10 Fla. L. Weekly Supp. 549a
Insurance — Personal injury protection — Attorney’s fees — Attorney’s pre-suit time spent in direct response to insurer’s coverage denial is compensable — Contingency risk multiplier — Fees should be enhanced for achievement of excellent results where insured fully recovered PIP coverage plus interest — Where insured had pure contingency risk contract, case was not run-of-the-mill PIP case but a complete denial of coverage based on insured’s failure to list son on application, there was even chance of success at outset, and it would have been difficult if not impossible for insured to get proper legal representation without use of contingency contract and possibility of multiplier, multiplier of 2.0 is appropriate — Expert witness fees, costs, and prejudgment interest awarded
JUAN ALVARADO, Plaintiff, vs. FEDERATED NATIONAL INSURANCE COMPANY, Defendant. County Court, 15th Judicial Circuit in and for Palm Beach County. Case No. NC-02-19111-RH. May 22, 2003. Final Judgment. May 22, 2003. Cory J. Ciklin, Judge. Counsel: Diego C. Asencio, Diego C. Asencio, P.A., North Palm Beach. James P. Cooksey, Riviera Beach.
ORDER ON PLAINTIFF’S MOTION FOR ATTORNEYSFEES, COSTS AND PREJUDGMENT INTERESTON ATTORNEYS FEES AND COSTS
THIS CAUSE came to be heard upon Plaintiff’s Motion for Attorneys Fees and Costs. The Court heard the testimony of Gary Russo (hereinafter Mr. Russo), Diego C. Asencio (hereinafter Mr. Asencio) and Mr. James P. Cooksey (hereinafter Mr. Cooksey) and considered the exhibits submitted at the attorneys fees hearing held May 12, 2003. Based on the foregoing the Court makes the following findings of fact and conclusions of law:FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. FACTS OF THE UNDERLYING INSURANCE DISPUTE
Defendant FEDERATED NATIONAL INSURANCE COMPANY (hereinafter FEDERATED) denied coverage on the basis that there was an undisclosed driver in the household of Plaintiff JUAN ALVARADO (hereinafter MR. ALVARADO). FEDERATED claimed that MR. ALVARADO failed to list his son on the application as a driver.
Any misrepresentation materially affecting a risk would invalidate an insurance policy even if the representation was made in good faith by the insured. See F.S. §627.409 and Life Ins. Co. v. Shifflet, 201 So.2d 715 (Fla. 1967); Continental Ins. Co. v. Carroll, 485 So.2d 406 (Fla. 1986). The insurer is allowed in Florida to rely upon the truthfulness of the statements in the application and is not required to make further inquiry. Swift v. North American Company for Life and Health Insurance, 677 F.Supp. 1145 (S.D. Fla. 1987); Shelby Life Ins. Co. v. Paolasini, 489 So.2d 89 (Fla. 3d DCA 1986) rev. den. 501 So.2d 1283 (Fla. 1986).
In other words, even if MR. ALVARADO did not intend to deceive the insurer, the alleged misstatement (whether innocent or not) gave the insurer valid grounds to void the policy.
2. TIME AND LABOR
The dispute over the insurance coverage ran from March 22, 2002 to March 22, 2003. Mr. Cooksey received FEDERATED’s March 18, 2002 letter reserving rights to deny coverage on March 22, 2002. That was followed up by FEDERATED’s April 8, 2002 letter denying coverage. Suit was filed on August 12, 2002 by Mr. Asencio. FEDERATED agreed to entry of a judgment finding coverage and the judgment was entered on March 10, 2003. FEDERATED paid $8,839.42 in PIP benefits and interest. That payment was received by Mr. Asencio on March 22, 2003. The parties agreed to resolve separately by settlement or by a fee hearing the amount of attorneys fees and costs. The total number of hours shown on Mr. Cooksey’s billing statement for that period is 8.00 hours. Mr. Asencio became involved on August 6, 2002 and his billing records reflect another 8.00 hours.
The Court finds that Mr. Cooksey reasonably expended 7.5 hours from March 22, 2002 to March 22, 2003. The Court finds that the 7.9 hours spent by Mr. Asencio from August 6, 2002 to March 22, 2003 was also reasonable and necessary. Although some of the time claimed by Mr. Cooksey involved persuit work, he did not bill for any routine PIP work. There were no charges for preparing the PIP application or for submitting any PIP claims. Mr. Cooksey only started billing after FEDERATED sent its reservation of rights letter of March 18, 2002. Accordingly, the Court finds Mr. Cooksey’s presuit time compensable as it was in direct response to FEDERATED’s coverage denial. Rosado v. USF&G, 606 So.2d 628 (Fla. 3d DCA 1982).
