4 Fla. L. Weekly Supp. 325b
Insurance — Attorney’s fees — Insured seeking award of attorney’s fees and costs following resolution of insured’s suit against insurer for unpaid medical bills — Insured not entitled to fee award for counsel’s presuit activity of filing earlier lawsuit which was voluntarily dismissed — Multiplier of 1.75 applied to fee award — Insured’s attorney entitled to fee award for time spent arguing for application of a multiplier
ERICK JOSEPH, Plaintiff, v. ALLSTATE INSURANCE COMPANY, Defendant. County Court in and for Palm Beach County, Civil Division. Case No. MS-94-19824-RF. October 3, 1996. Peter D. Blanc, Judge.
ORDER CONTAINING JUDGMENT FOR ATTORNEY’S FEES AND COSTS
THIS MATTER came before the Court for hearing on Plaintiff’s Motion for Attorney’s Fees and Costs. The Court received testimony and evidence, heard argument of counsel, and was otherwise duly advised in the premises.
This case began as a claim by an insured Plaintiff against her insurance company Defendant for unpaid medical bills pursuant to a policy of insurance issued by Defendant to Plaintiff. The Defendant ultimately acknowledged responsibility for the medical bills and they were paid. Plaintiff’s counsel now seeks an award of attorney’s fees and costs in conjunction with the successful resolution of the Plaintiff’s claim.
The Plaintiff seeks the Court’s determination on the following issues:
1. The amount of taxable costs to which Plaintiff is entitled.
2. The amount of attorney’s fees to which Plaintiff is entitled based upon the successful resolution of Plaintiff’s claim.
3. The Plaintiff’s entitlement to presuit fees and, if awardable, the appropriate amount.
4. Plaintiff’s entitlement to the application of a multiplier.
5. Plaintiff’s entitlement to attorney’s fees for time spent arguing entitlement to a multiplier.
Defendant responds to the claims listed above in the following manner:
A. Defendant agrees that Plaintiff is entitled to taxable costs, but disputes the appropriate amount of taxable costs.
B. Defendant agrees that Plaintiff is entitled to attorney’s fees for the successful resolution of Plaintiff’s claim, but disputes the reasonable amount of attorney’s fees to which Plaintiff is entitled.
C. Defendant believes that Plaintiff is not entitled to presuit attorney’s fees.
D. Defendant believes that the Plaintiff is not entitled to the application of a multiplier.
E. Defendant believes the Plaintiff is not entitled to attorney’s fees for the time spent arguing entitlement to a multiplier.
Based upon the record before it, the Court will address the issues listed above in the order in which they have been presented.
1. The Court finds the Plaintiff entitled to taxable costs in the amount of $100.00 (Case No: MS-94-19824-RF — filing fee $85.00; service of process – $15.00) pursuant to the Affidavit of Fees and Costs of JAMES P. COOKSEY. The Court finds the other costs requested by Plaintiff are not taxable as part of this cause of action.
2. Applying the testimony and evidence presented to the principles of the lodestar formula identified in Florida Patient’s Compensation Fund v. Rowe, 472 So.2d 1145 (Fla. 1985), the Court finds a reasonable hourly rate for the services of attorney ASENCIO to be $225.00 and a reasonable hourly rate for the services of attorney COOKSEY to be $150.00. Additionally, the Court finds that twelve (12) hours were reasonably incurred by attorney ASENCIO in the prosecution of this action and that twenty (20) hours were reasonably incurred by attorney COOKSEY in the prosecution of this action.
3. Although the Court has discretion to award attorney’s fees for certain presuit activities, the Court finds that such an award is not appropriate herein. The presuit activities in this instance consist of the filing of an earlier lawsuit by attorney COOKSEY that was later voluntarily dismissed. Although Plaintiff’s counsel describes the dismissal as part of a strategic plan to eliminate a potential defense, the Court finds that the dismissal could also be described as the result of a strategic error. In this instance the error could be described as the untimely filing of the lawsuit. On that basis no presuit fees shall be awarded.
