IN THE SUPREME COURT OF FLORIDA. CASE NO. Fifth District Case No. 5D03-135; 5D03-138; 5D03-139; 5D03-140; 5D03-141; 5D03-142

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1 ALLSTATE INSURANCE COMPANY, vs. Petitioner, BARNES FAMILY CHIROPRACTIC, ETC. IN THE SUPREME COURT OF FLORIDA CASE NO. Fifth District Case No. 5D03-135; 5D03-138; 5D03-139; 5D03-140; 5D03-141; 5D Respondent. / ON PETITION FOR DISCRETIONARY REVIEW FROM THE DISTRICT COURT OF APPEAL, FIFTH DISTRICT OF FLORIDA PETITIONER=S BRIEF ON JURISDICTION Gregory A. Victor Jack R. Reiter 2601 South Bayshore Drive Suite 1600 Miami, Florida Telephone: (305) Facsimile: (305) Attorneys for Petitioner

2 TABLE OF CONTENTS Page TABLE OF AUTHORITIES...ii STATEMENT OF THE CASE AND FACTS...1 SUMMARY OF ARGUMENT...2 ARGUMENT...4 I. THE FIFTH DISTRICT=S FEES AWARD FOR LITIGATING AN ISSUE COLLATERAL TO THE MERITS OF THE INSURANCE ISSUE EXPRESSLY AND DIRECTLY CONFLICTS WITH THE FIRST AND THIRD DISTRICTS WHICH HAVE DENIED FEES FOR COLLATERAL ISSUES NOT DIRECTLY RELATING TO SUBSTANTIVE INSURANCE MATTERS AND THIS COURT S PRONOUNCEMENTS MANDATING STRICT CONSTRUCTION OF FEE AWARD STATUTES....4 CONCLUSION...7 CERTIFICATE OF SERVICE...9 CERTIFICATE OF COMPLIANCE WITH RULE 9.210(A)(2)...9 i

3 TABLE OF AUTHORITIES Cases Cases Page Allstate Ins. Co. v. Titusville Total Health Care, 848 So. 2d 1166 (Fla. 5th DCA 2003)... 1, 2, 7 Bluegrass Art Cast, Inc. v. Consolidated Erection Services, Inc., 870 So. 2d 196 (Fla. 5th DCA 2004)...8 Coordinated Pretrial Proceedings in Petroleum Products Antitrust Litigation, 658 F. 2d 1355 (9th Cir. 1981)...7 Freeman v. Chicago Musical Instrument Co., 689 F.2d 715 (7th Cir. 1982)...7 Hardee v. State, 534 So. 2d 706 (Fla. 1998)...4 Holiday v. Nationwide Mut. Fire Ins., 864 So. 2d 1215 (Fla. 5th DCA 2004)...8 Ins. Co. of North America v. Lexow, 602 So. 2d 528 (Fla.1992)...5 Loper v. Allstate Insurance Co., 616 So. 2d 1055 (Fla. 1st DCA 1993)...6 Mancini v. State, ii

4 312 So. 2d 732 (Fla. 1975)...4 Moore v. Allstate, 570 So. 2d 291 (Fla.1990)...6 Nationwide Mutual Fire Insurance Company, Etc., et al. v. Pamela Holiday (Case No : SC04-184)...8 Novak v. Blum, 614 So. 2d 36 (Fla. 2d DCA 1993)...7 Sarkis v. Allstate Insurance Company, 863 So. 2d 210 (Fla. 2003)... 3, 4, 5 State Farm Fire & Casualty Co. v. Palma, 629 So. 2d 830 (Fla. 1993)...2, 5 United Services Automobile Association v. Kiibler, 364 So. 2d 57 (Fla. 3d DCA 1978)...5 United States v. Bolden, 353 F. 3d 870 (10 th Cir. 2003)...7 United States v. Caggiano, 660 F. 2d 184 (6 th Cir. 1981)...7 iii

