IN THE SUPREME COURT OF THE STATE OF FLORIDA
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1 IN THE SUPREME COURT OF THE STATE OF FLORIDA CASE NO: SC ACE AMERICAN INSURANCE COMPANIES, INC., a foreign corporation, et al, v. Petitioner, SEA WORLD OF FLORIDA, INC., A Florida corporation, et al Respondent. / BRIEF OF MAYAN SCHWARTZ AS AMICUS CURIAE ON BEHALF OF THE RESPONDENT Andrew Seiden, Esq. FBN SEIDEN ALDER & MATTHEWMAN, P.A NW Beacon Square Blvd., Suite 201 Boca Raton, Fl Tel: (561) Fax: (561) Philip D. Parrish, Esq. FBN PHILIP D. PARRISH, P.A SW 57 th Court, Suite 430 Miami, Fl Tel: (305) Fax: (305) I. IDENTITY OF AMICUS AND HIS STATEMENT OF INTEREST
2 Mayan Schwartz sued his former law firm, Bloch, Minerley & Fein ( BMF ) on theories that included attorney s fees as damages pursuant to the Wrongful Act Doctrine. Mayan presented testimony from his attorney as to the necessity of the attorney s fees incurred as a result of BMF s wrongful acts. In addition, the jury heard testimony from Mayan himself, as well as from Israel Schwartz, the defendant/counter-plaintiff in the underlying litigation, as well as Israel s attorney John Farina. Finally, the jury heard the testimony of BMF s independently retained expert witness, Brooks Ricca, Jr., who testified that Seiden s hourly rate ($150) and 20% contingency kicker were reasonable but that Seiden s hours were not, and that a reasonable fee would be between $100,000 and $150,000. The jury ultimately awarded $250,000, or roughly 20% of the fees which Mayan sought. This was significantly less than the $430,000 which Mr. Seiden s opposing counsel, Farina, had been paid by his client for the same litigation. Then, in post trial motions, the trial court granted BMF s Motion for Renewed Directed Verdict because Mayan did not present the testimony of an independently retained fee expert. Mayan has appealed that ruling to the Fourth District, Case No. 4D Mayan s interest in the case before this Court is clear. He is in agreement 2
3 with the holding of the Fifth District Court of Appeal that an independently retained expert witness is not necessary in cases where attorney s fees are sought as an element of damages, such as in a breach of contract action or as an element of damages allowable under the Wrongful Act Doctrine. II. SUMMARY OF THE ARGUMENT Florida law requires only that damages be proven with reasonable certainty. The Fifth District Court of Appeal applied that long standing rule in this case because Sea World sought, as a component of its breach of contract damages, recoupment of the fees which it had paid to an attorney to defend it against DuFault s lawsuit. The fees of an attorney are no more beyond the ordinary experience of a court or a jury than are the fees of a doctor, an engineer, or an architect. The unnecessary requirement of an added layer of independent paid experts to testify with respect to attorney s fees does nothing to protect whatever perceived ethical concerns there are with respect to recoupment of attorney s fees. The attorney s fees need only be proven up by fact witnesses such as the attorneys and the clients involved. Thereafter, the fact finder, be it a judge or a jury, can determine those damages just as it determines any other element of damages under the law, subject to review by the appellate courts of this state. 3
4 III. ARGUMENT THE FIFTH DISTRICT CORRECTLY RULED THAT THERE IS NO REQUIREMENT FOR A PLAINTIFF TO RETAIN AND PAY AN INDEPENDENT ATTORNEY S FEES EXPERT TO SUPPORT AN AWARD OF ATTORNEY S FEES AS AN ELEMENT OF DAMAGES IN A BREACH OF CONTRACT ACTION. In order for this Court to appreciate the position of this Amicus it is necessary to understand the context in which Mayan incurred the Seiden firm attorney s fees and the context in which he sought to recover them from BMF. Mayan s theories of liability against BMF were premised upon negligence (legal malpractice) and breach of fiduciary duty, which caused Mayan damages. Among other things, the BMF law firm advised Mayan to assign his interests in certain entities to his father Israel Schwartz, when Mayan asked BMF for legal advice on how to protect his assets in light of his pending marriage. BMF had represented Mayan on many transactions for about a decade. Unbeknownst to Mayan, however, the BMF law firm considered its client to be the Schwartz family, including Mayan, his father Israel, and his brother and sister. As a result, 15 months after the assignments were executed, Israel Schwartz utilized them to oust his son Mayan from control 4
