News Room

News Room

Contingency Fee Multiplier in Calculating Attorney’s Fees Denied in Coverage Situation * Ambiguity in Offeror’s Proposal For Settlement Reverses Verdict * Policy’s Failure to Provide Uninsured Motorist Coverage Did Not Conflict with Florida’s Underinsured Vehicles Statute

                                                             September 29, 2016

Ladies/Gentlemen:

         This month we would like to share with you some recent opinions of the Florida District Courts of Appeal which may be of interest to you.

            In Florida Peninsula Insurance Company v. Wagner, the Second District Court concluded that the circuit court erroneously applied a contingency fee multiplier in calculating the attorney’s fees award following a judgment in the insureds’ favor.

            In Nunez v. Allen, the Fifth District Court addressed ambiguity of an offeror’s proposal for settlement made after a vehicle accident.

           In State Farm v. Smith, the Second District Court found that a policy’s failure to provide uninsured motorist coverage did not conflict with the Florida statute providing that underinsured vehicles were to be considered uninsured where vehicle was insured under automobile insurance policy’s liability provisions.

Florida Peninsula Insurance Company v. Wagner – 2016WL3065065, Second DCA, June 1, 2016 (Civil Procedure – attorney’s fees – insurance coverage) (subject to review)

Facts & Procedural History

            After a dispute arouse with Florida Peninsula Insurance Company (“insurer”) concerning coverage under Rhonda and Mark Wagners’ (“insureds”) policy, the insureds retained a law firm under a contingency fee agreement.  The firm capably represented the insured throughout litigation and subsequently prevailed on their declaratory relief claim.  A subsequent jury trial rendered a verdict in favor of the insured for all of their coverage claims in the amount of $71, 123.79.  The trial court’s final judgement also awarded attorney’s fees in the lodestar amount of $243,755.00 as well as applied a 2.0 multiplier to the loadstar amount.  Florida Peninsula Insurance Company petitioned for the District Court of Appeal to review the trial court’s order alleging that the court’s decision to apply a multiplier to an attorney’s fee award was an abuse of discretion.

Appellate Proceeding

            The appellate court found merit in Florida Peninsula Insurance Company’s argument that the circuit court erroneously applied a multiplier to the attorney’s fees awarded to the Wagner’s and reversed the order accordingly.  The Second District considered the three factors mentioned in the Supreme Court case of Standard Guar. Ins. Co. v. Quanstrom, 555 So.2d 828, 834 (Fla. 1990) when determining whether or not the circuit court properly awarded a fee multiplier.[1]  The court concluded that there was no showing or finding that without the prospect of a multiplier to an otherwise reasonable fee award, the Wagners would have had difficulty finding competent counsel to represent them in the present insurance coverage dispute.  In other words, according to the Second District, there was no evidence that the Tampa Bay legal market, could not provide competent counsel for the Wagners’ case at the prevailing hourly rates.

Nunez v. Allen – 2016WL3452511, Fifth DCA, January 20, 2016 (Insurance-proposal for settlment) (subject to review)

Facts & Procedural History

            This case resulted from a motor vehicle accident involving Riley Allen (“Mr. Allen”) and Gabriel Nunez.  At the time of the incident Gabriel Nunez was operating a vehicle owned by his father, Jairo Nunez.  Mr. Allen sought damages from both Gabriel Nunez for negligently operating a vehicle and Jairo Nunez under the theory of vicarious liability.  Mr. Allen served identical proposals for settlement on each defendant, except that their respective names were substituted in place of the others on each proposal for settlement.  The proposals made no mention of both defendants but instead addressed each defendant individually.  Paragraph five of each proposal for settlement read: “This proposal for settlement is inclusive of all damages claimed by Plaintiff, Riley Allen, including all claims for interest, costs and expenses and any claims for attorney’s fees.”  Following a favorable bench trial, Mr. Allen moved to enforce the proposal for settlement due to the fact that the award exceeded the proposals for settlement by more than twenty-five percent.  The Nunez’ moved to strike the proposals for settlement arguing that they were ambiguous as to whether acceptance and payment of one of the proposals for settlement would resolve the case against both defendants or just one of them.  The trial court ultimately denied the Nunez’ motion to strike determining that the proposals for settlement were valid and enforceable.

Appellate Proceeding

            The Appellate Court reversed the lower court’s holding, finding the language in paragraph five of the proposals for settlement ambiguous and invalid.  The court reasoned that the language in the proposals for settlement raised a legitimate question as to whether acceptance resolved Mr. Allen’s claim for “all damages” against the named defendant or resolved the entire claim against both Gabriel and Jairo Nunez.  The Court stated that that this discrepancy could reasonably affect the decision to accept the proposal because one defendant might want to accept the proposal directed to it only if it knows for certain that its payment would result in the release of both defendants as would be the case where one defendant is the owner of the vehicle and the other defendant is the only driving the vehicle.

