4 Fla. L. Weekly Supp. 490a
Attorney’s fees — Insurance — Personal injury protection — Insured awarded attorney’s fees incurred in action against insurer — Number of hours claimed is reasonable — Issues involved were somewhat novel and complex in that insurer raised defense that insured had made material misrepresentations in insurance application by failing to disclose resident relatives and defense that insured made material misrepresentations when applying for benefits — Market rate applicable to case is that charged in community for cases concerning principally tort and contract issues — Application of contingency risk multiplier of 2.0 is appropriate under circumstances — Insured entitled to award of fees incurred in litigating issue of entitlement to attorney’s fees — Issue of whether or not multiplier should be used is “entitlement” issue — Insured entitled to award of prejudgment interest on attorney’s fees from date of entitlement — Where insurer entered into settlement with insured for benefits and interest on specified date, but failed to pay settlement amount within twenty days, insurer is required to pay additional interest on full settlement amount as penalty for delay
JACQUELINE FORESTE, Plaintiff, v. ARMOR INSURANCE COMPANY, Defendant. County Court, Palm Beach County, Civil Division. Case No. MC-94-9662-RF. December 20, 1996. Peter D. Blanc, Judge. Counsel: Diego C. Asencio, West Palm Beach, and James P. Cooksey, Riviera Beach, for Plaintiff.
ORDER ON PLAINTIFF’S MOTION FOR ATTORNEYS FEES AND COSTS AND PLAINTIFF’S MOTION TO ENFORCE SETTLEMENT
THIS CAUSE came to be heard upon the Plaintiff’s Motion for Attorneys Fees and Costs, the Plaintiff’s Suggestion to Certify Question of Great Public Importance and Plaintiff’s Motion to Enforce Settlement, and the Court having heard the testimony of Glen Ged, Esquire, Diego C. Asencio, Esquire, Peter James Cooksey, Esquire, and Defendant’s attorney fee expert witness, Mark Rutledge, Esquire, and having further considered the billing and cost statements from Plaintiff’s counsel, Diego C. Asencio, Esquire and the billing and cost statements of Plaintiff’s counsel, Peter James Cooksey, Esquire, and the Court having considered all of the evidence adduced at the attorney fee hearing, the Court makes the following findings of fact:
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. TIME AND LABOR
The Court finds that the time for attorney Diego C. Asencio of 55.85 hours from 9/19/94 to 6/20/96 was reasonable and necessary. The Court finds the time spent of 46.25 hours from 12/28/93 to 6/20/96 by James Peter Cooksey, Esquire to be reasonable and necessary. The additional time spent from 6/20/96 to 7/26/96 to compel proper payment of the benefits was also reasonable and necessary. Thus, the Court finds an additional 2.25 hours for attorney Diego C. Asencio and an additional .6 for attorney James Peter Cooksey.
The Court is not unmindful of the testimony of attorney Mark Rutledge, Esquire that this was a case involving a small amount of money and that it could and should have been resolved easily. However, the case was not resolved from December of 1993 until June of 1996. It went to hearings on issues raised by the defense. Moreover, the Court notes that the single defense firm matched the two Plaintiff solo firms hour for hour of time spent after making its appearance in March of 1995. Although not given great weight by the Court, this fact does tend to support Plaintiff’s contention that the attorney time claimed is reasonable.
2. NOVELTY, COMPLEXITY AND REQUIRED SKILL
The Court finds that this case was somewhat novel and complex. It was not a simple breach of contract case as portrayed by the defense. Normally, PIP claims involve the issues of whether or not bills are reasonable, necessary or related. However, the defense raised many issues in addition to the usual PIP issues. The defense maintained that the Plaintiff had made material misrepresentations in her application for insurance. It maintained that the Plaintiff lived with undisclosed residents. It maintained that the Plaintiff had admitted that she lived with undisclosed resident relatives during her sworn statement. The case was further complicated by the failure of the defense to produce the recorded statement of the Plaintiff for more than two years.
The defense also accused the Plaintiff of making material misrepresentations when applying for benefits. Specifically, the defense claimed that the Plaintiff had falsely misrepresented who lived with her in the application for benefits and in her affidavit in support of those benefits. To complicate matters further the defense claimed that the Plaintiff had failed to cooperate in the investigation of her claims by failing the explain who the persons were that Defendant’s investigation had disclosed lived in the household.
All of the time expended by the Plaintiff’s counsel was directed at these issues. The Court finds that the time was well spent and the approach of Plaintiff’s counsel sound and reasonable.
