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Inspired Development Group, LLC v. Inspired Products Group, LLC

United States District Court, S.D. Florida

April 25, 2018




         THIS CAUSE is before the Court on Defendant's Motion for Its Attorneys' Fees and Costs (“Motion”) [DE 160], Plaintiff's response in opposition [DE 162], and Defendant's reply [DE 165], which has been referred to the undersigned for appropriate disposition [DE 175]. Being fully advised, the Court RECOMMENDS that Defendant's Motion [DE 160] be GRANTED IN PART and DENIED IN PART, and that Defendant be awarded $205, 946.80 in attorneys' fees and Defendant's request for costs be denied.

         I. BACKGROUND

         This case arises from Defendant's, Inspired Products Group, LLC (“IPG”/“Defendant”), alleged breach of its promise to pay $3 million to Plaintiff, Inspired Development Group (“IDG”/“Plaintiff”), in exchange for using IDG's character car seat concept and licensing its patents. On December 5, 2016, IPG served on IDG a Proposal for Settlement for $300, 000 pursuant to Fla. Stat. § 768.79 (the “Offer”) [DE 160-1], which IDG never accepted. Thereafter, the parties engaged in mediation and filed briefs on motions for summary judgment and motions in limine. On January 25, 2017, the Court granted summary judgment to IPG on Counts II (breach of contract), III (unjust enrichment), and IV (promissory estoppel) of the four-count complaint.[1]

         On February 2, 2017, the remaining count, Count I for breach of contract, was dismissed with prejudice after the parties entered into a stipulated settlement agreement of $50, 000, with IPG to make payment upon conclusion of the appeal or other proceedings in this case. The settlement agreement contains a provision regarding IDG's right to appeal[2] the summary judgment order and IPG's right to seek recovery of fees and costs pursuant to Fla. Stat. § 768.79 [DE 153-1]. The parties further agreed that the settlement amount of $50, 000 shall be satisfied as an offset from any award of attorney's fees or costs. [DE 153-1 at ¶ 2.3].

         IPG now seeks $257, 433.50 in attorneys' fees and $15, 675.59 in costs pursuant to Fla. Stat. § 768.79 [DE 165]. IDG disputes both IPG's entitlement and the amount of fees and costs sought for a period spanning less than two months [DE 162].


         A. Entitlement to Fees under Fla. Stat. § 768.79

         This Court must first determine whether IPG is entitled to attorneys' fees and costs under Fla. Stat. § 768.79. “Where the Court has both a federal question and supplemental or diversity jurisdiction over Florida claims, § 768.79 applies only to the Florida claims.” Design Pallets, Inc. v. Gray Robinson, P.A., 583 F.Supp.2d 1282, 1287 (M.D. Fla. 2008). Here, the Court determined that, although diversity jurisdiction is lacking, it has subject matter jurisdiction over the action under 28 U.S.C. § 1338(a) because IDG's claims arose under patent law. [DE 172]. Although the claims arose under federal patent law, they were “based on state law” and framed as state law causes of action. [Id. at 4]. Indeed, the Court applied Florida law when resolving Plaintiff's claims for breach of contract, unjust enrichment, and promissory estoppel. [DE 130]. See Menchise v. Akerman Senterfitt, 532 F.3d 1146, 1150 (11th Cir. 2008) (applying § 768.79 where the underlying legal malpractice action was governed by Florida law but filed in federal court). The Court further determined it has original jurisdiction over Plaintiff's claims and, alternatively, “through its supplemental jurisdiction.” [DE 172 at 8]. As such, the Court's lack of diversity jurisdiction over IDG's claims is not a bar to IPG's request for relief under § 768.79.

         The Court applies the substantive law set forth in Fla. Stat. § 768.79 and the rule implementing it, Florida Rule of Civil Procedure 1.442. See Menchise, 532 F.3d at 1150; Safranek v. Wal-Mart Stores, Inc., 2011 WL 766218, *2 (S.D. Fla. Feb. 25, 2011). Section 768.79 provides in relevant part that

In any civil action for damages filed in the courts of this state, if a defendant files an offer of judgment which is not accepted by the plaintiff within 30 days, the defendant shall be entitled to recover reasonable costs and attorney's fees incurred by her or him or on the defendant's behalf pursuant to a policy of liability insurance or other contract from the date of filing of the offer if the judgment is one of no liability or the judgment obtained by the plaintiff is at least 25 percent less than such offer, and the court shall set off such costs and attorney's fees against the award.

         Fla. Stat. § 768.79(1). An offer of settlement must be in writing, state that it is being made pursuant to this section, name the party making it and to whom it is being made, state the amount offered to settle a claim for punitive damages, if any, and state the offer's total amount. Fla. Stat. § 768.79(2).

         Rule 1.442 also requires that the offer state that the proposal resolves all damages that would otherwise be awarded in a final judgment in the action, state with particularity any relevant conditions, state the total amount of the proposal and state with particularity all nonmonetary terms, state whether the proposal includes attorneys' fees, and include a certificate of service. Fla. R. Civ. P. 1442(c). With respect to the particularity requirement, Rule 1.442 “merely requires that the settlement proposal be sufficiently clear and definite to allow the offeree to make an informed decision without needing clarification. If ambiguity within the proposal could reasonably affect the offeree's decision, the proposal will not satisfy the particularity requirement.” State Farm Mut. Auto. Inc. Co. v. Nichols, 932 So.2d 1067, 1079 (Fla. 2006). The offeror may attach to the settlement proposal a copy of a general release that includes expansive language, as long as the release does not extinguish other outstanding claims.

         Id. at 1079, 1080.

