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Fla. L. Weekly D2459bTop of Form
Fla. L. Weekly D2459bTop of Form
Insurance
— Attorney’s fees — Insured prevailing in action against insurer — Where
attorney representing insured had worked at law firm that originated insured’s
claim, and continued to represent insured after leaving that firm, it was error
for trial court to refuse to consider hours expended by attorney while working
at prior firm in calculating attorney’s fee award — Trial court should have
considered all of hours reasonably expended by all of insured’s attorneys in
its calculation of fee to be awarded to insured — Prejudgment interest —
Trial court also erred in limiting prejudgment interest calculation by only
including interest accruing through evidentiary fee hearing rather than date
judgment was entered
— Attorney’s fees — Insured prevailing in action against insurer — Where
attorney representing insured had worked at law firm that originated insured’s
claim, and continued to represent insured after leaving that firm, it was error
for trial court to refuse to consider hours expended by attorney while working
at prior firm in calculating attorney’s fee award — Trial court should have
considered all of hours reasonably expended by all of insured’s attorneys in
its calculation of fee to be awarded to insured — Prejudgment interest —
Trial court also erred in limiting prejudgment interest calculation by only
including interest accruing through evidentiary fee hearing rather than date
judgment was entered
DAVID FORTHUBER,
Appellant/Cross-Appellee, v. FIRST LIBERTY INSURANCE CORPORATION,
Appellee/Cross-Appellant. 5th District. Case No. 5D16-2599. Opinion filed
November 17, 2017. Appeal from the Circuit Court for Seminole County, Jessica
J. Recksiedler, Judge. Counsel: James C. Hauser, Maitland, of The Woodward Law
Firm, Orlando, for Appellant/Cross-Appellee. C. Ryan Jones of Traub Lieberman
Straus & Shrewsberry, LLP, St. Petersburg, for Appellee/Cross-Appellant.
Appellant/Cross-Appellee, v. FIRST LIBERTY INSURANCE CORPORATION,
Appellee/Cross-Appellant. 5th District. Case No. 5D16-2599. Opinion filed
November 17, 2017. Appeal from the Circuit Court for Seminole County, Jessica
J. Recksiedler, Judge. Counsel: James C. Hauser, Maitland, of The Woodward Law
Firm, Orlando, for Appellant/Cross-Appellee. C. Ryan Jones of Traub Lieberman
Straus & Shrewsberry, LLP, St. Petersburg, for Appellee/Cross-Appellant.
(PER CURIAM.) Appellant challenges
the adequacy of his attorney’s fee award, pursuant to section 627.428, Florida
Statutes (2010), rendered in this first-party insurance dispute. As the first
of two issues raised on appeal, we address whether the trial court erred by
refusing to consider the hours expended by Appellant’s attorney while he was working
at a prior law firm — the firm that originated the claim on Appellant’s
behalf. The trial court categorically rejected these hours because that firm
had withdrawn from representing Appellant before conclusion of the case,
thereby waiving any claim to a fee. We hold that the trial court erred in
failing to consider these hours in its award of a reasonable fee “in favor of
the insured,” as provided in section 627.428. We also agree with Appellant that
the trial court erred in limiting its prejudgment interest calculation by only
including interest accruing through the date of the evidentiary fee hearing
rather than the date it entered judgment. On cross-appeal, Appellee challenges
a portion of the hours awarded by the trial court, claiming that they are
attributable to time expended by Appellant’s counsel while employed by a
different prior firm. We affirm the issue raised on cross-appeal without
further discussion.
the adequacy of his attorney’s fee award, pursuant to section 627.428, Florida
Statutes (2010), rendered in this first-party insurance dispute. As the first
of two issues raised on appeal, we address whether the trial court erred by
refusing to consider the hours expended by Appellant’s attorney while he was working
at a prior law firm — the firm that originated the claim on Appellant’s
behalf. The trial court categorically rejected these hours because that firm
had withdrawn from representing Appellant before conclusion of the case,
thereby waiving any claim to a fee. We hold that the trial court erred in
failing to consider these hours in its award of a reasonable fee “in favor of
the insured,” as provided in section 627.428. We also agree with Appellant that
the trial court erred in limiting its prejudgment interest calculation by only
including interest accruing through the date of the evidentiary fee hearing
rather than the date it entered judgment. On cross-appeal, Appellee challenges
a portion of the hours awarded by the trial court, claiming that they are
attributable to time expended by Appellant’s counsel while employed by a
different prior firm. We affirm the issue raised on cross-appeal without
further discussion.
