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Category: Statutory Fees

Eleventh Circuit: Insurer Doesn’t Have to Pay Attorney Fees in Dismissed Action

May 9, 2023

A recent Law 360 by Ganesh Setty, “11th Circ. Says No Attorney Fees for Cos. In Tossed Insurance Suit,” reports that a home builder and contractor accused of faulty stucco work can't seek attorney fees from their insurance company after a Florida federal court found the insurer lacked standing to litigate whether it had a duty to defend the companies, the Eleventh Circuit ruled.  Under the circuit's 1984 decision in Certain British Underwriters at Lloyds of London v. Jet Charter Serv. Inc. , statutory attorney fees are an element of damages and are therefore part of the merits of a case itself, U.S. Circuit Judge Elizabeth L. Branch wrote in the court's unpublished opinion.

Thus, when U.S. District Judge Timothy J. Corrigan tossed Southern-Owners Insurance Co.'s suit because it failed to meet the federal $75,000 amount-in-controversy threshold, the court lacked the subject-matter jurisdiction to hear any ensuing dispute over attorney fees, Judge Branch found. U.S. Circuit Judge Gerald Bard Tjoflat penned a separate concurrence, while U.S. Circuit Judge Britt C. Grant issued a dissent.

According to the decision, the dispute began in August 2013, when the home builder, Maronda Homes Inc. of Florida, sold a house to a couple who later complained of various construction defects related to the home's stucco installation. Maronda had hired JROD Plastering LLC to perform the installation, which held a commercial general liability policy with Southern-Owners that listed Maronda as an additional insured.

The insurer subsequently sued Maronda and JROD in Florida federal court seeking a declaration it had no coverage obligations over the alleged construction defects.  But Judge Corrigan dismissed the suit for lack of subject-matter jurisdiction, finding that the insurer failed to meet the $75,000 amount-in-controversy threshold for federal litigation.

Maronda and JROD sought attorney fees under the now-repealed Florida statute § 627.428, which allowed a court to award attorney fees to insureds who prevailed in coverage litigation against their insurer.  The district court further dismissed those motions, citing in part the Jet Charter decision.  In that case, the Eleventh Circuit ruled that "attorney's fees recovera[bl]e by statute are to be regarded as 'costs' only when made so by statute," and are otherwise "treated as an element of damages," according to excerpts included in Friday's decision.

Though the Eleventh Circuit in Prime Insurance Syndicate Inc. v. Soil Tech Distributors Inc. ruled the opposite way in 2008, finding that attorney fees are "collateral issues" within the court's purview even if the underlying case isn't, that decision was not published, Judge Branch noted.  And even if it were, circuit precedent holds that in the case of conflicting published panel decisions, the oldest one controls, she said.

"All in all, while some Florida courts have reached a different result than we did in Jet Charter, these decisions are too varied to constitute a definitive change in law," Judge Branch added in a footnote.  "As such, we decline to exercise our discretionary power to rewrite our circuit's precedent which means that we are bound to follow Jet Charter."

NALFA Welcomes Phillip Neiman, Esq., FCIArb

July 27, 2020

The National Association of Legal Fee Analysis (NALFA) is pleased to announce that Phillip Neiman, Esq., FCIArb has been named a Fellow of the association.

Mr. Neiman, a full-time neutral with JAMS in San Francisco, specializes in the resolution of complex business and commercial disputes.  He devotes much of his practice to securities and investment-related cases, including shareholder, partnership and M&A disputes, and has substantial experience in a range of other areas, including employment, insurance, IP, real property, professional liability, personal injury and privacy tort cases, as well as fintech and cannabis sector disputes.

Prior to establishing his ADR practice in 2004, Mr. Neiman spent a decade as CEO and General Counsel of a FINRA-registered investment bank.

Mr. Neiman has extensive experience resolving attorney fee disputes, both as an arbitrator ruling on contested fee petitions and as a mediator overseeing settlement negotiations with a fee component.  He has addressed a range of complex issues in contractual and statutory fee award cases, including lodestar adjustments, prevailing party determinations in partial success and disproportionate damages cases, multiparty apportionment, privilege claims related to billing records, Daubert challenges and assertions of bad faith litigation practices, among others.   

