12 Fla. L. Weekly Supp. 704a
Attorney’s fees — Insurance — Personal injury protection — Justiciable issues — No abuse of discretion in denying fee award against attorneys representing medical provider who filed PIP suit using unregistered fictitious name based in good faith reliance on information provided by provider — Trial court did not apply wrong standard to determine whether action was frivolous by admitting evidence of when counsel for insurer became aware of certain issues that were raised by insurer for first time after three years of litigation where insurer raised other theories for recovery of attorney’s fees besides frivolity of action and blended theories throughout hearing on entitlement to fees — No merit to insurer’s argument that attorneys acted in bad faith by filing suit on behalf of corporate entity without its knowledge where provider thought he was doing business in name of franchisor and openly conducted business in that name, and addition of “Inc.” after franchisor’s name in pleadings, resulting in unregistered fictitious name, was clerical error — No merit to argument that award against attorneys is warranted by fact that they sued wrong party where confusion was only in name of attorneys’ client, not that of insurer, and insurer was always proper defendant — Award against attorneys is not warranted based on deceptive HCFA forms containing name of franchisor where insurer has paid prior claims using same documentation, insurer has always known that provider was proper entity, and all HCFA forms had taxpayer identification number belonging to provider
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, v. MOTION X-RAY, d/b/a NU-BEST DIAGNOSTICS LABS, Appellee. Circuit Court, 9th Judicial Circuit (Appellate) in and for Orange County. Case No. CVA1-03-63. L.C. Case No. 99-SC-1414. March 3, 2005. Appeal from County Court for Orange County, C. Jeffery Arnold, Judge. Counsel: Robert D. Bartels, Rissman, Weisberg, Barrett, Hurt, Donahue & McLain, P.A., Orlando, for Appellant. Donald McKeever, McKeever, Albert & Barth, Winter Park, for Appellee.
(Before Henson, Adams, J., and Gridley, JJ.)
ORDER AFFIRMING THE LOWER COURT’S ORDER
(PER CURIAM.) Appellant State Farm Mutual Automobile Insurance Company (“State Farm”) appeals the trial court’s final order rendered on October 10, 2003, in favor of Motion X-ray (“Motion”), Inc. d/b/a Nu-Best Diagnostics Labs, denying State Farm’s entitlement to attorney’s fees and costs under section 57.105, Florida Statutes, and Florida Rule of Civil Procedure 1.442. We have jurisdiction pursuant to Florida Rule of Appellate Procedure 9.030(c)(1)(A). We dispense with oral argument pursuant to Florida Rule of Appellate Procedure 9.320.Factual and Procedural Background
On November 18, 1997, Drs. Rick Argall and France Carpentier, co-owners of Motion X-Ray (plaintiff below), entered into a franchise agreement (“Agreement”) with Nu-Best1 Franchising, Inc. to perform videofluoroscopy tests exclusively in Orange and Seminole Counties in Florida. The Agreement required that all franchisees to conduct their business as Nu-Best. As part of the Agreement, Dr. Postlethwaite supplied Motion form documents, which included, the Health Care Finance Administration Claim Form (“HCFA”), the prescription, and the assignment of benefits forms. Dr. Postlethwaite also required the franchisees to purchase a mobile testing vehicle to perform the motion x-ray testing on patients. Drs. Argall and Carpentier, both licensed chiropractors in Florida, hired Dr. Brent Baldasare2 to take the videofluoroscopies inside the mobile unit purchased from Dr. Postlethwaite.
