This isn't your grandmother's referral

FLORIDA LAW WEEKLY

VOLUME 45, NUMBER 39

CASES FROM THE WEEK OCTOBER 2, 2020

FEE SPLITTING AGREEMENT BETWEEN TWO LAW FIRMS VOID FOR FAILING TO COMPLY WITH THE APPLICABLE FLORIDA BAR RULES ON CONTINGENCY FEE CONTRACTS—FIRMS MUST ABIDE BY THE RULE AND SEEK COURT APPROVAL OF SUCH AGREEMENTS, WHEN THE POTENTIAL TOTAL AMOUNT OF FEES COULD EXCEED THOSE AUTHORIZED BY THE FEE SCHEDULE IN 4-1.5.

Parker v. Santek Management, 45 Fla. L Weekly D2221 (Fla. 2nd DCA September 25, 2020):

After a man was rendered quadriplegic, he executed a contract with the first plaintiffs’ lawyer, the Gerber Law Group, which allowed a 40 percent contingency fee over any gross recovery over $100,000. It also established a division of responsibilities between that firm and another, Swope Rodante: 62.5% for Gerber, and 37.5% for Swope, the firm Gerber brought in to handle insurance coverage, bad faith and other legal issues. Because the fees exceeded those authorized under schedule rule 4-1.5, the agreement required—and received--court approval.

When the case got called for trial and the Gerber firm felt unable to try it, it asked the Swope firm to take over. However, there was evidence that the Gerber firm refused to re-negotiate the fee, which led the Swope firm to reject the offer to take on more work and responsibility, for the same percentage previously negotiated for support work.

This led the Gerber firm to contact the Harmon Parker firm to try the case. Despite that the agreement failed to spell out which firm would do what to justify the division of fees, and despite its failure to specify that the firms were assuming “joint legal responsibility,” the Gerber firm and Harmon Parker entered into the same agreement that Gerber and Swope entered, which required payment of a fee in excess of what is allowed in Rule 4-1.5(f). Two months later (though the Rule requires 10 days), the trial court approved the agreement.

The original case resulted in a $3.16 million contingency fee on an $8 million personal injury settlement. The Harmon Parker firm refused to pay the fee based on the initial agreement, paying itself an additional $390,000. Gerber sued for that portion of the fee, and the case went to trial, with the trial court entering a JNOV for Gerber, awarding that firm the money.

The Second DCA reversed, and entered judgment for Harmon Parker.

It found that the agreement violated the Bar rule, because it allowed for a fee in excess of the amounts allowed by the Bar without approval, and exceeded the fee amount allowed by the Bar to the lawyer “not primarily responsible” (in most cases, the referring attorney).

The Bar Rule prohibits referring attorneys from receiving more than 25% of the fee without court approval. To get that approval, the attorneys must provide a detailed list of services that each firm will perform to justify the higher division of fees, along with a statement that the two firms will assume joint responsibility to the client, as if they were partners in the same firm. Here, the agreement between the Gerber Firm and Harmon Parker failed to comply with these prescriptions.

Because the agreement was void against public policy and thus unenforceable, and because there was no claim pled for quantum merit, the court reversed judgment for the Gerber firm (the original lawyer who essentially referred the case to the Harmon Parker firm), and entered judgment for the Harmon Parker firm pursuant to the standard contingency fee contract.

This case makes it very clear how important it is to follow the bar rule when entering referral and other fee arrangements that vary from the standard contingency fee structure, and to get court approval of those arrangements.

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RELYING EXCLUSIVELY ON THE STATUTORY TEXT, OUR SUPREME COURT REFUSES TO APPLY THE “DELAYED DISCOVERY” DOCTRINE TO CLAIMS OF SEXUAL ABUSE BECAUSE THE STATUTE DOES NOT PROVIDE FOR IT.

R.R. v. New Life Community Church of CMA, Inc., 45 Fla. L Weekly S261 (Fla. October 1, 2020):

Two young women sued the New Life Community Church, along with the sexual abuser’s parents, for the sexual abuse the man perpetrated on them when they were children (the abuser and his parents were all employees of the Church). The abuse allegedly occurred during babysitting sessions when the man would “punish” the girls, by holding them in his lap and molesting them.

One plaintiff alleged the molestation occurred between 1998 and 2005 when she was ages 4 through 11, and the other alleged a single act of molestation in 1996 when she was 4. In 2013, the perpetrator pleaded guilty to federal child pornography charges, and is still serving a lengthy prison sentence.

The plaintiffs filed their lawsuits in 2014 against the man’s parents and the Church based on both negligence and respondeat superior claims. Relying on Hearndon v. Graham, 767 So.2d 1179 (Fla. 2000), the plaintiffs opposed the summary judgment brought based on the statute of limitations, arguing that the “delayed discovery” rule postponed the accrual of their claims, because they were abused, and they also relied on §§95.11(7) and 95.11(9) regarding “tolling,” and on equitable estoppel.

