       Third District Court of Appeal
                               State of Florida

                           Opinion filed April 27, 2016.
         Not final until disposition of timely filed motion for rehearing.

                               ________________

                                No. 3D15-723
                         Lower Tribunal No. 08-59582
                             ________________

   Vanguard Car Rental USA, LLC, a Delaware limited liability
    company f/k/a Vanguard Car Rental USA, Inc., a Delaware
             corporation d/b/a National Car Rental,
                                    Appellant,

                                        vs.

                           Lawrence Suttles, Jr.,
                                    Appellee.


      An Appeal from the Circuit Court for Miami-Dade County, Peter R. Lopez,
Judge.

      Holland & Knight, Frances G. De La Guardia and Lee P. Teichner, for
appellant.

     Alan C. Gold and James L. Parado, for appellee.


Before WELLS, EMAS and LOGUE, JJ.

     WELLS, Judge.
         Vanguard Car Rental USA, LLC appeals from a final order denying its

motion for attorney’s fees and costs made pursuant to a proposal for settlement

under section 768.79 of the Florida Statutes and Florida Rule of Civil Procedure

1.442. See § 768.79, Fla. Stat. (2014) 1; Fla. R. Civ. P. 1.442.2 Because we agree

with Vanguard that its proposal for settlement met all the prerequisites for a fee

award, we reverse the order on appeal and remand for a determination of the

amount to be awarded.

         In 1991, National Car Rental advised law enforcement that Lawrence

Suttles, Jr. had failed to timely return a rental car. Two years later, National filed



1   Section 768.79, of the Florida Statutes (2014), as pertinent here, provides:

         (2) . . . An offer must:

         ....

         (b) Name the party making it and the party to whom it is being made.
2   Florida Rule of Civil Procedure 1.442 provides in part:

         (c) Form and Content of Proposal for Settlement.

         (1) A proposal shall be in writing and shall identify the applicable
             Florida law under which it is being made.

         (2) A proposal shall:

         (A) name the party or parties making the proposal and the party or
         parties to whom the proposal is being made . . . .


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for bankruptcy and Vanguard’s predecessor, CAC LLC, purchased National’s

assets in the bankruptcy proceeding.

      Fourteen years later, in 2007, Suttles was arrested on a long outstanding

warrant related to the 1991 report that he had not returned a rental car. The

following year, Suttles sued Vanguard Car Rental USA, Inc. d/b/a National Car

Rental (herein Vanguard, Inc.), the successor to CAC LLC. In April of 2010,

Suttles was allowed to amend his complaint to add the Florida State Attorney’s

office as a party-defendant. A year after that, Suttles added “National Car Rental

System, Inc., a Delaware Corporation d/b/a National Car Rental” as a defendant.

Suttles thereafter filed a fourth amended complaint to add a claim for punitive

damages. Throughout this time, Vanguard Inc. remained a named defendant.

      On January 3, 2013, Vanguard Inc. served a proposal for settlement on

Suttles, which Suttles rejected. In May 2013, Vanguard Inc. filed its answer and

affirmative defenses and demanded a jury trial.

      After learning that Vanguard Inc. had converted from a corporation to a

limited liability company, Suttles revised his fourth amended complaint to name

Vanguard LLC f/k/a Vanguard Inc. as a party defendant. Vanguard LLC, the

entity into which Vanguard Inc. had converted in 2009, filed an answer,

affirmative defenses and demand for jury trial.




                                         3
      On August 19, 2014, final summary judgment was entered in favor of

“Vanguard Car Rental USA, LLC, a Delaware limited liability company f/k/a

Vanguard Car Rental USA, [Inc.], a Delaware corporation” on a finding that

Vanguard did not assume National Car Rental’s liabilities when it purchased

National’s assets out of bankruptcy. After that judgment was affirmed on appeal,

Vanguard moved for an award of attorneys’ fees pursuant to its earlier filed

proposal.

