STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
TERRI J. GANSON, )
)
Petitioner/Appellant, )
)
vs. ) DOAH CASE NO. 89-4818F
) 1st DCA CASE NO. 88-01568 STATE OF FLORIDA, DEPARTMENT )
OF ADMINISTRATION, )
)
Respondent/Appellee )
)
REPORT AND RECOMMENDATION
By opinion filed July 7, 1989, reported at 14 FLW 1594, the District Court of Appeal, First District, reversed and remanded a final order of the Department of Administration. The opinion included the following disposition of Ganson's motion for costs and attorney fees:
Appellant's motion for attorney fees under section 120.57(1)(b)10, Florida Statutes (1987), based upon her assertion that the agency action which precipitated the appeal was a gross abuse of the agency's discretion, is granted. The parties may, within twenty days of the date this decision becomes final, file with this court a stipulation regarding the amount of reasonable attorney fees to be awarded. In the event the amount of the attorney fees cannot be agreed upon by the parties within the time allotted, the Department shall promptly refer the matter to Michael Parrish, the Division of Administrative Hearings hearing officer, for an immediate evidentiary hearing to determine the amount of reasonable attorney fees. The hearing officer's recommendations - thereon shall be filed with this court within sixty days after this opinion shall have become final, at which time this court will enter an appropriate order awarding attorney's fees.
Purvis v. Department of Professional Regulation, 461 So.2d 134 (Fla. 1st DCA 1984); Johnston v. Department of Professional Regulation, 456 So.2d 939 (Fla. 1st DCA 1984).
The parties were unable to reach a stipulation regarding the amount of reasonable attorney fees to be awarded. On August 28, 1989, the Department of Administration referred the matter to Michael Parrish, a hearing officer of the Division of Administrative Hearings, to conduct an evidentiary hearing to
determine the amount of reasonable attorney fees. In order to accommodate scheduling difficulties of counsel, at the request of the parties the court extended the sixty-day period for the filing of the hearing officer's recommendations until October 13, 1989. (See Motion For Extension of Time filed September 7, 1989, and order granting same issued September 14, 1989.)
An evidentiary hearing was originally scheduled for September 15, 1989. At the request of counsel for the Department of Administration, the evidentiary hearing was continued until September 22, 1989. At the hearing on September 22, 1989, Ganson presented the testimony of Kenneth D. Kranz, Esquire, the attorney who performed all of the services for which fees are claimed. Ganson also offered numerous exhibits including the affidavits of two local attorneys (Vernon T. Grizzard, Esquire, and Fishel Philip Blank, Esquire), both of which included expert opinions regarding the reasonableness of the attorney fees sought by Ganson. The Department also called Mr. Kranz as a witness and offered four exhibits. [Rulings on all exhibits offered by all parties are contained in the appendix to this report and recommendation.] The Department did not call any expert witnesses to oppose the opinions expressed by Messrs. Kranz, Grizzard, and Blank.
At the conclusion of the hearing, the parties were allowed until September 29, 1989, within which to file memorandums of law, which have been carefully considered during the preparation of this report and recommendation.
The statutory provision pursuant to which the court has granted an award of attorney fees, Section 120.57(1)(b)(10), Florida Statutes (1987), reads as follows, in pertinent part:
When there is an appeal, the court in its discretion may award reasonable attorney's fees and costs to the prevailing party if the court finds that the appeal was frivolous, meritless, or an abuse of the appellate process or that the agency action which precipitated the appeal was a gross abuse of the agency's discretion.
Attorney Fees
Ganson's Proposal For Amount Of Attorney's Fees And Costs Of Litigation suggests that there may be some disagreement between the parties as to whether the court's award of attorney fees encompasses all phases of this litigation, or is only an award of attorney fees for legal services on appeal. It would appear from the court's specific mention of Purvis v. Department of Professional Regulation, 461 So.2d 134 (Fla. 1st DCA 1984), and Johnston v. Department of Professional Regulation, 456 So.2d 939 (Fla. 1st DCA 1984), that the court envisioned an award of attorney fees "at the hearing level," as well as on appeal. And it also appears to be well settled that attorney fees may also be recoverable for the time spent litigating entitlement to attorney fees. See Bill Rivers Trailers, Inc. v. Miller, 489 So.2d 1139 (Fla. 1st DCA 1986); B & L Motors, Inc. v. Big Inotti, 427 So.2d 1070 (Fla. 2d DCA 1983). See also Albert Heisler v. Department of Professional Regulation, Construction Industry Licensing Board, 11 FALR 3309 (DOAH Final Order issued May 19, 1989). For purposes of this report and recommendation, I have assumed that the court's award of attorney fees encompassed all three phases of activity in this litigation; the "administrative phase" (from the commencement of the administrative claim until the Department's final order), the "appeal phase"
(from the Department's final order until the appellate court opinion), and the "attorney fee phase" (from the appellate court opinion to the present).
Accordingly, I have included in this report and recommendation discussion and recommendations as to the appropriate attorney fee award for all three phases of the litigation. Where it appears helpful to do so, issues regarding the three phases are discussed separately.
The methodology to be followed in determining the amount of reasonable attorney fees to be awarded to a prevailing party is set forth in Florida Patient's Compensation Fund v. Rowe, 472 So.2d 1145 (Fla. 1985). There, the Florida Supreme Court decided to "adopt the federal lodestar approach for computing reasonable attorney fees" and, at pages 1150-51, set forth the following methodology:
The first step in the lodestar process requires the court to determine the number of hours reasonably expended on the litigation. Florida courts have emphasized the importance of keeping accurate and current records of work done and time spent on a case, particularly when someone other than the client may pay the fee...... To accurately assess the labor involved, the attorney fee applicant should present records detailing the amount of work performed. Counsel is expected, of course, to claim only those hours that he could properly bill to his client. Inadequate documentation may result in a reduction in the number of hours claimed, as will a claim for hours that the court finds to be excessive or unnecessary.
The "novelty and difficulty of the question involved" should normally be reflected by the number of hours reasonably expended on the litigation.
The second half of the equation, which encompasses many aspects of the representation, requires the court to determine a reasonable hourly rate for the services of the prevailing party's attorney. In establishing this hourly rate, the court should assume the fee will be paid irrespective of the result, and take into account all of the Disciplinary Rule 2-106 factors except the "time and labor required," the "novelty and difficulty of the question involved," the "results obtained," and "[w]hether the fee is fixed or contingent." The party who seeks the fees carries the burden of establishing the prevailing "market rate," i.e., the rate charged in that community by lawyers of reasonably comparable skill, experience and reputation, for similar services.
The number of hours reasonably expended, determined in the first step, multiplied by a reasonable hourly rate, determined in the second step, produces the lodestar, which is an objective basis for the award of attorney fees. Once the court arrives at the lodestar figure, it may add or subtract from the fee based upon a "contingency risk" factor and the "results obtained."
The number of hours reasonably expended on the litigation.
Ganson's attorney has submitted contemporaneously prepared, detailed time records evincing his labors at all three phases of this litigation. These records reflect that Ganson's counsel recorded 66.2 hours at the administrative phase, 94.2 hours at the appeal phase, and 32.6 hours at the attorney fee phase, for a grand total of 193 hours. To support the application for fees, Ganson introduced the affidavits of two members of the Florida Bar, both of whom practice administrative law in the Tallahassee area, and both of whom opined that the total number of hours claimed was reasonable and that the number of hours claimed for each of the three phases of the litigation was also reasonable. Although the Department argues that many of the hours claimed by Ganson's attorney are excessive, the Department did not offer any expert witness testimony to support its arguments.
Part of the Department's argument in this regard is that the hours claimed by Ganson's attorney should be reduced because the attorney prepares his own legal documents, including pleadings, notices, motions, and briefs, by typing on a computer. Mr. Kranz explained in his testimony that such preparation is no different and no more time-consuming than preparation of documents by such means as oral dictation or handwriting, and the Department has not offered any evidence that Mr. Kranz' document preparation methods are more time-consuming than the methods of other attorneys.
Also, without benefit of expert opinion or other evidence, the Department argues that the amount of time spent by Ganson's attorney on writing the brief in the appellate court should be reduced from the claimed 51 hours to an arbitrary figure of 26 hours. There is simply no basis in the record for such a reduction. Nor is there any record basis for the Department's contention that the hours spent by Ganson's attorney in preparation for oral argument should be arbitrarily reduced from the claimed 13 to a mere 4. The Department has raised challenges to several other details of the hours claimed by Ganson's attorney, but all of the challenges fail for want of expert opinion or other evidence to support them.
Based on the evidence presented, all of the hours claimed by Ganson's attorney are reasonable. Accordingly, the first step in the lodestar calculation consists of a total of 193 hours broken down as follows: 66.2 hours at the administrative phases, 94.2 hours at the appeal phase, and 32.6 hours at the attorney fee phase.
The reasonable hourly rate for the services of Ganson's attorney.
The parties disagree on what constitutes a reasonable hourly rate for Ganson's attorney. Ganson contends that the rate should be $125 per hour, basing the contention largely on the opinions in the Blank and Grizzard affidavits to the effect that $125 is the "market rate" in the Tallahassee legal
community for services of the nature provided in this case. The Department contends, based primarily on its notions about the experience level of Mr. Kranz and on what Mr. Kranz has charged other clients for legal work, that a reasonable hourly rate would be $75 for legal work at the administrative phase and $100 per hour for legal work at the appeal phase and thereafter.
Ganson's contentions are supported by evidence; the Department's are not. Further, Ganson's contentions are consistent with the second step methodology of Rowe, supra, while the Department's are not. Rowe places on the party seeking attorney fees the burden of establishing "the rate charged in that community by lawyers of reasonably comparable skill, experience and reputation, for similar services." The evidence shows that rate to be $125 per hour.
The calculation of the lodestar amount.
The calculation of the lodestar amount under the Rowe methodology is normally a simple arithmetic task; the multiplication of the reasonable number of hours times the reasonable hourly rate. Here, the calculation is as follows: For the administrative phase, 66.2 hours x $125.00 $8,275.00; for the appeal phase, 94.2 hours x $125.00 $11,775.00; and for the attorney fee phase, 32.6 hours x $125.00 $4,075.00. Adding the three components together produces a lodestar of $24,125.00.
But the Department argues, on the basis of cases such as Miami Children's Hospital v. Tamayo, 529 So.2d 667 (Fla. 1988), that the fee to be awarded in this case must be limited to the maximum fee that Ganson was obligated to pay to her attorney; an amount which the Department contends is only $500.00. Disposition of this issue requires a closer look at the nature of Ganson's fee arrangement and at a couple of other more analogous cases.
The fee arrangement between Ganson and her attorney is described as follows in one of the Kranz affidavits (Petitioner's Exhibit 2, at pp. 8 and 9):
Our agreement was that: 1) no fee would be owed if we were not successful in her claim; and 2) we would attempt to secure an award of fees against the Department, and in the event that we were successful in that claim, attorney's fees would be whatever were awarded.
Upon being advised at the outset that an eventual award of fees appeared very unlikely, the client initially insisted that she wanted to pay me something if we ultimately won on the merits, but did not prevail on the issue of fees. I perceived that it was very important to her not to consider herself to be taking advantage of me. I agreed and said that we would decide on a fee later if that situation arose. We never discussed an amount certain, but it was my intention that, if we ended up in this situation, I would charge her, if anything, a token amount only large enough to make her comfortable. Realistically, no significant fee (if any) would have been paid by the
client; any fees bearing any rational relationship to the work required in this case could only have come from an award against the Department.
