Insurance
— Homeowners — Attorney’s fees — Insureds prevailing in action against
insurer — Trial court abused discretion in applying multiplier to fees awarded
to insureds where there was no showing that insureds would have had difficulty
finding competent counsel to represent them — Finding that attorneys went all
the way through trial to completion was not a valid basis for award of fee
multiplier

FLORIDA PENINSULA INSURANCE COMPANY, Appellant, v. MARK
WAGNER and RHONDA WAGNER, Appellees. 2nd District. Case Nos. 2D15-1152, 2D15-1790.
(Consolidated) Opinion filed June 1, 2016. Appeals from the Circuit Court for
Pinellas County; Pamela A.M. Campbell, Judge. Counsel: David C. Borucke and
Robert C. Hubbard of Cole, Scott & Kissane, P.A., Tampa, for Appellant.
Raymond T. Elligett, Jr. and Amy S. Farrior of Buell & Elligett, P.A.,
Tampa; Howard W. Weber of Danahy & Murray, Tampa, for Appellees.

(LUCAS, Judge.) Florida Peninsula Insurance Company (Florida
Peninsula) appeals a final judgment that construed an insurance policy
provision in favor of Rhonda and Mark Wagner, as well as the court’s award of
attorney’s fees against it following a jury’s verdict on damages. We find merit
in Florida Peninsula’s argument that the circuit court erroneously applied a
multiplier to the attorney’s fees awarded to the Wagners and reverse that order
accordingly. We affirm the circuit court’s judgment in all other respects.

I.

The underlying facts in this case are fairly succinct and,
in many regards, undisputed. We recount them only insofar as they pertain to
the circuit court’s justification for applying a multiplier to the Wagners’
award of attorney’s fees.

When a refrigerator water line broke and caused some
flooding inside their house, the Wagners sought coverage from their insurer,
Florida Peninsula, under their property insurance policy. Florida Peninsula
retained a remediation company to drain the water and dry out the property. But
once the house was in a condition to have the extent of its damage ascertained,
a dispute arose between the Wagners and Florida Peninsula concerning Florida
Peninsula’s invocation of an “Option to Repair” provision in the policy,1 the scope of remedial work that would
be required to repair the damage from the leak, and the selection and hiring of
a contractor to effectuate those repairs.

Unable to reach an agreement with their insurer, the Wagners
initially hired an attorney, a neighbor, who soon realized that he could not
adequately represent their interests. Not long after his withdrawal, the
Wagners retained the law firm of Danahy & Murray under a contingency fee
arrangement. The firm filed the initial complaint on the Wagners’ behalf and capably
represented them throughout the underlying litigation. The case proceeded
through discovery, motion hearings, a mediation, and a nonjury trial in which
the Wagners prevailed on their declaratory relief claim. A subsequent jury
trial on damages yielded a verdict in favor of the Wagners for all of their
coverage claims in the total amount of $71,123.79.

The Wagners then filed a motion to recover attorneys’ fees
and costs pursuant to section 627.428, Florida Statutes (2013). At the outset
of the hearing on the motion, the parties reached a stipulation as to the
reasonable number of hours and hourly rates for the Wagners’ individual
attorneys and paralegals. The stipulated fee rates ranged between $250 and $450
an hour, depending on the particular attorney’s experience, with the majority
of the work performed by one attorney whose hourly billing rate was $375 an
hour. Having agreed upon a lodestar amount of $243,755 in attorney’s fees, the
Wagners then urged the circuit court to apply a multiplier of between 1.75 and
2.25 to the lodestar award.

The Wagners did not testify at the fee hearing. Their trial
counsel relayed the Wagners’ experience with their prior attorney. He then
remarked that he felt their case was unique and that it had been vigorously
litigated. The Wagners also called an expert witness who had contacted a few
attorneys prior to the hearing to ask whether it was important to have the
possibility of a contingency fee multiplier in deciding whether to accept a
first-party coverage dispute such as the Wagners’. The expert never relayed
what he learned from those conversations. He did respond affirmatively (but
without any elaboration) to the question of whether the skill required to
prevail in a case like this one would “limit the number of attorneys” the
Wagners could have “gone to for help.” In response, Florida Peninsula’s expert
pointed out that there were 258 local attorneys listed in the Martindale
Hubbell directory who held themselves out as first-party insurance attorneys.
Florida Peninsula also argued that the amount in dispute and ultimately
recovered was already substantially smaller than the amount of stipulated fees
the Wagners’ attorneys would recover.

The circuit court agreed with the Wagners and applied a 2.0
multiplier to the lodestar award. The court was apparently impressed by the
Wagners’ counsel’s willingness to see the matter through trial. Remarking that
“there may be multiple attorneys out there that are willing to go to trial,
actually going to trial is another issue,” the court likened trial experience
to a market condition that necessitated a contingency fee multiplier. Or as the
court put it, “It is the rare attorney that actually goes all the way through
trial to the completion.” As we will explain, none of these reasons supported
the application of a fee multiplier in this coverage dispute.

II.

