13 Fla. L. Weekly Supp. 928a
Attorney’s fees — Insurance — Automobile — Sufficiency of motion — Motion for attorney’s fees was legally sufficient where, although insured did not cite statutes that entitled her to fees, she did state that basis for motion was insurer’s payment of property damage claim while suit was pending and cite to case holding that payment of claim after suit is filed is functional equivalent of confession of judgment — Moreover, insurer was on notice of statutory basis for insured’s attorney’s fees claim where insured’s attorney took position that payment of claim was confession of judgment entitling insured to fee award in memorandum in opposition to insurer’s motion for summary judgment and in hearing on competing summary judgment motions — No abuse of discretion in determining that payment by actual carrier was functional equivalent of confession of judgment by defendant insurer, which was owned by the same holding company as carrier, because defendant would have had to pay damage claim as well as attorney’s fees but for actual carrier’s payment — Amount of fee award — No abuse of discretion in basing award on half the time requested by insured’s attorney, without multiplier — Appellate fees — Insured is entitled to award of appellate fees for defending entitlement to fees but not for defending amount of fee award
EQUITY MUTUAL INSURANCE COMPANY, Appellant, v. MIGNA ZAYAS, Appellee. Circuit Court, 9th Judicial Circuit (Appellate) in and for Orange County. Case No. CVA104-31. L.C. Case No. CCO-01-2096. May 22, 2006. Appeal from the County Court, Jeffrey Arnold, Judge. Counsel: Erin J. O’Leary, Brown, Garganese, Weiss & D’Agresta, P.A., Orlando, for Appellant. Carlos Diez-Arguelles, Attorneys Trial Group, Orlando, for Appellee.
(BEFORE THORPE, M. SMITH, and WHITE, JJ.)
FINAL ORDER AFFIRMING TRIAL COURT
(PER CURIAM.) Appellant, Equity Mutual Insurance Company (“Equity”), seeks review of a Final Judgment Awarding Attorney’s Fees and Costs rendered on May 13, 2004. This Court has jurisdiction pursuant to Florida Rule of Appellate Procedure 9.030(c)(1)(A). We dispense with oral argument. Fla. R. App. P. 9.320. For the reasons stated herein, the Final Judgment is affirmed.
Lionel Morales (“Morales”) was insured by Casualty Reciprocal Exchange (“CRE”). Appellee, Migna Zayas (“Zayas”), Morales’ wife, was listed as an additional insured. On July 25, 2000, Zayas was involved in an automobile accident while driving Morales’ car. Zayas struck an automobile driven by Christopher Pilarte, who was insured by Allstate. Zayas was issued a traffic citation for failure to yield and paid a fine.
Pilarte’s vehicle sustained $2,581.65 in damage. Allstate paid for Pilarte’s repairs. Dodson Group, a holding company for CRE and Equity, sent correspondence to Allstate dated October 17, 2000, advising Allstate that Morales’ policy had expired due to nonpayment and that there was no coverage. Allstate then contacted Zayas via letter dated October 17, 2000, regarding a potential subrogation claim against her or her insurance company, if she had one.
On February 13, 2001, Zayas filed suit against Equity Mutual Insurance Company d/b/a Casualty Reciprocal Exchange. Equity failed to file a responsive pleading and a clerk’s default was entered on March 16, 2001.
On April 19, 2001, a Notice of Appearance was filed on behalf of Equity. On April 20, 2001, Equity filed a Motion to Vacate Default. Equity argued excusable neglect, a meritorious defense, and that Zayas had incorrectly pled the action against Equity.
On April 26, 2001, the trial court held a hearing on Equity’s Motion to Vacate Default. On May 1, 2001, the court entered an order setting aside the default against CRE only. The order specified that the default was not set aside as to Equity. Equity filed a Motion for Reconsideration on May 9, 2001. On November 16, 2001, Zayas filed a Notice of Voluntary Dismissal against CRE.