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 $150 per hour to $300 per hour. Plaintiff has requested $250 per hour for Diego C. Asencio, Esquire and James Peter Cooksey, Esquire has requested $200. The Count finds that based on the testimony that Diego C. Asencio is a Board Certified Civil Trial Lawyer who has been board certified since 1989 and has been practicing for fourteen (14) years as a trial lawyer and also based on the testimony of Glen Ged, Esquire who indicated that attorney Asencio, Esquire is well respected in this area of the law, that a reasonable hourly rate for Asencio is $225 per hour.
Plaintiff has requested $200 per hour for James Peter Cooksey, Esquire. The Court finds that based on the testimony that James Peter Cooksey, Esquire is a lawyer who has been practicing for eleven (11) years as a trial lawyer and has had many bench trials and also based on the testimony of Glen Ged, Esquire who indicated that attorney James Peter Cooksey, Esquire should command such a market rate, that a reasonable hourly rate for Cooksey is $175 per hour.
The defense suggests that there is a “PIP rate” for Plaintiff’s attorneys who choose to represent claimants with no-fault claims. It is suggested that skill is not needed and thus the hourly rate should be less. Prevailing market rate is the rate charged in the relevant community by lawyers of reasonably comparable skill, experience and reputation, for similar services. Florida Patient’s Compensation Fund v. Rowe, 472 So.2d 1145, 1151 (Fla. 1985). This case is classified “second category” of cases which “concerns principally tort and contract cases”. Standard Guar. Ins. Co. v. Quanstrom, 555 So.2d 828, 834 (Fla. 1990). Thus, the issue is the market rate for attorney in a “second category” of case and not any lower rate because this is a PIP case.
4. AMOUNTS INVOLVED AND RESULTS OBTAINED
The Court finds that, while the amount involved indeed was small, the Defendant chose to dispute the amount for over two and one-half years. While the amount may not seem like much to the legal community, it is understandable that these amounts may seem very great to the Plaintiff. Part and parcel of the results obtained is the vindication that the Plaintiff was entitled to benefits. Plaintiff’s counsel obtained the result of having all of the Plaintiff’s bills paid with interest. In addition to the monetary recovery, Plaintiff also obtained a judgment that established Plaintiff’s rights to coverage under her policy. This judgment was obtained after ARMOR INSURANCE COMPANY attempted to argue that the case was moot by the mere offer to make payment of PIP benefits with interest. The results were that the Plaintiff would collect payment of all of her past due bills with interest and be eligible to make future claims.
5. CONTINGENT FEE, RELEVANT MARKET AND MITIGATION OF RISK
Plaintiff had a pure contingent fee contract with the law firm of Diego C. Asencio, P.A. and Diego C. Asencio assumed representation under that contract on a pure contingency. Attorney James Peter Cooksey also had a pure contingency fee contract. Both Diego C. Asencio and James Peter Cooksey undertook the entire risk of the loss of recovery in this case. The contract only allowed for a fee to be determined by the Court. 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. Moreover, the Plaintiff was a person of modest means who could not afford an attorney. James Peter Cooksey testified that there was no way that the Plaintiff could afford an attorney and thus there was no way that the attorneys could mitigate the risk of non-recovery.
While a contingency risk multiplier is not appropriate in a run of the mill insurance case such as U.S. Sec. Ins. Co. v. Lapour, 617 So.2d 374 (Fla. 3rd DCA 1993), it has been amply shown this was not such a run of the mill case. 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, Palma v. State Farm, 489 So.2d 147 (Fla. 4th DCA 1986), involved a fee of over $200,000 for litigating a $600 thermography bill. The Court believes that the Palma case illustrates that a simple dispute such as whether to pay a few bills for an auto accident can be turned into a major case when an insurance company chooses to do so.
The Court finds that it would have been difficult if not impossible to get proper legal representation on this particular PIP case without the use of a contingency contract and without the use of an attorney fee multiplier. Attorneys of skill and reputation will not accept contested PIP cases and go to trial without the possibility of a multiplier. The Court heard the testimony of attorney Asencio that the multiplier persuaded him to enter into the area of PIP litigation. Without a contingency fee multiplier such cases are highly undesirable. Attorneys of skill and reputation would prefer to handle cases involving serious injury where a large recovery will justify the labor and costs expended. If an insurance company has made up its mind that it will contest the case, the risk of loss will always be present.
