On December 30, 2015, the 5th DCA issues its decision in Citizens Property Ins. Corp. v. Pulloquinga. The case dealt with a coverage dispute from a fire loss which resulted in a total loss to the dwelling and personal property. Citizens initially issued a payment of $5,000.00 but made no further payments. Suit was filed and Citizens asserted affirmative defenses of arson, fraud, material misrepresentation, and policy avoidance. The trial court entered summary judgment in favor of Pulloquinga and Citizens tendered coverage limits on the eve of trial. The trial court entered a Final Judgment for Plaintiff’s Attorney’s Fees and Costs which Citizens appealed.
The 3rd DCA affirmed the application of a contingency risk multiplier of 1.5 but reversed an award of time and costs for travel and reversed an award of costs for “back-up experts” on the grounds that there was no evidence to support the necessity of the costs. The court relied upon another 3rd DCA decision issued earlier this year in TRG Columbus Dev. Venture, Ltd. v. Sifontes, 163 So.3d 548 (Fla. 3rd DCA 2015) which affirmed a 2.0 multiplier finding that there was competent substantial evidence to support it. The court noted that there was direct evidence that “competent counsel willing both to take such cases on a contingency fee basis and to take such cases to final judgment were few in number”.
The 3rd DCA noted that the evidence showed that “Pullonquinga interviewed seven attorneys who would only have accepted her case under an up-front fee agreement and a few others would only have accepted the case if she had been willing to agree to a partial settlement”. The court further noted that there was evidence that “there were no other attorneys willing to accept Pulloquinga’s case who were willing to take the case on a contingency and try it to final judgment”.
The 3rd DCA cited to Michnal v. Palm Coast Dev. Inc., 842 So.2d 927 (Fla. 4th DCA 2003) which held that “a primary rationale for the contingency risk multiplier is to provide access to competent counsel for those who could afford it”. The court held that “multipliers are intended to level the playing field, to provide litigants, who may otherwise lack the resources, to obtain competent counsel, as a means of access to the legal system”.
The court also cited to Zunde v. Int’l Paper Co., 13 Fla. L. Weekly Fed. D346 (M.D. Fla. 2000), which considered the financial condition of the plaintiff and noted that “he is a lone individual versus a large business entity”. The 3RD DCA seemed to rely heavily on the financial situation of the plaintiff, noting that she was left in “meager housing due to her dire financial situation”. The court also repeatedly noted the contentious nature of the litigation and defenses posed.
It’s interesting to note that the 3rd DCA in Pulloquingamakes no reference to its decision issued on September 16, 2015, in State Farm Fla. Ins. Co. v. Alvarez, 175 So.3d 352 (Fla. 3rd 2015), which dealt with a supplemental claim for Hurricane Wilma. The claim was settled at mediation and an award of fees was entered, which State Farm appealed the number of hours, the hourly rate, and the application of a 1.5 multiplier. The appellate court affirmed the hourly rate but reversed on the number of hours and the application of a multiplier. The court held that,
The application of a multiplier is the exception, not the rule. As the United States Supreme Court has explained, there is strong presumption that the lodestar figure is reasonable and this presumption is overcome only in rare and exceptional circumstances. This presumption generally remains, even in a complex case, because the novelty and complexity of the case is typically reflected in the number of hours reasonably spent in the litigation. The novelty and complexity of the question involved should normally be reflected by the number of hours reasonably expended on the litigation. The novelty and complexity of a case generally may not be used as a ground for an enhancement because these factors presumably are fully reflected in the number of billable hours recorded by counsel.
The court further found that the number of hours was not reasonable, holding that “the trial court’s discretionary power is subject only to the test of reasonableness, but that test requires a determination of whether there is logic and justification for the result”. The court remanded to the trial court with specific instructions to “keep in mind that a court must consider the time that would ordinarily have been spent by lawyers in the community to resolve this particular type of dispute, which is not necessarily the number of hours actually expended by counsel in the case at issue”.
On November 20, 2015, the 5th DCA issued its decision in Federated Nat. Ins. Co. v. Joyce. The case dealt with a claim which was denied based on an alleged material misrepresentation on the homeowners insurance application. The lawsuit was settled and an award of fees was entered, which Federated appealed. The 5th DCA affirmed the lodestar figure of $38,000.00 but reversed the application of a multiplier of 2.0.
The 5th DCA referenced its previous decision inProgressive Express Ins. Co. v. Schultz, 948 So.2d 1027 (Fla. 5th 2007), wherein they held that there is “a strong presumption that the lodestar represents the reasonable fee”. The court also referenced Alvarez.
The appellate court noted that “as one would anticipate given todays’ legal market, there was no evidence the Joyces had any difficulty obtaining counsel to handle this matter”. The appellate court stated that “while we review the trial court’s decision for an abuse of discretion, we are not required to abandon what we learned as lawyers or our common sense in evaluate the reasonableness of an award”.
The 5th DCA’s decision is more in line with the analysis of the 3rd DCA in Alvarez as opposed to Pulloguinga, though the 3rd DCA made it clear that it was dealing with a very contentious lawsuit and unique circumstances inPulloguinga. While the court did not reference the “rare and exceptional circumstances” for applying a multiplier that it discussed in Alvarez, such analysis can be adduced. The standard of reviewing judgments for fees is abuse of discretion, which means great deference is given to the trial court. The appellate courts make it clear that the standard of reasonableness remains the polestar that should govern the award of fees.