Inacio v. State Farm Fire & Cas. Co.

• Decision Date: 26 September 1989
• Docket Number: No. 88-126,88-126
• Citation: 550 So.2d 92,14 Fla. L. Weekly 2269
• Parties: 14 Fla. L. Weekly 2269 Paul S. INACIO, Appellant, v. STATE FARM FIRE & CASUALTY COMPANY, Appellee.
• Court: Florida District Court of Appeals

Page 92

550 So.2d 92

14 Fla. L. Weekly 2269

Paul S. INACIO, Appellant, v. STATE FARM FIRE & CASUALTY COMPANY, Appellee.

No. 88-126.

District Court of Appeal of Florida First District.

Sept. 26, 1989.

Thomas R. Jenkins of Beggs & Lane, Pensacola, for appellant.

C. Miner Harrell and Robert C. Palmer, III, of Harrell, Wiltshire, Swearingen, Wilson & Harrell, Pensacola, for appellee.

ZEHMER, Judge.

Paul Inacio, an insured under an automobile insurance policy issued by State Farm Fire & Casualty Company, sued State Farm on a claim under the uninsured motorist provision. The matter was eventually settled without trial, leaving for decision by the court only the amount of attorney's fees due Inacio under sections 624.155(3) ¹ and 627.428, FLORIDA STATUTES (1987)². Inacio appeals the order awarding attorneys fees, arguing three points for reversal:

1. The trial court erred by failing to award fees for hours spent by appellant's counsel in pursuit of the claim for attorney's fees after settlement with appellee.

2. The trial court erred by failing to apply a contingency risk factor when calculating appellant's entitlement to an award of attorney's fees.

3. The trial court erred by failing to award prejudgment interest on its award of fees for time spent through the date of settlement between the parties.

We find error in respect to each point and reverse.

This proceeding began by Inacio's filing a personal injury action against John Whalen and Metropolitan Toyota to recover for injuries he sustained when struck by an automobile driven by Whalen and owned by Metropolitan Toyota. Inacio was granted summary judgment against Whalen on the issue of liability. He then made a claim under the uninsured motorist coverage in his policy with State Farm. State Farm denied coverage, so Inacio joined State Farm as a defendant and alleged causes of action to recover personal injury protection benefits, medical payments benefits, and uninsured motorist benefits under the policy. Subsequently, Inacio amended his complaint to add a claim for damages for State Farm's unfair trade practices in violation of section 626.9541, Florida Statutes (1987).

The claims against State Farm were eventually settled for $50,000 on November 20, 1986, and apparently the settlement was paid at that time. However, a stipulation filed with the trial court at the time of settlement provided in part that "the court shall retain jurisdiction for the purpose of awarding attorneys' fees to the Plaintiff ... pursuant to provisions of Sections 624.155 and 627.428, Florida Statutes" (R. 330). After the trial court entered an order declaring that defendant John Whalen was an uninsured motorist and granting summary judgment against State Farm on this issue, the court considered Inacio's motions for attorney's fees and prejudgment interest and rendered a memorandum order setting forth explicit findings of fact and conclusions of law pursuant to Florida Patient's Compensation Fund v. Rowe, 472 So.2d 1145 (Fla.1985). The court found that plaintiff's attorney had devoted a total of 262 hours to the case from the inception of the action until the hearing set for consideration of the attorney's fees award; that 231 of these hours were expended from inception of the action until the settlement was concluded in November 1986; and that of these 231 hours, 32 hours were expended in pursuit of the tort claim against the original defendants and before serious consideration was given to pursuit of relief under the provisions of the plaintiff's automobile insurance policy. The court concluded that 199 hours were reasonably expended in the representation of plaintiff in the action against State Farm. After reviewing the written fee contract as amended, the court concluded that the 32 hours expended subsequent to the date of settlement in preparation for and litigation of the award of attorney's fees should be disallowed on the authority of B & L Motors, Inc. v. Bignotti, 427 So.2d 1070 (Fla.2d DCA 1983). Finding that an hourly rate of $90 would be reasonable and multiplying the 199 hours by that rate, the court arrived at a lodestar figure of $17,910. The court concluded that assignment of a contingency risk factor to enhance the lodestar fee was inappropriate under the facts of this case because the fee contract was no longer contingent. Alternatively, the court concluded that if upon further review it should be ruled that a contingency risk factor is appropriate, the court would assess a factor of 1.5 because success was more likely than not at the outset. The court also ruled that plaintiff was not entitled to any prejudgment interest on the attorney's fee award under Argonaut Insurance Co. v. May Plumbing Co., 474 So.2d 212, 215 (Fla.1985), for the reason that even though entitlement to attorney's fees was undisputed, the amount of the award was unsettled or unliquidated and had to await determination by the court.

