Insurance Coverage & Bad Faith Case Law Update – The Florida Supreme Court Holds the Application of a Contingency Fee Multiplier to an Award of Attorney’s Fees to a Prevailing Party is not Limited to “Rare” and “Exceptional” Circumstances

November 15, 2017 by on News

In Joyce v. Federated National Insurance Company, No. SC16-103 (Fla. Oct. 19, 2017), the Court addressed the issue regarding whether a contingency fee multiplier can be applied to an attorney’s fee award to a prevailing party only in “rare” and “exceptional” circumstances.  The trial court applied a 2.0 contingency fee multiplier to the award of attorney’s fees to the insureds that prevailed in action against their homeowners’ insurance carrier.  The insureds sought to recover fees under section 627.428, Florida Statutes.  Relying on Standard Guar. Ins. Co. v. Ouanstrom, 555 So. 2d 828 (Fla. 1990), the trial court found that the relevant market required a contingency fee multiplier for the insureds to obtain competent counsel, that the insureds’ attorney could not have mitigated the risk of nonpayment, that the case was a complex commercial case, and that the likelihood of success at the outset was even at best.

The insurer appealed the use of the contingency fee multiplier.  On appeal, the Fifth District reversed the trial court’s use of a contingency fee multiplier and held that a contingency fee multiplier should only be applied in “rare” and “exceptional” circumstances.  Accordingly, the Fifth District held that the trial court erred in finding that the insureds should be awarded a contingency fee multiplier.

On appeal, the Florida Supreme Court held that the Fifth District improperly interpreted the Court’s opinion in Florida Patient’s Compensation Fund v. Rowe, 472 So. 2d 1145 (Fla. 1985).  The Court noted that the opinion in Rowe did not set forth a “rare” and “exceptional” standard.  The Court also discussed its opinion in Quanstrom, noting that while the opinion used the words “rare” and “exceptional,” the Court held that “they were not used as a prerequisite to the application of a contingency fee multiplier.”  The Court clarified that its opinion in Quanstrom did not hold that a multiplier was only to be used in rare and exceptional circumstances; instead, the Court was “referring to preserving flexibility in terms of the overall framework.”  Therefore, the use of a contingency fee multiplier has not been limited to only “rare” and “exceptional” circumstances.  The Florida Supreme Court remanded the case to the Fifth District to reinstate attorney’s fees award.

The dissenting opinion found that the trial court used a contingency fee multiplier without sufficient justification and that competent, substantial evidence did not support the trial court’s use of a multiplier.

Jane Anderson
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Britney R. Horton
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