Truman J. Costello, P.A. v. City of Cape Coral

• Decision Date: 05 March 1997
• Docket Number: No. 96-00681,96-00681
• Parties: 22 Fla. L. Weekly D621 Truman J. COSTELLO, P.A., and Robert N. Reynolds, P.A., Appellants, v. The CITY OF CAPE CORAL, Florida, a municipal corporation existing under the laws of the State of Florida, Appellee.
• Court: Florida District Court of Appeals

Page 48

693 So.2d 48

22 Fla. L. Weekly D621

Truman J. COSTELLO, P.A., and Robert N. Reynolds, P.A., Appellants, v. The CITY OF CAPE CORAL, Florida, a municipal corporation existing under the laws of the State of Florida, Appellee.

No. 96-00681.

District Court of Appeal of Florida,

Second District.

March 5, 1997.

Rehearing Denied May 7, 1997.

Truman J. Costello of Costello, Sims & Royston, Fort Myers; and Robert N. Reynolds of Robert N. Reynolds, P.A., Winter Park, for Appellants.

Gerald W. Pierce of Henderson, Franklin, Starnes & Holt, P.A., Fort Myers, for Appellee.

BLUE, Judge.

Truman J. Costello, P.A., and Robert N. Reynolds, P.A., (Costello/Reynolds) appeal the final judgment entered in their action claiming attorney's fees from the City of Cape Coral (City) based on the "common fund doctrine." Because the trial court erred in finding as a matter of law that there was no fund to support the claim under the common fund doctrine, we reverse the final judgment for the City and the order awarding fees to the City based on section 57.105(1), Florida Statutes (1993).

The common fund doctrine, in its simplest terms, provides that when litigation contributes substantial benefits to persons not party to the litigation and a fund is established from which the benefits will be paid, the persons responsible for gaining the benefit should be entitled to costs and attorney's fees paid from the fund. The common fund doctrine found its way into our jurisprudence as a result of a trilogy of cases from the United States Supreme Court. The first of these cases is Trustees v. Greenough, 105 U.S. 527, 26 L.Ed. 1157 (1881), which gave birth to the common fund doctrine. In Greenough, one of a number of bondholders brought an action against the trustees for the bondholders claiming improprieties. As a result of the litigation, money was recovered that benefited all of the bondholders in the same class as the plaintiff. The successful litigator made a claim for costs and attorney's fees that the individual bondholder, as plaintiff, had incurred. Because the individual bondholder had, through his efforts, created a fund which benefited others who had incurred no expense, the Supreme Court ruled that it was equitable for the fund to be charged with the costs and attorney's fees incurred in creating the fund.

The second case in the development of the doctrine is Central Railroad & Banking Co. of Georgia v. Pettus, 113 U.S. 116, 5 S.Ct. 387, 28 L.Ed. 915 (1885). This case approved the decision in Trustees v. Greenough and extended the principle to allow attorneys to claim fees in their own right rather than through the client for whom a common fund was created.

The third case, and the one which appears to have firmly established the common fund doctrine, is Sprague v. Ticonic National Bank, 307 U.S. 161, 59 S.Ct. 777, 83 L.Ed. 1184 (1939). This case recognized that courts with equity jurisdiction have the right and the power to require those benefited to share in the costs of the litigation which benefited them. The following language from Sprague is appropriate to the question we are required to decide:

Whether one professes to sue representatively or formally makes a fund available for others may, of course, be a relevant circumstance in making the fund liable for his costs in producing it. But when such a fund is for all practical purposes created for the benefit of others, the formalities of the litigation--the absence of an avowed class suit or the creation of a fund, as it were, through stare decisis rather than through a decree--hardly touch the power of equity in doing justice as between a party and the beneficiaries of his litigation. As in much else that pertains to equitable jurisdiction, individualization in the exercise of a discretionary power will alone retain equity as a living system and save it from sterility. In the actual exercise of the power to award costs 'as between solicitor and client' all sorts of practical distinctions have been taken in distributing the costs of the burden of the litigation. And so, the circumstances under which the petitioner enforced the fiduciary obligation of the Ticonic Bank--the relation of its vindication to beneficiaries similarly situated but not actually before the court, as well as the interest of the common creditors where the funds of the bank are not sufficient to pay them in full, and doubtless other considerations--must enter into the ultimate judgment of the District Court as to the fairness of making an award, or the extent of such award, 'as between solicitor and client' in this case. In any event such allowances are appropriate only in exceptional cases and for dominating reasons of justice. But here we are concerned solely with the power to entertain such a petition.

307 U.S. at 166-67, 59 S.Ct. at 780 (footnotes omitted).

The doctrine was first recognized in Florida in Tenney v. City of Miami Beach, 152 Fla. 126, 11 So.2d 188 (Fla.1942). In Tenney, Miami Beach had imposed special assessment liens on lots of 232 owners abutting Collins Avenue. These liens were attacked by Tenney as being illegal and, therefore, void. He successfully defeated the liens and then petitioned the court to be allowed attorney's fees from each of the persons benefited by the litigation. The trial court first ordered fees to be paid by each of the benefited property owners, but later entered an amended decree finding it had no jurisdiction over those property owners who had not contracted with the attorney who had brought the litigation. The Florida Supreme Court reversed the trial court's order which found no jurisdiction and reinstated the decree requiring all property owners to share in the costs and fees. Support for this decision was found in the United States Supreme Court cases set forth above. In requiring the fees to be paid, the court had this to say:

The hard and fast rule of the common law requiring the parties to a cause to be formally before the court has never been a part of the chancery practice when nothing more is involved than a decree distributing the costs of the litigation. In equity, this is often a practical matter as much as a legal one and all sorts of distinctions have been observed. Daniel's Chancery Pleading and Practice, 2nd Ed., 1434-1440; 2 Street Federal Equity Practice, paragraphs 2033 to 2048. In the case at bar, Tenney sued as the representative of more than 170 of the 232 lot owners affected. His suit resulted in liberating their lands from void liens imposed by the City. To hold that those likewise affected as Tenney cannot be required to bear their portion of the burden is to admit that equity practice is effete and has not kept pace with the factual...