42
Fla. L. Weekly S852aTop of Form

Attorney’s
fees — Contingency fee multiplier — The application of a contingency fee
multiplier to an award of attorney’s fees to a prevailing party is not limited
to “rare” and “exceptional” circumstances — Trial court properly applied 2.0
contingency fee multiplier to award of attorney’s fees to insureds that
prevailed in action against insurer upon finding that relevant market required
contingency fee multiplier for insureds to obtain competent counsel, that
insureds’ attorney could not have mitigated the risk of nonpayment, that case
was a complex commercial case, and that likelihood of success at the outset was
even at best

WILLIAM JOYCE, et al., Petitioners,
v. FEDERATED NATIONAL INSURANCE COMPANY, Respondent. Supreme Court of Florida.
Case No. SC16-103. October 19, 2017. Application for Review of the Decision of
the District Court of Appeal — Direct Conflict of Decisions. Fifth District –
Case No. 5D15-1210 (St. Johns County). Counsel: Tracy L. Markham of Avolio
& Hanlon, P.C., St. Augustine; and Raymond T. Elligett, Jr., and Amy S.
Farrior of Buell & Elligett, P.A., Tampa, for Petitioners. Derek J. Angell
and Nicholas J. Mari of O’Connor & O’Connor, LLC, Winter Park; and A. Hinda
Klein of Conroy Simberg, P.A., Hollywood, for Respondent.

(PARIENTE, J.) The issue in this
case is whether trial courts may apply a contingency fee multiplier to an award
of attorney’s fees to a prevailing party only in “rare” and “exceptional”
circumstances, as the Fifth District Court of Appeal held in Federated National Insurance Co. v. Joyce,
179 So. 3d 492 (Fla. 5th DCA 2015). Petitioners, the insureds in a successful
dispute with their homeowners’ insurance carrier, assert that the Fifth
District’s opinion misapplied our precedent from Florida Patient’s
Compensation Fund v. Rowe, 472 So. 2d 1145 (Fla. 1985), and its progeny. We
have jurisdiction. See art. V, § 3(b)(3), Fla. Const.

We agree with Petitioners and
conclude that the Fifth District erred by imposing a “rare” and “exceptional”
circumstances requirement before a trial court may apply a contingency fee
multiplier. We reaffirm our decisions regarding the requirements for the
application of a contingency fee multiplier in Rowe, 472 So. 2d 1145, Standard
Guaranty Insurance Co. v. Quanstrom, 555 So. 2d 828 (Fla. 1990), and Bell
v. U.S.B. Acquisition Co., 734 So. 2d 403 (Fla. 1999). Accordingly, we
quash the Fifth District’s decision.

FACTS

William and Judith Joyce, an elderly
retired couple, filed a claim for insurance benefits with their homeowners’ insurance
carrier, Federated National Insurance Company (“Federated National”), following
water damage to their home. Joyce, 179 So. 3d at 493. Federated National
denied coverage on the basis of alleged material misrepresentations made by the
Joyces in the application process — namely, that the Joyces failed to disclose
certain losses they had with their previous carrier. Id. The Joyces
hired an attorney on a contingency fee basis because they could not afford an
attorney at an hourly rate and filed suit against Federated National alleging
that the insurer wrongfully denied their claim. After months of litigation,
Federated National finally agreed to settle the claim. The parties stipulated
that the Joyces were entitled to recover reasonable attorney’s fees. The
Joyces’ right to recover attorney’s fees is derived from section 627.428,
Florida Statutes (2014), a fee-shifting statute which authorizes an award of
attorney’s fees only to an insured and provides, in relevant part:

(1) Upon
the rendition of a judgment or decree by any of the courts of this state
against an insurer and in favor of any named or omnibus insured or the named
beneficiary under a policy or contract executed by the insurer, the trial court
or, in the event of an appeal in which the insured or beneficiary prevails, the
appellate court shall adjudge or decree against the insurer and in favor of the
insured or beneficiary a reasonable sum as fees or compensation for the
insured’s or beneficiary’s attorney prosecuting the suit in which the recovery
is had.

At the fee hearing, the trial court
heard testimony from the Joyces’ attorney and fee expert and Federated
National’s fee expert. The trial court also examined certain evidence exhibits,
including time records for the Joyces’ attorney and a copy of the contingency
fee agreement. After the hearing, the trial court awarded the Joyces $76,300 in
attorney’s fees, using a two-step process. First, the court calculated the
“lodestar” amount — the number of hours reasonably incurred by the Joyces’ attorney,
multiplied by a reasonable hourly rate — as being $38,150, or 109 hours
reasonably expended at a reasonable hourly rate of $350. In determining the
lodestar amount, the trial court noted that it reviewed and considered the
factors set forth in Florida Rule of Professional Conduct 4-1.5, in accordance
with this Court’s decisions in Rowe and Quanstrom.

Second, the trial court applied a
contingency fee multiplier of 2.0 to the lodestar amount. In doing so, the
trial court analyzed the following factors set forth in Quanstrom for
determining whether a contingency fee multiplier is warranted: (1) whether the
relevant market requires a contingency fee multiplier to obtain competent
counsel; (2) whether the attorney was able to mitigate the risk of nonpayment
in any way; and (3) whether any of the factors set forth in Rowe are
applicable, especially the amount involved, the results obtained, and the type
of fee arrangement between the attorney and his client. See Quanstrom,
555 So. 2d at 834.

As to the first Quanstrom
factor — the “relevant market” — the trial court relied on testimony from the
Joyces’ attorney and their fee expert that both were unaware of any other
attorneys in St. Johns County who specialized in representing first-party
plaintiffs against their respective insurance companies. The trial court also
observed that the Joyces’ fee expert testified that a contingency fee
multiplier was necessary to obtain competent counsel, based on the expert
having “interviewed attorneys that accept claims against insurance companies
where claims have been denied.”

The trial court cited to testimony
from the Joyces’ attorney that she took the Joyces’ case with the “hope and
expectation” that, should she be successful, the court would award a
contingency fee multiplier when calculating her attorney’s fees. She further
testified that she would not have taken the case without that possibility
because it would not have been economically feasible. Because she often fails
to recover some or all of the fees owed on cases, the Joyces’ attorney
testified that the possibility of a contingency fee multiplier is critical in
her decision whether to accept this type of case.

The trial court concluded that
“there are few or no other attorneys who undertake this work who have offices
in the St. Augustine area,” and the Joyces would likely not have found another
competent attorney in that area who would have agreed to take the case “without
the possibility of a contingency fee multiplier.” Likewise, the trial court
explained, citing Massie v. Progressive Express Insurance Co., 25 So. 3d
584, 585 (Fla. 1st DCA 2009), that use of a multiplier in this case is
supported by “[e]xpert testimony that a party would have difficulty securing
counsel without the opportunity for a multiplier.”

As to the second Quanstrom
factor, the trial court found that the Joyces’ attorney could not have
mitigated the risk of nonpayment. The court relied on testimony from the
Joyces’ attorney that the Joyces told her they could not pay a retainer, as
well as testimony from the Joyces’ fee expert that there was no meaningful way
to have mitigated the risk of nonpayment in this case.

As to the third Quanstrom
factor, the trial court found that the Rowe factors were present,
including the amount involved, the results obtained, and the type of fee
arrangement. Although the amount involved “was not exceptionally large,” it was
material to the Joyces and the results favored the Joyces. Also, the trial
court observed that “these cases are difficult” and involve “complex” issues,
including “policy interpretation, application of exclusion language, agency
law, and other issues.” Finally, the trial court explained that, based on the
testimony, “this was a complex commercial case, with serious consequences to
the [Joyces], especially after Federated [National] submitted a proposal for
settlement.”

The trial court concluded in its
order that a multiplier of 2.0 was appropriate because “the likelihood of
success at the outset was even at best.” The trial court relied on the following
language from Quanstrom:

If the
trial court determines that success was more likely than not at the outset, it
may apply a multiplier of 1 to 1.5; if the trial court determines that the
likelihood of success was approximately even at the outset, the trial judge may
apply a multiplier of 1.5 to 2.0; and if the trial court determines that
success was unlikely at the outset of the case, it may apply a multiplier of
2.0 to 2.5.