Appellant was represented by three
different law firms during the course of the proceedings below, although the
same lawyer, Hewett G. Woodward, handled the case throughout the six-year
dispute. Initially, Woodward worked for Latham, Shuker, Eden & Beaudine,
LLP. He then switched to another law firm before starting his own firm. When
Woodward left the Latham firm, the firm advised Appellant in writing that he
had two options: (1) hire Woodward to complete the case or (2) engage a
different lawyer of his choosing. For reasons that are not in the record, the
letter did not offer Appellant the option of continuing with the Latham firm.
The fee agreements between Appellant and all firms were contingent on a
successful outcome and required payment of the greater of a percentage of the
recovery or a statutory reasonable fee.
different law firms during the course of the proceedings below, although the
same lawyer, Hewett G. Woodward, handled the case throughout the six-year
dispute. Initially, Woodward worked for Latham, Shuker, Eden & Beaudine,
LLP. He then switched to another law firm before starting his own firm. When
Woodward left the Latham firm, the firm advised Appellant in writing that he
had two options: (1) hire Woodward to complete the case or (2) engage a
different lawyer of his choosing. For reasons that are not in the record, the
letter did not offer Appellant the option of continuing with the Latham firm.
The fee agreements between Appellant and all firms were contingent on a
successful outcome and required payment of the greater of a percentage of the
recovery or a statutory reasonable fee.
Appellant signed and returned the
letter to the Latham firm, indicating his intent to continue with Woodward as
his attorney. The Latham firm then filed a notice of charging lien and
subsequently obtained court permission to withdraw as Appellant’s counsel of
record. During the resolution of a dispute between Appellant and the Latham
firm concerning the merits of the firm’s charging lien, the Latham firm’s
letter to Appellant was introduced into evidence. The trial court concluded
that the Latham firm had forfeited or waived its entitlement to a fee by
withdrawing from Appellant’s representation before the occurrence of the
contingency. This ruling was apparently not challenged by the Latham firm and
is conceded as correct by the parties to this proceeding.1
letter to the Latham firm, indicating his intent to continue with Woodward as
his attorney. The Latham firm then filed a notice of charging lien and
subsequently obtained court permission to withdraw as Appellant’s counsel of
record. During the resolution of a dispute between Appellant and the Latham
firm concerning the merits of the firm’s charging lien, the Latham firm’s
letter to Appellant was introduced into evidence. The trial court concluded
that the Latham firm had forfeited or waived its entitlement to a fee by
withdrawing from Appellant’s representation before the occurrence of the
contingency. This ruling was apparently not challenged by the Latham firm and
is conceded as correct by the parties to this proceeding.1
After Appellant and Appellee settled
the underlying dispute, Appellee agreed that Appellant was entitled to a
reasonable fee. It contended, however, that the trial court should disregard
the 247.2 hours logged by Woodward while he was employed by the Latham firm
because that firm had forfeited its fee. The trial court agreed. Accordingly,
it refused to consider whether all or any portion of those 247.2 hours were
reasonably incurred and could be included in its determination of a reasonable
fee under the statute. Appellant challenges this conclusion, which we review de
novo.
the underlying dispute, Appellee agreed that Appellant was entitled to a
reasonable fee. It contended, however, that the trial court should disregard
the 247.2 hours logged by Woodward while he was employed by the Latham firm
because that firm had forfeited its fee. The trial court agreed. Accordingly,
it refused to consider whether all or any portion of those 247.2 hours were
reasonably incurred and could be included in its determination of a reasonable
fee under the statute. Appellant challenges this conclusion, which we review de
novo.