6. CONTINGENCY RISK MULTIPLIER
Plaintiff’s expert witness testified that the likelihood of success in this case was less than 50/50 from the outset. There were various factors that made the case take on a greater risk. The Plaintiff’s attorney, James Peter Cooksey, testified that the claim was subjected to greater scrutiny because his client was a black Haitian. Risk must be determined at the outset of a case. J.E. Stack v. Lewis, 641 So.2d 969 (Fla. 1st DCA 1994) (appellate attorneys fees should include multiplier based on risk when case was first accepted); Dreese v. Craftman Auto Electric, 620 So.2d 1097 (Fla. 4th DCA 1993) (multiplier should still be awarded based on risk when case first accepted even if recovery was achieved thru default). Plaintiff’s case as it appeared to attorney Cooksey in December of 1993 when he decided to accept representation was one of a black Haitian claimant whose treatment was mostly chiropractic and would be subject to great scrutiny by Armor Insurance Company. Cooksey believed Armor Insurance Company would aggressively attempt to void the policy under F.S. §627.409. He believed that Armor Insurance Company would aggressively use lack of cooperation as a defense and attack the claim as fraudulent. Cooksey believed that adjusters Karla Vigel and Avis Swallow would be particularly aggressive in claims denials. In addition to these defenses, Armor Insurance Company also raised the usual PIP issues as to whether or not the bills were reasonable, necessary and related. This was not the sort of case where the insurer was merely questioning the amount of treatment. None of the bills were paid. The insurer was attempting to deny recovery to the insured in toto. The position of Armor Insurance Company did not change from the beginning of the claim in December of 1993 until the time it first agreed to pay in June of 1996. At no time prior to June of 1996 did Armor Insurance Company show that it believed the Plaintiff would prevail.
In addition to the above facts, attorney Diego C. Asencio also was aware of additional facts when he accepted representation in September of 1994. These additional facts included that the suit had not been resolved for over two months, that it did not look like a case that would settle, and that trial of the case was likely. Moreover, ARMOR INSURANCE COMPANY was claiming at this point that the Plaintiff had admitted facts during her sworn statement that would have formed a basis for a legal denial of coverage. Due the willingness of ARMOR INSURANCE COMPANY to take these matters into litigation there was certainly a greater than 50% probability that a jury or judge could have been convinced that the Plaintiff should not prevail.
Based upon all of the above factors, the Court finds a multiplier of 2.0 to be appropriate. This is based upon the risk assumed at the outset. The Court applies the same multiplier to both attorneys. The Court finds that the attorneys for the Plaintiff worked as a team. They shared the risks and they shared the work. They now will share in the multiplier.
7. FEES FOR LITIGATING ENTITLEMENT TO FEES
Plaintiff is also entitled to an award of fees for litigating entitlement to an award of attorneys fees. However, since the Florida Supreme Court’s opinion in State Farm v. Palma, 629 So.2d 830 (Fla. 1993) there has been some confusion on when attorneys fees can be recovered for litigation connected with seeking attorneys fees. The Palma case holds that an insured may obtain attorneys fees for litigating entitlement to attorneys fees but not for litigation of the amount of the fee. Naturally, all issues are considered by the defense to be “amount” issues. Unfortunately, there is no clear precedent.
The factual issue for the Court’s determination with regard to entitlement was whether or not there was an unequivocal stipulation as to all issues of entitlement prior to the hearing on the matter of attorneys fees and costs. The Court has considered the testimony of attorney Diego C. Asencio that there had been letters sent to attempt to pin down the opposing attorney as to whether or not there was agreement as to all entitlement issues. The attorney for the defense did not respond as to whether or not all of the issues were stipulated. The Court finds that while it appeared that the defense agreed that there may be some fee owing, there was no agreement on the amount of prejudgment interest to which the Plaintiff was entitled nor whether or not the Plaintiff was entitled to a multiplier. While the defense later agreed that the Plaintiff was entitled to a multiplier of some kind, the defense refused to agree on any particular multiplier. Thus, there was a dispute as to the entitlement to prejudgment interest and to a multiplier. Plaintiff’s counsel concedes that most of the time was spent on the issue of the multiplier.
When Palma was back at the circuit court level, the issue of what constitutes “entitlement” was litigated. The insured’s counsel argued that the issue of whether or not to use a multiplier was an “entitlement” issue and not an “amount” issue. In the trial Court opinion arising out of the Palma attorney fee hearing, Judge Kroll found for the insured on this argument. Palma v. State Farm, 3 FLW Supp. 231 (April 7, 1995). The Court held that “[d]ebate as to an appropriate multiplier, if any, is a legal issue and falls under “entitlement”.
The issue of whether the multiplier is an entitlement issue was recently discussed by this Court in a PIP case wherein the Court awarded attorneys fees for time spent on establishment of the use of a multiplier. Erick Joseph v. Allstate Ins. Co., 4 FLW Supplement 325 (Fla. County Court Palm Beach County, October 3, 1996). This Court recognized that this is an issue of first impression. This Court further recognized that the distinction between entitlement and amount is often difficult, if not impossible, to apply in the context of an actual fee hearing. With regard to whether the use of a multiplier benefits an insured, the Court stated at page 326:
While the application of a multiplier to an attorney’s fee clearly does not affect the entitlement to a fee, it is a factor in increasing 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.
