Fid. Warranty Servs., Inc. v. Firstate Ins. Holdings, Inc.
| Decision Date | 03 October 2012 |
| Docket Number | 4D11–993.,Nos. 4D11–633,s. 4D11–633 |
| Citation | 98 So.3d 672 |
| Court | Florida District Court of Appeals |
| Parties | FIDELITY WARRANTY SERVICES, INC. and Jim Moran & Associates, Inc., Appellants, v. FIRSTATE INSURANCE HOLDINGS, INC., Firstate Insurance by Eldridge, Firstate Insurance Company PR., Inc., Charles Eldridge and Renee Eldridge, Appellees. |
OPINION TEXT STARTS HERE
Kannon K. Shanmugam of Williams & Connolly LLP, Washington, District of Columbia, and Nancy A. Copperthwaite of Akerman Senterfitt, Miami, for appellants.
James L. Pruden of James L. Pruden, P.A., Boca Raton, and James M. Williams and Alanah O. Herbert, Metairie, Louisiana, for appellees.
At the conclusion of lengthy commercial litigation involving multiple claims and counterclaims, both the appellants and the appellees sought the award of attorneys' fees. Ultimately, the trial court entered a $1.4 million-plus attorney's fee judgment in favor of appellees, awarded costs to appellees, and denied the appellants' motion for fees. Appellants challenge the trial court's ruling finding that appellees were entitled to prevailing party fees, the extent of the fee award, the costs judgment, and the denial of their own motion for fees. We affirm in part, reverse in part, and remand for further proceedings.
The fee judgment is the end result of underlying litigation arising out of a soured business relationship involving the marketing and sales of extended automotivewarranties in Puerto Rico as summarized in this court's prior opinion. See Fid. Warranty Servs., Inc. v. Firstate Ins. Holdings, Inc., 74 So.3d 506 (Fla. 4th DCA 2011). Fidelity Warranty Services, Inc., and Jim Moran & Associates, Inc. (hereinafter “JMA” collectively) sued Firstate Insurance Holdings, Inc., Firstate Insurance by Eldridge, Firstate Insurance Company PR., Inc., and Charles and Renee Eldridge (hereinafter “Firstate” collectively), asserting five causes of action: breach of the administrative agreement that governed the parties' business relationship (count I); breach of fiduciary duty (count II); conversion (count III); open account (count IV); and breach of a promissory note executed between the parties (count V). Firstate asserted nine counterclaims: breach of the administrative agreement (count I); tortious interference with a business relationship (count II); fraud in the inducement of execution of the fourth amendment to the administrative agreement and the promissory note (count III); civil theft (count IV); violation of FDUTPA (count V); defamation (count VI); conspiracy to commit tortious interference with business relationships (count VII); infringement of trade name (count VIII); and breach of fiduciary duty (count IX). By the conclusion of the trial, JMA had lost on each of the claims it had brought against Firstate. JMA prevailed on its defense of the counterclaims for fraudulent inducement, civil theft, FDUTPA violation, and infringement of trade name. Firstate, though, prevailed on tortious interference and defamation, and obtained a jury verdict awarding damages of $3.25 million and $2.5 million, respectively.
At the conclusion of the trial, both parties sought attorney's fees. Firstate relied upon a prevailing party provision in the promissory note and argued that a majority of its attorney time was recoverable as the time spent defending the breach of note claim was sufficiently intertwined with the remaining claims and counterclaims such that allocation of attorney time was not possible. JMA sought statutory fees based on its prevailing on the civil theft counterclaim. According to JMA, it was the intentional tort counterclaims that made the case complex, and the time spent defending the civil theft counterclaim was intertwined with the time spent defending all tort-based counterclaims. Ultimately, the trial court granted Firstate's motion for fees and awarded it $1,427,362.50 in fees, finding that it had prevailed on the note claim and that, with the exception of the fees concerning the civil theft counterclaim, all the claims and counterclaims were so intertwined that it was impossible to allocate the attorney time. The trial court also awarded $87,196.61 in costs to Firstate. As for JMA's motion for fees, the trial court denied the same, finding that the claims could not be “separate and distinct” so as to permit multiple fee awards and intertwined as claimed by JMA; that fees were awardable to JMA only for time spent defending the civil theft counterclaim; and that no fees were awardable to JMA as it failed to allocate the time spent on the civil theft counterclaim.
