[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
JULY 2, 2008
No. 07-13046
THOMAS K. KAHN
________________________
CLERK
D. C. Docket Nos. 04-01693CV-T-24MSS & 03-00798-BKC-AL
CHAPTER 7 TRUSTEE DOUGLAS N. MENCHISE,
Plaintiff-Appellant,
versus
AKERMAN SENTERFITT,
a Florida professional association,
MICHAEL I. GOLDBERG,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Middle District of Florida
_________________________
(July 2, 2008)
Before EDMONDSON, Chief Judge, PRYOR, Circuit Judge, and JOHNSON,*
District Judge.
PRYOR, Circuit Judge:
The trustee for the estate of Terri L. Steffen appeals an award of attorney’s
fees to Akerman, Senterfitt, & Eidson, P.A., and attorney Michael I. Goldberg
(collectively “Akerman”) under Florida law. Fla. Stat. § 768.79. Steffen argues
that section 768.79 is inapplicable in a bankruptcy case and its plain language
applies to cases brought only in the “courts of” Florida. Steffen also argues that
section 768.79 is preempted by Federal Rule of Civil Procedure 68. Finally,
Steffen contends that the district court abused its discretion by denying her
requests for discovery and an evidentiary hearing. These arguments fail. Section
768.79 applies in this bankruptcy proceeding, cannot be interpreted to discriminate
against a federal forum, and is not preempted by Rule 68. The district court also
did not abuse its discretion by denying Steffen’s meritless requests for discovery
and an evidentiary hearing. We affirm.
I. BACKGROUND
Steffen’s husband, Paul Bilzerian, was convicted of defrauding the United
States. United States v. Bilzerian, 926 F.2d 1285, 1299 (2d Cir. 1991). After
*
Honorable Inge P. Johnson, United States District Judge for the Northern District of
Alabama, sitting by designation.
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Bilzerian’s conviction, the Securities and Exchange Commission filed a civil suit
for violations of the securities laws against Bilzerian. SEC v. Bilzerian, 1991 WL
83964 (D.D.C. Apr. 8, 1991), aff’d, 29 F.3d 689 (D.C. Cir. 1994). The district
court for the District of Columbia found Bilzerian liable for securities fraud and
ordered him to disgorge over sixty million dollars in illegal profits. SEC v.
Bilzerian, 1993 WL 542584, at *1 (D.D.C. June 25, 1993); SEC v. Bilzerian, 814
F. Supp. 116, 121–24 (D.D.C. 1993), aff’d, 29 F.3d 689 (D.C. Cir. 1994); SEC v.
Bilzerian, 1991 WL 83964, at *1 (D.D.C. Apr. 8, 1991), aff’d, 29 F.3d 689.
Bilzerian filed for bankruptcy after he transferred his interest in assets that he
owned with Steffen jointly to Steffen individually. See Steffen v. Gray, Harris &
Robinson, P.A., 283 F. Supp. 2d 1272, 1276 (M.D. Fla. 2003) (hereinafter Steffen
I), aff’d, 138 F. App’x 297 (11th Cir. 2005) (unpublished decision) (hereinafter
Steffen II).
The district court held Bilzerian in civil contempt and determined that his
transfer of assets violated the disgorgement order. SEC v. Bilzerian, 112 F. Supp.
2d 12, 13 (D.D.C. 2000). The district court appointed a receiver for the purpose of
“identifying, marshalling, receiving, and liquidating” Bilzerian’s assets in
satisfaction of the disgorgement order. SEC v. Bilzerian, 127 F. Supp. 2d 232, 232
(D.D.C. 2000). At the request of the receiver, the district court froze Steffen’s
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assets and the assets of her entities based on the receiver’s belief that Steffen
possessed property in which Bilzerian had an interest. See Steffen v. Akerman
Senterfitt, 2005 WL 3277894, at *2 (M.D. Fla. Dec. 2, 2005).
Steffen retained Akerman, for which Goldberg worked as an attorney, to free
Steffen’s assets and assets of her entities. See id. Two days later, Akerman
consented to an extension of the asset freeze and stipulated to an order for the
production of documents by Steffen and her entities to the receiver. See id.
Akerman later moved to withdraw as Steffen’s counsel, and the district court
granted the motion. See id. at *3.
In 2001, Steffen filed a petition under Chapter 11 of the Bankruptcy Code.