5 over or participation in certain business entities. Mayan was then forced to sue his father and defend a counterclaim due to the negligence, i.e., wrongful acts of BMF. After that lawsuit was concluded via a very unfavorable settlement, Mayan sued BMF for legal malpractice/breach of fiduciary duties. As part of his damages claim, Mayan sought recovery for the loss of or decrease in the value of his interest in twelve separate business entities. In addition, he sought the attorney s fees which he incurred in the underlying litigation with his father (and related entities) as a direct and proximate result of BMF s negligence and breach of fiduciary duty. Accordingly, the attorney s fees were sought pursuant to the Wrongful Act Doctrine, and constituted an element of damages in Mayan s causes of action against BMF. The Wrongful Act Doctrine provides that where the wrongful act of the defendant has involved the claimant in litigation with others, and has placed the claimant in such relation with others as makes it necessary to incur expenses to protect its interests, such costs and expenses, including reasonable attorney s fees upon appropriate proof, may be recovered as an element of damages. Martha A. Gottfried, Inc. v. Amster, 511 So.2d 595, 598 (Fla. 4 th DCA 1987). The Defendant, in its renewed motion for directed verdict, relied principally 5
6 upon Schwartz, Gold and Cohen, P.A. v. Streicher, 549 So.2d 1044 (Fla. 4 th DCA 1989), for the proposition that, in addition to presenting the testimony of the attorney who performed the services (here Seiden), the party seeking attorney s fees as an element of damages must also present the testimony of an independently retained expert witness. Streicher involved a dispute between a law firm and its former client based upon a charging lien. This is precisely the scenario in which the same court which issued Streicher has recently certified to this Court the question of whether an independently retained expert witness is necessary. See Roshkind, P.A. v. Machiela, 35 Fla. L. Wkly D.1571 (Fla. July 14, 2010). But that is not the context in which the issue was presented to the jury in Mayan s case against BMF. Rather, in that case attorney s fees were sought as an element of damages in a cause of action for legal malpractice, i.e., tort damages. However, legal malpractice actions can be premised alternatively upon theories of tort or breach of contract liability. See, e.g., Resolution Trust Corp. v. Holland & Knight, 832 F.Supp (S.D. Fla. 1993); Kartikes v. Demos, 214 So.2d 86, 87 (Fla. 3d DCA 1968) (malpractice is an action in contract). Thus, Mayan s claim for fees in a tort case are similar to Sea World s claim for attorney s fees in its breach of contract action. The type of evidence necessary to sustain an award of damages for a cause 6
7 of action for legal malpractice is the same as the burden of proof on the issue of damages in a breach of contract action: evidence sufficient to satisfy the mind of a prudent, impartial person as to the amount of awardable damages; in other words, there must be a reasonable basis in the evidence for the amount awarded. Sea World of Florida, Inc. v. Ace American Ins. Cos., Inc., 28 So.3d 158, 159 (Fla. 5 th DCA 2010), review granted, 36 So.3d 83 (Fla. 2010). Accordingly, Mayan s case involves the very issue currently pending before this Court. The basis upon which attorney s fees were sought in Sea World are quite similar to the basis upon which the jury awarded attorney s fees to Mayan. Sea World was required to defend a lawsuit brought by Robert DuFault for personal injuries he sustained while performing repair work on Sea World s premises. Sea World eventually settled that claim for $85,000, after incurring $181,000 in attorney s fees and costs defending the claim. Sea World then sued Hobart, with whom it had entered into a written contract whereby Hobart agreed to perform certain commercial kitchen repairs for Sea World, and to indemnify and hold Sea World harmless for any and all loss for the result of the negligence of Hobart s employees. Id. at 159. The loss was defined under the contract to include monies paid in settlement or for attorney s fees and costs of defense. Id. In support of its damage claims Sea World presented the testimony of Mark 7
