Sanchez v. An Luxury Imports of Pembroke Pines, Inc.

• Decision Date: 12 April 2017
• Docket Number: No. 4D15–2377,4D15–2377
• Citation: 216 So.3d 723
• Parties: Juan SANCHEZ, Appellant, v. AN LUXURY IMPORTS OF PEMBROKE PINES, INC. d/b/a Mercedes–Benz of Pembroke Pines, and Safeco Insurance Company of America, Appellees.
• Court: Florida District Court of Appeals

216 So.3d 723

Juan SANCHEZ, Appellant,

v.AN LUXURY IMPORTS OF PEMBROKE PINES, INC. d/b/a Mercedes–Benz of Pembroke Pines, and Safeco Insurance Company of America, Appellees.

No. 4D15–2377

District Court of Appeal of Florida, Fourth District.

April 12, 2017

Annabel C. Majewski of Wasson & Associates, Chartered, Miami, and Rebecca J. Covey of Rebecca J. Covey, LLC, Fort Lauderdale, for appellant/cross-appellee.

Nancy W. Gregoire of Birnbaum, Lippman & Gregoire, PLLC, Fort Lauderdale, and Richard A. Ivers of Law Office of Richard A. Ivers, Coral Springs, for appellees/cross-appellants.

Klingensmith, J.

Appellant Juan Sanchez was awarded attorney's fees against appellees AN Luxury Imports of Pembroke Pines, Inc. ("ANL") and Safeco Insurance Company of America ("Safeco") (collectively, "defendants"). He appeals that order, claiming the fee awards were unreasonably low. Defendants cross-appeal, arguing that the fee award against Safeco was too high since it should have been capped at the amount of the surety bond it issued on ANL's behalf. We affirm the fee award against ANL, and find the fee award against Safeco should have been issued under a different statute and capped at the amount of the surety bond.

I. Background

In 2008, ANL bought a vehicle that had been returned at the end of a year-long lease after inspection by ANL's finance and used car managers. In the two weeks following this purchase, the vehicle was inspected again to see if it qualified as a certified preowned vehicle (a "CPO"). If it qualified, the manufacturer, Mercedes–Benz USA, would cover it with an additional limited warranty after the dealership completed certain reconditioning. The vehicle qualified as a CPO and, consistent with the inspections, the Carfax report at the time was "clean"—indicating that it had not been in an accident.

Appellant purchased the vehicle from ANL and over the next year drove it almost 10,000 miles without any problems. In November 2009, appellant took the vehicle to the dealership for its annual service and inquired about trading it in. The sales representative then printed a Carfax report. This report showed that the vehicle had been in an accident, but did not indicate that there was any frame or structural damage.¹

Aware of the inconsistency between the two Carfax reports, appellant communicated with both Carfax and the Florida Department of Motor Vehicles and learned that the vehicle had in fact been in an accident seven months prior to his purchase. This new report was the first time either appellant or ANL had learned of this accident.

Thereafter, appellant contacted an attorney. Despite the absence of any reported problems prior to November 2009, over the next few months appellant brought the vehicle to the dealership with complaints of transmission, wheel, and braking issues. ANL covered all repairs covered by the CPO warranty, with little or no charge in most cases.

In June 2010, appellant filed suit against both ANL and its surety, Safeco, for fraud or negligent misrepresentation, as well as several violations of the Florida Deceptive and Unfair Trade Practices Act, sections 501.201–.213, 501.975–.976, Florida Statutes (2010) ("FDUTPA"). Appellant sought compensatory and punitive damages, damages for mental anguish, rescission, and declaratory and injunctive relief.

II. The Arbitration Proceedings

Pursuant to the arbitration clause in the vehicle purchasing documents, the parties arbitrated the claims. During arbitration, appellant maintained that the vehicle could not have qualified as a CPO because it allegedly sustained frame and structural damage. However, a representative of Mercedes–Benz USA testified that once the vehicle qualified as a CPO, Mercedes would honor that status even if "something thereafter shows up on a Carfax report," explaining that "[i]f the certification had been put on the vehicle, we wouldn't pull it back off. We wouldn't penalize the customer for that." Other evidence was presented that mere repainting or paint damage upon inspection would not have automatically disqualified the vehicle from CPO status because paint issues do not necessarily stem from accidents. Appellant also filed a copy of the form approved by the State of Florida Department of Highway Safety and Motor Vehicles for motor vehicle dealer surety bonds, which stated, "the aggregate liability of the surety hereunder shall in no event, in any one (1) year, exceed the sum of the bond."

