SUPREME COURT OF FLORIDA. No. SC L.T. No. 5D JEFFREY HICKS, Petitioner, vs. ALLSTATE INDEMNITY COMPANY, Respondent.

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1 SUPREME COURT OF FLORIDA No. SC L.T. No. 5D JEFFREY HICKS, Petitioner, vs. ALLSTATE INDEMNITY COMPANY, Respondent. RESPONDENT ALLSTATE INDEMNITY COMPANY's ANSWER BRIEF ON THE MERITS Respectfully submitted, CHARLES W. HALL, ESQUIRE Joseph Currier Brock, Esquire Charles W. Hall, Esquire Florida Bar No.: Florida Bar No.: Of Counsel to Igou & Smith and 545 Delaney Avenue Mark D. Tinker, Esquire Building #9 Florida Bar No.: Orlando, FL Fowler White Boggs Banker, P.A. (407) P.O. Box 210 Fax No.: (407) St. Petersburg, FL (727) Fax No.: (727) Counsel for Respondent, ALLSTATE INDEMNITY COMPANY

2 TABLE OF CONTENTS Table of Contents... i,ii Table of Authorities...iii,iv,v Preliminary Statement... 1 Statement of the Case and Facts I. Statement of the Case...2,3 II. Statement of the Facts Summary of Argument Argument I. THE COURT SHOULD DECLINE JURISDICTION BECAUSE THE CERTIFIED QUESTION DOES NOT PRESENT A MATTER OF GREAT PUBLIC IMPORTANCE, AND FURTHERMORE IS NOT REPRESENTATIVE OF THE ISSUE PRESENTED BY THE UNDERLYING FACTS OF THIS CASE II. COURTS MAY NOT AWARD ATTORNEY S FEES FOR LITIGATING THE APPLICATION OF A MULTIPLIER BECAUSE SECTION DOES NOT PROVIDE STATUTORY AUTHORITY FOR SUCH AN AWARD A. Section does not authorize attorney s fees for litigating the application of a multiplier because that issue does not concern a claim under the insurance policy B. Section does not create entitlement to fees for litigating any issue that potentially benefits insureds; it only i

3 applies to claims made under a policy of insurance C. Fees for establishing the right to a multiplier are unrelated to the underlying purpose of multipliers III. THE CIRCUIT COURT S MISAPPLICATION OF A STATUTE, DISREGARD OF PALMA, AND VIOLATION OF THE AMERICAN RULE PROVIDED AMPLE GROUNDS FOR CERTIORARI REVIEW Conclusion Certificate of Service Certificate of Compliance ii

4 TABLE OF CITATIONS PAGE Allstate Indemn. Co. v. Hicks, 880 So. 2d 772 (Fla. 5 th DCA 2004) Allstate Ins. Co. v. Luckey, 11 Fla. L. Weekly Supp. 510a (Fla. 9 th Cir. Ct. 2001) Bennett v. USAA Cas. Ins. Co., 5 Fla. L. Weekly Supp. 832 (Fla. 9 th Cir. Ct. 1998) Burdick v. State, 594 So. 2d 267 (Fla. 1992) Butterworth v. National League of Professional Baseball Clubs, 644 So. 2d 1021 (Fla. 1994) Carmichael v. State Comprehensive Health Ass n, 717 So. 2d 174 (Fla. 4 th DCA 1998) Cleveland v. City of Miami, 263 So. 2d 573 (Fla. 1972) Colonial Ins. Co. of California v. Sensory Neurodiagnostic, Inc., 5 Fla. L. Weekly Supp. 522b (Fla. 13 th Cir. Ct. 1998) Dean Witter Reynolds, Inc. v. Wood, 676 So. 2d 464 (Fla. 5 th DCA 1996) Dixie Ins. Co. v. Puzo, 5 Fla. L. Weekly 211 (Fla. 15 th Cir. Ct. 1996) EEZZZZ-ON Trailers, Inc. v. Bankers Ins. Co., 632 So. 2d 605 (Fla. 1994) iii

5 Lugassy v. Independent Fire Ins. Co., 636 So. 2d 1332 (Fla. 1994) North Florida Women s Health and Counseling Services, Inc. v. State, 866 So. 2d 612 (Fla. 2003) Ocean Harbor Cas. Ins. Co. v. Southeast Health Care, 8 Fla. L. Weekly Supp. 545 (Fla. 15 th Cir. Ct. 2001) Palma v. State Farm Fire & Cas. Co., 3 Fla. L. Weekly Supp. 231 (Fla. 15 th Cir. Ct. 1995) Quality Engineered Installation, Inc. v. Higley South, Inc., 670 So. 2d 929 (Fla. 1996)...20,23,28 Resha v. Tucker, 670 So. 2d 56 (Fla. 1996) Richardson v. Merkle, 646 So. 2d 289 (Fla. 2d DCA 1994) Sarkis v. Allstate Ins. Co., 863 So. 2d 210 (Fla. 2003) Standard Guar. Ins. Co. v. Quanstrom, 555 So. 2d 828 (Fla. 1990)...21,26,31 State v. J.P., So. 2d, 2004 WL (Fla. Nov. 18, 2004) State Farm Mut. Auto. Ins. Co. v. Brock, 9 Fla. L. Weekly Supp. 212 (Fla. 9 th Cir. Ct. 2001) State Farm Fire & Cas. Co. v. Edge, 9 Fla. L. Weekly Supp. 505a(Fla. 9 th Cir. Ct. 2002) iv

6 State Farm Fire & Cas. Co. v. Palma, 555 So. 2d 836 (Fla. 1990)...3,7,8,10-17,18,21-30 United Auto. Ins. Co. v. Renus, 7 Fla. L. Weekly Supp. 389 (Fla. 15 th Cir. Ct. 2000) OTHER AUTHORITIES: THE BLUEBOOK: A UNIFORM SYSTEM OF CITATION, (Columbia Law Rev., et. Al. 17 th Ed. 2000) , Fla. Stat ,17,19,21,26 Art. V, 3(b)(4), Fla. Const. (1980) v