8 Thompson, the attorney who defended Sea World in DuFault s lawsuit. Id. Attorney Thompson testified to the work his firm performed on behalf of Sea World, the reasons for the work, and the basis for the fees. His legal bills and invoices were also introduced into evidence. Id. However, Sea World did not call an independent attorney s fee expert to corroborate the reasonableness of Thomson s firm s fees. The trial court, relying upon Seitlin & Co. v. Phoenix Ins. Co., 650 So.2d 624 (Fla. 3d DCA 1994) found this lack of independent expert testimony to be fatal to Sea World s claim for attorney s fees. Id. The Fifth District noted that the Third District s opinion in Seitlin did not specify whether the expert testimony requirement imposed by that case would have been satisfied by testimony from the plaintiff s prior counsel or if the court would also have required testimony from an independent attorney s fees expert. Id. at 160. The Fifth District described the claim in Sea World as a situation where a party was seeking to recover previously incurred attorney s fees as an element of damages in a breach of contract action. Id. Accordingly, Sea World s burden of proof was that which is required in a breach of contract action the presentation of evidence sufficient to satisfy the mind of a prudent, impartial person as to the amount of awardable damages.... Id. In other words, there must be a reasonable basis in the evidence for the amount 8
9 awarded. Id. (citing Schimpf v. Reger, 691 So.2d 579, 580 (Fla. 2d DCA 1997)). The Fifth District held that the testimony of the attorney who had performed the services satisfied those requirements; although Sea World was entitled to call an independent expert witness to corroborate the reasonableness of Thomson s fees, it was not required to do so. Id. From a public policy standpoint, the court sagely observed: We also note that if a claimant is seeking to recover, as damages, fees paid to a physician, engineer, architect, or other professional, there is no requirement to present corroborating testimony from an independent expert. Indeed, our Supreme Court has held that there is no requirement for expert testimony (independent or otherwise) to support an award of physician s fees where the doctor s bill and the plaintiff s testimony made it a question for the jury to determine whether the bills represented reasonable and necessary medical expenses. Sea World, 28 So.2d at 160 (citing Garrett v. Morris, Kirschman & Co., Inc., 336 So.2d 566 (Fla. 1976)). In this regard, amicus BMF s reliance upon Angrand v. Key, 657 So.2d 1146 (Fla. 1995), is misplaced. First and foremost, Angrand involved a determination as to whether certain proffered expert testimony by a so-called grief expert was admissible or not. It had nothing to do with and therefore said nothing about the issue involved in this case, which is whether, in order to 9
10 make out a prima facie case to support reasonable breach of contract damages, a party must submit testimony of an independently retained attorney s fee expert. In fact, the Angrand decision supports the Fifth District s opinion and our position herein. In Angrand, this Court observed that the jury, guided by its judgment and everyday life experiences, is in the best position to make a fair assessment of damages, and that the relevant testimony on issues of damages in a wrongful death action usually comes from survivors, friends, ministers, and others who testify as fact witnesses, as opposed to experts. Id. at Sea World went on to acknowledge that where a party seeks attorney s fees incurred in that same action, the general rule in Florida is that independent expert testimony is required. Id. (Emphasis in original). The Fifth District distinguished those cases because they did not involve a party seeking to recover previously incurred attorney s fees as an element of damages in a breach of contract action. Id. at 161. (Emphasis added). Rather, the court reasoned, those cases involve the application of an exception to the general American rule that a party to a civil action should be responsible for the payment of his or her own attorney s fees. Id. Next, the Court joined its sister court in questioning the need for this judicially created rule, citing Island Hoppers, Ltd. v. Keith, 820 So.2d 967,