On July 15, 2002, Equity filed another Motion to Vacate Default & Dismiss Defendant. On August 19, 2002, the trial court entered an Order on Equity Mutual’s Motion to Vacate the Default and Motion to Dismiss. The trial court found that: it had jurisdiction; service was properly perfected on Equity; and Equity failed to exercise due diligence when it received Zayas’ Complaint. The trial court denied the pending motions for reconsideration, to vacate the default, and to dismiss. It found that the only matter remaining was the entry of a final judgment.
On May 20, 2003, Equity filed a Motion for Final Summary Judgment with Supporting Memorandum of Law. In its Motion for Final Summary Judgment, Equity explained that, after receiving information in discovery, it located the proper Allstate representative. CRE then paid Allstate the subrogation amount of $2,581.65. Equity argued that Zayas had no further right to maintain this case against it because Allstate, the actual claimant, had been paid by Morales’ insurer, CRE.
On May 27, 2003, Zayas filed a Motion for Summary Judgment seeking damages for the subrogation claim and other personal damages. On June 16, 2003, Zayas filed a Memorandum in Support of Plaintiff’s Motion for Final Summary Judgment and a Memorandum in Opposition to Equity Mutual Insurance Co’s Motion for Final Summary Judgment.
On September 23, 2003, Zayas filed a Motion for Attorney’s Fees and Costs based upon the payment of Allstate’s subrogation claim after a default was entered against Equity. On September 26, 2003, Equity filed an Objection to Plaintiff’s Motion for Attorney Fees and for Noticing Trial, and Motion for Protective Order. On October 15, 2003, Zayas filed a Motion and Memorandum Regarding Entitlement of Attorney’s Fees and Costs. Zayas claimed she was entitled to attorney’s fees based upon the holding in Ivey v. Allstate Ins. Co., 774 So. 2d 679 (Fla. 2000).
On October 27, 2003, Equity filed a Motion for an Order Denying Plaintiff’s Entitlement to Attorney Fees with Supporting Memorandum of Law. Equity argued that Zayas was not the prevailing party and was not entitled to attorney’s fees. It also argued that there was no legal basis to award fees under section 627.428, Florida Statutes, because CRE’s payment to Allstate did not constitute a confession of judgment. Zayas filed a Memorandum in Opposition to Equity Mutual Insurance Co.’s Motion for an Order Denying Plaintiff’s Entitlement to Attorney’s Fees on October 27, 2003.
On October 29, 2003, the trial court entered a Final Judgment Granting Defendant’s Motion for Final Summary Judgment and Denying Plaintiff’s Motion for Final Summary Judgment and Other Matters. The trial court then granted Zayas’ Motion for Attorney’s Fees by order dated November 6, 2003.
A Final Judgment Awarding Attorney’s Fees and Costs was rendered on May 13, 2004. Equity filed a Notice of Appeal on June 10, 2004.
The standard of review for issues of entitlement to attorney’s fees and the amount of attorney’s fees awarded is abuse of discretion. See Musselwhite v. Charboneau,840 So. 2d 1158, 1160 (Fla. 5th DCA 2003); Thomas v. Perkins, 723 So. 2d 293, 294 (Fla. 3d DCA 1999). A trial court’s ruling on discretionary matters will be sustained unless no reasonable person would take the view adopted by the trial court. Treloar v. Smith, 791 So. 2d 1195 (Fla. 5th DCA 2001).
This case presents a novel situation. The relevant facts are not disputed by the parties. Zayas sued Equity Mutual d/b/a Casualty Reciprocal for payment of property damages pursuant to an insurance policy under which Zayas was an additional insured. Equity and CRE are two separate entities owned by the same holding company, Dodson Group. CRE is Zayas’ insurer, not Equity.
