Steiner v. Lewmar, Inc.

816 F.3d 26, 2016 U.S. App. LEXIS 4232, 2016 WL 860359
CourtCourt of Appeals for the Second Circuit
DecidedMarch 7, 2016
DocketDocket Nos. 14-3817-cv(L), 14-4002-cv(XAP)
StatusPublished
Cited by37 cases

This text of 816 F.3d 26 (Steiner v. Lewmar, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Steiner v. Lewmar, Inc., 816 F.3d 26, 2016 U.S. App. LEXIS 4232, 2016 WL 860359 (2d Cir. 2016).

Opinion

CHIN, Circuit Judge:

In this ease, the parties seemingly resolved this matter in the district court when defendants made—and plaintiffs accepted—an offer of judgment pursuant to Rule 68 of the Federal Rules of Civil Procedure. In exchange for the dismissal of “all claims,” defendants agreed to the entry of judgment awarding plaintiffs $175,000 and granting injunctive relief. The offer of judgment, however, did not mention attorneys’ fees' or costs. After judgment was entered, plaintiffs moved for attorneys’, fees of $383,804 and costs of $41,470. The district-court denied, .attorneys’ • fees but awarded. costs of $2,926. Plaintiffs appeal from the denial of fees, and defendants cross-appeal from the award of costs. We affirm in part, vacate in part, and remand.

STATEMENT OF THE CASE

In January 2005, plaintiffs-appellants Donald J. Steiner and Dax. Labs, LLC (together, “Steiner”) and defendants-ap-pellees Lewmar Inc. and Lewmar Ltd. (together, “Lewmar”) entered into a contract (the “Agreement”) that gave Lewmar the exclusive right to manufacture and - sell Steiner’s patented sailboat winch handle, a device used to control the lines and sails of a sailboat. The Agreement included the following provision:

[30]*30In the event of a'dispute arising out of or in connection with- this Agreement, the Party prevailing in such dispute shall be entitled to recover its reasonable expenses, costs and attorney’s fees, in addition to all other appropriate relief. ‘ -

Appellees’ Suppl. App. at 303.

Disputes arose between the parties concerning Lewmar’s performance of the Agreement. On December 4, 2009, Steiner brought this action in the United States District Court for the District of Connecticut seeking damages and equitable relief for violations of the Lanham Act, breach of contract, breach of the implied covenant of good faith and fair dealing, conspiracy for aiding and abetting, and unfair trade practices in violation of CUTPA. Lewmar filed ..counterclaims for a declaration that its actions did not violate Steiner’s rights.

' On January 6, 2012, Steiner filed a motion for prejudgment remedy pursuant to Federal 'Rule of Civil Procedure 64 and Connecticut General Statutes § 52-278a et seq., claiming actual damages between $478,318 and $634,678,-with attorneys’ fees amounting to $220,314 and- projected to reach a total of $350,000 through trial. Steiner sought prejudgment relief apparently because of a concern that Lewmar did not have insurance to cover a judgment in Steiner’s favor.

On December 2, 2013, ten days prior- to a- scheduled hearing on Steiner’s motion for prejudgment remedy, Lewmar made an offer of judgment (the “Offer”) pursuant, to Rule 68 of the Federal Rules óf Civil Procedure. The Offer provided that Lewmar would agree to the entry of judgment against it in the amount of $175,000, and an injunction preventing it from various uses of Steiner’s trademark. The Offer stated that:

This action will be dismissed with prejudice including all claims that have been made or could have been made concerning the LiteTouch trademark, winch handles sold under the LiteTouch trademark, or the Agreement, except that the Court shall retain jurisdiction to enforce the terms of this offer.

Joint App. at 97. The Offer did not mention attorneys’ fees or costs.

Steiner filed a timely Notice of Acceptance of the Offer. On December 13,2013, the district court entered final judgment in Steiner’s favor based upon the notice of .acceptance.. The judgment stated:

This action is hereby dismissed with prejudice including all claims that have been made or could have been made concerning- the* LiteToueh trademark, winch handles sold under the LiteTouch trademark, or the Agreement, except -that the Court shall retain jurisdiction to enforce the terms of this Judgment and Permanent Injunction.

Joint App. at 101.

On December 23, 2013, Steiner moved for attorneys’ fees and costs as well as interest. Steiner sought fees: 1) under the prevailing party clause of the Agreement, and 2) pursuant to section 42-110g(d) of CUTPA.1

The district court denied Steiner’s motion for attorneys’ fees, holding that the language of the Offer and the Rule 68 judgment—dismissing “all claims that have been made or could have been made concerning ... the Agreement”—precluded Steiner’s claim for fees under the Agreement. Joint App. at 105. Steiner’s request for costs under Rule 68 was granted, provided that Steiner file a verified bill of [31]*31costs in compliance with Local Civil Rule 54. The district court also awarded post-judgment interest pursuant to 28 U.S.C. § 1961(a).

With respect to the CUTPA claim, the district court held that, because judgment had been entered by agreement of the parties without any findings having been made, “the particular circumstances of this case do not warrant an award of attorney’s fees dr costs under CÜTPA.” Joint App. at 108.

These appeals followed.

DISCUSSION

Federal Rule of Civil Procedure 68 provides that: “[a]t least 14 days before the date set for trial, a party defending against a claim may serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued.” Fed. R.Civ.P. 68(a). If, within 14 days, the opposing party accepts the offer in writing,either side may file the offer and notice of acceptance, and “[t]he clerk must then enter judgment.” Fed.R.Civ.P. 68(a). If the opposing party does not accept the offer, it must pay the “costs” incurred after the offer was made if it does not obtain a judgment “more favorable than the unaccepted offer.” Fed.R.Civ.P. 68(d).

Rule 68 is a cost-shifting rule intended to encourage .settlement and avoid protracted, litigation. Marek v. Chesny, 473 U.S. 1, 5, 105 S.Ct. 3012,. 87 L.Ed.2d 1 (1985). Rule 68 offers of judgment and acceptances. thereof are contracts to-be interpreted according to ordinary contract principles. Goodheart Clothing Co. v. Laura Goodman Enters., Inc., 962 F.2d 268, 272 (2d Cir.1992). Rule 68 offers of judgment, however, are different from other contract offers in that they carry legal consequences: a party that rejects a Rule 68 offer may be subject to the cost-shifting provision of Rule 68(d) if it does not obtain a more favorable judgment. See Sanchez v. Prudential Pizza; Inc., 709 F.3d 689, 692 (7th Cir.2013). Hence, as discussed more fully below, ambiguities will be construed against the party making the offer. Id.

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816 F.3d 26, 2016 U.S. App. LEXIS 4232, 2016 WL 860359, Counsel Stack Legal Research, https://law.counselstack.com/opinion/steiner-v-lewmar-inc-ca2-2016.