11 (Fla. 4 th DCA 2002), rev. on other grounds, Sarkis v. Allstate, 863 So.2d 219 (Fla. 2003) The Fifth District concluded by noting that although it may be speculative as to whether the application of this rule has helped to maintain the image of lawyers in the eyes of the public, as it was initially intended to do, it is not speculation that claimants expend time and money to retain fee experts, even in those cases where their testimony is likely to be of little or no assistance. 28 So.3d at 161. The Court went on to quote from a recent Bar Journal article to observe that so-called independent expert testimony in such cases is often nothing more than a rubber stamp of the billing and time records submitted to the court by the party seeking fees.... Robert J. Hauser, Raymond E. Kramer, III, and Patricia A. Lenard, Is Expert Testimony Really Needed in Attorney s Fees Litigation? Island Hoppers Call for Change in Other Ways to Reduce the Burdens of these Hearings, Fla. B. J., Jan.2003 at 38, 40. In Island Hoppers the court questioned whether the rule is always the best, or most judicious, practice. 820 So.2d at 972. The rule sprang to life in Lyle v. Lyle, 167 So. 2d 256 (Fla. 2d DCA 1964), and, as Judge Gross noted in his concurring opinion, rests on shaky theoretical grounds. The Lyle court cited no 11
12 authority, and simply announced the rule as a matter of public policy. The flimsy explanation for why a lawyer seeking fees could not qualify as his own expert was that the self serving nature of the testimony given by the attorney... precludes the court from making an award based solely on his testimony. Id. at 257. But, as Judge Gross noted in his concurring opinion, the finder of fact can take the self serving nature of testimony into consideration in determining the fee award; the credibility of testimony is best resolved by the finder of fact particularly where the testimony is subject to cross examination. Id. at 976. Both the majority and concurring opinions in Island Hoppers noted that the legal profession had matured and evolved, and that courts are well versed in the issues of attorney s fees, such that the necessity of an independently retained witness, particularly one which merely parrots the position of the party paying its fees, is a vestige of times gone by. See also Rakusin v. Christiansen and Jacknin, P.A., 863 So.2d 442 (Fla. 4 th DCA 2003) (also criticizing the rule). BMF relies upon a Texas intermediate appellate court decision, Lesikar v. Rappeport 33 S.W. 3d. 282 (Ct. App. Tex. 2000). However, in that case the only evidence to support a claim of prior attorneys fees was the testimony of the plaintiff/client herself. Although the court did note that Texas law generally requires expert testimony, it did not specifically state that it needed to be an 12
13 independently retained expert, as opposed to the attorney who incurred the fees. BMF s reliance upon American Med. Transport Group v. Glo-An, Inc., 509 S.E.2d 738 (Ga.Ct.App. 1998) is also misplaced. The court had before it an award of attorney s fees entered on summary judgment, and it mentioned the need for expert testimony because the issue presented a question of fact for a jury to determine. Nowhere in the opinion does the court state that an independently retained expert, as opposed to the attorney who incurred the fees, was necessary in order to support the claim for attorney s fees. BMF s position exalts form over substance. There can be no doubt that Mayan could have retained an independent attorney s fee expert to testify that all of Mr. Seiden s and his firm s fees were reasonable and necessary in the prosecution and defense of the underlying claim and counterclaim. But the jury already had sufficient testimony from Mr. Seiden himself, who was subject to cross examination. Mr. Seiden s testimony was no more self-serving than any plaintiff s testimony who testifies with respect to his or her own damages, be they personal injury or property damage. As the court noted in Island Hoppers, the basis of the rule requiring an independently retained expert witness rests on a shaky foundation, and the only people who benefit from such a rule are the independently retained expert witnesses who are paid to render such opinions. 13
14 Neither the court nor the jury would have learned anything from such a witness that they could not learn from the testimony of the attorneys involved (Seiden and Farina) as well as the parties involved in the litigation, and cross examination of those witnesses. Presentation of an independently retained expert witness in Mayan s case would have done nothing more than add to the costs and time involved in an already costly and time consuming litigation. BMF also argues that because Mayan did not tender his prior claim/counterclaim against his father to BMF, the wrongful actor, the need for expert testimony is particularly compelling. But there was no opportunity to tender the defense to BMF. As soon as Mayan s retained attorney, Seiden, corresponded with BMF seeking documentation, BMF raised what should have been obvious to BMF all along that BMF was in a position of a conflict of interest vis-a-vis Mayan and his father and other relatives. Thus, BMF was in no position to consider whether accepting responsibility for Mayan s legal expenses was in BMF s best interest. Ethical Considerations Respectfully, BMF overstates the ethical considerations at play in Sea World and in the Schwartz v. BMF litigation. BMF relies upon Fourtnoy v. Smith, 94 14