Zayas obtained a clerk’s default against Equity Mutual d/b/a Casualty Reciprocal. After a hearing, the default was set aside as to CRE, but not as to Equity. Zayas then voluntarily dismissed CRE. The trial court found that Equity’s liability for the property damage claim was established by the allegations in Zayas’ Complaint. After the default was entered against Equity, CRE paid Allstate directly for the property damage claim made by Zayas. Thereafter, Zayas sought attorney’s fees from Equity on a theory of confession of judgment. The trial court found that Zayas was entitled to attorney’s fees from Equity based upon the default and CRE’s payment of the property damage claim to Allstate.
On appeal, Equity argues that the trial court abused its discretion when it awarded Zayas attorney’s fees and costs because: 1) Zayas was not the prevailing party; 2) Zayas’ Motion and Memorandum Regarding Entitlement of Attorneys’ Fees and Costs was legally insufficient because it did not identify the statute or contract upon which she relied; 3) there is no statute or contract applicable in this case which entitles Zayas to attorney’s fees and costs; and 4) Equity did not confess judgment.
In response, Zayas argues that the trial court correctly awarded attorney’s fees. She also argues that Equity has waived any claim that her Motion for Attorney’s Fees was legally insufficient because it failed to raise the issue below.
Entitlement to Attorney’s Fees
Initially, Equity argues that Zayas failed to properly plead the basis for her entitlement to attorney’s fees. It argues that Zayas failed to identify the statute or contract that served as the basis for her claim in her motion or supporting memorandum. Equity argues that Zayas’ reference to case law was insufficient because a prevailing party in a lawsuit is only entitled to attorney’s fees and costs based upon a statute or contract.
Zayas argues that Equity did not raise the issue of the sufficiency of her Motion for Attorney’s Fees below; therefore, it cannot raise the issue for the first time on appeal. Zayas also argues that the prevailing party standard does not apply in this circumstance.
A review of the record reveals that Equity made an argument about the sufficiency of Zayas’ Motion for Attorney’s Fees, albeit for different reasons than the argument raised on appeal. On appeal, it claims that the failure to specify the statute under which she sought fees rendered Zayas’ motion legally insufficient. In its motion below, Equity’s arguments related to Zayas’ entitlement to fees, not the sufficiency of her motion. Assuming that the issue was properly preserved, this Court finds that Zayas’ Motion was legally sufficient.
Florida Rule of Civil Procedure 1.100 provides that when a party seeks an order of the court, a written motion must be made that “shall state with particularity the grounds therefor, and shall set forth the relief or order sought.” Zayas did not identify the statute that entitled her to attorney’s fees in her motion or supporting memorandum. She did state, however, that the basis for her motion was payment of the property damage claim while suit was pending. She also cited Ivey v. Allstate,774 So. 2d 679 (Fla. 2000), as the basis for her attorney’s fees request in her supporting memorandum.
The court in Ivey held that payment of an insured’s claim after suit is filed constitutes a functional equivalent of a confession of judgment entitling an insured to attorney’s fees under section 627.428, Florida Statutes. Id. at 684. Zayas satisfied the requirements of Florida Rule of Civil Procedure 1.100.
The prevailing party test does not apply to awards of attorney’s fees pursuant to section 627.428, Florida Statutes. See Danis Industries Corp. v. Ground Improvement Techniques, Inc., 645 So. 2d 420, 421 (Fla. 1994) (prevailing party test not applicable because only insured could be a prevailing party). Therefore, the fact that Zayas was not the prevailing party or failed, as the prevailing party, to cite the statute would not be fatal to her claim for fees under section 627.428.
Additionally, the Court notes that Zayas raised a claim for attorney’s fees pursuant to section 627.428 in her Memorandum in Support of Plaintiff’s Motion for Final Summary Judgment and Memorandum in Opposition to Equity Mutual Insurance Co.’s Motion for Summary Judgment. In the hearing on the parties’ competing motions for summary judgment, Zayas’ attorney took the position that CRE’s payment was a confession of judgment and that she was entitled to attorney’s fees under section 627.428. Clearly, Equity was on notice as to the statutory basis of Zayas’ claim for attorney’s fees. The Court finds that Zayas’ motion was not legally insufficient and that the trial court did not abuse its discretion in awarding attorney’s fees based upon that motion.
