Am I getting paid or not!?

FLORIDA LAW WEEKLY

VOLUME 47, NUMBER 3

CASES FROM THE WEEK JANUARY 21, 2022

FACTUAL ISSUES EXISTED AS TO WHETHER CLIENTS WHO FILED A BAR COMPLAINT AGAINST THEIR LAWYERS WERE RESPONSIBLE FOR PAYING A FEE BASED ON QUANTUM MERUIT, OR WHETHER THE ATTORNEYS WERE NOT ENTITLED TO A FEE AT ALL

Mineo Salcedo Law Firm v. Cesard, 47 Fla. L. Weekly D193 (Fla. 4^th DCA Jan. 12, 2022):

A law firm represented a couple in their first-party property claim brought against their insurance carrier. The law firm received notice that the plaintiffs had filed a complaint with The Florida Bar against two of the firm’s lawyers. This took place after the firm had worked on the plaintiffs’ claim for almost two years, and the firm had recommended the plaintiffs accept a settlement offer the insurer had made. 

The Bar complaint prompted the firm to withdraw and file a charging lien for fees incurred during its representation.  The question presented to the court was whether the trial judge erred in failing to award reasonable fees pursuant to the charging lien based on the withdrawal.

The facts were not in dispute. When the firm received the Bar complaint, the senior partner contacted the ethics hotline for an opinion about whether the complaint created an irreconcilable conflict of interest, necessitating the firm’s withdrawal. In typical Bar fashion, it failed to give a decisive answer, responding merely by saying that the complaint “created a conflict of interest sufficient to ethically require the firm’s withdrawal from the case.” After the trial court granted the withdrawal, the plaintiffs withdrew their Bar complaint, and the firm filed its notice of charging lien.

The plaintiffs’ new counsel settled the case. The trial court conducted an evidentiary hearing on the charging lien. The firm presented expert testimony to corroborate its assertion that a conflict existed due to the Bar complaint, and that the ethics rules made its withdrawal necessary under Rule 4-1.7(b)(1). The plaintiffs argued that because they had a contingency fee agreement with the firm, and the firm voluntarily withdrew prior to the contingency occurring, the firm was not entitled to any fees.

Because the firm created no contemporaneous time records, nor did it ever locate the original signed fee agreement, the firm’s expert testified to the reasonable amount of attorney’s fees by reviewing the trial docket. The expert also provided an unsigned contract purporting to be the kind that the clients would have signed, and testified regarding several pages of handwritten time entries that were not contemporaneously made. 

As a result, the expert opined that the firm was entitled to compensation in the amount of $82,630.00.  Although the plaintiffs’ new attorney testified, they presented no expert to opine on either the conflict of interest or the amount of the firm’s reasonable fees.

The trial court found the withdrawing firm was not entitled to a lien for its fees, but awarded $9,000.00 for its costs and $6,250.00 as the value of the benefits provided reduced by what the court described as the detriment incurred for the 11^th hour, perhaps avoidable, withdrawal.

The trial court concluded that the plaintiffs’ complaint did not demonstrate conduct that would have automatically allowed the firm to withdraw under Rule 4-1.16(b), and also found that the discussions between the firm and the plaintiffs might have resolved the issue without a withdrawal just before trial. The trial court also included a paragraph about the application of Faro v. Romani regarding the existence of a conflict, concluding that the existence of grounds for withdrawal does not always translate into an attorney’s right to be paid for work performed.

The Fourth District reminded us that for almost 170 years, the Florida Supreme Court has recognized an equitable right to have costs and fees due to an attorney for services in a lawsuit, secured to him or her in the judgment of recovery in that particular suit. A charging lien is an equitable right to have costs and fees due to an attorney for services in the suit, secured in the judgment or recovery in that particular suit.

Case law establishes the rule regarding entitlement to fees under a contingency fee agreement when the attorney either withdraws or is discharged prior to the occurrence of a contingency. When an attorney voluntarily withdraws from representation of a client before the contingency occurs, the attorney forfeits all rights to compensation, unless the client’s conduct makes the attorney’s continued performance either legally impossible or would cause the attorney to violate an ethical rule, in which case the attorney may be entitled to a fee when the contingency occurs.

Whether a firm’s withdrawal is voluntary or involuntary influences how a charging lien is resolved. There is an exception to the rule about no fee for a voluntary withdrawal, allowing the withdrawing attorney to recover in quantum meruit “if the client’s conduct made the attorney’s continued representation legally impossible or if the client’s conduct would cause the attorney to violate his or her ethical obligations.”

A withdrawal that may still result in quantum meruit must be necessitated by the representation becoming illegal, or in violation of an ethical rule.

