IN THE SUPREME COURT OF FLORIDA

IN THE SUPREME COURT OF FLORIDA CARMEN DESOCIO : : Respondent-Plaintiff, : : Case No. v. : Second District Court of : Appeal No. 04-2112 : Sixth Judicial Circuit, Pinellas County : Case No. 02-007080CI-011 : : SONIC AUTOMOTIVE 21699 U.S. : HWY 19 N. d/b/a CLEARWATER : MITSUBISHI, : : Petitioner-Defendant. : : On Discretionary Review From the District Court of Appeal of Florida, Second District PETITIONER S BRIEF ON JURISDICTION FORD & HARRISON LLP Edmund J. McKenna Florida Bar No. 0845922 Darren D. McClain Florida Bar No. 0385034 101 East Kennedy Boulevard Suite 900 Tampa, Florida 33602-5133 Telephone: (813) 261-7800 Facsimile: (813) 261-7899 Attorneys for Petitioner

TABLE OF CONTENTS Page TABLE OF AUTHORITIES... ii STATEMENT OF CASE... 1 NATURE OF CASE AND COURSE OF PROCEEDINGS... 1 STATEMENT OF FACTS... 2 SUMMARY OF THE ARGUMENT... 4 ARGUMENT... 5 The Court Should Grant Discretionary Review Because the Second District Court of Appeal s Decision Expressly and Directly Conflicts With the Court s Holding in Green v. Sun Harbor Homeowners Ass n, Inc., 730 So. 2d 1261, 1263 (Fla. 1998), Holding that a Defendant Is Not Required to Claim Entitlement to Attorney s Fees If It Does Not File a Responsive Pleading... 5 A. Express and Direct Conflict Exists with Green Because a Defendant Is Not Required to Claim Entitlement to Attorney s Fees When the Defendant Files No Pleading.... 6 B. The Issue Of Whether A Party Waives Entitlement To Attorney s Fees By Not Claiming Entitlement To Fees In An Arbitration Proceeding In Which No Pleading Is Required Warrants Review... 8 CONCLUSION... 10 CERTIFICATE OF SERVICE... 11 CERTIFICATE OF COMPLIANCE WITH FLA. R. APP. P. 9.210(A)(2)... 12 -i-

Cases TABLE OF AUTHORITIES Page Green v. Sun Harbor Homeowners Ass n, Inc., 730 So. 2d 1261 (Fla. 1998)...passim Stockman v. Downs, 573 So. 2d 835 (Fla. 1991)...passim Statutes 448.104, Florida Statutes... 2, 3 Rules American Arbitration Association National Rules...2 -ii-

STATEMENT OF CASE AND OF THE FACTS NATURE OF CASE AND COURSE OF PROCEEDINGS On September 11, 2002, Respondent Carmen Desocio ( Respondent ) served a one-count Whistle-Blower lawsuit on Petitioner Sonic Automotive 21699 U.S. HWY 19 N. d/b/a Clearwater Mitsubishi ( Clearwater Mitsubishi ) pursuant to 448.101-448.105, Florida Statutes. (Record, R. at 1-6). However, because Respondent had a signed, valid arbitration agreement, on December 4, 2002, the Circuit Court granted Clearwater Mitsubishi s Motion to Compel Arbitration and Stay Action. (R. at 24). After discovery, the arbitration hearing occurred on September 23 and 24, 2004. On October 20, 2003, Arbitrator Edward LaRose found in favor of Clearwater Mitsubishi on Respondent s entire Whistle-Blower claim and ordered that Respondent recover nothing, finding that Clearwater Mitsubishi was the prevailing party for purposes of 448.104, Florida Statutes. On November 12, 2003, Clearwater Mitsubishi timely filed its Motion for Attorney s Fees and Costs with the Circuit Court. (R. at 64-119). Respondent filed a response to Clearwater Mitsubishi s Motion and stipulated to the amount and reasonableness of the fees and costs, only claiming that Clearwater Mitsubishi was not entitled to fees and costs. (R. at 160-161).

