A lesson for defense counsel
A South Florida foreclosure lawsuit in federal court serves as a reminder for those of us in the property insurance business of what we’re dealing with in litigation and attorney fees where a fee multiplier is added to the award. In this case, the judge reduced the requested attorney fees by almost 90% – from $480,000 to $58,000.
In Dorvil v. Nationstar Mortgage the homeowner sued NationStar Mortgage claiming unfair foreclosure. Mr. Dorvil prevailed on only 2 of the 10 counts. His lawyers argued they were entitled to attorney fees under the federal Loadstar method, which multiplies the hours reasonably expended by a reasonable hourly rate. That came to $240,300. But they added a fee multiplier of two, bringing the total to $480,000. The judge rejected the request, finding there were no novel issues or particular challenges in representing the case, and awarded attorney fees to plaintiff counsel only on the 2 counts they won.
In the insurance litigation realm, contingency fee multipliers (and the threat of a multiplier during claims dispute negotiations) are among the abuses in the system, including the one-way attorney fee statute and bad faith statute that are raising costs eventually passed along to all homeowners through higher insurance rates. While Florida state courts generally follow the federal Lodestar, a carve-out was created by the state Supreme Court in a 2017 decision on a basic insurance claim dispute case. It has increased fees paid to plaintiff lawyers on top of their customary $500 or more hourly rate and is raising insurance rates as evidenced by a review of past years’ rate filings and rate increase public hearings. (For more, read How a $41,000 Plumbing Leak Turned Into a $1.2 million Attorney Fee.)
This foreclosure case is part of the pattern and practice of the attorney fee hustle. The goal is to see how many cases will stick in a courtroom and how many can get multiplier fees. Judges are starting to become more aware of the issue. Advocates have tried to return Florida solely to the federal standard and to only award contingency fees in the rare and exceptional circumstances for which they were designed. We’ll continue our efforts and this case inspires us in the name of consumer protection.
See you on the road,
LMA Newsletter of 2-14-22