9 Fla. L. Weekly Supp. 433a
Insurance — Personal injury protection — Attorney’s fees — Contingency risk multiplier — No abuse of discretion in application of 1.5 multiplier where trial court found probability of success at outset of case was 50/50, and there was evidence that possibility of multiplier was the only reason insured’s counsel was able to accept case — Costs — Expert witness fees — No abuse of discretion in award of expert fee for attorney who testified about reasonable attorney’s fees where there was evidence that preparation for testifying was lengthy and burdensome — Appellate fees — Motion for appellate fees for time expended litigating amount of fees is denied
STATE FARM MUTUAL AUTOMOBILE 1NSURANCE COMPANY, Appellant, vs. SHERRY GIBSON, Appellee. Circuit Court, 9th Judicial Circuit (Appellate) in and for Orange County. Case No. CVA100-22. L.C. Case No. CCO97-5609. February 27, 2002. Appeal from the County Court for Orange County, Jerry L. Brewer, Judge. Counsel: Robert J. Jack, Rissman, Weisberg, Barrett, Hurt, Donahue & McLain, P.A., for Appellant. Kim Michael Cullen, Wieland, Hilado & Kelley, P.A. for Appellee.
(BEFORE GRIDLEY, SMITH and CONRAD, JJ.)
ORDER AFFIRMING TRIAL COURT
(PER CURIAM.) State Farm Mutual Insurance Company appeals from the final order of the county court granting Sherry Gibson attorney’s fees in this matter. This Court has jurisdiction pursuant to Florida Rule of Appellate Procedure 9.030(c)(1)(A). Pursuant to Florida Rule of Appellate Procedure 9.320, this Court dispenses with oral argument.
Ms. Gibson was involved in an automobile accident in which she sustained injuries which required medical attention. Ms. Gibson was insured by State Farm. Ms. Gibson was receiving personal injury protection (hereinafter “PIP”) benefits from State Farm.
On August 26, 1996 State Farm arranged for Ms. Gibson to undergo an independent medical examination (hereinafter “IME”). Ms. Gibson requested that the IME be rescheduled. The IME was rescheduled for September 9, 1996. This date had been approved by Ms. Gibson. On September 9, 1996 Ms. Gibson called the doctor’s office and cancelled the rescheduled IME.
State Farm would not reschedule the IME and PIP benefits were discontinued. Ms. Gibson filed an action in the county court. There was a trial and the jury returned a verdict in favor of Ms. Gibson.
Following the trial, a hearing was held on attorney’s fees and costs. State Farm agreed to the number of hours claimed by Ms. Gibson’s attorney. State Farm also agreed to the hourly rate requested. State Farm, however, contested the use of a risk multiplier.
After a hearing, the trial court entered an order for costs and attorney’s fees which included the use of a 1.5 risk multiplier and costs of the expert who testified about reasonable attorney’s fees at the hearing on attorney’s fees.
State Farm filed this appeal requesting review of the appropriateness of the court using a risk multiplier in awarding attorney’s fees. State Farm is also appealing the taxation of costs for the expert who testified at the hearing on attorney’s fees.
The standard of review when reviewing an award of attorney’s fees where the trial court applied a risk multiplier to the lodestar is abuse of discretion. United States Security Ins. Co. v. Lapour, 617 So. 2d 347 (Fla. 3d DCA 1993). There must be an “evidentiary basis for applying [a] contingency risk multiplier.” Askowitz v. Susan Feuer Interior Design, Inc., 563 So. 2d 752, 753-54 (Fla. 3d DCA 1990), review denied, 576 So. 2d 292 (Fla. 1991).
State Farm contends that the facts and circumstances of the present case clearly indicated Ms. Gibson had a better than 50% chance of prevailing from the outset of the litigation and therefore did not deserve a risk multiplier of 1.5.
Attorney’s fees are to be calculated by the trial court in accordance with the instructions of the Florida Supreme Court in Florida Patient’s Compensation Fund v. Rowe, 472 So. 2d 1145 (Fla. 1985). According to Rowe, the trial court must determine the reasonable number of hours an attorney has expended on the case. Id. at 1150. Next, the court must consider what a reasonable hourly rate would be for the attorney who was successful in the litigation. Id.
The court must then multiply the number of hours it has determined are reasonable by the hourly rate it has set and this figure becomes the lodestar. Id. at 1151. The lodestar can then be adjusted by the court using a risk multiplier. A risk multiplier is determined by the court based on the probability of success at the onset of the litigation. Id.