5 Statutes Section , Florida Statutes...1, 2 Section (1), Florida Statutes...6 Section , Florida Statutes...passim Section (8), Florida Statutes...6 Section , Florida Statutes...6 Section (8), Florida Statutes...1, 2 Section , Florida Statutes...4 Other Authorities Section 4039, 6a-173 Appleman on Insurance Law and Practice,...6 Rules Rule 1.442, Florida Rules of Civil Procedure...4 iv

6 STATEMENT OF THE CASE AND FACTS This case arose from a dispute between Petitioner, Allstate Insurance Company ( Allstate ) and, Kimberly P. Simoes ( Simoes ), Allstate s former employee and counsel. As the Fifth District noted, after working as staff counsel for Allstate for a considerable time, Simoes left Allstate s employ and began filing suits for PIP benefits against Allstate on behalf of multiple assignees of insureds. See Allstate Ins. Co. v. Titusville Total Health Care, 848 So. 2d 1166 (Fla. 5th DCA 2003) (which the Fifth District specifically referenced) (A. 2). Simoes filed more than 30 such lawsuits. Id. at Allstate filed motions to disqualify Simoes and her firm based on her prior representation of Allstate in certain PIP matters which Allstate believed were substantially related to cases she handled while employed by Allstate. Proceedings on the merits of the PIP claims in those actions were stayed shortly after commencement to allow the courts to consider the disqualification issue. 848 So. 2d at Allstate had also filed a separate action in a Circuit Court to restrain improper use of information and further representation against Allstate, and sought to stay all County Court proceedings pending the disposition of the Circuit Court direct action. Id. at When the County Court in the instant case denied the motion to stay, Allstate sought a writ of certiorari from the Circuit Court, in its appellate capacity, which the Circuit Court denied (A. 2). Simoes then sought attorney s fees under Sections , (8), and Allstate argued that Section fees were inappropriate and that Sections 1

7 and (8) did not authorize the award of attorney s fees for litigation of collateral matters such as the disqualification motion. The Circuit Appeal Court awarded fees under all three statutory provisions (A. 2). The Fifth District quashed the award under Section , concluding that the lower court should have stayed the underlying case pending resolution of the Circuit Court disqualification matter and that Allstate had the right to seek certiorari relief (A. 2). See Titusville Total Health Care, 848 So. 2d at However, the Fifth District denied Allstate s Petition with respect to the fees award under Sections and (8) (A. 2-3). Allstate moved to certify the Opinion both as conflicting with other decisions regarding the scope of awardable fees under insurance fee statutes and as presenting a question of great public importance. The Fifth District denied the motion (A. 2). Allstate invoked the discretionary jurisdiction of this Court on July 19, SUMMARY OF ARGUMENT The Fifth District has improperly expanded the scope of fees awards under Florida s Insurance Code by awarding fees for a collateral matter having nothing to do with the substantive coverage issue. This directly conflicts with the First and Third District Courts of Appeal, which have denied fees under the insurance statutes for litigating collateral matters that fall outside the narrow insurance framework and required trial courts to tailor a fees award under insurance statutes solely to coverage issues. This also conflicts with this Court s decisions in State Farm Fire & Casualty Co. v. Palma, 629 So. 2d 830 (Fla. 1993) (holding that fees awards under the insurance code cannot 2

8 include fees for litigating the amount of the fees award) and Sarkis v. Allstate Insurance Company, 863 So. 2d 210, 223 (Fla. 2003) (noting that statutory authorization for awards of attorney s fees must be strictly construed in favor of the one against whom the penalty is imposed and is never extended by construction ). As a result of the Fifth District s conflicting decision, Allstate faces exorbitant attorney s fees awards for pursing a disqualification motion against one of its former counsel with likely contingency fee multiplier increases sought by Respondent s counsel (which lower courts have already awarded). Because awarding fees under the insurance statute for time incurred in litigating the disqualification issue conflicts with Florida courts that have expressly denied fees for litigating collateral matters and have held that fee award statutes must be strictly construed in favor of the party against whom fees are sought, this Court should exercise its discretionary jurisdiction to consider this issue and resolve the scope of authorized fees under the insurance statute. 3