In his testimony at the hearing, Mr. Kranz testified that if Ganson had won on the merits, but had not been awarded attorney fees against the Department, and if Ganson had insisted on paying a fee for legal services, he would probably have charged her about $500.00. But Mr. Kranz clarified that under those circumstances, the fee would have been more in the nature of what Ganson wanted to pay, rather than anything she would have been required to pay. In brief summary; although under certain speculative circumstances which might have, but never did, come about, Ganson might have wanted to pay a nominal fee to her attorney, her attorney had no intention of collecting a fee from any source other than an award of attorney fees against the Department. Specifically, Ganson's attorney did not have an agreement to share in any percentage of any recovery he might obtain for Ganson.
Ganson's fee agreement with her attorney is unlike the agreement in Miami Children's Hospital, supra, and is quite similar to the fee agreements addressed in Quanstrom v. Standard Guaranty Insurance Company, 519 So.2d 1135 (Fla. 5th DCA 1988), and State Farm Fire and Casualty Co. v. Palma, 524 So.2d 1035 (Fla. 4th DCA 1988). The fee agreement in Quanstrom, supra, "was to the effect that if the attorney ultimately prevailed..., the attorney would be entitled to a fee which would be the amount the court allowed as an attorney's fee under Section 627.428, Florida Statutes, rather than a percentage of the recovery." And in Palma, supra, the contingency fee agreement provided that "the amount of the fee agreed to under the contract was a fee to be awarded by the court." In both Quanstrom and Palma, the courts held that the usual Rowe factors should be used to calculate reasonable attorney fees, and in neither case was the fact that no fee was due from the client found to be a basis for limiting the fee. In view of the nature of the fee agreement in this case, and on the basis of Quanstrom and Palma, the usual Rowe factors should be applied here.
Effect of "results obtained" on the lodestar amount.
In the Rowe decision the court observed, at page 1151:
The "results obtained" may provide an independent basis for reducing the fee when the party prevails on a claim or claims for relief, but is unsuccessful on other unrelated claims. When a party prevails on only a portion of the claims made in the litigation, the trial judge must evaluate the relationship between the successful and unsuccessful claims and determine whether the investigation and prosecution of the successful claims can be separated from the unsuccessful claims.
In this case, Ganson was successful on her entire claim against the Department. Therefore, the "results obtained" component of the Rowe methodology does not provide a basis for reducing the fee.
Application of the "contingency risk" factor to the lodestar amount.
Ganson argues that a "contingency risk" factor of 2.5 should be applied to the lodestar amount. The Department argues, for a number of different reasons set out below, that no contingency risk factor should be applied in this case. At page 1151 of the Rowe decision, the court tells us the following about contingency risk factors:
Based on our review of the decisions of other jurisdictions and commentaries on the
subject we conclude that in contingent fee cases, the lodestar figure calculated by the court is entitled to enhancement by an appropriate contingency risk multiplier in the range from 1.5 to 3. When the trial court determines that success was more likely than not at the outset, the multiplier should be 1.5; when the likelihood of success was approximately even at the outset, the multiplier should be 2; and, when success was unlikely at the time the case was initiated, the multiplier should be in the range of 2.5 and 3. (emphasis added)
The use of the phrase "entitled to enhancement" supports a conclusion that the application of a multiplier is mandatory in contingent fee cases, and Florida appellate courts in two districts have so held. See State Farm Fire & Casualty Co. v. Palma, 524 So.2d 1035 (Fla. 4th DCA 1988); Quanstrom v. Standard Guaranty Insurance Company, 519 So.2d 1135 (Fla. 5th DCA 1988). But several decisions in the Third District Court of Appeal have concluded that the contingency risk multiplier is not mandatory. See Bankers Insurance Company v. Valmore Gonzalez, 14 FLW 906 (Fla. 3d DCA 1989); National Foundation Life Insurance Company v. Wellington, 526 So.2d 766 (Fla. 3d DCA 1988); Travelers Indemnity Company v. Sotolongo, 513 So.2d 1384 (Fla. 3d DCA 1987). Although the matter is not entirely free from doubt, unless and until the matter is further clarified by the Florida Supreme Court, it would appear that the better reasoned view, and the most widely accepted view, is that the contingency risk multiplier should be treated as mandatory in cases where the party seeking fees has entered into a contingent fee agreement.
The Department argues that, even if mandatory, a contingency risk multiplier is inappropriate here because the fee agreement between Ganson and her attorney was never reduced to writing. In this regard, the Department relies on FIGA v. R.V.M.P. Corp., 681 F.Supp 806 (S.D. Fla. 1988), in which a federal court applying Florida law held:
Because this contingency fee arrangement was never reduced to a writing, it is an unconscionable contract. The Rules Regulating the Florida Bar, in particular Rule 4-1.5(D)(1), (2)(1987), provide that every lawyer who accepts a contingency fee arrangement must reduce the arrangement to a writing signed by the client and a lawyer for the law firm representing the client This obviously is not the case here. Because the proposed arrangement violates this rule of professional responsibility, the contingency
fee agreement here is unconscionable and,' therefore, void. See Citizens Bank & Trust Co. v. Mabry, 102 Fla. 1084, 136 So. 714
(1931). Because the contingency fee arrangement here is unconscionable, the court will not apply a contingency risk factor.
See Aperm of Fla., Inc. v. Trans-Coastal Management Co., 505 So.2d 459 (Fla. 4th DCA 1987).
Because of the views quoted above, the court in FIGA declined to apply a contingency risk factor, but did, on a quantum merit theory, award a substantial attorney fee. For several reasons, FIGA does not appear to be controlling here. First, the conclusion in FIGA is not based on Florida case law, nor does there appear to be any Florida appellate court decision which has followed FIGA. Second, the facts in FIGA are different from the facts in this case. FIGA involved a contingency fee agreement in which the attorney was to receive one- third of the amount recovered and, if no amount was recovered, the client would pay the costs, but not the fees, of the litigation. As discussed above, the contingency fee agreement in this case does not contemplate the attorney taking a share of the client's recovery or otherwise receiving a fee from the client.
Rather, as in Quanstrom and Palma, supra, the only source from which the attorney seeks a fee is the opposing party. Because of these differences, FIGA is inapplicable to the instant matter.
The Department also argues that on the basis of Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 483 U.S. 711, 107 S.Ct. 3078,
97 L.Ed.2d 585 (1987), the use of the contingent fee multiplier should be limited or omitted. In response to an identical argument, the court in Aetna Life Insurance Company v. Casalotti, 544 So.2d 242 (Fla. 3d DCA 1989), held:
We are unable to entertain that suggestion, for the Florida Supreme Court in Rowe expressly authorized multipliers and prescribed the permissible range.
The same result should obtain here. See also, State Farm Fire & Casualty Co. v. Palma, 524 So.2d 1035 (Fla. 4th DCA 1988), and Quanstrom v. Standard Guaranty Insurance Company, 519 So.2d 1135 (Fla. 5th DCA 1988). (Contingent fee multipliers are mandatory.)
The Department argues that no multiplier should be used because it would result in an attorney fee many times larger than Ganson's recovery and would be a fee with no reasonable relationship to the size of the recovery. In answer to a similar argument, the court in Quanstrom v. Standard Guaranty Insurance Company, 519 So.2d 1135 (Fla. 5th DCA 1988), held:
As to the argument that the contingency risk multiplier may, in the trial court's opinion, result in an unreasonably large fee in a given case (such as when, as here, it is compared only to the amount in controversy) the answer is that the factors other than the contingency risk factor, such as the hours expended and the routinely charged fee rate, are equally implicated. If any formula considers only relevant factors, and all of
them, and correctly weighs those factors, the result necessarily will be correct. If the result is unsatisfactory to those having the responsibility and authority in the matter, then they should change the formula by reassessing the factors to be considered and the weight to be given each. We who are bound to follow the authority of others should not omit factors or juggle the weight given a factor, beyond the perimeters given the exercise of discretion, in order to reach a preferred result.
And it should also be noted that in State Farm Fire & Casualty Co. v. Palmer,
524 So.2d 1035 (Fla. 4th DCA 1988), an attorney fee in the amount of
$253,500.00, calculated pursuant to the Rowe factors, was approved on appeal even though the amount recovered by the plaintiff was only $600.00. (The Palma court noted that the litigation in that case had become protracted due to "stalwart defense" and "militant resistance;" characteristics which are to some extent shared by the litigation in this case.) On the basis of the foregoing, the mere size of the fee, if properly calculated pursuant to the Rowe methodology, is not a basis for reduction of the fee.
For all of the reasons set forth above, it is concluded that a contingency risk multiplier should be applied in this case. What remains to be done is to select the appropriate multiplier. Although Ganson argues otherwise, upon consideration of the evidence, it appears that at the outset the likelihood of success in this case was approximately even. To borrow from Appalachian, Inc. v. Ackmann, 507 So.2d 150 (Fla. 2d DCA 1987), in which a multiplier of 2 was approved, at the outset the outcome of this case "was tentative and incapable of a comforting prediction of success." Under such circumstances, Rowe requires a multiplier of 2. Application of that multiplier yields the following results: For the administrative phase, $8,275.00 x 2 $16,550.00; for the appeal phase, $11,775.00 x 2 $23,550.00; and for the attorney fee phase,
$4,075.00 x 2 $8,105.00. The total for all three phases of the litigation is calculated as $16,550.00 + $23,550.00 + $8,150.00 $48,250.00. On the basis of all of the foregoing, a reasonable attorney fee pursuant to the Rowe methodology totals $48,250.00
Costs
Ganson's motion before the appellate court was titled "Motion For Attorney's Fees," but the opening sentence of the motion requests an award of "attorney's fees and costs." (emphasis added) The motion also concludes with a request for an award of "reasonable attorney's fees and costs." (emphasis supplied) The court's opinion in this case grants Ganson's "motion for attorney fees," but never specifically awards costs. Similarly, the court's opinion does not specifically direct the hearing officer to make any recommendation regarding costs. Nevertheless, the court's specific mention of Purvis v. Department of Professional Regulation, 461 So.2d 134 (Fla. 1st DCA 1984), and Johnston v. Department of Professional Regulation, 456 So.2d 939 (Fla. 1st DCA 1984), leaves open the possibility that it was the court's intention to award costs as well as fees to Ganson. Because of that possibility, I include the following discussion of Ganson's costs.
The costs which Ganson seeks to recover are itemized in the three Kranz affidavits designated as Petitioner's Exhibits 2, 3, and 3A. Broken out into the three phases of this litigation, the costs claimed are summarized as follows:
Administrative Phase | |
Expert witness fee (Dr. Whitley) | 100.00 |
Expert Witness fee (Dr. Munasifi) | 125.00 |
Deposition transcript (Dr. Munasifi) | 151.94 |
Copying charge for medical records | 25.00 |
Miscellaneous copying charges | 89.00 |
Miscellaneous postage charges | 3.41 |
Sales tax on certain expenses | 13.16 |
Total claimed for this phase | 507.51 |
Appeal Phase | |
District Court of Appeal filing fee | 100.00 |
Copying charges--Initial Brief | 57.46 |
Copy/Binding Charge--Reply Brief | 19.44 |
Miscellaneous copying charges | 39.15 |
Miscellaneous postage charges | 5.85 |
Total claimed for this phase | 221.90 |
Attorney Fee Phase Photocopying charge--Proposal For Fees &
Exhibits--Tallahassee Copy & Printing 84.80
Total claimed for this phase 84.80
The necessity or reasonableness of the costs are not addressed in the affidavits of Blank and Grizzard. The Kranz affidavits itemize the costs, but contain no opinion concerning the reasonableness of the expert witness fees claimed nor any opinion that the other costs claimed were reasonably and necessarily incurred in the prosecution of Ganson's case. The evidence does show that the client has voluntarily paid all but the last few dollars of the costs claimed, which is some evidence of the reasonableness of the costs. Further, facial examination of the costs claimed reveals nothing out of the ordinary. With regard to the expert witness fees paid to Dr. Whitley and Dr. Munasifi, the necessity of such testimony can hardly be doubted in a case in which the central issue concerned the nature of Ganson's medical condition before and after her employment with the state. Finally, the Department of Administration has not argued that any of the costs claimed are unnecessary or unreasonable.
