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Category: Offer of Judgment (Rule 68)

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.

Article: New Attorney Fee Law May Be Boon To Florida Property Insurers

September 1, 2021

A recent article by Christine Renella and William Zieden-Weber, “New Fla. Atty Fee Law May Be Boon To Property Insurers,” reports a new law in Florida that amends Florida's attorney fees statutes, Sections 626.9373 and 627.428 of the Florida Statutes, as they apply to property insurance disputes.  This article was posted with permission.  The article reads:

Florida S.B. 76, designed to curb first-party property insurance litigation in Florida, took effect on July 1.  While the bill addresses several critical property insurance topics including roof-surface reimbursement schedules, regulation of contractors, proper notice, the right to inspect, and determination of whether abatement is applicable, the crown jewel of the bill amends Florida's infamous attorney fees statutes, Sections 626.9373 and 627.428 of the Florida Statutes, as they apply to property insurance disputes.

Background to Florida Attorney Fees Statutes

In most jurisdictions in the U.S., each party to insurance litigation pays its own attorney, regardless of the outcome of the litigation.  In fact, a court may only award attorney fees to the prevailing side if authorized by statute or agreement of the parties to the litigation.

Florida, however, is one of the minority jurisdictions that has allowed an insured to recover his or her own attorney fees if the insured prosecutes a lawsuit to enforce an insurance policy for more than a hundred years.  Florida has kept some version of this law on the books since 1893, and it reads in pertinent part as follows, with the underlined text added by S.B. 76:

Upon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer, the trial court or, in the event of an appeal in which the insured or beneficiary prevails, the appellate court shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured's or beneficiary's attorney prosecuting the suit in which the recovery is had.  In a suit arising under a residential or commercial property insurance policy not brought by an assignee, the amount of reasonable attorney fees shall be awarded only as provided in s. 57.105 or s. 627.70152.

The Florida Supreme Court has historically supported the need for fee and cost reimbursement in the realm of insurance litigation as being deeply rooted in public policy.  The court has given the Legislature deference in this area of the law, recognizing its sentiment on how essential it is to level the playing field between the economically advantaged insurance companies and the individual citizen.  However, practicing Florida attorneys have seen a perversion of this intent play out in recent years.  In first-party coverage disputes specifically, an insured would often file a lawsuit in instances in which the dispute was simply over the scope of damages.

This created a situation in which, as long as an insured prevailed in its lawsuit with a judgment greater than any amount of the insurance proceeds originally paid by the insurer — even $1 — the insured would be entitled to attorney fees.  As such, insureds were often able to leverage larger settlements using the attorney fees statutes.

Section 627.70152 Notice Requirement

Florida's new legislation effectively puts an end to the attorney fees statutes as they pertain to property insurance, which historically established a strong presumption that using a "lodestar fee" to compensate attorneys for property insurance claims was considered sufficient and reasonable.  This presumption is only rebutted in rare and exceptional circumstances with evidence that competent counsel could not have been retained in a reasonable manner.

Instead, S.B. 76 creates a new statute, Section 627.70152, which establishes a scheme for attorney fees structured around a presuit notice requirement.  Now that S.B. 76 has passed, the path to attorney fees for an insured is less certain, and insurers are hopeful that the vast number of suits filed against insurers in Florida every year will decrease.  Specifically, the burden has essentially shifted to an insured to prove entitlement through the imposition of a judgment between 20%-50% higher than the presuit settlement offer in order to obtain fees.

Additionally, the notice requirement provides an additional hurdle for insureds in that a suit may not be filed prior to the issuance of a written notice of intent.  Specifically, the notice statute imposes a notice requirement on claimants, stating that as a condition precedent to filing suit under a property insurance policy, a claimant must provide the insurer with written notice of intent to initiate litigation.  Under the notice statute, this notice must be served by certified mail, return receipt requested, or electronic delivery at least 10 days before filing suit, but may not be served before the insurer has made a coverage determination under Section 627.70131.