State Farm v. Adam Smith – 2016WL3127513, Second DCA, June 3, 2106 (Coverage-Uninsured motorist’s policy) (subject to review)

Facts & Procedural History

            Adam Smith (“Mr. Smith”) was injured in a motor vehicle accident.  At the time of the accident, Mr. Smith was driving a vehicle purchased by James and Elizabeth Motzenbecker and titled in the name of Elizabeth Motzenbecker.  The Motzenbeckers gave the vehicle to their daughter, Chelsea Ackermecht (“Ms. Ackermercht”), for her own use.  At the time of the accident, Mr. Smith was driving Ms. Ackermecht’s vehicle, with her permission, while she was a passenger in the vehicle.  The Motzenbeckers and Ms. Ackermecht were insured by State Farm under a policy issued to Elizabeth Motzenbecker that extended both liability and uninsured motorist coverage (the “Motzenbecker policy”).  Mr. Smith was insured under the liability and uninsured motorist provisions of a separate policy that State Farm issued to Mr. Smith’s mother (the “Smith policy”). The Smith policy extended liability coverage to Mr. Smith for his use of his mother’s vehicle as well as for any other vehicle that he used but did not own, including the vehicle at issue.

            Mr. Smith filed an action against the Motzenbeckers and Ms. Ackermecht on the theory that they negligently failed to maintain the brakes on the car.  Mr. Smith then amended his complaint to include a claim against State Farm for uninsured motorist benefits under the Smith policy.  State Farm counterclaimed for a declaration that it was not liable because the Motzenbeckers’ car was not an uninsured motor vehicle as defined by the Smith policy and, as a result, Mr. Smith by definition was not entitled to coverage under the uninsured motorist provisions of the Smith policy.

            State Farm moved for summary judgment on its counterclaim arguing that the uninsured motorist provisions of the Smith policy did not extend coverage to Mr. Smith in this case because the Smith policy defined the term “uninsured motor vehicle” to exclude any motor vehicle “insured under the liability coverage of this policy” and that the Motzenbecker’s car was insured under that coverage because Mr. Smith was driving it at the time of the accident.  State Farm also asserted that the Motzenbeckers’ car was deemed insured under the liability coverage of the Smith policy because the liability provisions of that policy had afforded bodily injury liability coverage to Mr. Smith for Ackermecht’s claim arising out of Mr. Smith’s operation of the vehicle. The trial court disagreed, and held that the claimed exclusion did not apply to Mr. Smith under the facts of the case, and denied the motion.

            The trial court later entered a final judgment against State Farm on the counterclaim and set Mr. Smith’s claims against the Motzenbeckers and Ms. Ackermecht for a jury trial. The jury found liability and ultimately apportioned ninety-two percent of the fault to the Motzenbeckers and Ms. Ackermecht and eight percent to Mr. Smith.  Mr. Smith was awarded damages of $214,860.

Appellate Proceeding

          State Farm appealed the trial court’s decision that the Smith policy’s exclusion of vehicles insured under the liability provisions of the policy from the definition of “uninsured motor vehicle” did not apply in the present case.  State Farm argued that the exclusion applied under the plain language of the policy.

             The Court first determined whether the provision governing vehicles insured under the liability coverage of the Smith policy unambiguously precluded uninsured motorist coverage for Mr. Smith’s injuries.  The Smith policy extended liability coverage applicable to “your car” to use by insured of non-owned car, which was defined as “car not owned, registered or leased by” insured but in insured’s lawful possession at time that insured used it.  After examining the subject policy, the court determined that the vehicle Mr. Smith was driving with its owner’s permission at time of accident was insured under liability coverage of his mother’s automobile insurance policy, and thus, the policy did not extend uninsured motorist coverage to the accident.

          Having determined that the policy unambiguously failed to provide uninsured motorist coverage to Mr. Smith, the Court subsequently considered whether its failure to do so violated Florida statute section 627.727, which establishes that underinsured vehicles were to be considered uninsured.  The Appellate Court held that such policy did not violate Florida statute because the Motzenbeckers’ car was an insured vehicle under the Smith policy when it was used by Mr. Smith and thus, the statute did not otherwise require that State Farm extend uninsured motorist coverage to Mr. Smith.  The court came to its decision by determining that a vehicle insured under an automobile insurance policy’s liability provisions, will not simultaneously be deemed uninsured under the Florida statute providing that underinsured vehicles were to be considered uninsured for purposes of uninsured motorist coverage.  This is true even where a policy’s liability provisions do not extend coverage to a specific plaintiff and accident at issue under given facts.

  [1] The factors considered include: (1) whether relevant market requires contingency fee multiplier to obtain competent counsel; (2) whether attorney was able to mitigate risk of nonpayment in any way; and (3) whether any factors set forth in Florida Patient’s Compensation Fund v. Rowe are applicable, especially amount involved in litigation, results obtained, and type of fee arrangement between attorney and client.

 

Thank you for the opportunity to share this update with you.

Sincerely,

John Bond Atkinson

 Daniel Hentschel