We begin our analysis with a
discussion of the applicable statute. Section 627.428 provides that a trial
court “shall adjudge or decree against the insurer and in favor of the
insured [who prevails] . . . a reasonable sum as fees or compensation for
the insured’s . . . attorney.” § 627.428, Fla. Stat. (2010) (emphasis added).
“[T]he statute is a one-way street offering the potential for attorneys’ fees
only to the insured.” Danis Indus. Corp. v. Ground Improvement Techniques,
Inc., 645 So. 2d 420, 421 (Fla. 1994). As the plain language of section
627.428 clearly establishes, the fees owed under the statute belong to “the insured
not the insured’s attorney.” Fortune Ins. Co. v. Gollie, 576 So. 2d
796, 797 (Fla. 5th DCA 1991). The statute does not specify the methodology of
calculating the “reasonable sum [or] fees” to which the insured is entitled.
Accordingly, courts typically determine the amount by multiplying the
reasonable number of hours expended by a reasonable hourly rate.2 Fla. Patient’s Comp. Fund v. Rowe,
472 So. 2d 1145, 1150- 51 (Fla. 1985).
discussion of the applicable statute. Section 627.428 provides that a trial
court “shall adjudge or decree against the insurer and in favor of the
insured [who prevails] . . . a reasonable sum as fees or compensation for
the insured’s . . . attorney.” § 627.428, Fla. Stat. (2010) (emphasis added).
“[T]he statute is a one-way street offering the potential for attorneys’ fees
only to the insured.” Danis Indus. Corp. v. Ground Improvement Techniques,
Inc., 645 So. 2d 420, 421 (Fla. 1994). As the plain language of section
627.428 clearly establishes, the fees owed under the statute belong to “the insured
not the insured’s attorney.” Fortune Ins. Co. v. Gollie, 576 So. 2d
796, 797 (Fla. 5th DCA 1991). The statute does not specify the methodology of
calculating the “reasonable sum [or] fees” to which the insured is entitled.
Accordingly, courts typically determine the amount by multiplying the
reasonable number of hours expended by a reasonable hourly rate.2 Fla. Patient’s Comp. Fund v. Rowe,
472 So. 2d 1145, 1150- 51 (Fla. 1985).
The fee agreement between a lawyer
and client, no matter how reasonable, does not control the amount of fees
assessed against a third-party under a fee-shifting statute. For example, even
though a lawyer and client may appropriately agree to a percentage-based fee
agreement, where the contractual fee results in an effective hourly fee that
greatly exceeds a customary and reasonable hourly rate, a third-party cannot be
assessed a fee based upon the percentage formula. See, e.g., Kaufman
& Broad Home Sys., Inc. v. Sebring Airport Auth., 366 So. 2d 1230 (Fla.
2d DCA 1979) (where contingency contract resulted in hourly fee over three
times reasonable hourly rate, award of fees based on contingency formula was
excessive). The converse is also true. When a party is not contractually
obligated to pay her lawyer or is obligated to pay the lawyer less than market
rate, the party may still recover a reasonable fee using the Rowe formula
under a fee-shifting statute. See, e.g., Rogers v. Vulcan Mfg. Co.,
93 So. 3d 1058, 1061 (Fla. 1st DCA 2012) (prevailing party could recover fees
even though paid by employer); Wright v. Acierno, 437 So. 2d 242, 244
(Fla. 5th DCA 1983) (reasonable fee not limited to amount paid by city to
salaried attorney); see also Aspen v. Bayless, 564 So. 2d 1081, 1082
(Fla. 1990) (fact that insurer paid costs did not preclude recovery under offer
of judgment statute).
and client, no matter how reasonable, does not control the amount of fees
assessed against a third-party under a fee-shifting statute. For example, even
though a lawyer and client may appropriately agree to a percentage-based fee
agreement, where the contractual fee results in an effective hourly fee that
greatly exceeds a customary and reasonable hourly rate, a third-party cannot be
assessed a fee based upon the percentage formula. See, e.g., Kaufman
& Broad Home Sys., Inc. v. Sebring Airport Auth., 366 So. 2d 1230 (Fla.