In Standard Guaranty Ins. Co. v. Quanstrom, 555 So. 2d 828 (Fla. 1990), the Florida Supreme Court listed the factors which must be considered by the court in determining whether to use a risk multiplier. The court found that in tort and contract cases, such as the one before this Court now, the trial court should consider the following when determining whether a multiplier should be used:
(1) whether the relevant market requires a contingency fee multiplier to obtain competent counsel; (2) whether the attorney was able to mitigate the risk of nonpayment in any way; and (3) whether any of the factors in Rowe are applicable, especially, the amount involved, the results obtained, and the type of fee arrangement between the attorney and his client.
Id. at 834. The court then set the criteria for how much of a multiplier should be used. The court stated:
If the trial court determines that success was more likely than not at the outset, it may apply a multiplier of 1 to 1.5; if the trial court determines that the likelihood of success was approximately even at the outset, the trial judge may apply a multiplier of 1.5 to 2.0; and if the trial court determines that success was unlikely at the outset of the case, it may apply a multiplier of 2.0 to 2.5.
Id.
Based on the criteria stated in Quanstrom, the 1.5 multiplier would be appropriate if the court determined that success was more likely than not or that the likelihood of success was approximately even at the outset. In the instant case, the trial court stated in its Order, that it found the “chance of success at the out-set of this case was = 50/50, and therefore, an appropriate contingency fee multiplier is 1.5.”
State Farm argues that because the lower court did not make any specific findings of fact as required by Quanstrom, it was inappropriate for the trial court to award any multiplier to Ms. Gibson. The lower court did state in its order that it had “considered all of the factors/criteria set forth in Florida Patient’s Compensation Fund v. Rowe, 472 So. 2d. 1145 and Standard Guaranty Ins. Co. v. Quanstrom, 555 So. 2d 818.”
The lower court made a finding of fact, included in its order awarding fees and costs, that the outcome was 50-50 at the outset of the case. Appellant is asking this Court to retry the issue of whether the lower court properly determined that the outcome of the case was 50-50 at the outset.
Even if this court were permitted to substitute its judgment for the lower court’s, and find that success was likely at the outset, the risk multiplier could be the same, 1.5. See Quanstrom, 555 So. 2d at 834.
The lower court was the trier of fact on the issue of attorney’s fees. The lower court held a hearing at which it heard evidence and argument. When the lower court holds a hearing and sits as trier of fact, the lower court’s decision comes to this Court with a presumption of correctness. Patrick v. Christian Radio, 745 So. 2d 578 (Fla. 5th DCA 1999).
In Patrick, settlement negotiations began after two years of litigation. After a settlement had been reached, a dispute arose over whether one of the attorneys who negotiated the settlement had authority to make the settlement and whether the settlement had been accepted. After a hearing on the issue, the trial court determined that the settlement should be ratified and affirmed. The court upheld the trial court’s determination and stated:
[S]ince the trial court conducted a full evidentiary hearing before determining there was a settlement here, the findings of the trial court:
[C]ome to this court clothed with a presumption of correctness, and where there is substantial competent evidence to sustain the actions of the trial court, the appellate court cannot substitute it opinion on the evidence but rather must indulge every fact and inference in support of the trial court’s judgment, which is the equivalent of a jury verdict.
Id. at 580 (citations omitted).
State Farm has failed to demonstrate and the record does not reflect that the lower court abused its discretion when it applied a risk multiplier to the lodestar. The lower court made findings of fact which come to this Court with a presumption of correctness. Based upon the findings, the trial court decided that a 1.5 risk multiplier was appropriate. Even if, as State Farm urges, Ms. Gibson was more likely than not to be successful at the onset of litigation, the 1.5 multiplier could be utilized.
State Farm urges this Court to find that a risk multiplier was inappropriate because there was no evidence introduced at the hearing that the relevant market required a risk multiplier to obtain competent counsel. State Farm cites this court to two cases, Strahan v. Gauldin, 756 So. 2d 158 (Fla. 5th DCA 2000) and Bell v. U. S. B. Acquisition Co., Inc., 734 So. 2d 403 (Fla. 1999). Both cases hold that there must be evidence in the record that without the risk multiplier, the successful party would have difficulty in finding counsel in the local market.
In Strahan, a pedestrian, Gauldin, was injured when a juke box fell out of a pickup truck during the process of loading. Gauldin brought a personal injury action against Strahan, the person loading the juke box, his parents, and their business. Prior to trial, Gauldin extended an offer of judgment in the amount of $50,000.00 to the Strahans collectively.