The court cited DePena v. Cruz, 884 So.2d 1062 (Fla. 2d DCA 2004) where an attorney represented clients but after the attorney recommended his clients accept a settlement offer, they questioned his loyalty and competence, leading the attorney to withdraw, citing irreconcilable differences. The court noted that a breakdown in the attorney-client relationship is not a basis to get attorney’s fees after withdrawal. Faro has been applied to situations where Rule 4-1.7 requires an attorney to withdraw in cases where the client embarked on a course of untoward conduct designed to undermine the integrity of the prosecution of the case, and subvert the judicial process.

The court also explained that whether the Bar rules require a firm’s withdrawal does not end the inquiry about fees. The existence of grounds for withdrawal does not always translate into an attorney’s right to be paid for work performed, but noted that a trial court must determine whether it was the firm’s conduct or the client’s conduct which made continued representation either legally impossible, or caused the attorney to violate an ethical rule. Without that finding, the court cannot rule.

If the firm was entitled to a fee, the court wrote that the award had to be based on quantum meruit without a lodestar. If the firm’s withdrawal is found to be involuntary, the court must consider the validity and application of the charging lien. 

A charging lien only attaches to the tangible fruits of an attorney’s services, therefore to support a lien, the firm must do more than allege that it provided services, the services must have produced a positive judgment or settlement for the client because the lien only attaches to those “tangible fruits.”

In this case, while the firm’s efforts may have assisted the plaintiffs in ultimately obtaining a favorable settlement, the court had not made sufficient findings as to whether the firm’s services created “tangible fruits” for the clients’ benefit, so that the charging lien could attach.

Proceedings to resolve charging liens are resolved by courts of equity, and the defense of unclean hands may be asserted against a party challenging a charging lien. Because the firm had no role in negotiating the terms of the settlement between the plaintiffs and their insurer, the firm was not bound by any agreement within the settlement apportioning how much of the total amount was for compensation, and how much was for fees and costs. 

At the evidentiary hearing, the plaintiffs did not present any evidence that the insurer paid a separate sum representing fees and costs, nor did they present any agreement indicating whether the settlement amount was to be apportioned with fees and costs. Consequently, the firm was not limited to having a fee award satisfied solely out of the monies that were part of an agreed upon apportionment.

Although the trial court’s order treated the firm’s withdrawal as voluntary without making any findings of fact adduced from evidence to support the conclusion, the trial court nonetheless awarded compensation for costs and for the value of the benefits provided reduced by the detriment caused by the 11^th hour withdrawal. This was error because the law provides that a fee award is applicable only where the court finds the attorney’s withdrawal was involuntary. As previously stated, the fee must be based upon quantum meruit (without a lodestar) that should not be made until there is an evidentiary hearing.

“CONFESSION OF JUDGMENT” IS NOT THE FUNCTIONAL EQUIVALENT OF A JUDGMENT THAT “CONCLUDES THE ACTION,” WHICH IS THE KIND THAT TRIGGERS THE TIMELINE UNDER RULE 1.525 FOR ATTORNEY’S FEES

Garrido v. SafePoint, 47 Fla. L. Weekly D173 (Fla. 3rd DCA Jan. 12, 2022):

The insurance company filed a document captioned “Confession of Judgment and Confession of Coverage.”  In it, the insurer consented to coverage under the policy as well as to the entry of judgment. The confession filing also stated that the insurance company conceded that the plaintiff was entitled to attorney’s fees pursuant to §627.428, provided she filed a timely motion pursuant to Rule 1.525.

Seven months after the confession filing, the plaintiff filed her motion for entry of final judgment and entitlement to attorney’s fees and costs. The trial court denied the fees finding the motion was untimely.

§627.428 is a substantive statute that prescribes an insured’s right to prevailing party attorney’s fees against insurer upon the rendition of a judgment of the insured. Conversely, Rule 1.525 is a procedural rule that sets forth the time.

The Court said that it was not comfortable in engrafting a substantive legal concept – the “legal fiction of a confession of judgment” to extend the statute’s application to circumstances when an insurer voluntarily pays a claim after the suit is filed. 

Simply put, a confession of judgment in the context of §627.428 is not the functional equivalent of a “judgment” that opens up the thirty-day filing window prescribed in Rule 1.525. While the insurance company’s voluntary payment of the claim may have triggered entitlement to fees, the insurance company’s subsequent unilateral action in filing a “confession” did not “conclude the action,” so as to trigger Rule 1.525’s thirty-day time period.

IDENTITY OF PARTIES MUST EXIST BEFORE COLLATERAL ESTOPPEL CAN APPLY

United Automobile Ins. Co. v. Millennium Radiology, 47 Fla. L. Weekly D175 (Fla. 3^rd DCA Jan. 12, 2022):

The trial court applied offensive collateral estoppel in a PIP case to preclude United Auto from challenging the reasonableness of the cost of MRI procedures performed at the plaintiff provider, on United Auto’s insureds. 

The court ruled it was compelled to reverse those judgments, because each of the PIP claims were premised on assignments that the provider received from different insureds. Therefore, the claims had not occurred between identical parties, which is an essential element of collateral estoppel, and the summary judgments had to be reversed.