On February 12, 2004, the Circuit Court awarded Clearwater Mitsubishi its attorney s fees and costs. Id. Respondent filed a Notice of Appeal to the Second District Court of Appeal on March 3, 2004. (R. at 162-164). On February 4, 2005, the Second District Court of Appeal reversed the Circuit Court s judgment awarding attorney s fees and costs to Clearwater Mitsubishi. (App. Tab 1). On February 21, 2005, Clearwater Mitsubishi filed a Motion for Rehearing. On March 9, 2005, the Court of Appeal denied Clearwater Mitsubishi s Motion for Rehearing. On April 6, 2005, Clearwater Mitsubishi timely filed its Notice to Invoke Discretionary Jurisdiction of the Court based on an express and direct conflict with a decision of this Court on the same question of law. STATEMENT OF FACTS Respondent and Clearwater Mitsubishi have a valid written agreement to arbitrate Respondent s claim under the Federal Arbitration Act ( FAA ) (R. at 8-11). Respondent and Clearwater Mitsubishi, an automobile dealership, agreed to be bound by the American Arbitration Association National Rules for the Resolution of Employment Disputes ( AAA Rules ). Id. On October 20, 2003, Arbitrator LaRose found in favor of Clearwater Mitsubishi on Respondent s Whistle-Blower claim and ordered that Respondent recover nothing, finding that Clearwater Mitsubishi was the prevailing party for purposes of 448.104, Florida Statutes, which states that [a] court may award -2-

reasonable attorneys fees, court costs, and expenses to the prevailing party. Id. (Emphasis added.) Arbitrator LaRose believed that he did not have authority to award attorney s fees and costs under the statute unless the parties agreed that he could do so. Thus, on November 12, 2003, Clearwater Mitsubishi filed its Motion for Attorney s Fees and Costs with the Circuit Court. (R. at 64-119). On February 12, 2004, because Arbitrator LaRose expressly found that Clearwater Mitsubishi was the prevailing party under section 448.104, Florida Statutes, the Circuit Court awarded Clearwater Mitsubishi its attorney s fees and costs. Id. The Circuit Court explained that the arbitration provision controlled. Therefore, there was no need or opportunity for Clearwater Mitsubishi to make a demand for attorney fees in the circuit court. [Respondent] has not shown that Clearwater Mitsubishi was required to make a claim for attorneys fees under the arbitration rules to which [Respondent] agreed. Id. On February 4, 2005, the Second District Court of Appeal reversed the judgment of the Circuit Court awarding attorney s fees and costs to Clearwater Mitsubishi. (App. Tab 1). The Court of Appeal believed that this Court s holding in Stockman v. Downs, 573 So. 2d 835 (Fla. 1991) required that in an arbitration proceeding governed by the AAA Rules, in which the parties did not consent to the arbitrator resolving the issue of attorney s fees, Clearwater Mitsubishi was required to notify Respondent of its intent to seek attorney s fees before the arbitration -3-

concluded, even though there was no opportunity to plead entitlement to attorney s fees in the Circuit Court before Clearwater Mitsubishi moved for award of attorney s fees in the Circuit Court. After the Second District Court of Appeal denied Clearwater Mitsubishi s Motion for Rehearing, this Appeal followed. SUMMARY OF THE ARGUMENT The Court should grant discretionary review because, while Clearwater Mitsubishi disagrees that Florida procedural rules apply to an arbitration under the Federal Arbitration Act ( FAA ), even if the case is reviewed under Florida procedural rules, the Second District Court of Appeal s decision expressly and directly conflicts with this Court s decision in Green v. Sun Harbor Homeowners Ass n, Inc., 730 So. 2d 1261, 1263 (Fla. 1998), holding that a defendant is not required to claim entitlement to attorney s fees before filing a motion for attorney s fees in the circuit court if it did not file a responsive pleading. In the Second District Court of Appeal s decision, the court believed that the decision of Stockman v. Downs, 573 So. 2d 835 (Fla. 1991), required Clearwater Mitsubishi to claim entitlement to attorney s fees before it timely filed its motion for attorney s fees and costs in the Circuit Court after the arbitration proceeded to conclusion. However, this Court in Green clarified that Stockman required a defendant to claim entitlement to attorney s fees before filing a motion for attorney s fees in circuit court only if a defendant had filed a responsive -4-

