NO MULTIPLIER WHERE THERE IS NO DIFFICULTY FINDING COMPETENT LOCAL COUNSEL.
Kimberly Sands, a partner with Upchurch Watson White & Max, has been a civil litigator and has been involved with difficult and complex disputes as litigator or mediator for over 30 years. To schedule a mediation with Kimberly, please call her case manager, Cathy McCleary, at (800) 863-1462, or visit our online calendar.
UWWM Partner and Mediator Kimberly Sands
It's an error for the trial court to award a multiplier in a first-party property insurance dispute absent a finding that, without the prospect of a multiplier, plaintiffs would have difficulty finding competent counsel to represent them.
Florida Peninsula Insurance Co. v. Wagner
, 41 Fla. L. Weekly D1279 (Fla. 2nd DCA June 1, 2016); http://caselaw.findlaw.com/fl-district-court-of-appeal/1737122.html
As noted by the Court, the facts of the case are pretty straightforward. The insured homeowners suffered a loss when a refrigerator water line broke and caused some flooding inside their house. They sought coverage from their insurer under their property insurance policy. The insurer retained a remediation company to drain the water and dry out the property. A dispute arose between the parties concerning an “Option to Repair” provision in the policy, the scope of remedial work that would be required to repair the damage from the leak, and the selection and hiring of a contractor to effectuate those repairs. Unable to reach an agreement with their insurer, the homeowners retained a law firm to represent them under a contingency fee arrangement. A subsequent jury trial yielded a verdict in favor of the homeowners.
The Plaintiffs then filed a motion to recover attorneys' fees and costs pursuant to section 627.428, Florida Statutes (2013). At the outset, the parties stipulated to the reasonable number of hours and hourly rates for the attorneys and paralegals. The stipulated fee rates ranged between $250 and $450 an hour, depending on the particular attorney's experience, with the majority of the work performed by one attorney whose hourly billing rate was $375 an hour. Having agreed upon a lodestar amount of $243,755 in attorney's fees, the plaintiffs then urged the circuit court to apply a multiplier of between 1.75 and 2.25 to the lodestar award.
The Plaintiffs did not testify at the fee hearing. Initially, a neighbor had been assisting them, but they eventually hired a more experienced attorney. The Plaintiffs claimed that the case was unique and that it had been vigorously litigated. An expert witness testified he contacted other attorneys to determine whether it was important to have the possibility of a contingency fee multiplier in deciding whether to accept this type of first-party coverage dispute but never relayed what he learned from those conversations. He did testify that the skill required to prevail in a case like this one would “limit the number of attorneys” the plaintiffs could have “gone to for help.”
In response, the insurer’s expert pointed out that there were 258 local attorneys listed in the Martindale-Hubbell directory who held themselves out as first-party insurance attorneys. The insurer also argued that the amount ultimately awarded to the insureds was substantially less than the amount of stipulated fees.
The trial court applied a 2.0 multiplier to the lodestar award, reportedly persuaded by plaintiffs’ willingness to see the matter through trial, noting “It is the rare attorney that actually goes all the way through trial to the completion.”
On appeal, the Court concluded that the lower court’s decision to apply a multiplier to an attorney's fee award was an abuse of discretion. The Court noted that the lodestar computation for attorney's fees—that is, a reasonable hourly rate multiplied by a reasonable number of hours for the work performed—carries “a strong presumption” that it represents a reasonable fee for legal services provided on a contingency basis and that the application of a multiplier is the exception, not the rule.
More on the Court’s decision in Florida Peninsula Insurance Co. v. Wagner
, in PART TWO