Johnson v. Hyatt Hotels Corp.

• Decision Date: 06 October 2017
• Docket Number: No. 2:15-cv-03175-DCN,2:15-cv-03175-DCN
• Court: U.S. District Court — District of South Carolina
• Parties: BRADLEY JOHNSON, as a general guardian, for and on behalf of S.J., a minor, and individually on behalf of S.J., Plaintiff, v. HYATT HOTELS CORPORATION, d/b/a Hyatt Place Airport/Convention Center, MONTAGUE REALCO, LLC, d/b/a Hyatt Place Airport/Convention Center, and NAMAN MANAGEMENT, LLC, Defendants.

BRADLEY JOHNSON, as a general guardian, for and on behalf of S.J.,a minor, and individually on behalf of S.J., Plaintiff, v. HYATT HOTELS CORPORATION, d/b/a Hyatt Place Airport/Convention Center,MONTAGUE REALCO, LLC, d/b/a Hyatt Place Airport/Convention Center,and NAMAN MANAGEMENT, LLC, Defendants.

No. 2:15-cv-03175-DCN

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF SOUTH CAROLINA CHARLESTON DIVISION

October 6, 2017

ORDER

This matter is before the court on plaintiff Bradley Johnson's ("Johnson") motion for attorneys' fees. For the reasons set forth below, the court denies the motion.

I. BACKGROUND

This dispute arises from an alleged assault on a minor that occurred at the Hyatt Place Airport/Convention Center located at 3234 West Montague Avenue, North Charleston, South Carolina (the "hotel"), on June 5, 2015. Am. Compl. ¶¶ 8-33. Johnson alleges that S.J., a 14 year old member of the Parkview High School freshmen baseball team from Lilburn, Georgia, was staying with his teammates and coaches, including members of the junior varsity and varsity teams, at the hotel for a summer baseball tournament. Id. ¶¶ 8, 10-13. S.J. was assigned to Room 314 with three other minor teammates. Id. ¶ 15. The hotel issued each set of roommates two electronic "key cards," which were used to access their assigned room. Id. ¶ 16.

On the evening of the incident, Johnson alleges that members of the varsity team began making unannounced visits to the rooms of the freshmen teammates to engage in certain bizarre and abusive hazing rituals. Id. ¶ 18. One of S.J.'s roommates alerted S.J. and others about this activity, and when a group of varsity players demanded entry into Room 314, S.J. and his roommates remained silent and did not answer the door. Id. ¶ 20. At this point, the varsity team members allegedly "went to the front desk of the hotel and asked for a 'keycard' so they could gain entry to [Room 314]." Id. ¶ 21. A hotel employee provided the requested keycard,

without any authority or permission from anyone who could give such authority or permission and, on information and belief, such was done without checking the identification of the person requesting the key; and it was done in violation of all hotel safety policies, procedures, and custom and in violation of law to allow the unauthorized and unpermitted holder(s) of the keycard to gain entrance to the room occupied by S.J. and his three roommates.

Id. ¶ 21. Johnson alleges that the varsity teammates then entered Room 314 and subjected S.J. to the aforementioned hazing. Id. ¶¶ 23-25.

Montague Realco, LLC's ("Montague") is the owner of the hotel. Id. ¶ 3. Naman Management, LLC ("Naman," together with Montage "defendants") is an affiliate of Montague that manages the operation of the hotel. Id. ¶ 4. Johnson brought claims against both defendants for negligence, invasion of privacy, breach of warranty, false imprisonment, violation of the South Carolina Unfair Trade Practices Act, and loss of solatium, seeking recovery of damages suffered as a result of the incident. Id. ¶¶ 34-62. Johnson alleges that S.J. has "sustained serious psychological damage and injury." Id. ¶ 64. The court entered acceptance of offer of judgment onApril 24, 2017. This motion for attorney's fees was filed on May 3, 2017 and Montague filed a response on May 17, 2017. Naman filed a separate response on May 17, 2017. Johnson replied to Naman's response on May 24, 2017, and to Montague's response on May 24, 2017. This motion is now fully briefed and is now ripe for the court's review.

II. STANDARD

Under the American Rule, each party bears the costs of its own attorneys, and attorney's fees are generally not a recoverable cost of litigation unless a statute or agreement provides otherwise. See Key Tronic Corp. v. United States, 511 U.S. 809, 814-15 (1994). The South Carolina Unfair Trade Practices Act ("SCUTPA") mandates that a court award attorney's fees and costs to a successful party. See S.C. Code Ann. § 39-5-140(a) ("[U]pon the finding by the court of a violation of this article [the SCUTPA], the court shall award to the person bringing such action under this section reasonable attorney's fees and costs.").

