Blue Infiniti, LLC and Jorge Diaz-Cueto v. Annette Cassells Wilson and Ricky Wilson

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA

FOURTH DISTRICT

BLUE INFINITI, LLC and JORGE DIAZ-CUETO,

Appellants,

v.

ANNETTE CASSELLS WILSON and RICKY WILSON,

Appellees.

Nos. 4D14-813 and 4D14-887

[July 8, 2015]

Consolidated appeals from the Circuit Court for the Seventeenth

Judicial Circuit, Broward County; Joel T. Lazarus, Judge; L.T. Case No.

CACE 12-23976 (11).

Jorge Diaz-Cueto, Miami, for appellants.

Herbert B. Dell of Herbert B. Dell, P.A., Fort Lauderdale, for appellees.

CONNER, J.

Blue Infiniti, LLC and Jorge Diaz-Cueto (collectively, “Blue Infiniti”),

appeal the trial court’s order granting the appellees’ motion for attorney’s

fees as the prevailing party and motion for sanctions pursuant to section

57.105, Florida Statutes (2013). Blue Infiniti argues that the trial court

erred in awarding prevailing party fees after Blue Infiniti voluntarily

dismissed the case upon the appellees substantially paying the debt owed

shortly after suit was filed, and in awarding section 57.105 fees without

holding an evidentiary hearing and making written findings. We agree

with Blue Infiniti’s arguments as to both fee awards, and reverse.

Factual Background and Trial Proceedings

The facts of the underlying case arose out of a loan between sisters.

Apparently because of the appellees’ financial difficulties in paying their

mortgage, Blue Infiniti, an entity owned by the lending sister, made a loan

to the appellees, evidenced by a note and secured by another mortgage on

the same property. In August 2012, after the appellees failed to make

payments on the note, Blue Infiniti filed a three-count complaint against

the appellees for: (1) foreclosure, (2) amount due, and (3) civil Racketeer

Influenced and Corrupt Organizations (“RICO”).

Three weeks later, on September 13, 2012, the appellees sent to Blue

Infiniti a letter claiming that the foreclosure count was premature because

the note amount did not become fully due and owing until September 15,

2012, pursuant to the note’s terms. Appellees enclosed a check in the

amount which the letter stated was to satisfy the “amount due and owing

together with interest.” Litigation, however, proceeded. In January 2013,

the appellees filed a motion for sanctions pursuant to section 57.105, as

to only the RICO count, claiming that that count was not “[(a)] supported

by the material facts necessary to establish that claim and/or (b) would

not be supported by the application of existing law to the material facts

pertaining to a Civil RICO claim.” In May 2013, Blue Infiniti filed a notice

of voluntary dismissal with prejudice for all three counts. In response, the

appellees filed a motion for an award of prevailing party attorney’s fees.

A hearing was held on the appellees’ motion for sanctions pursuant to

section 57.105 and motion for prevailing party attorney’s fees. In support

of its motion, appellees argued that since the litigation ended in a

voluntary dismissal, they were the prevailing party, and cited case law in

support of the position that a defendant is the prevailing party when the

plaintiff voluntarily dismisses the case. They also argued that the civil

RICO claim had no basis in law or facts, and therefore, Blue Infiniti should

be sanctioned. Blue Infiniti countered that although a voluntary dismissal

can result in the defendants as the prevailing party, the court had to look

at the substance of the proceeding and dismissal, and since Blue Infiniti

dismissed the case after the appellees substantially paid the amount that

was owed, it was the prevailing party. However, when Blue Infiniti’s

attorney attempted to testify in response to the motion for section 57.105

sanctions, the trial court stated that it did not see how his testimony would

be relevant.

The trial court entered its written order granting both of the appellees’

motions, finding that the appellees were the prevailing party “based upon

the Voluntary Dismissal, with Prejudice, filed by Blue Infiniti, LLC” and

57.105 fees were warranted because “the Civil RICO claim was frivolous.”

Blue Infinti gave notice of this appeal.

2

Appellate Analysis

Prevailing Party Attorney’s Fees

“The standard of review for a trial court’s ruling on the issue of

prevailing party attorney’s fees is abuse of discretion.” Newton v. Tenney,

122 So. 3d 390, 392 (Fla. 4th DCA 2013) (citing Shands Teaching Hosp. &

Clinics, Inc. v. Mercury Ins. Co. of Fla., 97 So. 3d 204, 213 (Fla. 2012)).