The immediate effect of the statute is the prohibition of suit prior to a coverage determination being issued.  This alone will lead to less litigation as insurer's often file suit before the conclusion of the investigation of a claim and issuance of a coverage determination.  Additionally, the statute requires that each notice include the following information: (1) that the notice is being provided pursuant to this section; (2) the alleged acts or omissions of the insurer giving rise to the action;and (3) that the notice has been provided to the insured if represented by an attorney.

In cases in which the notice is provided following a denial of coverage, the notice must include an estimate of damages.  In cases in which the notice is provided following something other than a denial of coverage, the notice must include the disputed amount of damages and a presuit settlement demand itemizing damages, attorneys fees and costs.  The online form used to submit the notice can be found on the civil remedy and required legal notices webpage of Florida's Division of Consumer Services.

The additional information required per the statute including the disputed amount of damage and presuit settlement demand in cases other than a denial of coverage will provide insurers with the requisite information necessary to evaluate the claim prior to suit being filed.  Prior to the imposition of the statute, insureds were able to file suit at anytime without having ever provided insurers with supporting documentation that in many cases would obviate the need for suit altogether. However, after July 1, insurers are in a position to address disputed damages in an attempt to avoid lawsuits.

In response to the notice, an insurer is now required to respond in writing within 10 days.  Specifically, in the response to a notice regarding denial of coverage, the insurer must either (1) accept coverage, (2) deny coverage, or (3) assert the right to reinspect the property within 14 business days.  Conversely, in the response to a notice regarding something other than denial of coverage, the insurer must respond by making a settlement offer or requiring the insured to participate in an appraisal process.

As a check and balance on the presuit process, the notice statute allows a court to dismiss without prejudice any suit in which the claimant failed to provide notice or the presuit period did not properly conclude, again reducing the amount of frivolous lawsuits that insurers are forced to defend.  If a claimant commences an action in a Florida court based upon or including the same claim against the same adverse party that such insured has previously voluntarily dismissed, then the court may order the insured to pay the attorney fees and costs of the adverse party resulting from the action that had previously been voluntarily dismissed.

Finally, the notice statute states that the notice and other documentation is admissible as evidence in a civil action or an alternative dispute resolution proceeding.  The notice and submissions requirements do not limit the evidence of attorney fees, damages or loss that may be offered at trial.  They also do not relieve any obligation that an insured or assignee has to give notice under any other provision of law.  While the notice statute imposes more stringent requirements on policyholders, the effect in practice will likely be a dramatic reduction in the amount of suits filed.  Accordingly, litigation costs for insurers will decrease, while meritorious suits are likely take less time to filter through the courts.

Section 627.70152 Attorney Fees Scheme

Most importantly, the notice statute sets a forth a new scheme for calculating the amount of attorney fees allowed to be awarded, which is based on the difference between the amount ultimately obtained by an insured compared to the amount originally in dispute.  That difference can then result in three distinct scenarios:

  1. The claimant does not recover attorney fees — when the difference between the amount obtained by the insured and the presuit settlement offer by the insurer is less than 20% of the amount in dispute during the presuit notice period, a claimant may not be awarded attorney fees under Sections 626.9373 and 627.428.
  2. The claimant recovers 20%-50% in attorney fees — when the difference between the amount obtained by the insured and the presuit settlement offer by the insurer is between 20%-50% of the amount in dispute during the presuit notice period, a claimant may recover the same percentage of attorneys fees under Sections 626.9373 and 627.428.
  3. The claimant recovers all attorney fees — when the difference between the amount obtained by the insured and the presuit settlement offer is greater than 50% of the amount in dispute at the presuit during the presuit notice period, a claimant the full amount of attorney fees under Sections 626.9373 and 627.428.

With the applicability of fees now based on this mathematical formula, courts will have considerably less discretion to order payment of attorney fees and costs, and insureds will be less inclined to race to the courthouse.  Many Florida practitioners hope that the notice statute will tip the scales in favor of a more balanced scheme for the imposition of attorney fees and costs.  While previously insureds were able to recover fees upon the rendition of a judgment alone, now insureds will be forced to show entitlement through the imposition of a judgment at least 20% higher than the amount in dispute during the notice period.