The Department's failure to object notwithstanding, the copying charges (with the exception of the charges for copies of medical records) and the postage charges are not the types of costs that are normally assessed against an opposing party. See Statewide Uniform Guideline For Taxation Of Costs In Civil Actions. Accordingly, the miscellaneous copying charges ($89.00) and miscellaneous postage charges ($3.14) should be deducted from the costs for the Administrative Phase; the initial brief ($57.46), the reply brief ($19.44), and miscellaneous ($39.15) copying charges and the miscellaneous postage charges
($5.85) should be deducted from the costs for the Appeal Phase; and the photocopying charge ($84.80) should be deducted from the costs for the Attorney Fee Phase. With these reductions, the costs Ganson should recover, if it is the intention of the court to award costs, are as follows:
Administrative Phase | $401.94 |
Appeal Phase | 100.00 |
Attorney Fee Phase | 0.00 |
TOTAL ALLOWABLE COSTS | $501.94 |
RECOMMENDATION
Based on the evidence presented at the hearing on September 22, 1989, the hearing officer recommends that the attorney fees awarded to Ganson be in the following amounts:
Attorney fees for the Administrative Phase: $16,550.00 Attorney fees for the Appeal Phase: 23,550.00 Attorney fees for the Attorney Fee Phase: 8,150.00 TOTAL ATTORNEY FEE RECOMMENDATION $48,250.00
Based on the evidence presented at the hearing on September 22, 1989, the Hearing Officer recommends that the costs awarded to Ganson be in the following amounts:
Administrative Phase | $401.94 |
Appeal Phase | 100.00 |
Attorney Fee Phase | 0.00 |
TOTAL COSTS RECOMMENDATION | $501.94 |
Respectfully submitted and entered this 12th day of October 1989, at Tallahassee, Leon County, Florida.
MICHAEL M. PARRISH, Hearing Officer Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 12th day of October, 1989.
APPENDIX TO REPORT AND RECOMMENDATION IN GANSON v. STATE OF FLORIDA, DEPARTMENT OF
ADMINISTRATION, DOAH CASE NO. 89-4818F, 1st DCA CASE NO. 88-01568
The following is a summary of the rulings at hearing on all of the exhibits offered by all parties at the evidentiary hearing on September 22, 1989.
Exhibits offered by Petitioner Ganson:
Petitioner Ex. 1: Received without objection. Petitioner Ex. 2: Received without objection. Petitioner Ex. 3: Received without objection. Petitioner Ex. 3A: Received without objection. Petitioner Ex. 4A: Received without objection. Petitioner Ex. 4B: Received without objection.
Petitioner Ex. 5. Objection on grounds of relevancy. Objection overruled and exhibit received. [Objection on the grounds of hearsay might have resulted in a different ruling, but there was no hearsay objection.]
Petitioner Ex. 6: Objection on grounds of relevancy. Objection overruled and exhibit received. [Objection on the grounds of hearsay might have resulted in a different ruling, but there was no hearsay objection.]
Petitioner Ex. 7: Received without objection. Petitioner Ex. 8: Received without objection.
Petitioner Ex. 9: Officially recognized without objection. Petitioner Ex. 10: Officially recognized without objection.
Petitioner Ex. 11: Objection sustained. [Included in record as rejected exhibit.]
Petitioner Ex. 12. Officially recognized without objection. Petitioner Ex. 13: Officially recognized without objection.
Exhibits offered by Respondent Department:
Department Ex. 1: Received without objection. Department Ex. 2: Received without objection.
Department Ex. 3: Objection on grounds exhibit constitutes statement made in negotiations concerning a compromise. Objection sustained. [Included in record as rejected exhibit.]
Department Ex. 4: Objection on grounds exhibit constitutes statement made in negotiations concerning a compromise. Objection sustained. [Included in record as rejected exhibit.]
COPIES FURNISHED:
Augustus D. Aikens, Esquire Department of Administration
435 Carlton Building Tallahassee, Florida 32399-1550
Kenneth D. Franz, Esquire 204-B South Monroe Street Tallahassee, Florida 32301
Raymond D. Rhodes, Clerk District Court of Appeal First District
State of Florida
300 Martin Luther King Boulevard Tallahassee, Florida 32399-1850
================================================================= DISTRICT COURT OPINION
=================================================================
IN THE DISTRICT COURT OF APPEAL FIRST DISTRICT, STATE OF FLORIDA
TERRI J. GANSON, NOT FINAL UNTIL TIME EXPIRES TO FILE MOTION FOR REHEARING AND
Appellant, DISPOSITION THEREOF IF FILED.
vs. CASE NO. 88-1568
DOAH CASE NO. 89-4818F
STATE OF FLORIDA, DEPARTMENT OF ADMINISTRATION, OFFICE OF STATE EMPLOYEES' INSURANCE,
Appellee.
/ Opinion filed December 22, 1989.
Appeal from an order of the Department of Administration.
Kenneth D. Kranz, of Eric B. Tilton, P.A., Tallahassee, for appellant.
Augustus D. Aikens, Jr., General Counsel, Department of Administration, Tallahassee, for appellee.
OPINION AND ORDER ON ATTORNEY FEE
BARFIELD, J.
By direction of this court the matter of attorney fees payable to appellant was submitted to Michael M. Parrish, Hearing Officer, for a recommendation on the amount of fee to be awarded. His Report and Recommendation follows.
REPORT AND RECOMMENDATION
By opinion filed July 7, 1989, reported at 14 FLW 1594, the District Court of Appeal, First District, reversed and remanded a final order of the Department of Administration. The opinion included the following disposition of Ganson's motion for costs and attorney fees:
Appellant's motion for attorney fees under section 120.57(1)(b)10, Florida Statutes (1987), based upon her assertion that the agency action which precipitated the appeal was a gross
abuse of the agency's discretion, is granted. The parties may, within twenty days of the date this decision becomes final, file with this court a stipulation regarding the amount of reasonable attorney fees to be awarded. In the event the amount of the attorney fees cannot be agreed upon by the parties within the time allotted, the Department shall promptly refer the matter to Michael Parrish, the Division of Administrative Hearings hearing officer, for an immediate evidentiary hearing to determine the amount of reasonable attorney fees. The hearing officer's recommendations thereon shall be
filed with this court within sixty days after this opinion shall have become final, at
which time this court will enter an appropriate order awarding attorney's fees. Purvis v.
Department of Professional Regulation, 461 So.2d 134 (Fla. 1st DCA 1984); Johnston v.
Department of Professional Regulation, 456 So.2d 939 (Fla. 1st DCA 1984).
The parties were unable to reach a stipulation regarding the amount of reasonable attorney fees to be awarded. On August 28, 1989, the Department of Administration referred the matter to Michael Parrish, a hearing officer of the Division of Administrative Hearings, to conduct an evidentiary hearing to determine the amount of reasonable attorney fees. In order to accommodate scheduling difficulties of counsel, at the request of the parties the court extended the sixty-day period for the filing of the hearing officer's recommendations until October 13, 1989. (See Motion For Extension of Time filed September 7, 1989, and order granting same issued September -14, 1989.)
An evidentiary hearing was originally scheduled for September 15, 1989. At the request of counsel for the Department of Administration, the evidentiary hearing was continued until September 22, 1989. At the hearing on September 22, 1989, Ganson presented the testimony of Kenneth D. Kranz, Esquire, the attorney who performed all of the services for which fees are claimed. Ganson also offered numerous exhibits including the affidavits of two local attorneys (Vernon T. Grizzard, Esquire, and Fishel Philip Blank, Esquire), both of which included expert opinions regarding the reasonableness of the attorney fees sought by Ganson. The Department also called Mr. Kranz as a witness and offered four exhibits. [Rulings on all exhibits offered by all parties are contained in the appendix to this report and recommendation.] The Department did not call any expert witnesses to oppose the opinions expressed by Messrs. Kranz, Grizzard, and Blank.
At the conclusion of the hearing, the parties were allowed until September 29, 1989, within which to file memorandums of law, which have been carefully considered during the preparation of this report and recommendation.
The statutory provision pursuant to which the court has granted an award of attorney fees, Section 120.57(1)(b)(10), Florida Statutes (1987), reads as follows, in pertinent part:
When there is an appeal, the court in its discretion may award reasonable attorney's fees and costs to the prevailing party if the court finds that the appeal was frivolous, meritless, or an abuse of the appellate process or that the agency action which precipitated, the appeal was a gross abuse of the agency's discretion.
Attorney Fees
Ganson's Proposal For Amount Of Attorney's Fees And Costs Of Litigation suggests that there may be some disagreement between the parties as to whether the court's award of attorney fees encompasses all phases of this litigation, or is only an award of attorney fees for legal services on appeal. It would appear from the court's specific mention of Purvis v. Department of Professional Regulation, 461 So.2d 134 (Fla. 1st DCA 1984), and Johnston v. Department of Professional Regulation, 456 So.2d 939 (Fla. 1st DCA 1984), that the court envisioned an award of attorney fees "at the hearing level," as well as on appeal. And it also appears to be well settled that attorney fees may also be recoverable for the time spent litigating entitlement to attorney fees. See Bill Rivers Trailers, Inc. v. Miller, 489 So.2d 1139 (Fla. 1st DCA 1986); B & L Motors, Inc. v. Big Inotti, 427 So.2d 1070 (Fla. 2d DCA 1983). See also Albert Heisler v. Department of Professional Regulation, Construction Industry Licensing Board, 11 FALR 3309 (DOAH Final Order issued May 19, 1989). For purposes of this report and recommendation, I have assumed that the court's award of attorney fees encompassed all three phases of activity in this litigation; the "administrative phase" (from the commencement of the administrative claim until the Department's final order), the "appeal phase" (from the Department's final order until the appellate court opinion), and the "attorney fee phase" (from the appellate court opinion to the present).
Accordingly, I have included in this report and recommendation discussion and recommendations as to the appropriate attorney fee award for all three phases of the litigation. Where it appears helpful to do so, issues regarding the three phases are discussed separately.
The methodology to be followed in determining the amount of reasonable attorney fees to be awarded to a prevailing party is set forth in Florida Patient's Compensation Fund v. Rowe, 472 So.2d 1145 (Fla. 1985). There, the Florida Supreme Court decided to "adopt the federal lodestar approach for computing reasonable attorney fees" and, at pages 1150-51, set forth the following methodology:
The first step in the lodestar process requires the court to determine the number of hours reasonably expended on the litigation. Florida courts have emphasized the importance of keeping accurate and current records of work done and time spent on a case, particularly when someone other than the client may pay the fee. To
accurately assess the labor involved, the attorney fee applicant should present records detailing the amount of work performed. Counsel is expected, of course, to claim only those hours that he could properly bill to his client. Inadequate documentation may result in a reduction in the number of hours claimed, as will a claim for hours that the court finds to be excessive or unnecessary. The "novelty and difficulty of the question involved" should normally be reflected by the number of hours reasonably expended on the litigation.
The second half of the equation, which encompasses many aspects of the representation, requires the court to determine a reasonable hourly rate, for the services of the prevailing party's attorney. In establishing this hourly rate, the court should assume the fee will be paid irrespective of the result, and take into account all of the Disciplinary Rule 2-106 factors except the "time and labor required," the "novelty and difficulty of the question involved," the "results obtained," and "[w]hether the fee is fixed or contingent." The party who seeks the fees carries the burden of establishing the prevailing "market rate," i.e., the rate charged in that community by lawyers of reasonably comparable skill, experience and reputation, for similar services.
The number of hours reasonably expended, determined in the first step, multiplied by a reasonable hourly rate, determined in the second step, produces the lodestar, which is an objective basis for the award of attorney fees. Once the court arrives at the lodestar figure, it may add or subtract from the fee based upon a "contingency risk" factor and the "results obtained."
