Standard Guar. Ins. Co. v. Quanstrom

Citation555 So.2d 828
Decision Date11 January 1990
Docket NumberNo. 72100,72100
Parties15 Fla. L. Weekly S23 STANDARD GUARANTY INSURANCE CO., Petitioner, v. Brenda L. QUANSTROM, Respondent.
CourtUnited States State Supreme Court of Florida

Lora A. Dunlap of Fisher, Rushmer, Werrenrath, Keiner, Wack & Dickson, P.A., Orlando, for petitioner.

Stephan W. Carter of Martinez, Dalton & Provencher, P.A., Orlando, for respondent.

Sharon Lee Stedman of Rumberger, Kirk, Caldwell, Cabaniss, Burke & Wechsler, Orlando, amicus curiae for Reliance Ins. Co.

OVERTON, Justice.

We have for review Quanstrom v. Standard Guaranty Insurance Co., 519 So.2d 1135 (Fla. 5th DCA 1988), in which the Fifth District Court of Appeal acknowledged conflict with the Third District Court of Appeal's decision in Travelers Indemnity Co. v. Sotolongo, 513 So.2d 1384 (Fla. 3d DCA 1987). We agree that there is conflict. 1 The question in this cause concerns the setting of a reasonable attorney's fee under the lodestar approach and requires a determination of whether a contingency fee multiplier must be utilized when determining the appropriate attorney's fee to be paid to a prevailing insured pursuant to section 627.428, Florida Statutes (1987). 2 We find it necessary to reexamine our decision in Florida Patient's Compensation Fund v. Rowe, 472 So.2d 1145 (Fla.1985), in view of the recent decisions by the United States Supreme Court in Blanchard v. Bergeron, 489 U.S. 87, 109 S.Ct. 939, 103 L.Ed.2d 67 (1989), and Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 483 U.S. 711, 107 S.Ct. 3078, 97 L.Ed.2d 585 (1987), which effectively eliminated the use of contingency fee multipliers in computing fees under the lodestar approach. Further, we find it necessary to clarify our opinion in Rowe concerning its application under the various types of fee-authorizing statutes. We find that this cause should be remanded to the trial court for consideration of whether a multiplier is applicable. We disapprove the district court's decision but approve the result.

The material facts are not in dispute. In its prior decision on the merits, reported as Quanstrom v. Standard Guaranty Insurance Co., 504 So.2d 1295 (Fla. 5th DCA 1987), the Fifth District Court of Appeal set forth the following relevant facts:

[Quanstrom] owned a 1976 Chevrolet Vega motor vehicle on which PIP insurance expired in July of 1984 but which she continued to drive until January, 1985, when the clutch cable broke and the vehicle became incapable of functioning. The vehicle's registration expired on February 17, 1985, and the vehicle was not operated or driven on the roads of this state until it was repaired on March 25, 1985, and [Quanstrom] reregistered and reinsured it on April 25, 1985. However, on March 9, 1985, [Quanstrom] sustained bodily injuries while riding as a passenger in a vehicle owned by [Terry Nelson] and insured by [Standard Guaranty Insurance Company] for personal injury protection (PIP) benefits under section 627.736(4)(d)4., Florida Statutes.

Id. at 1296. Quanstrom sought to recover $2,066.04 in PIP benefits from Nelson's insurer, Standard Guaranty Insurance Company. Standard Guaranty rejected her claim, asserting that Quanstrom was required to carry PIP coverage on her own vehicle and that her failure to do so resulted in her having no coverage under the policy covering the vehicle in which she was a passenger.

After both parties moved for summary judgment, the trial court granted Standard Guaranty's motion, finding that Quanstrom was not entitled to coverage. The Fifth District Court of Appeal identified the issue as follows:

[W]hether a person injured while occupying a motor vehicle covered by personal injury protection (PIP) insurance is barred by section 627.736(4)(a), Florida Statutes (1985), from recovering PIP benefits from the insurer of the owner of that vehicle because the insured person is the owner of an uninsured motor vehicle which is not in fact being driven or operated on the roads of this state because of needed repairs.

