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Award of Attorney Fee Multiplier Limited to Rare Circumstances * Settlement with Insured Not a Confession of Judgment Unless Insured was Forced to File Suit * Insurer Has No Duty to Enter Into a Consent Judgment in Excess of the Policy Limits

December 17, 2015

 Dear Ladies and Gentlemen:

The Florida District Courts of Appeal have recently issued several opinions concerning coverage that may be of interest to you.


 In Federated Nat. Ins. Co. v. Joyce, the Fifth District Court of Appeal reversed the application of a multiplier to a lodestar figure award of attorneys’ fees, holding that multipliers are to be used only in rare exceptions, and concluding that the underlying facts of the matter did not constitute such an exception.

In State Farm Florida Ins. Co. v. Lime Bay Condo, Inc., the Fourth District Court of Appeal reversed a final judgment and an award of attorneys’ fees entered by the trial court after the trial court found that State Farm’s settlement with its insured after the insured brought suit against State Farm for breach of contract constituted a confession of judgment. The Fourth District Court of Appeal held that the confession of judgment rule applies only when the insured is forced to bring suit to enforce its contract, which was not supported by the facts of the case.

In Kropilak v. 21st Century Ins. Co., the United States Court of Appeal for the Eleventh Circuit affirmed the district court’s ruling to exclude all evidence related to the claimant’s proposal the insurer to enter into a consent judgment, holding that, similarly to Cunningham agreements, an insurer has no duty to enter into consent judgment in excess of the policy limits.

  1. Federated Nat. Ins. Co. v. Joyce, 5D15-1210, 2015 WL 7302516 (Fla. 5th DCA 2015)


This matter involved an appeal from an award of attorneys’ fees to appellees William and Judith Joyce (collectively “the Joyces’”) in the underlying action.  The underlying action arose after Federated National Insurance Co. (“Federated”) denied a homeowners policy claim from their insureds, the Joyces.  The denial was based on an alleged material misrepresentation in the Joyces’ homeowners insurance application. Specifically, Federated argued that the Joyces had failed to disclose two previous insurance claims at the time of their application. However, early in discovery, it came to light that the Joyces had actually disclosed the prior claims.[1]

Ultimately, Federated acknowledged the error, and the parties executed a settlement agreement for $23,500, exclusive of attorney’s fees.  The Joyces subsequently pursued attorneys’ fees and were awarded $76,300.  The award was based on the “lodestar figure” and a multiplier by a factor of two.


The Fifth District Court of Appeal affirmed the lodestar figure award to the Joyces, but reversed on the application of the multiplier. The court cited Florida Patient’s Compensation Fund v. Rowe, which held that there exists “a strong presumption that the lodestar represents the reasonable fee.” Florida Patient’s Comp. Fund v. Rowe, 472 So. 2d 1145, 1151-1152 (Fla. 1985).  However, the court opined, citing State Farm Fla. Ins. Co. v. Alvarez, 175 So.3d 352 (Fla. 3d DCA 2015), that multipliers of the lodestar figure are to be used only as rare exceptions to the rule in cases which involve extremely complex issues.  The court reasoned:

This was not a complicated case. Either the Joyces had falsified their insurance application, or Federated had made an error. There were no esoteric legal issues or complicated factual disputes to resolve. As one would anticipate given today’s legal market, there was no evidence the Joyces had any difficulty obtaining counsel to handle this matter. Indeed, it took only one phone call for the Joyces to secure counsel.

As such, the Fifth District Court of Appeal concluded that the Joyces’ case was not one of those rare or exceptional cases in which the award of a multiplier was appropriate.  Thus the lodestar figure should have been awarded without a multiplier.

  1. State Farm Florida Ins. Co. v. Lime Bay Condo, Inc., 4D13-4802, 2015 WL 7273414, (Fla. 4th DCA 2015)


This action involved an appeal by State Farm of the final summary judgment entered in favor of Lime Bay Condominium, Inc. (“Lime Bay”) in a breach of contract action.  State Farm issued an insurance policy covering the condominiums owned by Lime Bay Condominium, Inc.  In October 2005, as a result of Hurricane Wilma, Lime Bay’s condominiums sustained roof damage and Lime Bay filed a claim with State Farm.  During the loss adjustment process, Lime Bay obtained a proposal to replace all the condominium buildings’ roofs for approximately $1.5 million. However, Lime Bay never provided State Farm with any evidence that the roofs needed to be replaced, only an estimate for replacement.

