TO AWARD ATTORNEY'S FEES AGAINST A LOSING PARTY UNDER FLORIDA STATUTES, SECTION 57.105(1), THE PREVAILING PARTY MUST SHOW THAT THE LOSING PARTY'S CLAIM SO CLEARLY WAS DEVOID OF MERIT BOTH ON THE FACTS AND THE LAW AS TO BE UNTENABLE AND FRIVOLOUS.

An individual contracted with two companies top provide marketing, feasability, and management services for them in connection with a proposed hotel complex that he contemplated constructing.   After the failure of the venture, the individual sued the two companies, alleging breach of contract and negligent misrepresentation.  Later, he amended his complaint and joined two other companies as defendants, claiming that they were parent corporations of the original defendants and that, under an agency theory, they are vicariously liable for the actions of those companies.  The later-joined defendants challenged jurisdiction and service of process and, after the trial court granted their motion on those defenses, sought an award of attorney’s fees, pursuant to Florida Statutes, Section 57.105(1).  The trial court awarded attorney’s fees and costs and found that the lawyers representing the individual were jointly and severally liable for one-half of the awarded amount.  The individual appealed the attorney’s fee award.

On appeal, the Fourth District Court of Appeal reversed the trial court’s ruling, finding that the trial court abused its discretion in awarding attorney’s fees and costs to the later-joined companies.  Citing prior precedent emanating from the Fourth District, the Court noted that, in order to award attorney’s fees against a losing party, there must be a showing that the claim was so clearly devoid of merit both on the facts and the law to be completely untenable and frivolous.  The Court noted that whether attorney’s fees should have been awarded in this case depended upon whether the dismissed cause of action was so clearly and obviously lacking as to have been untenable.  Analyzing Florida law with respect to liability of parent corporations for acts of their subsidiaries on agency theories, the Court concluded that the claim was not so completely and clearly lacking in merit as to be untenable.  Accordingly, the Court reversed the award of attorney’s fees.

Pappalardo v. Richfield Hospitality Servs., Inc.,
26 Fla. L. Weekly D1927 (Fla. 4^th DCA Aug. 8, 2001)