7 PRELIMINARY STATEMENT This is an appeal of a Personal Injury Protection ( PIP ) claim. The Petitioner, JEFFREY HICKS, was the plaintiff below. He will be referred to as HICKS in this Brief. Respondent, ALLSTATE INDEMNITY COMPANY, was the defendant and will be referred to as ALLSTATE. References to the record on appeal will be designated by the symbols V and R respectively, followed by the appropriate volume and page numbers. Legal citations contained in this Brief are intended to conform to Florida Rule of Appellate Procedure and THE BLUEBOOK: A UNIFORM SYSTEM OF CITATION (Columbia Law Rev., et. al. 17th Ed. 2000). All emphasis has been supplied by counsel unless otherwise noted. 1

8 STATEMENT OF THE CASE AND FACTS The majority of the facts stated in HICKS Initial Brief are completely irrelevant to the question presented. However, since some of those assertions are also inaccurate and misleading, ALLSTATE provides the following statements so that the Court has an accurate and complete record of the proceedings in this case. I. STATEMENT OF THE CASE. HICKS sued ALLSTATE in the county court for Personal Injury Protection ( PIP ) benefits. (V.1, R.29 31). The case settled, and ALLSTATE acknowledged that HICKS counsel was entitled to recover a reasonable attorney s fee. (V.1, R.39). The parties further agreed that a reasonable rate for his attorney s services was $ per hour. (V.1, R.66). ALLSTATE never objected to HICKS attorney s request that the court consider a contingency-fee multiplier. (V.1, R.39 41). However, it did contest his assertion that the agreed-upon rate should be enhanced by a multiplier greater than 1.0. (V.1, R.40). After holding an evidentiary hearing, the trial judge decided to apply a 2.0 contingency-fee multiplier to the fee award. (V.1, R.86 87). The county court also determined that HICKS lawyer was entitled to recover an additional 15.3 hours for litigating the application of that multiplier. (V.1, R.88). ALLSTATE sought review of the fee award in the circuit court. (V.1, R.96). That appeal raised only two issues: (1) the use of a 2.0 multiplier given HICKS 2

9 likelihood of success at the outset of the case; and (2) the award of attorney s fees for litigating the application of the multiplier under the rule of State Farm Fire & Cas. Co. v. Palma, 555 So. 2d 836 (Fla. 1990). (V.1, R.21, ). The circuit court affirmed on both issues, and furthermore granted HICKS Motion for Appellate Attorney Fees. (V.1, R.21 27). ALLSTATE thereafter sought certiorari relief from the Fifth District Court of Appeal. (V.1, R.1 17). That proceeding addressed only one issue: HICKS ability to recover attorney s fees for litigating the application of the multiplier. (V.1, R.1 17). The Fifth District granted the petition, holding that such fees are not recoverable under Palma. (V.2, R ). It thereafter denied rehearing, but certified the following to this Court as a question of great public importance: (V.2, R ). UNDER SECTION , FLORIDA STATUTES, IS AN INSURED ENTITLED TO RECOVER FROM ITS INSURER ATTORNEY'S FEES INCURRED IN SUCCESSFULLY LITIGATING ENTITLEMENT TO AN ATTORNEY'S FEE MULTIPLIER? II. STATEMENT OF THE FACTS. HICKS was injured in an automobile accident on February 28, (V.1, R.29). St. Germain Chiropractic provided treatment to HICKS and submitted bills directly to ALLSTATE for payment under his PIP policy. (V.1, R.48, 70). 3

10 ALLSTATE paid those bills. (V.1, R.70). However, when an independent medical examination ( IME ) report concluded that further chiropractic treatment was no longer reasonable, necessary, or related to the accident, ALLSTATE suspended benefits for chiropractic services rendered after May 28, (V.1, R.34, 53 54). St. Germain Chiropractic took an assignment of HICKS PIP benefits, and pursued payment of the post-ime chiropractic bills from ALLSTATE. (V.1, R.48, 77). On February 13, 2001, ALLSTATE entered into a global settlement agreement resolving those post-ime claims. (V.1, R.48, 77). Sixteen months after the IME suspension, HICKS personal-injury attorney submitted a claim form to ALLSTATE requesting payment for both post-ime chiropractic treatment and several unidentified wage and mileage claims. (V.1, R.70). On this point, HICKS Initial Brief is inaccurate. It claims that the attorney, Bruce Peisner, requested on multiple occasions that ALLSTATE pay the mileage claims. Initial Brief at 1 2. However, as HICKS own expert witness conceded at the fee hearing, Mr. Peisner only made one request. (V.1, R.75, 79). In addition, the Initial Brief repeatedly asserts that ALLSTATE refused to pay HICKS wage and mileage claims. Initial Brief at 2 3. Those claims are misleading because the evidence was solely that HICKS attorney s file did not contain a copy of any response from ALLSTATE. (V.1, R.78 79). 4

