The Florida Bar
www.floridabar.org
The Florida Bar Journal
May, 2003 Volume LXXVII, No. 5
New §57.105 Lawyer Sanctions, Our Ethics, and the Florida Constitution: Recent Developments and a Respectful Dissent

by John P. Fenner

Page 26

1999 Fla. Laws Ch. 225 (“tort reform” or the “act”) amended and greatly expanded F.S. §57.105. In theory, courts can now impose sanctions against clients and against their lawyers, for “[losing] any claim or defense . . . not supported by the material facts . . . or . . . not supported by the application of the then-existing law.”

This profoundly changes the rules for all civil and family trial lawyers and appellate lawyers. As stated in an April 2002 article: “Ladies and gentlemen, it is a new day. Go forth prepared and forewarned.”1

Effective October 1, 1999, new §57.105 brought Federal Rules of Civil Procedure “Rule 11 practice” to Florida state courts. We lawyers and our clients may be “sanctioned” if we lose “any claim or defense” and

the losing party or the losing party’s attorney knew or should have known that a claim or defense when initially presented to the court or at any time before trial:

(a) was not supported by the material facts necessary to establish the claim or defense; or

(b) would not be supported by the application of then-existing law to these material facts.

For our clients, this may seriously erode Florida’s version of the “American rule” on legal fees: “Generally, a court can only award attorneys’ fees when such fees are ‘expressly provided for by statute, rule or contract.’”2

For lawyers, we now may have to pay one-half of the other side’s attorneys’ fees, if we lose “a claim or defense.”3 This may change how we all practice law, for good and for ill.

This change raises hard questions about how to perform our basic professional duties—to zealously represent our clients and keep their confidences.

Recent Cases Cautiously Interpreting §57.105 as Written

The March 2002 Handbook on Discovery Practice4 stated, “If the Florida courts take the language at face value, fee awards should become more common.” Since then, all district courts of appeal have taken the Florida Legislature at its word, to one degree or another.5

• First DCA

In Bridgestone/Firestone, Inc. v. Herron, 828 So. 2d 414 (Fla. 1st DCA 2002), defendant Bridgestone Corporation moved to dismiss for lack of personal jurisdiction. Its motion was denied, and the First DCA upheld the denial on an interlocutory appeal (of a nonfinal order), ruling that Bridgestone Corporation had been previously ruled to be subject to Florida long-arm jurisdiction.

The First DCA then granted plaintiff’s motion for appellate attorneys’ fees under §57.105, holding that §57.105 now allowed such fees to be assessed “at any time before trial,” and at the end of an appeal from a nonfinal order:

Section 57.105, Florida Statutes (1999), creates an entirely different kind of entitlement to attorneys’ fees. The statute does not use the phrase “prevailing party” to mean the party who ultimately wins the case, but rather to refer to the party who defeats “any claim or defense.” A decision requiring a party to prevail on the merits of the case in order to recover attorneys’ fees, for the defense of a baseless interlocutory appeal would undermine the primary objective of the statute. As we have said, the major change in the statute is that it no longer requires a party to show a complete absence of a justiciable issue, but instead allows recovery of fees for particular claims and defenses that are unsupportable.

The First DCA rejected Bridgestone’s contention that its “defense was initially presented to the court as a good faith argument for the extension . . . of existing law . . . with a reasonable expectation of success” (§57.105(2)). “Bridgestone had no reasonable expectation of success. The argument made on appeal was not a novel argument designed to advance the state of the law; it was simply an argument without any possible merit.”

The First DCA then ruled that the exception in §57.105(1)(b)—where a lawyer can escape personal responsibility “if he or she has acted in good faith, based on the representations of his or her client as to the existence of these material facts”—did not apply, because “the material facts are settled in the record.”

The First DCA then raised several problems with new §57.105, cautioning that

the courts must apply §57.105 . . . carefully to ensure that it serves the purpose for which it was intended [“to decrease the cost of employing the civil justice system”]. If an order dismissing a claim or striking a defense routinely leads to a motion for attorneys’ fees, the point of the statute would be subverted and, in the end, it might even have the reverse effect of making civil litigation more expensive. The need to adjudicate multiple fee claims in the course of a single case could create conflicts between lawyers and their clients, and it could take time away from the court’s main objective; that is, to resolve the controversy presented by the case.