The number of hours reasonably expended on the litigation.
Ganson's attorney has submitted contemporaneously prepared, detailed time records evincing his labors at all three phases of this litigation. These records reflect that Ganson's counsel recorded 66.2 hours at the administrative phase, 94.2 hours at the appeal phase, and 32.6 hours at the attorney fee phase, for a grand total of 193 hours. To support the application for fees, Ganson introduced the affidavits of two members of the Florida Bar, both of whom practice administrative law in the Tallahassee area, and both of whom opined that the total number of hours claimed was reasonable and that the number of hours claimed for each of the three phases of the litigation was also reasonable. Although the Department argues that many of the hours claimed by Ganson's attorney are excessive, the Department did not offer any expert witness testimony to support its arguments.
Part of the Department's argument in this regard is that the hours claimed by Ganson's attorney should be reduced because the attorney prepares his own legal documents, including pleadings, notices, motions, and briefs, by typing on a computer. Mr. Kranz explained in his testimony that such preparation is no different and no more time-consuming than preparation of documents by such means as oral dictation or handwriting, and the Department has not offered any evidence that Mr. Kranz, document preparation methods are more time-consuming than the methods of other attorneys.
Also, without benefit of expert opinion or other evidence, the Department argues that the amount of time spent by Ganson's attorney on writing the brief in the appellate court should be reduced from the claimed 51 hours to an arbitrary figure of 26 hours. There is simply no basis in the record for such a reduction. Nor is there any record basis for the Department's contention that the hours spent by Ganson's attorney in preparation for oral argument should be arbitrarily reduced from the claimed 13 to a mere 4. The Department has raised challenges to several other details of the hours claimed by Ganson's attorney, but all of the challenges fail for want of expert opinion or other evidence to support them.
Based on the evidence presented, all of the hours claimed by Ganson's attorney are reasonable. Accordingly, the first step in the lodestar calculation consists of a total of 193 hours broken down as follows: 66.2 hours at the administrative phases, 94.2 hours at the appeal phase, and 32.6 hours at the attorney fee phase.
The reasonable hourly rate for the services of Ganson's attorney.
The parties disagree on what constitutes a reasonable hourly rate for Ganson's attorney. Ganson contends that the rate should be $125 per hour, basing the contention largely on the opinions in the Blank and Grizzard affidavits to the effect that $125 is the "market rate" in the Tallahassee legal community for services of the nature provided in this case. The Department contends, based primarily on its notions about the experience level of Mr. Kranz and on what Mr. Kranz has charged other clients for legal work, that a reasonable hourly rate would be $75 for legal work at the administrative phase and $100 per hour for legal work at the appeal phase and thereafter.
Ganson's contentions are supported by evidence; the Department's are not.
Further, Ganson's contentions are consistent with the second step methodology of Rowe, supra, while the Department's are not. Rowe places on the party seeking attorney fees the burden of establishing "the rate charged in that community by lawyers of reasonably comparable skill, experience and reputation, for similar services." The evidence shows that rate to be $125 per hour.
The calculation of the lodestar amount.
The calculation of the lodestar amount under the Rowe methodology is normally a simple arithmetic task; the multiplication of the reasonable number of hours times the reasonable hourly rate. Here, the calculation is as follows: For the administrative phase, 66.2 hours x $125.00 $8,275.00; for the appeal phase, 94.2 hours x $125.00 $11,775.00; and for the attorney fee phase, 32.6 hours x $125.00 $4,075.00. Adding the three components together produces a lodestar of $24,125.00.
But the Department argues, on the basis of cases such as Miami Children's Hospital v. Tamayo, 529 So.2d 667 (Fla. 1988), that the fee to be awarded in this case must be limited to the maximum fee that Ganson was obligated to pay to her attorney; an amount which the Department contends is only $500.00.
Disposition of this issue requires a closer look at the nature of Ganson's fee arrangement and at a couple of other more analogous cases.
The fee arrangement between Ganson and her attorney is described as follows in one of the Kranz affidavits (Petitioner's Exhibit 2, at pp. 8 and 9):
Our agreement was that: 1) no fee would be owed if we were not successful in her claim; and 2) we would attempt to secure an award of fees against the Department, and in the event that we, were successful in that claim, attorney's fees would be whatever were awarded.
Upon being advised at the outset that an eventual award of fees appeared very unlikely, the client initially insisted that she wanted to pay me something if we ultimately won on the merits, but did not prevail on the issue of fees. I perceived that it was very important to her not to consider herself to be taking advantage of me. I agreed and said that we would decide on a fee later if that situation arose. We never discussed an amount certain, but it was my intention that, if we ended up in this situation, I would charge her, if anything, a token amount only large enough to make her comfortable. Realistically, no significant fee (if any) would have been paid by the client; any fees bearing any rational relationship to the work required in this case could only have come from an award against the Department.
In his testimony at the hearing, Mr. Kranz testified that if Ganson had won on the merits, but had not been awarded attorney fees against the Department, and if Ganson had insisted on paying a fee for legal services, he would probably have charged her about $500.00. But Mr. Kranz clarified that under those circumstances, the fee would have been more in the nature of what Ganson wanted to pay, rather than anything she would have been required to pay. In brief summary; although under certain speculative circumstances which might have, but never did, come about, Ganson might have wanted to pay a nominal fee to her attorney, her attorney had no intention of collecting a fee from any source other than an award of attorney fees against the Department. Specifically, Ganson's attorney did not have an agreement to share in any percentage of any recovery he might obtain for Ganson.
Ganson's fee agreement with her attorney is unlike the agreement in Miami Children's Hospital, supra, and is quite similar to the fee agreements addressed in Quanstrom v. Standard Guaranty Insurance Company. 519 So.2d 1135 (Fla. 5th DCA 1988), and State Farm Fire and Casualty Co. v. Palma, 524 So.2d 1035 (Fla.
4th DCA 1988). The fee agreement in Quanstrom, supra, "was to the effect that if the attorney ultimately prevailed..., the attorney would be entitled to a fee which would be the amount the court allowed as an attorney's fee under Section 627.428, Florida Statutes, rather than a percentage of the recovery." And in
Palma, supra, the contingency fee agreement provided that "the amount of the fee agreed to under the contract was a fee to be awarded by the court." In both Quanstrom and Palma, the courts held that the usual Rowe factors should be used to calculate reasonable attorney fees, and in neither case was the fact that no fee was due from the client found to be a basis for limiting the fee. In view of the nature of the fee agreement in this case, and on the basis of Quanstrom and Palma, the usual Rowe factors should be applied here.
Effect of "results obtained" on the lodestar amount. In the Rowe decision the court observed, at page 1151:
The "results obtained" may provide an independent basis for reducing the fee when the party prevails on a claim or claims for relief, but is unsuccessful on other unrelated claims. When a party prevails on only a portion of the claims made in the litigation, the trial judge must evaluate the relationship between the successful and unsuccessful claims and determine whether the investigation and prosecution of the successful claims can be separated from the unsuccessful claims.
In this case, Ganson was successful on her entire claim against the Department. Therefore, the "results obtained" component of the Rowe methodology does not provide a basis for reducing the fee.
Application of the "contingency risk" factor to the lodestar amount.
Ganson argues that a "contingency risk" factor of 2.5 should be applied to the lodestar amount. The Department argues, for a number of different reasons set out below, that no contingency risk factor should be applied in this case. At page 1151 of the Rowe decision, the court tells us the following about contingency risk factors:
Based on our review of the decisions of other jurisdictions and commentaries on the subject, we conclude that in contingent fee cases, the lodestar figure calculated by the court is entitled to enhancement by an appropriate contingency risk multiplier in the range from
1.5 to 3. When the trial court determines that success was more likely than not at the outset, the multiplier should be 1.5; when the likelihood of success was approximately even at the outset, the multiplier should be 2; and, when success was unlikely at the time the case was initiated, the multiplier should be in the range of 2.5 and 3. (emphasis added)
The use of the phrase "entitled to enhancement" supports a conclusion that the application of a multiplier is mandatory in contingent fee cases, and Florida appellate courts in two districts have so held. See State Farm Fire & Casualty Co. v. Palma, 524 So.2d 1035 (Fla. 4th DCA 1988); Quanstrom v. Standard Guaranty Insurance Company, 519 So.2d 1135 (Fla. 5th DCA 1988). But several decisions in the Third District Court of Appeal have concluded that the
contingency risk multiplier is not mandatory. See Bankers Insurance Company v. Valmore Gonzalez, 14 FLW 906 (Fla. 3d DCA 1989); National Foundation Life Insurance Company v. Wellington, 526 So.2d 766 (Fla. 3d DCA 1988); Travelers Indemnity Company v. Sotolongo, 513 So.2d 1384 (Fla. 3d DCA (1987). Although the matter is not entirely free from doubt, unless and until the matter is further clarified by the Florida Supreme Court, it would appear that the better reasoned view, and the most widely accepted view, is that the contingency risk multiplier should be treated as mandatory in cases where the party seeking fees has entered into a contingent fee agreement.
The Department argues that, even if mandatory, a contingency risk multiplier is inappropriate here because the fee agreement between Ganson and her attorney was never reduced to writing. In this regard, the Department relies on FIGA v. R.V.M.P. Corp., 681 F.Supp 806 (S.D. Fla. 1988), in which a federal court applying Florida law held:
Because this contingency fee arrangement was never reduced to a writing, it is an unconscionable contract. The Rules Regulating the Florida Bar, in particular Rule
4-1.5(D)(1), (2)(1987), provide that every lawyer who accepts a contingency fee arrangement
must reduce the arrangement to a writing signed by the client and a lawyer for the law firm representing the client. This obviously is not the case here. Because the proposed arrangement violates this rule of professional
responsibility, the contingency fee agreement here is unconscionable and, therefore, void. See Citizens Bank & Trust Co. v. Mabry, 102 Fla. 1084, 136 So. 714 (1931). Because the contingency fee arrangement here is unconscionable, the court will not apply a contingency risk factor. See Aperm of Fla., Inc. v. Trans-Coastal Management Co., 505 So.2d 459 (Fla. 4th DCA 1987).
Because of the views quoted above, the court in FIGA declined to apply a contingency risk factor, but did, on a quantum merit theory, award a substantial attorney fee. For several reasons, FIGA does not appear to be controlling here. First, the conclusion in FIGA is not based on Florida case law, nor does there appear to be any Florida appellate court decision which has followed FIGA. Second, the facts in FIGA are different from the facts in this case. FIGA involved a contingency fee agreement in which the attorney was to receive one- third of the amount recovered and, if no amount was recovered, the client would pay the costs, but not the fees, of the litigation. As discussed above, the contingency fee agreement in this case does not contemplate the attorney taking a share of the client's recovery or otherwise receiving a fee from the client.
Rather, as in Quanstrom and Palma, supra, the only source from which the attorney seeks a fee is the opposing party. Because of these differences, FIGA is inapplicable to the instant matter.
The Department also argues that on the basis of Pennsylvania v. Delaware Valley Citizens, Council for Clean Air, 483 U.S. 711, 107 S.Ct. 3078, 97 L.Ed.2d
585 (1987), the use of the contingent fee multiplier should be limited or omitted. In response to an identical argument, the court in Aetna Life Insurance Company v. Casalotti, 544 So.2d 242 (Fla. 3d DCA 1989), held:
We are unable to entertain that suggestion, for the Florida Supreme Court in Rowe expressly authorized multipliers and prescribed the permissible range.
The same result should obtain here. See also, State Farm Fire & Casualty Co. v. Palma, 524 So.2d 1035 (Fla. 4th DCA 1988), and Quanstrom v. Standard Guaranty Insurance Company, 519 So.2d 1135 (Fla. 5th DCA 1988). (Contingent fee multipliers are mandatory.)
