Bell v. USB Acquisition Co., Inc.

• Decision Date: 20 May 1999
• Docket Number: No. 90, No. 321, No. 426.
• Citation: 734 So.2d 403
• Parties: William BELL, et al., Petitioners, v. U.S.B. ACQUISITION COMPANY, INC., etc., et al., Respondents. U.S.B. Acquisition Company, Inc., etc., et al., Petitioners, v. Allen G. Stamm, et al., Respondents.
• Court: Florida Supreme Court

734 So.2d 403

William BELL, et al., Petitioners, v. U.S.B. ACQUISITION COMPANY, INC., etc., et al., Respondents.

U.S.B. Acquisition Company, Inc., etc., et al., Petitioners, v. Allen G. Stamm, et al., Respondents.

Nos. 90,321, 90,426.

Supreme Court of Florida.

May 20, 1999.

Basil E. Dalack, West Palm Beach, Florida, for Petitioners.

Marshall J. Osofsky and Gary M. Dunkel of Lewis, Vegosen, Rosenbach & Silber, P.A., West Palm Beach, Florida, for Respondents.

PARIENTE, J.

We have for review U.S.B. Acquisition Co. v. Stamm, 695 So.2d 373, 376 (Fla. 4th DCA 1997), wherein the district court certified the following question:

IS A CONTINGENCY RISK MULTIPLIER INAPPLICABLE TO A COURT AWARDED ATTORNEY'S FEE WHERE THE ONLY AUTHORITY FOR FEES IS PREDICATED ON A CONTRACTUAL PROVISION AND NOT A STATUTE?

We have jurisdiction.¹ See art. V, § (b)(4), Fla. Const. We answer the certified question in the negative and quash Stamm on this issue.

BACKGROUND

This case arises from a lawsuit between U.S.B. Acquisition Company, Inc. (U.S.B), the buyer of a concrete manufacturing business, and sellers Allen G. Stamm, William Bell and Thomas Lagano (collectively referred to as "sellers"). U.S.B. claimed damages based on breach of contract and various tort theories, and the sellers sued for the balance of the purchase price owed pursuant to promissory notes. Both parties received verdicts on their individual claims, but the trial court reduced U.S.B.'s verdict in response to a posttrial motion.

In the initial appeal, the Fourth District Court of Appeal affirmed the postjudgment reduction of U.S.B.'s verdict. See U.S.B. Acquisition Co. v. Stamm, 660 So.2d 1075 (Fla. 4th DCA 1995), review denied, 670 So.2d 941 (Fla.1996). In the same appeal, both parties challenged the denial of their respective motions for attorney's fees. The Fourth District found that the trial court properly denied U.S.B.'s attorney's fees, but concluded that the sellers' claims for both trial and appellate counsel fees should have been awarded because their claim for fees was based on a contractual provision of the promissory note that provided for "a reasonable attorney's fee." See id. at 1081. The Fourth District reversed and remanded with directions for the trial court to determine the amount of the fee award. See id.

On remand, the trial court found that the sellers' trial and appellate attorneys met the criteria for a contingency risk multiplier, but that it could not consider the application of a multiplier because of the Fourth District's subsequent decision in Command Credit Corp. v. Mineo, 664 So.2d 1123 (Fla. 4th DCA 1995). In Command Credit, the Fourth District concluded, after reviewing prior decisions of this Court, that "a contingency multiplier is not applicable where the only authority for a fee award is based on a contractual provision and not a statute." Id. at 1125-26. The sellers filed a motion pursuant to Florida Rule of Appellate Procedure 9.400(c) to review the trial court's order refusing to consider the application of a multiplier in the award of appellate attorney's fees.² The Fourth District affirmed, but again certified the above question to this Court, as it had previously in Command Credit. See Stamm, 695 So.2d at 376; Command Credit, 664 So.2d at 1126.

Petitioner argued in this Court that the basis for the court-awarded fee is irrelevant to whether a contingency risk multiplier is applicable because the primary purpose of a contingency risk multiplier is to ensure that all individuals receive competent representation to pursue legitimate causes of actions or maintain legitimate defenses, regardless of their economic status. In response, U.S.B. argued that applying a multiplier in a contract case, where the only basis for the fees is the prevailing party provision in the contract, would violate both our precedent and public policy. U.S.B. further claimed that where a contract is silent on the issue of a multiplier, allowing a court to consider a multiplier results in the court rewriting the parties' contract. However, as discussed more fully below, we conclude that where the contract provides for court-awarded reasonable attorney's fees to the prevailing party, neither our precedent nor public policy precludes trial courts from considering a multiplier, so long as the evidence supports the need.³

ANALYSIS OF PRECEDENT

We begin our analysis by examining our precedent concerning the guidelines for calculating court-awarded attorney fees. In Florida Patient's Compensation Fund v. Rowe, 472 So.2d 1145, 1150-51 (Fla.1985), we first enunciated the factors to be utilized by a court in assessing "reasonable attorney fees." We noted the distinction between the "English Rule," that attorney fees are taxed to the losing party as part of costs, and the "`American Rule,' that attorney fees may be awarded by a court only when authorized by statute or agreement of the parties." Id. at 1148.⁴ We observed that "great concern ha[d] been focused on a perceived lack of objectivity and uniformity in court-determined reasonable attorney fees." Id. at 1149.

