CodeVentures, LLC v. Vital Motion Inc.

USCA11 Case: 22-11288 Document: 36-1 Date Filed: 03/27/2023 Page: 1 of 10
[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 22-11288
Non-Argument Calendar
____________________
CODEVENTURES, LLC,
a Florida limited liability company,
Plaintiff-Appellant,
versus
VITAL MOTION INC.,
a Delaware corporation
DAVID A. LOVENHEIM,
an individual,
Defendants,
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2 Opinion of the Court 22-11288
JAY M. EASTMAN,
an individual,
CHRISTIAN TVETENSTRAND,
an individual,
TERRY BRADLEY, as surviving spouse and
representative of David A. Lovenheim,
ERIK HIESTER,
an individual,
Defendants-Appellees.
____________________
Appeal from the United States District Court
for the Southern District of Florida
D.C. Docket No. 1:20-cv-21574-FAM
____________________
Before JORDAN, BRANCH, and MARCUS, Circuit Judges.
PER CURIAM:
CodeVentures, LLC appeals from the district court’s order
awarding attorney fees in favor of David Lovenheim, Jay Eastman,
Christian Tvetenstrand, Erik Hiester, and Terry Bradley
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22-11288 Opinion of the Court 3
(collectively, the “O&D Defendants”),1 who are former officers
and directors of Vital Motion, Inc., a Delaware corporation that
borrowed $100,000 from CodeVentures and failed to repay the
note. In the underlying complaint, CodeVentures sued Vital for
breach of the note (Count I) and sued Vital and the O&D Defend-
ants on several tort claims, including that they had fraudulently in-
duced CodeVentures to sign the note (Count II), had aided and
abetted fraud (Count III), and had conspired to defraud (Count IV)
(collectively, the “Tort Claims”). Several months after the suit was
filed, the O&D Defendants served a Proposal for Settlement
(“PFS”) on CodeVentures, seeking to settle the Tort Claims for
$100.00, an amount to be apportioned equally among the O&D
Defendants. CodeVentures did not accept the proposal. Thereaf-
ter, the district court dismissed two counts against all the defend-
ants (Counts III and IV), dismissed one count against all but Vital
and Lovenheim (Count II), granted summary judgment in favor of
CodeVentures on the count against Vital (Count I), and granted
CodeVentures’ voluntary motion to dismiss without prejudice the
remaining count against Vital and Lovenheim (Count II).
The court then awarded $16,754.60 in attorney fees to the
O&D Defendants pursuant to Fla. Stat. § 768.70, which authorizes
the award of reasonable attorney fees to a party whose statutory
1 Upon the filing of a suggestion of death of David Lovenheim, our Court
granted the motion to substitute Terry Bradley, Lovenheim’s surviving
spouse and personal representative, for Lovenheim in this appeal.
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4 Opinion of the Court 22-11288
settlement proposal is rejected by an opposing party and that party
ultimately achieves a significantly less favorable result than what
was offered. On appeal, CodeVentures argues that the district
court erred in awarding attorney fees to the O&D Defendants be-
cause CodeVentures’ voluntary dismissal of Lovenheim made it
impossible for the O&D Defendants to meet the “favorability” re-
quirement of the Florida statute. After careful review, we affirm.
I.
We review de novo a district court’s interpretation of a state
law like Florida’s offer-of-judgment statute. See McMahan v. Toto,
311 F.3d 1077, 1081 (11th Cir. 2002). We review only for abuse of
discretion the amount of attorney fees awarded by the district
court. Id. at 1084.
II.
Here, the O&D Defendants sought attorney fees under Flor-
ida’s offer-of-judgment statute, which provides:
(1) 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 defend-
ant shall be entitled to recover reasonable costs and at-
torney’s fees incurred . . . from the date of filing of the
offer if the judgment is one of no liability . . . . If a plaintiff
files a demand for judgment which is not accepted by the
defendant within 30 days and the plaintiff recovers a
judgment in an amount at least 25 percent greater than
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22-11288 Opinion of the Court 5
the offer, [the plaintiff] shall be entitled to recover rea-
sonable costs and attorney’s fees incurred from the date
of the filing of the demand. . . .