The Department argues that no multiplier should be used because it would result in an attorney fee many times larger than Ganson's recovery and would be a fee with no reasonable relationship to the size of the recovery. In answer to a similar argument, the court in Quanstrom v. Standard Guaranty Insurance Company, 519 So.2d 1135 (Fla. 5th DCA 1988) , held:
As to the argument that the contingency risk multiplier may, in the trial court's opinion, result in an unreasonably large fee in a given case (such as when, as here, it is compared only to the amount in controversy), the answer is that the factors other than the contingency risk factor, such as the hours expended and the routinely charged fee rate, are equally implicated. If any formula considers only relevant factors, and all of them, and correctly weighs those factors, the result necessarily will be correct. If the result is unsatisfactory to those having the responsibility and authority in the matter, then they should change the formula by reassessing the factors to be considered and the weight to be given each. We who are bound to follow the authority of others should not omit factors or juggle the weight given a factor, beyond the perimeters given the exercise of discretion, in order to reach a preferred result.
And it should also be noted that in State Farm Fire & Casualty Co. v. Palmer,
524 So.2d 1035 (Fla. 4th DCA 1988), an attorney fee in the amount of
$253,500.00, calculated pursuant to the Rowe factors, was approved on appeal even though the amount recovered by the plaintiff was only $600.00. (The Palma court noted that the litigation in that case had become protracted due to "stalwart defense" and "militant resistance;" characteristics which are to some extent shared by the litigation in this case.) On the basis of the foregoing, the mere size of the fee, if properly calculated pursuant to the Rowe methodology, is not a basis for reduction of the fee.
For all of the reasons set forth above, it is concluded that a contingency risk multiplier should be applied in this case. What remains to be done is to select the appropriate multiplier. Although Ganson argues otherwise, upon consideration of the evidence, it appears that at the outset the likelihood of success in this case was approximately even. To borrow from Appalachian, Inc.
Ackmann, 507 So.2d 150 (Fla. 2d DCA 1987), in which a multiplier of 2 was approved, at the outset the outcome of this case "was tentative and incapable of a comforting prediction of success. Under such circumstances, Rowe requires a
multiplier of 2. Application of that multiplier yields the following results: For the administrative phase, $8,275.00 x 2 $16,550.00; for the appeal phase,
$11,775.00 x 2 $23,550.00; and for the attorney fee phase, $4,075.00 x 2
$8,105.00. The total for all three phases of the litigation is calculated as
$16,550.00 + $23,550.00 + $8,150.00 - $48,250.00. On the basis of all of the foregoing, a reasonable attorney fee pursuant to the Rowe methodology totals
$48,250.00
Costs
Ganson's motion before the appellate court was titled "Motion For Attorney's Fees," but the opening sentence of the motion requests an award of "attorney's fees and costs." (emphasis added) The motion also concludes with a request for an award of "reasonable attorney's fees and costs." (emphasis supplied) The court's opinion in this case grants Ganson's "motion for attorney fees," but never specifically awards costs. Similarly, the court's opinion does not specifically direct the hearing officer to make any recommendation regarding costs. Nevertheless, the court's specific mention of Purvis v. Department of Professional Regulation, 461 So.2d 134 (Fla. 1st DCA 1984), and Johnston v.
Department of Professional Regulation, 456 So.2d 939 (Fla. 1st DCA 1984), leaves open the possibility that it was the court's intention to award costs as well as fees to Ganson. Because of that possibility, I include the following discussion of Ganson's costs.
The costs which Ganson seeks to recover are itemized in the three Kranz affidavits designated as Petitioner's Exhibits 2, 3, and 3A. Broken out into the three phases of this litigation, the costs claimed are summarized as follows:
Administrative Phase
Expert witness fee (Dr. Whitley) 100.00
Expert Witness fee (Dr. Munasifi) 125.00
Deposition transcript (Dr. Munasifi) | 151.94 | |
Copying charge for medical records | 25.00 | |
Miscellaneous copying charges | 89.00 | |
Miscellaneous postage charges | 3.41 | |
Sales tax on certain expenses | 13.16 | |
Total claimed for this phase | 507.51 | |
Appeal Phase | ||
District Court of Appeal filing fee | 100.00 | |
Copying charges--Initial Brief | 57.46 | |
Copy/Binding Charge -Reply Brief | 19.44 | |
Miscellaneous copying charges | 39.15 | |
Miscellaneous postage charges | 5.85 | |
Total claimed for this phase | 221.90 | |
Attorney Fee Phase | ||
Photocopying charge--Proposal For Fees Exhibits--Tallahassee Copy & Printing | & | 84.80 |
Total claimed for this phase | 84.80 |
The necessity or reasonableness of the costs are not addressed in the affidavits of Blank and Grizzard. The Kranz affidavits itemize the costs, but contain no opinion concerning the reasonableness of the expert witness fees claimed nor any opinion that the other costs claimed were reasonably and necessarily incurred in the prosecution of Ganson's case. The evidence does show that the client has voluntarily paid all but the last few dollars of the costs claimed, which is some evidence of the reasonableness of the costs.
Further, facial examination of the costs claimed reveals nothing out of the ordinary. With regard to the expert witness fees paid to Dr. Whitley and Dr. Munasifi, the necessity of such testimony can hardly be doubted in a case in which the central issue concerned the nature of Ganson's medical condition before and after her employment with the state. Finally, the Department of Administration has not argued that any of the costs claimed are unnecessary or unreasonable.
The Department's failure to object notwithstanding, the copying charges (with the exception of the charges for copies of medical records) and the postage charges are not the types of costs that are normally assessed against an opposing party. See Statewide Uniform Guideline For Taxation Of Costs In Civil Actions. Accordingly, the miscellaneous copying charges ($89.00) and miscellaneous postage charges ($3.14) should be deducted from the costs for the Administrative Phase; the initial brief ($57.46), the reply brief ($19.44), and miscellaneous ($39.15) copying charges and the miscellaneous postage charges ($5.85) should be deducted from the costs for the Appeal Phase; and the photocopying charge ($84.80) should be deducted from the costs for the Attorney Fee Phase. With these reductions, the costs Ganson should recover, if it is the intention of the court to award costs, are as follows:
Administrative Phase | $401.94 |
Appeal Phase | 100.00 |
Attorney Fee Phase | 0.00 |
Total allowable costs | $501.94 |
RECOMMENDATION
Based on the evidence presented at the hearing on September 22, 3.989, the hearing officer recommends that the attorney fees awarded to Ganson be in the following amounts:
Attorney fees for the Administrative Phase: | $16,550.00 |
Attorney fees for the Appeal Phase: | 23,550.00 |
Attorney fees for the Attorney Fee Phase: | 8,150.00 |
TOTAL ATTORNEY FEE RECOMMENDATION | $48,250.00 |
Based on the evidence presented at the hearing on September 22, 1989, the Hearing Officer recommends that the costs awarded to Ganson be in the following amounts:
Costs for the Administrative Phase: | $401.94 |
Costs for the Appeal Phase: | 100.00 |
Costs for the Attorney Fee Phase | 0.00 |
TOTAL COSTS RECOMMENDATION | $501.94 |
The court approves the Report and Recommendation and adopts it as the order and opinion of the court. The appellant is awarded an attorney fee of
$48,250.00 and costs in the amount of $501.94. SHIVERS, C. J., and ZEHMER, J., CONCUR.
================================================================= SUPPLEMENTAL REPORT AND RECOMMENDATION
=================================================================
STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
TERRI J. GANSON, )
)
Petitioner, )
)
vs. ) CASE NO. 89-4818F
) 1ST DCA CASE NO. 88-1568 STATE OF FLORIDA, DEPARTMENT )
OF ADMINISTRATION, )
)
Respondent. )
)
SUPPLEMENTAL REPORT AND RECOMMENDATION
This case about an award of attorney fees is before a Hearing Officer of the Division of Administrative Hearings by order of the District Court of appeal, First District, issued on July 17, 1991, remanding the case for further proceedings consistent with a May 30, 1991, order of the Florida Supreme Court. An understanding of the present posture of the case will be enhanced by a brief chronological summary of the primary events in the history of this litigation. 1/
The genesis of the current dispute is found in Ganson v. State, Department of Administration, 554 So.2d 516 (Fla. 1st DCA 1989). In that opinion the First District Court of Appeal reversed and remanded a final order of the Department of Administration. At page 522 of that opinion, the court included the following disposition of Ganson's motion for costs and attorney fees:
Appellant's motion for attorney fees under section 120.57(1)(b)10, Florida Statutes (1987), based upon her assertion that the agency action which precipitated the appeal was a gross abuse of the agency's discretion, is granted. The parties may, within twenty days of the date this decision becomes final, file with this court a stipulation regarding the amount of reasonable attorney fees to be awarded. In the event the amount of the attorney fees cannot be agreed upon by the parties within the time allotted, the Department shall promptly refer the matter to Michael Parrish, the Division of Administrative Hearings hearing officer, for an immediate evidentiary hearing to
determine the amount of reasonable attorney fees. The hearing officer's recommendations thereon shall be filed with this court within sixty days after this opinion shall have become final, at which time this court will enter an appropriate order awarding attorney's fees. Purvis v. Department of Professional Regulation, 461 So.2d 134 (Fla. 1st DCA 1984); Johnston v.
Department of Professional Regulation, 456 So.2d 939 (Fla. 1st DCA 1984).
The parties were unable to reach a stipulation regarding the amount of reasonable attorney fees to be awarded. On August 28, 1989, the Department of Administration referred the matter to Michael Parrish, a Hearing Officer of the Division of Administrative Hearings, to conduct an evidentiary hearing to determine the amount of reasonable attorney fees. That evidentiary hearing was held on September 22, 1989. On October 12, 1989, the Hearing Officer issued a Report And Recommendation in which he recommended that the court award to Ganson attorney fees in the amount of $48,250.00 and costs in the amount of $501.94.
On December 22, 1989, the First District Court of Appeal issued an Opinion And Order On Attorney Fee, which is reported as Ganson v. State, Department of Administration, 554 So.2d 522 (Fla. 1st DCA 1989). In that opinion, the court approved and adopted the Hearing Officer's Report And Recommendation and awarded an attorney fee and costs in the amounts recommended.
The attorney fee award described above included a contingency risk multiplier of 2.0 in accord with the principles set forth in Florida Patient's Compensation Fund v. Rowe, 472 So.2d 1145 (Fla. 1985). In Rowe, the Florida Supreme Court had stated:
. . . When the prevailing party's counsel is employed on a contingent basis, the trial court must consider a contingency risk factor when awarding a statutorily- directed reasonable attorney fee. . . . [I]n contingent fee cases, the lodestar figure calculated by the court is entitled to enhancement by an appropriate contingency risk multiplier in the range from 1.5 to 3.
The Report And Recommendation adopted by the First District Court of Appeal included the following analysis by the Hearing Officer: 2/
The phrase "entitled to enhancement" supports a conclusion that the application of a multiplier is mandatory in contingent fee cases, and Florida appellate courts in two districts have so held. See State Farm Fire & Casualty Co. v. Palma, 524 So.2d 1035 (Fla. 4th DCA 1988); Quanstrom v. Standard Guaranty Insurance Company, 519 So.2d 1135 (Fla. 5th DCA 1988). But several decisions in the Third District Court of Appeal have concluded that the contingency risk multiplier is not mandatory. See Bankers Insurance Company v. Valmore Gonzalez, 545 So.2d 907 (Fla. 3d DCA 1989); National Foundation Life Insurance Company v.
Wellington, 526 So.2d 766 (Fla. 3d DCA 1988); Travelers Indemnity Company v. Sotolongo, 513 So.2d 1384 (Fla. 3d DCA 1987). Although the matter is not entirely free from doubt, unless and until the matter is further clarified by the Florida Supreme Court, it would appear that the better reasoned view, and the most widely accepted view, is that the contingency risk multiplier
should be treated as mandatory in cases where the party seeking fees has entered into a contingent fee agreement.