After several inspections, State Farm determined that the roofs in question needed only to be repaired, not replaced. In September 2006, after making adjustments for the policy deductible, State Farm paid Lime Bay $6,940.46 for the roof repairs.

On February 9, 2007, Lime Bay filed a Civil Remedy Notice alerting State Farm that it intended to file suit. State Farm responded with a demand for an appraisal pursuant to the appraisal provision in the insurance contract. Lime Bay responded that it would not participate in the appraisal process until State Farm provided proof of compliance with the mediation notification requirements of § 627.7015(2), Florida Statutes (2012).[2]

On March 7, 2007, Lime Bay filed a breach of contract action against State Farm without first participating in the appraisal process. Subsequently, State Farm moved to abate the case pending the completion of appraisal, which was granted by the court.

During appraisal, the appraiser issued an award in the amount of approximately $1.1 million, before deductible. After applying deductibles and the previous payment, State Farm paid Lime Bay $608,141.41.  Lime Bay then filed a motion to confirm the appraisal award, as well as a motion for final judgment and attorney’s fees, arguing that State Farm’s payment of the appraisal award after Lime Bay filed suit was a confession of judgment. State Farm filed a motion for summary judgment, arguing that Lime Bay was not entitled to a confirmation of the appraisal award because the claim had been fully resolved through the parties’ contractual appraisal process and State Farm had paid the appraisal award; thus, State Farm did not breach the contract.

The trial court denied State Farm’s motion and granted Lime Bay’s motion for final judgment and attorneys’ fees. The court found that State Farm failed to prove that it complied with the mediation notification requirements of § 627.7015 and that State Farm’s voluntary payment after Lime Bay filed suit was a confession of judgment as a matter of law.


On appeal, State Farm argued that the final judgment ruling should be reversed because Lime Bay breached the insurance contract by filing suit after State Farm invoked the appraisal provision of the contract policy, which states in pertinent part:



  1. Appraisal.

If we and you disagree on the value of the property or the amount of loss, either may make written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser. Each will notify the other of the selected appraiser’s identity with 20 days after receipt of the written demand for appraisal.


  1. Legal Action Against Us.

No one may bring legal action against us under this insurance unless:

  1. there has been full compliance with all of the terms of this insurance.

However, the Fourth District Court of Appeal disagreed with State Farm’s argument, holding that “[t]he contract does not clearly require the parties to complete appraisal as a condition precedent to filing suit.”  Further, the court agreed with Lime Bay’s argument that it was not required to participate in the appraisal process because State Farm failed to comply with §627.7015(2) by not notifying Lime Bay of its right to mediate at the time Lime Bay filed its claim.

Nevertheless, the Fourth District Court of Appeal disagreed with the trial court’s finding that State Farm’s voluntary payment of the appraisal award constituted a confession of judgment, holding that “an insurer’s payment of appraisal award is only a confession of judgment only if the insured was forced to file the lawsuit to resolve the claim.”  While Lime Bay argues that State Farm’s failure to resolve the claim for eighteen months constituted breach of contract, State Farm argued that it had properly followed the claims process, conducting multiple estimates during that period of time.  As such, the Fourth District Court of Appeal reversed and remanded the trial court’s entry of final judgment, finding that genuine issue of material fact exists, as the record does not clearly indicate “whether State Farm knew that Lime Bay disputed the amount of loss.”

  • Kropilak v. 21st Century Ins. Co., 25 Fla. L. Weekly Fed. C 1802 (11th Cir. 2015)


This action involved an appeal from a judgment in favor of 21st Century Insurance Company (“21st Century”) on a claim against it for bad faith. On October 7, 2008, Robert Kropilak (“Kropilak”) and Nicole Collins (“Collins”) were involved in a vehicle collision in Pasco County, Florida, after Collins improperly made a left-hand turn in front of Kropilak’s motorcycle. Kropilak was transported by helicopter to a hospital for injuries he sustained. Collins remained at the scene of the accident where she was cited by a responding police officer.

Collins was insured under an automobile liability insurance policy issued by 21st Century. Her policy had a liability limit of $10,000 per person and $20,000 per accident. On the day the crash occurred, Collins reported it to 21st Century. At the time, she did not know Kropilak’s identity.