“[T]he party prevailing on the significant issues in the litigation is the

party that should be considered the prevailing party for attorney’s fees.”

Moritz v. Hoyt Enters., Inc., 604 So. 2d 807, 810 (Fla. 1992). At the hearing,

the appellees mainly quoted general case law stating that when a plaintiff

voluntarily dismisses a case, then the defendant is the prevailing party.

However, while this may be a general rule, there is a recognized exception

that directly applies to this case.

Padow v. Knollowood Club Ass’n, 839 So. 2d 744 (Fla. 4th DCA 2003),

dealt with the exception to the general rule and is factually similar to this

case. There, a condominium association filed a complaint against Padow

for failing to pay maintenance fees. Id. at 745. After the suit was filed,

Padow sent the association a check for $2,000, which the association did

not consider to have satisfied all of Padow’s debt. Id. The association filed

a motion for summary judgment, and the trial court denied its motion,

finding that the $2,000 check had satisfied the fees and costs owed by

Padow. Id. About seven months later, the association filed a voluntary

dismissal without prejudice. Id. Padow then filed a motion for attorney’s

fees, as the prevailing party. At the fee hearing, the association explained

it voluntarily dismissed the case “because it had gotten most of what it

had sought when filing its suit and . . . it did not believe that it was worth

while [sic] for a small [c]ondominium [a]ssociation to continue to litigate

indefinitely under those circumstances.” Id. (internal quotation marks

omitted). The trial court denied Padow’s motion for fees. Id.

On appeal, Padow quoted cases standing for the general proposition

that a voluntary dismissal by the plaintiff results in the defendant as the

prevailing party. Id. at 745-46. However, we stated:

[A] defendant is not automatically the prevailing party for the

purpose of an attorney’s fee statute when a plaintiff takes a

voluntary dismissal. Here, Padow cannot be a “prevailing

party” within the meaning of section 718.303(1) because he

paid the substantial part of the association’s claim for

delinquent assessments prior to the voluntary dismissal.

3

Id. at 746. We also agreed with the trial court’s reasoning behind finding

that Padow was not the prevailing party, by explaining that, “to find that

Padow was the prevailing party under these circumstances would require

a plaintiff to fight every case to judgment, even though it ‘achieved all of

the legitimate goals of [its] suit,’ which was not a goal of the legislature in

passing the statute [allowing attorney’s fees].” Id. at 745-46.

The exception to the general rule discussed in Padow applies to this

case. Two of the three counts that Infiniti filed against the appellees were

for the amount that the appellees owed on the note, with one of the counts

seeking foreclosure. Although the check that the appellees sent to Blue

Infiniti, in an attempt to satisfy its debt, was for $1,575.00 less than the

amount that Infiniti requested in its complaint1, Blue Infiniti clearly

recovered the majority of what it sought by filing suit. Having received

most of what it sought, Blue Infiniti dismissed all three counts, bringing

litigation to an end. The trial court improperly awarded prevailing

attorney’s fees in this case.

Section 57.105 Attorney’s Fees

“Generally, the standard of review of a trial court’s order awarding

section 57.105(1) attorney’s fees is abuse of discretion. However, to the

extent a trial court’s order on fees is based on an issue of law, this court

applies de novo review.” Lago v. Kame By Design, LLC, 120 So. 3d 73, 74

(Fla. 4th DCA 2013) (citing Ferere v. Shure, 65 So. 3d 1141, 1144 (Fla. 4th

DCA 2011)) (internal citation omitted).

The trial court’s order imposed attorney’s fees against both Blue Infiniti

and its attorney in equal amounts. Section 57.105, Florida Statutes

(2013), provides:

(1) Upon the court’s initiative or motion of any party, the court

shall award a reasonable attorney’s fee, including

prejudgment interest, to be paid to the prevailing party in

equal amounts by the losing party and the losing party’s

attorney on any claim or defense at any time during a civil

proceeding or action in which the court finds that the losing

party or the losing party’s attorney knew or should have

known that a claim or defense when initially presented to the

court or at any time before trial:

1The difference between the amounts was exactly $1,575, the amount that Blue

Infiniti stated was due and owing for late charges.

4

(a) Was not supported by the material facts necessary to

establish the claim or defense; or

(b) Would not be supported by the application of then-existing

law to those material facts.

....

