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Category: Interest on Fees

Florida Supreme Court: No Interest on Attorney Fees

September 9, 2021

A recent Law 360 story by Carolina Bolado, “Fla. High Court Won’t Add Interest To Atty Fee Calculations,” reports that the Florida Supreme Court ruled that prejudgment interest should not be added to a judgment when determining if the judgment triggers a party's entitlement to attorney fees under the state's proposal-for-settlement statute.  In a 5-2 decision, the high court opted to stand by its precedent and found that prejudgment interest accrued after CCM Condominium Association Inc. made a settlement offer to Petri Positive Pest Control Inc. should not be included in the "net judgment" for the purposes of calculating whether CCM can be awarded attorney fees under the statute.

The court relied on its 2002 ruling in White v. Steak & Ale of Florida, which defined the plaintiff's total recovery as including only attorney fees, costs and prejudgment interest accrued up to the date of its settlement offer.  When considered against the text of the offer-of-judgment statute, the White ruling is not clearly erroneous, and the formula set out in that decision has been consistently applied by district courts around the state in the two decades since to exclude amounts that were not present on the date an offer is made, according to the opinion.

"We simply do not have a definite and firm conviction that this court's prior interpretation of the offer of judgment statute and the terms 'judgment,' 'judgment obtained,' and 'net judgment entered' is wrong," the high court said.  The ruling is a win for Petri, which was fighting CCM's attempt to recover attorney fees after prevailing in a dispute over a contract for termite extermination.  Under Florida's offer-of-judgment statute, a judgment needs to exceed a prior settlement offer by more than 25% to trigger an entitlement to attorney fees.

In this case, CCM had offered to settle its negligence and breach of contract suit against Petri for $500,000, but that offer was rejected.  After a trial in November 2016, a jury awarded CCM $551,881 in damages.  The trial court entered a judgment of $636,327, which included the jury's damages award plus $84,446 in prejudgment interest.  CCM then moved to recover attorney fees based on that figure, which exceeded its settlement offer by more than 25%.

Petri objected, pointing to the White decision, but the trial court disagreed and awarded CCM $73,579 in post-offer attorney fees and costs.  On appeal, the Fourth District Court of Appeal ruled that the prejudgment interest should not be included based on Supreme Court precedent, though the Fourth District said it would reach the opposite conclusion based on its own interpretation of the term "judgment entered" in the offer-of-judgment statute.

In a dissenting opinion, Chief Justice Charles T. Canady said the majority's result is "detached from the text of the statute."  "A fair reading of the text of the statute cannot support the interpretation articulated in the statements from White relied on by the majority," Justice Canady said.  "As the Fourth District explains, the authorities cited in White to support its discussion that is relevant to post-offer fees, costs and interest are cases interpreting a different statute, … which provides for the award of prevailing party fees to an insured in litigation against an insurer."

Petri's attorney, Thomas Hunker, told Law360 the language of the statute left much to the court's interpretation, but ultimately the court reached the right decision with an interpretation that is fair to the party receiving the offer.  "A contrary holding would've required an impossible amount of speculation on what might occur later in litigation, which would be unfair to a party who faces the prospect of sanctions when trying to evaluate whether or not to accept or reject a statutory proposal for settlement," Hunker said.

Ninth Circuit Bumps Up Hourly Rate in Labor Case

April 19, 2021

A recent Law 360 story by Lauren Berg, “9th Circ. Bumps Ore. Atty’s Hourly Fee Rate in Labor Case,” reports that a U.S. Department of Labor administrative law judge wrongly reduced an Oregon attorney's hourly rate by $100 while awarding attorney fees in a Longshore and Harbor Workers' Compensation Act case, the Ninth Circuit ruled, telling the Benefits Review Board to assign the case to another judge.

In a 35-page published opinion (pdf), the three-judge panel said the review board should not have upheld the administrative law judge's decision to knock down attorney Charles Robinowitz's fee rate from $450 per hour to $349.85 per hour, finding that the attorney had presented "substantial evidence" that his requested rate was in line with similar services by lawyers of comparable skill and experience.  Robinowitz provided supportive affidavits from other attorneys, the 2012 Oregon State Bar Survey reporting that Portland attorneys with more than 30 years of experience billed between $300 per hour and $400 per hour, and court decisions awarding him $425 per hour and $420 per hour for work performed in 2012, 2013 and 2014, according to the opinion.

