Progressive Exp. Ins. Co. v. Schultz

• Decision Date: 23 February 2007
• Docket Number: No. 5D06-444.,5D06-444.
• Citation: 948 So.2d 1027
• Parties: PROGRESSIVE EXPRESS INSURANCE COMPANY, Petitioner, v. Donald SCHULTZ, Respondent.
• Court: Florida District Court of Appeals

948 So.2d 1027

PROGRESSIVE EXPRESS INSURANCE COMPANY, Petitioner, v. Donald SCHULTZ, Respondent.

No. 5D06-444.

District Court of Appeal of Florida, Fifth District.

February 23, 2007.

Rehearing Denied February 23, 2007.

Betsy E. Gallagher and Michael C. Clarke, of Kubicki Draper, P.A., Tampa, for Petitioner.

Glenn Klausman, of Jacobs & Goodman, P.A., Altamonte Springs, and Barbara Green, of Barbara Green, P.A., Coral Gables, for Respondent.

Anthony J. Russo of Butler Pappas Weihmuller Katz Craig LLP, Tampa, for Amicus, Florida Defense Lawyers Association.

John S. Mills of Mills & Carlin, P.A., Jacksonville, for Amicus, Academy of Florida Trial Lawyers.

ON MOTION FOR REHEARING AND CERTIFICATION

ORFINGER, J.

The amended motion for rehearing and certification filed by the respondent, Donald Schultz, is denied. However, we withdraw the opinion issued in this case on October 20, 2006, and substitute the following in its place.

Progressive Express Insurance Company seeks certiorari review of a decision rendered by the circuit court of Seminole County, Florida, acting in its appellate capacity. Progressive contends that the circuit court departed from the essential requirements of law by affirming a county court order awarding attorney's fees totaling $193,750. For the reasons explained below, we agree and grant the petition for certiorari.

Donald Schultz, a Progressive insured, was injured in an automobile accident. The next day, Mr. Schultz began chiropractic treatment with Dr. Jason Masters. After four months of treatment with Dr. Masters, Progressive elected to have Mr. Schultz examined by Dr. David Bennett, also a chiropractor. After Dr. Bennett concluded that no further chiropractic treatment was reasonable, necessary or related to the accident, Progressive stopped paying PIP benefits, leaving Mr. Schultz with a balance of $1,315.30 owed to Dr. Masters.

At Dr. Masters's suggestion, Mr. Schultz consulted with attorney Glen Klausman about pursuing a suit to recover for the unpaid chiropractic treatments. Following that consultation, Mr. Schultz retained Mr. Klausman, who then filed a PIP suit in county court, seeking to recover the outstanding chiropractic bills, mileage, attorney's fees and costs. Following extensive pretrial discovery, the parties settled the bulk of their dispute, leaving only the issue of the amount of attorney's fees and the appropriateness of a fee multiplier for resolution by the court. After a hearing, at which Progressive conceded Mr. Schultz's entitlement to attorney's fees, the county court approved Mr. Klausman's fee request for 193.75 hours at $400 per hour, resulting in a lodestar fee of $77,500. After the county court approved a 2.5 multiplier, the fee, now set at $1,000 an hour, totaled $193,750.

Progressive appealed the fee award to the circuit court, which affirmed the county court's judgment. Progressive now seeks certiorari review of the circuit court's decision, contending that the use of an attorney's fee multiplier was error and a manifest injustice. Mr. Schultz opposes review, arguing that this case fails to satisfy the high standard necessary for certiorari review. Because we conclude the fee award, particularly the application of a multiplier, is a manifest injustice, we elect to exercise our discretionary certiorari jurisdiction.

Certiorari review of a circuit court acting in its appellate capacity is only available when the circuit court does not afford procedural due process or departs from the essential requirements of law. Haines City Cmty. Dev. v. Heggs, 658 So.2d 523 (Fla.1995). A departure from the essential requirements of law is more than a simple legal error. "A district court should exercise its discretion to grant certiorari review only when there has been a violation of a clearly established principle of law resulting in a miscarriage of justice." Allstate Ins. Co. v. Kaklamanos, 843 So.2d 885, 889 (Fla.2003). A "clearly established principle of law" can derive from a number of legal sources, including the constitution, statutes, rules of court and controlling case law. Progressive Express Ins. Co. v. Physician's Injury Care Ctr., Inc., 906 So.2d 1125, 1126-27 (Fla. 5th DCA 2005). In this case, the circuit court departed from controlling statutory and case law in affirming the county court's fee award.

