Second DCA holds you can get “fees for fees”—if it is in your contract

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Ordinarily, where an attorneys’ fee award is available, a party is entitled to fees for litigating the entitlement to those fees, but not the amount.  The Second District Court of Appeal has now recognized that this rule is not absolute, and the language of an attorney fee provision in a contract can provide for a more extensive award.

In Trial Practices, Inc. v. Hahn Loeser & Parkes, LLP, 2D13-6051 & 2D14-86 (Fla. 2d DCA Apr. 12, 2017), Trial Practices (“TPI”) sued its former client for legal consulting services, claiming entitlement to a percentage of the client’s settlement of a third-party lawsuit.  The client prevailed against TPI, and the judgment was affirmed on appeal.

The client then sought an award of attorneys’ fees pursuant to the Consulting Agreement between himself and TPI.  The Consulting Agreement stated:

[the] prevailing party in any action arising from or relating to this agreement will be entitled to recover all expenses of any nature incurred in any way in connection with the matter, whether incurred before litigation, during litigation, in an appeal, . . . or in connection with enforcement of a judgment, including, but not limited to, attorneys’ and experts’ fees.

The trial court entered an award of fees that included a significant amount “attributed to [the client’s] attorney’s litigation of the issue of the amount of attorneys’ fees and costs.”  On appeal, the Second District held that the language of the “Consulting Agreement” was sufficiently broad to encompass this “fees for fees” award.

The Second District held that this case, in which fees were sought pursuant to contract, is distinguished from cases in which fees were sought pursuant to statute—where “fees for fees” is generally unavailable.  The Court also recognized that Florida law allows parties to “freely contract on the issue of attorney[s’] fees,” and that courts are not permitted to rewrite contracts to relieve parties of their obligations.

The Second District also held that attorneys who testified as fact witnesses in the original trial were entitled to receive reasonable compensation for their assistance, and that the “Consulting Agreement” was sufficiently broad to allow an award of overhead expenses as part of a cost award.  It did reverse, in part, for the trial court to itemize a bulk cost award in the judgment, and determine which costs were taxable and which costs were not taxable; and to change the date from which prejudgment was calculated.

In sum, if a party is seeking an award of attorneys’ fees pursuant to a broad contractual provision, the fee award may encompass not only time spent in litigating entitlement to fees, but also to litigating the amount.

Attorneys Fees and Costs after Voluntary Dismissal Under 9.350(b)

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A colleague recently asked me whether a notice of voluntary dismissal of an appeal should deal with or mention attorneys fees and costs. In Florida’s intermediate appellate courts the appellant can voluntarily dismiss the appeal by filing a notice of voluntary dismissal with the court, pursuant to Florida Rule of Appellate Procedure 9.350(b). (Notice the contrast to trial court practice, where it is service of a notice of voluntary dismissal, not filing, that ends the case, per Florida Rule of Civil Procedure 1.420). But what is the effect of that dismissal on a claim for attorney’s fees, and is the appellee entitled to costs?

Entitlement to Fees and Costs

The case law on this issue is sparse, but makes it clear that such a dismissal likely renders to the appellee the prevailing party for purposes of the fee and costs analysis. The Third District has stated that, while an appellee may technically be entitled to fees and costs, the court will not grant a fee award before any briefing has occurred because appellee’s fees would be de minimus. See Sanchez v. State Farm Florida Ins. Co., 997 So. 2d 1209 (Fla. 3d DCA 2008) [.pdf]. The First District more recently disagreed with this de minimus stance (and with Judge Judge Shepherd’s dissent in Sanchez), holding that there is no de minimis exception when determining entitlement to a fee award. First Real Estate, LLC v. Grant, 88 So. 3d 1073 (Fla. 1st DCA 2012) [.pdf].

And while the Second District Court of Appeal hasn’t ruled on this issue in the context of voluntary dismissal, it has signaled that it would like to follow the de minimus approach of the Third District, but feels constrained by the statute to allow at least offer of settlement attorneys fees when an appeal has been dismissed prior to briefing. Braxton v. Grabowski, No. 2D12-2708, ___ So.3d ___, 38 Fla. L. Weekly D1157 (Fla. 2d DCA May 24, 2013) [.pdf]. In Braxton, the appeal was dismissed for lack of prosecution rather than voluntarily dismissed (or at least, the voluntary dismissal crossed in the mail with the dismissal order, and because at the appellate level voluntary dismissal is accomplished by filing not service, the lack of prosecution order was the operative order). Still, the court concluded on rehearing that it had no choice but to grant the appellee’s motion for attorney’s fees under Section 768.79, Florida Statutes.

Practical Effect on Costs

Even if the appellee is entitled to costs, are there any costs to collect? Not likely. Taxable appellate costs are very narrowly defined as:

(1) fees for filing and service of process;
(2) charges for preparation of the record;
(3) bond premiums; and
(4) other costs permitted by law.

None of these narrow class of costs were likely paid by the Appellee. So while there may be entitlement, there’s most likely nothing to tax.

Practical Effect on Fees

If a voluntary dismissal is filed, best to serve that attorney’s fee motion quickly. A motion for appellate attorneys fees is generally due pursuant to Florida Rule of Appellate Procedure 9.400 “not later than the time for service of the reply brief” and where no reply brief will ever become due, it is unclear what the deadline would be. Entitlement to fees is not automatic — the Appellee must still show that there is a legal basis, either in statute or contract, for the award.

Florida Supreme Court Approves Alternative Fee Recovery

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The Florida Supreme Court last week resolved a circuit split between the Second and Fourth District Courts of Appeal and held that alternative fee recovery clauses in attorney engagement contracts are permissible and enforceable. What is an alternative fee recovery clause and why is it important to lawyers and clients? An alternative fee recovery clause, in essence, allows the court to award attorneys fees for the true value of the work performed, even if the client actually paid a discount rate. This allows lawyers to take cases their clients might not otherwise be able to afford, with the promise of a market rate fee award at the end of the litigation. As explained by the Court:

This clause generally provides for an attorney’s fee of the greater of either (i) a specified fee if the fee is paid by the client, or (ii) a court-awarded reasonable fee if the fee is paid by a third-party pursuant to a fee-shifting provision.

First Baptist Church of Cape Coral, Florida, Inc. v. Compass Const., Inc., __ So.3d ___, No. SC11-1278, 2013 WL 2349380 (Fla. 2013) [.pdf].

The Court upheld the billing arrangement even though the issue arrose in the context of an indemnification action (which was the reason for the dissent of Justice Lewis). The Court noted that the balancing act required by the lodestar analysis ensures that the resulting fee award is reasonable and not excessive.

The case is important because there is a line of fee award cases that hold that the recovery is limited to a reasonable fee or the amount actually paid by the client, whichever is greater. But First Baptist makes clear that the analysis is more nuanced — it’s limited not to what the client paid, but what the client agreed the fee would be. If the client agrees in advance that the fee is the greater of two calculations, the Court should conduct the calculations and award the greater of them, enforcing the parties’ contract.

That makes this case a must-read for any attorney considering having such a clause in his or her engagement contract.