Mr. Neiman is a Fellow of the Chartered Institute of Arbitrators.

For more on Phillip Neiman, visit https://www.jamsadr.com/Neiman/

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

NJ Justices Toss ‘Unsound’ Attorney Fee Ethics Rules

January 29, 2020

A recent Law 360 story by Bill Wichert, “NJ Justices Throw Out ‘Unsound’ Ethics Rules for Atty Fees,” reports that the New Jersey Supreme Court upended new ethics rules from an appellate panel with respect to attorney fees in discrimination and related cases, saying they could have “far-reaching and negative effects” on lawyers and their clients.  The justices reined in those “ethical pronouncements” from the panel's 2018 published decision affirming a trial court’s orders declaring Brian M. Cige’s agreement with Lisa Balducci unenforceable.  The Supreme Court said a new ad hoc committee of judges and attorneys will be created to address such issues and make recommendations to the court.

“Some of those pronouncements appear too broad and some unsound, and others are worthy of the deliberative process by which new ethical rules are promulgated by this Court,” Justice Barry T. Albin wrote in the unanimous opinion.  The ethical obligations set forth by the panel covered attorneys handling New Jersey Law Against Discrimination and other fee-shifting cases when a retainer agreement includes hourly fees.  In fee-shifting actions, a defendant is responsible for a prevailing plaintiff’s reasonable attorney fees.

Among those rules, the Supreme Court rejected the panel’s finding that such attorneys must provide clients with “‘examples of how much hourly fees have totaled in similar cases.’”  That requirement “imposes a difficult, if not impossible, task,” the justices said.  “The attorney would have to know whether the ‘similar case’ settled or was tried, the nature and length of the discovery process, the number of depositions conducted and expert witnesses retained, the overall complexity of the litigation, and many other factors,” Justice Albin wrote.

The justices challenged the panel’s directive that attorneys inform clients that “‘other competent counsel represent clients in similar cases solely on a contingent fee basis, without an hourly component,’” noting that clients may benefit more from an hourly-fee deal than a contingent-fee arrangement.  The Supreme Court also expressed doubts about the panel’s pronouncement that attorneys “‘disclose other competent counsel who represent clients in similar cases advance litigation costs.’”

“Must an attorney refer a potential client to a competitor who may be less experienced or skilled merely because that attorney advances litigation costs?” the justices said.  “The answer to that question suggests that the Appellate Division’s disclosure requirement must be considered critically.”  The panel further asserted that “‘if the attorney has no such experience with similar cases ... consideration should be given to referring the case to a certified civil trial attorney,’” but the Supreme Court questioned whether that was correct as well.

The justices noted that “an attorney who has represented a client in one particular species of LAD cases may be no less capable of handling another species of such cases.”  “In addition, without in any way diminishing the value or importance of the designation of certified civil trial attorney — a special designation that signals that an attorney has recognized competence and experience as a litigator — certification is a voluntary, lawyer-initiated process, and some of the finest attorneys in their respective fields have decided not to seek certification,” the Supreme Court said.

The Supreme Court, however, upheld the panel’s finding that Cige’s retainer agreement was invalid.  Balducci retained Cige in 2012 to represent her son in an LAD lawsuit against a school district over bullying he had faced, court documents state.  The retainer agreement stated that Cige was entitled to the greater of three fee calculation methods: his hourly rate, a contingent fee or an award of statutory attorney fees, court documents state.

Balducci has claimed that Cige told her she would not have to pay his hourly fees, although the retainer agreement indicated otherwise, court documents state.  She has said Cige assured her the attorney fees would be covered by the school board, court documents state. Cige has denied making any statements that conflicted with the written agreement, according to the court documents.

The agreement also did not specify what Cige would charge Balducci for expenses, including $1 for every email sent or received, court documents state.  After Balducci terminated his services in 2015, Cige billed her for about $286,000 in fees and expenses, court documents state.  Balducci then filed the instant action seeking to have the agreement declared unenforceable, court documents state.