The First DCA did not suggest how (under the new §57.105) lawyers should reconcile our obligation to represent our clients zealously, with the court’s caution against “routine . . . motion[s] for attorneys’ fees.” If the legislature has given parties the right to collect sanctions, and the courts allow us to obtain sanctions, how can we justify not moving for them?

• Second DCA

In Gahn v. Holiday Property Bond, Ltd., 826 So. 2d 423 (Fla. 2d DCA 2002), defendants first denied, but then conceded, long-arm jurisdiction. Plaintiffs unsuccessfully moved for fees and costs on this point. The Second DCA reversed the denial of fees, holding that

at the time the affidavits [contesting jurisdiction] were filed or at the latest during discovery, Appellees and their attorneys knew or should have known that their position on jurisdiction was wholly unsupported by material facts and existing law.

* * *

While lack of personal jurisdiction may have initially appeared to be a meritorious defense, facts disclosed during discovery made Appellees’ jurisdictional challenge completely untenable. Nevertheless, Appellees maintained their position and rebuffed an invitation to withdraw the motion to dismiss before Appellants sought attorneys’ fees and costs related to the motion [possibly under new §57.105(4), discussed below]. Section 57.105 now permits the merit of claims and defenses to be measured when the claim or defense is asserted, or any time prior to trial. [citations and quote omitted]

On remand, the circuit court shall determine the appropriate amount of fees incurred in defending the complaint against the motion to dismiss. The court should also conduct an inquiry into what defense counsel knew about Appellees’ business activities and relationships in Florida. If evidence establishes that counsel was aware of Appellees’ local contacts, business relationships, and operations, attorneys’ fees should also be levied against him or her personally.

The Second DCA did not rule how attorney-client privilege was to be upheld, in this inquiry.6

Later, however, in Cowgill v. Bank of America, 831 So. 2d 241 (Fla. 2d DCA 2002), the Second DCA reversed sanctions which had been imposed for making “arguable claims.”

We affirm the summary judgment entered in favor of Mickey Cowgill on the ground that the action filed by Eric Cowgill and Dana Cowgill Yeager, the Appellants, was barred by the statute of limitations. We reverse the award of attorneys’ fees to Mickey Cowgill pursuant to §57.105(1), Florida Statutes (2000), because the Appellants’ claim was arguably supported by material facts and then-existing law [emphasis added].

It is not clear whether this is a “transitional” decision, or whether the Second DCA is carving out an “arguability” exception for new §57.105.

Third DCA

O’Grady v. Potash, 824 So. 2d 904 (Fla. 3d DCA 2002), did not tell what point of law or fact the losing party lost, and did not indicate that Mr. Potash’s lawyers were to be sanctioned, but held that the fact that Ms. O’Grady was indemnified for her fees, by a third party, was not a defense to §57.015 sanctions: “Clearly, the legislature has not identified the equities of a situation as a consideration under §57.105.” The Third DCA’s footnote 1 states that “the 1999 amendment to §57.105 considerably changed the standards governing fee awards.”7

In a later case, the majority of a divided Third DCA in Goldfisher v. Ivax Corp., 827 So. 2d 1110 (Fla. 3d DCA 2002), ruled that a winning appellee could not recover appellate attorneys’ fees, under §57.105, because, although the appellant

was not victorious . . . neither his action nor subsequent appeal, were totally without merit. See Concrete & Lumber Enterprises Corp. v. Guaranty Business Credit Corp., [829 So. 2d 247] (Fla. 3rd DCA 2002). (“The only subsections of §57.105 which authorize the trial court to award noncontractual attorneys’ fees are subsections (1) and (3), which require a finding that the suit was frivolously filed or was litigated for the purpose of unreasonable delay.”)

Chief Judge Schwartz’s dissent to Goldfisher rejected the majority’s more cautious approach to §57.105 liability, however: “[T]he action brought below . . . is an awful example of litigation maintained only for the extortionate purpose of securing attorneys’ fees for those who brought it. I would grant the appellee’s motion for its own fees under §57.105.” Though no motion for rehearing en banc was filed in Goldfisher, Chief Judge Schwartz’s original dissenting opinion in Smallwood v. Perez, 717 So. 2d 347 (Fla. 3d DCA 1998), later became the Third DCA’s en banc opinion, affirming “inherent power sanctions” against a trial attorney.

Since new §57.105 uses the word “unsupported,” rather than “frivolous” (as Fla. R. App. P. 9.410 does), it is not clear that Goldfisher represents the Third DCA’s final position on this question. The word “frivolous” does not appear in new §57.105, or anywhere in the act.