555 So. 2d at 834.

Federated National appealed both the
trial court’s calculation of the lodestar amount and its use of the contingency
fee multiplier. On appeal, the Fifth District affirmed the lodestar amount but
reversed the trial court’s use of a contingency fee multiplier, concluding that
the federal lodestar approach includes “a ‘strong presumption’ that the
lodestar represents the ‘reasonable fee.’ ” Joyce, 179 So. 3d at 493
(quoting Progressive Express Ins. Co. v. Schultz, 948 So. 2d 1027, 1030
(Fla. 5th DCA 2007)). The Fifth District also quoted State Farm Florida Insurance Co. v. Alvarez,
175 So. 3d 352 (Fla. 3d DCA 2015), which cited to the United States Supreme
Court case of Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 544 (2010),
for the proposition that a contingency fee multiplier is to be used only in “
‘rare’ and ‘exceptional’ circumstances.” Joyce, 179 So. 3d at 494.
Lastly, the Fifth District concluded, in contradiction to the trial court that
heard the testimony at the evidentiary hearing, that this case was not complex
and that the Joyces had no trouble finding an attorney to represent them. Id.

This Court accepted review based on
conflict with our precedent regarding the application of contingency fee
multipliers.

ANALYSIS

We begin with an analysis of the
relevant jurisprudence from this Court and the United States Supreme Court to
understand the interplay between our jurisprudence and that of the United
States Supreme Court regarding contingency fee multipliers. We then explain why
we continue to adhere to our precedent, which does not utilize a “rare” and
“exceptional” requirement before a trial court may apply a contingency fee
multiplier. We further explain why we reject the United States Supreme Court
precedent, which has eliminated a contingency fee multiplier to attorney’s fees
awards under federal statutes.

This Court first addressed
contingency fee multipliers in 1985 in Rowe, a medical malpractice case
involving section 768.56, Florida Statutes (1981), which provided for a
prevailing party award of a “reasonable attorney’s fee.” Rowe, 472 So.
2d at 1146. Rowe “adopt[ed] the federal lodestar approach for computing
reasonable attorney fees,” id., in part due to “a perceived lack of
objectivity and uniformity in court-determined reasonable attorney fees.” Id.
at 1149. Rowe noted that although each case would turn on its own facts,
it was imperative “to articulate specific guidelines to aid trial judges in the
setting of attorney fees.” Id. at 1150. In other words, the federal
lodestar approach was to “provide[ ] a suitable foundation for an objective
structure.” Id.

Rowe established the eight criteria set forth in Disciplinary
Rule 2-106(b) of the Florida Bar Code of Professional Responsibility as the
criteria to be considered in determining reasonable attorney’s fees. Those
criteria, which Rowe noted were essentially the same as those considered
by federal courts at the time, are:

(1) The
time and labor required, the novelty and difficulty of the question involved,
and the skill requisite to perform the legal service properly.

(2) The
likelihood, if apparent to the client, that the acceptance of the particular
employment will preclude other employment by the lawyer.

(3) The
fee customarily charged in the locality for similar legal services.

(4) The
amount involved and the results obtained.

(5) The
time limitations imposed by the client or by the circumstances.

(6) The
nature and length of the professional relationship with the client.

(7) The
experience, reputation, and ability of the lawyer or lawyers performing the
services.

(8)
Whether the fee is fixed or contingent.

Id. at 1150 & n.5. The eight criteria now found in Rule of
Professional Conduct 4-1.5 are substantially similar to those addressed in Rowe.
Under Rowe, a trial court must first determine the lodestar amount,
which is the number of attorney hours reasonably expended multiplied by a
reasonable hourly rate. Id. at 1150-51. In calculating the hourly rate,
the trial court should look to all eight Rowe factors except “the ‘time
and labor required,’ the ‘novelty and difficulty of the question involved,’ the
‘results obtained,’ and ‘[w]hether the fee is fixed or contingent.’ ”1 Id. The trial court must set
forth “specific findings” as to its determination of the number of hours, the
hourly rate, and any reduction or enhancement factors. Id. at 1151.

The trial court may then adjust the
lodestar amount based upon “a ‘contingency risk’ factor and the ‘results
obtained.’ ” Id. Rowe noted that the contingency risk factor
(contingency fee multiplier) is a factor that trial courts “must consider . . .
when awarding a statutorily-directed reasonable attorney fee.” Id. Rowe
also established certain caps, depending on the fee arrangement, and set a
range for the multiplier of 1.5 to 3.0, depending upon the “likelihood of
success” at the outset of the case. Id. If a trial court adjusts the
lodestar amount, “it must state the grounds on which it justifies the
enhancement or reduction.” Id.

Nowhere in Rowe did this
Court state that the lodestar amount includes “a strong presumption” of
reasonableness which may only be overcome in “rare and exceptional
circumstances.” See Joyce, 179 So. 3d at 493-94. Rather, Rowe
indicated that the federal lodestar approach provided a “suitable foundation,”
that trial courts “must consider” a contingency fee multiplier, and, “when appropriate,”
the trial judge may adjust the fee on the basis of a contingency fee
multiplier, provided that he or she sets forth specific findings. 472 So. 2d at
1150-51. Thus, the Fifth District’s opinion in Joyce incorrectly
interpreted this Court’s holding of Rowe.

Five years after deciding Rowe,
this Court reexamined Rowe in Quanstrom, a case involving section
627.428, Florida Statutes (1987) — the same statutory provision at issue in
this case. Quanstrom reexamined Rowe for two reasons. First, the
United States Supreme Court had subsequently issued two decisions involving
contingency fee multipliers — Blanchard v. Bergeron, 489 U.S. 87
(1989), and Pennsylvania v. Delaware Valley Citizens’ Council for Clean Air,
483 U.S. 711 (1986). See Quanstrom, 555 So. 2d at 829. Second, there was
confusion as to whether trial courts were required to impose a contingency fee
multiplier after Rowe. Id. at 829, 831.

Quanstrom first examined the United States Supreme Court’s decision
in Delaware Valley, involving the award of attorney’s fees to the
prevailing party pursuant to § 304(d) of the Clean Air Act, 42 U.S.C. §
7604(d). Quanstrom noted that although the United States Supreme Court
in Delaware Valley “unanimously rejected that portion of the lodestar
approach pertaining to the contingency fee multiplier,” the Court could not
agree on how to account for the risk of nonpayment. Id. at 831. Quanstrom
also noted that Delaware Valley was a plurality opinion with four
dissenting justices who advocated “a market approach,” which considered various
factors, including “whether the attorney was able to mitigate the risk of
nonpayment in any way.” Id. (citing Delaware Valley, 483 U.S. at
747 (Blackmun, J., dissenting)).

In Delaware Valley, the
plurality analyzed why, based on the facts of the case, a contingency fee
multiplier was inappropriate, even if the fee-shifting statute otherwise
permitted risk enhancement. See Delaware Valley, 483 U.S. at 728. One
reason was that “[b]efore adjusting for risk assumption, there should be evidence
in the record, and the trial court should so find, that without risk
enhancement plaintiff would have faced substantial difficulties in finding
counsel in the local or other relevant market.” Id. at 731
(emphasis added). The Court found no such “relevant market” findings in the
record. Id.

The Quanstrom Court also
noted Justice O’Connor’s concurring opinion in Delaware Valley, which
advocated for an examination of how the local market compensates for
contingency cases as a class, and in which she agreed with the plurality that
no risk enhancement is proper unless the prevailing party “would have faced
substantial difficulties in finding counsel in the local or other relevant
market.” See Quanstrom, 555 So. 2d at 831-32 (citing Delaware Valley,
483 U.S. at 733 (O’Connor, J., concurring in part and concurring in the
judgment)).

Next, the Quanstrom Court
examined the United States Supreme Court’s decision in Blanchard, which
involved attorney’s fees in the context of a public policy enforcement case
brought under 42 U.S.C. § 1983.2 Quanstrom interpreted Blanchard
as holding that “a contingency fee arrangement between a plaintiff and his
counsel is only one factor to be considered and cannot, standing alone, limit
the trial judge’s discretion in setting a reasonable fee.” Quanstrom,
555 So. 2d at 832.

Significantly, this Court in Quanstrom
“reaffirm[ed] . . . Rowe concerning the lodestar approach as the basic
starting point” but recognized a need to modify the use of contingency fee
multipliers to better accommodate the use of contingency fee multipliers in
different types of cases. Id. at 833. In doing so Quanstrom
separated attorney’s fees cases into the following three categories: (1) public
policy enforcement cases; (2) tort and contract claims; and (3) family law,
eminent domain, and estate and trust matters, each with a separate means of
determining the appropriate amount of attorney’s fees. Id. In category
one cases, the fact that the case was taken on the basis of a contingency fee
is “but one of [twelve enumerated] factors to be considered” in assessing the
appropriate amount of attorney’s fees. Id. at 834. In category three
cases, which are calculated using the lodestar amount, this Court held that a
contingency fee multiplier is generally “not justified.” Id. at 835.