Looking to the statutes themselves, the court found that certain provisions of Chap. 95 mandated delayed discovery doctrine in cases of fraud, products liability, professional medical malpractice, and intentional torts based upon abuse. Because this case did not involve “intentional” torts against these defendants, that section did not apply.

The court emphasized several times, that courts must read the text of the statutes and consider the separation of powers. To give proper effect to statutes of limitations, the supreme court wrote, courts must “faithfully apply the accrual and tolling rules prescribed by the legislature.” (relying on a Justice Scalia concurrence as well as the Scalia & Garner text called “Reading Law: The Interpretation of Legal Texts.

Upon reviewing the applicable statutes, the majority of the Florida Supreme Court held there was no basis to extend the statutes of limitations for either of these plaintiffs’ claims.

BAD FAITH CLAIM TOSSED FOR FAILURE TO NOTE WITH SPECIFICITY THE POLICY LANGUAGE AND STATUTORY PROVISIONS AT ISSUE.

Julien v. United Property and Casualty Insurance Company, 45 Fla. L Weekly D2199 (Fla. 4th DCA September 23, 2020):

In his civil remedy notice, the plaintiff insured cited 35 statutory provisions and listed nearly every provision in the insurance policy, in support of his bad faith claim that the insurer paid part of the claim, while simultaneously sending the insured a reservation of rights, based on its belief that there may have been some manipulation of the claim.

The insured’s civil remedy notice alleged delay, an unsatisfactory settlement offer, unfair trade practices, a failure to properly investigate the claim, and failure to acknowledge and act promptly to communications regarding the claim. The insurer responded by stating that the investigation extended beyond the 90-day window because of factors outside of its control, and then disputed the remaining claims.

Shortly after plaintiff filed his lawsuit, the defendant moved to dismiss claiming that the civil remedy notice was facially invalid. The trial court agreed.

Looking to §624.155, the court explained that the statute providing a civil remedy for anyone damaged by an insurer’s conduct must give the insurer the ability to cure any grievances to avoid unnecessary bad faith litigation. To do so, the notice must be on a form provided by the department of financial services and must state the statutory provision, including the specific language of the statute which the insurer violated, the facts and circumstances giving rise to the violations, the name of any individual involved in the violation, and reference to specific policy language relevant to the violation.

The plain language of §624.155(3)(b) instructs the policyholder to “state with specificity” and to specify the “language of the statute, which the authorized insurer allegedly violated.”

The insured’s civil remedy notice here did not do that. Instead, it listed every statutory provision and every policy provision available to him. The court looked to several trial court decisions from federal courts, and then concluded that the way the plaintiff had listed all of the policy sections, along with 35 statutory provisions, failed to satisfy the specificity requirement set forth in the statute, requiring the insurer to identify the specific statute and specific policy provision relevant to the violation. The court upheld the dismissal.

TRIAL COURT ABUSED DISCRETION IN DENYING A RULE 1.540(b) MOTION TO SET ASIDE DEFAULT WITHOUT HOLDING AN EVIDENTIARY HEARING, BECAUSE THE MOTION ITSELF RAISED A COLORABLE ENTITLEMENT TO RELIEF.

Oshana v. Lopiano, 45 Fla. L Weekly D2208 (Fla. 3rd DCA September 23, 2020):

The defendant moved to vacate based on his attorney’s excusable neglect, and on the fact that he had never been personally served (thus making the judgment void). These allegations raised a colorable issue, necessitating an evidentiary hearing on defendants’ 1.540 motion.

TRIAL COURT PROPERLY ENTERED SUMMARY JUDGMENT FOR DEFENDANT FUNERAL HOME ON CLAIMS OF INTERFERENCE WITH THE DEAD BODY AND EMOTIONAL DISTRESS, WHERE PLAINTIFFS FAILED TO PROVIDE NOTICE OF THEIR SUMMARY JUDGMENT EVIDENCE AS REQUIRED BY THE MANDATORY LANGUAGE OF RULE 1.510(c).

Hunt v. SCI Funeral Services of Florida, LLC, 45 Fla. L Weekly D2209 (Fla. 3rd DCA September 23, 2020):

In a case that should get everyone’s attention, the defendant moved for summary judgment. At the hearing, defendant pointed out that plaintiffs’ counsel failed to file any opposition to the motion. Instead, they simply relied on evidence that was in the record, having been attached to their previously filed motion to amend to add punitive damages.

Pursuant to Rule 1.510(c)—a mandatory rule—the adverse party must identify by notice any summary judgment evidence upon which the adverse party relies, five days before the hearing. The court ruled that the Rule’s mandatory language does not give the trial judge discretion to allow the plaintiffs to rely on evidence that is not properly noticed under the rule.

As they say, “there but for the grace of….” This is definitely a case to be mindful of to avoid an extremely unpleasant situation.