Filed: Oct. 14, 2020
Latest Update: Oct. 14, 2020
Summary: USCA11 Case: 20-11762 Date Filed: 10/14/2020 Page: 1 of 9 [DO NOT PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT _ No. 20-11762 Non-Argument Calendar _ D.C. Docket Nos. 8:19-cv-81476-KAM; 15-bk-29068-EPK In re: WILLIAM B. MILLS, Debtor. _ WILLIAM B. MILLS, MARY JANE MILLS, Plaintiffs - Appellants, versus VERO BEACH COUNTRY CLUB, INC., Defendant - Appellee. _ Appeal from the United States District Court for the Southern District of Florida _ (October 14, 2020) Before JORD
Summary: USCA11 Case: 20-11762 Date Filed: 10/14/2020 Page: 1 of 9 [DO NOT PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT _ No. 20-11762 Non-Argument Calendar _ D.C. Docket Nos. 8:19-cv-81476-KAM; 15-bk-29068-EPK In re: WILLIAM B. MILLS, Debtor. _ WILLIAM B. MILLS, MARY JANE MILLS, Plaintiffs - Appellants, versus VERO BEACH COUNTRY CLUB, INC., Defendant - Appellee. _ Appeal from the United States District Court for the Southern District of Florida _ (October 14, 2020) Before JORDA..
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USCA11 Case: 20-11762 Date Filed: 10/14/2020 Page: 1 of 9
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 20-11762
Non-Argument Calendar
________________________
D.C. Docket Nos. 8:19-cv-81476-KAM; 15-bk-29068-EPK
In re: WILLIAM B. MILLS,
Debtor.
____________________________________________________________
WILLIAM B. MILLS,
MARY JANE MILLS,
Plaintiffs - Appellants,
versus
VERO BEACH COUNTRY CLUB, INC.,
Defendant - Appellee.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(October 14, 2020)
Before JORDAN, ANDERSON, and EDMONDSON, Circuit Judges.
PER CURIAM:
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Defendants William and Mary Jane Mills appeal the district court’s order
affirming the bankruptcy court’s denial of Defendants’ motion for a determination
of entitlement to attorney’s fees under Fla. Stat. § 57.105(1). No reversible error
has been shown; we affirm.1
Background:
This appeal arises from a Chapter 7 bankruptcy proceeding filed by William
Mills. As part of the bankruptcy proceedings, the bankruptcy court placed Mills’s
solely-owned company -- Real Estate & Management Group, LLC (“REMG”) --
into receivership. A court-appointed receiver filed an adversary complaint against
Vero Beach Country Club (“VBCC”) to recover membership dues paid by REMG
on behalf of Defendants (Adversary Case No. 18-01215). The Receiver’s claims
were brought pursuant to the Florida Uniform Fraudulent Transfer Act, Fla. Stat.
§§ 726.105(1)(b) and 726.106(1).
1
VBCC’s “Motion for Award of Damages and Costs for Frivolous Appeal,” pursuant to Fed. R.
App. P 38, is DENIED. Although we rule against Defendants in this appeal, Defendants’
arguments are not so “utterly devoid of merit” as to warrant Rule 38 sanctions. For background,
see Parker v. Am. Traffic Solutions, Inc., 835 F.3d 1363 (11th Cir. 2016); Bonfiglio v. Nugent,
986 F.2d 1391 (11th Cir. 1993).
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VBCC answered the Receiver’s complaint and also brought a third-party
complaint against Defendants, asserting claims for contractual indemnification
(“Count I”) and for common law indemnification under Florida law (“Count II”).
In response, Defendants asserted a counterclaim against VBCC for wrongful
suspension of Defendants’ membership privileges.
The Receiver and VBCC later agreed to settle the case for $25,000. The
bankruptcy court approved the settlement. The bankruptcy court also retained
jurisdiction over VBCC’s third-party claims and over Defendants’ counterclaim.
