Searcy, Denney, Scarola, Barnhart & Shipley, Etc. v. State

• Decision Date: 31 January 2017
• Docket Number: No. SC15–1747,SC15–1747
• Parties: SEARCY, DENNEY, SCAROLA, BARNHART & SHIPLEY, ETC., et al., Petitioners, v. STATE of Florida, Respondent.
• Court: Florida Supreme Court

209 So.3d 1181

SEARCY, DENNEY, SCAROLA, BARNHART & SHIPLEY, ETC., et al., Petitioners,

v.STATE of Florida, Respondent.

No. SC15–1747

Supreme Court of Florida.

[January 31, 2017]

Edna Louise Caruso of Edna L. Caruso P.A., West Palm Beach, Florida; Christian Dietrich Searcy and Jack Patrick Hill of Searcy Denney Scarola Barnhart & Shipley, P.A., West Palm Beach, Florida; and George Alexander Vaka of the Vaka Law Group, P.L., Tampa, Florida, for Petitioners

Pamela Jo Bondi, Attorney General, and Rachel Erin Nordby, Deputy Solicitor General, Tallahassee, Florida, for Respondent

Jessie Leigh Harrell, Rebecca Bowen Creed, and Bryan Scott Gowdy of Creed & Gowdy, P.A., Jacksonville, Florida, for Amicus Curiae Florida Justice Association

Edward Downey and Robert Lee McElroy, IV of Downey | McElroy, P.A., Palm Beach Gardens, Florida, for Amicus Curiae Guardian Ad Litem

George T. Levesque, Tallahassee, Florida, for Amici Curiae the Florida Senate and Andy Gardiner, in his official capacity as President of the Florida Senate

Matthew Joseph Carson, Tallahassee, Florida, for Amici Curiae the Florida House of Representatives and Steve Crisafulli, in his official capacity as Speaker of the Florida House of Representatives

PER CURIAM.

This case is before the Court for review of the decision of the Fourth District Court of Appeal in Searcy Denney Scarola Barnhart & Shipley, P.A. v. State , 194 So.3d 349 (Fla. 4th DCA 2015). In a separate decision, the district court certified the following question to be of great public importance:

AFTER THE ENACTMENT OF SECTION 768.28, FLORIDA STATUTES, AND THE ADOPTION OF FLORIDA SENATE RULE 4.81(6), IS IT CONSTITUTIONALLY PERMISSIBLE FOR THE FLORIDA LEGISLATURE TO LIMIT THE AMOUNT OF ATTORNEYS' FEES PAID FROM A GUARDIANSHIP TRUST ESTABLISHED BY A LEGISLATIVE CLAIMS BILL?

Searcy Denney Scarola Barnhart & Shipley, P.A. v. State , 190 So.3d 120 (Fla. 4th DCA 2015). Accordingly, we have jurisdiction. See art. V, § 3(b)(4), Fla. Const. As we explain, we answer the certified question in the negative when such limitation impairs an existing contract. Although the Legislature has complete discretion in its decision whether to grant a legislative claims bill, which is an act of grace, the claims bill may not unconstitutionally impair the preexisting contract between the claimant and the law firm for attorneys' fees, which may be recovered subject to the limits set forth in section 768.28(8), Florida Statutes (2007), Florida's limited waiver of sovereign immunity.

FACTS AND PROCEDURAL BACKGROUND

This case arose after the birth of Aaron Edwards, during which he sustained a catastrophic brain injury

as a result of the negligence of employees at Lee Memorial Health System (Lee Memorial) in 1997. The law firm of Searcy Denney Scarola Barnhart & Shipley, P.A. (Searcy Denney) was retained by the family to seek compensation under a standard contingency fee agreement providing for a payment of 40 percent of any recovery if a lawsuit was filed, plus costs. The agreement also stated that "[i]n the event that one of the parties to pay my claim for damages is a governmental agency, I understand that Federal and Florida Law may limit the amount of attorney fees charged by [Searcy Denney], and in that event, I understand that the fees owed to [Searcy Denney] shall be the amount provided by law."

The case proceeded to a five-week jury trial in 2007, at which the jury found Lee Memorial Health System's employees negligent, and that the negligence resulted in damages to the child in the amount of $28.3 million. The jury also awarded the mother $1.34 million and the father $1 million. Because the hospital was an independent special district of the State of Florida, the trial court enforced the sovereign immunity damage limitations in section 768.28(5), Florida Statutes (2007), and entered a judgment against the hospital for $200,000. This ruling was affirmed per curiam in Lee Memorial Health System v. Edwards , 22 So.3d 81 (Fla. 2d DCA 2009), and is not at issue in this case.

