The Bionetics Corp.. v. Kenniasty

• Decision Date: 06 September 2011
• Docket Number: No. SC09–1243.,SC09–1243.
• Citation: 69 So.3d 943
• Parties: The BIONETICS CORPORATION, Petitioner,v.Frank W. KENNIASTY, etc., et al., Respondents.
• Court: Florida Supreme Court

69 So.3d 943

The BIONETICS CORPORATION, Petitioner,

v.Frank W. KENNIASTY, etc., et al., Respondents.

No. SC09–1243.

Supreme Court of Florida.

Feb. 10, 2011.Rehearing Denied Sept. 6, 2011.

Joe Teague Caruso of Caruso, Swerbilow and Camerota, P.A., Merritt Island, FL, for Petitioner.Frank W. Kenniasty, pro se, Melbourne, FL; Judith Deitz, and William Moore, pro se, Silver Springs, FL, for Respondents.LABARGA, J.

In the case before us, The Bionetics Corporation (“Bionetics”) seeks review of the decision of the Fifth District Court of Appeal in Kenniasty v. Bionetics Corp., 10 So.3d 1183 (Fla. 5th DCA 2009), on the ground that it expressly and directly conflicts with the decision of the First District Court of Appeal in Walker v. Cash Register Auto Insurance of Leon County, Inc., 946 So.2d 66 (Fla. 1st DCA 2006). We have jurisdiction. See art. V, § 3(b)(3), Fla. Const.

This case concerns the applicability of the safe harbor provision contained in section 57.105, Florida Statutes (2002). Generally speaking, section 57.105 provides the basis for sanctions against parties and counsel who assert frivolous claims or defenses or pursue litigation for the purpose of unreasonable delay. See § 57.105, Fla. Stat. (2002). This statute was amended to include a safe harbor provision under subsection (4), which took effect on July 1, 2002, while the present case was ongoing at the trial level. See ch.2002–77, §§ 1–2, at 908–09, Laws of Florida. Section 57.105(4) provides:

A motion by a party seeking sanctions under this section must be served but may not be filed with or presented to the court unless, within 21 days after service of the motion, the challenged paper, claim, defense, contention, allegation, or denial is not withdrawn or appropriately corrected.

§ 57.105(4), Fla. Stat. (2002).

The conflict issue presented for our determination is whether the safe harbor provision of section 57.105(4), Florida Statutes, applies where a party's frivolous claims were originally filed before the provision became effective, but the initial motion seeking attorney's fees was filed in court after the provision became effective without the motion first having been served on the opposing party twenty-one days before filing. As explained in greater detail below, the Fifth District in Kenniasty held that the safe harbor provision contained in section 57.105(4) applies in a case where the party seeking sanctions filed its motion for attorney's fees after the safe harbor provision took effect despite the fact that the lawsuit commenced prior to the effective date of section 57.105(4). Kenniasty, 10 So.3d at 1186. In contrast, the First District in Walker held that the safe harbor provision cannot apply to a case where the complaint was filed and the alleged legal harm occurred prior to the effective date of the safe harbor provision. Walker, 946 So.2d at 71–72. We conclude that the safe harbor provision does not apply to a case where claims found to be frivolous by a trial court were originally filed before the safe harbor provision took effect. We therefore quash the decision of the Fifth District in Kenniasty to the extent that it is inconsistent with this opinion, and approve the decision of the First District in Walker to the extent that it is consistent with our analysis and holding.

FACTS AND PROCEDURAL BACKGROUND

Frank Kenniasty (“Kenniasty”) was former counsel to Judith Deitz and William Moore d/b/a Techniarts Engineering (“Deitz and Moore”). Kenniasty and Deitz and Moore appealed to the Fifth District the trial court's entry of final judgment in which Bionetics was awarded $39,025.778 in attorney's fees and costs against each pursuant to section 57.105, Florida Statutes. Kenniasty, 10 So.3d at 1184. The Fifth District reversed, concluding that Bionetics failed to comply with the safe harbor provision. Id. at 1186. The district court described the facts underlying its decision in Kenniasty as follows:

This case arose as a result of Deitz and Moore having prevailed in earlier litigation. In that case, Bionetics had filed a complaint against Deitz and Moore in 1999, alleging an ownership interest in motion picture film-processing [“MOPIX”] equipment that Deitz and Moore had purchased from the Defense Reutilization and Management Office. In its complaint, Bionetics also sought sequestration of the MOPIX equipment. The court granted an order of sequestration, and the MOPIX equipment was sequestered in a temperature and humidity-controlled environment at Deitz's & Moore's facility. There, the MOPIX equipment remained substantially assembled.