On 7 August 2019, the bankruptcy court denied VBCC’s motion for
summary judgment on Count II. The bankruptcy court explained that no Florida
court had “applied common law indemnity to a fraudulent transfer claim brought
under the Florida Uniform Fraudulent Transfer Act.” The bankruptcy court,
however, granted VBCC’s motion for summary judgment on Defendants’
wrongful-suspension counterclaim.
Meanwhile -- about two weeks before the bankruptcy court entered its
summary judgment order -- Defendants filed a civil action against VBCC in state
court, alleging wrongful suspension of their VBCC membership privileges and
seeking money damages and declaratory and injunctive relief. VBCC removed
that case to the bankruptcy court on 19 August 2019 (docketed as Adversary Case
No. 19-01329).
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The bankruptcy court then entered -- in both Case No. 18-01215 and in Case
No. 19-01329 -- an order to show cause why the court should not abstain from
hearing both matters so the claims could be adjudicated in state court. In response,
Defendants asked the bankruptcy court to abstain from considering the remaining
claim in Case No. 18-01215 and the claims in Case No. 19-01329. Defendants
also requested that both cases be remanded to state court so Defendants could seek
a jury trial. VBCC also consented to a remand.
The bankruptcy court entered an order (1) abstaining from hearing and
remanding Case No. 19-01329 to state court and (2) abstaining from hearing the
third-party complaint and counterclaim presented in Case No. 18-01215 and
dismissing the case “without prejudice to their pursuit in the State Court Matter.”
Defendants moved the bankruptcy court for a determination of their
entitlement to attorney’s fees in Case No. 18-01215, pursuant to Fla. Stat. §
57.105.2 After a hearing, the bankruptcy court denied Defendants’ motion. About
Count I, the bankruptcy court said there was no “prevailing party” for purposes of
section 57.105 because the bankruptcy court abstained and remanded the matter to
state court without addressing the merits. About Count II, the bankruptcy court
ruled that Defendants were unentitled to attorney’s fees for two reasons: (1) the
2
Defendants also moved for attorneys’ fees under 28 U.S.C. § 1447. Defendants have raised no
challenge to the bankruptcy court’s denial of relief under that statute.
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court’s denial of VBCC’s motion for summary judgment on Court II was no final
judgment ending the litigation and, thus, Defendants were no “prevailing party” on
that issue; and (2) VBCC’s common law indemnity claim constituted “a good faith
attempt to extend existing Florida law to fraudulent transfer matters.”
On appeal, the district court affirmed the bankruptcy court’s denial of
attorney’s fees under Fla. Stat. § 57.105. This appeal followed.
Discussion:
“When the district court affirms the bankruptcy court, we review the
bankruptcy court’s decision, reviewing its factual findings for clear error and its
legal conclusions de novo.” Roth v. Nationstar Mortg., LLC (In re Roth), 935 F.3d
1270, 1274 (11th Cir. 2019). We review for abuse of discretion the denial of a
motion for attorney’s fees under Fla. Stat. § 57.105. See Boca Burger, Inc. v.
Forum,
912 So. 2d 561, 573 (Fla. 2005).
Section 57.105(1) provides for an award of reasonable attorney’s fees to the
“prevailing party” under these circumstances:
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:
(a) Was not supported by the material facts necessary to
establish the claim or defense; or
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(b) Would not be supported by the application of then-existing
law to those material facts.
Fla. Stat. § 57.105(1). Attorney’s fees may not be awarded under section
57.105(1)(b), however, “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.” Id. §
57.105(3)(a).
“The purpose of section 57.105 is to discourage baseless claims, stonewall
defenses and sham appeals in civil litigation by placing a price tag through
attorney’s fees awards on losing parties who engage in these activities.” Schwartz
v. Millon Air, Inc.,
341 F.3d 1220, 1227 (11th Cir. 2003) (deciding a case under an
earlier version of section 57.105); see Wendy’s of N.E. Fla., Inc. v. Vandergriff,
865 So. 2d 520, 523 (Fla. Dist. Ct. App. 2003) (stating -- after section 57.105 was
amended in 1999 -- “the central purpose of section 57.105 is, and always has been,
to deter meritless filings”). Relief under section 57.105 “must be applied carefully
to ensure that it serves the purpose for which it was intended, which was to deter
frivolous pleadings.” Wendy’s of N.E. Fla.
