MIAMI BUSINESS LITIGATION: PREVAILING PARTY RECOVERY OF LEGAL EXPENSE

We recently wrote articles on a litigant’s ability to recover prevailing party attorney’s fees under the American Rule. The Rule prohibits attorney’s fees unless they are authorized by statutes or by a contract provision. Q.H. v. Sunshine State Health Plan, Inc., 305 So. 3d 543 (Fla. 4th DCA 2020) (“Under the American rule, a court may only award attorney’s fees when such fees are expressly provided for by statute, rule, or contract.”). However, as we showed in the prior two articles, the existence of an applicable statutory provision or contract provision permitting attorney’s fees does guarantee that a litigant can recover his or her attorney’s fees in the event he or she prevails. E.g., Tesla Elec., Armature & Mach., Inc. v. JLM Advanced Tech. Services, Inc., 128 So. 3d 865 (Fla. 1st DCA 2013) (denying a motion for attorney’s fees despite the existence of an attorney’s fees provision with Florida’s restrictive covenant statute); Pardo v. Goldberg, 92 So. 3d 295 (Fla. 3d DCA 2012) (denying a motion for attorney’s fees even though the contract between the parties permitted attorney’s fees in certain circumstances). In this article, we explore the circumstances in which a litigant can be classified as the prevailing party thereby enabling that party to recover his or her attorney’s fees (assuming an applicable statute or contract entitles the prevailing party to his or her attorney’s fees). The Miami business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

The party that prevails on the significant issues in the litigation is considered the prevailing party for purposes of attorneys’ fees and costs. Moritz v. Hoyt Enterprises, Inc., 604 So. 2d 807 Fla. 1992) (“The party prevailing on the significant issues in the litigation is the party that should be considered the prevailing party for attorney’s fees”). This prevailing party rule was adopted to create a flexible test yielding an equitable result. Trytek v. Gale Indus., Inc., 3 So. 3d 1194 (Fla. 2009) (“The reasoning supporting the decision… to replace the “net judgment rule” with the “significant issues” test conveys this Court’s preference for a flexible rule that will achieve an equitable result”). The prevailing party rule can therefore be applied to award attorneys’ fees to a party who did not obtain a favorable judgment if the party succeeded on the significant issues of the case. Deutsche Bank, Nat’l Tr. Co. as Tr. for Holders of the BCAP LLC Tr. 2007-AA1 v. Quintela, 268 So. 3d 156 (Fla. 4th DCA 2019) (“While a party who receives affirmative judicial or equitable relief is clearly considered a prevailing party under the law, the party must also prevail on a significant issue to obtain attorneys’ fees as a prevailing party”).

Litigation does not always result in a prevailing party. One litigant may prevail on some issues while the other litigant may prevail on other issues. If neither litigant prevailed on enough issues to be classified as significant, the court may determine that no party is entitled to his or her attorney’s fees.  Merchants Bonding Co. (Mut.) v. City of Melbourne, 832 So. 2d 184 (Fla. 5th DCA 2002) (“This is a classic case where two parties fought to a draw; no one won and no one lost. […] Both contracting parties were at fault. In these circumstances, the judge had the discretion to determine that no party prevailed”). Courts have ruled there is no requirement that they determine one party prevailed over another in a contract dispute. Boxer Max Corp. v. Cane A. Sucre, Inc., 905 So. 2d 916 (Fla. 3d DCA 2005) (“A trial court may determine that neither party has prevailed in a contract action and not award attorney’s fees under compelling circumstances”).

The Miami business litigation lawyers of the Mavrick Law Firm also represent clients in Fort Lauderdale, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.