42
Fla. L. Weekly D2086aTop of Form

Attorney’s
fees — Insurance — Insured prevailing in declaratory judgment action brought
by insurer — In awarding attorney’s fees to insured, trial court erred in
applying a contingency risk multiplier where fee agreement between insured and
his attorney was not a contingent fee agreement — Agreement which provided for
attorney to be paid normal hourly rate whether the case was won or lost, and a
higher amount in the event of higher award by the court was not a partial
contingency fee contract

FLORIDA FARM BUREAU CASUALTY
INSURANCE COMPANY, Appellant, v. GERALD H. GRAY AND SABRINA GRAY KING, TRACIE
HESSLEY, AS PERSONAL REPRESENTATIVE OF THE ESTATE OF RAIVYN B. SUMMERFIELD,
DECEASED, Appellees. 1st District. Case No. 1D16-3118. Opinion filed September
29, 2017. An appeal from the Circuit Court for Suwannee County. David W. Fina,
Judge. Counsel: Matthew C. Scarborough, Scarborough Attorneys at Law, Tampa,
for Appellant. Stephen C. Bullock, Brannon Brown Haley & Bullock, P.A.,
Lake City, for Appellee Gerald H. Gray; No appearance for Appellees Sabrina
Gray King and Tracie Hessley.

(LEWIS, J.) Appellant, Florida Farm
Bureau Casualty Insurance Company, appeals the trial court’s Final Judgment
Awarding Reasonable Attorneys’ Fees. Appellant raises three issues on appeal,
only one of which merits discussion and reversal. Appellant contends that the
trial court erred in applying a contingency risk multiplier to the attorney’s
fees it awarded to Appellee, Gerald H. Gray, because the fee agreement between
Appellee and his attorney was a non-contingent fee agreement. We agree with
Appellant and, therefore, reverse the judgment as to the application of the
multiplier, but otherwise affirm.

After a wrongful death suit was
brought against Appellee, Appellant filed a Complaint for Declaratory Judgment,
requesting that the trial court enter a judgment declaring that it had no duty to
defend or indemnify Appellee. As a result of these actions, Appellee sought
legal representation.

Appellee’s attorney’s fee agreement
with his counsel provided in part:

1. You
have employed our firm to represent you. We appreciate your confidence in our
firm and want to acquaint you with our method of handling your matters. This
letter is intended to set forth our firm’s agreement with you as to the nature
and scope of the legal services the firm will be performing, the manner in
which the firm’s fees for those services will be determined, and the terms upon
which payment will be made.

OUR BILLING RATES

2. Our
normal legal services would be billed at the rate of $350.00 per hour for the
firm’s partner attorneys’ time and $250.00 for the firm’s associate attorneys.
We use paralegals or legal assistants when possible, and their rates are $85
per hour. However, we may record higher hourly charges and in the event the
Court were to award legal fees and costs then [sic] any higher amount awarded
by the Court, including any multipliers, will then be the amount of legal fees.

INITIAL PAYMENT

3. We
require an initial lump sum payment of $5,000.00 at the signing of this
Agreement to be applied toward the final attorneys’ fee amount billed and/or
awarded by the Court in No. 2 above.

The fee
agreement further provided that “[t]ermination of our services by you or by us
shall not relieve you from payment of any amounts owed for services rendered by
us through the date of termination” and that Appellee would be “responsible for
reasonable attorneys’ fees” in the event the “firm uses the services of an
attorney to collect any sums owed on any account” of Appellee.

After Appellant admitted coverage,
Appellee moved for attorney’s fees, arguing in part that the trial court should
apply a 2.5 multiplier given that the “fee agreement contained a contingency
component for an amount to be awarded by the Court.” Appellee’s counsel sought
$80,695 in attorney’s fees.