2d DCA 1979) (where contingency contract resulted in hourly fee over three
times reasonable hourly rate, award of fees based on contingency formula was
excessive). The converse is also true. When a party is not contractually
obligated to pay her lawyer or is obligated to pay the lawyer less than market
rate, the party may still recover a reasonable fee using the Rowe formula
under a fee-shifting statute. See, e.g., Rogers v. Vulcan Mfg. Co.,
93 So. 3d 1058, 1061 (Fla. 1st DCA 2012) (prevailing party could recover fees
even though paid by employer); Wright v. Acierno, 437 So. 2d 242, 244
(Fla. 5th DCA 1983) (reasonable fee not limited to amount paid by city to
salaried attorney); see also Aspen v. Bayless, 564 So. 2d 1081, 1082
(Fla. 1990) (fact that insurer paid costs did not preclude recovery under offer
of judgment statute).
Although there are circumstances
where the contractual relationship between a lawyer and client might cap the
fees that may be recovered under a fee-shifting statute, here, the fee
agreements did not establish a cap because they contained “alternative fee
recovery clauses,” under which Appellant agreed to pay the greater of a
percentage of the recovery or the statutory fee. Under this fee arrangement,
the contractual agreement does not operate as a cap on statutory fees. This
principle is illustrated in First Baptist Church of Cape Coral, Florida,
Inc. v. Compass Construction, Inc., 115 So. 3d 978 (Fla. 2013). There, the
attorney defended an action pursuant to an hourly fee contract with the prevailing
party’s insurer. First Baptist Church, 115 So. 3d at 979. The contract
specified an hourly rate of $170 and contained no contingency. Id. However,
the fee contract also contained an “alternative fee recovery clause”
authorizing a rate of $300 per hour (or higher as determined by a court) in the
event the fee was ultimately paid by a third party under a fee-shifting
contract or statute. Id. at 979-80. In reinstating the trial court’s
award of $350 per hour in fees, the Florida Supreme Court concluded that its
prior precedents capping fees to the “fee agreement reached by the attorney and
his client” did not apply to a fee contract containing an “alternative fee
recovery clause.” Id. at 979, 983 (citation omitted).
where the contractual relationship between a lawyer and client might cap the
fees that may be recovered under a fee-shifting statute, here, the fee
agreements did not establish a cap because they contained “alternative fee
recovery clauses,” under which Appellant agreed to pay the greater of a
percentage of the recovery or the statutory fee. Under this fee arrangement,
the contractual agreement does not operate as a cap on statutory fees. This
principle is illustrated in First Baptist Church of Cape Coral, Florida,
Inc. v. Compass Construction, Inc., 115 So. 3d 978 (Fla. 2013). There, the
attorney defended an action pursuant to an hourly fee contract with the prevailing
party’s insurer. First Baptist Church, 115 So. 3d at 979. The contract
specified an hourly rate of $170 and contained no contingency. Id. However,
the fee contract also contained an “alternative fee recovery clause”
authorizing a rate of $300 per hour (or higher as determined by a court) in the
event the fee was ultimately paid by a third party under a fee-shifting
contract or statute. Id. at 979-80. In reinstating the trial court’s
award of $350 per hour in fees, the Florida Supreme Court concluded that its
prior precedents capping fees to the “fee agreement reached by the attorney and
his client” did not apply to a fee contract containing an “alternative fee
recovery clause.” Id. at 979, 983 (citation omitted).
In his thoughtful dissent in First
Baptist Church, Justice Lewis argued that a distinction should be made
between statutory fee-shifting provisions and a contractual provision for
indemnification, such as the one in First Baptist Church. In the latter
situation, Justice Lewis urged that the fee should be limited to what the
prevailing party is obligated to pay because indemnity is, by its nature, a
“reimbursement obligation.” Id. at 989-90 (Lewis, J., dissenting). Fee
shifting statutes, on the other hand, are not predicated on a reimbursement
theory; they are based on the public policy. Although this distinction did not
carry the day in First Baptist Church, Justice Lewis’s analysis
highlights the fact that the court rejected the notion that fee-shifting
remedies are grounded in an indemnity theory. If they were so grounded, in a
case such as Kaufman, the prevailing party would be entitled to
reimbursement of a percentage fee, even if this were to result in an effective
hourly rate far exceeding the prevailing hourly rate.