4. The Court has carefully considered the application of a multiplier. Based upon the testimony and evidence presented and with due consideration of all appropriate factors identified in Rowe and Standard Guaranty Ins. Co. v. Quanstrom, 555 So.2d 828 (Fla. 1990), the Court finds that it is appropriate to apply a multiplier of 1.75.
5. Finally, Plaintiff’s counsel seeks a determination from this Court that the right to a multiplier should be considered by the Court as an issue related to entitlement as opposed to amount of attorney’s fees. As such, Plaintiff’s counsel seeks an award of attorney’s fees in conjunction with the time spent arguing for the application of a multiplier. Conversely, defense counsel argues that the multiplier relates only to the amount of fees awarded and not to the issue of entitlement. According to Defendant, since the multiplier relates only to amount, Plaintiff is not entitled to compensation for arguing its application. This issue is one of first impression for this Court. Only two opinions have been found which discuss this concept. In her written opinion in Margarita J. Palma v. State Farm Fire & Casualty Co. (Case No: 83-4113AE dated April 7, 1995) [3 Fla. L. Weekly Supp. 231], Circuit Judge Kathleen Kroll stated:
“This Court finds entitlement issues are legal issues to determine the correct formula in calculating a reasonable fee. Amount issues are disputed issues of fact over the reasonable number of hours and prevailing market hourly rates. Debate as to an appropriate multiplier, if any, is a legal issue and falls under “entitlement”.”
In Diaz v. Santafe Health Care, Inc., 642 So.2d 765 (1st DCA 1994), the Court stated:
“In an appropriate case, the fee award may include time spent establishing entitlement to the use of a multiplier if the trial Court is of the opinion that such time was of benefit to the client.”
However, Diaz also suggests that in certain circumstances the Court may award fees for time spent establishing the amount of the fee. It should also be noted that the award of fees in Diaz is based upon Florida Statute 448 and is, therefore, distinguishable from the case at bar.
The two basic purposes of the contingency risk multiplier as envisioned in Rowe and Quanstrom are to increase the availability of legal services and to compensate attorneys for the risks they have taken by accepting contingency fee cases. The latter of these purposes, i.e. attorney compensation, was emphasized in Quanstrom where the Court stated, “We find that the multiplier is still a useful tool which can assist trial courts in determining a reasonable fee in this category of cases [tort and contract] when a risk of nonpayment is established.” Id. at 834.
This Court is unable to apply the doctrine of stare decisis to an analysis of the above referenced authority. The difficulties are three-fold. First and foremost, it appears to this humble trial Court that a distinction between entitlement and amount of fees makes perfect sense upon appellate review, but is often difficult if not impossible to apply realistically at the trial Court level. There are certainly cases where entitlement is conceded and only the amount of fees is subject to dispute. In those instances the application of the “entitlement/amount” rule is not a difficult matter. However, in those instances when both entitlement and amount are disputed, this Court has seen no practical method of separating the time spent arguing one issue from time spent arguing the other. In most instances attorneys will ask the Court to simply assign a percentage of the total time spent preparing for an attorney’s fees hearing to each of the two categories. The result is a somewhat arbitrary determination of awardable fees.
Second, the Diaz case discusses a distinction based upon the beneficiary of the award of attorney’s fees. The Diaz Court suggests that generally the time spent arguing the amount of fees is solely for the benefit of the attorney while time spent arguing entitlement benefits the client. Applying this distinction, the Court determined that time spent arguing entitlement is compensable while time spent arguing amount is not. However, this distinction blurs when applied to the two basic purposes of the contingency risk multiplier. The first purpose is to increase the availability of legal services and the second purpose is to compensate attorneys for the risk incurred in taking certain cases. While the application of a multiplier to an attorney’s fee clearly does not affect the entitlement to the fee, it is a factor in increasing the availability of legal services. Therefore, the application of the multiplier not only affects the amount of fees creating a benefit for the attorney, it also enhances the availability of quality legal services thereby creating a benefit to all potential clients. Both attorney and client benefit from the application of a multiplier.