See Steffen I, 283 F. Supp. 2d at 1280. Steffen later intervened in the action that
the Securities and Exchange Commission brought against Bilzerian and challenged
the asset freeze. Steffen v. United States (In re Steffen), 349 B.R. 734, 736–37
(M.D. Fla. 2006). In December 2001, Steffen entered a settlement agreement with
the Commission in which she agreed to transfer a fifty-percent interest in her assets
to the receiver in exchange for dissolution of the freeze order. Id. at 737.
In 2002, Steffen filed a legal malpractice action against Gray, Harris &
Robinson, P.A., which had represented her in the litigation with the Commission
after Akerman withdrew from the case. Steffen I, 283 F. Supp. 2d at 1280. Steffen
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alleged that the firm had negligently advised her to form a system of trusts that
exposed her assets during the Bilzerian contempt litigation. Id. The district court
granted summary judgment to the firm, id. at 1285, and we affirmed, Steffen II,
138 F. App’x 297.
In 2003, Steffen filed a one-count complaint for legal malpractice against
Akerman as an adversary proceeding in the bankruptcy court, and the district court
later withdrew the reference to the bankruptcy court. Akerman served Steffen with
an offer to settle in the amount of $10,000 under section 768.79 of the Florida
Statutes, but this offer did not apportion liability between the law firm and
Goldberg. After the decision of the Florida Supreme Court in Lamb v. Matetzschk,
906 So. 2d 1037 (Fla. 2005), Akerman served Steffen with a second offer, which
apportioned the amount between the defendants and was conditioned upon the
acceptance by Steffen of the offer from each defendant. Steffen did not accept
either offer. The district court granted summary judgment in favor of Akerman,
and we affirmed.
Akerman moved for attorney’s fees under section 768.79 of the Florida
Statutes. We granted the motion of Akerman to transfer its application for an
award of appellate attorney’s fees to the district court. Steffen moved for an
extension of time to respond to the motion for attorney’s fees, a period of
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discovery related to that motion, and an evidentiary hearing on that motion. The
district court denied Steffen’s motion.
The district court held that Akerman was entitled to attorney’s fees but
denied the requested amount. The district court ordered Akerman to file a second
amended motion for attorney’s fees that included a detailed billing statement and
affidavits regarding reasonableness. After Akerman filed its second amended
motion for attorney’s fees with appendices, and the district court thoroughly
reviewed each billing entry, the district court awarded Akerman $223,158.97 in
attorney’s fees.
Steffen appealed the award of attorney’s fees. The bankruptcy court later
converted Steffen’s bankruptcy case from a Chapter 11 reorganization to a Chapter
7 liquidation and appointed Douglas N. Menchise as the trustee of the estate.
Akerman moved to substitute Menchise as the appellant in this appeal, and we
granted the motion.
II. STANDARDS OF REVIEW
We review the decision of the district court to award attorney’s fees for an
abuse of discretion. Taylor v. City of Fort Lauderdale, 810 F.2d 1551, 1556 (11th
Cir. 1987). “To the extent that the district court’s conclusion implicates a question
of law, we review de novo.” Barnes v. Broward County Sheriff’s Office, 190 F.3d
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1274, 1276–77 (11th Cir. 1999) (citing Preserve Endangered Areas of Cobb’s
History, Inc. v. U.S. Army Corps of Eng’rs, 87 F.3d 1242, 1246 (11th Cir. 1996)).
We review discovery rulings and the denial of a request for an evidentiary hearing
for an abuse of discretion. Cliff v. Payco Gen. Am. Credits, Inc., 363 F.3d 1113,
1121 (11th Cir. 2004).
III. DISCUSSION
We address Steffen’s arguments in two parts. First, we conclude that the
district court did not err when it applied section 768.79 in this bankruptcy
proceeding. Second, we conclude that the district court did not abuse its discretion
when it denied Steffen’s requests for discovery and an evidentiary hearing.
A. The District Court Correctly Applied Section 768.79 in
This Bankruptcy Proceeding.
A Florida statute provides, “In any civil action for damages filed in the
courts of this state, if a defendant files an offer of judgment which is not accepted
by the plaintiff within 30 days, the defendant shall be entitled to recover reasonable
costs and attorney’s fees . . . if the judgment is one of no liability . . . .” Fla. Stat. §
768.79(1). The record establishes that Akerman, as a defendant against a
complaint of malpractice governed by Florida law, filed an offer of settlement that
Steffen rejected, and a judgment of no liability was entered later in favor of
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Akerman. The main question in this appeal is whether the district court was bound
to apply section 768.79 in this non-core bankruptcy proceeding.
Steffen argues that section 768.79 is inapplicable for two reasons. First,
Steffen argues that section 768.79 does not apply in bankruptcy proceedings.
