Attorney Fees - State Justices' Order on Multipliers Baffles Some
Carl Jones

Daily Business Review
October 20, 2005

Hinda Klein

In a closely watched case, the Florida Supreme Court has declined to take up the question of whether insurance policyholders' lawyers are entitled to a fee multiplier if they prevail in a case against an insurer where the carrier has been ordered to pay attorney fees. Nevertheless, in Nationwide Mutual Fire Insurance Co. v. Pamela Holiday and Leonard Shealey, the high court issued an order on Monday directing Columbus-based Nationwide Mutual to pay for the time spent by the policyholders' appellate attorneys in litigating the issue.

Under Florida statutes, plaintiff attorneys are allowed to recover an enhancement of their normal hourly rate if they prevail in a case. Precedent has set the limit of the multiplier at 2.5 times the lawyer's reasonable hourly rate. Multipliers can be invoked in various cases, including cases where a lawyer accepts a case on a contingency basis.

The disputed section of Florida law authorizes awards of attorney fees in insurance cases, but only defines the fee as a "reasonable sum".

Nationwide's lawyer, Hinda Klein, a partner at Conroy Simberg Ganon Krevans & Abel in Hollywood, said she is unhappy with the order and with the court's refusal to rule on the underlying issue, which had been certified by the 5th District Court of Appeal as an issue of great public importance. "I'm disappointed by the fact that they didn't take up the primary issue before them," she said. "I don't think that you could read into this any sort of precedent."

Shannon McLin Carlyle, a partner at the Carlyle Appellate Law Firm in the Villages in Central Florida, called the order a positive development for plaintiff lawyers because it gives them ammunition to support their claim that they should be compensated for time spent arguing whether the multiplier applies. Carlyle was co-counsel for the plaintiffs on the Nationwide case.

"It may not be a published opinion, but it is certainly worth knowing how the Supreme Court has handled this issue," said John Crabtree, a Key Biscayne solo appellate lawyer who also represented the policyholders in the case.

Previous state Supreme Court rulings have upheld multipliers as important in encouraging plaintiff attorneys to take on tough cases on a contingency basis and also as a sanction against big insurance companies that frivolously fight meritorious claims.

The Nationwide case arose in 1999 from a fire at an Orlando home purchased by Pamela Holiday and her then-boyfriend, Leonard Shealey. Nationwide declined to pay their fire damages claim on the grounds of the suspicious nature of the fire.

But after a four-day trial in Orange Circuit Court, a jury awarded Shealey and Holiday $17,700 Ñ the full amount of their claim. Shealey's attorney was awarded a fee multiplier, but Holiday's was not because of the way her contract with her attorney was written.

Both Holiday and Nationwide appealed to the 5th DCA on a variety of issues. But in a January 2004 opinion, the 5th DCA noted the possibility that an attorney fee multiplier may not be authorized under state law in insurance cases and certified the question to the Supreme Court.

The justices essentially looked at two questions Ñ whether multipliers are allowed in insurance cases and whether attorneys should be compensated for time spent litigating the amount of the fees. Even though the court declined to address these issues, defense attorneys say the justices helped attorneys seeking multipliers by awarding attorney fees to the plaintiff lawyers for time spent litigating whether they were entitled to a multiplier.

On Monday, the Supreme Court unanimously dismissed Nationwide's appeal and the plaintiffs' cross appeal, thus declining to decide the two questions.

But in a 4-3 vote, the high court awarded $2,500 in attorney fees to the policyholders' appellate lawyers for the time they spent arguing whether Nationwide had to pay them for the time they spent successfully litigating the multiplier issue.

Crabtree called it an unusual order that does not necessarily establish precedent. "It's hard to say what it is," Crabtree said of the order. "It is an order that, I think, runs counter to conventional wisdom." He said the 1993 Supreme Court ruling in State Farm v. Palma established that attorneys could recover fees for the time spent arguing whether the prevailing party was entitled to attorney fees, but that they could not recover fees for the time spent arguing over how much they were entitled to.

The dispute, Crabtree said, was whether arguments over multipliers fell under the first prong of the Palma decision or the second. In his cross appeal, Crabtree said the court should reverse the second part of Palma. But Crabtree said the distinction of where multipliers apply under Palma need not even be made because the time spent litigating the applicability of a multiplier benefits the policyholder and is thus statutorily authorized.

He had argued that the Supreme Court need not address the 5th DCA's question, because it had already answered the question in a 2003 case, Sarkis v. Allstate Insurance Co.

In that case, the high court held that plaintiff attorneys cannot receive an enhanced contingency fee for winning a long-shot case if the losing side must pay the fee because it refused to settle the case. Klein played down the impact of the Supreme Court ordering payment of the $2,500 fee. "I don't think that you could read into this any sort of precedent," she said.

The Florida Defense Lawyers Association and three insurance companies filed briefs before the Supreme Court supporting Nationwide.

The Academy of Florida Trial Lawyers filed a brief in support of Holiday and Shealey.

Carl Jones can be reached at cjones@alm.com or at (305) 347-6648.

Hinda Klein photo by Melanie Bell