11 On May 15, 2001 a full three months after ALLSTATE had settled the post- IME claims with St. Germain Chiropractic HICKS filed suit in the county court. (V.1, R.29 31, 48, 70). The Complaint did not specify any of the damages sought, but instead referred only to certain medical care and expenses. (V.1, R.29 30). Three months later, HICKS filed a bill of particulars to explain the claims. (V.1, R.35 37). That document revealed for the first time that the claims consisted primarily of the previously-settled post-ime chiropractic bills, plus lost wage claims incurred between February and April 1996 dates prior to the IME suspension. (V.1, R.36). Accordingly, from that point forward, ALLSTATE never defended the wage or mileage portions of the suit. (V.1, R.72). No pleadings or motions were filed, and neither party even sought discovery related to those issues. (V.1, R.72). The case eventually settled with ALLSTATE paying the wage and mileage claims only no additional claims for St. Germaine chiropractic were paid. (V.1, R.42, 78). When it settled the case, ALLSTATE also stipulated to HICKS entitlement to recover a reasonable attorney s fee. (V.1, R.39). The parties further agreed that a reasonable rate for attorney Michael B. Brehne s services was $ per hour. (V.1, R.66). Finally, ALLSTATE never objected to Mr. Brehne s request that the court consider a contingency-fee multiplier. (V.1, R.39 41). However, it did contest his assertion that the agreed-upon rate should be enhanced by a multiplier greater than

12 (V.1, R.40). The trial judge held an evidentiary hearing on September 4, (V.1, R.65 85). In support of a multiplier in the 2.0 to 2.5 range, Mr. Brehne s expert witness, Brian Coury, testified that this was a dangerous case because Mr. Brehne was unsure why the mileage and wage claims had not been paid. (V.1, R.75 76, 79). He hypothesized that the non-payments could have signified that ALLSTATE had evidence of insurance fraud. (V.1, R.79). However, Mr. Coury later conceded that the file did not reflect any indicia of fraud, nor did it show any other available defense to the pre-ime claims. (V.1, R.79). In opposition to the maximum-multiplier request, ALLSTATE presented the expert testimony of Ray Barber. (V.1, R.80 82). He disagreed with Mr. Coury s assessment of the danger presented by this case, pointing out that Mr. Brehne s likelihood of success at the outset was far greater than 50 percent due to the unpaid pre-ime mileage and wage claims. (V.1, R.81). ALLSTATE s counsel further explained: At the time this case walked through the door he knew he had one of the easiest cases within the very easy family to win of PIP cases, that is failure to pay wage loss and mileage for no apparent reason. No defenses. (V.1, R.84). The trial judge eventually decided to apply a 2.0 contingency-fee multiplier to the award. (V.1, R.R.85, 87). 6

13 In addition, Mr. Brehne sought fees for time spent seeking a maximum multiplier. (V.1, R.68 69). ALLSTATE s counsel explained that entitlement had never been at issue, and time spent litigating the application of the multiplier is not compensable under Palma. (V.1, R.82). He stated: But if we go back and look at the Quanstrom case and so forth, 1.0 is within the spectrum of a multiplier. So there has never been any disagreement that we said he couldn t have a 1.0 multiplier. (V.1, R.82). He continued: And, therefore, under State Farm versus Palma, on page 3 of that case it says: However, we do not agree with the district court below that attorney fees may be awarded for litigating the amount of attorney fees. (V.1, R.82). The trial judge nonetheless stated: I m not sure Palma is as valid as it was in 1990 when it came out, and thereafter awarded Mr. Brehne an additional 15.3 hours for his time spent litigating the multiplier issue. (V.1, R.82, 85, 87). ALLSTATE sought review of the fee award in the circuit court. (V.1, R.96). That appeal raised only two issues: (1) the use of a 2.0 multiplier given HICKS likelihood of success at the outset of the case; and (2) the award of attorney s fees for litigating the multiplier issue under the rule of State Farm Fire & Cas. Co. v. Palma, 555 So. 2d 836 (Fla. 1990). (V.1, R.21, ). The circuit court recited Mr. Coury s testimony that this was a dangerous case, and accordingly affirmed the 2.0 multiplier award. (V.1, R.23 25). On the issue of fees for litigating the application of 7

14 the multiplier, the circuit judge first recited the Palma entitlement versus amount distinction. (V.1, R.25). He conceded: the application of a multiplier to an attorney s fee clearly does not affect the entitlement to the fee.... (V.1, R.26). However, circuit court nonetheless concluded that trial judges have discretion to award fees for litigating the application of a multiplier and affirmed the judgment in its entirety. (V.1, R.26 27). ALLSTATE sought certiorari relief from the Fifth District Court of Appeal. (V.1, R.1 17). That proceeding addressed only one issue: HICKS ability to recover attorney s fees for litigating the multiplier issue. (V.1, R.1 17). The Fifth District granted the petition, holding that time spent litigating the appropriateness of a fee multiplier goes to amount, and as a result, is not recoverable under Palma. (V.2, R.284). The court reasoned: The use of a multiplier presupposes the entitlement to an attorney s fee award. Before a party can seek an attorney s fee multiplier, that party must first be entitled to recover fees pursuant either to a fee-authorizing statute or by virtue of a contract. Consequently, consideration of a multiplier does not occur unless a pre-existing entitlement to an attorney s fee has been established. (V.2, R.284). The district court bolstered that conclusion by looking to the dictionary definitions of amount, meaning total number or quantity, and entitlement, meaning the state or condition of being entitled to a right to benefit specified especially by law or 8

15 contract. (V.2, R.284). After issuing its opinion, the Fifth District denied HICKS request for rehearing and rehearing en banc. (V.2, R ). However, it certified the following to this Court as a question of great public importance: UNDER SECTION , FLORIDA STATUTES, IS AN INSURED ENTITLED TO RECOVER FROM ITS INSURER ATTORNEY S FEES INCURRED IN SUCCESSFULLY LITIGATING ENTITLEMENT TO AN ATTORNEY S FEE MULTIPLIER? (V.2, R ). The language used is identical to that suggested by HICKS Motion. (V.2, R.284). This Court has thus far postponed its decision on jurisdiction. 9

