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IN THE SUPREME COURT OF FLORIDA
MECHANIK NUCCIO HEARNE & WESTER, P.A., substituted as real party in interest for RC HIGHLANDS HOLDING OF FLORIDA, INC.,
Petitioner, Case No. SC13-2268
v. L.T. Case No. 2D12-1177
RAYMOND A. TUBBS and MICHAEL L. TUBBS,
Respondents.
ON REVIEW FROM THE DISTRICT COURT OF APPEAL
SECOND DISTRICT OF FLORIDA
RESPONDENTS' JURISDICTIONAL ANSWER BRIEF
WARWICK R. FURR, II Florida Bar No. 827800 [email protected] 90 Lake Byrd Blvd. Avon Park, Florida 33825 Tel: (863) 453-5562
Of Counsel
STEVEN L. BRANNOCK Florida Bar: 319651 [email protected] BRANNOCK & HUMPHRIES 100 South Ashley Drive, Suite 1130 Tampa, Florida 33602 Tel: (813) 223-4300 Fax: (813) 262-0604 Additional Email: [email protected]
Attorneys for Respondents
Electronically Filed 12/20/2013 02:55:47 PM ET
RECEIVED, 12/20/2013 14:58:41, John A. Tomasino, Clerk, Supreme Court
mailto:[email protected]:[email protected]:[email protected]
TABLE OF CONTENTS
Table ofAuthorities.................................................................................................. iii
Statement of the Case and Facts ................................................................................ 1
Summary of the Argument ........................................................................................ 3
Argument ................................................................................................................... 4
Conclusion ............................................................................................................... 10
Certificate of Service ............................................................................................... 11
Certificate of Compliance ....................................................................................... 11
11
TABLE OF AUTHORITIES
Cases
Alhambra Homeowners Ass 'n, Inc. v. Asad,
943 So. 2d 316 (Fla. 4th DCA 2006) .............................................................. 7
Angel Home Health Care, Inc. v. Mederi ofDade County, Inc.,
696 So. 2d 487 (Fla. 3d DCA 1997) ............................................................... 9
Bessard v. Bessard,
40 So. 3d 775 (Fla. 3d DCA 2010) ................................................................. 5
Birmingham Trust & Sav. Co. v. Jackson County Mill Co.,
41 Sla. 498, 27 So. 43 (1899) .......................................................................... 8
Coffin v. Talbot,
110 Fla. 131, 148 So. 184(1933)................................................................ 8, 9
Dam v. Heart ofFlorida Hosp., Inc.,
536 So. 2d 1177 (Fla. 2d DCA 1989) ............................................................. 7
Gimbel v. Int'l Mailing & Printing Co., Inc.,
506 So. 2d 1081 (Fla. 4th DCA 1987) ............................................................ 7
Mass. Cas. Ins. Co. v. Forman,
600 F .2d 481 (5th Cir. 1979) ........................................................................... 8
Moritz v. Hoyt Enterprises, Inc.,
604 So. 2d 807 (Fla. 1992) .............................................................................. 5
Novack v. Novack,
210 So. 2d215 (Fla. 1968) .............................................................................. 8
Padow v. Knollwood Club Ass 'n, Inc.,
839 So. 2d 744 (Fla. 4th DCA 2003) .......................................................... 5, 6
Simmons v. Schimmel,
476 So. 2d 1342 (Fla. 3d DCA 1985) ............................................................. 7
...
111
STATEMENT OF THE CASE AND FACTS
RC Highland's petition for jurisdiction vastly oversimplifies the complicated
procedural history of this case.1 As we demonstrate below, the Second District's
careful opinion merely applied well-settled black letter law principles to the unique
facts of this litigation. RC Highlands lost the attorneys' fees issue because it was
not the prevailing party. It lost the set off issue because Mechanik Nuccio, the
assignee, stood in the shoes of its assignor, RC Highlands. The legal principles
involved are ancient and well settled. There is no conflict.