Inc., 865 So. 2d at 523.
That a party “was successful in obtaining the dismissal of the action or
summary judgment in an action” is not enough by itself to warrant relief under
section 57.105. See id. Instead, “to justify an award under section 57.105, the trial
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court must find the action to be frivolous or so devoid of merit both on the facts
and the law as to be completely untenable.” Murphy v. WISU Props., Ltd., 895
So. 2d 1088, 1093-94 (Fla. Dist. Ct. App. 2004).
The bankruptcy court abused no discretion in declining to award Defendants
attorney’s fees under section 57.105. First, we accept that the bankruptcy court
could, without error, determine that no prevailing party existed on Count I. The
bankruptcy court -- triggered by Defendants’ filing in state court of a civil action
related to Defendants’ counterclaim in Case No. 18-01215 -- proposed that the
court abstain from considering the claims in both Case Nos. 18-01215 and 19-
01329. No party objected, and Defendants requested expressly that both cases be
remanded so that Defendants could pursue a jury trial. Under these circumstances
-- where the bankruptcy court raised the issue of abstention, no party objected, and
no ruling was made on the merits of Count I -- no party prevailed for purposes of
an award of attorney’s fees. 3 More important, because the bankruptcy court
abstained from considering the merits of Count I and dismissed that claim (letting
it be pursued in state court), the bankruptcy court necessarily made no frivolity
3
On appeal, Defendants characterize the bankruptcy court’s abstention order as an “involuntary
dismissal” of VBCC’s claims justifying an award of attorney’s fees. The cases relied upon by
Defendants (none of which deal with section 57.105) are distinguishable from the circumstances
of this case. Among other things, this case involves no act by VBCC that led to the bankruptcy
court’s decision to abstain. Instead, the bankruptcy court’s abstention ruling stemmed from
Defendants’ own conduct: filing a separate civil action in state court and then requesting that the
bankruptcy court abstain and remand to the state court.
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finding for that claim. Accordingly, no award of attorney’s fees is warranted based
on Count I.
Nor did the district court abuse its discretion in denying attorney’s fees
based on Count II. Although the bankruptcy court determined that common law
indemnification is inapplicable to claims made under Florida’s Uniform Fraudulent
Transfer Act, the bankruptcy court noted the issue was a matter of first impression.
In asserting its common law indemnification claim, VBCC relied on language in
the bankruptcy court’s decision in In re GPC Miami, Inc., 582 B.R. 534 (Bankr.
S.D. Fla. 2018). There, the bankruptcy court discussed the parties’ arguments
about the existence of a common law indemnity cause of action in the context of a
fraudulent transfer claim, but ultimately declined to decide the
issue. 582 B.R. at
537-41 (concluding that “even if a claim for common law indemnity can be made
in a case arising from a fraudulent transfer claim, there are no grounds to make a
claim in this case.”). Given the language in In re GPC Miami, Inc. and the absence
of contrary rulings from the Florida courts, the bankruptcy court’s finding that
VBCC’s argument in Count II was made in good faith is not clearly erroneous.4
4
We reject Defendants’ contention that the bankruptcy court abused its discretion in finding
good faith without an evidentiary hearing. Defendants never requested an evidentiary hearing.
Further, the record was sufficient for the bankruptcy court to make a finding about whether
VBCC’s legal argument was made in good faith.
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VBCC’s argument in Count II thus fell within section 57.105(3)’s “good faith”
exception.
The bankruptcy court abused no discretion in denying Defendants’ section
57.105 motion for attorney’s fees; we affirm the district court’s decision.
AFFIRMED.
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