The arbitrator issued a ruling in favor of ANL on all of the claims except for one of the FDUTPA claims, finding that ANL violated FDUTPA by "not appropriately representing" the general condition of the vehicle when it presented appellant with the clean Carfax report which did not reference the accident. The ruling noted that although there was no evidence that ANL knew the vehicle had been in an accident, when ANL gave the initial Carfax report to appellant it was aware that such reports are often not up to date or incomplete. On this basis, the arbitrator awarded appellant $3,500 for the reduction in value of the vehicle caused by the unreported accident. The trial court confirmed the award and entered final judgment for $3,500 plus interest, while reserving jurisdiction to consider post-trial motions for attorney's fees and costs.

As to the award of attorney's fees, the arbitrator did not explicitly determine who the prevailing party was since appellant's award was significantly less than the amount he had originally claimed. Consequently, the attorney's fee issue was returned to the trial court where both parties moved for prevailing party attorney's fees pursuant to FDUTPA sections 501.2105 and 501.211. Additionally, appellant separately moved for attorney's fees and a multiplier against Safeco pursuant to section 627.428, Florida Statutes (2012).

III. The Attorney's Fees Hearings

The court conducted evidentiary hearings on entitlement to and amount of attorney's fees. Appellant's counsel conceded the court had to consider the "number of reasonable hours" expended on the case and not just the total number of hours. Nevertheless, she claimed that she spent 549 hours on the case for a fee of $223,700 and 67.9 additional hours in preparation for the fee hearing all at a $450 hourly rate, but did not produce any documents establishing that she had ever received or been awarded that rate in the past. Appellant's expert testified that counsel was entitled to an attorney's fee award of $203,492.50 for 457.2 hours at $400 and $450 per hour, and that counsel's paralegal's time should total $9,524 based on a $110 to $200 hourly rate. The expert admitted, though, that he did not eliminate from his calculation the time spent on issues related to appellant's various unsuccessful claims. The expert further testified that he charged just $300 per hour—not $450 per hour—despite his twenty-five years of experience with this type of litigation.

Defendants' counsel pointed out that section 501.976, which is the FDUTPA attorney's fees statute specifically governing vehicles, mandates the trial court to consider "the amount of actual damages in relation to the time spent" in determining the reasonableness of an attorney's fee award. Concerning this issue, defendants' fee expert testified, among other things, that: appellant lost on all of his claims except "representing the quality of care of servicing or condition unless known to be true based on Carfax"; appellant's agreement with his counsel was not "entirely" contingent; a multiplier was unavailable under FDUTPA; and appellant's only prevailing claim could have been litigated in a short period of time with the two Carfax reports and no expert testimony. The expert opined that based on three different types of analyses, the appropriate fee award for appellant's attorney given the time spent on the successful Carfax claim ranged from $17,546 to $21,350, with the $21,350 figure being the best reflection of "the reasonable amount of effort required to litigate the issues that were actually won."²

The trial court issued an omnibus order ("Omnibus Order") finding that appellant was entitled to an attorney's fee award despite failing to prevail on the CPO issue, the most significant and time-consuming issue in the case, because he obtained the $3,500 damage award on one of his FDUTPA claims. The court found that "the fee [was] almost entirely contingent other than the initial $2,000.00 retainer" and that under sections 501.2105 and 501.976, the "amount of time actually spent was grossly disproportional" to the $3,500 damage award. The court then awarded appellant $29,885 in attorney's fees and $8,800.13 in costs, totaling $38,685.13.

Instead of awarding that amount solely against ANL, the court imposed joint and several liability against both ANL and Safeco for the fee award, thereby essentially making Safeco's liability joint and several with ANL based on the FDUTPA attorney's fees statutes as opposed to section 627.428.³ Also, the Omnibus Order did not analyze the applicability of a fee multiplier, further suggesting that the award against both Safeco and ANL was entered pursuant to the FDUTPA attorney's fees statutes and not section 627.428.

This appeal and cross-appeal followed.

IV. Analysis

On appeal, appellant argues: the trial court should have granted a separate fee award against Safeco under section 627.428 (in addition to the fee awarded against Safeco by the Omnibus Order), and should have applied a fee multiplier to that award; the fee awards should have been higher because FDUTPA allows for fees for all of the litigation, not just the litigation related to the single successful FDUTPA claim; and the Omnibus Order improperly failed to include prejudgment interest. In their cross-appeal, defendants contend that the fee award against Safeco should have been capped at the face amount of the surety bond it issued to ANL.

"A party's entitlement to an award of attorneys' fees under a statute or a procedural rule...