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney's fees. . . ." Id. at 13. Goble signed the Agreement on behalf of Advantage Trading Group. Id. at 14.
Goble contends that he is entitled to attorney's fees because he is the prevailing party under the Agreement. However, Goble has previously argued to this Court that he was not a party to the Agreement. In his motions to dismiss BCS's claims against him, Goble stated, "The Individual Defendants are not parties to the agreements." Case No. 6:08-cv-1567-Orl-19KRS, Doc. No. 26. Goble asserted that the Agreement was entered into between BCS and NAC, that he did not sign the Agreement in his personal capacity, that he was not the alter ego of NAC, and "[n]othing in the License Agreement or Amendment evidences any intent to bind GOBLE individually to its terms." Doc. No. 91 at 4, 6-7; Case No. 6:08-cv-1567-Orl-19KRS, Doc. No. 26 at 3, 5-6, 10.
In ruling on Goble's motions to dismiss, this Court noted that because the signature line in the Agreement began with the word "by" and included a description of Goble as the President of Advantage Trading Group and NAC, Goble signed the Agreement "in his corporate capacity." Doc. No. 95 at 12. The Court also noted that the Agreement did not include any language indicating that Goble was personally obligated under the Agreement or otherwise accepted individual contractual liability, and that Goble was not liable under the Agreement merely because of his signature on the document or his position as corporate officer. Id. See Johnson v. Pires, 968 So. 2d 700, 702 (Fla. 4th Dist. Ct. App. 2007) ("a person who signs a contract only in a corporate capacity is not bound as an agent"); In re Jacobs, 243 B.R. 836, 844 (Bankr. M.D. Fla. 2000) ("the law is settled that where an agent properly signs for a known principal, the name of the principal appears in the instrument, and it is evident from the writing as a whole that the intention was to bind the principal and not the agent, then the princip[al] is the sole contracting party.").
It appears, based on Goble's assertions and the Agreement itself, that the parties' intention was to bind NAC, not Goble. Because Goble was not a party to the Agreement, he is not entitled to recover attorney's fees under section 8.06 of the Agreement. See, e.g., In re University Centre Hotel, Inc., 323 B.R. 306, 309 (Bankr. N.D. Fla. 2005).
B. FDUTPA.
"Prior to a 1994 amendment, FDUTPA provided for the mandatory award of reasonable attorney's fees to any prevailing party." Humane Soc. of Broward County, Inc. v. Florida Humane Soc., 951 So. 2d 966, 971 (Fla. 4th Dist. Ct. App. 2007). Currently, however, the FDUTPA provides that the Court may in the exercise of its discretion award the prevailing party attorney's fees. Id. (citing Fla. Stat. § 501.2105). "[I]in exercising such discretion, courts typically balance the following non-exhaustive factors: (1) the scope and history of the litigation; (2) the ability of the opposing party to satisfy an award of fees; (3) whether an award of fees against the opposing party would deter others from acting in similar circumstances; (4) the merits of the respective positions-including the degree of the opposing party's culpability or bad faith; (5) whether the claim brought was not in subjective bad faith, but was frivolous, unreasonable, or groundless; (6) whether the defense raised a defense mainly to frustrate or stall; and (7) whether the claim brought was to resolve a significant legal question under FDUTPA law." Colomar v. Mercy Hosp., Inc., No. 05-22409-CIV, 2008 WL 4459383, at *2 (S.D. Fla. Sept. 29, 2008). The moving party bears the burden of demonstrating an entitlement to attorney's fees under this statute. Id.
Goble contends that he is entitled to attorney's fees under the FDUTPA because he is the prevailing party. Doc. No. 155 at 6. However, Goble has not established that an award of attorney's fees under the FDUTPA is appropriate in this case. He has not addressed any of the factors outlined in Colomar. He also has not demonstrated that his attorneys expended any meaningful time defending BCS's FDUTPA claim. See, e.g., JES Properties, Inc. v. USA Equestrian, Inc., 432 F. Supp. 2d 1283, 1291 (M.D. Fla. 2006); VP Gables, LLC v. Cobalt Group, Inc., 597 F. Supp. 2d 1326, 1330 (S.D. Fla. 2009) ("When there was no additional effort in defending the case because of a FDUTPA claim, fees should not be awarded in accordance with FDUTPA.").
Thus, Goble has not satisfied his burden of demonstrating that the circumstances of this case justify an award of attorney's fees under the FDUTPA.
