FCCI Commercial Ins. Co. v. Empire Indem. Ins. Co.

• Decision Date: 13 July 2018
• Docket Number: Case No. 2D17-1749
• Parties: FCCI COMMERCIAL INSURANCE COMPANY, Appellant, v. EMPIRE INDEMNITY INSURANCE COMPANY, as subrogee and assignee of Lakeview at Carlton Lakes Condominium Association, Inc.; Patnode Roofing, Inc.; Celerity Construction, Inc. ; and NTC Development, Ltd., Appellees.
• Court: Florida District Court of Appeals

250 So.3d 858

FCCI COMMERCIAL INSURANCE COMPANY, Appellant,

v.EMPIRE INDEMNITY INSURANCE COMPANY, as subrogee and assignee of Lakeview at Carlton Lakes Condominium Association, Inc.; Patnode Roofing, Inc.; Celerity Construction, Inc. ; and NTC Development, Ltd., Appellees.

Case No. 2D17-1749

District Court of Appeal of Florida, Second District.

Opinion filed July 13, 2018

Robert M. Darroch and Chad W. Bickerton of Goodman McGuffey LLP, Sarasota, for Appellant.

Wayne M. Alder and Andrew M. Greenidge of Kaufman Dolowich & Voluck, LLP, Boca Raton, for Appellee Empire Indemnity Insurance Company.

No appearance for remaining Appellees.

ROTHSTEIN-YOUAKIM, Judge.

FCCI Commercial Insurance Company (FCCI) appeals the trial court's order awarding attorney's fees to Empire Indemnity Insurance Company (Empire), as subrogee and assignee of Lakeview at Carlton Lakes Condominium Association, Inc., under the trial court's inherent authority to impose sanctions for egregious or bad-faith conduct. FCCI had retained an attorney to defend its insureds, Celerity Construction, Inc. (Celerity), and NTC Development, Ltd. (NTC), in Empire's construction-defect action, but on Empire's motion, the trial court disqualified the attorney for misconduct and determined that Empire was entitled to unspecified attorney's fees and costs "in connection with" the motion (the 2012 order). After FCCI intervened and moved for summary judgment on the fee issue, the court held a hearing and awarded Empire attorney's fees as a sanction against FCCI based on its finding that FCCI "did direct and orchestrate" the attorney's misconduct (the 2016 order).¹ Because the evidence did not support a finding that FCCI had engaged in egregious or bad-faith conduct, we reverse the award of fees and direct the trial court to enter summary judgment in FCCI's favor on Empire's supplemental precautionary motion for attorney fees.²

Background

In the 2012 order, the trial court determined that the attorney had improperly initiated direct contact with a represented party, had improperly obtained privileged documents from that represented party and then forwarded them to other defendants rather than informing the sender, and, in so doing, had violated various Rules of Civil Procedure and Rules Regulating the Florida Bar. Accordingly, the court disqualified the attorney. The court also generally granted Empire's request for sanctions by determining that Empire was entitled to attorney's fees. Celerity and NTC sought certiorari review of the 2012 order, and this court denied their petition per curiam. See Celerity Constr., Inc. v. Empire Indem. Ins. Co., 125 So.3d 1026 (Fla. 2d DCA 2013) (table decision).

Thereafter, Empire filed a "supplemental precautionary motion for attorney's fees" based on the 2012 order, in which Empire also sought discovery regarding FCCI's role, if any, in the attorney's misconduct. Consequently, FCCI sought and was granted leave to intervene in connection with the motion. FCCI subsequently moved for summary judgment on the motion, arguing, among other things, that it could not be liable for the attorney's misconduct and that it had not engaged in any misconduct itself. As set forth above, after a hearing, the court denied FCCI's motion for summary judgment and granted Empire's motion for fees. The trial court subsequently entered a final order awarding Empire attorney's fees against FCCI, and this appeal followed.

Analysis

As an initial matter, Empire incorrectly contends that we lack jurisdiction to consider this appeal. See Burt v. SP Healthcare Holdings, LLC, 163 So.3d 1274, 1275 (Fla. 2d DCA 2015). Not only is the order awarding Empire attorney's fees an executable judgment against FCCI concluding a portion of the litigation ancillary to Empire's ongoing litigation against Celerity and NTC (and other codefendants), see Hastings v. Osius, 104 So.2d 21, 22 (Fla. 1958) ; Burt, 163 So.3d at 1275 ; Saye v. Pieschacon, 750 So.2d 759, 760-61 (Fla. 1st DCA 2000), but FCCI's limited intervention solely for the purpose of addressing fees demonstrates that the conclusion of the attorney fees proceeding ended judicial labor as to FCCI, see Fla. R. App. P. 9.110(k) ; Smith v. State, 902 So.2d 179, 181 (Fla. 3d DCA 2005) (holding that an order awarding sanctions against an attorney was a final, appealable order because the entry of sanctions ended judicial labor in the case with respect to a nonparty); see also Gator Boring & Trenching, Inc. v. Westra Constr. Corp., 210 So.3d 175, 180 (Fla. 2d DCA 2016) ("Because the trial court's orders completely dispose of all claims involving Travelers, we have jurisdiction to review Gator's appeal from the dismissal of count II as a partial final judgment in accordance with rule 9.110(k).").