Fourth DCA

In Read v. Taylor, 832 So. 2d 219 (Fla. 4th DCA 2002), the Fourth DCA reversed an entire §57.105 fee award, because “appellant’s claims were not so completely lacking in factual or legal basis, so as to justify an award of attorneys’ fees pursuant to §57.105.”

The Fourth DCA—like the Second DCA in Cowgill—may not allow new §57.105 to operate as a fee-shifting device. Read stated:

[T]he 1999 revision changed the standards governing fee awards under §57.105. Unlike the prior version, the current version of the statute does not apply only to an entire action, but now applies to any claim or defense. Moreover, an award of fees is not limited to situations in which there is a complete absence of justiciable issue of law or fact. Instead, under the revised standard, fees shall be awarded if the party or its counsel knew or should have known that the claim or defense was not supported by the facts or an application of then-existing law . . . .

Although the revised statute expanded the number of circumstances in which fees should be awarded, courts have made clear that an award of fees may not be appropriate under §57.105, even though the party seeking fees was successful in obtaining the dismissal of the action. See Mason v. Highlands County Bd. of County Comm’rs, 817 So. 2d 922, 923 (Fla. 2d DCA 2002) (“Failing to state a cause of action is not in and of itself a sufficient basis to support a finding that a claim was so lacking in merit as to justify an award of fees pursuant to §57.105.”); Pappalardo v. Richfield Hospitality Serv., Inc., 790 So. 2d 1226, 1228 (Fla. 4th DCA 2001) (whether fees should have been awarded in this case depends upon whether the underlying cause of action, which was dismissed by the trial court, was so clearly and obviously lacking as to be untenable). The revised statute, while broader than its predecessors, still is intended to address the issue of frivolous pleadings.

The Fourth DCA appears to require more than mere losing to justify sanctions.

Fifth DCA

In Andzulis v. Montgomery Road Acquisitions, 831 So. 2d 237 (Fla. 5th DCA 2002), the Fifth DCA reversed the trial court’s ruling (which had put the burden of showing bad faith by the lawyer, on the party seeking sanctions), ruling:

The burden was not on the moving parties to show bad faith or the absence of good faith. Indeed, that would be almost an impossible burden for a movant to carry. How can a party know what the other party told or did not tell its counsel and how could it obtain that information without breaching the rather impermeable wall of attorney-client privilege? Accordingly, we . . . direct that [attorneys’ fees] be equally assessed against [the lawyer] and Montgomery Road.

Summary

Appellate interpretation of new §57.105 is still in progress, as the district courts react to particular fact situations. Many of these cases do not endorse §57.105 as a “fee-shifting” mechanism. Nonetheless, it is not yet clear where the “bright line”—between “arguability” and “frivolousness”—will be.

A Dissenting View

In almost all cases, a prudent fear of sanctions will improve the practice of law, by making us more careful. The few exceptions are the problem. The author personally believes that the potential ills from this change may outweigh the good. The author has also argued that lawyer sanctions are unconstitutional, under §15, Article V of the Florida Constitution—unless they are imposed and applied by the Florida Supreme Court or its designees.
Nonetheless, this change should also have good results. It puts large, sharp teeth into Rule of Professional Conduct 4-3-1, and Rule of Judicial Administration 2.060.
Perhaps we lawyers should be made to “practice safe law.” Certainly, we should research the law on all points we raise, and skeptically review our clients’ version of the facts, before we bring a case or defense to court. Most civil cases should be settled, after responsible lawyers review the facts and the law.

Questions Still to Be Answered

How broadly will the courts interpret this new statute? In theory, a judge could take the position that, if “claim or defense . . . was . . . supported by the material facts . . . [and] . . . the application of then-existing law,” then the judge would have ruled for you in the first place. Such a broad interpretation would weaken the “American rule” on legal fees.

Restrained by cautions in Bridgestone/Firestone, Cowgill, Goldfisher, and Read, and by constitutional concerns, trial courts may take a more “careful” approach to this new statute.

Recent Procedural Limitations

New §57.105 was based on Fed. R. Civ. P. 11. To conform to federal practice, the legislature recently amended §57.105 to require the party seeking sanctions to send a “21-day letter” and a copy of the sanctions motion, before a §57.105 motion is filed.