C. Lanham Act.
The Lanham Act provides that the court "in exceptional cases may award reasonable attorney fees to the prevailing party." 15 U.S.C. § 1117(a). The Eleventh Circuit has stated "that an `exceptional case' is one that can be characterized as `malicious, fraudulent, deliberate and willful,' . . . or one in which `evidence of fraud or bad faith' exists. . . ." Tire Kingdom, Inc. v. Morgan Tire Auto, Inc., 253 F.3d 1332, 1335 (11th Cir. 2001) (internal citations omitted). "Although a case may rise to the level of exceptionality, the decision to grant attorney fees remains within the discretion of the trial court." Lipscher v. LRP Publications, Inc., 266 F.3d 1305, 1319-20 (11th Cir. 2001) (quoting Burger King Corp. v. Pilgrim's Pride Corp., 15 F.3d 166, 168 (11th Cir. 1994)).
Goble contends that he is entitled to attorney's fees as the prevailing party because BCS's Lanham Act claim "was weak and without any factual basis" as BCS was unable to prove the allegations in its second amended complaint. Doc. No. 155 at 7. Goble also contends that BCS "acted in bad faith and with an improper motive" in pursuing its claim against Goble because BCS continued to maintain its claim against Goble despite having "no evidence whatsoever that Goble engaged in any conduct that could constitute a violation of the Lanham Act." Id.
The Court granted summary judgment to Goble on BCS's Lanham Act claim finding that there was no evidence in the record that Goble falsely designated the origin of any BCS software. Doc. No. 152 at 16-17. The Court noted that BCS sufficiently pleaded that Goble falsely designated the origin of software by changing its name, but BCS's allegation was deemed abandoned because it was neither raised in opposition to Goble's summary judgment motion nor supported by evidence in the record. Id. at 17. Failure to establish the claim, however, is not enough to support a finding that the case is exceptional without evidence of bad faith or improper motive. See Tire Kingdom, Inc., 253 F.3d at 1336.
Goble contends that BCS acted in bad faith because it asserted individual claims against Goble only after it learned that NAC went into receivership. Doc. No. 155 at 7. The Court appointed a receiver for NAC on May 27, 2008. Case No. 6:08-cv-829-Orl-35KRS, Doc. No. 12. The motion to amend the counterclaim to add Goble as an individual counterclaim defendant was filed on June 30, 2008. Doc. No. 48. BCS stated in the motion that it learned from the complaint filed by the SEC in Case No. 6:08-cv-829-Orl-35KRS, that Goble "had engaged in fraudulent acts[,]" but BCS did not state how facts revealed in the SEC complaint supported the Lanham Act claim or other causes of action brought against Goble. Doc. No. 48 at 6. Moreover, BCS stated in the motion that it wished to add Goble as a counterclaim defendant "to ensure that NAC, which is the subject of a recently filed civil action by the SEC, has assets to satisfy a potential judgment in favor of BCS. . . ." Id. at 7. Thus, Goble's argument that BCS added him as a counterclaim defendant based on an improper motive — that is, to add an individual against whom a judgment for wrong-doing by NAC could be collected — in the absence of facts showing that Goble violated the Lanham Act is supported by the record.
Courts have found in other contexts that an improper motive cannot be inferred "simply because a plaintiff makes an objectively unreasonable . . . claim against deep-pocket defendants. Some evidence of bad faith must be shown." Randolph v. Dimension Films, 634 F. Supp. 2d 779, 795 (S.D. Tx. 2009) (copyright case); see also Momentum Luggage Leisure Bags. v. Jansport, Inc., No. 00 Civ. 7909 (DLC), 2001 WL 1388063, at *7-8 (S.D.N.Y. Nov. 8, 2001) (baseless Lanham Act claim coupled with improper litigation tactics insufficient to establish bad faith). In the present case, while BCS and its counsel's conduct is certainly suspect, there is no evidence that BCS acted maliciously or in bad faith sufficient to warrant a finding that this case is "exceptional" under the Lanham Act. Therefore, an award of attorney's fees under the Lanham Act is not appropriate.
III. RECOMMENDATION.
Based upon the foregoing, I respectfully recommend that the Court DENY in part Defendant Richard Goble's Motion for Attorneys' Fees and Costs, Doc. No. 155.
Failure to file written objections to the proposed findings and recommendations contained in this report within fourteen (14) days from the date of its filing shall bar an aggrieved party from attacking the factual findings on appeal.
Recommended in Orlando, Florida.