The offer of judgment was rejected and the case went to trial. The jury found for Gauldin. One of the issues on appeal was the use of a risk multiplier to the award of attorney’s fees. The Strahans argued that there was an absence of sufficient findings of fact by the trial court to support the use of a multiplier in calculating the amount of attorney’s fees awarded to Gauldin.
In Strahan, the multiplier was not a consideration until after the offer of judgment had been rejected. The court found that a multiplier was inappropriate in that case because the multiplier provides an incentive to a lawyer to represent a client in a case in which few lawyers would venture. The multiplier did not provide the incentive to counsel to represent the client at the onset of the litigation. Id. at 162.
The court noted that no evidence was presented that Gauldin’s counsel could not have been retained but for a multiplier. Id. In the case before this Court, however, there is evidence that the possibility of a multiplier was the only reason Appellee’s counsel was able to accept the case. Mr. Cullen was Appellee’s attorney in the trial of the case. Mr. Cullen testified:
[I]t was understood that the only reason to take a PIP case would be in a situation where you might be awarded a contingency fee multiplier . . .
He further testified:
We don’t know that we’re going to get paid on any case, particulary those where there is a high risk or high probability that you’re going to lose the case such as this one that we’re talking about here.
Bell, 734 So. 2d 403, the other case State Farm urges this Court to consider, is a case which arose from a lawsuit between the buyer of a concrete manufacturing business and the sellers of the business. The claim was for breach of contract and various torts. The trial court found that a risk multiplier was appropriate. The issue before the court was whether a risk multiplier was applicable where the fee was based on a contractual provision and not a statute. The court held that the Quanstrom analysis applies to cases where a contract provides the basis for the court awarded fee. Id. at 411-12.
In Bell, the court stated that “[b]efore adjusting for risk assumption, there should be evidence in the record and the trial court should so find, that without risk enhancement plaintiff would have faced difficulties in finding counsel in the local or other relevant market.” Id. at 409 (citations omitted).
In the instant case, the lower court stated that it had considered all the factors and circumstances required by Rowe and Quanstrom and found that a risk multiplier was necessary. This Court must presume that this finding by the lower court as finder of fact after a hearing is correct. Patrick, 745 So. 2d 578.
Mr. Forman was called to testify about reasonable attorney’s fees in the relevant market. Mr. Forman testified “I believe a multiplier is applicable in this case.” Mr. Forman’s conclusion about a multiplier being applicable is based on factors which he elaborated on in his testimony.
Mr. Cullen and Mr. Forman discussed the legal problems with Ms. Gibson’s case, particularly her missing two IME’s. The law firm which Mr. Cullen originally worked for would not usually accept PIP cases, unless there was the possibility of a recovery of attorney’s fees which utilized a multiplier.
There was evidence in the record that without the use of a risk multiplier, Ms. Gibson would have faced difficulties in finding counsel in the local area. The lower court made a finding that the use of a risk multiplier was necessary in order for Ms. Gibson to find counsel in the area.
State Farm contends that despite the Florida Supreme Court’s contention in Quanstrom that contingency multipliers apply in PIP litigation, the contingency fee multiplier is not necessary in PIP litigation because it improperly provides a disincentive for plaintiff’s attorneys to accept reasonable attorney’s fees. State Farm also contends that multipliers provide a windfall for plaintiff’s attorneys who drag out litigation.
State Farm relies on City of Burlington v. Dague, 505 U.S. 557 (1992), for its contentions. In Dague, property owners brought an action alleging that the city operated its landfill in violation of the Resource Conservation and Recovery Act. After ruling on the merits for respondents, the District Court determined that they were “substantially prevailing” parties entitled to “reasonable” attorney’s fees under the act. The District Court calculated the fee using a 25% enhancement because the attorney was retained on a contingent-fee basis and that without such enhancement there would have been substantial difficulties in obtaining suitable counsel. The Court of Appeals affirmed.
The U.S. Supreme Court granted certiorari and held that the federal statutes at issue did not permit enhancement of a fee award beyond the lodestar amount. Id. at 2643-44.