In February 1999, Dr. Argall entered into a fee contract3 with the law firm of McKeever, Albert, and Barth, P.A. (“MAB”) to pursue unpaid medical claims against State Farm.4 On or about February 25, 1999, Motion filed its initial Complaint alleging that it provided and performed videofluoroscopy on State Farm’s insured under an automobile insurance policy issued by State Farm. Motion filed a total of nine cases against State Farm in the lower court.5
On January 23, 2002, the trial court consolidated all nine cases since they all involved the same parties and issues. In each of the cases, medical treatments were allegedly provided by Motion between July 1998 and June 1999 on State Farm’s insureds who had suffered injuries as a result of an automobile accident. The Complaint alleged that State Farm failed to pay the No-Fault benefits due under the policy as required by section 627.736(4)(b), Florida Statutes. Also, in each of the cases, Motion alleged that State Farm’s insured executed an assignment of benefits, assigning his/her rights, title, and interest under the Policy to Motion for diagnostic services due to injuries associated with the automobile accident.6
On March 22, 2002, the lower court entered an order granting Motion to amend its complaint in all nine, consolidated cases. In its order, the lower court found that the Plaintiff had used the unregistered fictitious name, Nu-Best Diagnostics Labs in its business.7 The lower court also found that Nu-Best Diagnostics Labs was not the same entity as Nu-Best Diagnostic Labs, Inc.8 As a result, the trial court permitted Motion to be substituted as the Plaintiff in the lawsuits. Motion X-ray, Inc., d/b/a Nu-Best Diagnostics Labs thereafter became the Plaintiff in all nine cases.
On September 3, 2002, the trial court granted a final summary judgment in favor of State Farm in each of the nine, consolidated cases.9 On March 26, 2003, State Farm filed its third amended motion for entitlement to attorney’s fees and costs in each of the nine cases. On March 26, 2003, the trial court granted State Farm’s motion to consolidate all nine cases for the limited purpose of an evidentiary hearing on State Farm’s amended motion for entitlement to attorney’s fees and costs. In State Farm’s third amended motion for attorney’s fees and costs, it sought fees and costs against Motion, Drs. Argall and Carpentier, MAB, and attorney Shea.
After conducting several hearings on the issue of entitlement, the lower court granted attorney’s fees against Motion, but denied attorney’s fees against Motion’s attorneys. In the Order on Defendant’s Third Amended Motions For Attorney’s Fees, the lower court found that MAB and attorney Shea acted in good faith based upon the factual representations of the client. On November 7, 2003, State Farm filed its notice of appeal.
Standard of Review
State Farm seeks to have this Court reverse the denial of attorney’s fees and costs against Motion’s attorneys pursuant to section 75.105, Florida Statutes. See DiStefano Construction, Inc. v. Fidelity & Deposit Co. of Maryland, 597 So. 2d 248 (Fla. 1992) (stating that an award of attorney’s fees is a matter of judicial discretion that will not be disturbed on appeal absent a showing of clear abuse of discretion); Centex-Rooney Construction Co., Inc. v. Martin County, 725 So.2d 1255, 1258 (Fla. 4th DCA 1999). “If reasonable men could differ as to the propriety of the action taken by the trial court, then it cannot be said that the trial court abused its discretion.” Canakaris v. Canakaris, 382 So. 2d 1197, 1203 (Fla. 1980).
Discussion
State Farm raises several arguments on appeal. First, State Farm asserts that the trial court utilized the wrong standard in determining its entitlement to attorney’s fees under section 57.105, Florida Statutes. Second, State Farm argues that the trial court erred in denying its request for attorney’s fees against MAB from the inception of the lawsuits through the court’s March 22, 2002, amended complaint order. Third, State Farm argues that the trial court erred in denying its request for attorney’s fees against MAB from the inception of the lawsuits through the October 10, 2003, entitlement order.
State Farm maintains on appeal that the standard utilized to determine whether an action is frivolous for awarding attorney’s fees under section 57.105 is based upon competent substantial evidence. In particular, State Farm contends that once it proved its entitlement to attorney’s fees, MAB then had the burden of proof to prove good faith reliance on its client to avoid sanctions under the statute.
In support of its position, State Farm cites Horticultural Enterprises v. Plantas Decorativas, LTDA, 623 So. 2d 821 (Fla. 5th DCA 1993) and Andzulis v. Montgomery Road Acquisitions, Inc., 831 So. 2d 237 (Fla. 5th DCA 2002) for the proposition that the movant party does not have the burden of proving bad faith or the absence of good faith to assess fees against the losing party’s attorney under section 57.105. State Farm contends that during the five-day evidentiary hearing on entitlement, the lower court, over State Farm’s objections, heard evidence concerning when State Farm’s attorneys knew of the dispositive issues involved.