On January 11, 1990, the Florida Supreme Court issued three opinions which altered the guidelines for application of contingency risk multipliers, and, most importantly for purposes of this case, answered the question of whether contingency risk multipliers are required in every case involving a contingency fee arrangement. Standard Guaranty Insurance Co. v. Quanstrom, 555 So.2d 828 (Fla. 1990); State Farm Fire and Casualty Co. v. Palma, 555 So.2d 836 (Fla. 1990); and Bankers Life Insurance Co. v. Owens, 554 So.2d 1165 (Fla. 1990). In this trilogy, the Court resolved the conflict between the district courts regarding the mandatory/discretionary nature of contingency risk multipliers by stating clearly that the application of a multiplier is not mandatory when the prevailing party's counsel is employed on a contingency basis. Quanstrom, 555 So.2d 828, 835. With regard to the phrase in Rowe which had been the subject of varying interpretations, the Court specifically stated:
[W]e emphasize that the words "must consider" do not mean "must apply," but mean "must consider whether or not to apply" the contingency fee multiplier.
555 So.2d 828, 831.
Thereafter, the Department of Administration sought review in the Florida Supreme Court on the basis of conflict with Quanstrom, supra. The Florida Supreme Court accepted jurisdiction and on September 13, 1990, issued an opinion quashing and remanding the award of attorney fees to Ganson. See Department of Administration v. Ganson, 566 So.2d 791 (Fla. 1990). In so doing, the Florida Supreme Court stated, at page 792:
Ganson successfully litigated a claim for state health insurance benefits in which the district court of appeal ordered a hearing to determine an appropriate attorney's fee. Ganson v. Department of Admin., 554 So.2d 516 (Fla. 1st DCA 1989). The hearing officer submitted a report, which the district court adopted in toto. In that report, the hearing officer recognized that there was a split of authority on the issue but concluded that a contingency risk multiplier was required because there was a contingent-fee agreement between the client and her attorney.
A few weeks after the district court of appeal affirmed the fee award, we issued Quanstrom, which held that the multiplier is not automatically required in contingent- fee cases. Quanstrom, 555 So.2d at 831. Therefore, the opinion below is incorrect and must be quashed. We remand for reconsideration in light of Quanstrom.
On February 1, 1991, the First District Court of Appeal issued an order reading as follows:
This case is before the court on remand to be reconsidered in light of Standard Guaranty Insurance Co. v. Quanstrom, 555 So.2d 828 (Fla. 1990), wherein the court held the contingency-risk multiplier was not mandatory, only permissive. We have again reviewed
this case and the report of the hearing officer.
The contingency faced by the attorney in this case was the strong probability that he could obtain nothing for his efforts while recovering in full for his client.
The law does not mandate a multiplier for this contingency, but the case does. We reiterate the multiplier of 2 recommended by the hearing officer and adhere to our previous award of an attorney fee of
$48,250.00 and costs in the amount of $501.94
Sometime thereafter, the Department of Administration filed a motion in the Florida Supreme Court seeking to enforce that court's mandate to the First District Court of Appeal. On May 30, 1991, the Florida Supreme Court issued an order reading as follows:
This cause came on to be heard on the petitioner's motion to enforce mandate. Upon consideration, it is hereby
ORDERED that the District Court of Appeal order on attorney's fee dated February 1, 1991, is hereby quashed with directions that the case be remanded to the hearing officer for a hearing at which evidence may be presented for a determination of whether a contingency-risk multiplier was required. See Standard Guar. Ins. Co. v. Quanstrom, 555 So.2d 828, 834 (Fla.
1990).
On July 17, 1991, the First District Court of Appeal issued the order which brought this case back before the Hearing Officer. That order reads: "This case is remanded to the hearing officer for further proceedings consistent with the order of the Florida Supreme Court dated May 30, 1991."
On August 16, 1991, a prehearing conference was held in this case, at which all parties agreed to September 16, 1991, as an acceptable date for the evidentiary hearing. On September 16, 1991, an evidentiary hearing was conducted for the purpose of providing the parties an opportunity to submit evidence "for a determination of whether a contingency-risk multiplier was required. See Standard Guar. Ins. Co. v. Quanstrom, 555 So.2d 828, 834 (Fla. 1990)." 3/ At the hearing on September 16, 1991, Ganson presented the testimony of Vernon T. Grizzard, who was accepted as an expert in attorney's fees in administrative cases; Michael F. Coppins, who was accepted as an expert in attorney's fees; Eric B. Tilton, who was accepted as an expert in insurance; and Kenneth D. Kranz, Petitioner's counsel. The Department presented the testimony of William Seaton. Ganson also presented evidence of additional time spent and costs incurred in the prosecution of this litigation from September 22, 1989 (the date of the previous evidentiary hearing in this matter), to the September 16, 1991, evidentiary hearing. The record of the hearing was left open for the submission of post-hearing affidavits by both parties. 4/ All parties filed proposed recommended orders on October 7, 1991.
Before addressing what is at issue in this case, it is helpful to identify that is not at issue. There is no issue about the appropriateness of the award of costs in the amount of $501.94. There is no issue about the appropriateness of the amount of the "lodestar figure," nor about the manner in which it was calculated. 5/
The primary issue to be resolved is whether a multiplier should be applied to the attorney fee award in this case. The criteria to be applied in the resolution of this primary issue are found in Standard Guaranty Insurance Co. v. Quanstrom, 555 So.2d 828 (Fla. 1990). In an effort to promote "a better understanding," the Quanstrom court placed attorney fee cases into the following three categories: "(1) public policy enforcement cases; (2) tort and contract claims; and (3) family law, eminent domain, and estate and trust matters." 6/
At pages 833-838, the Quanstrom court included the following discussion of those categories:
The first category relates to public policy enforcement cases, which are those cases which led to the development of the lodestar approach. These cases generally present discrimination, environmental, and consumer protection issues. As noted, the primary purpose of these fee-authorizing statutes is to encourage individual citizens to bring civil actions that enforce statutory policy. The circumstances set forth by the United States Supreme Court in Blanchard and by the Fifth District Court of Appeal in LaFerney
v. Scott Smith Oldsmobile, Inc., 410 So.2d 534 (Fla. 5th DCA 1982), illustrate two examples of cases which fit within this category. In LaFerney, the district court stated:
Appellee also justifies the fee award on the ground that the appellant recovered a relatively small amount of damages in proportion to the fees established. This view should be completely rejected in the context of Chapter 501. The Florida Deceptive Trade Practices Act depends for enforcement on its "enforcing authority" and the injured consumers. If, because of the small sums involved, consumers cannot recover in full their attorney fees, they will quickly determine it is too costly and too great a hassle to file suit, and individual enforcement of this act will fail. The First District Court of Appeal said in Marshall v. M. &
L. Enterprises Corp., 360 So.2d 1147, 1148 (Fla. 1st DCA 1978): "The obvious purpose of the 'little FTC Act' is to make consumers whole for losses caused by fraudulent consumer practices . . . . These aims are not served if attorney fees are not included in the protection."
Id. at 536 (footnotes omitted). As explained in these cases, the amount of damages recovered is not the controlling factor. We agree with the Court in Blanchard and find that the following twelve factors, as set forth in Johnson v. Georgia Highway Express, 488 F.2d 714 (5th Cir. 1974), should be considered to determine a reasonable attorney's fee in these cases:
the time and labor required; (2) the novelty and difficulty of the questions; (3) the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience,
reputation, and ability of the attorneys; (10) the "undesirability" of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.
Blanchard, 109 S.Ct. at 943 n. 5 (citation omitted). Further, "'[i]n computing the fee, counsel for prevailing parties should be paid, as is traditional with attorneys compensated by a fee-paying client.'" Id. at 943 (quoting S.R.Rep. No. 94-1011, 6, reprinted in 1976 U.S.Code Cong. & Amin.News 5913). It is important to note that the existence of a contingency fee arrangement is but one of the factors to be considered.
The second category concerns principally tort and contract cases. Here, we reaffirm the principles set forth in Rowe, including the code provisions, and find that the trial court should consider the following factors in determining whether a multiplier is necessary: (1) whether the relevant market requires a contingency fee multiplier to obtain competent counsel;
whether the attorney was able to mitigate the risk of nonpayment in any way; and (3) whether any of the factors set forth in Rowe are applicable, especially, the amount involved, the results obtained, and the type of fee arrangement between the attorney and his client. Evidence of these factors must be presented to justify the utilization of a multiplier. We find that the multiplier is still a useful tool which can assist trial courts in determining a reasonable fee in this category of cases when a risk of nonpayment is established. However, we find that the multiplier in Rowe should be modified as follows: If the trial court determines that success was more likely than not at the outset, it may apply a multiplier of 1 to 1.5; if the trial court determines that the likelihood of success was approximately even at the outset, the trial judge may apply a multiplier of 1.5 to 2.0; and if the trial court determines that success was unlikely at the outset of the case, it may apply a multiplier from 2.0 to 2.5. Accordingly, our Rowe decision is modified to allow a multiplier from 1 to 2.5. We find that this modification should apply to all cases in which the trial court has not set attorney's fees as of the date this opinion is released. The caps discussed in Rowe and explained in this opinion remain applicable in this category. We emphasize that the criteria and factors utilized in these cases must be consistent with the purpose of the fee-authorizing statute or rule.
* * *
We have identified these categories to illustrate that different criteria for different types of cases must be considered in calculating attorney's fees. We emphasize that the principles to be utilized in computing these fees must be flexible to enable the
courts to consider rare and extraordinary cases with truly special circumstances. State Farm Fire and Casualty Co. v. Palma, 555 So.2d 836 (Fla. 1990). (Emphasis added)
The fee award at issue here arose out of an administrative proceeding under Chapter 120, Florida Statutes. The original petition for hearing in this case sought relief from proposed agency action which denied payment of health insurance benefits claimed by Ganson under the State Group Health Insurance Program. Chapter 120, Florida Statutes, authorizes awards of attorney fees only in limited circumstances. Specifically, as relevant to this case, Section 120.57(1)(b)10., Florida Statutes, provides:
When there is an appeal, the court in its discretion may award reasonable attorney's fees and costs to the prevailing party if the court finds that the appeal was frivolous, meritless, or an abuse of the appellate process or that the agency action which precipitated the appeal was a gross abuse of the agency's discretion. (Emphasis added)
It is clear from the statutory language quoted immediately above that at the inception of an administrative proceeding, an award of attorney fees under Section 120.57(1)(b)10., Florida Statutes, is far from certain. A petitioner who prevails at the administrative level is not entitled to an award of attorney fees under Section 120.57(1)(b)10., Florida Statutes. Similarly, most petitioners who lose at the administrative level, but prevail on appeal, are not entitled to an award of attorney fees under Section 120.57(1)(b)10., Florida Statutes. 7/ The only petitioners who are entitled to an award of attorney fees under Section 120.57(1)(b)10., Florida Statutes, are those who lose at the administrative level, prevail on appeal, and also convince the appellate court that the agency committed a gross abuse of discretion. Because of the infrequency with which state agencies commit gross abuses of discretion, awards of attorney fees under Section 120.57(1)(b)10., Florida Statutes, have been, and in the future may be expected to be, infrequent. And, because of that same infrequency, at the inception of an administrative proceeding, it is virtually impossible to identify the proceeding as one in which an agency gross abuse of discretion, and thus an attorney fee award, will be forthcoming. Accordingly, at the inception of an administrative proceeding--even a proceeding in which the petitioner fully expects to prevail on the merits--the most that can be expected with respect to the possibility of an award of attorney fees is that such an award is a remote, infrequent possibility. 8/
While it is clear that this case is not a Quanstrom Category (3) case, it is difficult to determine whether it falls within either of the two other Quanstrom categories, or belongs in a category of its own. The Department argues that it should be classified as a Category (1) case, a category described in Quanstrom, as "public policy enforcement cases, which are those cases which led to the development of the lodestar approach." Although it could be argued that public policy is advanced by litigation that prevents or remedies gross abuses of agency discretion, the instant case does not truly fit neatly within the Quanstrom Category (1) classification. 9/ This case also fails to fit neatly into the Quanstrom Category (2) classification, which is described as "tort and contract claims." Although the basic nature of the underlying claim is analogous to a civil action on an insurance contract claim, there are significant differences. The major differences are that (a) the fee-authorizing statute applicable here applies to all administrative proceedings and (b) unlike
the case of a civil action on an insurance contract claim, under Section 120.57(1)(b)10., Florida Statutes, there is no direct relationship between likelihood of recovery on the merits and likelihood of an award of attorney fees. Because this case does not fit clearly within the Quanstrom categories it is necessary to take a "flexible" approach in computing fees in this case. This flexibility is authorized by the following language from Quanstrom, 555 So.2d at 835:
We have identified these categories to illustrate that different criteria for different types of cases must be considered in calculating attorney's fees. We emphasize that the principles to be utilized in computing these fees must be flexible to enable the courts to consider rare and extraordinary cases with truly special circumstances. State Farm Fire and Casualty Co. v. Palma, 555 So.2d 836 (Fla. 1990).