Third, the Supreme Court in State Farm Fire and Casualty Co. v. Palma, 629 So.2d 830 (Fla. 1993) emphasized that the purpose of Florida Statute Section 627.428(1) is to discourage insurance companies from contesting valid claims. According to the analysis in Palma, allowing an award of attorney’s fees for arguing entitlement and disallowing an award of fees for arguing amount was consistent with this intent. However, it appears to this Court that the availability of competent counsel is of great importance in discouraging insurance companies from contesting valid claims. History has shown that the scales of justice are balanced only when the insurance companies’ ability to accept or reject claims is tempered by the availability of competent counsel to challenge those decisions. Since the application of a multiplier affects the availability of counsel, an award of fees for successfully arguing its application would seem to be consistent with the statutory intent of Section 627.428(1).
Should this Court find that the application of a multiplier is an “entitlement” issue, it may encourage Plaintiff’s counsel to consistently seek a multiplier in excess of that contemplated by the defense in an effort to secure additional fees. However, this risk would be reduced by the Court’s discretion to decline to award fees in those cases where the application of a multiplier is argued unsuccessfully. Still, the Court would often be confronted with situations where a multiplier greater than that sought by the Defendant and less than that sought by the Plaintiff would be applied. It is unclear how the Court would assess entitlement to attorney’s fees in that instance. The Court would also have to determine if the multiplier applied to the time spent arguing for its application.
On the other hand, should the Court find the application of a multiplier to be an “amount” issue only, then defense counsel will have nothing to lose by consistently arguing against it. There will be no motivation for defense counsel to agree to the application of a multiplier even in those instances where it is clearly appropriate. Such a decision could adversely affect the availability of competent counsel in difficult cases.
In sum, it appears to this Court that a distinction between arguing entitlement and arguing amount is often arbitrary. It appears that a distinction based upon the beneficiary of the respective arguments blurs when considered in light of the role the multiplier plays in the availability of competent counsel. Finally, although application of a multiplier clearly affects the amount of the award of fees and the entitlement to the award, the ability of the Court to award fees in conjunction with the application of a multiplier appears to be consistent with the statutory intent behind Florida Statute 627.428(1).
Although common sense suggests that the application of a multiplier does not affect “entitlement” to fees, but instead affects the “amount” of fees by multiplying the Court’s award, common sense also suggests that the application of the multiplier creates a benefit to both attorney and client by increasing both the awardable fee and the availability of competent counsel. Consequently, it is the finding of this Court that an award of attorney’s fees for successfully arguing the application of a multiplier is consistent with the intent of Florida Statute 627.428(1) and, therefore, within this Court’s discretion. It is further the finding of this Court that an award of attorney’s fees for arguing the application of a multiplier in the instant case is appropriate.
Accordingly, the Court finds as follows:
A. Plaintiff is entitled to taxable costs in the amount of $100.00.
B. Plaintiff’s attorney ASENCIO reasonably incurred 18 hours at the reasonable hourly rate of $225.00 per hour (12 hours prosecuting the underlying claim, 6 hours arguing application of a multiplier).
C. Attorney COOKSEY reasonably incurred 20 hours prosecuting the underlying claim at the reasonable hourly rate of $150.00 per hour.
D. The application of a multiplier of 1.75 is appropriate.
E. The total amount of attorney’s fees awarded herein is $12,337.50.
Accordingly, it is
ORDERED AND ADJUDGED that the Plaintiff, ERICK JOSEPH, shall have and recover of the Defendant, ALLSTATE INSURANCE COMPANY, attorney’s fees and costs in the amount of $12,437.50 for which such sum let execution issue. This judgment shall bear interest at the rate of ten percent (10%) per annum until paid in full. It is further
ORDERED AND ADJUDGED that the Court reserves jurisdiction to determine entitlement to an appropriate amount of interest.
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