The Second District's decision nicely discusses the relevant procedural
history, which we will not repeat in detail here. Making a very long story short,
RC Highlands and Respondents, the Tubbses, were involved in a complex
commercial dispute that spawned several related lawsuits in two counties. A
portion of the lawsuit, the Tubbses' claims for foreclosure, had to be brought in
Highlands County, the location of the property. The balance of the claims had to
be brought in Hillsborough County because of a forum selection clause in the
agreement between the parties (A. 3-6).
During the litigation, the parties agreed that the Tubbses' note claims against
RC Highlands, which originally had been brought in Highlands County, would be
1 In this response we refer to the Petitioner, Mechanik Nuccio Hearne & Wester, P.A., substituted as real party in interest for RC Highlands Holdings Florida, Inc., as IIRC Highlands." We refer to the respondents, Michael and Raymond Tubbs, as the "Tubbses." We cite to the opinion below as "A."
1
litigated in Hillsborough County. The Tubbses transferred those note claims to
Hillsborough County (A. 5-6). In the meantime, the Tubbses obtained judgments
of foreclosure against two RC Highlands subsidiaries, Tu-Co Peat and Ram Peat.
But Wells Fargo Bank, which had a first lien on the property, got its own judgment
of foreclosure against RC Highlands, Tu-Co and Ram (A. 5). These developments
mooted, for all practical purposes, the foreclosure action against RC Highlands,
because a judgment of foreclosure against RC Highlands, although easily
obtainable, would have served no useful purpose (A. 11-12).
In light these developments, the Tubbses dismissed their Highlands County
foreclosure action against RC Highlands. The note claim against RC Highlands,
however, continued to be litigated in Hillsborough County (A. 5). The Tubbses
ultimately prevailed in Hillsborough against RC Highlands.
The trial court looked in isolation at the Tubbses' dismissal of the
foreclosure claim against RC Highlands (ignoring that the note claim was now
being litigated by agreement in Hillsborough County) and determined that RC
Highlands was the prevailing party and entitled to fees (A. 6-7). The Second
District reversed recognizing that the fee award was all form and no substance (A.
9-17). Applying black letter law concerning the definition of prevailing parties,
the Second District determined that RC Highlands did not prevail by any measure,
and was not entitled to fees (A. 9-17).
2
As to the set off issue, once the trial court erroneously declared RC
Highlands to be the prevailing party, the Tubbses pointed out that they already had
an $8.4 million award against RC Highlands that dwarfed the Tubbses' $355,000
fee obligation under the trial court ruling (A. 7). The trial court erroneously denied
the Tubbses the right of set off because RC Highlands had assigned the fee claim
to its lawyers, Mechanik Nuccio (A. 7). The Second District reversed on this
ground as well, relying on long-settled law that Mechanik Nuccio had stepped into
the shoes of RC Highlands and was subject to all of the Tubbses' defenses against
RC Highlands, including set off (A. 17-18).
RC Highlands now seeks review of both issues in this Court.
3
SUMMARY OF THE ARGUMENT
The Second District merely recognized that Florida law has long held that
the "substance of the litigation -- not procedural maneuvers" is what controls in
determining whether a party has prevailed (A. 12). This general rule applies to
voluntary dismissal just as it applies to any other procedural resolution of a case.
Here RC Highlands did not prevail, because the Tubbses did not dismiss their
entire claim, but merely dismissed the foreclosure portion of the case. The note
claim continued to judgment in Hillsborough County and the Tubbses prevailed.
RC Highlands was not a prevailing party by any practical measure under Florida
law.
As to the set off, Florida law is clear that an assignee such as Mechanik
Nuccio stands in the shoes of its assignor, RC Highlands, and is subject to any
defense that a third party would have against the assignor. This includes the set off
defense that the Tubbses possessed. In essence, RC Highlands makes the absurd
and inequitable argument that the Tubbses must pay RC Highlands $355,000 even
though RC Highlands owes the Tubbses $8.4 million. RC Highlands cannot evade
this set off defense by assigning the fee claim to its lawyers, Mechanik Nuccio.
Once again, the Second District applied long-settled black letter law to reject
RC Highlands' claims. This Court should deny review.