Two days after the crash, Tracy Schwager (“Schwager”), a 21st Century claims adjuster, sent a letter to Collins introducing herself and reiterating the policy limits. Although Schwager was notified that a policy report was available to be picked up on October 14, 2008, 21st Century did not obtain the report until October 20, 2008, when Kropilak’s attorney mailed a copy of it to 21st Century along with a letter of representation requesting insurance information.  It was at this time that 21st Century first learned of Kropilak’s identity.

On October 20, 2008, the hospital where Kropilak was being treated for his injuries faxed Schwager a hospital lien in the amount of $33,880. Kropilak received a copy of the lien around the same time. 21st Century responded to Kropilak’s attorney in a letter dated November 10, 2008. It provided the insurance information requested and asked the attorney to contact Schwager if she was open to discussing the possibility of settlement. Schwager thereafter learned of the extent of Kropilak’s injuries from State Farm Insurance Company, through which Kropilak held uninsured motorist coverage.

Unsolicited, on November 13, 2008 (37 days after the accident) 21st Century mailed to Kropilak’s attorney a check for $10,000, the amount of Collins’ policy limits, in settlement of Kropilak’s claim. Kropilak’s attorney received the check on November 17, 2008. Kropilak refused to accept the policy limits and did not cash the check.

The next day, November 18, 2008, Kropilak filed suit against Collins in a Florida state court. Collins was served with the complaint on February 6, 2009. 21st Century retained an attorney, Jeff Worman (“Worman”), to represent Collins. On March 18, 2009, Worman advised 21st Century in writing that Kropilak’s “damages well exceed [Collins’] policy limits of $10,000.” A jury verdict in Kropilak’s suit against Collins, Worman predicted, “could reasonably be expected to fall within [$]150,000 and $300,000.”

21st Century followed up on several occasions with Kropilak’s attorney to inquire about the $10,000 check mailed in November 2008. On December 11, 2008, Schwager telephoned Kropilak’s attorney about the settlement offer but received no response. 21st Century again contacted Kropilak’s attorney on April 1, 2009. It noted that the $10,000 check had not been cashed and asked, “[w]ill you advise your intention with the check?”

On March 5, 2010, over a year and three months after 21st Century had tendered the policy limits, Kropilak’s attorney sent Worman a “settlement opportunity” letter. The letter began: “This correspondence will address the claims conduct issues as regarding [21st Century’s] failure to settle this claim.” The letter went on to propose an agreement between 21st Century, Collins, and Kropilak.

The agreement, according to Kropilak’s attorney, would protect Collins “from financial ruin, but preserve all issues regarding [21st Century’s] claims conduct.”  Specifically, Kropilak’s lawyer offered a settlement with a consent judgment against Collins for $150,000. The parties would then “look solely to the determination of [21st Century’s] liability for the recovery of damages over the policy limits.” 21st Century could defend “in the face of a known reasonable amount of harm that was done to [Collins] by a breach of the duties of good faith, if any.” Under such an agreement, the letter stated, the insurance company “could settle the personal exposure of [Collins] without hurting [21st Century’s] interests. After all, we all know that a lawsuit against [21st Century] is going to be filed; it is just a matter of when and for how much.” The letter continued:

Obviously, if [21st Century] has done nothing wrong, then the interest of [21st Century] is tremendously benefitted by our proposal to a consent judgment and covenant not to execute. Specifically, [21st Century] can obtain protection of the insured, avoid litigation expenses in defending the current case and promptly move forward to defend [21st Century’s] claims conduct.

The offer remained open for 30 days.

Worman advised Collins of the settlement proposal contained in the letter. He also forwarded the letter to David Zawrotny (“Zawrotny”), a 21st Century adjuster assigned to the matter. According to his deposition testimony, Zawrotny believed that the $150,000 judgment amount proposed by Kropilak’s counsel was “in the reasonable range” of the value of Kropilak’s lawsuit and that Kropilak’s pain and suffering injury values alone were likely between $120,000 and $150,000. Worman subsequently prepared a pre-trial report for Zawrotny in which he predicted that Kropilak’s lawsuit would result in a directed verdict in Kropilak’s favor on “liability for the crash, causation of injury, and permanency of that injury” and a potential verdict of between $150,000 and $200,000. Nonetheless, 21st Century did not accept the proposal.

Kropilak’s negligence lawsuit against Collins thereafter proceeded to trial. On August 6, 2010, a jury returned a verdict in Kropilak’s favor in the amount of $173,097.07. In partial satisfaction of this judgment, 21st Century paid Kropilak the $10,000 policy limits and $2,500 for property damage. This left Collins personally liable for a balance of $160,597.07.

