In a case stemming from a claim for water damage, a divided Florida Supreme Court on Thursday ruled that an attorney was entitled to receive stepped-up fees for representing homeowners against an insurance company.
The court’s majority overturned a decision by the 5th District Court of Appeal that would have prevented attorney Tracy Markham from receiving what is known as a “contingency fee multiplier” for work representing St. Johns County homeowners William and Judith Joyce in their claim dispute with Federated National Insurance Co.
Justice Barbara Pariente, writing for the court majority, said the appeals court had improperly ruled that such multipliers are only available in “rare” and “exceptional” circumstances. Pariente wrote that the possibility of increased fees can be important in getting attorneys to take cases on a contingency basis.
“After reviewing this (Supreme) Court’s precedent regarding contingency fee multipliers, it is clear that this court has never limited the use of contingency fee multipliers to only `rare’ and `exceptional’ circumstances,” Pariente wrote in a 30-page opinion joined fully by Chief Justice Jorge Labarga and Justices R. Fred Lewis and Peggy Quince.
Justice Ricky Polston agreed with the outcome but did not sign on to the majority opinion.
Justice Charles Canady, in a dissent joined by Justice Alan Lawson, wrote that the majority’s decision “points unmistakably to the need for a full re-examination of this (Supreme) Court’s multiplier jurisprudence.” He said the increased fees in the case were not justified.
“Despite the fact that petitioners’ attorney may be highly qualified, no public policy supports the windfall being awarded to her in this case,” Canady wrote.
The underlying legal dispute began after Federated National Insurance Co. denied coverage for water damage to the Joyces’ home. The Joyces hired Markham on a contingency-fee basis because they could not afford to hire an attorney at an hourly rate, the Supreme Court opinion said.
The case was settled after months of litigation, with agreement that the Joyces could recover attorney fees. The Supreme Court described a two-step process in which a judge calculated that Markham should be paid a basic amount of $38,150 because of the amount of hours worked and a reasonable hourly rate. The judge then applied a contingency-fee multiplier that doubled the total to $76,300, according to the Supreme Court.
The insurance company appealed the fees. While the 5th District Court of Appeal upheld the basic amount of $38,150, it rejected the contingency-fee multiplier.
But the Supreme Court majority Thursday took issue with the appeals court’s reasoning and argued against the notion that the use of the contingency-fee multiplier would lead to a “windfall” for the attorney.
“We disagree that the possibility of receiving a contingency fee multiplier leads to a `windfall,’” Pariente wrote. “While the attorney for the insurer charges and receives an hourly rate regardless of whether the defense is successful, the insured’s attorney bears the risk of never being compensated for the number of hours spent litigating the case. This risk, among other factors, is what entitles the attorney to seek, and the trial court to consider, the application of a contingency fee multiplier.”
Republished with permission of the News Service of Florida.