As to category two, which applies to
insurance coverage disputes, reasonable attorney’s fees are calculated using
the two-step approach that the trial court used in this case. With respect to
the availability of a contingency fee multiplier, Quanstrom
“reaffirm[ed] the principles set forth in Rowe” for calculating the
lodestar amount and the Court then set forth the following three factors for
trial courts to consider in determining the necessity of a contingency fee
multiplier: “(1) whether the relevant market requires a contingency fee
multiplier to obtain competent counsel; (2) whether the attorney was able to
mitigate the risk of nonpayment in any way; and (3) whether any of the factors
in Rowe are applicable, especially, the amount involved, the results
obtained, and the type of fee arrangement between the attorney and his client.”
Id. at 834. Quanstrom observed that “the multiplier is still a
useful tool which can assist trial courts in determining a reasonable fee in
this category of cases when a risk of nonpayment is established,” and “the
criteria and factors utilized in these cases must be consistent with the
purpose of the fee-authorizing statute or rule.” Id. Lastly, Quanstrom
reiterated the caps established in Rowe and lowered the multiplier range
to 1.0 to 2.5 (down from the 1.5 to 3.0 range established in Rowe).
Id.

In short, Quanstrom made
clear that trial judges are not required to use a multiplier; but when they do,
evidence must be “presented to justify the utilization of a multiplier.” Id.
Although the Quanstrom opinion did use the terms “rare” and
“extraordinary,” they were not used as a prerequisite to the application of a
contingency fee multiplier:

We have identified these categories to illustrate that
different criteria for different types of cases must be considered in
calculating attorney’s fees. We emphasize that the principles to be utilized in
computing these fees must be flexible to enable the courts to consider rare and
extraordinary cases with truly special circumstances.

Id. at 835 (citing State Farm Fire & Cas. Co. v. Palma,
555 So. 2d 836 (Fla. 1990)).

Federated National and the Fifth
District misconstrue this language from Quanstrom as holding that the
multiplier itself was only to be used in rare and extraordinary circumstances.
Rather, Quanstrom was referring to preserving flexibility in terms of
the overall framework — for example, the different criteria for different
categories of cases — for computing fees in those rare and extraordinary cases
which might otherwise be pigeonholed into a particular category or which may
yield a much smaller fee amount than would otherwise be reasonable.

On the same day this Court decided Quanstrom,
it also decided Palma, 555 So. 2d 836, another case involving the
calculation of reasonable attorney’s fees under section 627.428, Florida
Statutes. Palma held that the trial court properly applied a contingency
fee multiplier of 2.6, resulting in an award of attorney’s fees in the amount
of $253,500, in a case where the amount in dispute was only $600. 555 So. 2d at
836-37.

In Palma, the insurance
company denied a claimed expense for a particular medical examination and used
the case to establish nationwide precedent because the medical procedure was
becoming more widely used. The result was a lengthy trial with testimony from
multiple medical professionals. Moreover, three expert witnesses testified as
to the reasonableness of the 650 hours spent by plaintiff’s attorney, as well
as the $150 hourly rate. Id. at 838. Palma upheld the application
of the contingency fee multiplier and the trial judge’s application of the Rowe
factors, noting that the case was an “illustration of the need for flexibility
to allow for this type of unique and rare case, especially where the
prevailing party has not been the primary cause of the extensive litigation.” Id.
(emphasis added). Again, this Court’s use of the term “rare” was a reference
not to the use of the multiplier itself but rather to the need for flexibility
in certain cases with respect to the application of the factors considered in
determining the amount of the multiplier.

This Court again recognized the validity
of the contingency fee multiplier when it decided Lane v. Head, 566 So.
2d 508 (Fla. 1990), as well as Sun Bank of Ocala v. Ford, 564 So. 2d
1078 (Fla. 1990). In Lane, this Court was asked to decide “whether a
trial court should apply the ‘lodestar’ formula, . . . to enhance customary
attorney’s fees when the client and attorney have agreed to make those fees
only partially contingent on the outcome of the case.” 566 So. 2d at 509. This
Court held in the affirmative, finding that trial courts have the discretion to
apply a multiplier in partially contingent cases, but not the same level of
enhancement as in fully contingent cases. Id. at 510-11. Lane
noted the policy reasons in support of its holding:

Attorneys
should be encouraged to take cases based on a partial contingency-fee
arrangement, since this policy also will encourage attorneys to provide
services to persons who otherwise could not afford the customary legal fee. No
incentive would exist under the approach taken by the district court below,
because no “enhancement” of the customary fee would be given to offset losses.

Id. at 511.

In Sun Bank, the issue was
whether a commercial bank was entitled to a contingency fee multiplier as the
prevailing party in an action on a promissory note, given that the agreement
with its attorney was a partial contingency fee agreement. Sun Bank, 564
So. 2d at 1079. The Court again recognized that the contingency fee multiplier
may apply in partial contingency fee arrangements but held that the trial
court’s use of a contingency fee multiplier was erroneous because “commercial
banks have [no] difficulty finding attorneys to represent them.” Id. Sun
Bank cited specifically to the United States Supreme Court’s plurality
opinion in Delaware Valley, stating: “Before adjusting for risk
assumption, there should be evidence in the record, and the trial court should
so find, that without risk-enhancement plaintiff would have faced substantial
difficulties in finding counsel in the local or other relevant market.” Id.
(citing Delaware Valley, 483 U.S. at 731).

In 1992, the United States Supreme
Court revisited the issue of contingency fee multipliers under fee-shifting
statutes in Burlington v. Dague, 505 U.S. 557 (1992), concluding that
“enhancement for contingency [was] not permitted under the fee-shifting
statutes at issue.” Id. at 567. Justice Scalia, writing for the
majority, reasoned that enhancement for contingency “would likely duplicate in
substantial part factors already subsumed in the lodestar,” id. at 562,
and would “make the setting of fees more complex and arbitrary.” Id. at
566. Dague also rejected the “relevant market” factor approach
articulated by Justice O’Connor in Delaware Valley, summarily concluding
that it did “not see how it can intelligibly be applied.” Id. at 563.

In 1999, without referencing Dague,
this Court decided Bell, reaffirming our precedent that contingency fee
multipliers can be applied even when the sole basis for the fees is the
parties’ contract (as opposed to a statute), “so long as the evidence supports
the need.” See Bell, 734 So. 2d at 406. Bell explained the
primary rationale for the contingency fee multiplier:

[I]t
assists parties with legitimate causes of action or defenses in obtaining
competent legal representation even if they are unable to pay an attorney on an
hourly basis. In this way, the availability of the multiplier levels the
playing field between parties with unequal abilities to secure legal
representation.

Id. at 411. Bell also reaffirmed the holding of Quanstrom:

A court
may consider applying a multiplier as a “useful tool” in determining a
reasonable fee if the evidence in the record establishes that: (1) the relevant
market requires a contingency multiplier to obtain competent counsel; (2) the
attorney was unable to mitigate the risk of nonpayment in any other way; and
(3) use of a multiplier is justified based on factors such as the amount of
risk involved, the results obtained, and the type of fee arrangement between
attorney and client.

Id. at 412 (citing Quanstrom, 555 So. 2d at 834).

Although Bell makes no
mention of Dague, the Court in Bell clearly indicated this
Court’s continued commitment to allowing the use of contingency fee multipliers
cases where appropriate. Thus, Bell evidences this Court’s separation from
federal precedent in this area. This Court chose to continue to allow the use
of multipliers, noting their usefulness in helping parties secure legal
representation and their importance in ensuring access to courts. Bell,
734 So. 2d at 411.

A few years after Bell, in
2003, this Court decided, in Sarkis v. Allstate Insurance Co., 863 So.
2d 210 (Fla. 2003), that the use of a multiplier is not appropriate in
determining attorney’s fees under section 768.79, Florida Statutes (2002) —
the offer of judgment statute.3 Sarkis held that the fees
authorized by section 768.79 are sanctions that attach to the rejection of a
reasonable offer, not to the underlying cause of action, and went on to note as
follows:

[T]he use
of a multiplier must be consistent with the purpose of the fee-authorizing
statute or rule. Quanstrom, 555 So. 2d at 834; see also [Bell,
734 So. 2d at 408-09]. The reason for an award of attorney fees authorized as a
sanction for the rejection of an offer to settle is very different from the
reason that we authorized the use of a multiplier in Quanstrom, 555 So.
2d at 833, and Rowe, 472 So. 2d at 1151. In those cases, we authorized
the use of a multiplier to promote access to courts by encouraging lawyers to
undertake representation at the inception of certain cases. See
Doyle-Vallery[ v. Aranibar], 838 So. 2d [1198, 1198-99 (Fla. 2d DCA
2003)] (Altenbernd, J., concurring).

Id. at 222.