The remaining issues presented by Equity appear to raise two questions: 1) did the trial court abuse its discretion when it determined that the entry of a default against Equity was sufficient to confer liability for attorney’s fees under section 627.428, Florida Statutes; and 2) did the trial court abuse its discretion when it found that CRE’s payment of Allstate’s subrogation claim was the functional equivalent of a confession of judgment entitling Zayas to an award of attorney’s fees against Equity.
When a default is entered, the defaulting party admits all well-pled factual allegations of the complaint. See State Farm Mut. Auto. Ins. Co. v. Horkheimer, 814 So. 2d 1069 (Fla. 4th DCA 2001); Dunkley Stucco, Inc. v. Progressive American Ins. Co., 751 So. 2d 723 (Fla. 5th DCA 2000). The entry of a default precludes a party from contesting the existence of the plaintiff’s claim and that party’s liability thereon. The Florida Bar v. Porter, 684 So. 2d 810, 813 n.4 (Fla. 1996).
In her Complaint, Zayas alleged that: she was involved in an automobile accident which resulted in a property damage claim against her for approximately $3,000.00; she was insured by Equity under a contract of insurance for property damage; she was unable to obtain a copy of that contract despite repeated requests; and Equity denied the claim by not paying benefits in a timely manner.
The Complaint states that there is a contract of insurance between Zayas and Equity. Equity, as the defaulting party, admits all well-pled allegations of the Complaint. Therefore, Equity has admitted it is Zayas’ insurer. Equity argues that its liability does not extend to section 627.428, Florida Statutes, because it did not execute a contract of insurance on behalf of Zayas. Contrary to Equity’s assertion, Zayas alleged that she was Equity’s insured and that a contract of insurance existed. When Equity defaulted, liability was created based upon that allegation. To limit Equity’s liability to the property damage claim when a contract of insurance has been established, even if through a default, would defeat the purpose of section 627.428, Florida Statutes. The Court finds that there is a reasonable basis for the trial court’s decision to hold Equity liable for attorney’s fees pursuant to section 627.428, Florida Statutes, and that the trial court did not abuse its discretion in doing so.
The second question is whether CRE’s payment acted as the functional equivalent of a confession of judgment entitling Zayas to an award of attorney’s fees against Equity. The record reflects, and both parties appear to concede, that CRE issued a contract of insurance to Morales, with Zayas as an additional insured. Prior to the entry of a default final judgment against Equity, CRE paid the full amount of the property damage claim to Allstate. The payment to Allstate was for the same damages claimed by Zayas in her Complaint. Because payment was made in full to Allstate, the trial court entered an order granting Equity’s motion for summary judgment and Zayas received no damages.
Under Florida law, each party generally bears its own attorneys’ fees unless a contract or statute provides otherwise. Florida Patient’s Comp. Fund v. Rowe,472 So. 2d 1145, 1148 (Fla. 1985). Section 627.428, Florida Statutes, provides insureds an entitlement to attorney’s fees under certain circumstances. The statute states that:
Upon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer, the trial court or, in the event of an appeal in which the insured or beneficiary prevails, the appellate court shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured’s or beneficiary’s attorney prosecuting the suit in which recovery is had.
Section 627.428, Florida Statutes, “directs the courts to assess attorney fees against only one side of the litigation in certain types of actions.” Pepper’s Steel & Alloys, Inc. v. United States, 850 So. 2d 462, 465 (Fla. 2003), quoting Rowe, 472 So. 2d at 1148. Actual rendition of an order in favor of the insured is not required to trigger that insured’s entitlement to attorney’s fees. See Mercury Ins. Co. of Florida v. Cooper,919 So. 2d 491 (Fla. 3d DCA 2005); Wollard v. Lloyd’s & Cos. Of Lloyd’s,439 So. 2d 217, 218 (Fla. 1983).