The fee appeal comes after Ladonna E. Seachris in 2006 filed a claim for benefits under the LHWCA following the 2005 death of her husband, who was injured while working as a longshoreman in 1979, according to court filings.  An administrative law judge denied the claim in 2010 and Seachris appealed to the Benefits Review Board, which affirmed the judge's order.  Seachris appealed again to the Ninth Circuit, which remanded the case in 2013, and the administrative law judge ruled in her favor in 2016, according to court records.

Following that decision, Seachris' attorney Robinowitz filed for attorney fees for 109 hours at a rate of $450 per hour, as well as costs of $5,413.  The administrative law judge in 2017, however, allowed the attorney 98 hours at about $341 per hour, according to court filings.  The Benefits Review Board then affirmed the decision, but increased the hourly rate to $349.85 because of an inflation error.

Seachris and her attorney then appealed to the Ninth Circuit. Seachris' husband's former employer, Brady-Hamilton Stevedore Co., said Robinowitz should only get an hourly fee rate of $358, arguing that the administrative law judge correctly calculated the market rate using the 2012 Oregon State Bar Survey, according to court filings.

In its opinion, the appellate panel said the judge erred by rejecting Robinowitz's evidence of prevailing market rates as outdated, saying reliance on historical market conditions is appropriate when it is the most current information available.  The panel said the judge needs to treat the parties equally, finding that both parties, as well as the judge, relied on dated evidence.

Brady-Hamilton also relied on the 2012 OSB Survey, the panel said, and the judge herself relied on that same survey as the linchpin of her rate decision.  By the time her fee decision came out in January 2017, the 2011 rates in that 2012 survey were already six years old, according to the opinion.  "The ALJ nevertheless relied on the survey by adjusting the 2011 data for inflation — appropriately so," the panel said. "But the ALJ declined to make similar adjustments to Robinowitz's evidence."

"We see no reason why she should not have taken the same approach to Robinowitz's evidence, and it was [an] error not to do so," the panel added.  The administrative law judge also erred by rejecting Robinowitz's evidence from the 2012 OSB Survey and not taking into account the way the survey reported rates, the panel said.  The survey reported hourly rates charged by Portland attorneys based on their years of experience, irrespective of practice area, and based on their practice area, irrespective of experience, according to the opinion.

Robinowitz relied on the survey chart based on years of experience to calculate his hourly rate, but the judge rejected the evidence as being too "one-dimensional," according to the panel.  But then the judge relied on the other survey chart based on practice area to determine her rate, the panel said.

"Although the ALJ rejected Robinowitz's survey evidence as 'one dimensional,' she proceeded to base her rate determination on the equally one dimensional chart reporting rates by practice area," the panel said.  "Even assuming arguendo that rates based on practice area are more probative than rates based on years of experience, the latter rates are at least relevant."  The panel found that the judge and the review board committed legal error in determining Robinowitz's hourly rate and that the judge's rate decision isn't supported by substantial evidence, according to the opinion.

The panel remanded the case and told the review board to assign it to a different judge, finding that "the tone of the ALJ's decision and the manner in which the ALJ evaluated the evidence suggest that the ALJ may not be able to provide Robinowitz with a fair and impartial hearing on remand."

The panel also noted that the Oregon State Bar has published an updated survey, saying the 2017 survey reports that Portland attorneys with more than 30 years of experience charged a median rate of $425 per hour in 2016 and for attorneys in the 75th percentile, the average rate was $495 per hour.  "These updated rates, which the BRB should take into account on remand, provide further support for Robinowitz's requested rate," the panel said.

California Appeals Court Clarifies Law on Attorney Fees

March 13, 2021

A recent The Recorder story by Alaina Lancaster, “Appeals Court Rules on ‘Curious Gap’ in State Law Over Attorney Fees,” reports that a California appeals court ruling underlined “a curious gap” in the state law over the recoverability of unpaid fees when attorneys sue clients for breach of contract.  A decision from California’s Second District Court of appeal noted that in 1993, a state bar committee raised the issue of how Business and Professions Code Section 6148 clarifies that an attorney may recover a reasonable fee for services absent a valid fee agreement, but fails to set a standard for fees when clients breach a fee agreement.  Nearly a decade later, the appeals court said it was unable to find a clear standard in the statutory or case law.

In an opinion authored by Associate Justice Anne Egerton, the court held that the terms of the fee agreement control the amount of recoverable fees when an attorney sues a client for a breach of a valid and enforceable contract—even if it exceeds what a lodestar analysis, which measures the number of hours expended multiplied by the hourly rate, would consider a reasonable fee.