During the attorney’s fee hearing,
Appellant’s counsel argued in part that the fee agreement was not a contingency
fee contract “because basically no matter what the fee up to a certain amount
of money, in this case $350 an hour, is to be recovered whether the client
win[s] or lose[s].” He also argued that the fee agreement was not a partial
contingency fee contract because Appellee’s counsel charged his normal hourly
rate. Appellee’s counsel, Stephen Bullock, later testified that his normal
hourly rate is $350 an hour. When asked if he was going to charge Appellee $350
an hour “even if you were to lose the coverage action for whatever reason,”
Bullock replied, “What I said was that that’s our normal billable rate. And
then I said, however, we may record a higher hourly charge in the event the
Court were to award legal fees. We’re now at that juncture. . . . This was just
if the court didn’t — listen, if we lost the case we’d be at 350 an hour.” He
also testified, “If we lost the case we’d be at 350 an hour. But the agreement
says if we don’t lose the case the Court is going to set the hourly rate . . .
.” When asked if he agreed that “this is not a full contingency fee agreement,”
he replied, “It’s a hybrid.” When asked if he agreed that it was not a partial
contingency fee contract, he replied, “It’s a hybrid, that’s what I said.” When
asked if he was calling his fee agreement a “hybrid contingency fee” contract,
he replied, “My — no. It’s contingency only in the sense that the Court is
going to set the hourly . . . . That’s not what it says. Here’s what it says.
It says is contingent on the Court setting the amount of the fee. That’s all.
That’s the only thing that’s contingent.”

Following Bullock’s testimony, as
well as the testimony of the parties’ expert witnesses as to a reasonable fee,
the trial court entered a Final Judgment Awarding Reasonable Attorney’s Fees,
wherein it characterized the fee agreement as a “hybrid partial contingency fee
contract.” The trial court accepted the testimony of Appellee’s attorney and
expert witness and found that Appellee’s potential success in the case was
unlikely at the outset and it was through the efforts and legal skill of
Appellee’s counsel that positioned him for “ultimate settlement.” After noting
that it had considered several final judgments entered by other judges in the
Third Judicial Circuit, the trial court concluded that seventy hours of time
spent on the case was reasonable, as was $450 per hour for attorney Bullock and
$350 per hour for an associate attorney in Bullock’s firm. The trial court
decided that a multiplier of 2.0 was justified, for a total amount of $72,000
in attorney’s fees. This appeal followed.

The trial court awarded Appellee
attorney’s fees pursuant to section 627.428(1), Florida Statutes (2015), which
provides:

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

Appellant does not dispute
Appellee’s entitlement to fees, but argues that the trial court erred in
awarding a contingency fee multiplier where the fee agreement was
non-contingent in nature. For the following reasons, Appellant’s argument is
well-taken, and reversal as to the multiplier is warranted.

In Florida Patient’s Compensation
Fund v. Rowe, 472 So. 2d 1145, 1150-51 (Fla. 1985), the supreme court
discussed the “lodestar process” of determining attorney’s fees, the factors to
be considered in determining a reasonable fee, and contingency risk factors.
The supreme court explained, “Because the attorney working under a contingent
fee contract receives no compensation when his client does not prevail, he must
charge a client more than the attorney who is guaranteed remuneration for his
services.” Id. at 1151. In determining whether a multiplier is
necessary, a trial court is to consider: (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. Standard Guar. Ins. Co. v. Quanstrom, 555 So.
2d 828, 834 (Fla. 1990).