4
ARGUMENT
In its petition for review, RC Highlands asks this Court to adopt a highly
artificial and technical view to determine whether RC Highlands was the
"prevailing party." The Second District correctly ruled that "the substance of the
litigation -- not just procedural maneuvers" -- is what controls (A. 12). This long
settled and often-applied black letter law was established by this Court in Moritz v.
Hoyt Enterprises, Inc., 604 So. 2d 807 (Fla. 1992) (to be a prevailing party, one
must prevail on the significant issues in the litigation). Consistent with Walter D.
Padow, MD., P.A. v. Knollwood Club Ass'n, 839 So. 2d 744, 745 (Fla. 4th DCA
2003), the Second District confirmed that this general rule applies to a voluntary
dismissal, just as it applies to any other procedural resolution of a case. See also
Bessard v. Bessard, 40 So. 3d 775, 778 (Fla. 3d DCA 2010) (results not procedure
govern which party prevailed) (A. 12-14).
The Second District's opinion carefully discusses why RC Highlands did not
prevail, and there is no need to repeat that extensive discussion here (A. 12-15).
Suffice it to say, RC Highlands ignores that the dismissal of the foreclosure case
against RC Highlands dismissed just one piece of a larger litigation puzzle. The
Tubbses did not dismiss their entire case against RC Highlands, merely one piece
of it. The Tubbses had already transferred their note claims against RC Highlands
5
to Hillsborough County, where they ultimately achieved a substantial judgment
against RC Highlands, which RC Highlands completely ignores.
As the Second District explained, the only reason this case was broken up
into different claims in different counties was the competing requirements of the
venue clause (requiring the Note Case to be litigated in Hillsborough County) and
the location of the real property in Highlands County (requiring the foreclosure
litigation to be litigated in Highlands) (A. 3-4). It would be entirely form over
substance to ignore the interrelationship between the Hillsborough and Highlands
cases, and the Second District correctly refused to do so (A. 13-15).
The Second District also correctly determined that the case had become
moot, for no reason connected with RC Highlands' defenses. Certainly, the
Tubbses could have pressed on and obtained a ruling that RC Highlands was in
default, just as it obtained default judgments against RC Highlands' subsidiaries
Tu-Co Peat and Ram Peat, but to what end? As the Second District recognized,
Florida law does not require the Tubbses to obtain a ruling that serves no practical
purpose, just to avoid attorneys' fees, and this decision is entirely consistent with
other Florida cases reaching the same conclusion (A. 11-12, citing Padow, 839 So.
2d at 745).
In short, the Second District properly applied Florida black letter law to
determine that RC Highlands was not a prevailing party and there is no conflict.
6
The Alhambra case is not to the contrary. Alhambra Homeowners Ass'n, Inc
v. A sad, 943 So. 2d 316, 317 (Fla. 4th DCA 2006). In Alhambra, the plaintiff
dismissed its entire case against the defendant. Here, by contrast, the Tubbses
dismissed only the foreclosure portion of their lawsuit transferring their note
claims to Hillsborough County. Neither Alhambra nor any other case holds that
dismissing one claim in a multiple claim lawsuit is the equivalent to the dismissal
of an entire action. See, e.g., Gimbel v. Int'l Mailing & Printing Co., 506 So. 2d
1081, 1082 (Fla. 4th DCA 1987) (plaintiffs dismissal of the replevin count in a
multi-count complaint did not entitle defendant to prevailing party attorneys' fees).
Nor does this case have anything to do with the conflict created by Simmons
v. Schimmel, 476 So. 2d 1342 (Fla. 3d DCA 1985). Petition at 5-7. Simmons
concluded that even a losing party might avoid paying fees if there was some sort
of strategic reason for the dismissal. As RC Highlands concedes (Petition at 6), the
Second District has already rejected the Simmons approach. Dam v. Heart of
Florida Hospital, 536 So. 2d 1177 (Fla. 2d DCA 1989). In any event, Simmons
never came into play because the Second District correctly determined that RC
Highlands did not prevail. In short, Simmons was irrelevant.