Baptist Church, Justice Lewis argued that a distinction should be made
between statutory fee-shifting provisions and a contractual provision for
indemnification, such as the one in First Baptist Church. In the latter
situation, Justice Lewis urged that the fee should be limited to what the
prevailing party is obligated to pay because indemnity is, by its nature, a
“reimbursement obligation.” Id. at 989-90 (Lewis, J., dissenting). Fee
shifting statutes, on the other hand, are not predicated on a reimbursement
theory; they are based on the public policy. Although this distinction did not
carry the day in First Baptist Church, Justice Lewis’s analysis
highlights the fact that the court rejected the notion that fee-shifting
remedies are grounded in an indemnity theory. If they were so grounded, in a
case such as Kaufman, the prevailing party would be entitled to
reimbursement of a percentage fee, even if this were to result in an effective
hourly rate far exceeding the prevailing hourly rate.
Applying these principles here, we
conclude that the trial court should have considered all of the hours
reasonably expended by all of Appellant’s attorneys in its calculation of a fee
to be awarded to the insured. Under the plain language of the statute and our
controlling precedent, the entitlement to a reasonable fee is Appellant’s
right, not his attorney’s.3 Appellant’s legal obligation to his
attorneys had no bearing on the methodology for calculating a reasonable fee.
Appellee’s argument that the fee-shifting statute only permits the court to “reimburse
[Appellant] for the attorney’s fees incurred” ignores the
plain language of the statute and distorts its objective. Indemnity is not the
objective of this statute. This statute is calculated to level the playing
field so that aggrieved insureds can find competent counsel to represent them.
This is especially true in small cases such as this one, where a percentage
formula alone would not provide the incentive for a lawyer to undertake a case
involving the potential commitment of many hours and substantial costs. The
statute is also intended to dissuade insurers from delaying or denying the
payment of legitimate claims.
conclude that the trial court should have considered all of the hours
reasonably expended by all of Appellant’s attorneys in its calculation of a fee
to be awarded to the insured. Under the plain language of the statute and our
controlling precedent, the entitlement to a reasonable fee is Appellant’s
right, not his attorney’s.3 Appellant’s legal obligation to his
attorneys had no bearing on the methodology for calculating a reasonable fee.
Appellee’s argument that the fee-shifting statute only permits the court to “reimburse
[Appellant] for the attorney’s fees incurred” ignores the
plain language of the statute and distorts its objective. Indemnity is not the
objective of this statute. This statute is calculated to level the playing
field so that aggrieved insureds can find competent counsel to represent them.
This is especially true in small cases such as this one, where a percentage
formula alone would not provide the incentive for a lawyer to undertake a case
involving the potential commitment of many hours and substantial costs. The
statute is also intended to dissuade insurers from delaying or denying the
payment of legitimate claims.
We have not overlooked Appellee’s
argument that our decision might result in a windfall to Appellant if he
recovers fees that he is not obligated to pay either his past or present
attorneys. The factual basis for this assertion is unclear on this record.
Nevertheless, we note that the flip-side is that an insurer might reap a
windfall if it is ordered to pay a fee that is less than the “reasonable sum”
mandated by the statute. In the rare circumstance that this Hobson’s choice
actually occurs, we think the statutory language mandates that any alleged
windfall inure to the insured.4 See Buckley Towers Condo., Inc. v.
Katzman Garfinkel Rosenbaum, LLP, 519 F.App’x 657, 666 n.12 (11th Cir.
2013) (explaining that client should be entitled to excess amount resulting
from difference between attorney’s fee recovered and attorney’s fee due).
argument that our decision might result in a windfall to Appellant if he
recovers fees that he is not obligated to pay either his past or present
attorneys. The factual basis for this assertion is unclear on this record.