In this case, it is undisputed that
the fee agreement was not a full contingency fee agreement. The trial court
found that the fee agreement was a “hybrid partial contingency fee” contract,
as argued by Appellee. In Lane v. Head, 566 So. 2d 508, 510 (Fla. 1990),
the supreme court explained that one of the purposes of Rowe was to
encourage attorneys to take cases under contingency fee arrangements, “thereby
making legal services more widely available to those who otherwise could not
afford them.” The supreme court explained that a multiplier is within the trial
court’s discretion in those instances in which the “contingency-fee arrangement
is only partial” because “this policy also will encourage attorneys to provide
services to persons who otherwise could not afford the customary legal fee.” Id.
at 510-11. The supreme court held that the fee agreement at issue constituted a
partial contingency fee arrangement because the fee agreement required the
appellant to pay his attorney the greater of $100 an hour or twenty-five
percent of the amount actually recovered, and the undisputed testimony
established that the attorney’s customary reasonable fee was $150 an hour. Id.
at 509. After noting that the attorney would have received only two-thirds of
his usual fee had the appellant lost the case, the supreme court set forth, “We
use the term ‘partial contingency-fee arrangement’ to mean those instances in
which an attorney is guaranteed a fee that is less than his or her customary
reasonable fee if the client loses, but the opportunity for an enhanced fee if
the client prevails.” Id. at 513 n.1. It concluded that attorneys taking
partial contingent cases are not entitled to the same enhancement of the
customary reasonable fee that would be available if the fee arrangement were
fully contingent. Id. at 511; see also Goodman v. Tectonics
Unlimited, Inc., 861 So. 2d 485, 485 (Fla. 4th DCA 2003) (holding that the
appellee’s fee agreement with its attorney was a partial contingency fee
arrangement “ ‘where ‘an attorney is guaranteed a fee that is less than his or
her customary reasonable fee if the client loses, but the opportunity for an
enhanced fee if the client prevails’ ” and noting that the appellee agreed to
pay its appellate attorney $1,500 as a “ ‘partial flat fee,’ ” the fee
agreement contemplated that if the appellee prevailed in the appeal, the
attorney would seek a court-awarded fee, and that if the attorney collected the
awarded fee from the appellants, the attorney would refund up to $1,500 to the
appellee (citation omitted)).

Here, in contrast to the fee agreement
in Lane, where the attorney was guaranteed an hourly rate below his
customary rate, Appellee’s attorney testified that his usual billing rate is
$350 an hour. The “Our Billing Rates” section of the fee agreement provided in
part, “Our normal legal services would be billed at the rate of $350.00 per
hour for the firm’s partner attorneys’ time and $250.00 for the firm’s
associate attorneys.” The agreement required an initial payment of $5,000 “to
be applied toward the final attorneys’ fee amount billed and/or awarded by the
Court . . . .” When asked on cross-examination if he was going to “be charging”
Appellee $350 an hour if he were to lose the coverage action, Bullock replied
in part, “[I]f we lost the case we’d be at 350 an hour.” When asked if he was calling
his contract a hybrid contingency fee agreement, Bullock replied, “It says [it]
is contingent on the Court setting the amount of the fee. That’s all. That’s
the only thing that’s contingent.” Based upon these facts, the trial court’s
determination that the fee agreement is a partial contingency fee contract is
erroneous.

Although Appellee argues on appeal
that he “indicated [below] that he would not and could not pay any legal fees
for the declaratory action,” we previously rejected a similar argument in the
context of whether an inability to pay one’s contracted attorney’s fees
transformed a fee agreement into a contingent fee agreement. See Superior
Ins. Co. v. Cordle, 851 So. 2d 207, 207 (Fla. 1st DCA 2003) (agreeing with
the appellant that the trial court erred in applying a “ ‘contingent risk’ ”
multiplier where the insured’s attorney “ ‘would have technically been entitled
to recover his fee up to $200.00 per hour from the client, win or lose’ ” but
agreed to a reasonable fee awarded by the court and holding that the
“likelihood that the client will not pay the agreed-upon hourly fee is not the
criterion upon which ‘contingency’ in this context is based”).

Accordingly, we reverse the final
judgment as to the application of the multiplier, but otherwise affirm. On
remand, the trial court is instructed to recalculate the attorney’s fee award
without applying a multiplier.

AFFIRMED in part; REVERSED in part;
and REMANDED with directions. (ROBERTS, J., CONCURS; WINSOR, J., CONCURS IN
RESULT.)

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