Second, Steffen argues that section 768.79 is preempted by Federal Rule of Civil
Procedure 68. These arguments fail.
1. Section 768.79 Applies in Bankruptcy Proceedings.
Steffen argues that section 768.79 is not substantive law in bankruptcy
proceedings, but we disagree. We have held that section 768.79 is substantive law
in diversity cases, Jones v. United Space Alliance, L.L.C., 494 F.3d 1306, 1309
(11th Cir. 2007), and we have concluded that the substantive law of the forum state
governs issues of state law that arise in bankruptcy proceedings. See Colwell v.
Royal Int’l Trading Corp. (In re Colwell), 196 F.3d 1225, 1226 (11th Cir. 1999);
Fruehauf Corp. v. Revitz (In re Transystems, Inc.), 569 F.2d 1364, 1366 (5th Cir.
1978). Steffen’s malpractice claim is governed by Florida law in the bankruptcy
court, and section 768.79 applies to this appeal.
Steffen also argues that the plain language of section 768.79 precludes its
application to actions filed in federal court. Section 768.79 applies to “any civil
action for damages filed in the courts of” Florida. Fla. Stat. § 768.79(1). Because
8
the text reads “courts of this state” instead of “courts in this state,” Steffen argues
that the statute applies only to actions filed in Florida courts, not to actions filed in
federal courts, and Steffen cites two decisions of a district court in support of her
argument. See Yossifon v. City of Cocoa Beach, 2006 WL 2130909, at *1 (M.D.
Fla. July 28, 2006) (finding that section 768.69 “refers only to cases filed in
Florida state courts and does not include suits filed in federal courts in the state of
Florida”); Keesee v. Bank of Am., NA, 371 F. Supp. 2d 1370, 1376 n.3 (M.D. Fla.
2005) (“Although [the] Florida legislature may have a strong policy favoring the
reduction of court case loads [evident from the enactment of section 768.79], that
policy appears self-evidently limited to Florida courts.” (citation omitted)).
This argument fails for two reasons. First, the language of section 768.79
does not bar its application to claims based on state law that are filed in federal
court. The district and bankruptcy courts of our Circuit that are located in Florida
are courts of Florida because they adjudicate claims under Florida law and are a
part of the judicial system in that state. At least one Florida court has explained
that section 768.79 “applies to all civil actions for damages brought in Florida.”
Marcy v. Daimlerchrysler Corp., 921 So. 2d 781, 785 (Fla. Dist. Ct. App. 2006).
Second, even if we were to read “filed in the courts of [Florida]” as an attempt by
the Florida Legislature to limit the application of section 768.79 to actions brought
9
in Florida courts, that attempt would fail because Florida cannot discriminate
against a federal forum. Under the Supremacy Clause of the Constitution, a state
can discriminate neither against a federal cause of action, Testa v. Katt, 330 U.S.
386, 394, 67 S. Ct. 810, 815 (1947); Mondou v. N.Y, New Haven & Hartford R.R.
Co., 223 U.S. 1, 58–59, 32 S. Ct. 169, 178–79 (1912); see also Burnett v. Grattan,
468 U.S. 42, 60–61, 104 S. Ct. 2924, 2935 (1984) (Rehnquist, J., concurring in the
judgment) (“Plainly, if the statute of limitations discriminates against federal
claims, such that a federal claim would be time-barred, while an equivalent state
claim would not, then the state law is inconsistent with federal law.”), nor against a
party’s resort to a federal forum, NAACP v. Alabama ex. rel. Flowers, 357 U.S.
449, 457, 78 S. Ct. 1163, 1169 (1958) (“Novelty in procedural requirements [under
state law] cannot be permitted to thwart review in this Court . . . .”). When federal
courts apply state law, whether in bankruptcy or diversity, they do so as a matter of
federal policy that cannot be disfavored by a state. As Justice Brandeis several
decades ago wrote for a unanimous Court, “[a] state may not discriminate against
rights arising under federal laws.” McKnett v. St. Louis & S.F. Ry. Co., 292 U.S.
230, 234, 54 S. Ct. 690, 692 (1934).
