Richard Bec, Of counsel. Espinosa Martinez, Miami

The court just entered judgment in favor of your client after prevailing on its breach of contract action. As you savor the victory, your lawyer brain begins outlining a motion for prevailing party attorney fees. You notice, however, that the judge has reduced the damages award due to a “diminution of value” defense raised by defendant. Following the reduction in the amount of damages, you question whether your client may still be the prevailing party for purposes of attorney fees under the subject agreement.

First thing first, look at the subject agreement. If a clear reading of the attorney fees provision applies to the context and type of contract claim of your case, then you are off to a good start. In Dear v. Q Club Hotel, Ltd. Liability Co., No. 15-CV-60474, 2017 U.S. Dist. LEXIS 181905 (S.D. Fla. Nov. 1, 2017) the Southern District refused to grant prevailing party attorney fees to a defendant that could not show how the subject attorney fees provision “clearly” and “unambiguously” authorized an award of attorney fees and costs for the type of contract claim at issue.

Your next question should be whether the only significant issue is, without a doubt, the one in which your client prevailed. Does your case involve a clear-cut breach of contract by the defendant and nothing else, or was it more complicated? The Eleventh Circuit Court of Appeals construes the term “prevailing party” to be the party that has prevailed on the “significant issues in the litigation.”

It is important to remember that it is not mandatory for courts to decide on a prevailing party. The Florida Supreme Court has made clear that trial courts have the discretion to determine that there is no prevailing party and, thus, to decline to award attorney's fees to either party, see Trytek v. Gale Industries, 3 So. 3d 1194, 1196 (Fla. 2009). Rather, where one is determined to exist, “… the entitlement to attorneys' fees is mandatory.”

Sometimes when parties win and lose on significant issues, the court will just pass on deciding who is the prevailing party. That is what happened in Schoenlank v. Schoenlank, 128 So. 3d 118 (Fla. 3d DCA 2013). There, neither party had completely prevailed on either major issue of the case. The Third DCA stressed that an attorney fee award is not required whenever a contract provides for prevailing party fees and made clear that a trial court retains the discretion to deny fees to both parties when each has prevailed and lost on significant issues.

The same applies to federal courts applying Florida law. In R.S.B. Ventures v. Federal Deposit Insurance, 2014 U.S. Dist. LEXIS 188109, 2014 WL 11598000 (S.D. Fla. May 20, 2014), the federal court concluded that where one party had prevailed on some issues and another party had prevailed on another issue, neither party should be deemed the prevailing party for purposes of fees, and it declined to make an award to either party.

More recently, in Winn-Dixie Stores v. Big Lots Stores, 2016 U.S. Dist. LEXIS 65508, 2016 WL 2918152 (S.D. Fla. May 18, 2016) (Middlebrooks, D.J.), the court concluded that because neither party had recovered on a claim or counter-claim and because neither party had been without fault, neither was a prevailing party and neither was entitled to an award of fees.

Returning to our hypothetical at the top of this article, assuming your client's win on the breach of contract claim is the only significant issue of the case, and your client has an applicable fee-shifting provision in the governing agreement, it is likely that your client is indeed the prevailing party. However, a very limited result in comparison to the scope of the litigation as a whole may affect the amount of attorney fees your client may ultimately be able to recover from the court in a subsequent motion for fees see Rodriguez v. Super Shine & Detailing, No. 09-23051-CIV, 2012 U.S. Dist. LEXIS 80214, at *22 (S.D. Fla. June 11, 2012).  A setoff or reduction of damages is secondary to the significant issue of the case and generally will not affect your client's status as the prevailing party for purposes of recovery of attorney fees.

Richard Bec is an attorney with the Miami intellectual property boutique law firm of Espinosa Martinez. He focuses his practice on practice on intellectual property and commercial litigation, real estate law and bankruptcy matters. Contact him at [email protected].