Thus, Sarkis clearly
distinguished section 768.79, Florida Statutes, while reaffirming the reasons
for authorizing the use of the contingency fee multiplier articulated in Rowe,
Quanstrom, and Bell. Nothing in Sarkis suggests that section
627.428 was to be viewed prospectively as a sanction against insurers in the
same way that Sarkis viewed section 768.79 as a sanction.

Whereas the Supreme Court expressly
reexamined Delaware Valley in Dague, the Supreme Court implicitly
reexamined Blanchard in Perdue, 559 U.S. at 542 — another public
policy enforcement case involving the calculation of an attorney’s fee under 42
U.S.C. § 1988 for civil rights violations. Perdue did not involve a
contingency fee multiplier. Rather, Perdue involved a lodestar
enhancement “due to superior performance and results.” 559 U.S. at 546. In
rejecting the lower court’s increase of the lodestar (in a case involving
seemingly remarkable results obtained by the plaintiffs’ attorneys), the
Supreme Court observed:

But as we
have also said in prior cases, there is a strong presumption that the lodestar
is sufficient; factors subsumed in the lodestar calculation cannot be used as a
ground for increasing an award above the lodestar; and a party seeking fees has
the burden of identifying a factor that the lodestar does not adequately take
into account and proving with specificity that an enhanced fee is justified.

Id. While Perdue did not completely close the door on
lodestar enhancements under federal law, Perdue clarified that Dague
had indeed closed the door on any enhancements based on contingency risk. Id.
at 558 (“And the [lower] court’s reliance on the contingency of the outcome
contravenes our holding in Dague.”).

We now turn to the Fifth District’s
application of the above precedent in Joyce. In Joyce, the Fifth
District quoted Alvarez, 175 So. 3d at 357-58, which cited Perdue
for the proposition that “[t]he application of a multiplier is the exception,
not the rule . . . and this presumption is overcome only in ‘rare’ and
‘exceptional’ circumstances.” Joyce, 179 So. 3d at 494. The Fifth
District’s reliance on Perdue (via Alvarez) misses the point that
Perdue addressed lodestar enhancements in contexts other than
contingency fee multipliers.

After reviewing this Court’s precedent
regarding contingency fee multipliers, it is clear that this Court has never
limited the use of contingency fee multipliers to only “rare” and “exceptional”
circumstances. In fact, in Bell, this Court emphasized the importance of
contingency fee multipliers to those in need of legal counsel and made clear
that trial courts could consider contingency fee multipliers any time the
requirements for a multiplier were met. Bell, 734 So. 2d at 412 (citing Quanstrom,
555 So. 2d at 834). This Court stated that the purpose of section 627.428 is to
“discourage insurance companies from contesting valid claims, and to reimburse
insureds for their attorney’s fees incurred when they must enforce in court
their contract with the insurance company.” Id. at 410 n.10. Thus, it is
clear that the Fifth District misapplied our precedent in Rowe, Quanstrom,
and Bell.4

To the extent that Respondents and
their amici ask us to eliminate the contingency fee multiplier in all but the
“rare” and “exceptional” case where attorney’s fees are awarded, we decline to
adopt the reasoning of the United States Supreme Court in Perdue and Dague.
First, this Court is not bound, in interpreting state statutes or prevailing
party attorney’s fees in contracts, by United States Supreme Court precedent
interpreting awards of attorney’s fees in federal statutes.

Second, with all due deference to
the United States Supreme Court, we do not accept the Dague majority’s
rationale for rejecting contingency fee multipliers. Justice Scalia, writing
for the majority in Dague, couched his disapproval of contingency fee
multipliers by reasoning that the multipliers incentivize nonmeritorious
claims, so that those claims are effectively raised as often as meritorious
claims:

[T]he
consequence of awarding contingency enhancement to take account of this
“merits” factor would be to provide attorneys with the same incentive to bring
relatively meritless claims as relatively meritorious ones. Assume, for
example, two claims, one with underlying merit of 20%, the other of 80%. Absent
any contingency enhancement, a contingent-fee attorney would prefer to take the
latter, since he is four times more likely to be paid. But with a contingency
enhancement, this preference will disappear: the enhancement for the 20% claim
would be a multiplier of 5 (100/20), which is quadruple the 1.25 multiplier
(100/80) that would attach to the 80% claim. Thus, enhancement for the
contingency risk posed by each case would encourage meritorious claims to be
brought, but only at the social cost of indiscriminately encouraging
nonmeritorious claims to be brought as well. We think that an unlikely
objective of the “reasonable fees” provisions. “These statutes were not
designed as a form of economic relief to improve the financial lot of lawyers.”
[Pa. v. De. Valley Citizens’ Council for Clean Air], 478 U.S. [546, 565
(1986)].

Dague, 505 U.S. at 563.

To the contrary, the contingency fee
multiplier provides trial courts with the flexibility to ensure that lawyers,
who take a difficult case on a contingency fee basis, are adequately
compensated. We also do not agree that the contingency fee multiplier
encourages “nonmeritorious claims” and would, instead, posit that solely
because a case is “difficult” or “complicated” does not mean that the case is
nonmeritorious. Indeed, without the option of a contingency fee multiplier,
those with difficult and complicated cases will likely be unable or find it
difficult to obtain counsel willing to represent them. As we stated in Bell,
the primary rationale for the contingency fee multiplier is to assist:

parties
with legitimate causes of action or defenses in obtaining competent legal
representation even if they are unable to pay an attorney on an hourly basis.
In this way, the availability of the multiplier levels the playing field
between parties with unequal abilities to secure legal representation.

Bell, 734 So. 2d at 411. As Justice O’Connor stated in dissent in
Dague, “in certain circumstances a ‘reasonable’ attorney’s fee should
not be computed by the purely retrospective lodestar figure, but also must
incorporate a reasonable incentive to an attorney to take the case in the first
place.” 505 U.S. at 575 (O’Connor, J., dissenting).

The point being, the lodestar
amount, which awards an attorney for the work performed on the case, is
properly analyzed through the hindsight of the actual outcome of the case,
whereas the contingency fee multiplier, which is intended to incentivize the
attorney to take a potentially difficult or complex case, is properly analyzed
through the same lens as the attorney when making the decision to take the
case. We disagree that the possibility of receiving a contingency fee
multiplier leads to a “windfall.” See dissenting op. at 18-19. While the
attorney for the insurer charges and receives an hourly rate regardless of
whether the defense is successful, the insured’s attorney bears the risk of
never being compensated for the number of hours spent litigating the case. This
risk, among other factors, is what entitles the attorney to seek, and the trial
court to consider, the application of a contingency fee multiplier.

Moreover the dissent’s attempts to
use the anecdotal experience of the increased number of PIP claims resulting
from the Legislature’s elimination of contingency fee multipliers to justify
the rejection of a contingency fee multiplier in this case is unpersuasive. See
dissenting op. at 10-11. First, in many cases, an attorney’s representation in
the PIP claim is adjunct to the attorney’s representation in the main
automobile accident dispute. Second, in a PIP claim, generally, the sole issue
is whether a medical bill was reasonable and necessary and whether the
treatment was related to the accident. Thirdly, the fact that there are
attorneys who specialize in PIP claims, which can be handled with relative ease
in a volume practice, does not correlate with the availability of competent
attorneys who are willing to litigate other types of insurance coverage cases,
where generally more complex issues are raised. In any event, it was the
Legislature — not this Court — that decided to prohibit the use of
contingency fee multipliers in PIP cases.

We also reject Justice Scalia’s
reasoning in Dague that enhancement for contingency “would likely
duplicate in substantial part factors already subsumed in the lodestar.” 505
U.S. at 562. Although the lodestar amount takes into account a variety of
factors, significantly, it does not include a consideration of whether the
relevant market requires a contingency fee multiplier to obtain competent
counsel. Importantly, this factor requires the court to consider whether the
attorney’s client would have been able to obtain counsel absent the
availability of a contingency fee multiplier. Further, we conclude that there
is no support in state courts, and indeed none has been offered, that the
availability of contingency fee multipliers “make the setting of fees more
complex and arbitrary.” Id. at 566. In conclusion, we reaffirm our
precedent in Rowe, Quanstrom, and Bell regarding the approach
that trial courts should take in calculating reasonable attorney’s fees and
determining whether a contingency fee multiplier is warranted.

We next turn to an examination of
this case.

This
Case

The Fifth District held that the
trial court erred in determining that the Joyces’ attorney should be awarded a
contingency fee multiplier. The Fifth District stated:

This was
not a complicated case. Either the Joyces had falsified their insurance
application, or Federated had made an error. There were no esoteric legal
issues or complicated factual disputes to resolve. As one would anticipate
given today’s legal market, there was no evidence the Joyces had any difficulty
obtaining counsel to handle this matter. Indeed, it took only one phone call
for the Joyces to secure counsel.

