A recent Daily Business Review story by Michael Mora, “Appeals Court Orders Reconsideration of $115K Legal Award for ‘Fees on Fees’ Litigation” reports that a Florida appeals court said a Miami law firm’s $115,000 fee award, already reduced from $200,000, must be reduced further because that award improperly encompassed the law firm’s work in asking for fees.  The ruling by the Third District Court of Appeal on cross-appeal ultimately stated the Silver Law Group is entitled to fees for its work in the underlying litigation, but ordered the Monroe County Circuit Court to reevaluate that amount.

The main takeaway lawyers should get from the ruling, said John W. Annesser, a partner at Annesser Armenteros in Miami, is that “fees on fees would not be awarded as a sanction” under Florida Statutes Section 57.105.   Annesser represents Silver Law, which saw its fee reduced in the ruling.  Annesser is planning to appeal the Third DCA’s decision to the Florida Supreme Court.  He said the ruling, if allowed to stand, would encourage needless litigation that is expensive to challenge.

According to the amended complaint filed in the circuit court, Silver Law sought fees for work that took place between June 2009 and December 2014 for “numerous legal matters” in which it represented Paul Bates and Coconut Cove Resort & Marina.  Silver Law eventually sued Bates and the resort for attorney fees amounting to nearly $203,500.  Bates, through his original counsel, Chepenik Trushin, filed a counterclaim alleging malpractice by Silver Law, according to the amended complaint.

The Circuit Court found the counterclaim was “malicious and frivolous,” which formed the basis for the sanctions award against Bates, the resort and their counsel.  Lawyers for Bates and the resort argued that the lower court abused its discretion by awarding any fees at all to Silver Law.  The Third DCA cited its 1995 decision in Eisman v. Ross, which found no statutory basis for a lower court to grant a portion of an award that represented cost and attorneys’ time spent litigating the amount of fees.

Annesser disputed that ruling, and cited to Florida Statutes Section 57.105, which states that when the “moving party proves by a preponderance of the evidence that any action taken by the opposing party … was taken primarily for the purposes of unreasonable delay,” the court should award damages for the reasonable expenses, including attorney fees and “other loss resulting from the improper delay.”  “As the court pointed out in oral arguments in the case, the effect for not rewarding the attorneys’ fees for litigating the amount of fees when it comes to a sanction,” Annesser said, “is to dilute the sanction itself and to encourage more litigation arising from the underlying sanctionable activity.”