3. MARKET RATE FOR FEES IN THE COMMUNITY
The Court finds that the market rate for the hourly fees charged in the Palm Beach County area by lawyers of reasonable comparable skill, experience and reputation performing similar services as those performed by Plaintiff’s counsel ranges between $250 per hour to $350 per hour. Plaintiff has requested $275 per hour for Mr. Cooksey. This is well within the ranges of fees charged in the community for similar work. However, Mr. Russo testified that Mr. Cooksey should get $250.00 per hour because he is not board certified. The Court finds $250.00 to be the appropriate market rate for Mr. Cooksey. The Plaintiff has requested $300.00 per hour for Mr. Asencio’s market rate. Mr. Russo testified that Mr. Asencio is worth more than $300.00 per hour. The Court finds that $300.00 per hour is the appropriate market rate for Mr. Asencio.
4. AMOUNTS INVOLVED AND RESULTS OBTAINED
The results obtained for the Plaintiff were excellent. The PIP coverage available was only $8,000. Mr. Asencio fully recovered on the PIP coverage and obtained an additional $839.42 in interest. The attorneys should have their fees enhanced for achieving the results.
5. CONTINGENT NATURE OF FEE, RELEVANT MARKET, AND MITIGATION OF RISK
Plaintiff had a pure contingent fee contract with both Mr. Asencio and Mr. Cooksey. Both lawyers assumed representation under that contract on a pure contingency. Both lawyers took the entire risk of the loss of recovery. The contract only allowed for a fee to be determined by the Court on the PIP dispute. Plaintiff was not obligated to pay any fee whatsoever absent a court award. Therefore, the application of a contingency risk multiplier to the Loadstar is within the sound discretion of the Court. While a contingency risk multiplier is not appropriate in a run of the mill PIP case such as U.S. Sec. Ins Co. v. Lapour, 617 So.2d 374 (Fla. 3d DCA 1993), it has been amply shown this was not such a run of the mill case. This case involved a complete denial of coverage.
The Court notes that, the leading case of Quanstrom v. Standard Insurance, 555 So.2d 828 (Fla. 1990) was itself a nondescript simple PIP case involving the issue of whether or not PIP coverage was available to an insured when he owned an inoperable motor vehicle. Another leading case, State Farm v. Palma, 555 So.2d 836 (Fla. 1990), involved a fee of over $200,000 for litigating a $600 thermography bill.
Mr. Asencio evaluated the case as having an “even” chance of success at the outset. That evaluate appears in his contemporaneous billing statement. Mr. Asencio took MR. ALVARADO’s case because he hoped and expected to get a multiplier if ultimately successful. Mr. Asencio testified that he would not have taken the case without the prospect of getting that multiplier. Mr. Asencio also testified that he believed in his client’s version of the facts. Likewise, Mr. Cooksey evaluated the case as having an “even” chance of success. Finally, Mr. Russo also agreed that misrepresentation cases are difficult and that the likelihood of success was even.
The Court finds that it would have been difficult if not impossible for MR. ALVARADO to get proper legal representation on the facts of this particular case without the use of a contingency contract and the possibility of a fee multiplier. Attorneys of skill and reputation similar to Mr. Asencio will not accept contested insurance cases with voided policies and go to trial without the possibility of a multiplier. The Court heard the testimony of attorney Asencio that the multiplier persuaded him to take this case. The Court finds that attorneys of skill and reputation are not eager to pursue such cases. Without a contingency fee multiplier such cases are highly undesirable. If the insurance company has made up its mind that it will contest the case, the risk of loss will always be present. This is exactly the type of case that requires a multiplier. In Palma, supra, a multiplier of 2.5 was found not to be excessive.
Plaintiff’s expert witness, Mr. Gary Russo, testified that success was even at the outset. There were various factors that made the case a greater risk. The Court finds that success at the outset was indeed even. The Court further finds that a multiplier of 2.0 is appropriate.