Joyce, 179 So. 3d at 494. The Joyces contend that the Fifth
District also erred in looking at their actual experience in the market rather
than looking at the relevant market itself, as required by Quanstrom and
Bell. We agree.

The Fifth District’s holding
directly contradicts the trial court’s conclusion, which was based on the
evidence presented at the evidentiary hearing:

The Court
further finds that these cases are difficult, the issues involved were complex,
involving policy interpretation, application of exclusion language, agency law,
and other issues. As pointed out by Ms. Markham and Mr. Miles, this was a complex
commercial case, with serious consequences to the [Joyces], especially after
Federated submitted a proposal for settlement.

Moreover, Federated National
continued to dispute the Joyces’ claim, even after they knew that the Joyces’
had in fact made a full disclosure. Throughout the litigation, Federated
National maintained that a signed application for coverage completed by the
Joyces did not exist and it only processed paperless applications. During the
exchange of interrogatories in the case, Federated National finally revealed
that the agent who worked with the Joyces was believed to have the original
application the Joyces completed. Following the discovery of the application,
Federated National admitted that they would honor the claim, however, it was
not until two months later that Federated National finally offered to settle
the case. Thus, the trial court’s findings, which properly considered the
complexity of these types of cases and this case in particular, were not in
error.

The dissent would have the trial
court analyze the complexity of the case though the benefit of hindsight by
looking at the actual outcome of the case. See dissenting op. at 7-8.
However, contingency fee multipliers are intended to encourage attorneys to
take cases they otherwise might not take.

Moreover, this was not an easy case.
The litigation here spanned several months and the Joyces’ attorney spent more
than 100 hours working on the case — a fact that all parties concede was a
reasonable number. Thus, the trial court correctly analyzed the complexity of
the case, looking to both the outcome of this case in particular and the
complexity of these types of cases.

Additionally, the Fifth District
concluded that the trial court improperly found that the relevant market necessitated
a contingency fee multiplier. In fact, the evidence presented at the attorney’s
fees hearing indicated that there were no other attorneys in St. Johns County
who specialized in this type of litigation. Further, the Joyces’ attorney
testified that she took the case with the hope and expectation that if she was
successful, the court would apply a contingency fee multiplier, and she would
not have taken the case without the possibility of a multiplier because she
often fails to recover some or all of the fees owed on these first-party cases.
The dissent contends that the trial court should have expanded its analysis
into Duval County, where there are “thousands of attorneys.” Dissenting op. at
4. Again, the dissent’s analysis misses the point of why trial courts are
required to analyze the relevant market. This factor is intended to assess, not
just whether there are attorneys in any given area, but specifically whether
there are attorneys in the relevant market who both have the skills to handle
the case effectively and who would have taken the case absent the availability
of a contingency fee multiplier.

Based on the testimony presented,
the trial court found that the Joyces’ attorney is highly qualified. She has
been an attorney since 1989 and became licensed in Florida in 1994. She is a
certified circuit court mediator by the Florida Supreme Court, as well as
approved by the Department of Financial Services to mediate disputes between
homeowners and insurance companies. Her practice focuses in large part on
representing homeowners in disputes with their insurance carriers, and she is
an experienced attorney in that area. Throughout her career, she has handled
over seventy first-party coverage denial cases. Indeed, the trial court found:

Although the Joyces did not seek any other counsel prior to
retaining [their attorney], the Court finds based upon the evidence presented,
including the testimony of [the Joyces’ attorney] and [attorney’s fees expert],
any such search would have been futile as there are few or no other attorneys
who undertake this work who have offices in the St. Augustine area. The
evidence shows that the plaintiffs would have been unlikely to have found any
attorney in the St. Augustine area with a competency in first party [insurance
coverage litigation] who would have agreed to take [their case] without the
possibility of a contingency fee risk multiplier.

Thus, the trial court, applying the Rowe
factors, found that a contingency fee multiplier of 2.0 was appropriate in this
case. This conclusion was based on competent, substantial evidence. See
Palma, 555 So. 2d at 838. It was error for the Fifth District to conclude
otherwise. Therefore, the Fifth District erred not only in applying a “rare”
and “exceptional” requirement but also in substituting its judgment on the Rowe
factors based on disagreement with the trial court’s conclusions based on its
findings of fact.

CONCLUSION

We reaffirm our adherence to the use
of contingency fee multipliers in this State and make clear that there is not a
“rare” and “exceptional” circumstances requirement before a contingency fee
multiplier can be applied. Accordingly, we quash the decision of the Fifth
District below, disapprove of the Third District’s decision in Alvarez
to the extent it is inconsistent with this opinion, and remand the case to the
Fifth District to reinstate the attorney’s fees award and judgment and for any
other proceedings not inconsistent with this opinion.

It is so ordered. (LABARGA, C.J.,
and LEWIS, and QUINCE, JJ., concur. POLSTON, J., concurs in result. CANADY, J.,
dissents with an opinion, in which LAWSON, J., concurs.)

__________________

(CANADY, J., dissenting.) Because
competent, substantial evidence does not support the trial court’s use of a
multiplier in this case, I would approve the result reached by the Fifth
District. I agree that the Fifth District misstated this Court’s case law
regarding the application of the contingency fee multiplier. But because the
multiplier was used without sufficient justification under the requirements of
our case law, the district court nonetheless reached the correct result in
reversing the fee award. The record here does not support the conclusion that
the availability of the multiplier was necessary for the insureds to obtain
counsel. I therefore dissent from the majority’s decision approving use of the
multiplier here.

Although a proper application of our
case law does not justify the use of the multiplier in this case, the
majority’s decision — which slides lightly over the insufficiency of the basis
advanced for the multiplier here — illustrates the arbitrary results that can
flow from application of the contingency fee multiplier. Of course, the
problems associated with the contingency fee multiplier have previously been
exposed. Twenty-five years ago in City of Burlington v. Dague, 505 U.S.
557 (1992), the United States Supreme Court unequivocally repudiated the use of
the contingency fee multiplier. The majority’s decision here underscores the
need for a full re-examination in a future case of our multiplier jurisprudence
in light of the reasoning of Dague.

I.
THE USE OF A MULTIPLIER WAS NOT

SUPPORTED
BY COMPETENT,

SUBSTANTIAL
EVIDENCE

There is nothing “competent” or
“substantial” about the evidence relied on by the trial court in awarding the
multiplier. See State Farm Fire & Cas. Co. v. Palma, 555 So. 2d 836,
838 (Fla. 1990). In order to be competent and substantial, the evidence must
“comport[ ] with logic and reason.” Gonci v. Panelfab Prod.,
Inc., 179 So. 2d 856, 858 (Fla. 1965). Because the testimony of
petitioners’ attorney and petitioners’ fee expert does not form a logical and
reasonable foundation upon which to conclude — as the trial court did — that
a multiplier was required, the Fifth District properly reversed the trial
court’s use of the multiplier. See Federated Nat’l Ins. Co. v. Joyce,
179 So. 3d 492, 494 (Fla. 5th DCA 2015). The trial court’s decision to award a
multiplier is seriously flawed.

This Court has repeatedly emphasized
the importance of proper justification for the imposition of the multiplier.
Beginning in Florida Patient’s Compensation Fund v. Rowe, 472 So. 2d
1145, 1151 (Fla. 1985), this Court explained that if a trial court adjusts the
calculated lodestar amount to account for “a ‘contingency risk’ factor,” the
trial court “must state the grounds on which it justifies the enhancement.”5 In Standard Guaranty Insurance Co.
v. Quanstrom, 555 So. 2d 828, 834 (Fla. 1990), this Court made clear that
if a trial judge uses a multiplier, there must be evidence “presented to
justify the utilization of [the] multiplier.” And in Bell v. U.S.B.
Acquisition Co., 734 So. 2d 403, 406 (Fla. 1999), this Court once again
noted that contingency fee multipliers can be applied, “so long as the evidence
supports the need.”

Here, the trial court relied, in
part, on certain testimony from petitioners’ attorney and fee expert that both
were unaware of any other attorneys in all of St. Johns County that
“specialized” in representing first-party plaintiffs against their insurance
companies on coverage issues. Petitioners’ attorney and fee expert also both
testified that this was a complex commercial case. Petitioners’ fee expert
further testified that a contingency fee multiplier was necessary to obtain
competent counsel, based on the expert’s having “interviewed attorneys that
accept claims against insurance companies where coverage has been denied.”6 And petitioners’ attorney testified
that she took the case with the “hope and expectation” that, should she
“succeed for [petitioners],” the court would award a multiplier. Based on this
testimony, the trial court determined that this was a “difficult” case and “the
issues involved were complex, involving policy interpretation, application of
exclusion language, agency law, and other issues.” And the trial court
concluded that “there are few or no other attorneys who undertake this work who
have offices in the St. Augustine area” and that petitioners would likely not
have found a competent attorney in that area who would have agreed to take the
case “without the possibility of a contingency fee multiplier.”