Conclusion

In conclusion, the notice statute is expected to bring much needed change to the landscape of property insurance litigation in Florida by adding some semblance of balance to a historically hostile environment for property insurers.

GA Appeals Court Affirms Jury’s $1.2M Attorney Fee Award

October 31, 2020

A recent Daily Report story by Greg Land, “Appeals Court Affirms Jury’s $1.2M Fee Award Blocks Fee Request Under Settlement Offer Law,” reports that affirming a trial judge, the Georgia Court of Appeals said an auto accident plaintiff who gleaned a $5 million judgment from a jury that included more than $1.2 million in attorney fees was not entitled to another fee award based on Georgia’s offer of judgment statute.  Lawyers for plaintiff Joao Junior had argued that the law—which allows a plaintiff to recover his fees and expenses if a defendant rejects a settlement demand then loses in court by a sum 125% or more than the spurned offer—was “clear and unambiguous” that the fees must be added.

A Fulton County judge ruled that such a double recovery was prohibited, and the appellate opinion authored by Presiding Judge Sara Doyle with the concurrence of Chief Judge Christopher McFadden and Judge Ken Hodges agreed.  The jury had awarded Junior’s fees under another statute, allowing for such an assessment for fees incurred in cases where a defendant “has acted in bad faith, has been stubbornly litigious, or has caused the plaintiff unnecessary trouble and expense.”

While Georgia law and prior appellate court precedent do not necessarily bar a double fee recovery under both statutes, wrote Doyle, Junior filed his motion for fees under the offer of judgment statute after having already been awarded fees by the jury.  “In some instances,” said Doyle, a party “may have incurred fees after a jury verdict but prior to entry of the final judgment by the trial court, in which case a subsequent award under [the offer of judgment statute] by a judge for such fees would be appropriate.  “Junior, however, does not contend that he incurred such fees,” she said, and they were therefore rightly denied. 

Defendant Sharon Graham and her insurer, USAA, were represented at trial by Cruser Mitchell Novitz Sanchec Gaston & Zimet partner R. Russell Grant, who was joined in the appeal by firm partner J. Robb Cruser along with Laurie Webb Daniel and Matthew Friedlander of Holland & Knight.  “We, of course, believe the Court reached the correct result, and did so with a thoughtful and thorough analysis,” said Daniel in an email.  Plaintiffs attorney Ben Brodhead III said the opinion misinterpreted both the law and Georgia Supreme Court precedent.

“Although I have only had the decision from the Court of Appeals for a few minutes, it appears that the issue of whether fees were ‘incurred’ might be an issue that needs clarification,” said Brodhead, who represents Junior with Brodhead Law colleagues Ashley Fournet, Holli Clark and John Nichols.

“It appears,” said Brodhead via email, “the Court of Appeals is under the impression that the attorneys’ fees under 13-6-11 [the stubbornly litigious statute] go to the attorney to pay the plaintiff’s attorneys’ fees.  While that might seem reasonable on the surface, it is not how contingency fee contracts are structured.”

Regardless of the fees a jury awards, the amount a lawyer makes is governed by contract, he said: 40% of the recovery in this case.  “Accordingly, whether the money recovered is for medical bills, pain and suffering, attorneys’ fees, or lost wages, it is treated the same,” he said.  Brodhead said he would be filing a motion for reconsideration or a petition for certiorari with the Georgia Supreme Court. 

As detailed in the opinion and other filings, the convoluted case began more than a decade ago when the vehicle driven by Junior, now 61, was between two other cars at a stop sign on Old Milton Parkway when Graham hit the last vehicle in line.  Junior’s Nissan Sentra was totaled, and he ultimately underwent surgery for herniated disk.  In 2010, Brodhead sent USAA a demand for Graham’s $100,000 policy limit; the insurer replied with an offer of $14,500, which Junior declined.  In 2011, Junior sued Graham in Fulton County State Court, and in 2013 Brodhead offered to settle for $600,000, which USAA also declined.  Some years later, the insurer offered it’s $100,000 limit, which Junior refused. 

