Pirelli Armstrong Tire Corp. v. Jensen

• Decision Date: 15 March 2000
• Docket Number: No. 97-04837.,97-04837.
• Citation: 752 So.2d 1275
• Parties: PIRELLI ARMSTRONG TIRE CORPORATION, formerly known as The Armstrong Rubber Company, a foreign corporation, Appellant/Cross-Appellee, v. Meta E. JENSEN, as Personal Representative of Alwin H. Jensen, Deceased, and Matthew W. Jensen, a minor child, by and through his Guardian Meta E. Jensen, Appellees/Cross Appellants.
• Court: Florida District Court of Appeals

752 So.2d 1275

PIRELLI ARMSTRONG TIRE CORPORATION, formerly known as The Armstrong Rubber Company, a foreign corporation, Appellant/Cross-Appellee, v. Meta E. JENSEN, as Personal Representative of Alwin H. Jensen, Deceased, and Matthew W. Jensen, a minor child, by and through his Guardian Meta E. Jensen, Appellees/Cross Appellants.

No. 97-04837.

District Court of Appeal of Florida, Second District.

March 15, 2000.

Wendy F. Lumish and Benjamin Reid of Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A., Miami, for Appellant/Cross-Appellee.

Hugh N. Smith of Smith & Fuller, P.A., Tampa, for Appellees/Cross-Appellants.

PER CURIAM.

Pirelli Armstrong Tire Corporation [Pirelli] was sued for a catastrophic tire failure that resulted in the deaths of Mr. and Mrs. Alwin Jensen and injuries to their four-year-old son Matthew. This case was before us on appeal from the final judgment of liability and damages, which we affirmed. Pirelli Armstrong Tire Corp. v. Jensen, 688 So.2d 923 (Fla. 2d DCA 1997). Pirelli now challenges the assessment of attorneys' fees against it under section 768.79, Florida Statues (1993), the offer of judgment statute. It claims primarily that in this personal injury case a contingency risk multiplier cannot be used to calculate a reasonable fee in addition to the factors already enumerated in the statute.¹ We disagree with this suggested interpretation and affirm. In so doing, we align ourselves with the Fourth and Fifth Districts on this issue. See Collins v. Wilkins, 664 So.2d 14 (Fla. 4th DCA 1995), and Garrett v. Mohammed, 686 So.2d 629 (Fla. 5th DCA 1996), review denied, 697 So.2d 510 (Fla.1997).

The tragic accident that orphaned young Matthew Jensen took place on December 18, 1993. In April, 1994, the appellees commenced the underlying tort suit.² The complaint advanced alternative theories of manufacturing defect, design defect, inadequate warning, or absence of warning. In July, 1994, the appellees served a three million dollar demand for judgment pursuant to section 768.79. Although given an enlargement of time to respond, the demand expired without Pirelli accepting it. Trial began in February, 1995. The appellees abandoned the manufacturing defect theory based on reports from tire experts so the trial court entered a directed verdict on that claim. The trial court also entered a directed verdict on the inadequate warning claim. The case, therefore, went to the jury on the theories of design defect and absence of warnings. The jury found no design defect but found Pirelli negligent for failing to warn of dangerous propensities in the tire and awarded appellees $ 5,402,089.45.

The appellees moved to tax costs, investigative expenses, and attorneys' fees; preliminary hearings were held. The issue was put on hold until the appeal on liability was concluded when our mandate issued in March, 1997. More evidence was then presented to the trial court on the reasonableness of the fees and whether the contingency risk multiplier could be used in these circumstances. The trial court decided it was proper to apply the contingency risk multiplier and assessed fees in the following manner: it first calculated the lodestar figure at slightly over $ 414,000.00; it then applied a contingency risk multiplier of 2.5, thus increasing the amount to just over $ 1 million; it then reduced that amount by 25% based on certain criteria in section 768.79(7)(b); to this total of $ 777,675.95 it added prejudgment interest of $ 183,200.96. The final judgment on fees awarded the appellees $ 960,876.91.

Pirelli contends that applying the contingency risk multiplier in assessing fees under section 768.79 is error because the trial court must use only the criteria the statute lists. This is the same argument raised in Collins that the Fourth District rejected, as did the Fifth District in Garrett. We agree with Judge Warner's expressed reasoning in Collins. Section 768.79(7)(b) directs the trial court to consider, in determining the reasonableness of the fee, certain enumerated factors "along with all other relevant criteria" (emphasis ours). The statute also refers the trial court to the guidelines promulgated by the supreme court. See § 768.79(6)(a), (b). These guidelines include the Rules Regulating the Florida Bar, one of which, rule 4-1.5, fees for legal services, refers to whether or not the fee is fixed or contingent. See R. Regulating Fla. Bar 4-1.5(b)(8). Additionally, in setting a reasonable fee, rule 4-1.5(c) provides that all factors in this rule should be considered, "and may be applied, in justification of a fee higher or lower than that which would result from application of only the time and rate factors." Thus, it is clear that the legislature authorized trial courts to consider and apply a contingency risk multiplier when awarding an attorneys' fee under section 768.79. See also Standard Guar. Ins. Co. v. Quanstrom, 555 So.2d 828, 831 (Fla.1990). Inasmuch as the procedure is clearly outlined in the statute, we decline to construe it in a manner inconsistent with its directive, despite the fact that it enhances the award in such a generous manner. The trial court properly applied the statute as written.

