Ingalsbe v. Stewart Agency, Inc., No. 4D03-2618

• Decision Date: 03 March 2004
• Docket Number: No. 4D03-618., No. 4D03-2618
• Citation: 869 So.2d 30
• Parties: Raymond G. INGALSBE, Raymond G. Ingalsbe, P.A., and J. Kent Brown, Appellants, v. STEWART AGENCY, INC., d/b/a Stewart Toyota of North Palm Beach; and Earl Stewart, Jr., Appellees.
• Court: Florida District Court of Appeals

869 So.2d 30

Raymond G. INGALSBE, Raymond G. Ingalsbe, P.A., and J. Kent Brown, Appellants, v. STEWART AGENCY, INC., d/b/a Stewart Toyota of North Palm Beach; and Earl Stewart, Jr., Appellees.

Nos. 4D03-2618, 4D03-618.

District Court of Appeal of Florida, Fourth District.

March 3, 2004.

Order Denying Rehearing and Granting Certification April 14, 2004.

Richard A. Kupfer of Richard A. Kupfer, P.A., West Palm Beach, for appellants.

Gary M. Dunkel, Greenberg Traurig, P.A., West Palm Beach, and Elliot Scherker, Greenberg Traurig, P.A., Miami, for appellees.

Dock A. Blanchard of Blanchard, Merriam, Adel & Kirkland, P.A., Ocala, for Amicus Curiae Academy of Florida Trial Lawyers.

FARMER, C.J.

The issue we review arises from a lawsuit by a plaintiff's lawyer for interference with his fee contract with his client. The trial court dismissed his claim for failure to state a cause of action, holding that it was barred by absolute immunity. We disagree and reverse.

Basically the facts are these. Appellants [Lawyer] were retained by their Client to sue appellees [Dealer] under the Lemon Law. Lawyer and Client agreed in writing to a fee with 3 different alternatives for calculating the actual amount due. Under the contract the amount due would be either:

(A) 40% of the amount recovered plus an additional 5% (or $10,000 if greater than 5%) for any appeal, or

(B) the amount set by the Court under the attorney's fee statutes in Lemon Law cases if greater than 40% of Client's recovery; or

(C) if Client settled the case against the advice of the Lawyer, Client would pay $300 per hour for all time reasonably spent on the matter.

Suit was filed, and the case was tried to a jury, which awarded some $21,000 in damages. On an appeal of that judgment, we reversed upon a holding that the court improperly excluded defensive evidence and remanded for a new trial.

At some point after remand, Dealer approached Client personally and urged they settle the claim without any lawyers. Dealer and Client reached an agreement whereby Dealer agreed to pay Client $35,000 in damages, as well as attorneys fees in the amount of 331/3% of the recovery and costs. When Dealer learned the actual terms of the fee agreement, Dealer increased the fee percentage to 40% of the recovery, plus $10,000 for the appeal that had been previously taken. Dealer tendered the 40% plus $10,000 to Lawyer, asserting he had tendered payment in full. Lawyer rejected Dealer's tender and instead sued Dealer for interfering with his fee agreement. Dealer moved to dismiss the claim on the grounds of immunity. The trial court's dismissal of Lawyer's claim brought this appeal.

Dealer argues that Lawyer's intentional interference with contractual relationship claim was barred absolutely by the "litigation privilege" established in Levin Middlebrooks Mabie Thomas Mayes & Mitchell, P.A. v. U.S. Fire Ins. Co., 639 So.2d 606 (Fla.1994). That case began as a bad faith action by an insured against an insurance carrier for failing to settle a claim when it should have done so. During discovery in the bad faith action the carrier identified the insured's attorney as a person having relevant knowledge of important facts in the suit. The carrier then filed a motion to disqualify the attorney and certified its intention to call that attorney as a witness during its defense of the bad faith action. The attorney was disqualified but the carrier never called the attorney as a witness at trial in the bad faith action.

The attorney then sued the carrier for intentional interference with a business relationship. In holding that his claim was barred by the privilege the supreme court explained:

"In balancing policy considerations, we find that absolute immunity must be afforded to any act occurring during the course of a judicial proceeding, regardless of whether the act involves a defamatory statement or other tortious behavior such as the alleged misconduct at issue, so long as the act has some relation to the proceeding. The rationale behind the immunity afforded to defamatory statements is equally applicable to other misconduct occurring during the course of a judicial proceeding. Just as participants in litigation must be free to engage in unhindered communication, so too must those participants be free to use their best judgment in prosecuting or defending a lawsuit without fear of having to defend their actions in a subsequent civil action for misconduct." [e.s.]