In view of Ganson's contention that this was a Quanstrom Category (2) case, evidence was offered and received on the issues of "(1) whether the relevant market requires a contingency fee multiplier to obtain competent counsel; [and] (2) whether the attorney was able to mitigate the risk of nonpayment in any way. . . ." 10/ That evidence supports the following findings on those subjects.
It is axiomatic that whether a claimant is going to be able to obtain competent counsel in the relevant market depends upon whether attorneys in the relevant market are going to be willing to take the case. Petitioner produced unrebutted expert testimony at trial to the effect that private sector law firms are in business to make a profit. By necessity, they must evaluate potential cases not only from the perspective of the merits of the claim and the likelihood of winning for the client, but also from the practical business perspective of whether or not the case will generate a fee for the firm which is larger than the potential cost of taking the case.
That evaluation takes into account a number of factors. A firm will generally examine three potential sources for payment of its fees: (1) Whether it is economically feasible for the client to pay a fee based on an hourly rate;
(2) Whether it is economically feasible for the firm to take the case on a "traditional" contingency fee arrangement in which the firm will receive a fee which is a percentage of the claimant's recovery; or (3) Whether there is an applicable fee-authorizing statute.
Whether the client can pay a straight hourly rate fee depends upon the financial status of the claimant. Whether it makes sense for a claimant to pay a straight hourly rate fee depends upon the size of the claim. A relatively small claim can quickly be overshadowed by legal fees if the dispute is not resolved quickly. Except in the rare "grudge" case brought by a wealthy claimant, claimants are not going to be willing to spend more in legal fees than they can hope to recover. In the present case, the amount in dispute was around
$5,700.00. For a person faced with the prospect of potentially protracted litigation against the Department of Administration, the facts of this case did not present a situation in which an hourly rate fee was practical.
Whether it is economically feasible for the firm to take the case on a percentage basis depends on the anticipated likelihood of success and the size of the claim. Notwithstanding the likelihood of success on the merits, if the claim itself is not large enough to generate a fee taken as a percentage of the
recovery which will cover the anticipated overhead and expenses of handling the case, the firm cannot afford to take the case. For a law firm faced with the prospect of potentially protracted litigation against the Department of Administration, the present case did not offer a situation in which it would be practical for a firm to take the case on a percentage fee basis.
Based on this analysis, both experts who testified at trial expressed the opinion that Petitioner would have had great difficulty finding representation in the open market because the likelihood of recovering fees appeared so slim.
Applying the foregoing analysis to the present case results in the conclusion, supported by unrebutted expert testimony at hearing, that few, if any, law firms would be willing to take this type of case in the absence of the availability of fee enhancement through a contingency risk multiplier. The obvious corollary conclusion is that in the absence of the availability of a contingency risk multiplier in this type of case, claimants will not have reasonable access to competent counsel.
As an indication of an attempt to mitigate the risk of nonpayment of fees in this case, Mr. Kranz testified that he attempted to obtain a statutory award of fees at the hearing level by making a claim for fees under Section 627.428, Florida Statutes, during the administrative proceedings. Both the Hearing Officer in his Recommended Order and the Department in its Final Order concluded that Section 627.428, Florida Statutes, was inapplicable to this case as this was not a "civil action" and the forum was not a "court." Both Mr. Grizzard and Mr. Coppins testified that in their opinion there was nothing Mr. Kranz could have done to mitigate the risk of nonpayment in the present case.
All of the Rowe factors, including the amount involved, the results obtained and the type of fee arrangement, 11/ are applicable in this case and were addressed at length in the Report And Recommendation issued by the Hearing Officer on October 12, 1989. All of the findings recited therein are readopted and incorporated herein by reference.
In brief summary, whether this case is viewed as a Quanstrom Category
(1) case, a Quanstrom Category (2) case, or as some sort of unique case that defies categorization, the relevant market requires a contingency fee multiplier to obtain competent counsel to litigate administrative cases in which, as here, the only viable source of a potential attorney fee is an award pursuant to Section 120.57(1)(b)10., Florida Statutes. Further, in such cases there is seldom, if ever, any opportunity for the attorney to mitigate the risk of nonpayment other than to decline to take the case. Accordingly, the court should conclude that a contingency risk multiplier is required in this case.
Ganson also seeks to have the Hearing Officer recommend a multiplier in an amount greater than the original recommendation, as well as to have the Hearing Officer recommend an award of an additional amount for attorney fees and costs incurred since the first evidentiary hearing on attorney fees on September 22, 1989. The activities for which such additional awards are sought include the time spent litigating before the Supreme Court and the time spent preparing for and participating in the second evidentiary hearing on September 16, 1991. Although the matter is not entirely free from doubt, these additional recommendations sought by Ganson appear to be beyond the scope of the orders remanding this case to the Hearing Officer. As Hearing Officers were recently reminded in a case presenting similar issues: "Remand for a specific act does not reopen the entire case; the lower tribunal only has the authority to carry
out the appellate court's mandate." Warren v. Department of Administration, 590 So.2d 514 (Fla. 5th DCA 1991). In this case the remand to the Hearing Officer is ". . . for a hearing at which evidence may be presented for a determination of whether a contingency risk multiplier was required." 12/ Because the matter was not entirely free from doubt, 13/ at the evidentiary hearing Ganson was allowed to submit evidence related to the additional issues on which Ganson seeks recommendations by the Hearing Officer. Because of my view of the scope of the remand, I have not included recommendations on those additional matters, but in the paragraphs which follow I have made findings sufficient for the court to resolve those issues without further remand in the event the court views the scope of the remand to be broader than I have construed it. 14/
With regard to Ganson's argument that the contingency-risk multiplier should be greater than 2, the evidence at hearing clearly establishes the anomalous fact that with regard to an award of attorney fees under Section 120.57(1)(b)10., Florida Statutes, the greater the likelihood of success on the merits, the smaller is the likelihood of receiving an attorney fee award. This is exactly the opposite of most statutes or contractual provisions providing for an award of attorney fees. Because of this anomaly, Ganson argues that in cases involving Section 120.57(1)(b)10., Florida Statutes, the determination of the amount of any contingency risk multiplier should be based on the likelihood of recovering attorney fees, rather than on the likelihood of prevailing on the merits of the underlying litigation. The anomaly is clear and the argument is logical. However, the argument was not raised during the evidentiary hearing on September 22, 1989, and, in view of the scope of the remand, does not appear to be a matter which can properly be addressed at this stage of the proceedings. Accordingly, I have no recommendations as to changing the amount of the multiplier. The multiplier of 2 is within the permissible range both before and after the Quanstrom modification of the multiplier range.
With regard to Ganson's argument that an additional award of attorney fees should be made for the time her attorneys have spent since the first evidentiary hearing on September 22, 1989, her attorneys have submitted contemporaneously prepared, detailed time records of all of their labors since the September 22, 1989, evidentiary hearing. These records reflect that Ganson's primary counsel, Mr. Kranz, spent the following hours since the September 22, 1989, evidentiary hearing: 12.0 hours on work related to the original evidentiary hearing on September 22, 1989, 15/ 22.0 hours on work related to review by the Florida Supreme Court, and 60.4 hours for work related to the evidentiary hearing on remand, for a grand total of 94.4 hours. Expert witnesses called by Ganson were of the opinion that the total number of hours claimed by Mr. Kranz was reasonable. Although the Department argues in general that Mr. Kranz has attempted to "balloon" his fees, the Department did not offer any expert witness testimony to support its arguments in this regard. Based on the evidence presented, all of the hours claimed by Mr. Kranz for work since the evidentiary hearing on September 22, 1989, are reasonable. A reasonable hourly rate for Mr. Kranz' work since the September 22, 1989, evidentiary hearing is
$125.00. Evidence at the evidentiary hearing on September 22, 1989, established that $125.00 per hour was "the rate charged in that community by lawyers of reasonably comparable skill, experience and reputation, for similar services." Evidence at the most recent evidentiary hearing confirmed that finding. Based on the foregoing, the "lodestar" calculation for Mr. Kranz' work since the September 22, 1989, hearing would be 94.4 hours multiplied by a rate of $125.00 per hour for a total of $11,800.00. Application of a contingency-risk multiplier of 2.0 to that amount would result in a reasonable fee in the amount of $23,600.00 for Mr. Kranz' work since the September 22, 1989, hearing.
The time records submitted by Ganson's attorneys also document 22.5 hours of work by Mr. Tilton, who was co-counsel with Mr. Kranz. Included in those hours are 7 hours for Mr. Tilton's attendance at the September 22, 1989, hearing and 9 hours for Mr. Tilton's attendance at the September 16, 1991, hearing. The primary purpose of Mr. Tilton's attendance at those hearings was that Mr. Kranz was to be a witness for a portion of each of those hearings. For the reasons discussed in TransFlorida Bank v. Miller, 576 So.2d 752 (Fla. 4th DCA 1991), especially considering that Mr. Kranz will be the primary beneficiary of any fee award ultimately paid in this case, it does not appear to be reasonable to include fees for two attorneys in attendance at the hearings. Accordingly, 16 hours should be deducted from the amount claimed by Mr. Tilton. 16/ The remaining 6.5 hours claimed by Mr. Tilton are reasonable, and their reasonableness is supported by expert opinion testimony in the record. The expert opinion testimony offered by Ganson also establishes that $150.00 per hour is the rate charged in the Tallahassee community for similar work by lawyers whose skill, experience, and reputation are comparable to those of Mr. Tilton. Based on the foregoing, the "lodestar" calculation for Mr. Tilton's work since the September 22, 1989, hearing would be 6.5 hours multiplied by a rate of $150.00 per hour for a total of $975.00. Application of a contingency- risk multiplier of 2.0 to that amount would result in a reasonable fee in the amount of $1,950.00 for Mr. Tilton's work since the September 22, 1989, hearing.
With regard to costs incurred since the September 22, 1989, evidentiary hearing, Ganson has submitted detailed contemporaneous records documenting costs totaling $604.37. The vast majority of the costs are for photocopies and postage. A few are for parking and for access to electronic research data bases. None of the costs are of the types normally assessed against an opposing party. See Statewide Uniform Guidelines For Taxation Of Costs In Civil Actions. Accordingly, even if it should be determined that Ganson is entitled to recover costs incurred since September 22, 1989, there is no evidence that she has incurred any costs during that period of the types normally assessed against opposing parties.