JMA argues that the trial court erred in finding Firstate prevailed on the note claim, insisting the combination of Firstate's successful defense of JMA's breach of note claim and JMA's successful defense of Firstate's fraudulent inducement claim resulted in the parties “battling to a draw” with respect to the note. JMA also contends the trial court erred in finding that, with the exception of the civil theft counterclaim, the claims and counterclaims were sufficiently intertwined such that the attorney time could not be allocated. We reject both of these arguments and affirm the trial court's rulings on these issues without further comment.
We turn, then, to JMA's claim that the fee award in favor of Firstate erroneously included fees awarded for attorney James Pruden, the firm of Graner, Root & Heimovics (“Graner firm”), and attorney Jan Morris. JMA asserts each of these attorneys was employed under a contingency fee agreement; each withdrew from the representation prior to the occurrence of the contingency, i.e., the jury verdict in favor of Firstate; and, thus, each forfeited their right to a fee.
If, prior to the conclusion of the case, the client discharges an attorney employed under a contingency fee agreement without cause, then the attorney may recover the reasonable value of his services, as limited by the contract maximum. See Santini, M.D. v. Cleveland Clinic Fla., 65 So.3d 22, 29 (Fla. 4th DCA 2011), review denied sub nom. Miller v. Santini, 90 So.3d 272 (Fla.2012). If an attorney employed under a contingency fee agreement is discharged for cause, he may recover in quantum meruit, with such amount reduced by the damages suffered by the client as the result of counsel's misconduct. Id. at 29–30 (citing Searcy, Denney, Scarola, Barnhart & Shipley, P.A. v. Scheller, 629 So.2d 947, 954 (Fla. 4th DCA 1993)). But, where an attorney voluntarily withdraws from the representation prior to the conclusion of the case, the attorney generally forfeits all right to recover a fee. See id. at 30 (citing Faro v. Romani, 641 So.2d 69 (Fla.1994)). An exception is made, allowing the withdrawing attorney to recover in quantum meruit, if the client's conduct made the attorney's continued representation legally impossible or if the client's conduct would cause the attorney to violate his or her ethical obligations. See id. (citing Faro, 641 So.2d at 71);DePena v. Cruz, 884 So.2d 1062, 1063–64 (Fla. 2d DCA 2004); Carbonic Consultants, Inc. v. Herzfeld & Rubin, Inc., 699 So.2d 321, 323 (Fla. 3d DCA 1997); Kocha & Jones, P.A. v. Greenwald, 660 So.2d 1074, 1075 (Fla. 4th DCA 1995).
We agree that the evidence established a voluntary withdrawal, not necessitated by the conduct of the client, on the part of both Pruden and Morris. Pruden had represented Firstate in connection with the transactional documents underlying the business relationship between JMA and Firstate. Despite this, Pruden initially undertook the representation of Firstate in the litigation. Pruden explained that, as the case progressed, he became concerned he would be a witness and thus discontinued work on the case. Later, after the return of the verdict, Pruden was “re-engaged” and entered into yet another fee agreement; the new agreement recognized that Pruden had been “replaced” by the Gauthier firm. As for Morris, the evidence established that he withdrew from the representation when he made the decision to re-join his old law firm as the firm represented JMA on other matters. Thus, the trial court erred by including the fees for Pruden and Morris in the judgment.1
With respect to Morris, Firstate argues that even if he voluntarily withdrew, it is nonetheless entitled to recover the fees billed by Morris because, subsequent to his withdrawal, there was an amended fee agreement obligating Firstate to pay Morris the greater of the $52,197.25 for services already rendered or three percent of any recovery. Prevailing law does not permit an attorney who represented a client under a contingency fee agreement to avoid the consequences of his withdrawal by subsequently modifying his fee agreement. See The Fla. Bar v. Hollander, 607 So.2d 412, 415 (Fla.1992) (); Kay v. Home Depot, Inc., 623 So.2d 764, 766–67 (Fla. 5th DCA 1993) ().See also In re Naturally Beautiful Nails, Inc., 18 Fla. L. Weekly Fed. B 19 (Bankr.M.D.Fla. Oct. 13, 2004) ().
JMA also contends the fee award in favor of Firstate must be reversed to the extent it...
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