While it would be easy to characterize this case as a run of the mill PIP dispute, admittedly, it was somewhat more than that. Mr. Schultz's attorney expended 193.75 hours, a significant amount of time, in a successful effort to undermine the credibility of Progressive's chiropractic expert.¹ However, it is hardly unusual that one side searches for evidence to impeach or discredit the other side's expert. The additional work is reflected in the lodestar amount, and, consequently, should have little or no impact on the need for a multiplier.

Underlying our analysis is the premise that both the applicable statute, section 627.428(1), Florida Statutes (2003), and the Rules Regulating the Florida Bar require that all fees awarded by the court be reasonable.² Section 627.428(1) authorizes the court to award reasonable attorney's fees to be paid by an insurer to an insured in the event the insured brings a successful action against an insurer under an insurance contract. Section 627.428 was intended "to discourage the contesting of valid claims against insurance companies and to reimburse successful insureds for their attorney's fees when they are compelled to defend or sue to enforce their insurance contracts." Ins. Co. of N. Am. v. Lexow, 602 So.2d 528, 531 (Fla.1992).

In Florida Patient's Compensation Fund v. Rowe, 472 So.2d 1145, 1150 (Fla. 1985), the supreme court adopted the federal lodestar approach, holding that in determining a reasonable attorney's fee, the federal lodestar methodology, the product of the reasonable hours expended times the hourly rate, "provides a suitable foundation for an objective structure." The federal lodestar approach establishes a "strong presumption" that the lodestar represents the "reasonable fee." Pennsylvania v. Del. Valley Citizens' Council for Clean Air, 478 U.S. 546, 565, 106 S.Ct. 3088, 92 L.Ed.2d 439 (1986).

The concept of a fee multiplier first appeared in Florida jurisprudence in Rowe, and was refined by the supreme court in Standard Guaranty Insurance Co. v. Quanstrom, 555 So.2d 828 (Fla.1990).³ Quanstrom set forth a number of factors to be considered in evaluating the need for a multiplier, including:

(1) [W]hether the relevant market requires a contingency fee multiplier to obtain competent counsel;

(2) [W]hether the attorney was able to mitigate the risk of nonpayment in any way; and

(3) [W]hether any of the factors set forth in Rowe are applicable. . . .

555 So.2d at 834. In later cases, the ability to obtain competent counsel rose to prominence in determining under what circumstances a multiplier was necessary and appropriate. See Bell v. U.S.B. Acquisition Co., Inc., 734 So.2d 403, 411 (Fla.1999) (holding that "[a] primary rationale for the contingency risk multiplier is to provide access to competent counsel for those who could not otherwise afford it").

Because Mr. Schultz did not testify at the fee hearing, we have nothing to suggest that he had any difficulty obtaining competent counsel to pursue his PIP claim, other than Mr. Klausman's statement that the attorney handling Mr. Schultz's third-party liability claim was not interested in pursuing Mr. Schultz's PIP case. In our view, that lack of evidence alone may be fatal to the claim for a multiplier. As was explained in Tetrault v. Fairchild, 799 So.2d 226 (Fla. 5th DCA 2001):

A second reason for denying application of the multiplier . . . is the Quanstrom limitation: the market conditions must be shown to require it. In other words, it must be proved that but for the multiplier, plaintiff could not have obtained competent counsel in the area. Plaintiff's counsel attempted to make this showing by himself testifying that he would not have taken the case without the multiplier. Since the test is whether plaintiff would have had substantial difficulty in obtaining . . . competent counsel within the area to take the case without the multiplier, whether plaintiff's counsel would have taken the case only on that basis is immaterial. The question is whether other competent counsel would have done so.

Id. at 234 (Harris, J., concurring specially).

The notion that evidence should support the plaintiff's difficulty in obtaining competent counsel is hardly novel. Our supreme court said years ago 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 substantial difficulties in finding counsel in the local or other relevant market." Sun Bank of Ocala v. Ford, 564 So.2d 1078, 1079 (Fla.1990) (quoting Pennsylvania v. Del. Valley Citizens' Council for Clean Air, 483 U.S. 711, 107 S.Ct. 3078, 97 L.Ed.2d 585 (1987)) (emphasis added).

Common sense also plays a role here. We are not so isolated from the world around us to know that few people have any difficulty retaining competent counsel in these circumstances. Our docket, and the dockets of the trial courts in Central Florida, have hundreds, and perhaps thousands, of PIP suits pending at any given time. It seems that few insureds, if any, have difficulty obtaining competent counsel to represent them. To the contrary, every television station and telephone book, and many billboards and buses, call out with ads from lawyers seeking to represent the injured.

We also choose to exercise our discretionary jurisdiction in this case because judges have a special responsibility in determining reasonable fees for both attorneys and expert witnesses. Miller v. First Am. Bank & Trust, 607 So.2d 483 (Fla. 4th DCA 1992). While the standard for certiorari review is narrow, it "also...