We review a circuit court’s decision to apply a multiplier
to an attorney’s fee award for abuse of discretion. USAA Cas. Ins. Co. v.
Prime Care Chiropractic Ctrs., P.A., 93 So. 3d 345, 347 (Fla. 2d DCA 2012).
A lodestar computation for attorney’s fees — that is, a reasonable hourly rate
multiplied by a reasonable number of hours for the work performed — carries “a
strong presumption” that it represents a reasonable fee for legal services
provided on a contingency basis. Federated Nat’l Ins. Co. v. Joyce, 179
So. 3d 492, 493 (Fla. 5th DCA 2015) (quoting Progressive Express Ins. Co. v.
Schultz, 948 So. 2d 1027, 10130 (Fla. 5th DCA 2007)). Indeed, as the Third
District succinctly observed, “[t]he application of a multiplier is the
exception, not the rule.” State Farm Fla. Ins. Co. v. Alvarez, 175 So.
3d 352, 357 (Fla. 3d DCA 2015). With that in mind, a court must consider three
factors before it may award a fee multiplier in a contract dispute:

(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 [Florida
Patient’s Compensation Fund v. Rowe, 472 So. 2d 1145, 1150 (Fla. 1985)] are
applicable, especially, the amount involved [in the litigation], the results
obtained, and the type of fee arrangement between the attorney and his [or her]
client.

Standard Guar. Ins. Co. v. Quanstrom,
555 So. 2d 828, 834 (Fla. 1990).

In the case at bar, the circuit court’s justification for a
multiplier, and the evidence before it, fell short of the dictates of Quanstrom.
There was no showing or finding that without the prospect of a multiplier to an
otherwise reasonable fee award, the Wagners would have had difficulty finding
competent counsel to represent them in this insurance coverage dispute. See
Sun Bank of Ocala v. Ford, 564 So. 2d 1078, 1079 (Fla. 1990) (“[T]here
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.” (quoting Pennsylvania
v. Del. Valley Citizens’ Council for Clean Air, 483 U.S. 711, 731 (1987)));
Prime Care Chiropractic Ctrs., P.A., 93 So. 3d at 347 (“If there is no
evidence that the relevant market required a contingency fee multiplier to
obtain competent counsel, then a multiplier should not be awarded.”). Simply
put, there was no evidence that the Tampa Bay legal market could not provide
competent counsel for the Wagners’ case at the prevailing hourly rates. See
Quanstrom, 555 So. 2d at 834. 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.

Nor can we accept the circuit court’s justification that the
case’s resolution through a trial, in and of itself, merited a fee multiplier.
Again, a contingency fee multiplier under Quanstrom serves to correct a
deficiency in a legal market for representation. See Sun Bank of
Ocala, 564 So. 2d at 1079; Prime Care Chiropractic Ctrs., P.A., 93
So. 3d at 347; see also Bell v. U.S.B. Acquisition Co., Inc., 734
So. 2d 403, 411 (Fla. 1999) (“A primary rationale for the contingency risk
multiplier is to provide access to competent counsel for those who could not
otherwise afford it.”). A Quanstrom fee multiplier is not a surrogate
for a sanction, and it should not be applied based solely, and in hindsight,
upon how far along in the civil adjudication process a particular case happened
to be resolved.2 There was no evidence presented
below, nor any specific finding by the circuit court, that the Wagners could
not find and retain competent counsel for their case through trial with the
prospect of remuneration at a prevailing market rate.3

III.

Accordingly, we reverse the circuit court’s order granting
the Wagners’ motion for attorney’s fees to the extent that it applied a
multiplier to the fee award and remand with instructions to enter a new order
consistent with this opinion. We affirm the judgment of the circuit court in
all other respects.

Affirmed in part; reversed in part; remanded with instructions.
(MORRIS and BLACK, JJ., Concur.)

__________________

1That provision afforded Florida
Peninsula the following option to provide coverage for “Coverage A — Dwelling”
claims: “If we give you written notice within 30 days after we receive your
signed, sworn proof of loss . . . [w]e may repair the damaged property with
material of like kind and quality without deduction for depreciation.” We agree
with the circuit court’s conclusion that Florida Peninsula did not properly
exercise this option because Florida Peninsula’s “referral” of contractors to
the Wagners (who the Wagners, not Florida Peninsula, would then engage) did not
satisfy the provision’s obligation that “we [Florida Peninsula] would be
required to repair the damaged property.” See Wash. Nat’l Ins. Corp.
v. Ruderman, 117 So. 3d 943, 949-50 (Fla. 2013) (“[I]t has long been a
tenet of Florida insurance that an insurer, as the writer of an insurance
policy, is bound by the language of the policy, which is to be construed
liberally in favor of the insured and strictly against the insurer.” (quoting Berkshire
Life Ins. Co. v. Adelberg, 698 So. 2d 828, 830 (Fla. 1997))).

2The relative duration of the
litigation is accounted for in the number of hours awarded under the lodestar
computation.

3We recognize the waning use of
trials to resolve many civil disputes. See Steven Wisotsky, Sounds
and Images of Persuasion: A Primer, 84 Fla. B.J. 40, 40 (2010) (noting that
in “this era of the ‘vanishing trial,’ ” less than two percent of cases filed
are tried to verdict). But we do not glean from this record that an insurance
coverage trial has become such a Halley’s Comet event that the majority of
local, competent insurance lawyers would refuse to handle such a matter for
anything less than double their market rates.

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