Kropilak and Collins then entered into an agreement concerning the unpaid balance of the judgment against Collins. Collins assigned to Kropilak the proceeds she might receive from any action against 21st Century “arising out of, or in any way relating to, the events which [were] the subject of” Kropilak’s negligence action against her. Collins further agreed to cooperate with Kropilak in pursuing such an action.

Together, Kropilak and Collins initiated a bad faith action in state court. They sought the amount of the underlying judgment in excess of Collins’ policy limits on the ground that 21st Century had acted in bad faith toward Collins, its insured. They articulated two theories of bad faith. First, they asserted a Powell theory, that 21st Century had improperly “failed to tender its policy limits to settle the claims of [Kropilak] against [Collins] within a reasonable period of time under the circumstances.” See Powell v. Prudential Prop. & Cas. Ins. Co., 584 So.2d 12 (Fla.Dist.Ct.App.1991). Second, they alleged that 21st Century had “unreasonably refused to settle under” the terms proposed by Kropilak’s counsel in the March 5, 2010 settlement opportunity letter.

21st Century removed the case to the United States District Court for the Middle District of Florida on the basis of diversity of citizenship pursuant to 28 U.S.C. § 1332. On the first day of trial, the District Court granted a motion in limine filed by 21st Century and excluded any evidence concerning the March 5, 2010 settlement opportunity letter sent by Kropilak’s attorney to 21st Century. It accepted 21st Century’s argument that “the proposed agreement bears no relevance on the issues, and that any potential relevance is substantially outweighed by the danger of unfair prejudice.”  In accordance with the District Court’s order, the jury heard evidence only on the Plaintiffs’ Powell theory. While the jury found that 21st Century had acted in bad faith in failing to tender the policy limits until 37 days after the collision, it also found in favor of 21st Century on its affirmative defense that there was no realistic possibility of settling Kropilak’s claim within the policy limits. Accordingly, the court entered judgment in favor of 21st Century.


On appeal, Kropilak and Collins did not challenge the verdict against them on the Powell theory of liability. Instead, they argue that the duty of good faith imposed upon insurers under Florida law includes a duty to enter into settlement agreements like the one proposed by Kropilak’s counsel in his March 2010 letter.  Thus, they argued that the judgment in 21st Century’s favor must be reversed because the District Court improperly excluded evidence related to the March 2010 settlement opportunity letter.

21st Century argued that the March 2010 settlement opportunity letter was the equivalent of a Cunningham agreement, referring to Cunningham v. Standard Guaranty Insurance Co., 630 So.2d 179 (Fla.1994), wherein the parties entered into an agreement pursuant to which the injured individuals would try a bad-faith action against the at-fault driver’s insurance company before trying the underlying negligence claim.  21st Century asserted, therefore, that is had no duty to accept the proposed agreement. See Berges v. Infinity Insurance Co., 896 So.2d 665, 668–69 (Fla.2004) (holding that an insurer has no duty to enter into a Cunningham agreement).

Kropilak and Collins argue that the proposed agreement was not an a Cunningham agreement, but rather an “offer to settle the claims against Collins within the $10,000 policy limits,” and that “[t]he preservation of a bad faith claim against 21st Century for liability above policy limits does not negate the opportunity for 21st Century to have fully settled the claims within policy limits.”

Ultimately, the United States Court of Appeals for the Eleventh Circuit affirmed the district court’s ruling, holding:

21st Century offered the policy limits within a few weeks after the accident and before any settlement demand was made. It is hard to fathom how any reasonable juror could find that 21st Century acted in bad faith under the circumstances presented in the record… In sum, an insurer owes no duty under Florida law to enter into a so-called Cunningham agreement and likewise owes no duty to its insured to enter into a consent judgment in excess of the limits of its policy. The District Court was therefore correct in precluding Kropilak and Collins from introducing evidence of the March 5, 2010 settlement opportunity letter in support of their bad-faith claim.

We hope you find the above cases helpful and insightful.  Should you have any questions with respect to the foregoing, please do not hesitate to contact the undersigned at your earliest convenience.

[1] The Joyces produced a copy of their original insurance application, which properly disclosed the prior claims. However, Federated’s agent had incorrectly transmitted the application data to Federated without the prior claims information.

[2] Section 627.7015(7) provides that the insured is not required to participate in the appraisal process until the insurer complies with subsection (2), which states: “the insurer shall notify the policyholder of its right to participate in the mediation program under this section.”


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