Patricia Benchouchan v. VMM Enterprises, Inc.

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 08-15162 FEBRUARY 3, 2009
Non-Argument Calendar THOMAS K. KAHN
CLERK
________________________
D. C. Docket No. 08-00994-CV-T-26TBM
PATRICIA BENCHOUCHAN,
Plaintiff-Counter-
Defendant-Appellant,
versus
VMM ENTERPRISES, INC.,
Defendant-Counter-
Claimant-Appellee.
________________________
Appeal from the United States District Court
for the Middle District of Florida
_________________________
(February 3, 2009)
Before BIRCH, HULL and KRAVITCH, Circuit Judges.
PER CURIAM:
Appellant Patricia Benchouchan (“Benchouchan”) appeals the district
court’s order finding that neither she nor Appellee VMM Enterprises, Inc.
(“VMM”) was the “prevailing party” in the underlying arbitration and that
therefore neither party was entitled to an award of arbitration expenses. We
conclude that Benchouchan did prevail on all claims for which arbitration expenses
are available; accordingly, we VACATE the order of the district court and
REMAND for further proceedings consistent with this opinion.
I.
VMM entered into a License and Distribution Agreement (“Agreement”)
granting Benchouchan exclusive access to its proprietary system, products and
other confidential information for use within two zip codes of Los Angeles,
California. The Agreement required, inter alia, that any dispute between the parties
be submitted to binding arbitration and that, for any action arising “under or
otherwise relat[ing] to the terms of this Agreement,” the prevailing party would be
entitled to full reimbursement of its arbitration expenses from the other party. The
Agreement defined “arbitration expenses” as “attorneys’ fees, defense costs,
witness fees and other related expenses including paralegal fees, travel and lodging
expenses and court costs.”1
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We refer to these arbitration expenses collectively as “attorneys’ fees.”
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A dispute arose between the parties regarding Benchouchan’s performance
under the Agreement. VMM brought a demand for arbitration against
Benchouchan, asserting claims for breach of contract, violation of Florida’s
Deceptive and Unfair Trade Practices Act (“FDUTPA”), interference with
contractual and business relationships, trademark infringement in violation of the
Lanham Act, trademark infringement in violation of the Florida Trademark Act,
and requesting injunctive relief. The parties did not ask the arbitrator to determine
entitlement or the amount of attorneys’ fees, but they did request that the arbitrator
address each allegation of VMM’s demand in order to assist the appropriate
tribunal in determining entitlement to such fees.
Following a hearing, the arbitrator entered a Final Award of Arbitrator
(“Award”). In this Award, the arbitrator addressed VMM’s allegations, finding
some to be true, some false, and finding that “it was not possible to determine” the
validity of others. Ultimately, the arbitrator denied all of VMM’s claims for
damages and, after finding that Benchouchan was “bound by the terms of the
existing Agreement,” he granted “[n]o further injunctive relief.” The Award
ordered the parties to bear equally the cost of the arbitrator and the fees of the
arbitration proceeding.
Pursuant to the Federal Arbitration Act, 9 U.S.C. § 9, Benchouchan filed a
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Petition to Confirm the Arbitration Award in the district court, to which VMM
responded. Benchouchan then filed a Motion for Summary Judgment, arguing
that, as a matter of law, the district court should confirm the Award and declare
that Benchouchan is the prevailing party entitled to attorneys’ fees, costs and
interest thereon. VMM filed its own Motion for Summary Judgment, agreeing that
the Award should be confirmed and arguing that it was the prevailing party and
entitled to fees and costs or, alternatively, that there was no prevailing party and
that each party should bear its own fees and costs.
Noting that the arbitrator (1) found that “VMM proved Bencouchan’s
breach, and contemplated breach, of portions of the Agreement, but that
Benchouchan did not complete, or VMM waived, breaches of the Agreement,” (2)
ordered Benchouchan to be bound by the terms of the existing Agreement, and (3)
decided not to award arbitration fees and expenses to either party, the district court
found that neither Benchouchan nor VMM had prevailed. Accordingly, it
confirmed the Award, but denied both VMM and Benchouchan’s request for
attorneys’ fees and costs.
Benchouchan appeals. VMM has not filed a response to this appeal.
II.
“We review the district court’s grant of summary judgment de novo,
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applying the same legal standards that bound the district court, and viewing all
facts and reasonable inferences in the light most favorable to the nonmoving
party.” Cruz v. Publix Super Markets, Inc., 428 F.3d 1379, 1382 (11th Cir. 2005)
(citation and quotation omitted). Summary judgment is appropriate when “there is
no genuine issue as to any material fact and . . . the moving party is entitled to a
judgment as a matter of law.” Fed. R. Civ. P. 56(c).
III.