Because we perceive this issue to be an important one for the administration of justice in this state, we certify the following question as one of great importance.

WHETHER THE APPLICATION OF A CONTINGENCY RISK MULTIPLIER TO AN AWARD OF ATTORNEY'S FEES UNDER SECTION 768.79, FLORIDA STATUTES (1993), THE OFFER OF JUDGMENT STATUTE, VIOLATE THE GUARANTEE OF EQUAL PROTECTION AFFORDED UNDER THE UNITED STATES OR FLORIDA CONSTITUTION?

Affirmed. PATTERSON, C.J., and NORTHCUTT, J., Concur. CASANUEVA, J., Concurs in part and dissents in part with opinion.

CASANUEVA, Judge, Concurring in part and dissenting in part.

I concur with the majority opinion insofar as it affirms that the appellees were entitled to an attorneys' fee award and certifies the question as one of great importance. However, I dissent from that portion of the majority opinion that concludes section 768.79, Florida Statutes (1993), authorizes a multiplier when awarding attorneys' fees.

The majority properly notes that two sister courts have decided that section 768.79(6)(a) authorizes a trial court to apply a multiplier in awarding attorneys' fees under the offer of judgment statute. In Collins v. Wilkins, 664 So.2d 14 (Fla. 4th DCA 1995), and Garrett v. Mohammed, 686 So.2d 629 (Fla. 5th DCA 1996), the Fourth and Fifth Districts concluded that rule 4-1.5, Rules Regulating the Florida Bar, authorizes the multiplier's use. Thus, by referring to the fee for legal services rule, the Fourth, Fifth, and now the Second Districts assert that the legislature statutorily authorized trial courts to apply a contingency risk multiplier in determining a reasonable fee under section 768.79. Although, arguably, a reading of the fee factors promulgated by our supreme court could support this holding, for the following reasons I believe a different conclusion is warranted.

First, the use of a contingency risk multiplier in the context of section 768.79 violates the constitutional principle of equal protection of the law. Only one side in a civil action-the plaintiff-is eligible under a rule 4-1.5 analysis to receive a contingency risk multiplier because the plaintiff is taking the risk in commencing the action. From Florida Patient's Compensation Fund v. Rowe, 472 So.2d 1145 (Fla.1985), through Bell v. U.S.B. Acquisition Co., Inc., 734 So.2d 403 (Fla.1999), awards of a multiplier have been approved, generally on the ground that an underlying statute encourages the bringing of a civil action. Such is not the case with section 768.79 because it encourages the terminating of litigation.

Equal protection analysis begins with the appropriate standard of review. Unlike statutes invoking racial classifications, for which constitutionality is measured under the strict scrutiny standard, here the lowest level of scrutiny applies-the rational basis standard. A legislative classification is valid unless it fails to "rationally further[] the purpose identified by the State." Massachusetts Bd. of Retirement v. Murgia, 427 U.S. 307, 314, 96 S.Ct. 2562, 49 L.Ed.2d 520 (1976). A mere imperfect classification does not violate the equal protection clause. See Dandridge v. Williams, 397 U.S. 471, 485, 90 S.Ct. 1153, 25 L.Ed.2d 491 (1970); Washington v. Confederated Bands and Tribes of Yakima Indian Nation, 439 U.S. 463, 501-502, 99 S.Ct. 740, 58 L.Ed.2d 740 (1979). However, a classification must rationally relate to a legitimate state interest to be constitutional. See City of New Orleans v. Dukes, 427 U.S. 297, 96 S.Ct. 2513, 49 L.Ed.2d 511 (1976); Haves v. City of Miami, 52 F.3d 918 (11th Cir.1995).

Both the legislative history and the judicial interpretation of section 768.79 suggest that its purpose is to encourage the resolution of litigation. In Eagleman v. Eagleman, 673 So.2d 946, 947 (Fla. 4th DCA 1996) (citations omitted), the Fourth District noted:

The spirit of the offer of judgment statute is to encourage litigants to resolve cases early to avoid incurring substantial amounts of court costs and attorney's fees. It serves as a penalty for parties who fail to act reasonably and in good faith in settling lawsuits.

The legislative history for chapter law 86-160 supports the Fourth District's conclusion. The staff analysis prepared by the Florida House of Representative's Committee on Judiciary for House Bill 321 stated that the proposed "legislation would provide sanctions for the unreasonable rejection of an offer of settlement given by either a defendant or plaintiff." Sanctions were to include attorneys' fees. The sanctions provided for by HB 321 would encourage settlement of civil cases which could, in turn, "result in lower litigation costs." Similarly, the Senate Staff Analysis and Economic Impact Statement prepared for Senate Bill 866...