(2) . . . . An offer must:
(a) Be in writing and state that it is being made pursu-
ant to this section.
(b) Name the party making it and the party to whom
it is being made.
(c) State with particularity the amount offered to set-
tle a claim for punitive damages, if any.
(d) State its total amount.
The offer shall be construed as including all damages which
may be awarded in a final judgment.
Fla. Stat. § 768.79(1)–(2). 2
In MX Investments, Inc. v. Crawford, 700 So. 2d 640 (Fla.
1997), the Florida Supreme Court concluded that to be entitled to
an award of attorney fees under § 768.79 based on a dismissal of the
case, the dismissal must be with prejudice. Id. at 642. In explaining
what constitutes a dismissal with prejudice, the court made it clear
that for purposes of the offer-of-judgment statute, the dismissal
must represent a judgment of no liability. Id. Thus, an involuntary
2 We’ve deemed § 768.79 to be substantive for Erie purposes and, therefore,
it is applicable to this case. See McMahan, 311 F.3d at 1080.
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dismissal, a dismissal with prejudice, and a second voluntary dis-
missal (which serves as adjudication on the merits pursuant to Flor-
ida Rule of Civil Procedure 1.420(a)(1)) all qualify as a basis of an
award of attorney fees under § 768.79. Smith v. Loews Miami
Beach Hotel Operating Co., 35 So. 3d 101, 103 (Fla. 3d DCA 2010).
Then, in Scherer Construction & Engingeering of Central
Florida, LLC v. Scott Partnership Architecture, Inc., 151 So. 3d 528(Fla. 5th DCA 2014), a Florida appellate court examined whether
the trial court properly awarded fees in connection with both
counts of a two-count complaint. Id. at 529. There, after the de-
fendant had served a PFS on the plaintiff, the court granted sum-
mary judgment in favor of the defendant on one count and the
plaintiff voluntarily dismissed without prejudice the second count.
The appellate court said it was improper for the trial court to award
fees on only the count that was voluntarily dismissed. Id. at 530.
Importantly, however, the court affirmed the award of fees for the
count on which the defendant prevailed. Id.Here, the district court relied on Scherer’s holding that a
court may issue an award of fees even if the party seeking costs
does not meet § 768.79’s favorability requirement on all counts.
We agree that Scherer applies squarely to this case. Just as in
Scherer, nearly all of the counts against the O&D Defendants were
adjudicated on the merits, but a remaining count was voluntarily
dismissed. So, under the prevailing Florida caselaw, the district
court was authorized to award fees to the O&D Defendants for the
counts that were adjudicated on the merits. This situation stands
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in contrast to those in MX Investments and Smith, the cases
CodeVentures relies on. Both of those cases involved voluntary
dismissals of the entire action, and there was no adjudication on
the merits on any claim. See Smith, 35 So. 3d at 101–03 (holding
that the defendant not entitled to fees under the offer of judgment
statute because the plaintiff had filed for a voluntary dismissal with-
out prejudice, which did not operate as an adjudication on the mer-
its); MX Invs., 700 So. 2d at 641 (same).
CodeVentures argues that Scherer is unhelpful because it
did not explain why a party could be awarded fees if it did not win
on all counts. 151 So. 3d at 529–30 (holding that “we affirm that
part of the judgment awarding fees for the defense of the contribu-
tion count,” the count on which the court had granted summary
judgment in favor of the defendant). According to CodeVentures,
Scherer’s holding “encourage[s] the continuation of litigation
when a plaintiff has already achieved substantial success -- contrary
to the goals of any system of justice, such as efficiency and proper
judicial administration.” The O&D Defendants, relying on the dis-
trict court’s reasoning, counter that if CodeVentures’ position were
to prevail, “a party could strategically avoid § 768.79’s fee-shifting
provision by including claims that have minimal potential reward
and voluntarily dismissing them if other claims are resolved in the
opposing party’s favor.”