639 So.2d at 608. Dealer argues that "any act occurring during the course of a judicial proceeding" plainly covers the settlement effected by Dealer and Client without their lawyers. He contends that the broad phrasing of the court's holding applies even in the case we face today involving Dealer's attempt to limit the amount of possible fees due Lawyer under the contract provisions for his representation of Client.

The essential rationale of the supreme court's Levin Middlebrooks holding is in the following sentence:

"Just as participants in litigation must be free to engage in unhindered communication, so too must those participants be free to use their best judgment in prosecuting or defending a lawsuit without fear of having to defend their actions in a subsequent civil action for misconduct."

639 So.2d at 608. Dealer's argument in this case does not fit within the supreme court's rationale. The carrier and its counsel in Levin Middlebrooks were privileged in discovery to use their best judgment to assert a good faith right to call the opposing attorney as a witness because the attorney's testimony might turn out at trial to be crucial to their defense of the bad faith claim. Their decision to name the attorney as one of their own witnesses was privileged—even though it resulted in the attorney's disqualification from the case— because of the implicit importance of the corollary right of civil litigants to "every man's evidence." ¹

Turning to this case and applying the same rationale, we begin with an acknowledgment that Dealer was privileged to propose and conclude a settlement because of the importance the law places on settlements of civil disputes.² But there is nothing inherent in the right to settle lawsuits that would compel a corollary right to interfere with a fee contract between one of the settling parties and his lawyer. Without such a legally recognized right, Dealer was not privileged to use the right to settle in such a way as to interfere with the obligation of Client arising from the clear language of the fee contract. Dealer could not thereby set up a settlement imperative directing which contractual alternative for calculating the fee would be controlling after the settlement. Nor could Dealer bind Lawyer to an involuntary rescission of one or more of the contract's reasonable alternatives simply by committing to paying only the one most favorable to Dealer. Nothing in Levin Middlebrooks purports to establish such a corollary right. No legitimate interest of Dealer and Client in settling their dispute gives them a privilege to interfere with Lawyer's fee contract in such a way as to restrict the fee due to only the lowest among the contract's reasonable alternatives.

We hasten to add that Levin Middlebrooks is also not controlling for still another reason. The facts alleged by Lawyer in this case are the functional mirror of the facts of the claim in Bankers Multiple Line Ins. Co. v. Farish, 464 So.2d 530 (Fla.1985). Dealer's relationship to Lawyer in this case cannot be differentiated on any principled basis from Bankers relationship to Farish in Bankers Multiple Line. In that case Farish represented a woman in a personal injury action. The defendant was insured under a policy issued by Bankers. MacArthur, the head of Bankers (who was also acquainted with plaintiff), told the woman of his "displeasure" with her fee agreement with Farish. The woman fired Farish and retained new counsel. In time, new counsel brought Farish back into the case. Farish tried the case, but the result was less favorable than he thought the case was worth. Farish thereupon sued both Bankers and MacArthur for tortious interference with his fee contract.

In affirming the liability of Bankers in that case, the supreme court necessarily approved of the legal sufficiency of the claim by Farish against Bankers. The claim alleged and tried by Farish against Bankers and MacArthur is interference with a contractual relationship. That is the identical claim alleged by Lawyer against Dealer in this case.

The person accused of interfering with Lawyer's fee contract in the present case is the corporate defendant's chief executive. In Bankers Multiple Line, the person accused of interfering was the corporate chief executive of the carrier insuring the defendant. Thus in both cases it was the entity who would pay any resulting judgment in the underlying litigation whose chief executive did the interfering. Hence the persons accused of interfering in the two cases are functionally identical.

Moreover the very tort of interference with a contractual relationship itself necessarily, and logically, can properly include attempts to alter or change only a single contractual provision benefitting the person bringing the action. This obvious implication must be true, whether the attempt is to extinguish the provision entirely or instead simply to alter it, so long as the effect is to interfere with benefits otherwise due the plaintiff.

By structuring the settlement in this case to limit the attorney's fees to only the first alternative of a percentage of the recovery, Dealer was interfering with Lawyer's entitlement to a fee under the alternative fee provisions regarding a fee set by the court and a fee based on an hourly rate. These alternative fee provisions were of obvious importance for the underlying claim that was the subject of the fee agreement. In consumer cases, such as those under the Lemon Law, the actual amount of...