III. DISCUSSION

On April 24, 2017, the underlying matter was resolved by way of plaintiff's acceptance of an offer to allow judgment to be taken against defendant, pursuant to Rule 68, Fed. R. Civ. P. Johnson now contends that because defendant's offer of judgment made no explicit provision for fees, and because he is the prevailing party by way of the Rule 68 offer of judgment, he is entitled to fees in the sum of $264,047.52. Defendants counter that the offer of judgment did provide for fees in that it offered a "total sum of $150,000," thereby implicitly resolving the matter of costs. The first issue before the court is whether the offer of judgment that was accepted byall parties and entered by the court on April 24, 2017, which referenced all of Johnson's claims and "costs" but did not include any language on attorneys' fees, precludes Johnson's motion for attorneys' fees. Since the court finds that the offer of judgment does not encompass fees, the court then proceeds to the customary analysis of computing attorneys' fees to determine if Johnson is owed the full $264,047 fee award. While the court finds that Johnson may file a motion for fees because the Rule 68 offer of judgment was ambiguous on whether fees is encompassed in the judgment amount, the court ultimately denies Johnson's motion for fees. The court's entry of the offer of judgment was a ministerial duty and not a verdict rendered by the court against defendants on the SCUTPA claim.

A. Fee Award under SCUTPA where Rule 68 Offer of Judgment is Silent on Fees

A review of the offer of judgment reveals that it states only that it is "inclusive of any costs." Johnson contends that the Rule 68 offer of judgment was ambiguous with respect to attorneys' fees because it failed to specify whether it included such fees, and that this ambiguity must be construed against defendants. Pl.'s Mot. 6. As explained below, the issue of if a prevailing party may be awarded attorneys' fees under a Rule 68 offer of judgment that is ambiguous on whether fees are included has not been conclusively decided by the Fourth Circuit. The court draws on existing Fourth Circuit precedent on fee awards under Rule 68 offers of judgment as well as out-of-circuit courts that have decided the issue to determine that fees was not encompassed by the Rule 68 offer of judgment.

Federal Rule of Civil Procedure 68 states, in relevant part, that

At least 14 days before the date set for trial, a party defending against a claim may serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued. If, within 14 days after being served, the opposing party serves written notice accepting the offer, either party may then file the offer and notice of acceptance, plus proof of service. The clerk must then enter judgment.

Fed.R.Civ.P. 68(a). The party accepting an offer of judgment is considered the "prevailing party" such that an award of costs is appropriate under Federal Rule of Civil Procedure 54(d)(1). See Fed. R. Civ. P. 54(d)(1) ("[C]osts—other than attorneys' fees—should be allowed to the prevailing party. . ."). The language of Rule 68 itself speaks only of "costs" and not in terms of "attorney's fees," and in the absence of a relevant underlying fee-shifting statute specifying that fees are recoverable for the prevailing party, Rule 68 alone provides no guidance on fees. The relevant statute here is the SCUTPA, which is count V of the complaint, which provides for mandatory fees to be paid to a prevailing party in addition to any costs. Pl.'s Mot. 1. The SCUTPA's plain language makes clear that where the court finds that the statute was violated, the court "shall" award to the person bringing the action—here, Johnson—reasonable attorneys' fees and costs. S.C. Code Ann. § 39-5-140(a). In terms of whether fees are to be considered separately from costs, SCUTPA makes clear that a court must award fees and costs to a prevailing party.

The Rule 68 offer of judgment is clearly silent on whether fees were to be included in the offer of judgment. As a general rule, courts have found that an ambiguous Rule 68 offer of judgment should be construed against the offeror—here, it would be construed against the defendants and interpreted to allow for fees. See Nordby v. Anchor Hocking Packaging Co., 199 F.3d 390, 391 (7th Cir. 1999) (holding that "any ambiguities in a Rule 68 offer must be resolved against the[offeror]"); Nusom v. Comh Woodburn, Inc., 122 F.3d 830, 833 (9th Cir. 1997) (concluding that "the 'usual rules of contract construction' apply to a Rule 68 offer of judgment" and "[t]herefore, ambiguities are construed against the offeror" (citation omitted)). However, there is a circuit split about whether this rule is equally applicable to Rule 68 offers that include ambiguities concerning fees. In Sanchez v. Prudential Pizza, Inc., 709 F.3d 689, 692 (7th Cir. 2013), the Seventh Circuit held that "an offering defendant bears the burden of any silence or ambiguity concerning attorneys' fees" in the context of a Rule 68 offer. On the other hand, the Sixth Circuit in McCain v. Detroit II Auto Fin. Ctr., 378 F.3d 561 (6th Cir. 2004) held that a Rule 68 offer of judgment that stated it was inclusive "as to all claims and causes of actions" precluded an award of fees.¹ Meanwhile, the Eighth Circuit in Stewart v. Prof'l Computer Centers, Inc., 148 F.3d 937 (8th Cir. 1998) vacated a Rule 68 judgment altogether where the offer was silent as to whether attorney fees were included.

Johnson contends that the Fourth Circuit has conclusively determined that a prevailing party is entitled to post-judgment fees where an offer of judgment is ambiguous on fees in Bosley v. Mineral Cty. Comm'n, 650 F.3d 408, 413 (4th Cir. 2011). Pl.'s Mot. 6. In Bosley, the...