Insurance Co. of North America v. Welch

• Decision Date: 18 July 1972
• Docket Number: No. 71-680,71-680
• Citation: 266 So.2d 164
• Parties: INSURANCE COMPANY OF NORTH AMERICA, Appellant, v. Cecil A. WELCH, Administrator of the Estate of James Reed Welch, Deceased, and James H. Pruitt Agency, Inc., Appellees.
• Court: Florida District Court of Appeals

Page 164

266 So.2d 164

INSURANCE COMPANY OF NORTH AMERICA, Appellant, v. Cecil A. WELCH, Administrator of the Estate of James Reed Welch, Deceased, and James H. Pruitt Agency, Inc., Appellees.

No. 71-680.

District Court of Appeal of Florida, Fourth District.

July 18, 1972.

Rehearings Denied Sept. 19, 1972.

Leonard N. D'Aiuto and Dale O. Morgan of Howell, Kirby, Montgomery, D'Aiuto, Dean & Hallowes, Orlando, for appellant.

Sammy Cacciatore of Nance & Cacciatore, Melbourne, for appellees Cecil A. Welch, etc.

PER CURIAM.

Appellant-defendant, Insurance Company of North American (I.N.A., appeals a summary final judgment in favor of appellee-plaintiff, Cecil A. Welch, as Administrator of the Estate of James Reed Welch, deceased, and an order awarding plaintiff costs and attorneys' fees.

The summary final judgment was entered on June 25, 1971. The record reflects that no motion which would have tolled the running of the 30-day appeals period was filed. The order awarding plaintiff costs and attorneys' fees was entered on July 28, 1971. The notice of appeal was filed July 29, 1971.

It is apparent that the notice of appeal is timely only as to the order entered on July 28, 1971. F.A.R. 3.2(b), 32 F.S.A. Therefore, the appeal from the summary final judgment of June 25, 1971, being untimely is dismissed. Wabash Life Ins. Co. of Indianapolis v. Rosenberg, Fla.App.1965, 177 So.2d 538.

The appeal concerning the order awarding costs and attorneys' fees being timely presents a more complex problem. The instant action arose from the crash of an airplane which killed plaintiff Welch's decedent. The aircraft was owned by Marty's Flying Service, Inc., and was insured under a policy issued by I.N.A. to Marty's. Plaintiff instituted an action for damages against Marty's. I.N.A. denied coverage, and refused to defend the action. Marty's did not defend, and a judgment for damages was accordingly entered in favor of plaintiff against Marty's. Subsequently, Marty's assigned to plaintiff whatever cause of action it might have had against I.N.A. for failure to defend the original action, and for bad faith refusal to settle. Pursuant to this assignment, plaintiff brought the instant action against I.N.A. seeking damages for failure to defend and bad faith refusal to settle, and also seeking reformation of the insurance policy.

Prevailing in the trial court, plaintiff then sought an award of attorneys' fees under Section 627.0127, Florida Statutes 1969, F.S.A. At the hearing held to determine the amount of the attorneys' fees to which plaintiff was entitled, plaintiff's attorney testified that he had entered into a contingent fee contract with plaintiff, by which the attorney would receive one-third of any recovery obtained by plaintiff at trial. Plaintiff's expert witness testified that in his opinion a reasonable contingent fee would vary between thirty-three and one-third per cent and forty per cent, and that since the total recovery was some $52,000, a reasonable fee would run between $17,000 and $18,000. The trial court entered an order awarding attorneys' fees in the amount of $17,000 in favor of plaintiff and against I.N.A. Hence this appeal.

Initially, the record does not reflect whether the fees awarded to plaintiff included compensation for plaintiff's attorneys' efforts in the prior action against Marty's, as well as for the attorneys' services in the instant action. However, we consider it worthwhile to state unequivocally that plaintiff may be awarded fees against I.N.A. Only as regards his attorneys' services in the instant action. This is so because the prior judgment against Marty's was not rendered 'against an insurer.' F.S. Section 627.0127, F.S.A., provides for the payment of attorneys' fees only upon the rendition of a judgment against an insurer.

The leading case concerning the propriety of awarding attorneys' fees against an insurer on the basis of a contingent fee contract between a plaintiff and his attorney is Travelers Insurance Co. v. Davis, 5 Cir. 1969, 411 F.2d 244. Applying Florida law, the court there stated:

'The purpose of the Florida statute allowing recovery of attorney's fees by successful claimants under insurance policies is to discourage litigation over such policies and to reimburse successful plaintiffs reasonably for monies expended for attorney's fees in suits to enforce insurance contracts. American Fidelity & Casualty Co. v. Greyhound Corp., 258 F.2d 709 (5 Cir. 1958); Feller v. Equitable Life Assurance Society of United States (Fla.1952), 57 So.2d 581. Although an allowance thereunder may be considered as in the nature of a penalty, the general rule in states having such statutes is that the amount assessed should never be based on a contingent contract, such as might exist between a claimant and his attorney, but should represent only a reasonable fee for the services actually performed. 3 Appleman, Insurance Law and Practice § 1646 at 424. See, e.g., Metropolitan Life Insurance Co. v. Leach, 198 Ark. 531, 129 S.W.2d 588 (1939); Wolf v. Mutual Ben. Health & Acc. Ass'n, 188 Kan. 694, 366 P.2d 219 (1961); American Nat. Ins. Co. v. Valencia, 91 S.W.2d 832 (Tex.Civ.App.1936). In analogous situations the Florida courts have consistently held that 'a court is without power to measure an attorney's fee except on the basis of quantum meruit or a quid pro quo.' Brickell v. Di Pietro, 152 Fla. 429, 12 So.2d 782, 783 (1943). This rationale is clearly set forth in Ronlee, Inc. v. P. M. Walker Co. (Fla.App. 3rd Dist. 1961), 129 So.2d 175, 176:

"The amount which a person may agree to pay as a contingent fee ordinarily is not a fair measure of the value of the legal services involved. This is true because, in the case of a contingent fee where nothing will be payable in the absence of recovery, the fee to be paid in the event of recovery usually is set higher than . . . would be a flat fee for the services actually performed. Also, if a party to a contract such as the one involved in this case could require the defaulting party to pay any fee which the former might arrange with his attorney, he would be inclined to be liberal in contracting with his attorney.'

'Thus the amount to be awarded as attorney's fees under the Florida statute is to be determined not from the point of view of the lawyer and client, but from that of the presiding trial judge. The court may, of course, take into consideration the nature of the suit, the amount in controversy, any unusual features of the case, such as the lengthiness of a trial or the...