Id. The district court reversed, finding that Quanstrom was entitled to PIP coverage under the insurance policy covering the vehicle in which she was a passenger and concluding that she was not required to carry PIP coverage on her inoperable car. The district court then directed the trial court to enter a final judgment in favor of Quanstrom. On remand, the sole issue was attorney's fees. Standard Guaranty and Quanstrom stipulated to a reasonable number of hours and a reasonable hourly rate, resulting in an agreed-upon lodestar fee of $8,100. On the merits in this cause, Quanstrom's counsel filed a complaint, filed and argued a motion for summary judgment, took one deposition, and filed and presented the issue on appeal. On remand, the only contested issue before the trial court was whether a contingency fee multiplier should be applied to the agreed-upon lodestar fee. Quanstrom's counsel contended that a multiplier must be applied and sought a multiplier of 3, which would result in a fee exceeding $24,000. The trial court rejected the application of a multiplier, finding that the fee arrangement between Quanstrom and her attorney was not a contingency fee arrangement, and found that $8,100 was a reasonable fee in this matter. The Fifth District Court of Appeal reversed the trial court, finding that this was a contingency fee agreement and that "the application of a multiplier factor is mandatory on the trial judge when the prevailing party's counsel is employed on a contingency fee basis and a reasonable attorney's fee is being calculated as directed in Rowe." 519 So.2d at 1136. We disagree with the holding that a multiplier must be applied under these circumstances.

Initially, it is necessary that we reexamine the principles adopted in Rowe. In Rowe, we found that, in setting a reasonable attorney's fee, the federal lodestar approach "provide[d] a suitable foundation for an objective structure," 472 So.2d at 1150 (citations omitted). In so holding, we recognized that, in determining the fee, courts should apply those factors enunciated in the Florida Bar Code of Professional Responsibility. 3 We explained how the lodestar amount is determined and noted how some of the code factors were integrated into this calculation. With regard to contingency fee matters, we also emphasized that "[o]nce the court arrives at the lodestar figure, it may add or subtract from the fee based upon a 'contingency risk' factor and the 'results obtained.' " 472 So.2d at 1151 (emphasis added). We also explained that, in personal injury cases, "[w]hen the prevailing party's counsel is employed on a contingent fee basis, the trial court must consider a contingency risk factor when awarding a statutorily-directed reasonable attorney fee." Id. (emphasis added). In view of the Fifth District Court of Appeal's holding in the instant case, we emphasize that the words "must consider" do not mean "must apply," but mean "must consider whether or not to apply" the contingency fee multiplier.

The federal courts developed the lodestar method of determining attorney's fees to apply to a special class of cases, in which Congress had enacted fee-authorizing statutes to pay fees to prevailing plaintiffs for the purpose of obtaining public enforcement of Congressional acts. The lodestar method was not originally created to apply to personal injury cases. When we adopted the lodestar approach in Rowe, we were applying it to personal injury malpractice actions in which the legislature had determined that the prevailing party, plaintiff or defendant, was entitled to attorney's fees. In adopting the lodestar approach in Rowe, we realized that, without the statute, plaintiff's counsel ordinarily would enter into a contingency fee arrangement with his client, entitling counsel to receive a percentage of any amount recovered, and defendant's counsel generally would receive a fee from his client based on a fixed hourly rate.

In Rowe, we established two caps on the amount of attorney's fees to be awarded. First, we indicated that "because the party paying the fee has not participated in the fee arrangement between the prevailing party and that party's attorney, the arrangement must not control the fee award." Id. However, we qualified that statement and effectively established a cap on the fee by holding that "in no case should the court-awarded fee exceed the fee agreement reached by the attorney and his client." Id. at 1151. Second, we set limitations on the contingency fee multiplier, stating: "[I]n contingent fee cases, the lodestar figure calculated by the court is entitled to enhancement by an appropriate contingency risk multiplier in the range from 1.5 to 3." Id. The factors and caps ensured that the fee would not be significantly different in amount than it would be absent the statutory provision. See, e.g., Perez-Borroto v. Brea, 544 So.2d 1022 (Fla.1989); Miami Children's Hosp. v. Tamayo, 529 So.2d 667 (Fla.1988). There clearly was no intent on the part of the legislature to increase the amount of attorney's fees in this type of action for the prevailing party's counsel.

Subsequent to our Rowe decision, the United States Supreme Court, in Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 483 U.S. 711, 107 S.Ct. 3078, 97 L.Ed.2d 585 (1987), unanimously rejected that portion of the lodestar approach pertaining to the contingency fee multiplier. While the Court rejected this method of enhancing a statutorily authorized attorney's fee, the justices were unable to agree on how the risk of nonpayment should be factored in to determine reasonable attorney's fees. In a plurality opinion, four justices stated that "we are unconvinced that Congress intended the risk of losing a lawsuit to be an independent basis for increasing the amount of any otherwise reasonable fee for the time and effort expended in prevailing." Id. at 725, 107 S.Ct. at 725. Four other justices dissented, indicating that Congr...

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