Second case in a row
Many in Florida’s insurance industry say further consumer reforms wouldn’t be complete without tackling another cost-driver that didn’t make it into SB 76: attorney contingency fee multipliers. Further proof came last week when an appeals court overturned a Miami-Dade County Circuit Court decision, finding the award of not only the multiplier – but the basic fees and costs in the case – “was not supported by competent, substantial evidence.”
Florida’s fee-shifting statute authorizes an attorney to recover a “reasonable fee” when their client prevails, utilizing the federal Lodestar method which multiplies the hours reasonably expended by a reasonable hourly rate. It was Florida Supreme Court Chief Justice Barbara Pariente’s court in 2017 that turned that on its head by essentially allowing the use of fee multipliers any time. (For a further explanation, read my March 2020 blog How a $41,000 Plumbing Leak Turned Into a $1.2 Million Attorney Fee)
Last week, Florida’s 3rd District Court of Appeal found the numbers didn’t add up in their ruling in Citizens Property Insurance Corporation vs. Joseph Casanas and Nancy Cervantes. Plaintiffs in the underlying homeowners’ insurance case sustained damage to their roof during Hurricane Irma in 2017, reported the loss to Citizens and retained counsel to represent them before Citizens had an opportunity to investigate the loss or determine coverage (sound familiar?). Citizens ultimately denied coverage after determining the damage was below the hurricane deductible. Plaintiffs filed suit for underpayment of the claim in January 2018. The case was minimally litigated—there were no depositions taken, no dispositive motions filed, few hearings, and no trial. The case settled in mediation in January 2019 with a judgment in the amount of $35,000 entered in favor of plaintiffs, subject to motions for costs and fees.
The trial court determined the lodestar fee was $70,800 and added a 1.8 multiplier for a fee of $127,440. It then added another $9,360 in litigation costs, plus a $13,800 fee for the plaintiffs’ fee expert. Your “Price is Right” total for this showcase comes to $150,600, “nearly five times the amount of the $35,000 settlement,” the appeals court noted. It picked apart the circuit court’s blanket adoption of fees and costs and based its overturning decision on one it just issued in Universal Property & Casualty Insurance Co. v. Deshpande, a “remarkably similar homeowner’s insurance claim where counsel was awarded an excessive and unsupported amount of attorneys’ fees,” the appeals court wrote. It sent this case back to Circuit Judge Martin Zilber and ordered specific changes to lower the billable hours and other costs.
We remain puzzled that certain lawyers believe they should be entitled to two or three or four times their fees in cases that are simple disputes about the proper claim amount. Again, this is an important cost-driver to our double-digit property insurance rate increases that could be addressed by today’s Florida Supreme Court or Florida Legislature. Senator Jeff Brandes (R-Pinellas) tried to do so in last spring’s legislative session with SB 212, which would allow contingency risk multipliers only “in a rare and exceptional circumstance with evidence that competent counsel could not be retained in a reasonable manner.” The bill, unfortunately, never got a hearing.
LMA Newsletter of 11-1-21