As an initial matter, it is unclear
why the trial court chose attorneys with offices in St. Augustine as the
“relevant market” for purposes of Quanstrom.7 While petitioners’ attorney has an
office in St. Augustine and testified that the relevant market should be St.
Augustine, petitioners’ own fee expert testified that the relevant market was
all of St. Johns County, and respondent’s fee expert testified that the
relevant market includes Duval County — given that he and many other attorneys
based in Duval County also practice in St. Johns County. Moreover, respondent’s
fee expert testified that there are “thousands” of lawyers in Jacksonville, and
petitioners’ attorney admitted that she is unaware of how many attorneys in
Duval County would take first-party insurance claims. The trial judge chose to
focus on attorneys “who have offices in the St. Augustine area” and did so
without any reasoned explanation. The trial court’s decision cannot be
reconciled with Quanstrom, which adopted a “relevant market” factor, not
a “local market” factor. See Quanstrom, 555 So. 2d at 834. If the City
of St. Augustine somehow only has one attorney who handles these insurance
disputes and yet the neighboring county is home to thousands of attorneys, then
that neighboring county should obviously be part of any “relevant market”
analysis. The trial court’s unexplained decision here is grossly inadequate. By
reinstating the trial court’s award of a multiplier in this case, the majority
is essentially holding that the “relevant market” is whatever the trial court
says it is. The majority should instead recognize that the “relevant market”
factor must take into account the fact that the market for delivering legal
services is dynamic and is not subject to narrow geographic restrictions. It is
not rational to limit the “relevant market” in this case to attorneys who have
offices in St. Augustine.8

In addition, awarding a multiplier
based, even in part, on testimony that petitioners’ attorney may be the only
attorney in St. Johns County who “specialized” in first-party coverage denials
is problematic, for several reasons. As an initial matter, even assuming that
petitioners’ attorney is the only such specialist, Quanstrom refers to a
person’s ability “to obtain competent counsel,” not “specialized”
counsel. Quanstrom, 555 So. 2d at 834 (emphasis added). Petitioners’
attorney’s specialization is irrelevant for purposes of the multiplier in this
case. Moreover, awarding a multiplier based on this finding is tantamount to
rewarding an attorney for having a monopoly on a particular geographic market.
That hardly jibes with any public policy underlying fee-shifting statutes. See,
e.g., Dague, 505 U.S. at 563 (“These statutes were not designed as a form
of economic relief to improve the financial lot of lawyers.” (citation
omitted)). An examination of petitioners’ attorney’s testimony reveals that she
routinely takes first-party insurance disputes and almost never does so
on a fixed hourly basis.

The other testimony relied upon by
the trial court hardly rises to the level of competent, substantial evidence.
For example, petitioners’ fee expert indicated that he “prepared e-mails to
various attorneys, some in this area and some that were outside of this area.”
In other words, the trial court relied on testimony that the expert sent
e-mails to an undisclosed number of attorneys. Petitioners’ fee expert
also earlier testified that he had spoken with approximately four attorneys in
the St. Johns County community and with an undisclosed number of attorneys from
Jacksonville. This Court should hold that this expert testimony is insufficient
— as a matter of law — to prove that the relevant market “requires” a fee
multiplier.

The trial court also noted that
petitioners’ fee expert “reviewed numerous orders from this circuit and across
the state.” But a review of the transcript reveals that the expert reviewed
those orders primarily for the purpose of determining a reasonable hourly fee
— not the applicability of a multiplier. Moreover, the fee expert
testified that he had not even read all of the orders on which he was relying,
and that the orders almost exclusively related to cases outside St. Johns
County.9

The trial court also relied on
testimony from petitioners’ attorney and fee expert in concluding that this was
a “difficult” case involving numerous “complex” issues. But the record does not
support the trial court’s conclusion. Rather, the record supports the district
court’s conclusion that this was a simple, straightforward case. See Joyce,
179 So. 3d at 494 (“This was not a complicated case. Either the Joyces had
falsified their insurance application, or Federated had made an error.”).
Indeed, the evidence shows that Federated agreed to honor the claim immediately
after the depositions of the two insurance agents — the only depositions in
the case — when it was conclusively determined that the agent did, in fact,
have the original paper application showing that the Joyces had disclosed their
previous losses.10

The trial court also noted that
petitioners’ attorney testified she took the case with the “hope and
expectation” that the trial court would award a multiplier. Relying on this
testimony, even in part, is illogical, as aptly noted by the Second District in
a recent decision:

Certainly,
most (all?) attorneys would prefer to collect twice their market rate at
the conclusion of a successful contingency fee case, a point that perhaps needed
no expert testimony to illuminate. It does not follow, though, that that
preference would create a dearth of competent lawyers who would have
taken this case at the prevailing rate. On that critical point, this record is
silent.

Florida Peninsula Ins. Co. v.
Wagner, 196 So. 3d 419, 422 (Fla. 2d DCA
2016).

Lastly, the evidence does not
reasonably support the conclusion that the multiplier is necessary in this case
to achieve the specific policy purpose on which this Court previously relied in
justifying its use. In Bell, this Court identified the primary rationale
for the multiplier as follows:

[I]t
assists parties with legitimate causes of action or defenses in obtaining
competent legal representation even if they are unable to pay an attorney on an
hourly basis. In this way, the availability of the multiplier levels the
playing field between parties with unequal abilities to secure legal
representation.

Bell, 734 So. 2d at 411. The majority here quotes that same
excerpt from Bell. See majority op. at 18. But as explained next, it
very much appears that “the playing field” is already “level[ ],” Bell,
734 So. 2d at 411, without the need for a contingency fee multiplier, at least
with respect to insurance dispute cases. The district court below recognized as
much, noting: “As one would anticipate given today’s legal market, there was no
evidence the Joyces had any difficulty obtaining counsel to handle this matter.
Indeed, it took only one phone call for the Joyces to secure counsel.” Joyce,
179 So. 3d at 494. The district court did not err in stating the obvious.

The homeowners’ insurance dispute in
this case involves the calculation of fees under section 627.428, Florida
Statutes, which allows a prevailing insured in an insurance dispute to recover
reasonable attorney’s fees from the insurer.11 Insurance disputes under Florida’s
no-fault personal injury protection (PIP) laws similarly involve section
627.428.12 Indeed, Quanstrom was a PIP
case involving section 627.428, as was Palma, a case decided by this
Court on the same day as Quanstrom. In both cases, this Court recognized
the availability of the multiplier.

In 2012, the Legislature revised
Florida’s PIP laws by passing HB 119 — Motor Vehicle Personal Injury
Protection Insurance. See ch. 2012-197, Laws of Fla. As codified in
section 627.736(8), Florida Statutes, this legislative change included an
amendment specifically prohibiting the use of a contingency fee multiplier in
calculating reasonable attorney’s fees to be awarded to a prevailing insured in
a PIP dispute. See ch. 2012-197, § 10, at 30-31, Laws of Fla. Not
surprisingly, the post-2012 unavailability of a multiplier in PIP cases has not
had any negative effect on insureds’ ability to obtain counsel in PIP cases —
cases which by their very nature generally involve disputed claims of less than
$10,000. In fact, this Court recently noted that PIP cases appear to have
become even more prevalent in recent years. See In re Certification
of Need for Additional Judges, 206 So. 3d 22, 33 (Fla. 2016). And in the
instant case, petitioners’ own fee expert acknowledged the obvious on
cross-examination — that nowhere in the State of Florida is there a “paucity
of attorneys” willing to take PIP cases:

Q. But in
the PIP cases, you would agree that where attorney’s fees is awarded, the
amount of controversy is by definition generally $10,000 or less?

A.
Generally I would say yes it is.

Q. All
right. And is there any paucity of attorneys that you’re aware of in the state
of Florida with regard to representation of clients who have PIP claims?

A. Well, I
hate to say this, but I’m going to say it. No, there’s not.

Given that Florida’s 2012 PIP
amendments have had no negative effect on PIP insureds’ ability to obtain
counsel in PIP cases despite the absence of the availability of a contingency
fee multiplier in those cases, it is apparent that the playing field is already
“level[ ],” Bell, 734 So. 2d at 411, without the need for a multiplier.
Attorneys are abundantly motivated to take PIP cases based solely on the
opportunity to earn the lodestar amount under section 627.428, Florida
Statutes. Given the undisputed availability of legal representation in PIP
cases notwithstanding the bar on use of the multiplier, there is no reason to
believe that attorneys in homeowners’ insurance disputes are somehow only
motivated because a possible multiplier is also involved. The undisputed
experience under the PIP statute dictates that a multiplier is not, in fact,
“required” in homeowners’ insurance cases. The district court below properly
refused to ignore this reality.