Also, in Moakley v. Smallwood, 826 So. 2d 221 (Fla. 2002), although the Florida Supreme Court did not address new §57.105’s constitutionality, it strongly suggested that lawyers and clients are entitled to due process, before a court can impose sanctions.

Practical Questions and Modest Proposals

How can lawyers ethically avoid sanctions?

• Tell your clients about new §57.105, before going to court or to the courthouse. This disclosure should be prominent in your retainer agreements.

This raises important questions: Where will clients go for representation if they cannot afford to pay you, or your firm, sufficient fees, so that you could absorb sanctions? How can average citizens obtain justice against wealthy, determined opponents? Does turning down such a client violate the oath of admission to The Florida Bar?

• Make your clients verify their pleadings. This can establish that you “acted in good faith, based on the representations of [your] client as to the existence of those material facts” under §57.105(1)(b), without violating attorney-client privilege.

• If you take a legal “long shot,” tell the court, in your pleadings when you first take the long shot, that you make “a good faith argument for the extension, modification, or reversal of existing law or the establishments of new law, as it applied to the material facts.”

Because the trial court has to follow “existing law,” tell your client that an appeal may be necessary, to vindicate the client’s position on this point. Under new §57.105(2), you must also establish “a reasonable expectation of success” for this change in the law, to avoid sanctions.

What Are the Procedures for Imposing (or Obtaining) Sanctions?

A 2002 amendment to §57.105, and two 2002 Florida Supreme Court decisions, give guidance on sanction procedures.

Effective July 1, 2002, 2002 Fla. Laws Ch. 77 added F.S. §57-105(4). This gives Fed. R. Civ. P. 11(c)(1)(A)’s procedural protections to Florida lawyer sanctions:

A motion by a party seeking sanctions under this section must be served, but may not be filed with or presented to the court unless, within 21 days after service of the motion, the challenged paper, claim, defense, contention, allegation, or denial is not withdrawn or appropriately corrected.

This 21-day procedure offers the parties an early chance to narrow the issues, and to smoke out the other side’s case.

An informal “conference” between opposing lawyers should save the courts’ time.


Unless a case can be narrowed or resolved at this point, a 21-day letter may not reduce legal fees on a case, because lawyers now have this additional procedure. Nonetheless, if these letters are taken seriously, it would reduce the present burden on the courts, by settling, focusing, or narrowing cases at an early stage.

Recent Supreme Court Cases: Lawyer Sanctions Require Due Process

The Florida Supreme Court recently reversed two “inherent power” sanctions against lawyers, in Moakley and Diaz v. Diaz, 826 So. 2d 229 (Fla. 2002).

Moakley and Diaz both reversed lawyer sanctions imposed under the trial court’s “inherent authority” to sanction lawyers for bad behavior under Sanchez v. Sanchez, 435 So. 2d 347, 350 (Fla. 3d DCA 1983), and Patsy v. Patsy, 666 So. 2d 1045 (Fla. 4th DCA 1996). Though these opinions did not rule on the Florida Constitution’s grant of exclusive jurisdiction over lawyer discipline to the Supreme Court, both decisions suggest how the Supreme Court may deal with some of the questions that §57.105 raises.

Moakley ruled that “inherent authority” sanctions by trial courts could only be imposed for “bad faith litigation.” The trial court must hold a hearing, giving notice and the right to call witnesses. The trial court must also make detailed findings of fact, detailing the “bad faith.”

In Moakley the trial court sanctioned a lawyer and client $1,125 for the lawyer’s issuing a subpoena to a fact witness (former counsel to the opposing party) with “no reasonable explanation for issuance of the subpoena.” The Third DCA affirmed, 730 So. 2d 786 (Fla. 3d DCA 1999), under the trial court’s “inherent authority” to sanction lawyers.

The Supreme Court ruled that trial courts have “inherent authority” to punish lawyers, but only for “bad faith conduct,” relying on Bitterman v. Bitterman, 714 So. 2d 356, 365 (Fla. 1998). Bitterman allowed sanctions against parties for “inequitable conduct . . . egregious conduct or act[ing] in bad faith.” In doing so, the Supreme Court recognized that lawyers must walk a narrow line between “bad faith litigation tactics” and “zealous advocacy”:

[A] trial court possesses the inherent authority to impose attorneys’ fees against an attorney for bad faith conduct. In exercising this inherent authority, an appropriate balance must be struck between condemning, as unprofessional or unethical, litigation tactics undertaken solely for bad faith purposes, while ensuring that attorneys will not be deterred from pursuing lawful claims, issues or defenses on behalf of their clients, or from their obligation as an advocate to zealously assert the clients’ interests. The inherent authority of the trial court, like the power of contempt, carries with it the obligation of restrained use and due process.

