27 Fla. L. Weekly D920b
Attorney’s fees — Insurance — Class action against automobile insurer for failing to comply with applicable statutes in cancellation of insurance policies — Error to apply contingency fee multiplier in determining attorney’s fee award on grounds that case involved complex and novel issues and that case had less than fifty percent chance of success at the outset, where there was no evidence that without risk enhancement plaintiff would have faced substantial difficulties in finding counsel in the local or other relevant market — Award of prejudgment interest on attorney’s fees from date summary judgment was entered for plaintiff was inequitable where plaintiff did not file motion for attorney’s fees until more than three years after summary judgment, and defendant did not receive amount being requested until after filing of motion
THE ARIES INSURANCE COMPANY, Appellant, vs. ONELIA MARIA ALEMAN, Appellee. 3rd District. Case No. 3D00-2316. L.T. Case No. 95-2394. Opinion filed April 24, 2002. An appeal from the Circuit Court of Miami-Dade County, Murray Goldman, Judge. Counsel: Buckner & Shifrin; Lauri Waldman Ross, for appellant. Podhurst, Orseck, Josefsberg, Eaton, Meadow, Olin & Perwin and Joel S. Perwin, for appellee.
(Before SCHWARTZ, C.J., and COPE, and FLETCHER, JJ.)
(FLETCHER, Judge.) Aries Insurance Company appeals an award of attorney’s fees in a class action. After a thorough examination of the record, we find the award to be excessive, and reverse and remand the matter with instructions.
Onelia Maria Aleman initially filed suit against Aries seeking coverage for an automobile accident which occurred after her insurance policy was canceled. This action was later voluntarily dismissed and followed by an action, filed individually and on behalf of a class of similarly situated insureds, seeking a determination that the insurer failed to comply with applicable statutes in the cancellation of her insurance policy. Although the insurer initially objected to the class as defined, the parties subsequently stipulated to the class certification and then filed cross-motions for summary judgment on the legal issue of the validity of the cancellation. The parties also agreed to stay discovery pending resolution of these motions. The trial court entered summary judgment in favor of the insured on the liability issue [4 Fla. L. Weekly Supp. 257a], which order was affirmed by this court in Aries Ins. Co. v. Aleman, 695 So. 2d 910 (Fla. 3d DCA 1997).1 After extensive settlement negotiations, the parties reached an agreement that damages were to be calculated by an accountant to be paid by the insurer. The insurer additionally agreed to pay reasonable attorney’s fees on which a hearing was conducted with both sides presenting expert testimony. After assessing the reasonable hours and hourly rates for the various attorneys who worked on the case on behalf of the plaintiff and reducing the hours requested, the trial court determined the lodestar attorney’s fees at $228,450. Further concluding that at the outset the case had less than a fifty percent chance of success and involved complex and novel issues, the trial court enhanced the award by the maximum 2.5 multiplier and added prejudgment interest from the date of entry of the summary judgment, for a total attorney’s fee award of $794,015.
Aries appeals from this judgment, raising three points of alleged error. First, Aries argues that the trial court’s conclusion with regard to a reasonable attorney’s fee in this case was excessive in light of the fact that the litigation was stream-lined and determined on legal issues. For similar reasons, Aries further contends that there is no basis for the 2.5 multiplier awarded. Finally, Aries contests the award of prejudgment interest as inequitable. We will address each issue separately.
We found no abuse of discretion in the trial court’s determination of the lodestar attorney’s fee amount, but disagree with the contingency fee multiplier awarded under the circumstances of this case. In Standard Guar. Ins. Co. v. Quanstrom, 555 So. 2d 828, 834 (Fla. 1990), the Florida Supreme Court set forth certain factors which must be present to justify the application of a multiplier in a contract case. These factors are: “(1) whether the relevant market requires a contingency fee multiplier to obtain competent counsel; (2) whether the attorney was able to mitigate the risk of nonpayment in any way; and (3) whether any of the factors set forth in Rowe2 are applicable. . . .” Id. at 834. In the instant case, the trial court based its determination in part on its conclusion that the case involved complex and novel issues. As the court pointed out in Rowe, however, “[t]he `novelty and difficulty of the question involved’ should normally be reflected by the number of hours reasonably expended on the litigation.” 