      During the hearing to determine whether fees should be awarded to

Vanguard pursuant to its proposal for settlement, Suttles, for the first time, claimed

that Vanguard LLC could not recover its attorney fees and costs because Vanguard

LLC was not the party that served the proposal for settlement. Following a second

hearing on the matter, the court below ruled that Vanguard LLC, the prevailing

party in the action, could not recover its fees and costs because Vanguard, Inc. had

made the proposal for settlement3:

      My ruling is on the face of the offer itself. It should have been LLC
      saying we converted back in ‘09, Inc. is no longer here, we are the
      one, Mr. Plaintiff, here is our offer on our behalf as a converted entity
      from Inc. And I think all of the rights and obligations arguments
      legally flow, I agree with you, but it’s a different name. So for that
      reason, the motion is denied.



3 On June 17, 2009, Vanguard Inc. had filed a Certificate of Conversion with the
Delaware Secretary of State, converting from Vanguard Inc. to Vanguard LLC
effective July 31, 2009 at 11:59 p.m.

                                          4
       We reverse this order for two reasons, first, because the proposal for

settlement satisfied all prerequisites necessary for Vanguard Inc. to recover its fees

and costs, and second, because the conversion of Vanguard Inc. to Vanguard LLC

had no effect on Vanguard’s potential liability as a party in this action.

       In TGI Friday’s, Inc. v. Dvorak, 663 So. 2d 606, 611 (Fla. 1995), the Florida

Supreme Court confirmed that section 768.79 creates a mandatory right to a fee

award where a party has served a demand or offer of judgment and that party has

recovered a judgment in its favor at least 25 percent more or less than the demand

or offer:

             We also find that the district court correctly held that section
       768.79 provides for an award of attorney’s fees regardless of the
       reasonableness of an offeree’s rejection of an offer of judgment. In
       making this determination, the district court referred to its earlier
       decision in Schmidt v. Fortner, 629 So. 2d 1036 (Fla. 4th DCA 1993).
       In Schmidt, the district court explained the application of section
       768.79 as follows:

                    ....

                    To begin, the words “shall be entitled” [e.s.] in
             subsection (1) [of section 768.79] quoted above cannot
             possibly have any meaning other than to create a right to
             attorney’s fees when the two preceding prerequisites
             have been fulfilled: i.e., (1) when a party has served a
             demand or offer for judgment, and (2) that party has
             recovered a judgment at least 25 percent more or less
             than the demand or offer. These are the only elements of
             the statutory entitlement. No other factor is relevant in
             determining the question of entitlement.




                                           5
                   Subsection (6)(b) of section 768.79 (in pertinent
            part) provides as follows:

                  “(6) Upon motion made by the offeror
                  within 30 days after the entry of judgment or
                  after voluntary or involuntary dismissal, the
                  court shall determine the following:

                  (a) If a defendant serves an offer which is
                  not accepted by the plaintiff, and if the
                  judgment obtained by the plaintiff if at least
                  25 percent less than the amount of the offer,
                  the defendant shall be awarded reasonable
                  costs, including . . . attorney’s fees . . . .

                  (b) If a plaintiff serves an offer which is not
                  accepted by the defendant, and if the
                  judgment obtained by the plaintiff is at least
                  25 percent more than the amount of the
                  offer, the plaintiff shall be awarded
                  reasonable costs, including . . . attorney’s
                  fees . . . .”

                Under this provision, the right to an award turns only
            on the difference between the amount of a rejected offer
            and the amount of a later judgment. It does not depend
            on whether the offer or the rejection was reasonable. If
            the offer is 25 percent more or less than the judgment,
            then the party has qualified for an award. To repeat,
            these two provisions together create an entitlement which
            qualifies a party to an award of attorney’s fees where the
            party has served an offer that is more or less than the
            ultimate judgment, if the motion therefore has been
            timely made.

Id. at 611-613 (quoting with approval and agreeing with Schmidt, 629 So. 2d at

1040-42); see also McGregor v. Molnar, 79 So. 3d 908, 910 (Fla. 2d DCA 2012)




                                        6
(confirming that “the supreme court explained that section 768.79 creates a

mandatory right to attorney’s fees if its prerequisites are met”).

