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Contractor Fails to Prove Joint Venture Theory, Becomes Liable for Opponent’s Attorney’s Fees

A joint venture is defined by Florida case law as “an association of persons or legal entities to carry out a single business enterprise for profit.” To prove the existence of a joint venture, there must be evidence that each party to the joint venture had the right and the authority to bind the others within the joint enterprise.

In Marriott International, Inc. v. American Bridge Bahamas, Ltd., 193 So.3d 902 (Fla. 3d DCA 2015), Marriott International, Inc. formed a company, RCRI, to construct and own a resort on Rose Island in the Bahamas.  An entity called GenLB Rose Island, Ltd. (GenLB), whose shareholders were Lehman Brothers Holdings, Inc. and another company called Gencom, acquired a 75% interest in RCRI.  A Marriott subsidiary retained the remaining 25% of RCRI.

American Bridge Bahamas, Ltd. and RCRI entered into a contract for construction of the marina. In response to a funding shortfall, RCRI’s shareholders agreed to loan RCRI $31 million. When Lehman filed bankruptcy in 2008, GenLB was unable to meet the terms of the loan agreement.  GenLB defaulted on the loan agreement, causing RCRI’s shareholders to stop their contributions. RCRI notified American Bridge that it should stop construction and left American Bridge with unpaid invoices. American Bridge sued RCRI in a Bahamian court for breach of contract and obtained a default judgment for $7,585,482.63, plus interest. American Bridge filed suit in Miami-Dade circuit court to enforce the default judgment against Marriott and other defendants. At trial, the jury found Marriott liable for the Bahamian judgment against RCRI on the theory that Marriott and Gencom were joint venturers and RCRI was the agent of the joint venture.  Marriott appealed.

The Third District Court of Appeal held that American Bridge failed to present any evidence on one of the essential elements which must be present for a finding of a joint venture. The court stated that there are five elements comprising a joint venture contract: (1) a community of interest in the performance of the common purpose; (2) joint control or right of control; (3) a joint proprietary interest in the subject matter; (4) a right to share in the profits; and (5) a duty to share in any losses which may be sustained.

Joint control, the second element, requires the right and authority to bind the other co-adventurers. The court found no evidence that any of the alleged joint venturers in the project had the right to exercise control over the others or to bind the others by making unilateral decisions. Marriott’s control over the construction project, the court found, was limited to its role as a minority shareholder of RCRI. Thus, the case was reversed and remanded.

On remand, Marriott requested an award of its attorney’s fees pursuant to a proposal for settlement that it had served on American Bridge.  Marriott had proposed to pay American Bridge $100,000 to settle the case.  American Bridge rejected the offer.  As a result, not only did American Bridge fail to recover anything from Marriott, but ended up having to pay both its own and Marriott’s attorney’s fees.  Marriott claimed $3,669,265.93 in attorney’s fees.  Presumably, American Bridge spent a similar amount on its own attorneys.  The court record does not disclose the amount American Bridge paid Marriott to settle Marriott’s attorney’s fee claim.

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