pleading. Thus, the Second District Court of Appeal s holding that Clearwater Mitsubishi waived entitlement to attorney s fees by not claiming entitlement to attorney s fees before it filed its motion for fees in the Circuit Court expressly and directly conflicts with this Court s holding in Green because Clearwater Mitsubishi filed no responsive pleading, rather the only documents filed, prior to arbitration, were a Motion to Compel Arbitration and Stay Action and an Alternative Motion to Dismiss. 1 Therefore, the Court should grant discretionary review. ARGUMENT The Court Should Grant Discretionary Review Because the Second District Court of Appeal s Decision Expressly and Directly Conflicts With the Court s Holding in Green v. Sun Harbor Homeowners Ass n, Inc., 730 So. 2d 1261, 1263 (Fla. 1998), Holding that a Defendant Is Not Required to Claim Entitlement to Attorney s Fees If It Does Not File a Responsive Pleading. The Court has discretionary jurisdiction to review the Second District Court of Appeal s decision because it expressly and directly conflicts with the Court s decision in Green v. Sun Harbor Homeowners Ass n, Inc., 730 So. 2d 1261, 1263 (Fla. 1998). Fla. Con. Art, 5 3(b)(3). The Second District Court of Appeal held that the Court s decision in Stockman v. Downs, 573 So. 2d 835 (Fla. 1991), required Clearwater Mitsubishi to notify Respondent of its intent to seek attorney s fees in an arbitration proceeding governed by the AAA Rules before the arbitration 1 Clearwater Mitsubishi also filed an Unopposed Motion to Substitute Counsel and other filings related to its Motion to Compel Arbitration and Stay Action. -5-

proceeded to conclusion and Clearwater Mitsubishi filed its motion for attorney s fees and costs in Circuit Court, even though Clearwater Mitsubishi filed no responsive pleading in this case. Because this Court in Green held that Stockman does not require a defendant to claim entitlement to attorney s fees before filing a motion for attorney s fees in the circuit court when the defendant is not required to file a responsive pleading in a case, the Second District Court of Appeal s decision expressly and directly conflicts with this Court s holding in Green. A. Express and Direct Conflict Exists with Green Because a Defendant Is Not Required to Claim Entitlement to Attorney s Fees When the Defendant Files No Pleading. The Court in Stockman required that a claim for attorney s fees must be pled by a defendant if the defendant filed a responsive pleading. Stockman, 573 So. 2d at 838 (emphasis added). In Stockman, the plaintiff filed a complaint raising a claim for contractual attorney s fees. Id. at 836. The defendants filed an answer failing to plead entitlement to attorney s fees. Id. (emphasis added). The defendants later moved for an award of attorney s fees after the trial court found in their favor. Id. The Court held that a claim for attorney s fees, whether based on statute or contract, must be pled. Failure to do so constitutes a waiver of the claim. Id. at 837-38 (emphasis added). Because the defendants failed to plead entitlement to attorney s fees in their responsive pleadings, they waived their claim for attorney s fees. Id. (emphasis added). -6-

As subsequently clarified by the Court in Green, 730 So. 2d at 1263, a case where no responsive pleading was required because of a successful motion to dismiss, the Court explained that its use of the phrase must be pled in Stockman is to be construed in accord with the Florida Rules of Civil Procedure. Complaints, answers, and counterclaims are pleadings pursuant to Florida Rule of Civil Procedure 1.100(a). A motion to dismiss [as in this case a Motion to Dismiss or Motion to Compel Arbitration and Stay Action] is not a pleading. (Emphasis added). This Court further explained that Stockman is to be read to hold that the failure to set forth a claim for attorney fees in a complaint, answer, or counterclaim, if filed, constitutes a waiver. However, the failure to set forth a claim for attorney fees in a motion does not constitute a waiver. Until a rule is approved for cases that are dismissed before the filing of an answer, we require that a defendant s claim for attorney fees is to be made either in the defendant s motion to dismiss or by a separate motion which must be filed within thirty days following a dismissal of the action. If the claim is not made within this time period, the claim is waived. Id. at 1263 (emphasis added). Thus, as this Court clarified in Green, Stockman requires a defendant to plead entitlement to attorney s fees only if it filed a responsive pleading. When a party is not required to file a pleading, a complaint, answer or counterclaim, Stockman does not require a claim for attorney s fees before the party files its motion for attorney s fees in circuit court because the party did not commit an act (filing a pleading without claiming entitlement to attorney s fees) that waived its -7-

entitlement to attorney s fees. Green, 730 So.2d at 1263. Therefore, Clearwater Mitsubishi complied with Green when it timely sought its attorney s fees by motion in the Circuit Court after the arbitration proceeding concluded, as it never filed a responsive pleading in this case. B. The Issue of Whether a Party Waives Entitlement to Attorney s Fees by Not Claiming Entitlement to Fees in an Arbitration Proceeding in Which No Pleading Is Required Warrants Review. Here, the Second District Court of Appeal found that the parties dispute was subject to arbitration, and the AAA Rules, which governed the arbitration proceeding, did not require a formal plea for attorney s fees. However, the Court of Appeal essentially ignored Green when it determined that Stockman required Clearwater Mitsubishi to notify [Respondent] in some manner of its intent to seek fees before the arbitration proceeded to conclusion. The Court of Appeal made no finding that Clearwater Mitsubishi failed to claim entitlement to attorney s fees in a responsive pleading. Rather, in express and direct conflict with Green, it required Clearwater Mitsubishi to claim entitlement to attorney s fees in an arbitration proceeding in which there were no formal pleading requirements and the Florida Rules of Civil Procedure did not apply. The Second District Court of Appeal s decision here under review, in conflict with Green, created a new requirement that a party must claim or waive entitlement to attorney s fees even in a proceeding in which no pleading pursuant -8-

