Insurance — Automobile — Attorney’s fees — Where, after
insured had filed breach of contract complaint against insurer for failure to
pay automobile theft claim, insurer made payment to lienholder of automobile,
insurer’s payment to lienholder was the functional equivalent of a confession of
judgment, and trial court erred in denying insured’s motion for attorney’s fees
for prosecuting his case against insurer — Trial court properly denied
insured’s motion for fees for defending insurer’s counterclaims which were
dismissed for lack of prosecution because order granting motion to dismiss for
lack of prosecution was not a judgment or the functional equivalent of a
judgment in insured’s favor

KOOK C. DO, Appellant, vs. GEICO GENERAL INSURANCE COMPANY, Appellee. 3rd
District. Case No. 3D12-1655. L.T. Case No. 07-35663. Opinion filed February 26,
2014. An appeal from the Circuit Court for Miami-Dade County, Gisela Cardonne
Ely, Judge. Counsel: Montes & Associates Law Firm, P.A., and Juan C. Montes,
for appellant. Clark, Robb, Mason, Coulombe, Buschman & Charbonnet and James
K. Clark and Rafael T. De La Grana, for appellee.

(Before WELLS, ROTHENBERG, and LAGOA, JJ.)

(LAGOA, Judge.) The Appellant, Kook C. Do (“Do”), appeals from an order
denying his renewed motion for attorney’s fees and costs. For the following
reasons, we affirm in part and reverse in part.

I. FACTUAL AND PROCEDURAL HISTORY

On May 21, 2007, Officer Curtis Stone, a law enforcement park ranger for the
U.S. Fish and Wildlife Services, discovered Do’s leased silver Audi A8 partially
submerged in a canal in a restricted area of the Loxahatchee National Wildlife
Refuge. Officer Stone observed two men, Marcos Franca and Douglas Capisch, at
the scene. Officer Stone, along with Officer Biagiotti from the Palm Beach
County Sheriff’s Office, detained both men and questioned them about the
partially submerged Audi. Because the vehicle had not been reported missing,
Franca and Capisch were charged with illegal dumping.

Do, the owner of the Audi, reported the theft of his vehicle to his auto
insurer,1 the Appellee, GEICO General
Insurance Company (“GEICO”). Do submitted a claim under his policy, which GEICO
did not pay.

On October 23, 2007, Do filed a Complaint against GEICO for breach of
contract. In its answer, GEICO alleged that coverage was not afforded under the
policy because the loss of the Audi was not “accidental” and that Do was
complicit in the theft of his own vehicle.

On September 24, 2008, GEICO made a payment of $44,242.18 to the vehicle
lienholder named in Do’s policy, Audi Bank USA. A representative for GEICO
testified in a deposition that the payment was made under the policy,2 and represented the pre-loss value of the Audi,
plus sales tax, minus Do’s policy deductible. Upon learning of GEICO’s payment,
Do filed a motion for attorney’s fees and costs arguing that, pursuant to
Wollard v. Lloyd’s & Cos. of Lloyd’s, 439 So. 2d 217 (Fla. 1983), the
payment made by GEICO to the lienholder was the functional equivalent of a
confession of judgment, and that Do therefore was entitled to attorney’s fees
and costs under section 627.428, Florida Statutes (2008).

Two months later, the trial court permitted GEICO to file an Amended Answer
and Counterclaims to Do’s Complaint, asserting for the first time the following
five counterclaims against Do: (1) civil conspiracy; (2) unjust enrichment; (3)
fraudulent misrepresentation; (4) fraud in the inducement; and (5) civil RICO
violations.

The trial court subsequently held a hearing on Do’s motion for attorney’s
fees and costs, and denied the motion. Do appealed the denial to this Court, and
GEICO filed a motion to dismiss the appeal as premature, as its counterclaims
remained pending below. On February 22, 2010, this Court dismissed Do’s appeal
for lack of jurisdiction.

On June 13, 2011, GEICO filed before the trial court a motion to dismiss the
case for lack of prosecution because there had been no record activity for one
year. On June 21, 2011, Do also filed a motion to dismiss for lack of
prosecution, agreeing that the case should be dismissed because there had been
no record activity on the only remaining claims — GEICO’s counterclaims. The
trial court subsequently entered an order granting both motions on July 13,
2011.

On July 15, 2011, Do filed a renewed motion for attorney’s fees and costs,
asserting that under section 627.428 he was entitled to fees for prosecuting his
claim, and for defending the now dismissed counterclaims. The trial court denied
the renewed motion, and this appeal ensued.

II. STANDARD OF REVIEW

The proper standard of review for a lower court’s ruling on a party’s
entitlement to an award of attorney’s fees pursuant to section 627.428, is de
novo. See Jerkins v. USF & G Specialty Ins. Co., 982 So.
2d 15 (Fla. 5th DCA 2008).