Prior to filing suit, Inacio and his attorneys entered into a standard contingent fee contract set forth in a written agreement entitled "Authority to Represent" and dated March 2, 1984. This agreement initially covered the claims to be asserted against Whalen and Metropolitan Toyota, and provided for payment of a sliding scale of percentage, depending on the state of the proceeding at which recovery should be effected, including a provision for one third of any recovery made after suit had been filed and before trial. Of course, no statutory provisions authorized recovery of attorney's fees in the actions against these original tortfeasors.

After State Farm was made a defendant on the several claims under the policy provisions and the unfair trade practices act, Inacio and his attorney executed a written addendum to the original attorney fee agreement, which recited that:

I, PAUL SERGIO INACIO, do hereby certify that this is an Addendum to the Authority to Represent which was executed by me on March 2, 1984. The purpose of this Addendum is to reduce to writing certain modifications of the above-mentioned [attorneys' fee agreement] which were made as a result of claims against State Farm Fire & Casualty Company after the original Authority to Represent was executed, specifically, I am referring to claims for denial of payment under personal injury protection and uninsured motorist coverages and violations of the Unfair Insurance Trade Practices Act, all of which provide for statutory awards of attorneys' fees which were not contemplated nor addressed in the original Authority to Represent. In light of such additional claims, and in light of the settlement of the original claims without the necessity of trial, the original Authority to Represent has been modified to the extent that the law firm of Beggs & Lane shall be paid Thirty-Three and One-Third (33 1/3%) Percent of the gross amount (less costs) collected or the amount of any fees awarded by the Court, whichever amount is greater. In the event that the Court awarded fee is greater than the contingency fee of Thirty-Three and One-Third (33 1/3%) Percent of the gross amount collected (less costs), then out of any such Court awarded fee I shall be reimbursed by Beggs & Lane from any attorneys' fees which I have already paid to Beggs & Lane.

(R. 342.) This written addendum was dated in February 1987, about three months after settlement with State Farm was made on November 20, 1986, and nearly ten months before the trial court ruled on the attorney fee issue. It purports to recite the agreement between the plaintiff and his counsel pursuant to which the attorneys undertook the handling of Inacio's claims against State Farm and the award of any statutory fee, and neither the trial court nor we have found any reason to conclude otherwise. ³

Initially, we must address whether, under this fee agreement, the allowable fee is limited to one third of the amount of the recovery or whether the amount of a reasonable fee may exceed this percentage should the court find that the amount of a reasonable fee for the services of plaintiff's attorney in the action against State Farm is greater than the contingency amount. This question is prompted by the supreme court's statements in Rowe that "because the party paying the fee has not participated in the fee arrangement between the prevailing party and that party's attorney, the arrangement must not control the fee award" but, nevertheless, "in no case should the court-awarded fee exceed the fee agreement reached by the attorney and his client." 472 So.2d at 1151. This statement in Rowe was apparently made in contemplation of an agreement providing only a fee based on a fixed percentage of the recovery. ⁴ It has been construed by this court as mandating that the total fee cannot exceed the agreed percentage of the amount of the recovery, even though the court should determine that a reasonable fee would be significantly greater. State Farm Fire & Casualty Company v. Johnson, 547 So.2d 940 (1988), reh'g denied, 14 F.L.W. 1998 (Fla. 1st DCA Sept. 1, 1989). But the court in Johnson found no evidence in the record that the parties' agreement contemplated the contingency amount or a reasonable amount, whichever may be greater; therefore, that case is patently distinguishable from the agreement and resulting issue involved in the case now before us. Certainly, the client and the attorney may agree that the client's obligation to pay a fee will be entirely contingent on prevailing in the suit and effecting a recovery, and the law recognizes that they may agree that the amount of the contingent fee ultimately due to the attorney will be a reasonable amount to be set by the court. State Farm Fire & Casualty Co. v. Palma, 524 So.2d 1035 (Fla. 4th DCA 1988); Quanstrom v. Standard Guaranty Insurance Company, 519 So.2d 1135 (Fla. 5th DCA 1988). Counsel for both parties agreed at oral argument that prior to the supreme court decision in Rowe it had been customary practice in...