6. EXPERT WITNESS FEES OF ATTORNEY
When the expert witness in a fee hearing expects to be paid for his time in preparing and testifying, the Court has no discretion to deny the attorney an expert witness fee. Stokus v. Phillips, 651 So.2d 1244 (Fla. 2d DCA 1995). Mr. Russo testified without contradiction that he expended seven (3) hours for meeting with attorney Asencio, reviewing attorney Asencio’s file in preparation for the testimony and in testifying. Mr. Russo also testified without contradiction that his hourly rate for such testimony is $275.00 per hour and that Mr. Asencio had agreed to pay him that fee. Accordingly, the Court finds that Plaintiff is entitled to $825.00 for this expert witness fee.
7. TAXABLE COSTS
Plaintiff is seeking as a cost the expert witness fees charged by Mr. Bone under to Section 92.231, Florida Statutes. Mr. Asencio agreed to pay Mr. Bone $350 per hour. Mr. Bone testified that he expended 6.5 hours including his time in preparing and testifying. This was less time that Mr. Phillips spent up to the time of his deposition. Mr. Bone also testified that he fully expected to be paid regardless of the outcome of the hearing. Accordingly, the Court awards the 6.5 hours at $350.00 per hour. The Court awards these fees to Plaintiff as a cost. See Stokus v. Phillips, 651 So.2d 1244 (Fla. 2d DCA 1995); Mangel v. Bob Dance Dodge, Inc., 739 So.2d 720 (Fla. 5th DCA 1999) (expert witness taxed as cost under Section 92.231, Florida Statutes). Thus, Plaintiff shall receive $2,100.00 for Mr. Bone’s fees.
The Court also awards the costs for the underlying coverage matter in the amount of $246.00. Those costs are as follows:
$200.00 Clerk of Court Filing fee
$15.00 Dept. Insurance Service fee
$31.00 Copy expenses
The Court also awards the costs incurred by Plaintiff in pursuit of the attorneys’ fees. The sole cost, besides the expert witness fee above, is the cost of the Court report of $100 per diem. The Court finds that it was reasonably necessary for Mr. Asencio to have a court reporter at the hearing.
8. PREJUDGMENT INTEREST ON ATTORNEY FEES AND COSTS
Plaintiff is entitled to prejudgment interest on attorney fees and costs from the date of resolution of the case. Quality Engineering Installation v. Higley South, Inc., 670 So. 2d 929 (Fla. 1996). This case was resolved was completed when Plaintiff was paid the benefits and interest on March 22, 2003. Thus prejudgment interest on attorneys fees and costs shall accrue interest at the rate of 6% running from March 22, 2003.
Based on the above, the Court finds and it is ORDERED AND ADJUDGED that the reasonable attorneys fees and costs in this case are:
A. Attorney time of 7.9 for Mr. Asencio (number of hours reasonably and necessarily expended) X $300.00 per hour (reasonable hourly rate) = $2,370.00 (Loadstar) X 2.0 (Contingency Risk Multiplier) = $4,740.50 total attorneys fees.
B. Attorney time of 7.5 hours for Mr. Cooksey (number of hours reasonably and necessarily expended) X $250.00 per hour (reasonable hourly rate) = $1,875.00 (Loadstar) X 2.0 (Contingency Risk Multiplier) = $3,750.00 total attorneys fees.
C. Taxable costs as follows:
1. Expert witness fees for Mr. Gary Russo for three (3) hours at the rate of $275 per hour = $825.00;
2. Pre-hearing taxable costs of $246.00;
3. and the per diem for the Court reporting covering the attorneys fees hearing of $100.00.
D. Total fees and costs of $8,736.50 (A, B, & C2) shall accrue 6% interest from March 22, 2003 to May 22, 2003. The per diem rate of interest is $1.44) ($8,736.50 X .06 ö 365). The total amount of that interest is $86.17 for 60 days. Thus, the fees, costs and interest total $8,822.67.
E. Adding together the sum of (D) $8,822.67 in attorneys fees, costs and interest together with the post settlement taxable costs of $925.00 (C2 & C3) results in a total combined figure of $9,747.67 upon which judgment shall be entered and which shall bear interest at the rate of interest of 6%.
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FINAL JUDGMENT
Pursuant to the attorney fee hearing held in this matter and the order on attorneys fees and costs rendered in this action,
IT IS ORDERED AND ADJUDGED that the Plaintiff, JUAN ALVARADO, recover from the Defendant, FEDERATED NATIONAL INSURANCE COMPANY, the sum of $9,747.67 with interest as provided in F.S. §55.03, for which sums let execution issue.
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