III. ANALYSIS

“The issue of awarding attorney’s fees under section 627.428, Florida
Statutes, has been litigated and is now well settled in the State of Florida.”
Avila v. Latin Am. Prop. & Cas. Ins. Co., 548 So. 2d 894, 894 (Fla.
3d DCA 1989). Section 627.428 provides, in relevant part:

§ 627.428(1), Fla. Stat. (2008).

“Section 627.428 was intended ‘to discourage the contesting of valid claims
against insurance companies and to reimburse successful insureds for their
attorney’s fees when they are compelled to defend or sue to enforce their
insurance contracts.’ ” Progressive Express Ins. Co. v. Schultz, 948 So.
2d 1027, 1029-30 (Fla. 5th DCA 2007) (quoting Ins. Co. of N. Am. v.
Lexow, 602 So. 2d 528, 531 (Fla. 1992)). To that end, the Florida Supreme
Court held in Wollard v. Lloyd’s & Cos. of Lloyd’s, 439 So. 2d 217,
218 (Fla. 1983), that, although the statute requires the “rendition of a
judgment” in favor of the insured, where an insurer pays the policy proceeds
after a suit has been filed but before a judgment has been rendered, “the
payment of the claim is, indeed, the functional equivalent of a confession of
judgment or a verdict in favor of the insured.” Id. (emphasis added);
accord Augustin v. Health Options of S. Fla., Inc., 580 So. 2d
314, 315 (Fla. 3d DCA 1991); Amador v. Latin Am. Prop. & Cas. Ins.
Co., 552 So. 2d 1132, 1133 (Fla. 3d DCA 1989); Avila, 548 So. 2d at
894-95; Fortune Ins. Co. v. Brito, 522 So. 2d 1028, 1029 (Fla. 3d DCA
1988).

As a result, when an insurer voluntarily pays the disputed loss after suit is
filed, “ ‘[section 627.428] must be construed to authorize the award of an
attorney’s fee to an insured . . . even though technically no judgment for the
loss claimed is thereafter entered favorable to the insured.’ ” Wollard,
439 So. 2d at 218 (quoting Cincinnati Ins. Co. v. Palmer, 297 So. 2d 96,
99 (Fla. 4th DCA 1974)); see also Ajmechet v. United Auto. Ins.
Co., 790 So. 2d 575, 576 (Fla. 3d DCA 2001) (holding that the insured was
entitled to fees under section 627.428 “[b]ecause the payment was obviously
effected by the law suit”).

Because section 627.428 was intended to discourage litigation and encourage
prompt settlement, the Florida Supreme Court in Wollard refused to
“[r]equir[e] the plaintiff to continue litigation in spite of an acceptable
offer of settlement merely to avoid having to offset attorney’s fees against
compensation for the loss.” 439 So. 2d at 218. Thus, when insureds are compelled
to sue in order to enforce their insurance contracts, insurers cannot escape
liability for attorney’s fees under section 627.428 “simply by paying the policy
proceeds after suit is filed but before a judgment is actually entered because
to so construe the statute would do violence to its purpose, which is to
discourage litigation and encourage prompt disposition of valid insurance claims
without litigation.” Id. (quoting Gibson v. Walker, 380 So. 2d
531, 533 (Fla. 5th DCA 1980)).

To avoid this, GEICO argues that the payment was not a confession of
judgment, but rather, represented the “purchase price” it paid to the lienholder
in order to preserve the Audi for evidence in its counterclaims. We find this
argument without merit.

First, GEICO’s payment to the vehicle lienholder was made on September 24,
2008, after litigation was initiated but before GEICO asserted its counterclaims
against Do. In fact, GEICO did not file its counterclaims until two months after
Do filed his motion for attorney’s fees and costs based on GEICO’s alleged
confession of judgment. Second, we question how the counterclaims asserted by
GEICO would require the Audi as physical evidence, especially since GEICO’s
representative also testified that prior to “purchasing” the Audi to support its
counterclaims, it tried to return the car to the dealership, which would not
take it.

Additionally, even if this Court were persuaded by GEICO’s argument that the
$44,262.18 payment was to “purchase” the Audi, there is no requirement that an
insurer must intend to confess judgment in order for it to occur — the sole
fact that the claim was paid, without more, constitutes a settlement or judgment
within the meaning of section 627.428. See Avila, 548 So. 2d at
895.

In Avila, this Court was asked to determine whether there had been a
confession of judgment in an action where an insurer allegedly made payment of a
claim prior to the action being dismissed. In reversing the denial of attorney’s
fees to the insured, this Court indicated that the analysis of the issue was
simple: “[e]ither the check was issued or it was not.” 548 So. 2d at 895. This
Court remanded the action for findings as to whether a check was issued by the
insurer before the dismissal, emphasizing, “[i]f so, then the payment
constituted a settlement, and attorney’s fees are mandatory.” Id. Thus,
GEICO’s argument regarding its contended purpose for making the $44,262.18
payment is without merit.