Empire also argues that Celerity and NTC's earlier certiorari proceeding bars this appeal under the law-of-the-case doctrine. Again, Empire is incorrect. First, the law-of-the-case doctrine does not apply because our review in the prior certiorari proceeding was limited to the attorney's disqualification; we lacked certiorari jurisdiction to review the sanction portion of the order. See Parrish v. RL Regi Fin., LLC, 194 So.3d 571, 571 (Fla. 2d DCA 2016) ("Generally, an order imposing monetary sanctions against trial counsel and directing that they be paid on a certain date is a final, appealable order.... An order determining an entitlement to attorney's fees and costs without setting the amount is a nonfinal, nonappealable order." (first citing Burt, 163 So.3d at 1275 ; then citing Greenberg v. Greenberg, 129 So.3d 470, 471 (Fla. 2d DCA 2014) ) ); DeMartino v. Simat, 948 So.2d 841, 843-44 (Fla. 2d DCA 2007) ("[T]he law of the case doctrine ... applies only to rulings on questions of law that were actually presented and considered in a prior appeal. Other than the dismissal of a previous attempt to appeal a nonfinal, nonappealable order, there have been no appellate court rulings on questions of law in this case." (first citing Fla. Dep't of Transp. v. Juliano, 801 So.2d 101, 106 (Fla. 2001) ; then citing U.S. Concrete Pipe Co. v. Bould, 437 So.2d 1061, 1063 (Fla. 1983) ) ).

Moreover, the findings in the 2012 order pertained only to the attorney's conduct, and as explained below, findings of misconduct must be tailored to the entity against which sanctions are entered. Although the findings in the 2012 order provided the context for the 2016 order, the 2012 order did not address whether FCCI had engaged in egregious conduct or had acted in bad faith in directing the attorney.³ See Juliano, 801 So.2d at 106 ("Under the law of the case doctrine, a trial court is bound to follow prior rulings of the appellate court as long as the facts on which such decision are based continue to be the facts of the case."); Specialty Rests. Corp. v. Elliott, 924 So.2d 834, 838 (Fla. 2d DCA 2005) ("Because they were not parties to the earlier appeal, this court's earlier ruling did not become law of the case as to them and therefore is not binding upon them.").

Turning to the merits, a trial court has the inherent authority to award "attorney's fees where one party has exhibited egregious conduct or acted in bad faith." Bitterman v. Bitterman, 714 So.2d 356, 365 (Fla. 1998). This authority, however, should rarely be exercised, as it is "reserved for those extreme cases where a party acts ‘in bad faith, vexatiously, wantonly, or for oppressive reasons,’ " id. (quoting Foster v. Tourtellotte, 704 F.2d 1109, 1111 (9th Cir. 1983) ), whether in connection with the conduct leading to the litigation or during the litigation itself, id. (quoting Dogherra v. Safeway Stores, Inc., 679 F.2d 1293, 1298 (9th Cir. 1982) ). This authority also extends to imposing sanctions against an attorney, Moakley, 826 So.2d at 224, as does the caveat that it be exercised "sparingly and cautiously," id. at 225 (citing Patsy v. Patsy, 666 So.2d 1045, 1047 (Fla. 4th DCA 1996) ).

Before exercising its inherent authority to impose sanctions, a trial court must provide to the parties "notice and an opportunity to be heard—including the opportunity to present witnesses and other evidence." Id. at 227.⁴ The court's imposition of sanctions under that authority "must be based upon an express finding of bad faith conduct and must be supported by detailed factual findings describing the specific acts of bad faith conduct that resulted in the unnecessary incurrence of attorneys' fees." Id. The court, however, need not employ any "magic words." See Robinson v. Ward, 203 So.3d 984, 990 (Fla. 2d DCA 2016) (explaining that the court's order need not specifically intone the words "bad faith" as long as it specifically identifies the incidents of bad-faith conduct). We review for an abuse of discretion the trial court's award of sanctions. See Tenev v. Thurston, 198 So.3d 798, 801 (Fla. 2d DCA 2016).

We have found no case that would preclude a trial court from sanctioning an insurer for egregious or bad-faith conduct that the insurer committed while performing its duty to defend the insured. Nonetheless, in such circumstances, the trial court cannot ignore that it should rarely invoke this inherent authority, see Bitterman, 714 So.2d at 365, and should do so only after complying with Moakley. Thus, although we do not rule out that an insurer could be liable for the egregious or bad-faith conduct of the attorney that it has hired to represent its insured, it would not be sufficient for the trial court to find simply that the insurer had taken an active role in the representation of the insured because no authority provides an exception to the requirement that the trial court make detailed factual findings describing the specific egregious or bad-faith conduct committed by the party against whom sanctions are imposed. See Moakley, 826 So.2d at 227 ; see also Robinson, 203 So.3d at 991 (affirming sanctions imposed against lead trial counsel because the trial court specifically articulated eight...