The Second District applied well-settled law to the unique facts of this
complex case. There is no conflict and review should be denied.
7
The Set Off Issue
RC Highlands' argument on the set off claim is equally without merit.
Mechanik Nuccio does not contest that it "stands in the shoes" of RC Highlands,
the assignor of the fee claim. Petition at 9. Thus, Mechanik Nuccio's derivative
right is subject to all of the Tubbses' defenses against RC Highlands, including the
defense of set off (A. 17). See Mass. Cas. Ins. Co. v. Forman, 600 F.2d 481,483
85 (5th Cir. 1979) (applying Florida law); Novack v. Novack, 210 So. 2d 215, 217
(Fla. 1968) (applying a set off to an attorneys' fee award). RC Highlands owes the
Tubbses $8,400,000 on the valid judgment the Tubbses hold against it. The
Second District correctly followed this precedent, recognizing that Mechanik
Nuccio's judgment was dwarfed by the Tubbses' $8.4 million judgment, and thus,
the Tubbses' set-off defense was valid (A. 17-18).
There is no conflict between this case and the two cases cited in the Petition.
See Coffin v. Talbot, 110 Fla. 131, 148 So. 184 (1933); Birmingham Trust &
Savings Co. v. Jackson Country Mill Co., 41 Fla. 498, 27 So. 43 (1899). The
Birmingham Trust case is inapposite because the claimed set-offs in those cases
arose from completely unrelated transactions that were unknown to the assignee at
the time of the assignment. Id. By contrast, the Tubbses' $8.4 million judgment
arises out of the same transaction, the stock sale, as the rest of this litigation.
Mechanik Nuccio knew full well at the time it took the assignment that RC
8
Highlands was under siege by both the Tubbses and Wells Fargo, and that it was
quite likely that its fee claim would be subject to set off claims. In other words, the
law firm knew at the time of the assignment that it would be standing in line with
other creditors, and, in particular, the Tubbses and Wells Fargo, whose claims the
law firm was defending on RC Highlands' behalf. Thus, there is nothing unfair
about subjecting the law firm to a set-off based on the very claims that were
brought by Wells Fargo and the Tubbses.
The Coffin case, which was never cited by RC Highlands in the Second
District, is similarly inapposite. As in Birmingham Trust, the assignee took the
assignment with no knowledge of the potential set off claim. Moreover, as in
Birmingham Trust, the Court found that the set off was collateral to the note, and
did not affect the enforceability of the note, which was a negotiable instrument.
Coffin, 110 Fla. at 139-140. As noted above, these facts are in sharp contrast to
this case where Mechanik Nuccio took the assignment with knowledge of the pre
existing claims.
As the Second District aptly summarized, "A result allowing Mechanik
Nuccio to collect more than $355,000 from the Tubbses based on a derivative right
of Mechanik Nuccio's client, RC Highlands, 'would be totally absurd.'" See A. 18,
citing Angel Home Health Care, Inc. v. Mederi ofDade Cnty., Inc. 696 So. 2d 487,
9
488 (Fla. 3d DCA 1997). This common sense conclusion creates no conflict and
review must be denied.
CONCLUSION
There is no conflict presented by this case. The petition for review should
be denied.
WARWICK R. FURR, II
Florida Bar No. 827800
90 Lake Byrd Blvd.
Avon Park, Florida 33825
Tel: (863) 453-5562
Of Counsel
S
Florida Bar: 319651
BRANNOCK & HUMPHRIES
100 South Ashley Drive, Suite 1130
Tampa, Florida 33602
Tel: (813) 223-4300
Fax: (813) 262-0604
Additional Email: [email protected]
Counsel for Appellants
10
mailto:[email protected]:[email protected]:[email protected]
Florida Bar: 319651
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing was sent
by email [email protected]).Smith. Hulsey &
Busey, 225 Water Street, Suite 1800, Jacksonville, Florida 32202 and Richard
Candelora ([email protected], [email protected]), Mechanik,
Nuccio, Hearne & Wester, 305 South Blvd., Tampa, Florida 33606, on this ;