16 SUMMARY OF ARGUMENT The Fifth District Court of Appeal has certified a question to be of great public importance, thus vesting this Court with discretionary jurisdiction. However, the Court should decline to exercise that jurisdiction for two reasons. First, the question as framed does not present a matter of great public importance. This is because Florida s courts are generally applying State Farm Fire & Cas. Co. v. Palma, 629 So. 2d 830 (Fla. 1993) to consistently and logically address the issue. Second, the Court has declined to answer certified questions in the past when they failed to appropriately represent the underlying issues. In this case, the certified question does not correspond with the issues actually litigated. Specifically, ALLSTATE did not object to Mr. Brehne s request that the court consider is entitlement to a contingency-fee multiplier, but rather litigated the existence of the factual predicate to support such an award. Therefore, factually, this is not the case for the Court to address the certified question and it should decline jurisdiction. Finally, if the Court does accept jurisdiction, it should consider rephrasing the certified question. Adopting verbatim the language suggested by HICKS, the Fifth District s proposed question references litigation concerning entitlement to an attorney s fee multiplier. That language is not representative of the issue presented in this case because, as stated above, legal entitlement was never litigated. Instead, 10

17 ALLSTATE challenged only the factual aspect of the award. In addition, the certified question asks whether an insured is entitled to recover fees for litigating a multiplier. However, an insured has no interest in multiplier litigation and thus is not really the party asking to recover fees for that issue. Therefore, the Court should rephrase the certified question as follows: UNDER SECTION , FLORIDA STATUTES, MAY THE COURT AWARD ATTORNEY S FEES INCURRED IN SUCCESSFULLY LITIGATING THE APPLICATION OF A CONTINGENCY-FEE MULTIPLIER? On the merits, this Court s Palma opinion answers the certified question. In its most simplistic form, the Palma rule is that attorney s fees are recoverable under section for litigation concerning entitlement to recover an attorney s fee, but are not recoverable for litigation concerning the amount of that award. Contingencyfee multipliers, by their very nature, serve only to enhance the amount of a predetermined lodestar fee award. Litigation regarding the application of a multiplier does not in any way effect the litigant s entitlement to recover attorney s fees on behalf of his or her counsel. Accordingly, pursuant to the rule announced in Palma, the certified question should be answered in the negative. More importantly, the reasoning behind the Palma decision applies with even greater force to the multiplier question. Palma is founded on the premise that Florida 11

18 follows the American Rule courts may award attorney s fees only when authorized by statute or contract. The fee-shifting statute at issue, section , provides that an insurer is liable for its insured s attorney s fees when the insured successfully obtains a judgment on a claim under the policy. The terms of that statute are an implicit part of every insurance policy issued in Florida. Given that analysis, the Palma Court concluded that litigation over the issue of entitlement to attorney s fees is still a claim under the policy and thus is within the scope of Section The same is not true with respect to multipliers. Since an insured could simply decline to execute a contingency-fee contract and hire an attorney at a specified hourly rate to prosecute a claim for benefits, multipliers simply cannot be considered an implicit part of every insurance policy written in Florida. Accordingly, litigation concerning the application of a multiplier is not a claim under a policy and thus is not within the scope of section As the district court realized, the timing of multiplier litigation bolsters the conclusion that fees are not recoverable for that issue. Trial courts cannot even consider whether to apply a multiplier to section fees until they have already awarded benefits under the policy and granted entitlement to recover a reasonable attorney s fee. In fact, the multiplier analysis does not even occur until the court has determined the number of hours reasonably expended and an appropriate hourly rate 12

19 both amount issues under Palma. If the amount portion of the fee litigation is non-compensable because it inures to solely to the attorney s benefit, it necessarily follows that litigation concerning the enhancement of that amount is equally noncompensable. HICKS Initial Brief asserts that, because the potential right to a multiplier benefits insureds, litigation concerning that issue should be compensable under section That position is fundamentally flawed. First, the premise that multipliers benefit insureds, rather than their attorneys, is dubious at best. Multiplier litigation cannot occur unless and until the insured has already recovered both benefits under the policy and entitlement to a reasonable attorney s fee. At that point in time, the insured has been made whole. Any further interest in the amount and enhancement of the fee award belongs solely to the attorney. More importantly, HICKS position overlooks the real issue in this case: whether section authorizes fees for litigating the multiplier issue. Simply stated, litigation regarding the application of a multiplier is not litigation on a claim under an insurance policy. Therefore, benefit or no benefit, the fee-shifting provision of section does not apply to multiplier litigation. HICKS final point is an assertion that this Court should quash the Fifth District s decision to grant certiorari review because no clearly established principle 13

20 of law governed the issue. That assertion is incorrect. As this Court has recognized in the past, clearly established law can derive from a variety of legal sources, including controlling case law, rules of court, statutes, and constitutional law. In this case, the circuit court misapplied a statute section In addition, the circuit court s decision directly conflicted with two bodies of controlling case law Palma and cases interpreting the American Rule. The district court s decision to grant certiorari is supported by any and all of those grounds. 14

21 ARGUMENT HICKS Initial Brief presents two main points for the Court s consideration, but does not address the outstanding jurisdiction issue. This Answer Brief will discuss jurisdiction in Point I, and respond to HICKS positions on the merits in Points II and III. I. THE COURT SHOULD DECLINE JURISDICTION BECAUSE THE CERTIFIED QUESTION DOES NOT PRESENT A MATTER OF GREAT PUBLIC IMPORTANCE, AND FURTHERMORE IS NOT REPRESENTATIVE OF THE ISSUE PRESENTED BY THE UNDERLYING FACTS OF THIS CASE. The Fifth District Court of Appeal has certified a question to be of great public importance, thus vesting this Court with discretionary jurisdiction. Art. V, 3(b)(4), Fla. Const. (1980). However, the Court should decline to exercise that jurisdiction for two reasons: The certified question does not truly present a matter of great public importance, and furthermore it is not representative of the issue presented by the underlying facts of this case. First, the question as framed does not present a matter of great public importance. This is because Florida s courts are generally applying State Farm Fire & Cas. Co. v. Palma, 629 So. 2d 830 (Fla. 1993) to consistently and logically address the issue. Indeed, the Palma opinion references challenges to the application of a multiplier as being part of the amount of fees litigation. Id. at 833( State Farm raises 15