Following a trial last year before Fulton County Judge John Mather, the jury found for Junior in a final judgment totaling $4,979,066, including $1,251,554 in fees and expenses under the bad faith/stubbornly litigious statute.  Junior’s lawyers then moved to have the court award attorney fees and expenses from the time the $600,000 offer was rejected under O.C.G.A. 9-11-68, the offer of judgment statute.

In rejecting the motion, Mather wrote that “the statutory language does not explicitly preclude a determination of bad faith in either scenario.”  But, Mather wrote, “[w]hile an award under the two statutes may be based upon different conduct, the fees were expended as to one defendant under one cause of action.”

“While an award under the two statutes may be based upon different conduct, the fees were expended as to one defendant under one cause of action,” he said, and “allowing Plaintiff a further award of attorney’s fees would permit a double recovery.”  In appealing the order, Junior’s lawyers wrote that the offer of judgment statute’s mandate that a prevailing party “shall be entitled to recover reasonable attorney’s fees and expenses of litigation” did not involve any other sanction issued by a court or jury. 

“Specifically,” it said, “although the amount of damages under O.C.G.A. § 13-6-11 and the amount of sanctions under O.C.G.A. § 9-11-68 are both calculated with reference to attorneys’ fees, they are different statutes with different language that apply to different conduct that occurs at different times,” Junior’s appellate brief said. 

In upholding Mather, Doyle cited the Georgia Supreme Court’s 2014 decision in Ga. Dept. of Corrections v. Couch, 295 Ga. 469, which expressly stated that fees awarded by a jury for bad faith “must be based on conduct arising from the transaction underlying the cause of action being litigated, not conduct during the course of the litigation itself.  “By contrast, attorney fees awarded under OCGA § 9-11-68 (b) are not identified as damages; they relate entirely to conduct during the course of the litigation; and they are determined post-judgment by the court rather than during trial by the jury,” that ruling said. 

Couch, however, did not address whether a claimant could recover a full amount of attorney fees under OCGA § 13-6-11 and another full amount under OCGA § 9-11-68 (b), and such a finding is not implied in this case,” Doyle wrote.  “This is because, by the time that Junior filed his motion … he had no longer ‘incurred’ the $1,251,554 in attorney fees for which he was awarded additional damages by the jury—those costs had been compensated,” Doyle wrote.

Judge: Can Counsel Tack 40% Fee Request on Top of $33M Verdict?

October 23, 2020

A recent Law.com story by Katheryn Tucker, “Judge’s Question on $12M Legal Bill: ‘I Want to Hear Why This Is Something Legitimate’, reports that a big fee was the sticking point during Zoom oral arguments before the Georgia Court of Appeals.  The panel of three—Presiding Judge Sara Doyle, Chief Judge Chris McFadden and Judge Ken Hodges—is being asked to decide whether plaintiffs lawyers can tack on their 40% contingency fee award on top of a $33 million wrongful death verdict.

“I want to hear why this is something legitimate,” Doyle said to Mike Terry of Bondurant Mixson & Elmore, arguing for the plaintiff’s side to defend the verdict and attorney fee claim.  Doyle said she understands that plaintiffs lawyers take on the risk of a case with no guarantee of being paid, and that’s “why they get more.”  But why wouldn’t the fee come out of the $33 million judgment, she asked.

Terry said plaintiffs counsel is entitled to the added fee under Georgia law after making a $1 million offer of settlement, then far exceeding that sum at trial.  So the plaintiffs counsel’s math subtracts that $1 million from the $33 million verdict, which makes $32 million, multiplies that by 40%, which is about $12 million, then adds the two together, making $45 million.

On the other side was Laurie Webb Daniel of Holland & Knight, representing the driver who turned left in front of a reportedly speeding motorcycle.  Daniel was hired by the insurance company, State Farm, which now has $45 million on the line between the verdict and the added-on fee award.  Daniel told the panel that the plaintiffs counsel had shown no documentation to justify the fee demand.  Plus she said Terry’s argument had been “based on an erroneous order,” and that “improper material had been presented to the jury.”  She said the judge allowed plaintiffs counsel to question the defendant about her prior driving record and past speeding, which had nothing to do with the case.  “The law does not allow collateral impeachment,” Daniel said.

