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Note: Dependable Component Supply (Beneficiary) sued Carrefour Informatique Tremblant (Applicant) and First American Bank of Illinois (Issuer), in Florida state court for Issuer's wrongful dishonor of a LC and fraud. Applicant removed the action to the United States District Court for the Southern District of Florida and moved to dismiss the complaint for failure to state a cause of action and failure to plead fraud with particularity. The District Court dismissed the complaint, but gave Beneficiary leave to amend its complaint within fourteen days. Beneficiary failed to amend its complaint, the District Judge entered a final order of dismissal which Beneficiary did not appeal.

Applicant then moved for an order requiring Beneficiary to pay its attorneys' fees and costs. One week later, Beneficiary admitted that it had failed to amend its complaint within the fourteen-day window, but asked the court to reopen the case, a motion which was denied. The parties asked the District Court to clarify whether the Final Order of Dismissal functioned as adjudication on the merits for the purposes of attorneys' fees. The District Court ruled that its Final Order of Dismissal was an adjudication on the merits, that the Applicant was the prevailing party, and that Applicant was entitled to attorneys' fees.

On appeal, the U.S. Court of Appeals for the 11th Circuit affirmed the District Court's ruling, applying Florida state law which reviews a district court's award of attorneys fees for an abuse of discretion, and ruled that the Final Order of Dismissal functioned as adjudication on the merits. The court found that Fla. Stat. § 675.111(5) (Supp. 2013), which governs claims for wrongful dishonor of a LC, requires the award of "[r]easonable attorneys' fees...to the prevailing party." The court also found that under Florida law, "the prevailing party for purposes of attorneys' fees is the party that prevailed on any significant issue in the litigation." The method for determining who is the prevailing party "is to allow the trial judge to determine from the record which party in fact prevailed on the significant issues." The appellate court concluded that, notwithstanding dismissal without prejudice of Beneficiary's complaint, the award of attorney's fees was proper.

The parties also appealed the District Court's decision to limit the award of attorneys' fees to litigation of the wrongful dishonor of a LC claim. The court ruled that Fla. Stat. §675.111(e) authorizes "attorney's fees in all actions where a remedy is sought under [§ 675]." The court's prior decision regarding a claim under Fla. Stat. § 675.109 entitled the prevailing party to recover attorneys' fees at a reasonable hourly rate (USD 350). The court also concluded that Applicant, as the prevailing party on a §675 claim was entitled to attorney's fees because Beneficiary "failed to persuade us that the attorneys' fees awarded were attributable to claims too unrelated to the wrongful dishonor claim."

[MJS]

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The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.