22 two issues pertaining to the use of the contingency risk multiplier in determining the amount of fees applicable.... State Farm argues that... the district court should have directed the trial judge to reconsider whether a multiplier was appropriate at all. ). Thus, even before the Fifth District published its opinion in this case, the overwhelming majority of the reported decisions have recognized that multipliers serve only to enhance the amount of an already-determined attorney s fee award. Accordingly, the courts have consistently held that Palma does not permit the recovery of fees for litigating that issue. See generally, Dean Witter Reynolds, Inc. v. Wood, 676 So. 2d 464, 466 (Fla. 5th DCA 1996)( Dean Witter also challenges the amount of the fees awarded, both as to interest and costs, and the court s application of a contingency fee multiplier. ); Carmichael v. State Comprehensive Health Ass n, 717 So. 2d 174, 174 (Fla. 4th DCA 1998)( Appellant also challenges the amount of fees, claiming that the court abused its discretion in failing to assess a multiplier.... ); Richardson v. Merkle, 646 So. 2d 289, 290 (Fla. 2d DCA 1994)(We find error only in the computation of the amount of fees. A contingency risk multiplier should not be applied.... ); State Farm Fire & Cas. Co. v. Edge, 9 Fla. L. Weekly Supp. 505a (Fla. 9th Cir. Ct. 2002)( Because the issue of entitlement to a multiplier goes to the amount of the attorney s fees, not entitlement to that award, Attorney Saltsgaver s motion for attorney s fees shall be denied); State Farm Mut. Auto. Ins. Co. v. Brock, 16

23 9 Fla. L. Weekly Supp. 212 (Fla. 9th Cir. Ct. 2001)( The only issue appealed in this case was the application of a 2.5 multiplier, which addresses the amount of fees. Therefore, no award of appellate attorney s fees will be granted. ); Allstate Ins. Co. v. Luckey, 11 Fla. L. Weekly Supp. 510a (Fla. 9th Cir. Ct. 2001)( We hold that litigation regarding whether to apply a multiplier is an amount issue, and therefore is not included in an award of attorney fees pursuant to Section , Florida Statutes. ); Ocean Harbor Cas. Ins. Co. v. Southeast Health Care, 8 Fla. L. Weekly Supp. 545 (Fla. 15th Cir. Ct. 2001)( Because entitlement to a multiplier goes to the amount of an attorney s fee award, and not to entitlement to that award, Appellee s motion for attorney fees is DENIED. ); United Auto. Ins. Co. v. Renus, 7 Fla. L. Weekly Supp. 389 (Fla. 15th Cir. Ct. 2000)( [T]ime spent arguing for application of a multiplier relates to the amount of attorney s fees and not to entitlement. ); Colonial Ins. Co. of California v. Sensory Neurodiagnostic, Inc., 5 Fla. L. Weekly Supp. 522b (Fla. 13th Cir. Ct. 1998)( Litigation as to the application of a multiplier once entitlement to a reasonable attorney s fee has already been determined would appear to be an amount issue, not an entitlement issue. ); Dixie Ins. Co. v. Puzo, 5 Fla. L. Weekly 211 (Fla. 15th Cir. Ct. 1996)( [P]ursuant to the principles enunciated by the Florida Supreme Court in State Farm Fire & Casualty Co. v. Palma, 629 So. 2d 830 (Fla. 1993), no attorney s fees may be awarded for time spend researching and litigating the issue 17

24 regarding the contingency risk multiplier since Appellant was only disputing the amount of attorney s fees to be awarded, rather than entitlement thereto. ). Trial-level rulings to the contrary predate the appellate rulings in their respective circuits. See Bennett v. USAA Cas. Ins. Co., 5 Fla. L. Weekly Supp. 832 (Fla. 9th Cir. Ct. 1998); Palma v. State Farm Fire & Cas. Co., 3 Fla. L. Weekly Supp. 231 (Fla. 15th Cir. Ct. 1995). This Court s Palma opinion provides the rule that answers the certified question and, outside of a few rogue decisions, Florida s courts are generally applying it in a consistent and logical manner. But see, (V.1, R.82)(the county-court judge concluded: I m not sure Palma is as valid as it was in 1990 when it came out. ). Therefore, the question does not present any new issue of great public importance, and the Court should decline to exercise its jurisdiction. In addition, the Court has declined to answer certified questions in the past when they were either not germane to the cause or failed to appropriately represent the underlying issues. See Cleveland v. City of Miami, 263 So. 2d 573, 575 (Fla. 1972)( Although [certified questions] operate to confer jurisdiction of the case upon us, it is not mandatory that we answer them when we find them inapplicable to the case and we shall refrain from doing so. )(internal citation omitted). In this case, the certified question does not correspond with the issues actually litigated. Specifically, the question states: 18

25 UNDER SECTION , FLORIDA STATUTES, IS AN INSURED ENTITLED TO RECOVER FROM ITS INSURER ATTORNEY S FEES INCURRED IN SUCCESSFULLY LITIGATING ENTITLEMENT TO AN ATTORNEY S FEE MULTIPLIER? (V.2, R ). It expressly addresses litigation regarding entitlement to an attorney s fee multiplier. In this case, entitlement to a multiplier was not at issue the litigation concerned the amount of the multiplier award. ALLSTATE did not object to Mr. Brehne s request that the court consider a contingency-fee multiplier, but rather stated that it would contest the application of a multiplier greater than 1. (V.1, R.40). Similarly, at the fee hearing, ALLSTATE s counsel explained: But if we go back and look at the Quanstrom case and so forth, 1.0 is within the spectrum of a multiplier. So there has never been any disagreement that we said he couldn t have a 1.0 multiplier. (V.1, R.82). Simply stated, the district court s question is directed at litigation concerning entitlement to a multiplier. Factually, this is not the case for the Court to address that issue, and it should therefore decline jurisdiction. Finally, if the Court does accept jurisdiction, it should consider rephrasing the certified question. See Resha v. Tucker, 670 So. 2d 56, (Fla. 1996)(rephrasing a certified question because, as stated, it was not representative of the issue presented by the facts of the case). Adopting verbatim the language suggested by HICKS, the 19