(3) Notwithstanding subsections (1) and (2), monetary

sanctions may not be awarded:

(a) Under paragraph (1)(b) if the court determines that the

claim or defense was initially presented to the court as a

good faith argument for the extension, modification, or

reversal of existing law or the establishment of new law, as

it applied to the material facts, with a reasonable

expectation of success.

(b) Under paragraph (1)(a) or paragraph (1)(b) against the

losing party’s attorney if he or she has acted in good faith,

based on the representations of his or her client as to the

existence of those material facts.

§ 57.105, Fla. Stat. (2013). Thus, in determining an award of fees under

section 57.105, “[t]he [trial] court determines if the party or its counsel

knew or should have known that the claim or defense asserted was not

supported by the facts or an application of existing law.” Asinmaz v.

Semrau, 42 So. 3d 955, 957 (Fla. 4th DCA 2010) (quoting Wendy’s of N.E.

Fla., Inc. v. Vandergriff, 865 So. 2d 520, 523 (Fla. 1st DCA 2003)); § 57.105,

Fla. Stat. (2013). “A trial court’s findings must [] ‘be based upon

substantial competent evidence presented to the court at the hearing on

attorney’s fees or otherwise before the court and in the trial record.’”

Montgomery v. Larmoyeux, 14 So. 3d 1067, 1073 (Fla. 4th DCA 2009)

(quoting Weatherby Assocs., Inc. v. Ballack, 783 So. 2d 1138, 1141 (Fla.

4th DCA 2001)); Wapnick v. Veterans Council of Indian River Cnty., Inc.,

123 So. 3d 622, 624 (Fla. 4th DCA 2013).

Excluding arguments made to the trial court during the hearing on

their motion for fees, the appellees are unable to point to anything in the

record that would constitute substantial competent evidence for the trial

court to find that the RICO count filed by Blue Infiniti could not be

supported by the facts or an application of existing law. Thus, a full

5

evidentiary hearing was necessary for the trial court to make such a

determination against Blue Infiniti and its counsel. “A ‘full hearing’ is one

during which the party was ‘represented by counsel, examined witnesses,

and had the opportunity to offer evidence.’” Ferdie v. Isaacson, 8 So. 3d

1246, 1250 (Fla. 4th DCA 2009) (quoting Brinkley v. Cnty. Of Flagler, 769

So. 2d 468, 472 (Fla. 5th DCA 2000)). Because the trial court did not allow

Blue Infiniti’s attorney to testify, even though he specifically informed the

court that he appeared at the hearing in order to do so, neither he nor

Blue Infiniti was afforded a full hearing on the issues. Additionally, the

only finding that the trial court made in its order was its “finding the Civil

RICO claim was frivolous.” This falls short of the requirement that the

trial court make detailed and specific findings of bad faith. “[I]f the trial

court concludes that an award of fees under section 57.105 is an

appropriate sanction, ‘it should recite in its order the facts upon which it

bases that conclusion.’” Lago, 120 So. 3d at 75 (quoting Regions Bank v.

Gad, 102 So. 3d 666, 667 (Fla. 1st DCA 2012)); see also Avis Rent A Car

Sys., Inc. v. Newman, 641 So. 2d 915 (Fla. 3d DCA 1994). It was therefore

error for the trial court to impose sanctions upon Blue Infiniti and its

attorney prior to affording a full opportunity to be heard and without

making detailed findings in its order.2

Accordingly, we reverse the trial court’s order awarding attorney’s fees

to the appellees as the prevailing party. We also reverse the trial court’s

award of attorney’s fees to the appellees pursuant to section 57.105, and

remand the case with instructions that the trial court afford Blue Infiniti,

and its attorney, a full hearing on the 57.105 motion.

Reversed and remanded.

STEVENSON and GERBER, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.

2 We also note that in connection with the assessment of fees against a party’s

counsel in which the attorney asserts good faith as a defense, this court has held

that “[a] trial court’s decision under section 57.105(1) must be supported by

competent substantial evidence; therefore, it follows that a full evidentiary

hearing on the good faith issue is necessary.” Ferdie, 8 So. 3d at 1250. Our

supreme court has also required that a trial court’s order imposing sanctions

upon an attorney pursuant to section 57.105 be supported by detailed factual

findings, following the sanction notice and an opportunity to be heard. See

Moakley v. Smallwood, 826 So. 2d 221, 227 (Fla. 2002)

6