In short, the reasoning of Bell
cannot justify the continued application of the multiplier in insurance dispute
cases involving the calculation of “reasonable” attorney’s fees under section
627.428, Florida Statutes. And the majority offers no alternative reasons to
justify the continued application of the multiplier in these cases. Despite the
fact that petitioners’ attorney may be highly qualified, no public policy
supports the windfall being awarded to her in this case. Indeed, it is hardly
surprising that petitioners’ attorney testified that she “knew going in this
was a [section] 627.428 case” and that taking the case on a contingency fee
basis presented her with “an opportunity to make a big fee if [she]
should succeed.” (Emphasis added.)

To sum up, the majority here upholds
the award of a 2.0 multiplier in a case in which: (1) the plaintiffs’ fee
expert testified that he contacted an undisclosed number of attorneys who said
they would not have taken the case without at least the possibility of a
multiplier; (2) that same fee expert begrudgingly “hate[d]” to admit that
plaintiffs’ attorneys throughout the entire State of Florida are abundantly
motivated to take PIP cases (even though PIP cases contain no possibility of a
multiplier); (3) that same fee expert presented no explanation of how and why
the economics of the market for legal representation in homeowners’ insurance
cases are fundamentally different from the market for PIP cases; (4) the plaintiff’s
own attorney testified that she has no idea how many attorneys in the
neighboring county — which is home to thousands of attorneys — would
have taken this case in the absence of a multiplier; (5) the plaintiffs needed
only one phone call to secure counsel; and (6) none of the “difficult” and
“complex” issues purportedly inherent in this case played out during the course
of the dispute. To affirm the award of a multiplier in this case — let alone a
multiplier of 2.0 — is to set the bar as low as possible for the imposition of
the multiplier. This Court should instead acknowledge that the trial court’s
findings are fundamentally flawed and the evidence presented in this case does
not “comport[ ] with logic and reason.” Gonci, 179 So. 2d
at 858.

II.
THE MAJORITY’S DECISION HERE

POINTS
TO THE NEED FOR RE-EXAMINATION

OF
OUR MULTIPLIER JURISPRUDENCE

IN
LIGHT OF DAGUE

Twenty-five years ago in Dague,
the United States Supreme Court definitively re-addressed the applicability of
the multiplier under federal fee-shifting statutes after having previously left
the issue unresolved in Pennsylvania v. Delaware Valley Citizens’ Council
for Clean Air, 483 U.S. 711 (1987). See Dague, 505 U.S. at 559
(“[T]he question is essentially identical to the one we addressed, but did not
resolve, in [Delaware Valley].”). The six-Justice majority in Dague
unequivocally repudiated the use of the multiplier, with Justice Scalia
cogently explaining the Court’s reasons for doing so. The majority here
declines to “accept the Dague majority’s rationale for rejecting
contingency fee multipliers.” Majority op. at 22. In doing so, the majority
fails to recognize how its decision in this case perfectly illustrates all of
the reasons why Dague categorically rejected the multiplier.

Dague began by noting that any risk enhancement to the lodestar
would inherently “double count[ ],” Dague, 505 U.S. at 563, by “likely
duplicat[ing] in substantial part factors already subsumed in the lodestar,” id.
at 562. Dague reasoned that the risk of loss in any given case always
involves, among other things, “the difficulty of establishing [the legal and
factual] merits” in the case, and that this factor will be “ordinarily
reflected in the lodestar — either in the higher number of hours expended to
overcome the difficulty, or in the higher hourly rate of the attorney skilled
and experienced enough to do so.”13 Id. at 562. Here, that
“duplicat[ion],” id., is apparent on the face of the trial court’s
reasoning. For example, in awarding the multiplier, the trial court noted that
“these cases are difficult” and “the issues involved were complex, involving
policy interpretation, application of exclusion language, agency law, and other
issues.” As indicated above, none of these purportedly “complex” issues played
out during the course of this case, in which the insurer conceded coverage
after the very first deposition in the case. But even assuming that this case
somehow involved complex and difficult issues, Dague explained that “the
difficulty of establishing [the legal and factual] merits” in a particular case
is a factor that will be “ordinarily reflected in the lodestar.” Id.
Indeed, this Court itself has previously made clear that the difficulty of the
case and the complexity of the issues are properly considered in the first half
of the lodestar calculation — the reasonable number of hours. See Bell,
734 So. 2d at 407 (“[W]e stated [in Rowe] that ‘the novelty and
difficulty of the question involved’ should be considered in determining the
number of hours reasonably expended on the litigation.”); Rowe, 472 So.
2d at 1150 (“The ‘novelty and difficulty of the question involved’ should
normally be reflected by the number of hours reasonably expended on the
litigation.”). Double counting results from relying on those very same factors
in awarding a multiplier. See Delaware Valley, 483 U.S. at 731
(O’Connor, J., concurring in part and concurring in the judgment) (agreeing
with the plurality that it was improper to employ a risk multiplier based on
the “novelty and difficulty of the issues presented,” given that those “are
factors adequately reflected in the lodestar”).

After rejecting the notion of
awarding a multiplier based on the riskiness of any specific case, Dague
next rejected the notion of a class-wide approach to the multiplier.
Specifically, Dague rejected the market-centric version of the “relevant
market” factor proposed by Justice O’Connor in her Delaware Valley concurrence.14 Dague, 505 U.S. at 563-65. Dague
reasoned that it was impractical to adopt a class-wide market approach that
prohibited the “assessment of the ‘riskiness’ of any particular case,” given
that the “predominant reason that a contingent-fee claimant has difficulty
finding counsel in any legal market . . . is that attorneys view his case as
too risky.”15 Id. at 564. Dague
ultimately concluded that such an approach could not “intelligibly be applied.”
Id. at 563. Here, the majority reaffirms the “relevant market” factor
while seemingly adopting a market-centric approach, see majority op. at
26 (“The Joyces contend that the Fifth District also erred in looking at their
actual experience in the market rather than looking at the relevant market
itself, as required by Quanstrom and Bell. We agree.”), and while
simultaneously noting the relevance of and upholding “the trial court’s
findings” regarding “the complexity of these types of cases and this case in
particular,” majority op. at 27 (emphasis added). And in doing so, the
majority provides no definition of the nature and scope of the “relevant
market” factor. The absence of a meaningful definition — either in the
majority opinion in this case or in this Court’s decision in Quanstrom
— lends support to the Supreme Court’s conclusion that the factor, in fact,
cannot “intelligibly be applied.” Dague, 505 U.S. at 563.

Dague next reasoned that allowing contingency enhancement under
fee-shifting statutes that authorize a reasonable fee would impermissibly
permit attorneys to offset losses from other cases and thus “pay for the
attorney’s time (or anticipated time) in cases where his client does not
prevail.” Id. at 565. Here, the majority specifically notes that
petitioners’ attorney testified that “she would not have taken the case without
the possibility of a multiplier because she often fails to recover some or all
of the fees owed on these first-party cases.” Majority op. at 28. Thus, the
majority reaffirms the use of the multiplier based, in part, on the notion that
the multiplier helps to offset losses from other cases. In doing so, the
majority effectively reads section 627.428, Florida Statutes, which expressly
permits the recovery of a “reasonable” fee, as somehow authorizing the award of
an excessive fee in a case simply because the attorney in that case may be
unsuccessful in some other case or cases. But the plain language of section
627.428 does not contemplate what may or may not have happened in other cases.
Rather, section 627.428 simply allows for the award of “a reasonable sum as
fees or compensation for the insured’s or beneficiary’s attorney prosecuting the
suit in which the recovery is had.” § 627.428(1), Fla. Stat. (emphasis
added).