Deitz and Moore sought relief from the sequestration, offering to post a bond “in lieu of sequestration of the MOPIX [e]quipment so that [they] could continue their business opportunities.” Bionetics rejected the offer, and the trial court denied the motion. Later, Deitz and Moore filed a motion to amend the order of sequestration because the lease had expired on their facility. The trial court ordered the Sheriff to move the MOPIX equipment to Bionetics' facility for storage.

The case went to trial and Deitz and Moore prevailed as the legal owners of the MOPIX equipment, and the trial court vacated the order of sequestration. When Deitz and Moore entered Bionetics' facility, they found it in a seriously degraded condition in a non-secure area with “a leaking roof, no air conditioning units, ... lack of ventilation, and extreme filth and dust.” The equipment was disassembled and scattered on the facility's floor.

In 2001, Deitz and Moore, with Kenniasty as counsel, filed a four count complaint against Bionetics, alleging malicious prosecution in count one, negligent sequestration in count two, misappropriation of trade secrets in count three, and tortious interference with business relations in count four. Bionetics filed a motion to dismiss all counts. The trial court denied the motion as to count one, deferred in ruling as to count two, and granted the motion as to counts three and four with leave to amend.

Deitz and Moore filed an amended four count complaint on February 13, 2002, alleging malicious prosecution in count one, negligent sequestration in count two, misappropriation of trade secrets in count three, and tortious interference with business relations in count four. Bionetics once again filed a motion to dismiss all counts. The trial court granted the motion with prejudice as to count two, and with leave to amend as to counts one, three and four.

On April 10, 2002, Deitz and Moore filed a second amended complaint, which consisted of six counts: malicious prosecution in count one, misappropriation of trade secrets in count two, tortious interference with business relations in count three, invasion of privacy in count four, trespass to property in count five, and violation of the Procurement Integrity Act (41 U.S.C. § 423) in count six. Again, Bionetics filed a motion to dismiss all counts. The trial court granted the motion with leave to amend counts one through five, and with prejudice as to count six.

Deitz and Moore filed a third amended complaint on September 17, 2002, alleging malicious prosecution in count one, misappropriation of trade secrets in count two, and tortious interference with business relations in count three. Bionetics once more filed a motion to dismiss all counts. The trial court denied the motion as to count one but granted the motion as to counts two and three with leave to amend.

On November 12, 2002, Deitz and Moore filed a fourth amended complaint, alleging malicious prosecution in count one, misappropriation of trade secrets in count two, and defamation in count three. Bionetics filed a motion to dismiss counts two and three. The trial court denied the motion as to count two, but granted the motion as to count three with leave to amend.

On March 28, 2003, Bionetics filed a motion for award of attorney's fees pursuant to section 57.105, Florida Statutes (2002). The trial court deferred consideration and ruling on the award of attorney's fees until the conclusion of the trial. The case was tried without a jury and, at the close of Deitz's & Moore's case, Bionetics moved for involuntary dismissal, which the trial court granted. On July 21, 2004, Bionetics filed a second motion for an award of attorney's fees pursuant to Section 57.105, Florida Statutes.

Id. at 1184–85. The trial court found that Bionetics was entitled to attorney's fees pursuant to section 57.105 for the following three claims: (1) tortious interference with contract; ¹ (2) invasion of privacy; and (3) violation of the Procurement Integrity Act under 41 U.S.C. § 423. A successor judge found that Bionetics was entitled to $72,000 in attorney's fees and $6,051.56 in costs. Accordingly, the lower court entered a final judgment awarding Bionetics $39,025.78 in attorney's fees and costs against Kenniasty, individually, and $39,025.78 against Deitz, individually, Moore individually, and d/b/a Techniarts Engineering. Kenniasty and Deitz and Moore appealed the trial court's entry of final judgment awarding Bionetics attorney's fees and costs to the Fifth District.

On appeal, the Fifth District held that the trial court erred in awarding Bionetics attorney's fees and costs pursuant to section 57.105 because Bionetics failed to comply with the safe harbor provision of that statute. Id. at 1185–86. The district court disagreed with Bionetics' contention that “the safe harbor provision of section 57.105(4) represented a substantive rather than procedural statutory change and therefore could not be applied in this lawsuit.” Id. at 1186. The district court held in relevant part that “the safe harbor provision applies in situations like this case where the lawsuit was filed before [the effective date of] July 1, 2002, but the motion for attorney's fees was not filed until after this date.” Id. Consequently, the district court concluded that the trial court erred in awarding Bionetics...