Steffen argues that the application of section 768.79 would frustrate the
purpose of the Bankruptcy Code because it would punish a debtor’s estate for the
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pursuit of a claim in a bankruptcy proceeding. We disagree. The Supreme Court
recently ruled that the Bankruptcy Code does not disallow “contract-based claims
for attorney’s fees based solely on the fact that the fees at issue were incurred
litigating issues of bankruptcy law.” Travelers Cas. & Sur. Co. of Am. v. Pac. Gas
& Elec. Co., 127 S. Ct. 1199, 1204 (2007). The Court described the “basic federal
rule” in bankruptcy “that state law governs the substance of claims, Congress
having generally left the determination of property rights in the assets of a
bankrupt’s estate to state law.” Id. at 1205 (quoting Raleigh v. Ill. Dep’t of
Revenue, 530 U.S. 15, 20, 120 S. Ct. 1951, 1955 (2000)) (internal quotation marks
omitted). The Travelers Court reversed a decision of the Ninth Circuit, which had
not followed its general rule that “a prevailing party in a bankruptcy proceeding
may be entitled to an award of attorney fees in accordance with applicable state
law if state law governs the substantive issues raised in the proceedings.” Ford v.
Baroff (In re Baroff), 105 F.3d 439, 441 (9th Cir. 1997); see also Cadle Co. v.
Martinez (In re Martinez), 416 F.3d 1286, 1288 (11th Cir. 2005) (affirming an
award of fees in a bankruptcy proceeding under the reciprocal attorney’s fees
statute in Florida, Fla. Stat. § 57.105(6)).
Steffen’s argument that the application of section 768.79 in a bankruptcy
case “subjects bankruptcy estates to penalties for unsuccessfully pursuing claims
11
authorized by a bankruptcy court” is unpersuasive. The statute would “penalize”
the estate only if the estate did not accept a reasonable settlement offer made in
good faith. Fla. Stat. § 768.79. The main purposes of bankruptcy law are to
collect all of the assets and liabilities of an entity, to pay the creditors of the
bankrupt to the fullest extent possible, and to give the debtor a fresh start. St.
Laurent v. Ambrose (In re St. Laurent), 991 F.2d 672, 680 (11th Cir. 1993). The
goal of the statute, which is to make whole a party forced to litigate after a
reasonable settlement offer is rejected, does not conflict with the purposes of the
Bankruptcy Code. The statute seeks to encourage settlement and to conserve
judicial resources.
2. Rule 68 Does Not Preempt Section 768.79.
Steffen also argues that Rule 68 preempts section 768.79. Steffen argues
that both the federal rule and the state statute were designed to encourage early
settlement and they directly conflict. Again, we disagree.
Federal law preempts a state statute when the two directly conflict, N.Y.
State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S.
645, 654, 115 S. Ct. 1671, 1676 (1995), but section 768.79 and Rule 68 do not
conflict. Section 768.79 provides for the recovery of attorney’s fees and other
costs, but Rule 68 provides for an award of only costs. Compare Fla. Stat. §
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768.79 with Fed. R. Civ. P. 68. Section 768.79 also addresses offers of judgment,
demands for judgment, and offers of settlement and does not require the entry of a
judgment as a prerequisite. Fla. Stat. § 768.79; see also Abbott & Purdy Group,
Inc. v. Bell, 738 So. 2d 1024, 1027 (Fla. Dist. Ct. App. 1999). Rule 68 applies
only to offers of judgment, so a “judgment [against the defendant] on specified
terms” is required. Fed. R. Civ. P. 68; see also Bell, 738 So. 2d at 1027.
Eighteen years ago, we concluded that the predecessor to the current version
of section 768.79 was not preempted by Rule 68, Tanker Mgmt., Inc. v. Brunson,
918 F.2d 1524, 1528–29 (11th Cir. 1990), and that decision controls our resolution
of this issue. In Tanker, the defendant made three offers that the plaintiff rejected:
a proposal for settlement under section 45.061 of the Florida Statutes, an offer of
judgment under an earlier version of section 768.79, and an offer of judgment
under Rule 68. Id. at 1526. The district court directed a verdict in favor of the
defendant and awarded the defendant costs and attorney’s fees, but the court did
not specify the statute under which it awarded attorney’s fees. Id. We examined
each provision to determine which of them, if any, could support the award of
attorney’s fees. Id. at 1527. We concluded that Rule 68 did not support the award
because it allowed an award of only costs “unless the underlying statute that
creates the cause of action expressly provides that attorney’s fees are recoverable
13
as costs.” Id. We concluded that the earlier version of section 768.79 did not
support the award because that version did not apply to a prevailing defendant. Id.