At the hearing, State Farm objected to the line of questioning by MAB on State Farm’s counsel, claiming what State Farm’s attorneys knew was irrelevant as to whether MAB relied in good faith on its client’s representations under section 75.105. A reveal of the record, however, indicates that there was more than one theory filed and argued below by State Farm to affix liability against the various entities including, Motion, Motion’s attorneys, and Drs. Argall and Carpentier. At the entitlement hearing, State Farm advanced three theories upon which to assess fees and costs. They included: 1) the proposal for settlement, section 768.79, Florida Statutes, and Fla. R. Civ. P. 1.442; 2) the summary final judgment, section 57.105, Florida Statutes; and 3) the March 22, 2003, order amending the complaint to allow substitution of parties.
The record shows that during the hearing, the lower court allowed pertinent testimony concerning what and when State Farm’s attorneys knew of the dispositive issues to determine the reasonableness of State Farm’s actions because the offer of settlement was part of the legal theory upon which State Farm was trying to affix liability. The trial court, while recognizing that it was MAB’s burden to rebut the presumption of good faith, explained:
I [the court] would have to say that I would likely be in error if I were to grant it [State Farm’s motion for fees] in a broad brush stroke at this point not having a clue as to what all they [MAB] are going to be doing, particularly as it relates to the proposal for settlement and how you all figured that you were going to win it and why you did what you did and all those kinds of things.
And I understand that it is the Plaintiff’s [MAB] responsibility to prove lack of reasonable basis or good faith on it, but I also know that what they [MAB] are likely to do in trying to reach that hurdle.
(emphasis added.)
The record also shows that State Farm blended the two legal theories, Fla. R. Civ. P. 1.44210 and section 57.105, Florida Statutes, throughout the evidentiary hearing. The lower court further articulated its rationale in admitting evidence concerning when State Farm’s attorneys became aware of certain issues when it stated:
Actually, the Defense takes the position that all that they do tends to blend into any of the legal theories that are going to be important to me in my decision-making process. So I don’t think that they’ve ever at any of the hearings ever separately divided up those things as to the two possible theories [section 57.105 and Fla. R. Civ. P. 1.442] of [sic] recovery and they do tend to bleed together.
So, while recognize your frustration over this question, the reality is that they [State Farm’s attorney] throughout the case blended them [section 57.105 and Fla. R. Civ. P. 1.442] together and they [State Farm] are hoping that on any of those items I’m going to find something that intrigues me enough to award attorney’s fees and costs against one or more of these Defendants.
So I don’t see all of this is relating to only one theory and we are going to flip a page and go to the second theory. SoI’m going to share that thought with you for purposes of your thinking.
(emphasis supplied.)
Thus, the lower court did not apply the wrong standard when it admitted evidence of when counsel for State Farm became aware of certain issues that were being raised by State Farm for the first time after three years of litigation.
State Farm next argues that the trial court abused its discretion in denying its attorney’s fees against MAB because MAB failed to establish good faith reliance to avoid sanctions under section 57.105, Florida Statutes. In the present case, eight of the nine cases were filed prior to October 1, 1999, and therefore, the 1997 version of section 57.105, for the most part, would be controlling in this appeal. Section 57.105(1), Florida Statutes, as it read in 1997, provided, in pertinent part:
The court shall award a reasonable attorney’s fee to be paid to the prevailing party in equal amounts by the losing party and the losing party’s attorney in any civil action in which the court finds that there was a complete absence of a justiciable issue of either law or fact raised by the complaint or defense of the losing party; provided, however, that the losing party’s attorney is not personally responsible if he or she has acted in good faith, based on the representations of his or her client. Ifthe court finds that there was a complete absence of a justiciable issue of either law or fact raised by the defense, the court shall also award prejudgment interest.
§ 57.105(1), Fla. Stat. (1997) (emphasis supplied.)
Regardless of the version of the statute, the law is clear that in order to avoid the imposition of costs and fees against counsel for raising unsupported claims, the losing party’s attorney must demonstrate good faith reliance upon its client prior to filing the lawsuit. Otherwise, the assessment of attorney’s fees is mandatory under the statute. See Visoly v. Security Pacific Credit Corp., 768 So. 2d 482 (Fla. 3d DCA 2000).