“The purpose behind section 627.428 is plainly to place the insured or beneficiary in the place she would have been if the carrier had seasonably paid the claim or benefits without causing the payee to engage counsel and incur obligations for attorney’s fees.” Travelers Indem. Ins. Co. of Illinois v. Meadows, MRI, LLP,900 So. 2d 676 (Fla. 4th DCA 2005). The statute also serves to “discourage insurance companies from contesting valid claims . . . . ” Pepper’s Steel at 465, quoting Bell v. U.S.B. Acquistion Co., 734 So. 2d 403, n. 10 (Fla. 1999). It must be strictly construed because it is in derogation of common law. Pepper’s Steel, citing Roberts v. Carter, 350 So. 2d 78, 79 (Fla. 1977).
“Where an insurer makes payment of a claim after suit is filed, but before a judgment is rendered, such payment operates as a confession of judgment, entitling the insured to an attorney’s fee award.” Magnetic Imaging Sys. I, Ltd. v. Prudential Prop. & Cas. Ins. Co.,847 So. 2d 987, 990 (Fla. 3d DCA 2003); Pepper’s Steel, 850 So. 2d at 465. However, statutory attorney’s fees cannot be awarded where no suit is filed prior to payment of the full amount of the proceeds under an insurance policy. See Florida Life Ins. Co. v. Fickes, 613 So. 2d 501(Fla. 5th DCA 1993).
If Equity had paid Allstate after suit was filed, then Zayas would be entitled to attorney’s fees pursuant to section 627.428, Florida Statutes. In this case, however, the trial court found that CRE paid Allstate. The trial court made the following findings at the hearing on entitlement to attorney’s fees:
When we go to who paid what, when, and how we find that someone paid Allstate the $2,581.65 and we know that it was issued by check number 104119, having an issue date of June 17, 2003. It’s issued on the Dodson’s check, Liberty National Bank of Florida, Hallandale, Florida branch. And interestingly in the upper part of the check it shows Casualty Reciprocal Exchange or CRE a[s] its one entity and the second one is Equity Mutual Insurance Company is the second entity. . . . It is payable to Allstate . . . and it’s issued on the Dodson Group.
(R 546).
Upon finding that payment was made after a default was entered against Equity, the trial court stated that it felt “compelled to find that this is the functional equivalent of a confession of judgment and that the plaintiff is entitled to lay claim to the credit that the payment was made as a result of [her] having filed a suit and intervening on behalf of his client.” (R 547).
In this case, Equity became Zayas’ insurer by virtue of the default. CRE, a related company and Zayas’ actual insurer, paid the property damage claim to Allstate. Zayas clearly derived a benefit from CRE’s payment to Allstate because CRE would not have paid the claim if Zayas had not filed suit. The record reflects that CRE and Dodson Group had initially denied the claim. While there is no case law on point, related case law is instructive.
In O’Malley v. Nationwide Mutual Fire Insurance Co., 890 So. 2d 1163 (Fla. 4th DCA 2004) an insurer defended its insured under a reservation of rights and then filed a declaratory judgment action claiming that there was no coverage. The insurer resolved the underlying suits in its favor and then voluntarily dismissed the declaratory judgment action. The insured sought attorney’s fees for defending the declaratory judgment action. The appellate court found that the trial court incorrectly focused on the fact that Nationwide paid no money to the claimant to settle the case. The appellate court noted that this approach did “not take into account the benefit received by the insured.” Nationwide provided the insured with the exact thing it claimed it was not responsible for in the declaratory judgment action and then dismissed that action. Id. at 1164.
In Unterlack v. Westport Insurance Company, 901 So. 2d 387 (Fla. 4th DCA 2005), a similar situation arose and the court found that the fact that the dismissal and the settlement were related was sufficient to trigger the operation of section 627.428 and obligated the insurer to pay attorney’s fees.