Noting that it was "incumbent upon this Court to articulate specific guidelines to aid trial judges in the setting of attorney fees," we considered the federal lodestar approach to be a "suitable foundation for an objective structure" upon which to base an award. Id. at 1150. We did not differentiate between court-awarded fees authorized by statute and court-awarded fees authorized by the agreement of the parties.

We defined an objective structure in Rowe. In calculating "reasonable fees," the trial court must determine the number of hours reasonably expended by the attorney and a reasonable hourly rate for those services, then multiply the two to arrive at the "lodestar" amount. Id. at 1150-51. The Rowe opinion further explained that the criteria set forth in Disciplinary Rule 2-106(b) of the Florida Bar Code of Professional Responsibility should be utilized to calculate the loadstar.⁵ 472 So.2d at 1150. For example, we stated that "the novelty and difficulty of the question involved" should be considered in determining the number of hours reasonably expended on the litigation. Id. As to the second half of the lodestar equation—the hourly rate—we stated that the court should take into account all of the factors enumerated in the Florida Bar Code of Professional Responsibility "except the `time and labor required,' the `novelty and difficulty of the question involved,' the `results obtained,' and `[w]hether the fee is fixed or contingent.'" Id. at 1150-51.

We instructed that after calculating the lodestar, the court "may add or subtract from the fee based upon a `contingency risk' factor and the `results obtained.'" Id. at 1151. Thus, although the court is precluded from considering the contingent nature of the fee when determining a reasonable hourly rate, this factor should be taken into account when determining whether a multiplier is appropriate. In Rowe, we recognized the economic reality that attorneys who work on a contingent fee basis only receive compensation when they prevail, and thus must charge a higher fee than if they had been guaranteed an hourly rate. 472 So.2d at 1151.

While Rowe emanated from a statutory prevailing party attorney's fee provision, we did not limit our analysis to statutorily based attorney's fees. Our overriding concern was in setting forth a detailed formula to provide the trial judges "with objective guidance in the awarding of reasonable attorney fees and allow parties an opportunity for meaningful appellate review." Id. at 1152.

In Standard Guaranty Insurance Co. v. Quanstrom, 555 So.2d 828, 830 (Fla.1990), we found it necessary to reexamine the principles adopted in Rowe regarding the federal lodestar approach and the use of the multiplier. We observed that federal courts had developed the lodestar method for determining attorney's fees to apply to a "special class of cases, in which Congress had enacted fee-authorizing statutes to pay fees to prevailing plaintiffs for the purpose of obtaining public enforcement of Congressional acts." Id. at 831. We then noted that subsequent to Rowe, in Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 483 U.S. 711, 107 S.Ct. 3078, 97 L.Ed.2d 585 (1987), the United States Supreme Court had "substantially restricted, if not eliminated" the use of a contingency risk multiplier as a method of enhancing a statutorily authorized attorney's fees. Quanstrom, 555 So.2d at 832. We observed that the plurality in Delaware Valley was "unconvinced that Congress intended the risk of losing a lawsuit to be an independent basis for increasing the amount of any otherwise reasonable fee." Id. at 831 (quoting Delaware Valley, 483 U.S. at 725, 107 S.Ct. 3078).

We further observed that in the context of a public policy enforcement case decided subsequent to Delaware Valley, the Supreme Court in Blanchard v. Bergeron, 489 U.S. 87, 109 S.Ct. 939, 103 L.Ed.2d 67 (1989), authorized courts to consider the contingency fee arrangement as one factor in determining a reasonable fee, but that the contractual fee arrangement between the plaintiff and his attorney would not cap the amount of fees awarded in this type of case. See Quanstrom, 555 So.2d at 832. In contrast, in Rowe we had capped all court-awarded fees at the prevailing party's fee agreement with counsel. 472 So.2d at 1151.

Although we reaffirmed the use of the contingency risk multiplier in certain cases in Quanstrom, we recognized the need to modify the application of the contingency risk multiplier based on the type of case under consideration:

Different types of cases require different criteria to achieve the legislative or court objective in authorizing the setting of a reasonable attorney's fee. Although we reaffirm our decision in Rowe concerning the lodestar approach as the basic starting point, we find that the use of the contingency fee multiplier

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