472 So. 2d. at 1150; see also Florida Birth-Related Neurological Injury Compensation Ass’n v. Carreras, 633 So. 2d 1103, 1108-09 (Fla. 3d DCA 1994). The number of hours reasonably expended then becomes the lodestar figure after being multiplied by a reasonable hourly rate. The contingency risk multiplier, on the other hand, is intended to enhance the lodestar figure where a risk of nonpayment is established. See Rosenberg v. Ross, 613 So. 2d 505 (Fla. 3d DCA 1993). The other reason given by the trial court for its award of the maximum 2.5 multiplier in this case was the court’s opinion that the case had a less than fifty percent chance of success at the outset. This fact also does not automatically mandate award of a multiplier. See Travelers Indem. Co. v. Sotolongo, 513 So. 2d 1384, 1385 (Fla. 3d DCA 1987) (“[A]s we read Rowe, the court is not obligated to adjust the lodestar fee in every case where a successful prosecution of the claim was unlikely.”). Subsequent cases on this issue demonstrate that the main focus of the court’s inquiry in determining whether to apply a multiplier should be on the first factor listed in Quanstrom, i.e., whether the relevant market requires a contingency fee multiplier to obtain competent counsel. See, e.g., Bell v. U.S.B. Acquisition Co., 734 So. 2d 403 (Fla. 1999); Sun Bank of Ocala v. Ford, 564 So. 2d 1078 (Fla. 1990); Jones v. Minnesota Mut. Life Ins. Co., 759 So. 2d 723 (Fla. 4th DCA 2000); Strahan v. Gauldin, 756 So. 2d 158 (Fla. 5th DCA 2000); Simmons v. Royal Floral Distribs., Inc., 724 So. 2d 99 (Fla. 4th DCA 1998); and Askowitz v. Susan Feuer Interior Design, Inc., 563 So. 2d 752 (Fla. 3d DCA 1990), rev. denied, 576 So. 2d 292 (Fla. 1991). Quoting from Pennsylvania v. Delaware Valley Citizens’ Council for Clean Air, 483 U. S. 711 (1987), the Bell court directs: “Before adjusting for risk assumption, there should be evidence in the record, and the trial court should so find, that without risk-enhancement plaintiff would have faced substantial difficulties in finding counsel in the local or other relevant market.” We find no such evidence in the record in this case. Apparently, counsel who represented plaintiff herein was the first attorney Mrs. Aleman consulted. There was no substantial evidence presented to the effect that other lawyers in our community would have refused to represent this plaintiff or to bring this class action on her behalf.
Finally, we must also reverse the award of prejudgment interest on the attorney’s fee from August 29, 1996. Although the general rule is that prejudgment interest on attorney’s fees accrues from the date that entitlement to fees is determined by an award or a settlement even though the amount of the award is still to be determined, entitlement to prejudgment interest is not absolute and remains subject to equitable considerations. See and compare Quality Engineered Installation, Inc. v. Highley South, Inc., 670 So. 2d 929 (Fla. 1996) and Broward County v. Finlayson, 555 So. 2d 1211 (Fla. 1990); see also Volkswagen of America, Inc. v. Smith, 690 So. 2d 1328 (Fla. 1st DCA 1997). In Quality Engineered Installation, the supreme court reasoned that using the date when entitlement to the fees is determined as the date when interest begins to accrue “serves as a deterrent to delay by the party who owes the attorney’s fees” and that party “can be protected against delay in determining the amount of fees and further accrual of interest through a tender of payment.” 690 So. 2d at 931. This envisions a scenario where the plaintiff in its motion for attorney’s fees sets forth a basis upon which the defendant can make a tender of payment. This was not what happened in this case. The trial court here fixed the date where entitlement to attorney’s fees was determined as the date when the summary judgment was entered in favor of Mrs. Aleman on August 29, 1996. Plaintiff did not file her motion for attorney’s fees, however, until October 12, 1999 and even then provided no clue as to the amount of fees being sought. (Plaintiff’s motion was comprised of one sentence merely asking for attorney’s fees.) Defense counsel testified that she did not receive the amount being requested nor any supporting records until June of 2000. We believe that given these circumstances it would be inequitable to award prejudgment interest from the date of accrual. As a consequence, we reverse the award of prejudgment interest from August 29, 1996, without prejudice to the trial court’s determining an alternative date where defendant had sufficient information upon which to base a tender of payment of attorney’s fees and awarding prejudgment interest from said date.
Accordingly, the judgment below is reversed and the cause is remanded for entry of a judgment in the amount of the lodestar attorney’s fees, $228,450 and further consideration as to prejudgment interest. (COPE, J., concurs.)
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1Thereafter, plaintiff’s counsel filed a similar case on behalf of another plaintiff which was consolidated with the present case.
2Florida Patient’s Compensation Fund v. Rowe, 472 So. 2d 1145 (Fla. 1985).
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(SCHWARTZ, Chief Judge, dissenting in part.) I believe that the $228,450.00 “lodestar fee” is disgustingly excessive for the services which were actually, reasonably required, and should be reduced to a small fraction of that amount. See Donald S. Zuckerman, P.A. v. Alex Hofrichter, P.A., 676 So. 2d 41 (Fla. 3d DCA 1996); Miller v. First American Bank & Trust, 607 So. 2d 483 (Fla. 4th DCA 1992).