        While a trial court may in its discretion refuse to grant a fee award where

these prerequisites are met, it may do so only if it determines that a qualifying offer

was not made in good faith. See Dvorak, 663 So. 2d at 612 (stating that while

subsection 768.79(7) does “allow the court in its discretion to disallow an award of

attorney’s fees,” it may do so “only if it determines that a qualifying offer ‘was not

made in good faith.’” (quoting § 768.79(7)); Molnar, 79 So. 3d at 910-11 (same,

quoting Dvorak, 663 So. 2d at 612).

        There is no question that a qualifying offer was made by a named

“defendant” in this case, that the offer was not accepted, and that a defense

judgment, which was at least 25 percent less than the offer made, was entered.

Significantly, no determination was made that the offer was not a good faith offer.

Rather, the trial court refused to make an entitlement determination in Vanguard’s

favor because the court concluded the party that made the offer was not the same

party that secured the favorable recovery. We do not agree.

        At the time the proposal for settlement was made, as relevant here, only

Vanguard Inc. was named as a defendant.4 Although Vanguard Inc. had converted

4   The Settlement proposal provided:

         The party making this Proposal: Vanguard Car Rental, USA, Inc.


                                           7
from a corporation to a limited liability company in 2009, Suttles had not named or

added the LLC as a defendant by the time Vanguard Inc., served its settlement

proposal in 2013. Thus, under section 768.79, only Vanguard Inc. could serve a

proposal for settlement. § 768.79(1), Fla. Stat. (2014) (“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 a plaintiff files a

demand for judgment . . . [reflecting similar right of recovery].”); see also Carey-

All Transport, Inc. v. Newby, 989 So. 2d 1201, 1205 (Fla. 2d DCA 2008)

(confirming that only a “present party to the litigation,” that is one “by or against

whom a legal suit is brought” may make an offer under section 768.69 and rule

1.442) (quoting Black’s Law Dictionary 1122 (6th ed. 1990))).

      When the final summary judgment was entered, Vanguard Inc. had not been

dropped from the action. Rather, Vanguard Inc. was only “re-named” to evidence

the fact that it was now doing business as Vanguard LLC. This did not change the

identity of the “party” making the settlement proposal (Vanguard Inc.) nor deprive

Vanguard LLC of the right to recover fees based on that proposal.

      Both Florida and Delaware law confirm that a “conversion” from one

corporate identity to another is not determinative of an entity’s existing rights and

obligations. To the contrary, section 607.1114, of the Florida Statutes (2014),



                                          8
addressing the effect of a conversion of a domestic corporation into another

business form, confirms what should be regarded as the entity’s continued

existence:

      When a conversion becomes effective:

      (1) A domestic corporation that has been converted into another
      business entity pursuant to this chapter is for all purposes the same
      entity that existed before the conversion.

             ....

      (3) The other business entity into which the domestic corporation was
      converted shall continue to be responsible and liable for all the
      liabilities and obligations of the converting domestic corporation . . .

      (4) Any claim existing or action or proceeding pending by or against
      any domestic corporation that is converted into another business
      entity may be continued as if the conversion did not occur.

(Emphasis added).

      Delaware law likewise confirms that a conversion does not constitute a

dissolution, such as might arguably support the view that Vanguard Inc. should be

considered as an entirely different entity than Vanguard LLC. See Del. Code Ann.

tit. 8, § 266(f) (2015) (“Unless otherwise provided in a resolution of conversion

adopted in accordance with this section, the converting corporation shall not be

required to wind up its affairs or pay its liabilities and distribute its assets, and the

conversion shall not constitute a dissolution of such corporation.”) (emphasis

added).