A trial court heard testimony from Balducci, her son and Cige, and sided with Balducci in invalidating the agreement, court documents state. The appellate panel upheld that decision.  In affirming the invalidation ruling, the Supreme Court concluded there was “sufficient credible evidence in the record” to back up the trial court’s findings.

“The court accepted Balducci’s assertion that she would not have retained Cige had he informed her that she would be responsible for his hourly fees if the lawsuit failed.  The court, moreover, determined that ‘a reasonable client’ would have viewed the retainer agreement as a typical contingent-fee arrangement, obligating the client to pay a percentage of a monetary recovery only if the lawsuit succeeded,” the justices said.

Minnesota Supreme Court Rules Attorney Fees are Capped by Policy Limit

November 14, 2017

A recent Claims Journal article by Steven Plitt, “Minnesota Supreme Court Rules that Statutory Attorney’s Fees are Capped by the Policy Limit,” writes about the recent Minnesota Supreme Court decision in Wilbur v. State Farm Mutual Automobile Insurance Co.  This article was posted with permission.  The article reads:

The question of whether attorney’s fees awarded under Minnesota’s insurance unreasonable denial statute could exceed the policy limits of the policy was recently addressed by the Minnesota Supreme Court in Wilbur v. State Farm Mutual Automobile Insurance Co., 892 NW2d 521 (2017).  Under Minnesota statute, Minn. Stat. §604.18 (2016) courts were authorized to award “taxable costs” when an insurance company denies insurance benefits without a reasonable basis.  The issue of whether the taxable cost award was kept by the insurance policy limit recently came before the Minnesota Supreme Court.  The court in Wilbur concluded that §604.18 unambiguously capped “proceeds awarded” at the amount recoverable under the insurance policy and were therefore capped by the policy limit.

The issue turned on whether the phrase “proceeds awarded” referenced in §604.18 referred to an amount capped by the insurance policy limit or not.  The insured claimant argued that no policy limit cap was contemplated by the statute.  The court began its analysis of §604.18 by noting that the statute provided a remedy for an insured when an insurer denied a first party claim without a reasonable basis.  Under the statute, courts in Minnesota were authorized to award taxable costs to an insured who could demonstrate that there was an absence of a reasonable basis for denying the benefits together with proof that the insured knew of the lack of a reasonable basis or active and reckless disregard.  If the insured was able to establish that proof, the court was authorized to award under the statute as taxable costs an amount equal to one-half of the proceeds awarded on coverage that were in excess of the amount offered by the insurer at least ten days before the trial began or $250,000, whichever was less.  For three reasons, the Minnesota Supreme Court held that §604.18 referred to an amount that was capped by the insurance policy limit.

First, the court noted that the statute’s use of the word “proceeds” to refer to insurance policies in two other subdivisions of the statute demonstrated that the phrase “proceeds awarded” was constrained by the defined limits of the insurance policy.  Second, the court noted that subdivision 3(a)(1) of the statute contemplated a capped settlement offer, which indicated to the court that the phrase “proceeds awarded” was capped by the insurance policy limit.  The connection between the phrase “proceeds awarded” and the “amount offered by an insurer” before trial was telling to the court.  Insurance companies’ settlement offers before trial were almost always capped by the insurance policy’s limit according to the observation of the Minnesota Supreme Court.

Third, the court found that the timing of the §604.18 proceeding suggested to the court that the phrase “proceeds awarded” were capped by the insurance policy limit.  Under the statute, subdivision 4(b) states “an award of taxable costs under this section shall be determined by the court in a proceeding subsequent to any determination by a factfinder of the amount an insured is entitled to under the insurance policy . . .” Minn. Stat. §604.18, subdivision 4(b).  Thus, proceeds could be awarded under §604.18 only “subsequent to” a jury’s determination of the benefits to be paid “under the insurance policy.”  The benefits paid under the insurance policy were capped by the insurance policy’s limits.  This provided a link in establishing that “taxable costs” awarded under §604.18 could not exceed the policy’s limit.

Mr Plitt is the current author of Couch On Insurance 3d and is a nationally recognized insurance expert.  See www.insuranceexpertplitt.com for more information.