Nevertheless, we note that the flip-side is that an insurer might reap a
windfall if it is ordered to pay a fee that is less than the “reasonable sum”
mandated by the statute. In the rare circumstance that this Hobson’s choice
actually occurs, we think the statutory language mandates that any alleged
windfall inure to the insured.4 See Buckley Towers Condo., Inc. v.
Katzman Garfinkel Rosenbaum, LLP, 519 F.App’x 657, 666 n.12 (11th Cir.
2013) (explaining that client should be entitled to excess amount resulting
from difference between attorney’s fee recovered and attorney’s fee due).
REVERSED AND REMANDED, as to appeal;
AFFIRMED as to cross-appeal. (TORPY, EDWARDS and EISNAUGLE, JJ., concur.)
AFFIRMED as to cross-appeal. (TORPY, EDWARDS and EISNAUGLE, JJ., concur.)
__________________
1As we have previously held, when an
attorney is employed on a contingency basis, unless he is discharged by the
client without cause before the contingency occurs, he forfeits his right to a
fee by withdrawing before the contingency occurs. Kirschner v. Biritz,
843 So. 2d 349, 350 (Fla. 5th DCA 2003). The only exceptions to this rule are
when the attorney’s continued representation is “legally impossible” or when
the “client’s conduct would cause the attorney to violate the law or an ethical
rule of conduct.” DePena v. Cruz, 884 So. 2d 1062, 1063-64 (Fla. 2d DCA
2004).
attorney is employed on a contingency basis, unless he is discharged by the
client without cause before the contingency occurs, he forfeits his right to a
fee by withdrawing before the contingency occurs. Kirschner v. Biritz,
843 So. 2d 349, 350 (Fla. 5th DCA 2003). The only exceptions to this rule are
when the attorney’s continued representation is “legally impossible” or when
the “client’s conduct would cause the attorney to violate the law or an ethical
rule of conduct.” DePena v. Cruz, 884 So. 2d 1062, 1063-64 (Fla. 2d DCA
2004).
2The trial
court did not apply a multiplier here, a ruling that is not challenged.
court did not apply a multiplier here, a ruling that is not challenged.
3On this
basis we distinguish Liberty Mutual Insurance Co. v. Holbrook, 861 So.
2d 1216 (Fla. 2d DCA 2003), upon which Appellee relies. In that case, the
attorney, who had forfeited her fee by withdrawing, intervened in the action
and asserted entitlement to a fee in her own right. Holbrook, 861 So. 2d
at 1217. Consistent with our precedents in Fortune Insurance Co. v. Gollie,
576 So. 2d 796 (Fla. 5th DCA 1991), and Kirschner v. Biritz, 843 So. 2d
349 (Fla. 5th DCA 2003), our sister court properly rejected the attorney’s
claim to fees. Holbrook did not address the situation we have here,
where the insured is the party seeking the fee to which the insured is
statutorily entitled.
basis we distinguish Liberty Mutual Insurance Co. v. Holbrook, 861 So.
2d 1216 (Fla. 2d DCA 2003), upon which Appellee relies. In that case, the
attorney, who had forfeited her fee by withdrawing, intervened in the action
and asserted entitlement to a fee in her own right. Holbrook, 861 So. 2d
at 1217. Consistent with our precedents in Fortune Insurance Co. v. Gollie,
576 So. 2d 796 (Fla. 5th DCA 1991), and Kirschner v. Biritz, 843 So. 2d
349 (Fla. 5th DCA 2003), our sister court properly rejected the attorney’s
claim to fees. Holbrook did not address the situation we have here,
where the insured is the party seeking the fee to which the insured is
statutorily entitled.
4The fact
that this case is one of first impression suggests that this is a rare
circumstance and that law firms more often offer the client served by a
departing lawyer the opportunity to continue with the firm, providing the form
of notice authorized by Rule Regulating The Florida Bar 4-5.8(d).
that this case is one of first impression suggests that this is a rare
circumstance and that law firms more often offer the client served by a
departing lawyer the opportunity to continue with the firm, providing the form
of notice authorized by Rule Regulating The Florida Bar 4-5.8(d).
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