                                           9
      Rather, similar to Florida law, Delaware law provides that when one entity

converts to another corporate form, the entities shall be deemed to be the same:

      (h) When a corporation has been converted to another entity or
      business form pursuant to this section, the other entity or business
      form shall, for all purposes of the laws of the State of Delaware, be
      deemed to be the same entity as the corporation.                   When
      any conversion shall have become effective under this section, for all
      purposes of the laws of the State of Delaware, all of the rights,
      privileges and powers of the corporation that has converted, and all
      property, real, personal and mixed, and all debts due to such
      corporation, as well as all other things and causes of action belonging
      to such corporation, shall remain vested in the other entity or business
      form to which such corporation has converted and shall be the
      property of such other entity or business form, and the title to any real
      property vested by deed or otherwise in such corporation shall not
      revert or be in any way impaired by reason of this chapter; but all
      rights of creditors and all liens upon any property of such corporation
      shall be preserved unimpaired, and all debts, liabilities and duties of
      the corporation that has converted shall remain attached to the other
      entity or business form to which such corporation has converted, and
      may be enforced against it to the same extent as if said debts,
      liabilities and duties had originally been incurred or contracted by it
      in its capacity as such other entity or business form.

Del. Code Ann. tit. 8, § 266(h) (2015) (emphasis added).

      In sum, under both Delaware and Florida law, pre and post-converted

entities are to be treated as the same entity for all purposes. Thus, the party which

made the proposal for settlement below must be treated as the same entity in whose

favor judgment was entered. Vanguard LLC f/n/a Vanguard Inc. was entitled to a

fee award.




                                         10
      Finally, there is no dispute that the conversion that took place while this

action was pending had no practical effect on Suttles’ ability to determine the party

making the proposal and cannot be regarded as making the offer ambiguous. See

Newby, 989 So. 2d at 1205 (“[A] proposal for settlement should be as specific as

possible, leaving no ambiguities so that the recipient can fully evaluate its terms

and conditions.” (quoting Nichols v. State Farm Mut., 851 So. 2d 742, 746 (Fla.

5th DCA 2003), approved, 932 So. 2d 1067 (Fla. 2006))).

       Accordingly, we reverse the trial court’s denial of Vanguard LLC’s Motion

for Attorney’s Fees, enter judgment in Vanguard LLC’s favor, and remand for the

trial court to determine the fees to be awarded.




                                         11
                   Vanguard Car Rental USA, LLC, et al., v. Lawrence Suttles, Jr.
                                                             Case No. 3D15-723



      LOGUE, J. (concurring)

      I concur. I write solely to encourage the Florida Bar’s Civil Procedure Rules

Committee to consider a rule change along the lines suggested in a prior opinion

by Judge Emas. In Design Home Remodeling Corp. v. Santana, 146 So. 3d 129,

133 n.7 (Fla. 3d DCA 2014), Judge Emas suggested that a party who does not

accept a proposal for settlement due to a procedural defect or deficiency in the

form of the offer should be required to serve a limited response identifying the

specific defect or deficiency, thus allowing the offeror to correct the procedural

defect, after which the offeree could then consider the corrected proposal on its

merits. Judge Emas wrote:

      While we do not suggest the existence of an unassailable solution, we
      would encourage the Florida Bar’s Civil Procedure Rules Committee
      to consider whether [Florida Rule of Civil Procedure 1.442] should be
      amended to require an offeree to serve a limited response to a
      proposal (apart from the existing response provision in the rule),
      raising any procedural defects to the proposal, thereby providing the
      offeror with an opportunity to serve a corrected proposal, in an effort
      to effectuate the salutary purpose underlying a proposal for settlement.
      Should the offeree fail to serve such a response, the rule could provide
      that this failure waives any right to subsequently challenge the
      proposal based upon these procedural defects. Such an amendment
      would prevent situations in which an offeror might reasonably believe
      he has made a fair, valid and binding offer, only to find out (at the
      eventual conclusion of costly and lengthy litigation) that the offer was
      procedurally defective and therefore invalid ab initio. If the aim is to


                                        12
        promote early and reasonable settlements, it seems worthwhile to
        consider whether the rule should be fashioned to give the offeror an
        opportunity to cure any procedural defects so that the offeree has a
        genuine opportunity to weigh the substantive merits of a proposal for
        settlement.

Id. An amendment to rule 1.442 of this nature would advance the purpose of the

rule, which is to foster early settlements. It would also mitigate one unfortunate,

unintended, and ironic consequence of the rule, which is the creation of a new and

growing cascade of litigation brought by parties trying to avoid the consequences

of rejecting a proposal for settlement by making an after-the-fact attack on the

form.




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