9 ARGUMENT I. THE FIFTH DISTRICT=S FEES AWARD FOR LITIGATING AN ISSUE COLLATERAL TO THE MERITS OF THE INSURANCE ISSUE EXPRESSLY AND DIRECTLY CONFLICTS WITH THE FIRST AND THIRD DISTRICTS WHICH HAVE DENIED FEES FOR COLLATERAL ISSUES NOT DIRECTLY RELATING TO SUBSTANTIVE INSURANCE MATTERS AND THIS COURT S PRONOUNCEMENTS MANDATING STRICT CONSTRUCTION OF FEE AWARD STATUTES. When evaluating whether a conflict exists that supports jurisdiction, the Court may evaluate whether a District Court of Appeal has announced a rule of law which conflicts with a rule previously announced by this Court or another District. See Mancini v. State, 312 So. 2d 732, 733 (Fla. 1975). Conflict must be found to be express and direct, within the four corners of the Opinion at issue. The District Court need not expressly identify a conflict, however, if the conflict is apparent from the face of the Opinion. Accordingly, if the fair implication of a Court s holding conflicts with another Court s ruling, conflict jurisdiction is appropriate. Hardee v. State, 534 So. 2d 706, 707 (Fla. 1998). Here, the fair implication of the Fifth District s conclusion, juxtaposed with decisions issued by the First and Third Districts relating to fee awards under the insurance statute, demonstrates conflict warranting jurisdiction. This Court recently announced in Sarkis v. Allstate Insurance Company, 863 So. 2d 210 (Fla. 2003), that a multiplier was not appropriate in awarding attorney s fees authorized by the offer of judgment statute. In doing so, the Court emphasized "that statutory authorization for attorney fees is to be strictly construed... Applying a strict construction of the statute and rule, a multiplier therefore cannot be applied under section or rule A multiplier is not authorized." Id. at 223. The same rule of strict construction is applicable to Section , Florida 4

10 Statutes. The decision of the Fifth District is in conflict with Sarkis. It awards attorney s fees and costs for litigating issues not covered by Section by awarding fees in connection with matters beyond continuing litigation of an insurance claim. See also State Farm Fire & Casualty Co. v. Palma, 629 So. 2d 830 (Fla. 1993) (holding that attorney s fees awardable under Section do not include fees for litigating the amount of such fees to be awarded). Accordingly, Courts reviewing fee awards under insurance statutes have limited fees to insurance matters and disallowed fees for those elements of the action that may be deemed collateral to the insurance-related or coverage dispute. Indeed, the legislative intent for fee-shifting in this context is to discourage insurers from contesting valid PIP claims. Ins. Co. of North America v. Lexow, 602 So. 2d 528 (Fla.1992). Awarding fees against an insurer who seeks disqualification of its former counsel does not advance legislative intent, but instead improperly penalizes the insurer for seeking disqualification, regardless of the ultimate outcome of the disqualification litigation. This directly conflicts with the principle enunciated by other districts that fees should not be awarded for litigating collateral matters. As the Third District Court of Appeal held in United Services Automobile Association v. Kiibler, 364 So. 2d 57, 58 (Fla. 3d DCA 1978),... It is well settled in this State that a successful tort claimant is not entitled to attorneys= fees for litigating the tort-feasor=s liability. The claimant is only entitled, pursuant to ' , to a reasonable fee for litigating the issue of insurance coverage. (emphasis added). In 5

11 Loper v. Allstate Insurance Co., 616 So. 2d 1055 (Fla. 1st DCA 1993), the First District held: The trial court correctly determined that attorneys' fees were awardable only on the coverage issue. See Moore v. Allstate, 570 So. 2d 291 (Fla.1990), wherein the supreme court held that section (8) limits the fee awardable under section (1) to the issue of coverage, explaining that the uninsured motorist provisions of section were intended to place the injured party in the same position as he would have been had the tortfeasors been insured, and that (8) accomplishes this purpose by directing that the insurer pay attorney's fees only for the coverage issue when the insured prevails. Id. at 1061 (emphasis added) (citations in original). 1 That the foregoing decisions did not involve PIP claims does not undermine the express and direct conflict facing the Court. Within the context of insurance coverage, the fee-shifting provisions exist to promote resolution and deter improper denial of coverage or benefits. Thus, the First and Third Districts conclusion that fees under the fee-shifting statute must be narrowly-tailored to manifest legislative intent does not coincide with the Fifth District s fees award for litigating a matter having nothing to do with insurance, coverage, or promoting an insurer to provide coverage to its insured. The conflict is magnified here because the Fifth District already concluded that disqualification is collateral to the merits of the insurance case, but awarded fees anyway. When the Fifth District previously held that Allstate correctly sought to stay the insurance dispute, it plainly deemed the disqualification matter as collateral to the merits of the case. 1 See 6a-173 Appleman on Insurance Law and Practice, 4039 (First Edition) (noting that court in awarding attorneys fees to insured was not required to compensate for all time devoted to extensive proceedings collateral to the case). 6