“The trial court correctly held a lodestar determination is not required in a breach of contract action where an attorney’s hourly rate is specified in a fee agreement,” wrote Egerton on behalf of Associate Justice Halim Dhanidina and Presiding Justice Lee Smalley Edmon.  “To hold otherwise would ignore the statutorily recognized difference between instances where the attorney has entered into a valid fee agreement with his or her client, and those where the attorney has failed to do so and is limited to a ‘reasonable fee’ under Section 6148.”

In the underlying case, Santa Monica, California, attorney Richard Pech sued owners of a mobile home park to recover more than $1 million in attorney fees and interest he claimed he was owed for representing them in several matters. Los Angeles Superior Court Justice Mary Strobel granted Pech’s applications for attachment of defendants’ assets on the grounds that the attorney had established the probable validity of his breach of contract claims.

The owners of the mobile home park contended that the fees were excessive and unreasonable and that the trial court should have considered the lodestar determination to determine the reasonableness of the fees.  Instead, the court decided to turn to the standard adopted by the 1993 bar committee, which was applied to mandatory fee arbitration, to address “this apparent gap in our law.”  The standard mandates that a fee agreement is not enforceable if it is unconscionable; the attorney’s performance must be consistent with the implied covenant of good faith and fair dealing; and a court must determine if the attorney used “reasonable care, skill, and diligence” in responding to the contract.

The ruling determines that the bar standard is consistent with Section 6148’s “implicit recognition” that an attorney and client can agree to a fee that might not be considered “reasonable,” as long as the rate and legal services are disclosed in the contract.  “The standard articulated in Advisory 1993-02 sensibly balances the competing interests that arise when a client breaches a fee agreement by refusing to pay an agreed upon fee,” the opinion states.

Joshua Furman of Joshua Furman Law, which represented the mobile home park owners, said, “While we are gratified that the Court of Appeal recognized the gap in the law concerning standards for attorney fee claims against former clients under written fee agreements, and largely adopted the position we argued—that the standards established by State Bar arbitration advisories should apply—we remain concerned that the standard as articulated by the court is both unclear and too low to effect the public policy of client protection.  Under the standards articulated in this decision, an attorney could bill any number of hours and obtain an attachment order against the former client’s assets without significant scrutiny as long as the hourly rate matched the rate in the fee agreement.  This unfairly disadvantages the client, who may be unable to defend against the attorney’s lawsuit while the client’s assets are subject to attachment.  We remain concerned that the court’s decision does not protect consumers from unscrupulous billing practices by attorneys and continue to evaluate our options moving forward.”

The Nation’s Top Attorney Fee Experts of 2020

June 24, 2020

NALFA, a non-profit group, is building a worldwide network of attorney fee expertise. Our network includes members, faculty, and fellows with expertise on the reasonableness of attorney fees.  We help organize and recognize qualified attorney fee experts from across the U.S. and around the globe.  Our attorney fee experts also include court adjuncts such as bankruptcy fee examiners, special fee masters, and fee dispute neutrals.

Every year, we announce the nation's top attorney fee experts.  Attorney fee experts are retained by fee-seeking or fee-challenging parties in litigation to independently prove reasonable attorney fees and expenses in court or arbitration.  The following NALFA profile quotes are based on bio, CV, case summaries and case materials submitted to and verified by us.  Here are the nation's top attorney fee experts of 2020:

"The Nation's Top Attorney Fee Expert"
John D. O'Connor
O'Connor & Associates
San Francisco, CA
 
"Over 30 Years of Legal Fee Audit Expertise"
Andre E. Jardini
KPC Legal Audit Services, Inc.
Glendale, CA

"The Nation's Top Bankruptcy Fee Examiner"
Robert M. Fishman
Cozen O'Connor
Chicago, IL

"Widely Respected as an Attorney Fee Expert"
Elise S. Frejka
Frejka PLLC
New York, NY
 
"Experienced on Analyzing Fees, Billing Entries for Fee Awards"
Robert L. Kaufman
Woodruff Spradlin & Smart
Costa Mesa, CA

"Highly Skilled on a Range of Fee and Billing Issues"
Daniel M. White
White Amundson APC
San Diego, CA
 
"Extensive Expertise on Attorney Fee Matters in Common Fund Litigation"
Craig W. Smith
Robbins LLP
San Diego, CA
 
"Highly Experienced in Dealing with Fee Issues Arising in Complex Litigation"
Marc M. Seltzer
Susman Godfrey LLP
Los Angeles, CA

"Total Mastery in Resolving Complex Attorney Fee Disputes"
Peter K. Rosen
JAMS
Los Angeles, CA
 
