CodeVentures, LLC v. Vital Motion Inc.
| Decision Date | 22 March 2022 |
| Docket Number | 20-CV-21574-MORE/GOODMAN |
| Parties | CODEVENTURES, LLC, a Florida limited liability company, Plaintiff, v. VITAL MOTION INC., a Delaware corporation, et al., Defendants. |
| Court | U.S. District Court — Southern District of Florida |
OMNIBUS REPORT AND RECOMMENDATIONS ON PLAINTIFF'S AND INDIVIDUAL DEFENDANTS' MOTION FOR ATTORNEY'S FEES
Plaintiff CodeVentures, LLC (“CodeVentures”) filed a Motion for Attorneys' Fees seeking recovery of attorneys' fees and costs against Defendant Vital Motion Inc. (“Vital”) incurred in litigating Count I of its Amended Complaint, Vital's default on a $100, 000 promissory note. [ECF No. 99]. Vital filed a response [ECF No. 113] and CodeVentures filed a reply [ECF No. 116]. Defendants David Lovenheim, Jay Eastman, Christian Tvetenstrand, Terry Bradley, and Erik Hiester (collectively “Individual Defendants”) filed a Motion for Attorneys' Fees seeking recovery of attorneys' fees incurred in defending CodeVentures' three tort claims (Counts II, III, and IV). [ECF No.104].
CodeVentures filed a response [ECF No. 115] and Individual Defendants filed a reply [ECF No. 118].
United States District Judge Federico A. Moreno referred both motions to the Undersigned for a Report and Recommendations. [ECF Nos. 101; 105]. The Undersigned held a Zoom evidentiary hearing lasting more than one hour and took testimony from one of CodeVentures' attorneys, Kevin Kaplan.
For the reasons stated below, the Undersigned respectfully recommends that the District Court grant in part and deny in part CodeVentures' Motion for Attorneys' Fees and Costs.
The Undersigned also respectfully recommends that the District Court grant Individual Defendants' Motion for Attorneys' Fees.
This lawsuit arose out of CodeVentures' January 2019, $100, 000 investment in Vital. [ECF No. 38]. Specifically, CodeVentures made a $100, 000 loan to Vital and, in response, Vital issued a convertible bridge promissory note (“the Note”) to CodeVentures. Id. The Note matured on January 10, 2020, at which time the principal and any unpaid interest became due. Id. After the maturity date, CodeVentures and Vital communicated about the amount due to CodeVentures, but no payment was ever made.
CodeVentures filed suit against Vital for breach of a promissory note (the “Note Claim”). In addition to the Note Claim, CodeVentures also brought claims against Vital and Individual Defendants (except Hiester) for Fraudulent Transfer (Count II), Conversion (Count III), and Conspiracy (Count IV) (the “Fraudulent Transfer Claims”). [ECF No. 1]. Defendants filed a motion to dismiss the suit for lack of jurisdiction. [ECF No. 16]. On August 19, 2020, while the original Complaint [ECF No. 1] and Motion to Dismiss [ECF No. 16] were pending, CodeVentures served a Proposal for Settlement (“PFS”) on Vital, seeking to settle all claims for $94, 198.00. [ECF No. 99-1]. This PFS was never accepted by Vital.
After the PFS acceptance period lapsed, CodeVentures sought leave to amend its Complaint, which was granted. [ECF Nos. 36; 37]. CodeVentures filed an Amended Complaint (now including Hiester), amending Counts II-IV to Fraud in the Inducement (Count II), Aiding and Abetting Fraud in the Inducement (Count III), and Conspiracy (Count IV) (the “Tort Claims”). [ECF No. 38].
In support of Counts II-IV (under either version of CodeVentures' Complaint), CodeVentures alleges Vital and the Individual Defendants fraudulently induced CodeVentures into investing in Vital Motion, Inc. by misrepresenting its finances and business prospects.
Throughout the litigation, Vital has conceded the material facts to the Note Claim (i.e., existence of the Note, obligation to pay the Note, and failure to pay the Note). Vital's only defenses, which were ultimately found to be unmeritorious, were jurisdictional-based positions. Individual Defendants, in contrast, sought dismissal of CodeVentures' Fraudulent Transfer Claims and Tort Claims for failure to state a claim. Defendants, collectively, filed a motion to dismiss CodeVentures' Complaint [ECF No. 16] and then CodeVentures' Amended Complaint [ECF No. 49].
