The Week in Torts – Cases from the Week of November 20, 2020
Fees, Fees, Fees..
FLORIDA LAW WEEKLY
VOLUME 45, NUMBER 46
CASES FROM THE WEEK NOVEMBER 20, 2020
COURT FINDS AWARD OF ATTORNEYS’ FEES EXCESSIVE—ALSO RULES THAT COURT MISAPPLIED MULTIPLIER
Universal Property and Casualty Ins. Co. v. Deshpande, 45 Fla. L Weekly D2511 (Fla. 3rd DCA November 12, 2020):
The insured plaintiff suffered water damage to his home and after Universal denied coverage, he spent $23,000 out of his pocket to perform repairs. He then hired counsel to file suit.
The parties engaged in minimal discovery and only two depositions were taken. Neither party filed any substantive motions or expert reports. There was no trial. Eighteen months from the time he reported the claim, Universal served a proposal for settlement for $25,000 excluding attorneys’ fees and costs, which the plaintiff accepted.
In support of his fee claim, Plaintiff’s counsel produced invoices reflecting billings of 469 hours for five attorneys and one paralegal in preparation of the case. Universal’s fee expert provided a line-item response detailing objections for the entries he deemed were excessive for the nature of the task, were vague, contained duplicate work, or reflected billings for secretarial or ministerial tasks.
Plaintiff’s fee expert testified the hourly rates were reasonable. However, he did not prepare a line-item analysis of the firm’s time entries. Instead, to accomplish a “conservative” estimate, he applied a 10% across the board hourly reduction reducing the number of billed hours to 422 hours, but did not explain why that reduction represented a reasonable amount of time to prepare the case. The fee expert also opined that a 2.0 multiplier was appropriate based on the favorable outcome achieved in the likelihood of recovery at the outset.
The defendant’s fee expert opined that the number of hours billed should be reduced from 469 to 101, and testified regarding objections to specific itemized entries. The defendant’s fee expert also testified that the relevant market is saturated with firms practicing first- party insurance who would have taken the case on a contingent basis, and that the market did not require a multiplier to obtain competent counsel.
The trial court accepted plaintiff’s fee expert’s conclusions in every respect, and awarded a lodestar of $206,090.00 in attorneys’ fees, and a 2.0 multiplier. The court also awarded over $12,000.00 in costs and $13,000.00 to plaintiff’s fee expert.
In determining the lodestar, the trial court properly found a reasonable hourly rate for all five attorneys. However, the record did not contain competent substantial evidence that 469 hours were reasonably expended in the case. The court explained that the plaintiff’s counsel failed to present evidence that was reasonable for five attorneys to spend 469 hours in this first-party property insurance case that settled after minimal discovery, and in which no significant motions were litigated. It found the amount of fees were excessive in relation to the results obtained, and that in a relatively simple and straightforward matter resulting in such a fee claim seemed “disingenuous.” The court admonished against attorneys’ duplicating and essentially fabricating fees.
In determining the appropriateness of a multiplier, the rationale of the first point of Quanstrom — the relevant market factor — is to assess not just whether there are attorneys in any given area, but specifically whether there are attorneys in the relevant market who have both the skills to handle the case effectively, and who would have taken the case absent the availability of a contingency fee multiplier.
While there was testimony that plaintiff’s counsel had expertise in first-party insurance cases and that counsel obtained a favorable result, the record contained no evidence that the plaintiff could not have obtained other competent counsel in the market absent the availability of a contingency fee multiplier.
The plaintiff’s fee expert failed to testify that plaintiff’s counsel was the only competent attorney in the relevant market, or that other counsel would not have taken the case on a simple contingency fee without a multiplier. Without evidence of the relevant market requiring a contingency fee multiplier for competent counsel, the court ruled to reverse on that issue too.
The court then reversed the costs awarded to the plaintiff’s expert who never testified at trial and who were never deposed. Generally, it is not appropriate to tax as costs the fees of witnesses who are neither qualified as experts by the court, nor testify at trial.
While under certain circumstances, a court may tax costs of an expert reasonably incurred in preparing testimony even if the testimony proves unnecessary, it is incumbent upon the trial court to determine exactly which expenses would be reasonably necessary for an actual trial, which would include expert witness preparation costs.
UM AND BAD FAITH FEES EXPLAINED.
Milling v. The Travelers Home and Marine, 45 Fla. L Weekly D2550 (Fla. 2nd DCA November 13, 2020):
Plaintiff sued her UM carrier after an excess jury verdict in the underlying case. After the excess verdict, the parties agreed to the entry of a stipulated partial judgment, resolving the plaintiff’s claim for the excess verdict, and providing a reservation of jurisdiction to consider motions for fees and costs for failing to act in good faith, and for failing to pay UM benefits.
The plaintiff filed a motion for summary judgment for entitlement to attorneys’ fees, as part of her bad faith damages. In the motion, the plaintiff argued entitlement pursuant to §624.155(8) as well as §627.727(10), claiming all fees incurred in the underlying UM suit as damages in the first-party bad faith action. She also claimed entitlement to prevailing party fees in the bad faith action.
The insurance company argued that the fees incurred in furtherance of the UM case were not recoverable in a bad faith suit. It argued that plaintiff failed to put forth undisputed evidence of bad faith, or that her damages were caused by bad faith. The insurer also argued that the plaintiff could not recover attorneys’ fees for establishing the amount of attorneys’ fees to be awarded, because the case law precludes an award of “fees-for-fees.”
§624.155(1)(b)1 provides a civil remedy when an insurer does not attempt in good faith to settle claims when it should have. §624.155(4) provides for prevailing party fees that a plaintiff incurs in prosecuting a bad faith action. The fees are also a form of damages under §624.155(8).
Damages recoverable in first-party bad faith actions are those which naturally and proximately flow from the insurer’s bad faith actions. The attorneys’ fees that the plaintiff sought were those that flowed from the insurance company’s bad faith to settle. Those fees were not “fees-for-fees.”
Litigation of the existence and amount of the plaintiff’s damages, including whether and how much of the fees incurred litigating the UM action were the natural, proximate, probable or direct consequence of the insurer’s bad faith action, was a part of the prosecution of the bad faith suit. As such, attorneys’ fees incurred in such litigation are awardable as prevailing party fees in the bad faith case.
The plaintiff was also entitled to recover UM attorneys’ fees. However, the plaintiff’s fee agreement in this case with her UM attorneys provided that she would be responsible for payment to the UM attorneys for forty percent of the recovery, and if the UM attorney obtained a court-awarded fee that was higher than the forty percent, she agreed to pay them the higher amount. While the plaintiff was entitled to compensatory damages, the court said under the agreement she was not liable to her attorneys for an hourly rate beyond the forty percent.
The plaintiff moved for summary judgment and bore the burden of proof on these issues. Because the plaintiff failed to establish the absence of material issue of fact regarding her liability for the UM fees, the trial court properly denied her motion for summary judgment on the fees in excess of what she would have owed her own attorneys.