The case was tried in February 2019 before Spalding County State Court Judge Josh Thacker. The plaintiff is the wife of a man killed 15 years ago when a car turned left in front of his motorcycle.  The jury awarded: $63,000 for medical and funeral expenses, $3.25 million for general estate damages, $4.1 million for wrongful death-loss of wages and $26 million for wrongful death-noneconomic value of the life of Daniel K. Mayfield Jr.

“This was a tragic case of a driver who turned left directly in front of a motorcyclist that she failed to see approaching,” Mayfield family attorney Ben Brodhead of Brodhead Law said after the verdict.  “The case was complicated by three independent witnesses who claimed that the motorcyclist was traveling at approximately 80 mph to 100 mph as he approached the intersection.”  But Brodhead said he was able to establish that “no one observed the motorcycle’s speed in the 10 seconds before the crash.” 

The jury apportioned 3% of the fault to Mayfield and 97% to defendant Vickie Lynn Fain Kennison, the driver who turned left into the path of Mayfield’s motorcycle.  Broadhead said he made requests for the $100,000 State Farm policy limit over the course of a decade of litigation.  He said immediately after the trial that he would be asking for the added 40% fee award in addition to 97% of the verdict, plus interest and litigation expenses.

Sixth Circuit Sets out Guidelines for Lodestar Fee Awarded in Class Actions

August 22, 2020

Attorney fee awards are a major driver of class action litigation – both in the employment and other contexts.  How they are awarded, and what is “reasonable” has been an ongoing source of contention in many cases.  A recent opinion from the Sixth Circuit provides some guidance and also places limits on methodology used by some courts to support generous, even lavish, fee awards.

The decision in Linneman v. Vita-Mix Corp., Case Nos. 19-3993/4249 (6th Cir., Aug. 12, 2020), related to the settlement of a class action involving the high-end Vita-Mix blenders used commercially and by consumers.  The plaintiffs, who owned the mixers, claimed that a seal used in the blenders was defective and would wear away with use.  The parties settled the case under a two-part structure: Consumers could get either a $70 gift card or a replacement assembly with a revised seal; commercial users would get only the assembly.  As the parties were unable to agree to a fee amount, the settlement provided that class counsel would receive a fee to be determined by the district court.  As explained below, after two years of litigation, and using a lodestar calculation, the district court awarded $3.9 million in fees ($2.2 million plus a 75% premium), and the defendant appealed.

Much of the Court of Appeals’ decision related to the application of the Class Action Fairness Act (CAFA), as it was largely undisputed that the terms of the agreement made the deal a coupon settlement.  The importance to this blog is that the court found that it was appropriate for the trial court to use a lodestar calculation rather than a percentage of the settlement.

With respect to the lodestar calculation, the court made a number of important pronouncements, ruling for the plaintiffs in some instances and for the defendant in others. Among them:

  • In a lodestar calculation, the result (reasonable hours times a reasonable rate) is presumed to be the correct reasonable rate. The court can apply a multiplier (no surprise there), but only in “rare and exceptional” circumstances.
  • A fee award can include the time spent pursuing fees (again, no surprise), but in this case, the defendant had made a reasonable Rule 68 offer of judgment on the amount ($3.1 million), calling into serious question why the fee issue needed to be litigated for another two years.
  • The rates used must be appropriate in the local community, not nationwide.  Thus, the plaintiffs were limited to the relatively lower rates charged in southern Ohio, where the case was pending, and not higher rates charged in other or “national” markets.

The court ultimately remanded the case for numerous reasons and for further determination of the issues noted above, as well as to determine whether the settlement had actually accomplished much for the class members given the steps the defendant had taken prior to the litigation to correct the alleged defect.

The Linneman case is a good example of what can happen when a court actually looks at the amount of work done, the results obtained for the class and whether a fee enhancement is actually in order.  The bottom line: Courts that look closely at what goes into lodestar fee awards in class actions may award less than the plaintiffs expect.