Dague next noted that the Supreme Court had been generally
rejecting the contingent-fee model in favor of the lodestar model, “even though
the lodestar model often (perhaps, generally) results in a larger fee award
than the contingent-fee model.”16 Dague, 505 U.S. at 565-66.
And Dague concluded that contingency enhancement to the lodestar would
produce an undesirable “hybrid scheme that resorts to the contingent-fee model
to increase a fee award but not to reduce it.” Id. at 566. This case
perfectly demonstrates that undesirable hybrid scheme. Here, petitioners’
attorney testified that the amount in controversy was approximately $15,000 and
that the parties eventually agreed on a recovery amount of $23,500, exclusive
of attorney’s fees. The trial court ultimately determined that a reasonable
lodestar amount was $38,150. So the lodestar obviously exceeded — by many
multiples — any contingent fee payable on that recovery. The trial court then
applied a contingency enhancement of 2.0, doubling the attorney’s fee award to
$76,300. Thus, even though “[c]ontingency enhancement is a feature inherent in
the contingent-fee model,” id., calculating “reasonable” attorney’s fees
in this fashion ignores the contingent-fee agreement for all purposes except
for the purpose of increasing the lodestar amount. And that approach will
“often (perhaps, generally),” id., end up resulting in a fee windfall
for the attorney — as is very much the case here. Indeed, it is hardly
surprising that petitioners’ attorney testified regarding the lure of “mak[ing]
a big fee,” even though section 627.428, Florida Statutes, only authorizes a
“reasonable” fee.

Lastly, Dague pointed to the
“ready administrability” of the lodestar approach, concluding that
“[c]ontingency enhancement would make the setting of fees more complex and
arbitrary, hence more unpredictable, and hence more litigable.”17 Id. at 566. Here, the
majority concludes that “there is no support in state courts, and indeed none
has been offered, that the availability of contingency fee multipliers ‘make[s]
the setting of fees more complex and arbitrary.’ ” Majority op. at 25 (quoting Dague,
505 U.S. at 566). But one need look no further than the instant case to find
support for the Supreme Court’s conclusion. For example, as explained
previously, the trial court’s decision to limit the “relevant market” in this
case to attorneys who have “offices in the St. Augustine area” could not be any
more arbitrary. And the majority’s decision to uphold a multiplier of 2.0 in
this simple, straightforward case which lacks competent, substantial evidence
will hardly make the setting of fees less “unpredictable” or “litigable.” Dague,
505 U.S. at 566.

III.
CONCLUSION

I therefore would affirm the Fifth
District’s decision to reject the trial court’s award of a contingency fee
multiplier. Competent, substantial evidence does not “justify,” Quanstrom,
555 So. 2d at 834, the trial court’s use of a multiplier in this simple case
involving section 627.428, Florida Statutes. The majority’s decision to uphold
the fee award in this case embodies all of the flaws identified by the Supreme
Court in Dague regarding use of the multiplier. The majority’s decision
points unmistakably to the need for a full re-examination of this Court’s
multiplier jurisprudence. I dissent. (LAWSON, J., concurs.)

__________________

1The “time and labor required” and
the “novelty and difficulty of the question involved” are excluded from the
calculation of the hourly rate because those factors are already taken into
account in calculating the reasonable number of hours. See Rowe, 472 So.
2d at 1150 (“The ‘novelty and difficulty of the question involved’ should
normally be reflected by the number of hours reasonably expended on the
litigation.”).

2A prevailing party is entitled to an
award of attorney’s fees under the provisions of 42 U.S.C. § 1988.

3Following Sarkis and Dague,
in 2004, in Holiday v. Nationwide Mutual Fire Insurance, 864 So. 2d 1215
(Fla. 5th DCA 2004), the Fifth District Court of Appeal certified the following
question, in an attempt to clarify the effect of the United States Supreme
Court’s holding in Dague on this Court’s jurisprudence:

IN LIGHT OF THE SUPREME COURT’S DECISION IN SARKIS,
MAY A MULTIPLIER BE APPLIED TO ENHANCE AN AWARD OF ATTORNEY’S FEES GRANTED UNDER
A FEE-SHIFTING STATUTE SUCH AS SECTION 627.428, FLORIDA STATUTES (2002).

Id. at 1221. However, this Court ultimately discharged
jurisdiction in the case after briefing was completed. Nationwide Mut. Fire
Ins. v. Holiday, 924 So. 2d 809 (Fla. 2005).

4In 2012, the Legislature amended the
language of Florida’s Personal Injury Protection (“PIP”) laws to specifically
prohibit the use of a contingency fee multiplier in calculating reasonable
attorney’s fees to be awarded to a prevailing insured in a PIP dispute. See
ch. 2012-197, Laws of Fla.

5In Rowe, this Court
“adopt[ed] the federal lodestar approach for computing reasonable attorney
fees.” Rowe, 472 So. 2d at 1146. The lodestar approach involves
calculating the “lodestar” amount by multiplying the number of attorney hours
reasonably expended by a reasonable hourly rate. Id. at 1150-51.

6Petitioners’ fee expert apparently
spoke with four attorneys in the St. Johns County community and with an
undisclosed number of attorneys from Jacksonville.

7In Quanstrom, this Court
established three factors to be considered by trial courts in determining the
necessity of a multiplier in cases involving tort and contract claims,
including insurance coverage disputes. Quanstrom, 555 So. 2d at 834. The
first factor is “whether the relevant market requires a contingency fee
multiplier to obtain competent counsel.” Id. Quanstrom did not define
the nature and scope of this “relevant market” factor.

8In approving the trial court’s
decision to ignore the thousands of attorneys in Duval County, the majority
reasons that the “relevant market” factor considers “not just whether there are
attorneys in any given area, but specifically whether there are attorneys in
the relevant market who both have the skills to handle the case effectively and
who would have taken the case absent the availability of a contingency fee
multiplier.” Majority op. at 28. In other words, the majority appears to
conclude that despite the sea of lawyers in the neighboring county, the Joyces
nevertheless would have had difficulty finding a competent attorney in that
county who would have been willing to take their case based solely on the
lodestar. In my view, that conclusion ignores “today’s legal market,” Joyce,
179 So. 3d at 494, and is unsupported by competent, substantial evidence in
this case.

9The fact
that the trial court noted the relevance of these “numerous orders” — almost
all of which related to cases outside St. Johns County — further demonstrates
the wholly arbitrary nature of the trial court’s eventual decision to focus on
attorneys who have “offices in the St. Augustine area.”

10In
upholding the trial court’s conclusions regarding the complexity of this case
and the need for the multiplier, the majority here notes that Federated did not
“finally offer[ ] to settle the case” until two months after Federated agreed
to honor the claim. Majority op. at 27. But the fact that the insurance company
delayed for two months before agreeing on a final settlement with petitioners
does not somehow render this a “complex” case. And that delay certainly has no
bearing on the issue of “whether the relevant market requires a contingency fee
multiplier.” Quanstrom, 555 So. 2d at 834. The majority also notes as
relevant the fact that “the Joyces’ attorney spent more than 100 hours working
on the case.” Majority op. at 27. But again, that fact does not somehow render
this a “complex” case. Moreover, a review of the Joyces’ attorney’s timesheet
reveals that nearly fifty hours of that time was spent after Federated agreed
to honor the claim.

11Section
627.428 authorizes an award of fees to a prevailing insured but does not
authorize an award of fees to a prevailing insurer.

12Under
Florida’s PIP laws, motorists are generally required to carry at least $10,000
in PIP coverage. See generally §§ 627.730-627.7405, Fla. Stat. (2017)
(“Florida Motor Vehicle No-Fault Law”). Florida’s PIP laws also contain an
attorney’s fees provision, see § 627.736(8), Fla. Stat., which allows a
successful insured to recover attorney’s fees from the insurer pursuant to
section 627.428, Florida Statutes, subject to certain limitations.

13Dague further concluded that awarding a multiplier based on the
riskiness of any particular case would “provide attorneys with the same
incentive to bring relatively meritless claims as relatively meritorious ones.”
Dague, 505 U.S. at 563.

14In Delaware
Valley, the Supreme Court’s plurality noted that “there should be evidence
in the record, and the trial court should so find, that without risk
enhancement plaintiff would have faced substantial difficulties in finding
counsel in the local or other relevant market.” Delaware Valley, 483
U.S. at 731. Justice O’Connor “agree[d] with the plurality” on that point, id.
at 733 (O’Connor, J., concurring in part and concurring in the judgment), but
she argued that “compensation for contingency must be based on the difference
in market treatment of contingent fee cases as a class, rather than on
an assessment of the ‘riskiness’ of any particular case,” id. at 731
(O’Connor, J., concurring in part and concurring in the judgment).

15Dague also rejected a class-wide market approach on the basis
that it “cannot possibly achieve the supposed goal of mirroring market
incentives.” Dague, 505 U.S. at 564.

16In so
noting, Dague recognized that the “lodestar method may ‘give lawyers
incentives to run up hours unnecessarily, which can lead to overcompensation.’
” Dague, 505 U.S. at 566 (quoting Report of the Federal Courts Study
Committee 104 (Apr. 2, 1990)).

17Dague also noted that “[i]t is neither necessary nor even
possible for application of the fee-shifting statutes to mimic the intricacies
of the fee-paying market in every respect.” Dague, 505 U.S. at 566-67.

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