12 As the Court explained, The critical issue of disqualification of the lawyer... had to be answered before the Court proceeded to the merits of the case. 848 So. 2d at 1167 (emphasis added). It is axiomatic that an issue that must be resolved prior to reaching the merits of the case is collateral. See Novak v. Blum, 614 So. 2d 36 (Fla. 2d DCA 1993) (noting that a collateral matter is one that is not determinative of any issue going to the merits of the case). 2 CONCLUSION The Fifth District awarded fees for the plainly collateral matter of disqualification under insurance fee-shifting provisions. This pronouncement directly conflicts with the implicit holding rendered by various District Courts of Appeal that an insured does not recover attorney s fees for litigating matters that are collateral to the underlying coverage issue and the holdings of this Court regarding the limitations on statutory attorney s fee awards. Moreover, as a result of the Fifth District s conflicting decision, Allstate faces 2 Courts in other contexts have also described disqualification proceedings as collateral to the merits. See In re Coordinated Pretrial Proceedings in Petroleum Products Antitrust Litigation, 658 F. 2d 1355, 1357 (9th Cir. 1981)( the grant of a motion to disqualify counsel serves to resolve an important issue completely separate from the merits of the action ); Freeman v. Chicago Musical Instrument Co., 689 F.2d 715 (7th Cir. 1982)(same); United States v. Bolden, 353 F. 3d 870, 876 (10 th Cir. 2003) (stating that a disqualification order is an issue completely independent of the merits of the action ) (citations omitted); United States v. Caggiano, 660 F. 2d 184 (6 th Cir. 1981) (finding that disqualification is separable from and collateral to the merits of the main proceeding). 7

13 fee awards of hundreds of thousands perhaps millions of dollars. Accordingly, a conflict exists here that warrants this Court s exercise of discretionary jurisdiction. 3 Gregory A. Victor Florida Bar No Jack R. Reiter Fla. Bar No S. Bayshore Dr., Suite 1600 Miami, Florida Telephone:(305) Facsimile: (305) Attorneys for Petitioner 3 Courts already addressing this issue have not only imposed fees, but have also imposed a contingency multiplier against Allstate. Application of the multiplier will necessarily implicate other unresolved issues. See Holiday v. Nationwide Mut. Fire Ins., 864 So. 2d 1215, 1218 (Fla. 5th DCA 2004) and Bluegrass Art Cast, Inc. v. Consolidated Erection Services, Inc., 870 So. 2d 196 (Fla. 5th DCA 2004). In both cases, the Fifth District considered trial court orders imposing multipliers where the basis for the fee award arose under Section and certified the question of whether a multiplier could be applied to enhance a fees award under Section , as a matter of great public importance. Holiday, 864 So. 2d at That case remains pending in this Court. Nationwide Mutual Fire Insurance Company, Etc., et al. v. Pamela Holiday (Case No : SC04-184). 8

14 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished by UPS to: Kimberly P. Simoes, Susan Tolbert, P.L., Post Office Box 2222, Daytona Beach, Florida and Shannon McLin Carlyle, La Plaza Grande Professional Center, 20 La Grande Boulevard, The Villages, Florida on this day of August, CERTIFICATE OF COMPLIANCE WITH RULE 9.210(A)(2) I certify that the foregoing brief was prepared using Times New Roman 14-point font, in compliance with Fla. R. App. P (a)(2). 9