Florida Supreme Court states 5th District erred in applying 'rare' requirement for fees

By Elizabeth Alt | Oct 31, 2017

TALLAHASSEE, Fla. (Legal Newsline) – The Florida Supreme Court has remanded a case filed by an elderly couple against their insurer back to the 5th District to reinstate an award of attorney's fees.

The Florida Supreme Court overturned the appellate court’s ruling Oct. 19 to grant contingency fee multiplier fees to an attorney representing a retired couple in a case against their insurer, Federated National.

The court noted that the appellate court incorrectly interpreted the language used to determine whether to use a contingency multiplier fee, narrowly focusing on the term “rare.”

Justice Barbara Pariente stated in the opinion for the Florida Supreme Court that the term “wasn’t intended for the contingency fee 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.”

According to the court opinion, William and Judith Joyce, a retired Florida couple, filed a claim for water damage to their home with their insurance company, Federated National. But Federated National denied their claim on the grounds of material misrepresentation, stating that the Joyces had not told it about several claims filed with their previous insurance company. 

In discovery, it was found that the Joyces had in fact told Federated about the other claims, and the parties settled. Federated National appealed the 5th Circuit decision to award the attorneys fees, saying that the case didn’t warrant a fee multiplier because there was nothing “exceptional" or “rare” about the circumstances of the case.

The Joyces claimed they could not afford to hire a lawyer on an hourly basis, but hired attorney Tracy L. Markham, who took the couple on a contingency basis, the opinion states. The trial court concluded that the Joyces did not have many local options for counsel in who specialized in lawsuits for plaintiffs against their insurance companies, and that most lawyers wouldn’t have accepted the case without a contingency fee multiplier, the court stated. 

According to the ruling, Markham previously stated that because the Joyces could not pay a retainer, she was relying on the multiplier, as she often has fees and losses she cannot recover in cases. The trial court determined it would not have been possible to obtain competent representation, or mitigate the risk of non-payment, without a contingency fee multiplier.

On appeal, the 5th Circuit affirmed the lodestar fee but reversed the contingency fee multiplier, stating that following the standard set by the U.S. Supreme Court decision in the 1985 case of Rowe that established attorneys fees for a prevailing party, the contingency fee multiplier should be used only in rare or exceptional cases. 

It reasoned that the Joyces' case was not complex as the trial court concluded, and that they could have easily found another attorney to represent them, noting that the Joyces had in fact only made one phone call to secure a lawyer, the ruling states.

“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,'” Pariente stated. 

The court expounded that in other cases, it has reaffirmed and emphasized that the lodestar amount is the starting point. When the Florida Supreme Court re-reviewed Rowe in the Quanstrom case, after confusion in trial courts as to whether the courts had to issue a contingency fee multiplier, they separated attorney’s fees cases into categories that determine the appropriate attorneys fees based on case type.

The court emphasized the importance of contingency fee multipliers to those in need of legal counsel and emphasized that trial courts have the discretion to consider contingency fee multipliers so long as there is evidence shown to support the need. Pariente noted that this was done in large part to dissuade insurance companies from challenging valid claims and making sure an insured would be reimbursed attorney fees if they had to go to trial against their insurer.

Pariente stated in the opinion, “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.”

In the dissenting opinion, Justice Charles Canady said that the testimonies in trial court of a fee expert and the insured’s attorney was not “logical or reasonable” evidence, calling the trial court’s decision to award a multiplier “seriously flawed." 

Canady said the majority needs to acknowledge that the relevant market factor should be a wider geographical region in this day and age. Canady says this is setting the bar very low for implication of the multiplier, and that attorneys are already very motivated to take these cases without a contingency multiplier fee. Canady called for “full re-examination in a future case of our multiplier jurisprudence”.

Derek J. Angell of O’Connor & O’Connor in Winter Park, Florida, was counsel for Federated National. The Joyces were represented by Tracy L. Markham of Avolio & Hanlon in St. Augustine, Florida.

Supreme Court of Florida case number SC16-103

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