Despite State Farm’s contention that Dague heralds the demise of risk multipliers, there is a case which discusses the use of multipliers in state litigation in light of the Dague decision. In Rendine v. Pantzer, 648 A. 2d 223 (N.J. Super. Ct. App. Div. 1994), the court was deciding an appeal of a sexual discrimination suit. One of the issues before the court, was the enhancement of the attorney’s fees with a 2.0 multiplier. The court, while finding that the U.S. Supreme Court had abolished enhancement under the fee-shifting statutes, found that the New Jersey Courts and the New Jersey Legislature had been leaders in attempting to end sexual discrimination in the workplace. The court found that even though the New Jersey courts looked to the federal civil rights law in construing its antidiscrimination law, the New Jersey courts were not bound by federal law, and the court upheld the enhancement on state law grounds. Id. at 461-62.
In Bell, 734 So. 2d 403, the Florida Supreme Court stated that section 627.428, Florida Statutes, has a broad policy purpose. The purpose of the statute is to discourage insurance companies from contesting valid claims, and to reimburse insureds for their attorney’s fees incurred when they must enforce their contracts in court. Id. at 411.
In Bell, the court reiterated the public policy behind the contingency fee multiplier by quoting Justice Grimes’ concurring opinion in Lane v. Head, 566 So. 2d 508, 513 (Fla. 1990). The court said “the justification for a contingency fee multiplier is that without providing an added incentive for lawyers to obtain higher fees, clients with legitimate causes of action (or defenses) may not be able to obtain legal services.” Bell, 734 So. 2d at 411.
It is the public policy of the State of Florida to ensure competent representation, and when necessary, a risk multiplier should be used.
State Farm contends that the trial court erred in awarding as taxable costs, the attorney’s fees paid to her expert witness, Brian Forman, without finding that the case was complex and that the preparation for testifying was lengthy and burdensome.
In Orlando Regional Medical Center v. Chielewski, 573 So. 2d 876 (Fla. 5th DCA 1990), Chielewski and his wife brought a medical malpractice action against ORMC. After a jury verdict in Chielewski’s favor, the court awarded costs and attorney’s fees. ORMC appealed. The lower court did not tax costs for the expert who testified on the issue of reasonable attorney’s fees. The appellate court upheld the lower court on this issue because the attorney witness said he spent only three hours looking at the file and he made it a “cursory review.” Id. at 883. The court cited the Florida Supreme Court case of Travieso, stating that “expert witness fees may be awarded in the trial court’s discretion, in complex cases when the preparation for testifying is lengthy and burdensome.” Id., at 883.
State Farm cites this Court to Seminole County v. Boyle Investment Co., 719 So. 2d 1004 (Fla. 5th DCA 1998). Boyle is an appeal from attorney’s fees and costs awarded in an eminent domain case. The court stated that it did “find error in the award of expert witness fees for appellee’s experts who testified about the amount of fees to be awarded.” Id. at 1004. The court also stated that the court found “no error in the method used and result obtained in setting the attorney’s fees, in this unique case.” Id. at 1004. This case is, however, of not benefit to this Court in the instant case because there is no discussion of the facts of the case to guide the Court.
Factors to consider when assessing fees for an expert on the issue of the reasonableness of attorney’s fees include the nature of the case, the size of the file, the amount of time it took to make the necessary file review, the fees issue involved, and the attack on the reasonableness of the fees. See, e.g. Mantel v. Bob Dance Dodge, Inc., 739 So. 2d 720, 725 (Fla. 5th DCA 1999)
In the case before this Court, the trial court heard testimony from the expert that he expected to be compensated and that he had expended 10.3 hours in his review and testimony. The court was made aware that there were two large boxes of material to be reviewed by the expert. Throughout the direct and cross examination of Mr. Forman, it was obvious he had to become and was very familiar with several cases which touched on the issues about which he testified.
The award of expert fees was in the discretion of the trial court. The trial court did not abuse its discretion in the award of an expert fee for the attorney who testified about reasonable attorney’s fees.
Ms. Gibson has filed a motion requesting appellate attorney’s fees. State Farm has filed a motion opposing appellate attorney’s fees, relying primarily upon State Farm Fire & Casualty Co. v. Palma, 629 So. 2d 830 (Fla. 1993). Based on Palma, Ms. Gibson is not entitled to attorney’s fees for the time expended in litigating the amount of the fee. Ms. Gibson’s Motion for Appellate Attorney’s Fees is hereby DENIED.
Pursuant to section 57.105, Florida Statutes, Ms. Gibson has filed a motion for sanctions alleging nonpayment of the uncontested portion of the lower court’s order on attorney’s fees. That motion is hereby DENIED.
AFFIRMED. (GRIDLEY, SMITH, and CONRAD, JJ., concur.)
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