CodeVentures, in turn, filed a motion for partial summary judgment on Count I against Vital. [ECF No. 57].
On January 20, 2021, Individual Defendants served a PFS on CodeVentures, seeking to settle the Tort Claims for $100.00, an amount to be apportioned equally among Individual Defendants. [ECF No. 104-1]. CodeVentures never accepted this proposal.
The District Court first denied Vital's operative motion to dismiss the Counts against it for lack of personal jurisdiction. [ECF No. 70]. Next, the District Court granted, in part, Vital and the Individual Defendants' motion to dismiss for failure to state a claim. [ECF No. 71]. Specifically, the District Court dismissed with prejudice Counts III and IV against all Defendants and Count II against all Defendants except Vital and Lovenheim. [ECF Nos. 71; 83]. Finally, the District Court granted CodeVentures' motion for partial summary judgment on Count I. [ECF No. 72].
CodeVentures voluntarily dismissed without prejudice Count II against Vital and Lovenheim [ECF No. 80] and the District Court entered a Final Judgment in favor of CodeVentures against Vital for $122, 421.72. [ECF No. 84]. CodeVentures and Individual Defendants then filed competing fees and costs motions. [ECF Nos. 99; 104].
Absent a statute or rule to the contrary, a prevailing party is not ordinarily entitled to recover attorney's fees from its opponent. See Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 247 (1975). Here, both CodeVentures and Individual Defendants seek attorneys' fees under Florida's offer of judgment statute, Florida Statute § 768.79. The Eleventh Circuit has deemed § 768.79 to be substantive for Erie purposes and, therefore, it is applicable to this case. See McMahan v. Toto, 311 F.3d 1077 (11th Cir. 2002).
Section 768.79 provides the following:
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 defendant shall be entitled to recover reasonable costs and attorney'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 the offer, [the plaintiff] shall be entitled to recover reasonable costs and attorney's fees incurred from the date of the filing of the demand.
An offer must:
Fla. Stat. § 768.79(1), (2).
In addition to § 768.79's procedural requirements, it also requires settlement offers and demands to have been made in good faith. See McMahan, 311 F.3d at 1084 . “The burden is upon the offeree to prover that the offeror acted without good faith.” Id. at 1083 (internal quotations and alterations omitted).
The decision on whether to disallow fees based on a finding that a PFS was not made in good faith is in the court's discretion. McGergor v. Molnar, 79 So.2d 908, 910 (Fla. 2d DCA 2012). Moreover, even absent a bad faith finding, “[a] court may reduce excessive, redundant, or otherwise unnecessary hours, or may engage in ‘an across-the-board cut,' as long as the court adequately explains its reasons for doing so.” Am. Home Assur. Co. v. Weaver Aggregate Trans., Inc., 89 F.Supp.3d 1294, 1306 (M.D. Fla. 2015) (citing Galdames v. N & D Inv. Corp., 432 F. App'x. 801, 806 (11th Cir. 2011)).
CodeVentures' Amended Complaint alleged four causes of action against six different defendants (Vital and Individual Defendants). Count I was levied against only Vital and Counts II-IV were levied against all six Defendants. CodeVentures prevailed on Count I and all Defendants prevailed on Counts III and IV.[1] Defendants Jay Eastman, Christian Tvetenstrand, Terry Bradley, and Erik Hiester prevailed on Count II and CodeVentures voluntarily dismissed without prejudice Count II against Vital and Lovenheim.
In these competing fee motions, neither CodeVentures nor Individual Defendants dispute the hourly rates of the opposing side's attorneys.
Vital does not dispute that CodeVentures is entitled to attorney fees under § 768.79. It argues, instead, that the Court should reduce CodeVentures' fee request for the following reasons: (1) the request includes fees incurred before the PFS was served; (2) the request includes fees incurred prosecuting the Tort Claims; and (3) the request includes vague, duplicative, and block billed entries.
But Vital disputes nearly the entirety of CodeVentures' costs request on the basis that CodeVentures failed to provide any context or justification for the costs and that some discreet costs are impossible. Plaintiff, in contrast, disputes Individual Defendants' entitlement to fees. CodeVentures argues that Individual Defendants' fee request should be denied or reduced for the following reasons: (1) Individual Defendants' nominal offer was...
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