Ganson also seeks to recover costs for expert witness fees payable to the two attorneys she called as expert witnesses at the hearing on September 16, 1991. The fees claimed for those two witnesses are $812.50 for Mr. Coppins and
$1,425.00 for Mr. Grizzard. The amounts claimed appear to be reasonable fees for the services provided. Nevertheless, for the reasons discussed in Travieso
v. Travieso, 474 So.2d 1184 (Fla. 1985), it does not appear appropriate to tax such expenses as costs. 17/
RECOMMENDATION
Based on the evidence presented at the hearing on September 16, 1991, and on the previous findings made in the Report And Recommendation issued on October 12, 1989, the Hearing Officer recommends that the court conclude that a contingency-risk multiplier was required in this case and recommends that the court apply a contingency risk multiplier in the amount of 2.0, which is the amount of the multiplier previously recommended and applied.
Because of my narrow construction of the scope of the remand, I have not made any recommendations with regard to the request for a larger multiplier, nor have I made any recommendations as to whether Ganson should be awarded additional attorney fees for work her attorneys have performed litigating her entitlement to fees since September 22, 1989. If the court is of the view that modification of the size of the multiplier is within the scope of the remand, the court may wish to consider increasing the size of the multiplier in this
case to compensate for the remote, infrequent possibility of obtaining an attorney fee award under Section 120.57(1)(b)10., Florida Statutes. If the court is of the view that the scope of the remand encompasses an award of additional fees for services since September 22, 1989, the amount of such additional award should be calculated on the basis of the findings of fact in paragraphs 30 and 31 of this Supplemental Report And Recommendation.
RESPECTFULLY SUBMITTED AND ENTERED this 20th day of March 1992, at Tallahassee, Leon County, Florida.
MICHAEL M. PARRISH, Hearing Officer Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675 SC 278-9675
Filed with the Clerk of the Division of Administrative Hearings this 20th day of March 1992.
ENDNOTES
1/ Those who are familiar with the history of this case prior to the second evidentiary hearing on September 16, 1991, can slip to paragraph 12 without missing anything important.
2/ See Ganson v. State, Department of Administration, 554 So.2d 522, 528 (Fla. 1st DCA 1989), which includes the entire text of the Hearing Officer's Report And Recommendation.
3/ This quoted statement of the purpose of the hearing is a direct quotation of a portion of the Florida Supreme Court order of May 30, 1991, and was included in the same words in the Notice of Hearing advising the parties of the September 16, 1991, hearing before the Hearing Officer.
4/ Ganson desired to have the record left open to file affidavits updating earlier itemizations of costs incurred and hours worked by her attorney up to the date of filing proposed recommended orders. Such affidavits were filed.
The Department of Administration sought to have the record left open to file the transcript of a post-hearing deposition and affidavits in response to Ganson's affidavits, but did not file either.
5/ Neither the amount of the costs nor the amount of the "lodestar figure" was the subject of any criticism or comment by the Florida Supreme Court in either its opinion of September 13, 1990 or its order of May 30, 1991. The "lodestar figure" in this case was arrived at by means of the criteria in Florida Patient's Compensation Fund v. Rowe, 472 So.2d 1145 (Fla. 1985). The Quanstrom, Palma, Owens trilogy does not appear to have made any significant changes to the methodology for determining the "lodestar figure."
6/ The court also noted that "[t]hese catagories are not intended to be all- inclusive." This is fortunate because, while it is clear that the instant case is not a Category (3) case, it is difficult to say with certainty whether the
instant case comes closer to fitting into one of the other two categories, or belongs in a category of its own. Perhaps the instant case might best be described as one of those "rare and extraordinary cases" for which the court recognizes the need for a "flexible" approach. See Quanstrom, at 835.
7/ A review of appellate case law in Florida reveals very few cases in which courts have awarded attorneys fees under Section 120.57(1)(b)10., Florida Statutes. That speaks well for the manner in which most state agencies have been exercising their discretion.
8/ In this regard, Section 120.57(1)(b)10., Florida Statutes, is quite unlike the typical statute authorizing an award of attorney fees in that under the typical statute the likelihood of the fee award is directly related to the likelihood of prevailing on the merits. See, for example, Section 627.428, Florida Statutes, providing for an award of attorney fees against insurers.
Because of such direct relationship, the likelihood of an award of attorney fees is much more predictable at the inception of a case than is the likelihood of an award of attorney fees under Section 120.57(1)(b)10., Florida Statutes.
9/ Even if the instant case is viewed as one involving "consumer protection issues," it still does not fit neatly into Category (1) because the fee authorizing statute applicable here applies to all administrative proceedings, not just those, as here, involving claims for health insurance benefits.
10/ The third factor to be considered in Quanstrom Category (2) cases is "whether any of the factors set forth in Rowe are applicable, especially, the amount involved, the results obtained, and the type of fee arrangement between the attorney and his client." All of the Rowe factors were addressed at length in the Report And Recommendation issued by the Hearing Officer on October 12, 1989.
11/ The type of fee arrangement was addressed in an affidavit executed by Petitioner which was introduced as Respondent's Exhibit 2. As reflected in that affidavit, Petitioner's counsel had indicated to her at the time of appeal that fees, if any, would be limited to those awarded pursuant to the fee-authorizing statute. This does not alter the substance of the earlier findings regarding the arrangement between Petitioner and her counsel.
12/ Florida Supreme Court order of May 30, 1991. The remand from the First District Court of Appeal was ". . . for further proceedings consistent with the order of the Florida Supreme Court dated May 30, 1991."
13/ The matter is not entirely free from doubt for two reasons. First, "a determination of whether a contingency-risk multiplier was required" may or may not encompass the intimately related issue of: If required, what size multlplier is required? Because of the simplicity with which the Florida Supreme Court could have commanded renewed consideration of the amount of the multiplier, I have interpreted the court's silence in that regard as approval of a multiplier of 2, if a multiplier is required. The second reason for doubt as to the scope of the mandate is that, although there is no mention of the matter in either of the remand orders, it would appear to be the law of the case that Ganson is entitled to recover attorney fees "for the time spent litigating entitlement to attorney fees." See Ganson v. State, Dept. of Administration,
554 So.2d 522 (Fla. 1st DCA 1989), at page 525, and cases cited therein. (There is also recent authority to the contrary. See U.S. Security Company v. Cole,
579 So.2d 153 (Fla. 2d DCA 1991). Because there is no order clearly awarding fees for the hours spent by Ganson's attorneys since the evidentiary hearing on
September 22, 1989, I have not recommended an additional award for those hours. But because such an award may be part of the law of the case, I have included findings upon which the court can make such an award if it deems it appropriate to do so.
14/ For similar reasons, I have not made any recommendations regarding Ganson's claim for interest on the attorney fee award.
15/ The 12.0 hours claimed for work related to the original evidentiary hearing on September 22, 1989, are all hours in addition to the hours that were considered in the calculation of the original "lodestar" fee. They include 7 hours for preparation and attendance at the hearing on September 22, 1989, and 5 hours of post-hearing work involving preparation of documents related to that hearing. These 12 hours should have been claimed at the original hearing and should be considered waived unless the court determines that the scope of the remand is broad enough to encompass a fee award for hours spent since the hearing on September 22, 1989.
16/ Mr. Kranz' time for attendance at the two hearings has been included in the prior calculations.
17/ By separate order issued today, I have also denied a motion filed on behalf of Mr. Grizzard which seeks to have the Hearing Officer order the Department to pay a portion of Mr. Grizzard's fees for appearing as an expert witness.
COPIES FURNISHED:
Augustus D. Aikens, Esquire General Counsel
Department of Administration
435 Carlton Building Tallahassee, Florida 32399-1550
Kenneth D. Kranz, Esquire Eric B. Tilton, P.A.
241-B Virginia Street Tallahassee, Florida 32301
Jon Wheeler, Clerk District Court of Appeal First District
State of Florida
300 Martin Luther King Boulevard Tallahassee, Florida 32399-1850
| Issue Date | Proceedings |
|---|---|
| Apr. 06, 1992 | NOtice of change of address(Kenneth D. Kranz, Gustafson, Tilton, & Kranz, P.A., 2120 Killearney Way, Suite 200, Tallahassee, Fl. 32308 filed. |
| Mar. 20, 1992 | Order Closing File sent out. CASE CLOSED, |
| Mar. 20, 1992 | Order Denying Motion To Strike sent out. (motion to strike denied) |
| Mar. 20, 1992 | Order Denying Motion to Strike sent out. (motion to strike denied) |
| Mar. 20, 1992 | Order sent out. (motion for fees and reimbursement of cost denied) |
| Mar. 20, 1992 | Supplemental Report And Recommendation sent out. |
| Nov. 07, 1991 | Petitioner's Response to Motion to Strike filed. |
| Nov. 05, 1991 | Petitioner's Response to Motion to Strike filed. |
| Oct. 24, 1991 | (Respondent) Motion to Strike filed. |
| Oct. 08, 1991 | Corrected Pages 18 & 20 filed. (From Augustus D. Aikens, Jr.) |
| Oct. 07, 1991 | Affidavit of Kenneth D. Kranz Re: attorney's Fees and Costs filed. |
| Oct. 07, 1991 | Respondent's Proposed Recommended Order filed. |
| Oct. 07, 1991 | Affdiavit of Kenneth D. Kranz Re: Attorney's Fees and Costs; Petitioner's Proposed Report and Recommendation filed. |
| Sep. 26, 1991 | Motion for Fees and Reimbursement of Costs; Affidavit of Kenneth D. Kranz Re: Attorneys Fees and Costs w/Atts.; Affidavit of Eric B. TiltonRe: Attorneys Fees; Affidavit of Vernon T. Grizzard Re: Fees for Services as Expert Witness w/Att. filed. |
| Sep. 16, 1991 | CASE STATUS: Hearing Held. |
| Sep. 13, 1991 | Petitioner`s Motion in Limine; Petitioner`s Motion Keep Record Open; Motion to Quash Subpoena Duces Tecum filed. (From Kenneth D. Kranz) |
| Sep. 13, 1991 | Notice of Hearing filed. (From Kenneth D. Kranz) |
| Sep. 11, 1991 | Subpoena Duces Tecum (4) filed. (From Augusta D. Aikens) |
| Aug. 26, 1991 | Order Scheduling Hearing sent out. (hearing set for September 16, 1991: 10:00 am: Tallahassee) |
| Aug. 15, 1991 | Letter to M.M. Parrish from Kenneth D. Kranz(RE; DCA's order on attorneys' fees) filed. |
| Aug. 07, 1991 | Order Scheduling Pre-Hearing Conference sent out. |
| Aug. 05, 1991 | Letter from Kenneth D. Kranz to M.M. Parrish(re; Supreme Court's Order Dated May 1, l991) filed. |
| Aug. 01, 1991 | CASE RE-OPNENED per MMP-ac. |
| Jul. 18, 1991 | 1st DCA Order remanding case to the hearing officer for further proceedings consistent with the order of the FL Supreme Court dated 5-30-91filed. |
| Oct. 12, 1989 | Final Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Jul. 17, 1991 | Remanded from the Agency | |
| Dec. 22, 1989 | Opinion | |
| Oct. 12, 1989 | DOAH Final Order | Attorney fee awards under Sec. 120.57(1)(b)10, F.S., do not fit Quanstrom categories. Contingency risk multiplier is required in this type of case. |
CREATIVE DESIGNS AND INTERIORS, INC. vs. DEPARTMENT OF TRANSPORTATION, 89-004818F (1989)
NANA`S PETROLEUM, INC.; EDILIA PEREZ; AND EMILIO PEREZ vs DEPARTMENT OF REVENUE, 89-004818F (1989)
FCCI INSURANCE GROUP vs AGENCY FOR HEALTH CARE ADMINISTRATION, 89-004818F (1989)
FCCI INSURANCE GROUP vs AGENCY FOR HEALTH CARE ADMINISTRATION, 89-004818F (1989)