26 Fifth District s proposed question references litigation concerning entitlement to an attorney s fee multiplier. That language is not representative of the issue presented in this case. Specifically, the term entitlement infers a challenge to the legal aspect of the award. For example, in Sarkis v. Allstate Ins. Co., 863 So. 2d 210, (Fla. 2003), the parties litigated whether or not an attorney is ever legally entitled to seek a multiplier in offer-of-judgment cases. In this case, however, legal entitlement was not at issue. Instead, ALLSTATE challenged only the factual aspect of the award whether the factual predicate required for the application of a multiplier existed. Furthermore, the use of the word entitlement in the certified question is inconsistent with this Court s use of that term in the past, and thus would engender confusion. See Quality Engineered Installation, Inc. v. Higley South, Inc., 670 So. 2d 929, 931 (Fla. 1996)(fee entitlement occurs when the obligation to pay attorney fees has been fixed ). Therefore, if the Court does accept jurisdiction, it should rephrase the question to refer to the application of a multiplier. In addition, the certified question asks whether an insured is entitled to recover fees for litigating a multiplier. However, an insured has no interest in multiplier litigation and thus is not really the party asking to recover fees for that issue. A trial court cannot even consider whether to apply a multiplier to section fees until it has already awarded benefits under the policy and granted entitlement to recover a 20

27 reasonable attorney s fee. E.g., Standard Guar. Ins. Co. v. Quanstrom, 555 So. 2d 828, 831 (Fla. 1990)(explaining that the multiplier analysis occurs after the court arrives at a lodestar figure). At that point in the litigation, the insured has been made whole any further interest in enhancing the fee belongs solely to the attorney. Therefore, the Court should rephrase the certified question as follows: UNDER SECTION , FLORIDA STATUTES, MAY THE COURT AWARD ATTORNEY S FEES INCURRED IN SUCCESSFULLY LITIGATING THE APPLICATION OF A CONTINGENCY-FEE MULTIPLIER? II. COURTS MAY NOT AWARD ATTORNEY S FEES FOR LITIGATING THE APPLICATION OF A MULTIPLIER BECAUSE SECTION DOES NOT PROVIDE STATUTORY AUTHORITY FOR SUCH AN AWARD. This Court s opinion in State Farm Fire & Cas. Co. v. Palma, 629 So. 2d 830 (Fla. 1993) answers the certified question. Simply stated, litigation concerning the application of a multiplier concerns solely the amount of the attorney s fee award. It does not pertain to the litigant s entitlement to recover a fee on behalf of his or her attorney. Accordingly, under Palma, fees are not recoverable for time spent litigating the application of multipliers. In this case, the county-court judge simply failed to adhere to that rule, stating: I m not sure Palma is as valid as it was in 1990 when it came out. (V.1, R.82). 21

28 A. Section does not authorize attorney s fees for litigating the application of a multiplier because that issue does not concern a claim under the insurance policy. The rule announced by this Court in Palma is that attorney s fees are recoverable under section for litigation concerning entitlement to recover an attorney s fee, but are not recoverable for litigation concerning the amount of that award. Palma, 629 So. 2d at That rule governs this case. See Butterworth v. National League of Professional Baseball Clubs, 644 So. 2d 1021, 1023 n.7 (Fla. 1994)(when the Supreme Court has established a standard or test governing a situation, [r]ule stare decisis requires that the same test be applied to subsequent cases). When applied to multiplier litigation, the Palma rule answers the certified question in the negative. Contingency-fee multipliers, by their very nature, serve only to enhance the amount of a predetermined lodestar fee award. Litigation regarding the application of a multiplier does not in any way effect the litigant s entitlement to recover attorney s fees on behalf of his or her counsel. Accordingly, pursuant to the rule announced in Palma, the certified question should be answered in the negative. HICKS has not asked this Court to recede from Palma and, indeed, the Court has repeatedly reaffirmed that holding. E.g. Quality Engineered Installation, Inc. v. Higley South, Inc., 670 So. 2d 929, 931 (Fla. 1996); Lugassy v. Independent Fire Ins. Co., 22

29 636 So. 2d 1332, (Fla. 1994); EEZZZZ-ON Trailers, Inc. v. Bankers Ins. Co., 632 So. 2d 605, 605 (Fla. 1994). There is no reason for this Court to now forsake stare decisis and abandon the Palma precedent. See State v. J.P., So. 2d, 2004 WL at *5 (Fla. Nov. 18, 2004)( This Court adheres to the doctrine of stare decisis.); North Florida Women s Health and Counseling Services, Inc. v. State, 866 So. 2d 612, 638 (Fla. 2003)( We cannot forsake the doctrine of stare decisis and recede from our own controlling precedent when the only change in this area has been in the membership of this Court. ). More importantly, the reasoning behind the Palma decision applies with even greater force to the multiplier question. In that opinion, the Court reiterated that insureds are only entitled to recover attorney s fees from their insurers when the litigation concerns a dispute within the scope of section Palma, 629 So. 2d at 832. It stated: Thus, the issue presented in this case is when does a dispute relating to attorney s fees fall within the scope of section Id. The same question controls this case: When does a dispute relating to contingency-fee multipliers fall within the scope of section ? As a matter of law, it never does. Specifically, section states, in pertinent part: Upon the rendition of a judgment or decree by any of the 23