Earlier case law from the Florida Supreme Court would also tend to support an argument that the use of a multiplier is an entitlement issue in which the client retains an interest. In Standard Guar. Ins. Co. v. Quanstrom, 555 So.2d 828 (Fla. 1990) the Florida Supreme Court recognized that one of the factors in determining a fee award is “whether the relevant market requires a contingency fee multiplier to obtain competent counsel”. Thus, this is an issue in which a client always retains an interest since failure to award a multiplier would make it impossible for insureds to obtain competent counsel. As stated by this Court in Joseph v. Allstate “it is a factor in increasing the availability of quality legal services” and “[b]oth attorney and client benefit from the application of a multiplier”.
The Court has considered such time as set forth above. The Court finds that 9.55 hours was reasonably expended by Diego C. Asencio on the litigation issue of whether or not to use a multiplier to enhance the fee award. The Court finds that attorney Peter James Cooksey has reasonably expended 2.5 hours on the multiplier issues. The hourly rate for this time is $225 for attorney Asencio and $175 an hour for attorney Peter James Cooksey.
Pursuant to F.S. §34.017 (1984) the Court denies Plaintiff’s motion to certify the issue before it as a question of great public importance.
8. REASONABLE COSTS
The Court finds that under F.S. §627.428 and F.S. §57.041 Plaintiff is entitled to an award of reasonable costs in this matter. Plaintiff has attached a statement of costs in the amount of $1,637.79 for attorney Diego C. Asencio and $308.64 for attorney Peter James Cooksey. The Defense has stipulated that all of these costs are reasonable.
An insured is also entitled to an expert witness fee for any attorney witness needed to support attorneys fees pursuant to F.S. §92.231. Stokus v. Phillips, 651 So.2d 1244 (Fla. 2nd DCA 1995) (expert witness taxed as costs under F.S. §92.231). The Court finds that the Plaintiff’s expert fee witness should be compensated for 12 hours for his review of the file materials and for testifying. A reasonable fee for the Plaintiff expert fee witness is $175 per hour. Accordingly, the Court finds for the Plaintiff for such expert witness fees.
9. PREJUDGMENT INTEREST ON ATTORNEYS FEES
Plaintiff is entitled to prejudgment interest on the attorneys fees from the date of entitlement. Quality Engineering Installation v. Higley South, Inc., 670 So. 2d 929 (Fla. 1996). Accordingly, the Court finds that the award of attorneys fees shall accrue interest from the date of June 20, 1996 when the entitlement to attorneys fees became fixed. The rate shall be 10% in accordance with F.S. §55.03 (1996). The interest shall be added to the judgment. Id.
10. CLAIM FOR PENALTY INTEREST
It is undisputed that ARMOR INSURANCE COMPANY agreed to make payment of disputed benefits and interest under F.S. §627.736(4)(c) on June 20, 1996. It is undisputed that more than twenty (20) days passed before ARMOR INSURANCE COMPANY actually paid the overdue benefits and interest. Plaintiff’s counsel wrote to Defendant’s counsel on 7/02/96 and 7/12/96 demanding payment. ARMOR INSURANCE COMPANY still failed to pay. Plaintiff counsel researched the issue of interest on 7/15/96 and wrote to Defendant’s counsel on 7/16/96 enclosing a motion to enforce settlement. By 7/22/96 Defendant’s counsel had still not responded. Plaintiff’s counsel did not receive payment until 7/26/96. Defendant’s counsel maintains that it should simply pay the 10% interest that is provided for under F.S. §627.736(4)(c) and that no further interest should be paid. F.S. §627.4265 (1984) provides in its relevant part:
In any case in which a person and an insurer have agreed in writing to the settlement of a claim, the insurer shall tender payment according to the terms of the agreement no later than 20 days after such settlement is reached…. [I]f the payment is not tendered within 20 days, or such other date as the agreement may provide, it shall bear interest at a rate of 12 percent per year from the date of the agreement.
ARMOR INSURANCE COMPANY paid $618.91 in interest to the Plaintiff on 7/27/96. Plaintiff maintains that it does not reflect the correct amount of interest under F.S. §627.736(4)(c). Plaintiff maintains that the correct amount of interest under F.S. §627.736(4)(c) is $637.59. Moreover, Plaintiff is seeking an additional 12% interest penalty under F.S. §627.4265. The additional 12% interest penalty under §627.4265 is $30.74. The check issued by ARMOR INSURANCE COMPANY was returned because it was not in the correct amount.