Moreover, GEICO’s payment to the lienholder was in accordance with the terms
of the policy’s loss payable endorsement, which provides that any claim under
the physical damage coverages may be settled by separate payment to the
lienholder. This fact was affirmed by a representative for GEICO, who testified
in a deposition that the payment was made to the lienholder as an additional
insured under the policy. The representative further clarified that the amount
paid, $44,262.18, represented the cash value of the Audi, plus tax, minus Do’s
deductible under the policy. Accordingly, we conclude that GEICO confessed
judgment when it voluntarily paid the vehicle lienholder under the policy after
Do brought suit and that this payment entitled Do to attorney’s fees under
section 627.428.

Lastly, Do also argues that section 627.428 entitles him to attorney’s fees
for time spent defending GEICO’s counterclaims, which were filed after it paid
the lienholder. Although Do is entitled to attorney’s fees under section 627.428
for time spent prosecuting his suit, Do’s claim for fees to include work related
to GEICO’s counterclaims is without merit. Section 627.428 requires an insurer
to pay attorney’s fees only upon rendition of a “judgment or decree” in favor of
the insured. Here, the trial court on July 13, 2011, dismissed the case for lack
of prosecution.3 Although Wollard
requires GEICO’s earlier payment to be treated as the functional equivalent of a
confession of judgment in Do’s favor, the trial court’s later dismissal for lack
of prosecution was not a determination on the merits. See JB Int’l,
Inc. v. Mega Flight, Inc., 840 So. 2d 1147, 1150 (Fla. 5th DCA 2003);
Sacks v. Rickles, 155 So. 2d 400, 401 (Fla. 3d DCA 1963). Because the
order of dismissal was not a judgment in favor of the insured, or, under the
circumstances of this case, its functional equivalent, we affirm the trial
court’s order denying Do’s motion for fees and costs with respect to the
counterclaims. See Guarantee Ins. Co. v. Worker’s Temporary Staffing,
Inc., 61 So. 3d 1233, 1235 (Fla. 5th DCA 2011) (concluding that insurer’s
voluntary dismissal without prejudice was not concession on the merits and
therefore not a judgment or functional equivalent of a confession of judgment
under section 627.428); O.A.G. Corp. v. Britamco Underwriters, Inc., 707
So. 2d 785, 787 (Fla. 3d DCA 1998), abrogated on other grounds by
Caufield v. Cantele, 837 So. 2d 371 (Fla. 2002) (holding that insurer’s
voluntary dismissal did not constitute an adjudication on the merits and
therefore was not a judgment or the functional equivalent of a confession of
judgment under section 627.428).

IV. CONCLUSION

Because GEICO’s payment of the claim to the vehicle lienholder after Do filed
suit against it was the functional equivalent of a confession of judgment in
favor of Do, the trial court erred in denying an award of attorney’s fees to Do
for prosecuting his suit pursuant to section 627.428.

Do, however, is not entitled to additional fees for time spent defending
GEICO’s counterclaims because the order granting the motions to dismiss for
failure to prosecute was not a judgment, or the functional equivalent of a
judgment, in Do’s favor. The order on appeal is therefore affirmed in part,
reversed in part and remanded to the trial court for determination of the amount
of the fees.

AFFIRMED IN PART, REVERSED IN PART AND REMANDED.

__________________

1Do alleged in his complaint that he
reported his Audi stolen on May 19, 2007 — two days before the car was
recovered on May 21. GEICO, however, claims that Do reported the Audi missing on
May 21, 2007.

2The policy contains a loss payable
endorsement that provides that any claim under the physical damage coverages of
the policy “will be paid jointly to the insured and the Lienholder,” and that
GEICO may settle a claim at its option by separate payment to the insured and
the lienholder.

3A dismissal for lack of prosecution
operates to dismiss the entire action, and not isolated claims or counterclaims.
Leon v. Old Republic Ins. Co., 561 So. 2d 1304 (Fla. 3d DCA 1990). Here,
however, no part of Do’s case remained pending after GEICO made payment. As Do
argued in his motion to dismiss for lack of prosecution, after GEICO paid the
lienholder, there remained nothing left for Do to prosecute on his claim other
than the assessment of fees and costs against GEICO. GEICO, however, contested
Do’s entitlement to fees under section 627.428, and then filed several
counterclaims against Do. The trial court denied Do’s motion for fees pending
resolution of the counterclaims. When GEICO failed to take any action, Do moved
to dismiss for lack of prosecution.