30 courts of this state against an insurer and in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer, the trial court or, in the event of an appeal in which the insured or beneficiary prevails, the appellate court shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured s or beneficiary s attorney prosecuting the suit in which the recovery is had (1), Fla. Stat. (2000). The statute explicitly applies only to claims made under a policy of insurance. Id. See also, Palma, 629 So. 2d at Litigation regarding a multiplier cannot be considered a claim under an insurance policy, and it therefore is not within the scope of the statute. Specifically, Palma is founded on the premise that Florida follows the American Rule courts may award attorney s fees only when authorized by statute or contract. Palma, 629 So. 2d at 832. The fee-shifting statute at issue, section , provides that an insurer is liable for its insured s attorney s fees when the insured successfully obtains a judgment on a claim under the policy. Id. at 832. [T]he terms of Section are an implicit part of every insurance policy issued in Florida. Palma, 629 So. 2d at 832. Accordingly, [w]hen an insured is compelled to sue to enforce an insurance contract because the insurance company has contested a valid claim, the relief sought is both the policy proceeds and attorney s fees pursuant to section Id.(emphasis in original). Given that analysis, the Palma 24

31 Court concluded that litigation over the issue of entitlement to attorney s fees is still a claim under the policy and thus is within the scope of Section Id. at However, the Court noted that litigation regarding the amount of any such fee is not a claim under the insured s policy it inures solely to the attorney s benefit. Id. at 833. Therefore, time spent litigating that issue is not compensable. Id. Following the Palma precedent, the Court should again conclude that litigation regarding the application of a contingency-fee multiplier is not compensable. The American Rule provides that fees may be awarded only if authorized by statute or contract. Since entitlement to attorney s fees is an implicit part of every insurance policy, section authorizes an award of fees for litigating that issue. However, unlike entitlement to attorney s fees, a multiplier cannot be considered an implicit part of every insurance policy issued in Florida. To the contrary, an insured could simply decline to execute a contingency-fee contract and hire an attorney at a specified hourly rate to prosecute a claim for benefits. Accordingly, litigation concerning the application of a multiplier is not a claim under a policy and thus is not within the scope of section Simply stated, litigation regarding a multiplier is not a part of obtaining any benefits under the insurance policy. The Fifth District s majority recognized this in the proceedings below. It noted that the dictionary definition of entitlement was the state or condition of being 25

32 entitled to a right to benefit specified especially by law or contract. Hicks, 880 So. 2d at 774 n.2. Amount, on the other hand, is defined as total number or quantity. Id. The court reasoned that, since the use of a multiplier presupposes that entitlement has already been established, and since the multiplier only serves to effect the quantity of the award, time spent litigating the appropriateness of a fee multiplier goes to amount, and as a result, is not recoverable under Palma. Id. at 774. As the district court realized, the timing of multiplier litigation bolsters the conclusion that fees are not recoverable for that issue. Trial courts cannot even consider whether to apply a multiplier to section fees until they have already awarded benefits under the policy and granted entitlement to recover a reasonable attorney s fee. E.g., Allstate Indemn. Co. v. Hicks, 880 So. 2d 772, 774 (Fla. 5th DCA 2004)( The use of a multiplier presupposes the entitlement to an attorney s fee award. ). In fact, the multiplier analysis does not even occur until the court has determined the number of hours reasonably expended and an appropriate hourly rate both amount issues under Palma. See Quanstrom, 555 So. 2d at 831(explaining that the multiplier analysis occurs after the court arrives at a lodestar figure). If the amount portion of the fee litigation is non-compensable because it inures to solely to the attorney s benefit, it necessarily follows that litigation concerning the enhancement of that amount is equally non-compensable. 26

33 HICKS Initial Brief attempts to rebut that conclusion by stating: Allstate s argument based on the timing of a multiplier s benefit to insureds fails because the same can be said of the entitlement to fees itself: When entitlement to fees is being litigated, the validity of an insurance claim has already been conceded or otherwise legally established. Initial Brief at 12. That is not true. As this Court held in Palma, entitlement to an attorney s fee is an implicit part of every insurance policy written in Florida. Accordingly, [w]hen an insured is compelled to sue to enforce an insurance contract because the insurance company has contested a valid claim, the relief sought is both the policy proceeds and attorney s fees pursuant to section Palma, 629 So. 2d at 832(emphasis in original). Therefore, litigation concerning entitlement to attorney s fees is still litigation under the policy the insurance claim has not been completely resolved. The same is not true with respect to multipliers. Litigation over the application of a multiplier presupposes that both the benefits and entitlement to attorney s fee portions of the claim have been established. Hicks, 880 So. 2d at 774. At that point, the insured has been made whole. Since the insured has already obtained full recovery under the policy and thus has no further interest in the litigation prior to the time that a multiplier first becomes an issue, multiplier litigation necessarily inures solely to the attorney s benefit. 27

34 In his dissenting opinion below, Judge Pleus asserts: litigating the appropriateness of a fee multiplier goes to the entitlement to, as well as the amount of, attorney s fees. Hicks, 880 So. 2d at 775(Pleus, J., dissenting). However, the holdings of Palma and Quality Engineered do not recognize or permit such a hybrid category. Under Palma, the entitlement issue for which fees are to be assessed is the issue of entitlement to attorney s fees. Palma, 629 So. 2d at 833. Palma bars fee assessments for litigating the amount of fees. Id. Therefore, amount issues including the application of a multiplier which presuppose that entitlement to attorney s fees has been established, cannot also be entitlement issues for which fees may be awarded. Similarly, under Quality Engineered, entitlement and amount issues are mutually exclusive. Pre-judgment interest begins to accrue on a fee award once entitlement to attorney s fees has been established, but further fees for fees cannot be recovered. Quality Engineered, 670 So. 2d at 931. Given those existing precedents, a hybrid entitlement/amount category is both unworkable and illogical. Finally, in the primary argument of his Initial Brief, HICKS concedes that fees may only be awarded for litigating the application of a multiplier if the issue is within the scope of section Initial Brief at 9. However, he asserts that multipliers should be considered to fall within the scope of the statute since they serve its 28