to the Florida Rules of Civil Procedure was required or filed. Even though the AAA Rules, as in this case, may govern an arbitration proceeding, and do not require a formal plea for attorneys fees, the Second District Court of Appeal now requires a plea of entitlement to attorneys fees before the arbitration proceeds to conclusion or the party waives its entitlement to attorney s fees. Stockman, as clarified by Green, does not require a defendant (like Clearwater Mitsubishi) to claim entitlement to attorney s fees in an arbitration proceeding in which no pleading pursuant to the Florida Rules of Civil Procedure, such as an answer or counterclaim, is required or filed. Rather, the Court in Green explained that Stockman provides that under the specific circumstance of filing a pleading, a party waives its entitlement to attorney s fees if the party fails to claim entitlement to attorney s fees in the pleading. Thus, the Second District Court of Appeal s decision that Clearwater Mitsubishi waived its entitlement to attorney s fees by not claiming entitlement to its attorney s fees before the arbitration proceeding concluded and filing of its motion for attorney s fees and costs in the Circuit Court created a requirement of which Clearwater Mitsubishi could not have been aware before the Second District Court of Appeal s decision. Clearwater Mitsubishi committed no act which triggered its waiver of attorney s fees pursuant to Stockman, as it filed no pleading pursuant to the Florida Rules of Civil Procedure during the arbitration proceeding. -9-

Thus, the decision causes obvious substantial prejudice to Clearwater Mitsubishi which was not aware that it could waive its entitlement to attorney s fees without filing a pleading and that it was required to claim entitlement to attorney s fees in a proceeding that did not require it to plea entitlement to attorney s fees. As the Court explained in Green, there is no rule requiring a defendant to claim entitlement to attorney s fees before the defendant files a responsive pleading. As such, Clearwater Mitsubishi could not have waived its entitlement to attorney s fees as the Second District Court of Appeal held. Thus, the Second District Court of Appeal s decision expressly and directly conflicts with this Court s holding in Green, and the Court should grant discretionary review and accept jurisdiction of this case. CONCLUSION Based on the foregoing, the Court should grant discretionary review to resolve the express and direct conflict between the Second District Court of Appeal s decision, holding that a party is required to plea entitlement to attorney s fees in an arbitration proceeding in which no formal plea for attorney s fees is required and the Court s decision in Green v. Sun Harbor Homeowners Ass n, Inc., 730 So. 2d 1261, 1263 (Fla. 1998), holding that a defendant is not required to plea entitlement to attorney s fees when no responsive pleading is required or filed. -10-

Respectfully submitted, FORD & HARRISON LLP By: Edmund J. McKenna Florida Bar No. 0845922 Darren D. McClain Florida Bar No. 0385034 For the firm CERTIFICATE OF SERVICE 101 East Kennedy Boulevard Suite 900 Tampa, Florida 33602-5133 Telephone: (813) 261-7800 Facsimile: (813) 261-7899 I HEREBY CERTIFY that a true and correct copy of the foregoing has been served by U.S. First Class Mail on: this 15th day of April, 2005. Brian L. Weakland 2805 W. Busch Blvd., Suite 100 Tampa, Florida 33618 A copy has also been submitted to this Court electronically via e-mail in Microsoft Word format pursuant to Administrative Order AOSC04-84. Attorney -11-

CERTIFICATE OF COMPLIANCE WITH FLA. R. APP. P. 9.210(a)(2). The undersigned hereby certify that this Brief is proportionately spaced, with 14 point Times New Roman font and this Brief complies with the type-volume limitation set forth in Fla. R. App. P. 9.210(a)(2). Respectfully submitted, FORD & HARRISON LLP By: Edmund J. McKenna Florida Bar No. 0845922 Darren D. McClain Florida Bar No. 0385034 For the firm 101 East Kennedy Boulevard Suite 900 Tampa, Florida 33602-5133 Telephone: (813) 261-7800 Facsimile: (813) 261-7899 -12-

TABLE OF CONTENTS TO APPENDIX Opinion filed February 4, 2005, in the District Court of Appeals of Florida, Second District... Tab 1 TAMPA:197400.1