Plaintiff maintains that ARMOR INSURANCE COMPANY should be required to pay the additional interest because the benefits and interest were not paid as required. This would result in an additional penalty against Armor Insurance Company because interest under F.S. §627.4265 (1984) accrues from the date of the settlement. In other words, if the Plaintiff is correct, ARMOR INSURANCE COMPANY will be required to pay 12% on the benefits and interest agreed upon from the date of the settlement of June 20, 1996 to the date of payment. This is a question of first impression. There is no case law which interprets F.S. §627.4265 (1984) in a PIP case. However. it is clear that the statute is intended to apply to insurers that are parties to a settlement. Kladke v. Phillips, 535 So.2d 712 (Fla. 5th DCA 1989); Thomas v. Reeves Southeastern Corp., 472 So.2d 493 (Fla. 2nd DCA 1985).
The Plaintiff has filed a request for judicial notice wherein there is an administrative regulation which comments on the application of F.S. §627.4265 (1984) in a PIP case. Rule 4-166.026, which set forth the standards for prompt, fair and equitable settlements applicable to all insurers, states in subsection (4) that “[e]very insurer shall tender payment pursuant to the provisions of Section 627.4265, Florida Statutes. The provisions of this subsection do not relieve an insurer of the requirements of Section 627.736(4) regarding personal injury protection benefits”. The Court finds that there was a settlement for benefits and interest on June 20, 1996. The plain meaning of F.S. §627.4265 (1984) requires the application of a 12% penalty in the event a settlement is not paid by an insurer within twenty (20) days. It is of no consequence that the settlement includes interest on overdue benefits. Plaintiff shall recover $637.59 in interest under F.S. §627.736(4)(c) and an additional $30.74 under F.S. §627.4265 (1984) for Defendant’s failure to pay the settlement within twenty days.
Based on the above, the Court finds and it is
ORDERED AND ADJUDGED that the Plaintiff shall recover the following sums by way of a separate judgment to be entered forthwith:
A. Attorney time of 58.10 for Diego C. Asencio (number of hours reasonably and necessarily expended on obtaining overdue benefits and interest) X $225 per hour (market rate) = $13,072.50 (Loadstar) X 2.0 (Contingency Risk Multiplier) = $26,145.00 total attorneys fees on obtaining Plaintiff’s recovery.
B. Attorney time of 46.85 hours for Peter James Cooksey (number of hours reasonably and necessarily expended on obtaining overdue benefits and interest) X $175 per hour (market rate) = $8198.75 (Loadstar) X 2.0 (Contingency Risk Multiplier) = $16,397.50 total attorneys fees on obtaining Plaintiff’s recovery.
C. Attorney time of 9.55 hours for Diego C. Asencio (number of hours reasonably and necessarily expended on entitlement to attorneys fees issues) X $225 (market rate) = $2,148.75 (Loadstar) X 2.0 (Contingency Multiplier) = $4,297.50.
D. Attorney time of 2.5 hours for Peter James Cooksey (number of hours reasonably and necessarily expended on entitlement to attorneys fees issues) X $175 (market rate) = $437.50 (Loadstar) X 2.0 (Contingency Multiplier) = $875.00.
E. Attorney time of 12 hours for Glen Ged (number of hours reasonably expended to give expert witness testimony in this case) X $175 (market rate) = $2,100.00
F. Costs of $1,637.79 for attorney Diego C. Asencio and $308.64 for attorney Peter James Cooksey.
G. Prejudgment interest from June 20, 1996, must be added to the attorneys fees of $26,145.00 awarded for the time of Diego C. Asencio at a per diem rate of $7.16. Prejudgment interest must be added to the attorneys fees of $16,397.50 awarded for the time of James Peter Cooksey at a per diem rate of $4.49. Interest on the award of fees for Asencio is $1,310.28 and interest on the award of fees for Cooksey is $821.67.
H. Interest is awarded to the Plaintiff in the amount of $637.59 under F.S. §627.736(4)(c) and an additional $30.74 under F.S. §627.4265 (1984).
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FINAL JUDGMENT
Pursuant to the attorney’s fee hearing held in this matter and the order on attorney’s fees and costs rendered in this action, it is
ORDERED AND ADJUDGED that the Plaintiff, JACQUELINE FORESTE, recovers from the Defendant, ARMOR INSURANCE COMPANY, the sum of $54,550.71 in attorney’s fees and costs with interest as provided in F.S. §55.03, for which sums let execution issue.
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