         Here, it is undisputed that IPG served IDG the Offer on December 5, 2016 that IDG never accepted, that the Court granted summary judgment to IPG on three of the four counts, and that the Court entered an order on February 2, 2017 dismissing with prejudice IDG's final count after the parties entered into a settlement agreement of $50, 000.[3] IDG's $50, 000 recovery is at least 25% less than IPG's $300, 000 proposal for settlement. IDG does not dispute that § 768.79 and Rule 1.442 apply in this case. What IDG disputes is IPG's entitlement to fees and costs because IDG argues the Offer contains ambiguities as to which claims would be resolved, which parties are releasing whom, and the settlement amount. The Court considers IDG's arguments below.

         1. The Offer is clear as to which claims IPG seeks to resolve and which parties are releasing whom.

         IDG argues that IPG's Offer is ambiguous as to which claims IPG attemps to resolve because paragraph 2 of the Offer states it intends to resolve “IDG's claims against IPG for breach of contract (Counts I and II), unjust enrichment (Count III), and promissory estoppel (Count IV), ” but the attached release indicates that it applies to IPG, its successors, assigns, employees, agents and related individuals, and IPG seeks to resolve “[a]ny and all liabilities, claims, actions, losses or any other damages relating to the claims asserted in the action” . . . and applies “to all claims whether or not claimed, known or suspected.” [DE 160-1]. IPG counters that the Offer unambiguously stated that the claims brought by IDG would be settled in exchange for a $300, 000 payment to IDG and mutual general releases. Additionally, IPG maintains that nothing in the releases suggest that a corporation signing its release would also release claims of its owners or employees, individually. This Court agrees with IPG.

         Courts should not “nitpick” proposals for settlement in searching for ambiguities. Anderson v. Hilton Hotels Corp., 202 So.3d 846, 853 (Fla. 2016); see also, Inc. v. Travelers Prop. Cas. Co. of Am., 2015 WL 419879 (S.D. Fla. Jan. 22, 2015) (finding no ambiguity between the language of the proposal for settlement and language in the attached release where the release contained expansive language); Costco Wholesale Corp. v. Llanio-Gonzalez, 2017 WL 1076927 (Fla. 4th DCA Mar. 22, 2017) (same). The Florida Supreme Court has found that a general release may include expansive language, as long as the release does not extinguish other outstanding claims. Nichols, 932 So.2d at 1079, 1080.

         The line of cases IDG cites is distinguishable because here there are no other pending lawsuits or claims between the parties. The instant releases are properly attached and referenced in paragraph 5 of the Offer. Additionally, paragraph 2 of the Offer indicates that the Offer is “intended to resolve all claims . . . which IDG brought or could have brought in the above-referenced action.” [DE 160-1] (emphasis added). Further, standard release language that is attached to a proposal for settlement and identifies a party as including “parent corporations, subsidiaries, officers, directors, and employees” is not ambiguous and has not been found to invalidate a proposal for settlement. Alamo Financing, L.P. v. Mazoff, 112 So.3d 626, 631 (Fla. 4th DCA 2013). Accordingly, the Offer is clear as to which claims IPG seeks to resolve and as to who is releasing claims.

         2. The Offer is clear as to the settlement amount.

         IDG argues that the Offer is ambiguous because there is a discrepancy in the settlement amount listed in the Offer and the settlement amount listed in the attached releases. While the Offer indicates a $300, 000 settlement amount in paragraph 4, the releases indicate that the parties are releasing the claims “for and in consideration of TEN DOLLARS ($10.00) and other good and valuable consideration.” [DE 160-1]. IDG maintains that it is unclear whether the Offer amount was $300, 000; $310, 000; or $10. IPG counters that paragraphs 4 and 5 of the Offer make clear that $300, 000 was the amount offered although the releases included language of a nominal exchange of $10 as consideration, and IPG cannot seriously suggest it was confused by the amounts.

         In support of its argument, IDG cites to Stasio v. McManaway, 936 So.2d 676, 677 (Fla. 5th DCA 2006) in which the court found a patent ambiguity where the settlement proposal offered $60, 000 and the attached release listed the offer as “FIFTY NINE THOUSAND NO/100 DOLLARS ($60, 000).” However, the facts in Stasio are distinguishable as a natural reading of the documents in Stasio side by side may cause confusion. In contrast, here the $300, 000 offer and the release language indicating “TEN DOLLARS ($10.00) and other good and valuable consideration” would not cause confusion to a litigant, especially one experienced in business transactions. Understanding the offer to be $10 would be akin to believing Blackacre was actually sold for a peppercorn. Accordingly, the Court finds no merit in IDG's argument that the Offer was unclear as to the settlement amount.

         Ultimately, this Court finds that IPG is entitled to attorneys' fees and costs as the Offer complies with the requirements set forth in Fla. Stat. § 768.79 and Florida Rule of Civil Procedure 1.442.

         B. Amount of Fees

         Having found that IPG is entitled to fees and costs under § 768.79, the Court must determine the amount to which IPG is entitled. In calculating an award of attorneys' fees, federal courts use the lodestar method whereby a reasonable fee award is “properly calculated by multiplying the number of hours reasonably expended times a reasonable hourly rate.” American Civil Liberties Union v. Barnes, 168 F.3d 423, 427 (11th Cir. 1999) (citing Blum v. Stenson, 465 U.S. 886, 888 (1984)). To discern if a fee is reasonable, a court “is itself an expert on the question and may consider its own knowledge and experience concerning reasonable and proper fees and may form an independent judgment either with or without the aid of witnesses as to value.” Norman v. ...

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