It is State Farm’s contention, at the entitlement hearing and on appeal, that MAB failed to perform a good faith investigation prior to initiating suit. Specifically, State Farm argues that MAB always knew who its clients were, and had MAB conducted a good faith investigation, it would have discovered that its client lacked standing at the time of filing of the lawsuits because: a) the assignment of benefits was to a non-existent corporation, and therefore, there was not a valid assignment of benefits; and b) that Dr. Baldasare was not a licensed technician as defined by Florida Statutes, and therefore, the videoflouroscopy tests performed were not lawfully rendered.11 To support its assertion, State Farm cites Lage v. Blanco, 521 So. 2d 299 (Fla. 3d DCA 1988) for the proposition that MAB acted in bad faith and filed suit on behalf of Nu-Best Diagnostic without that entity’s authorization and/or knowledge. However, the Lage case is clearly distinguishable upon its facts.
In Lage, plaintiff’s attorneys filed suit on behalf of two corporations against two of the corporations’ employees. Lage, So.2d at 300. The case was ultimately dismissed after it was discovered that the suit was brought without the corporation’s authority or knowledge. Id. However, in the instant case, Dr. Argall’s testimony at the entitlement hearing establishes that he believed that he was doing business as Nu-Best Diagnostic Labs and openly conducted his business as such after he bought the franchise from Dr. Postlethwaite in 1997.12 MAB did not have any reason to believe that Dr. Argall would sign a fee contract reflecting the wrong name of his own franchise. As pointed out by the lower court, “. . . Motion X-ray used multiple documents and on multiple occasions that had a variety of names. And Argall and Carpentier and Baldasare didn’t recognize, apparently, the fine line or legal distinctions amongst what they should and shouldn’t be doing, including the use of the term Nu-Best . . .”
Unlike Lage, it is undisputed that the addition of the “Inc.” after the name Nu-Best Diagnostic Labs to the plaintiff’s name in the pleadings was a clerical error which was later corrected on a motion to amend. See Emerson Realty Corp. v. Schanze, 572 So. 2d 942, 944 (Fla. 5th DCA 1991) (stating that “a technical error which is patently harmless should be ignored or corrected on motion.”) In addition, it is undisputed that Motion in fact provided medical services to State Farm’s insureds, and MAB filed suit with Motion’s full authority and knowledge. Therefore, State Farm’s argument that MAB was not authorized to file suit on behalf of the originally named plaintiff is unpersuasive.
Next, State Farm urges this Court to adopt the reasoning found in Keene v. Bernardo, 452 So. 2d 1133 (Fla. 2d DCA 1984). In Keene, the appellate court affirmed the trial court’s decision to award attorney’s fees when the plaintiff sued the wrong defendant. Id. at 1134. In that case, the wrong party was served and even though Keen acknowledged in writing that he had the wrong party, he continued to litigate and deposed the wrong party. Id. The appellate court upheld the trial court’s award of fees against Keene because it found that Keene knew long before the deposition that he had the wrong party and failed to dismiss him. Id. However, in this case, State Farm had always been the proper defendant below and there was never a confusion as to who the parties were. The confusion was only in the names of the client, as later discovered by MAB during the course of litigation.
Florida courts consistently agree that the frivolousness of a claim or a defense must be judged when it was initially filed, and if it can pass muster at that point, subsequent developments which render the claim or defense to be without justiciable issue in law or fact should not subject the losing party to attorney’s fees. Arenas v. City of Coleman, 791 So. 2d 1234 (Fla. 5th DCA 2001), citing Schwartz v. W-K Partners, 530 So. 2d 456 (Fla. 5th DCA 1988). As articulated by the Second District Court of Appeal in Greater Clearwater Chamber of Commerce, Inc. v. Modern Graphic Arts, Inc., 464 So. 2d 594 (Fla. 2d DCA 1985), “[e]vents during course of a lawsuit which reveal litigation is not sustainable do not necessarily convert a case into one in which is frivolous to allow award of attorney’s fees.” See also Richardson v. Helms, 502 So. 2d 1372 (Fla. 2d DCA 1987) (reversing the trial court’s award of attorney’s fees when the plaintiff’s attorney in good faith relied on information provided by the client which indicated that there were justiciable issues of law and fact raised); H.J.J., Inc. v. Party Productions, II, Inc., 738 So. 2d 515 (Fla. 3d DCA 1999).