The trial court in this case looked to the benefit to the insured and the timing of the payment. Here, Equity was liable for the claim and, but for CRE’s payment, Equity would have had to pay the property damage claim and would have been liable for attorney’s fees. To permit Equity to avoid payment of attorney’s fees under section 627.428, Florida Statutes, where another related entity paid Zayas’ claim, would be contrary to the intent of the statute. Based upon the specific facts presented herein, the Court finds that the trial court did not abuse its discretion in determining that CRE’s payment to Allstate acted as a functional equivalent of a confession of judgment.
Amount of Attorney’s Fees Awarded
Equity argues that the attorney’s fee award in this case “embodies an unacceptable, even incredible result.” Miller v. First American Bank and Trust, 607 So. 2d 483, 484 (Fla. 4th DCA 1992). Equity argues that the result here is unacceptable because it did not insure Zayas and it did not pay the claim that resulted in an award of attorney’s fees. Zayas argues that Equity continues to argue about the underlying facts and judgment instead of anything related to the amount or calculation of the award of attorney’s fees.
Once entitlement to attorney’s fees is determined by the trial court, the trial court must then calculate a reasonable fee based on an hourly rate and the number of hours spent in pursuit of the judgment or recovery, but the fee does not include time spent in pursuit of the fee itself. See Allstate Indem. Co. v. Hicks, 880 So. 2d 772, 773-74 (Fla. 5th DCA 2004). Equity is essentially arguing that it is not fair that Zayas receive $26,000 in attorney’s fees because it is not reasonable that she was found to be entitled to attorney’s fees. Equity’s argument cannot stand. Once the trial court determined entitlement, the only judicial responsibility that remained was to determine a reasonable fee.
A hearing was held as to the amount of attorney’s fees. The trial court heard testimony and awarded half the time requested by Zayas’ attorney and did not award a multiplier. The Court finds that the trial court’s award of $26,000 in attorney’s fees to Zayas was not an abuse of discretion.
Award of Appellate Attorney’s Fees
Zayas filed a Motion for Appellate Attorney’s Fees and Costs on January 12, 2005. Zayas seeks appellate attorney’s fees pursuant to Florida Rule of Appellate Procedure 9.400(a) and (b) and section 627.428, Florida Statutes. Section 627.428, Florida Statutes, provides in pertinent part: “in the event of an appeal in which the insured or beneficiary prevails, the appellate court shall adjudge or decree against the insurer and in favor of the insured. . . a reasonable sum as fees or compensation for the insured’s . . . attorney prosecuting the suit in which recovery is had.”
The statute contemplates an award of attorney’s fees where an insured prevails against an insurer on appeal. Equity, however, has appealed the amount of attorney’s fees awarded to Zayas as well as the issue of her entitlement to attorney’s fees. Section 627.428, Florida Statutes, allows attorney’s fees to be awarded for litigating the issue of entitlement to attorney’s fees, but not for litigating the issue of the amount of attorney’s fees. See State Farm Fire & Casualty Co. v. Palma,629 So. 2d 830 (Fla. 1993); Progressive Express Ins. Co. v. Physician’s Injury Care Center, Inc.,906 So. 2d 1125, 1127 (Fla. 5th DCA 2005). Accordingly, Zayas is entitled to an award of appellate attorney’s fees for defending her entitlement to attorney’s fees but not for defending the amount of attorney’s fees awarded.
Accordingly, it is hereby ORDERED AND ADJUDGED as follows:
1. The Final Judgment Awarding Attorneys Fees and Costs is AFFIRMED.
2. Appellee’s Motion for Attorneys Fees is GRANTED in part. Appellee shall have thirty days from the date of this Order to file a proper motion pursuant to Florida Rule of Appellate Procedure 9.400(a) with the lower tribunal. (THORPE, M. SMITH, and WHITE, JJ., Concur.)
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