"Understands Fees, Funding, and Billing Issues in Cross Border Matters"
Glenn Newberry
Eversheds Sutherland
London, UK
 
"Solid Expertise with Fee and Billing Matters in Complex Litigation"
Bruce C. Fox
Obermayer Rebmann LLP
Pittsburgh, PA
 
"Excellent on Attorney Fee Issues in Florida"
Debra L. Feit
Stratford Law Group LLC
Fort Lauderdale, FL
 
"Nation's Top Scholar on Attorney Fees in Class Actions"
Brian T. Fitzpatrick
Vanderbilt Law School
Nashville, TN
 
"Great Leader in Analyzing Legal Bills for Insurers"
Richard Zujac
Liberty Mutual Insurance
Philadelphia, PA

Florida High Court Asked to Clarify Attorney Fee Award Calculation

May 3, 2019

A recent Law 360 story by Nathan Hale, “Fla. High Court Asked to Clarify Atty Fee Award Calculation,” reports that a Florida appeals court suggested that a clash between case law and its own judgment means the state's high court needs to clarify whether to include certain prejudgment interest when determining if a judgment triggers a party's entitlement to attorney fees under a state statute.  In its opinion, the Fourth District reversed a trial court's awarding of attorney fees to CCM Condominium Association Inc. in its negligence and breach of contract case against Petri Positive Pest Control Inc., saying the lower court improperly included prejudgment interest accrued after the association made a settlement offer.

The panel said it based its decision on language in Florida Supreme Court opinions, including White v. Steak & Ale of Florida, which suggests post-offer prejudgment interest should be excluded, even though it would reach the opposite conclusion based on its own interpretation of the term "judgment entered" in the offer-of-judgment statute, found in Section 768.79 of the Florida Statutes.  "[W]e are troubled by how far the formula created in White strays from what we believe is the plain meaning of the statute," the judges said.

They certified a question of great public importance to the Supreme Court, asking it to clarify whether to exclude post-offer prejudgment interest and noting that the law is widely used and is an important tool for settling cases.  The Fourth District also certified that its decision conflicts with two other appeals court decisions.

"We're obviously disappointed to lose, but we are very pleased that the court recognized the conflict and recognized that it is an issue of great public importance, and we are optimistic that the Supreme Court will accept review so it can clear up an area of law that affects many litigants across the state," CCM counsel Maegen P. Luka of Brannock & Humphries told Law360.  The appeal arose from a 2013 lawsuit that CCM, which does business as Country Club Manor Condominium Association, filed against Petri for negligence and breach of contract.

According to the opinion, CCM offered to settle all of its claims for $500,000, but Petri rejected the proposal.  After a trial in 2016, a jury awarded CCM more $551,881 in damages, and the trial court entered a judgment of $636,327, including prejudgment interest.  CCM moved to recover attorney fees based on that figure, which exceeded its settlement offer by more than 25%, the statutory threshold to trigger its entitlement.

Petri objected, pointing to the 2002 White decision, which it said defined the plaintiff's total recovery as including only attorney fees, costs and prejudgment interest accrued up to the date of its settlement offer.  That would push CCM's recovery below the 25% threshold.  Looking first at the statute itself, the Fourth District said the meaning of "judgment entered" is "easily understood."

"It is easy to calculate.  Included in that judgment are all of the elements of damages recovered in a case.  This includes prejudgment interest where applicable," the panel said, citing state court decisions that hold prejudgment interest is just another element of pecuniary damages.  But looking to the case law, the panel agreed with Petri that the Supreme Court appears to have gone beyond the text of the statute to create a different threshold.

In White, the high court found that the plaintiff's preoffer taxable costs should be included in calculating the "judgment obtained" for the purpose of entitlement to attorney fees, and said that "total net judgment" "includes plaintiff's taxable costs up to the date of the offer and, where applicable, the plaintiff's attorneys' fees up to the date of the offer."

"Thus, the court did not use the judgment actually entered or recovered in accordance with the statutory language, but it directed the calculation of a different amount based upon what might have been a final judgment at the time that the offer was made," the Fourth District said.  "However, the court did not include in this calculation any direction regarding prejudgment interest."

For an answer on prejudgment interest, the appeals panel pointed to the Supreme Court's 2012 decision in Shands Teaching Hospital and Clinics v. Mercury Insurance Co. of Florida, in which the justices approved a lower court's denial of fees based on "adding to the amount of damages recovered the attorney's fees, costs and pre-judgment interest accrued up to the date of the proposal for settlement."