In the present case, MAB made legal arguments and offered proof at the hearing that it acted in good faith based on the representations of its clients as to the existence of material facts. In particular, MAB had previously litigated against State Farm involving a case wherein the HCFA and the complaint said Nu-Best Diagnostic, Inc. The name of the parties on the pleadings was never an issue nor was it raised at the outset of litigation. That case was tried and resulted in a verdict in favor of Nu-Best Diagnostic Labs, Inc. The only issues being pursued in that lawsuit as well as in the subject lawsuits filed below were whether the videofluroscopy test was medically necessary, related or reasonable as provided in the explanation of benefits by State Farm. Dr. Baldasare’s qualifications were never questioned and the only legal defense raised by State Farm was whether the treatment rendered was medically necessary. Thus, State Farm cannot claim after two to three years of litigation that they are now surprised or prejudiced of who the corporate entity was.13
State Farm also cites LL v. Zipperer & Orange County, Florida, 484So. 2d 92 (Fla. 5th DCA 1986) to show that the lower court abused its discretion. In Zipperer, the appellee was a state employee who negligently operated her vehicle and injured appellant’s minor child. Id. The county advised LL prior to suit that Zipperer was not a county employee. Despite this knowledge, LL brought action against the county. Id. Thus, the appellate court affirmed the trial court’s award of attorney’s fees. Unlike Zipperer, MAB did not wrongfully file suit against State Farm as Motion undisputedly rendered valuable medical services to State Farm’s insureds. Therefore, the cases cited by State Farm are inapplicable to the facts of this case and provide no relief on this appeal.
Last, State Farm argues that the HCFA forms were false, misleading, and patently deceptive because Motion was not identified as the entity providing the services in the HCFAs submitted to State Farm. We find this argument disingenuous in light of the history of payments by State Farm to Motion on prior claims, using the same documentation as that submitted in the subject lawsuits. State Farm knew and has always known during the litigation that Motion was the proper entity. In addition, all the documentation had the same corporate tax identification number (“TIN”) which could easily be verified by State Farm by looking up the TIN and see that the identification number belongs to Motion. MAB filed suit based upon its client’s representations and relied on information that were set forth in the HCFA and the assignment of benefits by its client.
In this case, we find that MAB met its burden of proof that the breach of contract action against State Farm was brought in good faith reliance upon information provided by its client, which at the time MAB filed the lawsuit indicated that there were justiciable issues of law and facts raised. We also agree with the trial court’s finding that the issue with the plaintiff’s name in the pleadings was a misnomer when the trial court said:
I think that the Inc. was, in fact, a scrivener’s error. I don’t ever think that anyone believed that Inc. was necessarily a separate corporation or a name for which Motion X-ray was entitled to us it. They [State Farm’s insureds] were dealing with Motion X-ray, they [State Farm’s insureds] were dealing with Nu-Best Diagnostic Labs. With or without an S, and with and without an Inc., I think was just sloppy work with the client Motion X-ray.
(emphasis supplied.)
Accordingly, we find that the trial court did not abuse its discretion in denying State Farm’s request for fees against MAB and attorney Shea. The decision of the lower tribunal comes to this Court clothed with the presumption of correctness and it will not disturbed on appeal unless it is clearly erroneous. Vandergriff v. Vandergriff, 456 So. 2d 464, 466 (Fla. 1984).We will not second guess the trial court’s findings on issues of facts unless an abuse of discretion is shown. Here, the record does not reflect an abuse of discretion by the trial court.Appellee’s Motion for Appellate Attorney’s Fees
MAB has timely filed a motion seeking an award of appellate attorney’s fees pursuant to sections 627.428 and 57105, Florida Statutes. Pursuant to Florida Rule of Appellate Procedure 9.400, MAB shall be granted an award of its appellate attorney’s fees and that the assessment of those fees shall be remanded to the lower tribunal. Additionally, MAB is entitled to have costs taxed in its favor by filing a proper motion with the lower tribunal within thirty days after the issuance of the mandate in this case.
Based upon the foregoing, it is hereby ORDERED AND ADJUDGED that the trial court’s final order rendered on October 10, 2003, is AFFIRMED.
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1Nu-Best is a registered trademark owned by VF Works, Inc., a company that is owned and operated by John Postlethwaite, franchiser of Drs. Argall and Carpentier (husband and wife).