35 purpose. Initial Brief at That argument is contrary to both logic and prior pronouncements from this Court. First, HICKS argument confuses the issue by using the phrases serves the purpose and within the scope interchangeably. They are not equivalent. An issue may serve the purpose of a statute without being covered by the statutory language. More importantly, HICKS position was previously rejected by this Court in Palma. Specifically, the Court noted that federal courts addressing the issue have not distinguished between entitlement to attorney s fees and the amount of attorney s fees, but instead permit fees for the entire time spent on the issue. Palma, 629 So. 2d at 833. The Court further recognized: In awarding fees for litigating all issues relating to attorney s fees, the federal courts have noted that such awards comport with the purpose behind most statutory fee authorizations, namely to encourage attorneys to represent indigent clients. Id. Determining that public policy cannot form the basis for a fee award, the Court conclusively rejected that position by stating: If the scope of section is to be expanded to include fees for time spent litigating the amount of attorney s fees, then the Legislature, rather than this Court, is the proper party to do so. Id. Following the Palma precedent, the Court should again reject HICKS position. Regardless of whether multipliers may or may not serve the purpose of section 29

36 , they nonetheless do not fall within its scope because litigation concerning a multiplier is not a claim under a policy. Simply stated, HICKS public-policy argument regarding the purpose behind multipliers cannot form the basis for a fee award. Just as the Court noted in Palma, if section is to be expanded to include fees for time spent litigating multipliers, the Legislature is the proper party to do so. It cannot go unnoticed that, in the decade which has passed since this Court s pronouncement in Palma, the Legislature has not seen the need to change the statute. See Burdick v. State, 594 So. 2d 267, 271 (Fla. 1992)(finding the Legislature s tacit approval of the Court s prior interpretation of a statute from the fact that it had not been amended). Applying the rule established in Palma, the Court should determine that section does not provide statutory authority for an attorney s fee award for litigating the application of a multiplier. Therefore, the Court should answer the certified question in the negative. 30

37 B. Section does not create entitlement to fees for litigating any issue that potentially benefits insureds; it only applies to claims made under a policy of insurance. HICKS second argument is based upon the assertion that the potential right to a multiplier benefits insureds and thus should be compensable under section Initial Brief at 12. That position is fundamentally flawed. First, the premise that multipliers benefit insureds, rather than their attorneys, is dubious at best. In addition to the timing analysis outlined above, this point is perhaps best illustrated by a quotation from HICKS Initial Brief. He states: It is a lawyer s prospect of receiving a multiplier in the future, made real by receiving it when the lawyer wins, that encourages the lawyer to undertake representation of the insured. Initial Brief at 12. The benefit is the lawyer s, not the insured s. HICKS nonetheless urges the Court to conclude that multiplier awards create a secondary benefit to insureds. However, that position confuses the right to seek a multiplier with the right to collect attorney s fees for litigating the issue. Specifically, HICKS argues that, because the availability of a multiplier presumably benefits insureds by helping them obtain counsel, fees must be available for litigating the multiplier issue. That conclusion does not follow the premise. Under the current state of the law, trial courts must always consider whether to apply a multiplier to a section fee award. Quanstrom, 555 So. 2d at 831. The potential benefit thus exists 31

38 regardless of whether fees are awardable for litigating multiplier application, and HICKS argument lacks merit. This Court s Palma decision supports that conclusion. Specifically, the Court held that litigation regarding the amount of a fee award inures solely to the attorney s benefit. Palma, 629 So. 2d at 833. Multipliers, by their very nature, only serve to enhance the amount of a predetermined lodestar fee award. For example, the multiplier in this case simply enhanced Mr. Brehne s effective rate from $ per hour to $ per hour. Since the amount of the fee award inures solely to the attorney s benefit, and multipliers only serve to enhance that amount, it necessarily follows that multipliers also inure solely to the attorney s benefit. Therefore, HICKS argument should be rejected on that basis as well. Finally, HICKS entire argument on this point overlooks the real issue in this case: The question is not who the multiplier benefits it is whether section authorizes fees for litigating the issue. As explained above, litigation regarding the application of a multiplier is not litigation on a claim under an insurance policy. Therefore, benefit or no benefit, the fee-shifting provision of section does not apply to multiplier litigation. 32

39 C. Fees for establishing the right to a multiplier are unrelated to the underlying purpose of multipliers. HICKS final assertion is re-argument of the position taken in the previous section. Specifically, he claims that multipliers will no longer encourage lawyers to take on cases if the attorneys are unable to obtain fees for litigating their application. Initial Brief at Again, that argument confuses the right to have the court consider the use of a multiplier with the right to collect attorney s fees for litigating the issue. Under the current state of the law, multipliers are potentially available to attorneys regardless of whether fees are awardable for litigating their application. Insureds benefit from the fact that, at the inception of representation, their attorneys have the incentive of the potential for a multiplied fee award. Therefore, the asserted benefit for insureds exists no matter now this Court rules on the issue, and HICKS argument is without merit. As a final point to his argument, HICKS envisions a parade of horribles resulting from the proper application of Palma. He contends that recalcitrant insurance companies would be encouraged to concede that fee entitlement exists but litigate the application of a multiplier with impunity if attorneys cannot recover additional fees for that issue. That position should be rejected for two reasons. First, as with all of HICKS other arguments, it fails to recognize that Florida follows the American Rule 33