We examined section 45.061, which provided that a prevailing defendant who had
served either an offer of judgment or an offer of settlement could recover
attorney’s fees if the plaintiff rejected the offer. Id. at 1528. We held that Rule 68
did not preempt section 45.061 because the two provisions were not in “direct
collision.” Id. “Rule 68 concerns only [costs] and offers of judgment, while
[section 45.061] concerns attorney’s fees, offers of judgment and settlement
offers.” Id. We explained that Rule 68 was “in no way applicable to settlement
offers.” Id. at 1529. In 1990, the Florida Legislature consolidated sections 768.79
and 45.061 into the current version of section 768.79, and this new provision
addresses offers of judgment, demands for judgment, and offers of settlement and
provides for awards of costs and attorney’s fees to either party.
Akerman made offers of settlement to Steffen like the offers in Tanker.
Steffen insists that Akerman made offers of judgment, not offers of settlement,
because the documents she received were titled “offer of judgment,” but neither
offer provided for an entry of judgment against Akerman. The offers instead
proposed a settlement of all claims with Steffen for $10,000 if she would “dismiss
her claims against [Akerman] with prejudice.” An offer of judgment, as
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contemplated by Rule 68, requires that a judgment be entered in favor of the
offeree. Fed. R. Civ. P. 68; see also Bell, 738 So. 2d at 1027. The offers by
Akerman were like the settlement offers in Tanker, so the reasoning in Tanker
compels our conclusion that Rule 68 does not preempt section 768.79.
B. The District Court Did Not Abuse Its Discretion When It Denied Steffen’s
Requests for Discovery and an Evidentiary Hearing.
Steffen argues that the district court abused its discretion when it denied her
requests for discovery and an evidentiary hearing regarding whether the motion for
attorney’s fees filed by Akerman was made in good faith. She contends that the
district court failed to explain its rulings. She also argues that the denial of
discovery by the district court was “essentially a denial of due process” because
she could not meet her burden to prove that Akerman did not make its offer under
section 768.79 in good faith without additional discovery. These arguments fail.
As the Supreme Court has explained, “[a] request for attorney’s fees should
not result in a second major litigation.” Hensley v. Eckerhart, 461 U.S. 424, 437,
103 S. Ct. 1933, 1941 (1983). When deciding a motion for attorney’s fees, courts
rarely reopen discovery, and evidentiary hearings are often unnecessary. See Fed.
R. Civ. P. 54(d)(2) advisory committee’s note; 2 Mary Francis Derfner & Arthur
D. Wolf, Court Awarded Attorney Fees § 25.01 (2007) (“[P]ost-judgment
discovery into fee issues is rare.”). A determination of a fee award by a district
15
court “solely on the affidavits in the record” is “perfectly proper.” Norman v.
Hous. Auth. of Montgomery, 836 F.2d 1292, 1303 (11th Cir. 1988).
The district court did not abuse its discretion when it denied Steffen’s
requests for discovery and an evidentiary hearing. Steffen did not provide the
district court with any legal argument in support of her requests. She did not allege
that discovery could produce any evidence that was necessary, or even helpful, to
the fee determination. The district court, in a thorough opinion, initially
determined that it did not have enough information in the record about the hours
billed and the fees charged by Akerman to determine whether they were
reasonable, so it ordered Akerman to produce evidence to support the fee
application. After a review of additional affidavits and each billing entry, the
district court awarded Akerman approximately half of the amount that Akerman
initially requested. The district court was then able to determine an appropriate fee
award, and Steffen does not challenge the amount of the award as unreasonable.
We cannot conclude that the district court abused its discretion when it denied
Steffen’s requests for discovery and an evidentiary hearing.
Steffen cites Jamie Schapiro AIA v. Rubinson, 784 So. 2d 1135 (Fla. Dist.
Ct. App. 2000), for the proposition that an “evidentiary hearing is required” in
connection with a good faith inquiry under section 768.79, but Steffen
16
misunderstands that decision. In Jamie Schapiro AIA, the trial court denied the
defendant’s motion for attorney’s fees under section 768.79 without a hearing on
the ground that the defendant did not make the settlement offers in good faith. Id.
at 1137. The appellate court determined that the trial court should have held a
hearing on the issue of good faith because the trial court had not required the
plaintiff to meet her burden to establish a lack of good faith. Id. The Jamie
Schapiro AIA court did not hold that an evidentiary hearing is always required to
determine when an offer is made in good faith, as Steffen argues. The court
instead concluded that a hearing might be necessary if the record does not include
evidence sufficient to establish bad faith and the court is inclined to deny a motion
for attorney’s fees on the basis of a bad faith offer. Id.
IV. CONCLUSION
The award of attorney’s fees to Akerman is
AFFIRMED.
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