15 So. 503 (Fla. 1922), which was a mortgage foreclosure case, in which the only evidence to support the award of a 10% of the amount of the mortgage contingent attorney s fee was an interrogatory answer by the attorney seeking the fee. This Court noted that 10 per cent of the amount decreed may not be reasonable particularly in merely formal foreclosures where no unusual skill or labor is required. Id. at 555. Likewise, Baruch v. Giblin, 122 Fla. 59, 164 So. 831 (Fla. 1936) is of no help to BMF s position either. That case involved a claim for fees based upon quantum meruit, not upon an actual contract for services, as was the case herein. This Court noted that distinction: Id. at 65. In cases where there is an express contract for attorney s fees, litigants will generally be bound by their contract regardless of the amount of the fees specified, but where a quantum meruit is relied on, the test of the fee is the amount and the value of the services rendered... Finally, BFM s assertion that there are attorneys practicing in this state who willingly churn cases, driving up fees and costs in hopes that a defendant will one day be ordered to pay them, does not apply here nor in the Schwartz v. BMF litigation. This is a particularly shallow assertion in a wrongful act case involving underlying litigation where Mr. Seiden agreed to drop his fees to $150 15
16 per hour with a 20% contingent fee. Furthermore, there is never any guarantee that fees will be recovered when they are sought as an element of damages under the Wrongful Act Doctrine in what is, by definition, a second piece of litigation. To the extent that BMF or any other would-be attorney s fee payor is concerned that any attorney s fees have been churned, the requirement of an independently retained expert witness fee can hardly be said to rectify that concern. As the Fourth District recently noted: There is little reason to simply increase litigation costs by requiring another lawyer to testify as an expert. After all, each party usually chooses a lawyer friend, who will willingly testify that the rate and time expended are either reasonable or unreasonable. Roshkind PA v. Machiela, 35 Fla. L. Wkly D.1571 at *2 (Fla. 4 th DCA July 14, 2010). To the contrary, the better rule would require the attorney who incurred the fees to defend his or her actions by swearing to them under oath, and facing rigorous cross-examination. The notion that an independent expert for attorney s fee is, well, independent, is a mere fantasy. IV. CONCLUSION Independent expert testimony with respect to attorney s fees as an element of damages is both a misnomer and a vestige of outdated romanticism of the practice 16
17 of law. First, the expert testimony is not truly independent as the Fourth District recently noted. The retained expert is almost always a friend or former colleague of the attorney seeking or defending fees. If anything, the addition of a layer of handsomely rewarded independent experts adds to the public s mistrust of attorneys, rather than detract from it. CERTIFICATE OF SERVICE WE HEREBY CERTIFY that a true and correct copy of the foregoing was furnished via U.S. Mail this 22nd day of September, 2010 to Edward S. Polk, Esq., Justin D. Siegwald, Esq., COLE SCOTT & KISSANE, P.A., 9150 S. Dadeland Blvd, 14 th Floor, Miami, Fl Attorneys for Amicus Curiae in Support of Petitioner; Michael J. Roper, Esq., Dale A. Scott, Esq. BELL & ROPER, P.A., 2707 E. Jefferson Street, Orlando, Fl Attorneys for Petitioner, and Robert I. Westerfield, Esq, BOWLES & VERNA, LLP, 2121 N. California Blvd, Suite 875, Walnut Creek, CA and Erin J. O Leary, Esq., BROWN, GARGANESE, WEISS & D AGRESTA, P.A., 111 North Orange Avenue, Suite 2000, Orlando, Fl 32802, Attorneys for Respondents; and John S. Vishneski, III, Esq., REED SMITH LLP, 10 S. Wacher Dr., Chicago, IL Andrew Seiden, Esq. SEIDEN ALDER MATTHEWMAN & BLOCH, P.A NW Beacon Square Blvd., Suite 201 Boca Raton, Fl Tel: (561) Fax: (561)
18 PHILIP D. PARRISH, P.A SW 57 th Court, Suite 430 Miami, Fl Tel: (305) Fax: (305) Attorneys for Amicus Curiae in Support of Respondent Philip D. Parrish, Esq. FBN:
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