On appeal, Benchouchan argues that the district court erred in finding that
she was not entitled to attorneys’ fees under the terms of the Agreement. She also
argues that the district court erred in failing to consider whether she was entitled to
attorneys’ fees and costs under the FDUTPA, the Lanham Act, or the Florida
Trademark Act, all of which contain provisions shifting attorneys’ fees to the non-
prevailing party. Upon review of Benchouchan’s Petition to Confirm Arbitration
Award and Motion for Summary Judgment, however, we find that she only asked
the district court to consider whether she was entitled to attorneys’ fees pursuant to
the Agreement; she did not claim to be entitled to attorneys’ fees under the
provisions of the Florida or federal statues. Because she did not raise these
arguments before the district court, we will not consider them on appeal. See
Access Now, Inc. v. Southwest Airlines Co., 385 F.3d 1324, 1331 (11th Cir. 2004).
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Accordingly, we only consider whether Benchouchan is entitled to attorneys’ fees
under the terms of the Agreement.
The Agreement provides that the “prevailing party” on disputes arising
under the Agreement is entitled to recover attorneys’ fees from the non-prevailing
party. The Agreement, by its own terms, is governed by Florida law. Accordingly,
the relevant inquiry is whether, under Florida law, Benchouchan would be
considered the prevailing party on those claims “arising out of the contract.”
Lochrane Eng’g, Inc. v. Willingham Realgrowth Inv. Fund, Ltd., 563 So.2d 719(Fla. Dist. Ct. App. 1990) (“where a plaintiff, in a multi-count complaint, (1)
asserts a claim to which is appurtenant a provision for attorney’s fees to the
prevailing party and, (2) asserts other theories of recovery which do not include
provision for prevailing party attorney’s fees, one party or the other is a prevailing
party as to the cause of action involving those fees independent of which party
wins or loses on the other theories of recovery asserted in the same cause.”); see
also Caulfield v. Cantele, 837 So.2d 371, 379 (Fla. 2002) (finding that plaintiff
who prevailed on its fraudulent inducement claim was entitled to contractual
attorneys’ fees even though it did not prevail on its breach of contract claim
because “had there been no contract” there would have been no misrepresentation).
In this case, only VMM’s claims for breach of contract and injunctive relief
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arise out of the Agreement; had there been no Agreement, VMM could still have
asserted its claims under the Lanham Act, the Florida Trademark Act, the
FUDTPA and its claim for tortious interference with VMM’s other contractual and
business relationships. As the Florida Court of Appeals has explained, “[t]he fact
that all theories of recovery are based on the same factual transaction does not
mean that all arose out of the written contract which was but one facet in a larger
factual scenario.” Lochrane Engineering, 563 So.2d at 721. The question,
therefore, is whether a Florida court would consider Benchouchan to have
prevailed on the breach of contract claim and the request for injunctive relief. See
Harbaugh v. Greslin, 365 F. Supp. 2d 1274, 1277 (S.D. Fla. 2005) (interpreting
Florida law).
Under Florida law, “the party prevailing on the significant issues in the
litigation is the party that should be considered the prevailing party for attorneys’
fees.” Moritz v. Hoyt Enterprises, Inc., 604 So.2d 807, 810 (Fla. 1992).
Benchouchan argues that she is the prevailing party because the arbitrator (1) did
not award any damages for breach of contract and (2) did not grant an injunction
with the terms requested in VMM’s demand for arbitration. We agree.
Regarding the breach of contract claim, the arbitrator specifically found that
VMM “did not prove any damages as a result of [Benchouchan’s] breaches or
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contemplated breaches of the Agreement.” Damages are a required element of a
breach of contract claim without proof of which a plaintiff may not prevail.
Knowles v. C.I.T. Corp., 346 So.2d 1042, 1043 (Fla. Dist. Ct. App. 1977). The
arbitrator’s factual finding that Benchouchan breached portions of the Agreement
does not change the fact that VMM did not prevail on its claim for damages.
Accordingly, because Benchouchan successfully defended against this claim, she is
the prevailing party.
Regarding the claim for injunctive relief, VMM had requested an injunction
ordering Benchouchan (1) to not breach the Agreement, (2) to not sell or use the
products, (3) to not use VMM’s confidential information, training, service marks,
copyrighted and trademarked materials, (4) to not operate a competing wrapping
business, and (5) to not solicit other VMM licensees and clients. The arbitrator –
after finding that Benchouchan did not operate a competing business, did not
solicit other licensees or clients, did not misuse VMM’s confidential information
or protected materials, and did not use or sell the product in an unauthorized
manner – refused to issue VMM’s requested injunction. The arbitrator noted that
Benchouchan “is bound by the terms of the existing Agreement;” however, this
fact was never contested by Benchouchan. Accordingly, we conclude that
Benchouchan also successfully defended against VMM’s claim for injunctive relief
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and, therefore, is the prevailing party.
Because Benchouchan prevailed on the claims arising under the Agreement,
we conclude that she is entitled to attorneys’ fees. We therefore vacate the district
court’s order and remand to the district court to determine the amount of expenses
and reasonable attorneys’ fees for the services of Benchouchan’s attorney in
successfully defending the claims for breach of contract and injunctive relief.
VACATED AND REMANDED.
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