However, we need not enter into this policy debate. “A fed-
eral court applying state law is bound to adhere to decisions of the
state’s intermediate appellate courts” -- absent some persuasive
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8 Opinion of the Court 22-11288
indication that the state’s highest court would decide the issue oth-
erwise -- “whether or not the court agrees with the reasoning on
which the state court’s decision is based or the outcome which the
decision dictates.” Silverberg v. Paine, Webber, Jackson & Curtis,
Inc., 710 F.2d 678, 690 (11th Cir. 1983). Scherer has not been over-
ruled by the Florida Supreme Court and there is no indication that
the Florida Supreme Court would decide the issue differently.
Thus, we are bound by Scherer even if we are unimpressed by, or
even disagree with its reasoning.
CodeVentures further posits that Scherer is no longer good
law because in 2013, the Florida Supreme Court amended the gov-
erning Florida rule to require that “a proposal for settlement must
resolve all claims between the proponent and the party to whom
the proposal is made . . . .” In re Amendments to the Fla. Rules of
Civil Procedure, 131 So. 3d 643, 648 (Fla. 2013) (amending Rule
1.442(c)(2)(B) to add quoted language). But neither this case nor
Scherer involve partial proposals for settlement. The O&D De-
fendants’ PFS was not directed to one or some claims but not oth-
ers, but rather to “all claims for affirmative relief by CodeVentures
against the [O&D] Defendants . . . .” As we see it, because the PFSs
in both this case and Scherer sought to resolve all claims between
the parties, the 2013 amendments have no effect on Scherer’s hold-
ing or how it applies here.
CodeVentures also mentions in passing that the O&D De-
fendants’ PFS was an invalid “all-or-nothing” offer. But it cites
nothing for this proposition. In Attorneys’ Title Insurance Fund,
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22-11288 Opinion of the Court 9
Inc. v. Gorka, 36 So. 3d 646 (Fla. 2010), the court addressed the
standard when there is a PFS made to multiple offerees, not when
there is a PFS made by multiple offerors. Id. at 649 (“The issue
presented by the conflicting decisions is whether a joint offer of set-
tlement or judgment that is conditioned on the mutual acceptance
of all of the joint offerees is valid and enforceable.”). In the PFS at
issue in this case, the offer was made only to one party, CodeVen-
tures, by the five O&D Defendants. CodeVentures has not ex-
plained why this kind of PFS -- unlike the one in Attorneys’ Title --
was improper under Florida law. Rather, Florida law only seems
to say that where there is a PFS made by multiple offerors, the PFS
must state the amount attributable to each individual offeror. See
Pratt v. Weiss, 161 So. 3d 1268, 1271 (Fla. 2015) (“This Court has
held that subdivision (c)(3) of rule 1.442, which requires a joint pro-
posal to state the amount and terms attributable to each offeror or
offeree, must be strictly construed because it, as well as the offer of
judgment statute, is in derogation of the common law rule that
each party is responsible for its own fees.”). The O&D Defendants’
PFS provided that “[t]his amount of this joint PFS and its terms are
apportioned equally among the [O&D] Defendants.” (emphasis
added). Thus, the O&D Defendants’ PFS met this requirement.
Finally, CodeVentures argues that the error in allowing the
O&D Defendants to recover fees for the counts that were adjudi-
cated on the merits was made clear when the O&D Defendants
argued that the claims raised by Codeventures were “intertwined”
so they were entitled to the full fees expended on the case. As the
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10 Opinion of the Court 22-11288
record reflects, the district court agreed that the claims and the re-
sultant fees were intertwined based on the O&D Defendants’ ex-
planation that “[e]ach of the three counts is based on the allegation
that the [O&D] Defendants fraudulently induced CodeVentures to
make the bridge loan, or had knowledge of and approved the fraud-
ulent inducement . . . . [and] CodeVentures expressly re-alleged the
same factual allegations (paragraphs 1 – 53) in support of each of
the Tort Claims.” CodeVentures does not appear to dispute that
the claims were inextricably intertwined; rather it appears to be
saying, without citing any support under Florida law, that Vital or
someone else should have paid the full amount of fees instead.
Accordingly, we affirm the district court’s award of attorney
fees in favor of the O&D Defendants.
AFFIRMED.