2At the time Dr. Baldasare performed the services on State Farm’s insured, he was a licensed chiropractor in South Carolina. He was not, however, licensed in Florida but believed he was qualified to take the videofluoroscopies because he had taken all of the appropriate courses with regard to X-Ray and taking the pictures, and was certified as an x-ray technician by Dr. Postlethwaite and the State of Florida, Department of Radiation.
3The fee contracts entered between Motion and MAB utilized two different names, “Nu-Best Diagnostic Labs, Inc.” and “Nu-Best Motion X-rays, Inc.”
4Attorney Bob Shea was also assigned to litigate these cases when he joined the law firm in late 1999.
5Eight of subject claims were filed in 1999 and one was filed in 2000.
6Of the nine cases filed below, three of the assignments of benefits were issued to Nu-Best and the rest were issued to Nu Best Diagnostic, Inc., a dissolved company once owned by Dr. Postlethwaite.
7Drs. Argall and Carpentier did not register the fictitious names Nu-Best Diagnostic Labs and Nu-Best Motion X-rays with the Florida Department of State until March 2000.
8Dr. Postlethwaite owns Nu-Best Diagnostic Labs, Inc.
9The nine, consolidated cases that were affected by the trial court’s summary final judgment were: Motion X-Ray, Inc., d/b/a Nu-Best Diagnostics Labs, as assignee of Barbara Whitaker vs. State Farm Mutual Automobile Insurance Company, Case No. SCO99-1287; Motion X-Ray, Inc., d/b/a Nu-Best Diagnostics Labs, as assignee of Peggy Carnley vs. State Farm Mutual Automobile Insurance Company, Case No. SCO99-1414; Motion X-Ray, Inc., d/b/a Nu-Best Diagnostics Labs, as assignee of Michael Chaney vs. State Farm Mutual Automobile Insurance Company, Case No. SCO99-2915; Motion X-Ray, Inc., d/b/a Nu-Best Diagnostics Labs, as assignee of Javiar Soto vs. State Farm Mutual Automobile Insurance Company, Case No. SCO99-2913; Motion X-Ray, Inc., d/b/a Nu-Best Diagnostics Labs, as assignee of Kietario L. Burt vs. State Farm Mutual Automobile Insurance Company, Case No. SCO99-3359; Motion X-Ray, Inc., d/b/a Nu-Best Diagnostics Labs, as assignee of Joel Packard vs. State Farm Mutual Automobile Insurance Company, Case No. SCO99-3386 [10 Fla. L. Weekly Supp. 346a]; Motion X-Ray, Inc., d/b/a Nu-Best Diagnostics Labs, as assignee of Edna Jean vs. State Farm Mutual Automobile Insurance Company, Case No. SCO99-5113; Motion X-Ray, Inc., d/b/a Nu-Best Diagnostics Labs, as assignee of James Tran vs. State Farm Mutual Automobile Insurance Company, Case No. SCO99-5486; Motion X-Ray, Inc., d/b/a Nu-Best Diagnostics Labs, as assignee of Ramona Richards vs. State Farm Mutual Automobile Insurance Company, Case No. SCO00-4679 [9 Fla. L. Weekly Supp. 52a]. (emphasis added.)
10Under Fla. R. Civ. P. 1.442, entitlement to attorney’s fees may be lost if the proposal of settlement was not served in good faith. See T.G.I. Friday’s, Inc. v. Dvorak, 663 So. 2d 606(Fla. 1995).
11At the time of filing of the complaints, MAB was not aware of the licensure issue with Dr. Baldasare. State Farm did not raise the licensure issue at the outset of the litigation until two to three years into the litigation. Once MAB discovered Dr. Baldasare’s licensure issue in March 2002, it moved for a voluntary dismissal a month or two later.
12Some of the forms provided by Dr. Postlethwaite as part of the franchise package had Nu-Best Diagnostic Labs. Without seeking legal advice in setting up the franchise, Drs. Argall and Carpentier started using the old forms without changing the names on the forms.
13Previous to this lawsuit, State Farm had stipulated in another case filed by Motion in Seminole County that they paid Motion X-ray d/b/a Nu-Best Diagnostic Labs, hundreds of times, for tests performed by Motion similar to those in the lawsuits filed below. (SR. 3279.)
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