Searcy Denney and various other firms were involved in litigation of the medical malpractice suit, the first appeal, and a subsequent two-year lobbying effort to secure a claims bill from the Legislature on behalf of the injured child and his parents.¹ Because the waiver of sovereign immunity in section 768.28 limited the family's recovery to only $200,000 of the $28.3 million judgment, a claims bill for the excess judgment amount was filed in the Florida Legislature in 2011, but was not passed during that legislative session. However, in 2012 the Legislature passed a claims bill, chapter 2012–249, Laws of Florida, directing Lee Memorial to pay $10 million, with an additional $5 million to be paid in annual installments of $1 million each to "the Guardianship of Aaron Edwards, to be placed in a special needs trust created for the exclusive use and benefit of Aaron Edwards, a minor." Ch. 2012–249, § 2, Laws of Fla. The claims bill further stated that payment of fees and costs from funds awarded in the claims bill shall not exceed $100,000. No funds were awarded in the claims bill for the parents. In November 2012, the child's mother petitioned to establish a guardianship over the minor son's property, and Lee Memorial subsequently made its first payment of $10 million.

Searcy Denney, with the full support of the family, then petitioned the guardianship court to approve a closing statement allowing $2.5 million for attorneys' fees and costs. This requested amount was based on the contract that existed with the Edwards family, as limited by the provisions of section 768.28(8), Florida Statutes. Section 768.28(8), a provision of the limited waiver of sovereign immunity statute, states in pertinent part, "No attorney may charge, demand, receive, or collect, for services rendered, fees in excess of 25 percent of any judgment or settlement."

Because the petition to approve the closing statement also contended that the limit on fees contained in the claims bill was unconstitutional, the State of Florida intervened to defend the constitutionality of the claims bill enactment. And because of competing claims for a portion of the proceeds of the claims bill, the guardianship court appointed a guardian ad litem for the injured child. The evidence presented to the guardianship court revealed that the firms seeking fees and costs spent more than 7000 hours representing the family at trial, on appeal, and during the claims bill process. The evidence also demonstrated that costs of more than $500,000 were expended during the representation. As to the law firm's request for fees and costs of $2.5 million from funds provided by the claims bill, the guardianship court, relying on precedent from this Court and the Fourth District,² denied the request for fees in that amount, concluding that the court lacked judicial authority to contravene the fee and cost limitation the Legislature placed in the claims bill. The guardianship court also denied the request to find the fee limitation invalid and sever it from the remainder of the claims bill.

Searcy Denney and the other firms appealed the order of the guardianship court denying the $2.5 million in fees and costs, contending that the $100,000 fee and cost limitation in the claims bill was an unconstitutional impairment of their contract with the Edwards family, and that the provision should be severed from the claims bill. Alternatively, the firms argued in the district court that the guardianship court had inherent jurisdiction to depart from the legislative limitation because section 768.28(8), Florida Statutes, would allow a fee up to 25 percent of the award.³

The Fourth District rejected these contentions, stating that "[a]lthough sympathetic to Appellants' situation, we must disagree with their legal arguments based on separation of powers principles, supported by reasoning set forth from the Florida Supreme Court." Searcy Denney , 194 So.3d at 349. After reciting a brief history of sovereign immunity, both federal and state, the district court noted that section 768.28 is the codification of the State's limited waiver of sovereign immunity in tort actions, which limits recovery against the state or its agencies or subdivisions to $100,000 per person or $200,000 per incident, with a 25 percent cap on attorneys' fees. The statute further states that any portion of the judgment that exceeds the amounts allowed under the limited waiver of sovereign immunity may be paid in whole or in part only by an act of the Legislature.

In finding the fee limitation in the claims bill valid, the district court relied on this Court's decision in Gamble v. Wells , 450 So.2d 850 (Fla. 1984), the underlying facts of which predated the waiver of sovereign immunity statute. In Gamble , we held that an attorney's fee limitation in a "private relief act" granted by the Legislature was not an unconstitutional impairment of contract because the private relief act was "an act of grace," and the Legislature could "allow compensation, decide the amount of compensation, and determine the conditions, if any, to be placed on the appropriation." Gamble , 450 So.2d at 853. The Fourth District also noted its earlier case in which it held that the amount allowed in a claims bill was voluntarily given by the Legislature and was separate and apart from the recovery in the lawsuit—and that the Legislature could limit attorneys' fees in a claims bill "no matter what the underlying fee contract provides." Searcy Denney , 194 So.3d at 353–54 (quoting Noel v. Sheldon J. Schlesinger, P.A. , 984 So.2d 1265, 1267 (Fla. 4th DCA 2008) ).

Based on the precedent discussed above, the majority of the district court panel held that the guardianship court was correct in recognizing the Legislature's prerogative to limit the payment of fees and costs to $100,000. While sympathizing with the plight of the attorneys, and of persons in the future who might have difficulty obtaining counse...