United States District Court, D. South Carolina, Beaufort Division
ORDER AND OPINION
Richard Mark Gergel United States District Court Judge
matter is before the Court on Defendants' motion for
attorneys' fees and costs. For the reasons set forth
below, the Court denies the motion.
action concerns a contract for the sale of timeshare
interests in real property located in Florida. On August 10,
2016, Plaintiffs filed this action in the Beaufort County
Court of Common Pleas, asserting causes of action for fraud,
violation of Florida's Deceptive and Unfair Trade
Practices Act, violation of Florida's Vacation Plan and
Timesharing Act, exploitation of the elderly in violation of
Florida Statutes Chapter 825, civil racketeering, and
disgorgement of assets. On September 21, 2016, Defendants
removed to this Court. A week later, on September 28,
Defendants filed a motion to dismiss or to transfer. On
October 12, 2016, Plaintiffs filed a voluntary dismissal
under Rule 41(a) of the Federal Rules of Civil Procedure. On
October 24, 2016, Defendants filed the present motion for an
award of $18, 822.50 in attorneys' fees and $40, 000 in
argue they are entitled to an award of fees and costs under
the timeshare agreement's prevailing party clause. That
clause provides, "In the event of any litigation arising
out of this Contract, the prevailing party will be entitled
to recover its reasonable attorney's fees, including
paralegal fees, and all costs and fees on appeal, "
(Dkt. No. 9-1 ¶ 15.) The contract includes a Florida
choice of law clause, and, under Florida law, a defendant is
the prevailing party even when the case is voluntarily
dismissed without prejudice. See Alhambra Homeowners Ass
'n, Inc. v. Asad, 943 So.2d 316, 318 (Fla. Dist. Ct.
respond that Defendants are not entitled to fees under the
contract because no named Defendant was a party to the
contract. Defendants use several legal entities to conduct
their timeshare business, and although Plaintiffs named eight
different entities, the parties agree that Plaintiffs failed
to name the correct counterparty to the timeshare agreement.
(See Dkt. Nos. 1-1 ¶ 10 & 10 at 3 (the
correct contracting entity is "Westgate Lakes,
LLC").) Plaintiffs also named fifty John Doe Defendants,
but defense counsel seeking fees in the present motion
represent only four named Defendants; Westgate GV at the
Woods, LLC, Westgate Resorts, Ltd., CFI Resorts Management,
Inc., and Central Florida Investments, Inc. None of those is
party to the contract.
Florida law, nonparties cannot avail themselves of the rights
and remedies a contract provides to prevailing parties.
"A person not a party to nor in privity with a contract
has no right to enforce it." Gallagher v.
Dupont, 918 So.2d 342, 347 (Fla. Dist. Ct. App. 2005).
If Defendants wanted an award of fees under the contract,
they should have moved to join Westgate Lakes, LLC as an
essential party. If Defendants thereafter prevailed, Westgate
Lakes, LLC would be entitled to an award of fees. Instead,
they moved to dismiss the action in part because the named
parties are not parties to the contract. (Dkt. No. 4.)
contrary argument that Plaintiffs are somehow estopped from
opposing an award of attorneys' fees rests entirely on
MCG Fin. Servs., L.L.C. v. Technogroup, Inc., 149
So.3d 118 (Fla. Dist. Ct. App. 2014). (See Dkt. No.
9 at 3-4.) In MCG, at trial "all parties
stipulated that [defendants] Mason and MCG were the parties
in interest to the contract. [Plaintiff] ABS claimed that
Mason and MCG were bound by the contract, and Mason and MCG
never argued otherwise." 149 So.3d at 121. The trial
court found in favor of MCG and Mason. Id. at 120.
MCG and Mason then moved for attorney's fees relying on
the contractual provision allowing fees. At the hearing, ABS
was represented by a new attorney who argued that she was not
bound by what ABS' prior attorney had alleged. ABS now
claimed that the contract was between ABS and Lawen, not
between ABS and MCG/Mason. The trial court accepted this
argument and denied MCG and Mason fees because they were not
parties to the contract. MCG and Mason appeal the denial of
Id. The Florida appellate court of course held ABS
was estopped from arguing against stipulations it made at
trial. Id. Here, Defendants moved to dismiss this
action in part because they are not parties to the contract,
and Plaintiffs responded by dropping their suit.
(See Dkt. No. 4 at 9; Dkt. No. 7.) In MCG,
the defendants and plaintiffs stipulated at trial that they
were parties to the contract. Further, in MCG the
Florida appellate court held that "even if ABS were not
estopped from denying the contract, the trial court's
conclusion that MCG and Mason were not parties to the
contract is contrary to all the evidence and stipulations at
trial.... In the present case, a contract was formed because
the parties agreed on the essential terms and intended to be
bound." 149 So.3d at 121. MCG is inapposite to
the present case.
also argue that they sued for fraud in the inducement and for
statutory violations, not for breach of contract or other
matters "arising out of the contract." (Dkt. No. 10
at 4; see also Dkt. No. 1-2 ¶ 47.)
Under Florida law, "where there is fraudulent inducement
of a contract, the fraudulent misrepresentation vitiates
every part of the contract." D & M Jupiter, Inc.
v. Friedopfer, 853 So.2d 485, 489 (Fla. Dist. Ct. App.
2003). Plaintiffs' fraud allegation, if true, vitiates
the prevailing party clause. Thus, Court cannot award fees
under the prevailing party clause without reaching the merits
of Plaintiffs' fraud claim. If Defendants had answered
the complaint and filed their motion to dismiss under Rule
12(c) of the Federal Rules of Civil Procedure, the Court
would have reached the merits of the parties' arguments
(albeit perhaps at the cost of Defendants' jurisdictional
challenge). Defendants instead chose to file no answer and to
move for dismissal under Rule 12(b)(2), Rule 12(b)(3), and
Rule 12(b)(6). Accordingly, Plaintiffs had every right to
dismiss their complaint voluntarily without the Court
assuming the validity of the contract. The Court cannot award
Defendants attorneys' fees by assuming the allegations in
the unanswered complaint are false.
foregoing reasons, the Court DENIES Defendants motion for an
award of ...