The Supreme Court then laid out substantive and procedural rules for “inherent authority sanctions”:

[T]he trial court’s exercise of the inherent authority to assess attorneys’ fees against an attorney must be based upon an express finding of bad faith conduct and must be supported by detailed factual findings, describing the specific acts of bad faith conduct that resulted in the unnecessary incurrence of attorneys’ fees. Thus, a finding of bad faith must be predicated on a high degree of specificity in the factual findings.

In addition, the amount of attorneys’ fees must be directly related to the attorneys’ fees that the opposing party has incurred as a result of the specific bad faith conduct of the attorney.

Moreover, such a sanction is appropriate only after notice and an opportunity to be heard—including the opportunity to present witnesses and other evidence.

Finally, if a specific statute or rule applies, the trial court should rely on the applicable rule or statute rather than inherent authority.

Earlier in the Moakley opinion, the Florida Supreme Court favorably quoted Chambers v. NASCO, Inc., 501 U.S. 32, 50 (1991), the 5-4 U.S. Supreme Court decision upholding federal trial courts’ “inherent power” to sanction lawyers: “A court must, of course, exercise caution in invoking its inherent power, and it must comply with the mandates of due process.”

Chief Justice Wells, however, in his separate opinion in Moakley (which concurred only in quashing the sanctions) stated his concerns that

bad faith is not defined. What is bad faith in the subjective view of one judge is, in all likelihood, not going to be bad faith to another. Lawyers will not have notice of the boundaries of “bad faith.”

* * *

Based on my experience as a litigator, it is tempting to join the majority, because I certainly have witnessed firsthand the type of lawyer abuse which the majority is desirous of sanctioning. Since I have been on this court, I am aware of instances of lawyer abuse which should have been sanctioned but were not, for the likely reason that the trial judge did not feel that there was an effective way to do it.

I deplore this abuse, but I have to weigh this against the problems I foresee with opening an new way to sanction lawyers, which has the lack of specificity, resulting from this opinion. As clearly as the judicial system needs to be protected against this type of lawyer abuse, the judicial system has to also be protected against restraining lawyers in work on innovative and unpopular causes and in innovative ways which to some trial judges could appear to be “bad faith.” Lawyers cannot be placed in a position of fearing monetary exposure based upon the decisions which cannot be effectively reviewed by appellate courts. Frankly, I am concerned about the arbitrary or intimidating applications of undefined and unlimited “bad faith” sanctions.

* * *

[I]t would be better to have the rules committees develop rules in which “bad faith” is defined and the sanctions specified. In that way, the Bar can debate the issues and present to the Court a proposal that has been fully and fairly scrutinized . . . . I would join in sending the issue of bad faith sanctions against lawyers to the rules committees.

In spite of expanding some trial courts’ “inherent authority” to sanction lawyers, and not defining “bad faith conduct,” Moakley narrows the scope of these sanctions.8

The Supreme Court also acknowledged that inherent authority sanctions must not deter us from our duty to zealously advocate our clients’ causes, within the rules. This could be extremely important to future judicial interpretation of new F.S. §57.105.

The Supreme Court also decided Moakley’s companion case, Diaz, on the issue of “bad faith.” Diaz starts to flesh out new rules of lawyer conduct, particularly for family lawyers.

Diaz reversed inherent power sanctions of $40,000 against a lawyer who did not compel his divorce client to settle a “long-shot” position. The client (before the lawyer was hired) had refused to accept an early offer, which would have given the client more than he received at trial. The trial court, angry at the fees incurred in the divorce, ruled that

there is no way that anyone with knowledge of family law could not have figured out that [the sanctioned lawyer’s client] could not do better [than] accepting the [first, proffered, pre-discovery offer of] settlement . . . . I do not know who was responsible for this. I do not know whether it was the client who did not want to accept the advice that he was given. I do not know whether it was a combination of the two factors.

The Third DCA affirmed these sanctions, 727 So. 2d 954 (Fla. 3d DCA 1998). The Third DCA acknowledged that “offers of judgment” are not used in family cases, but ruled that there was substantial, competent evidence to support the trial court’s ruling.

Reversing the Third DCA, the Supreme Court held that a lawyer should not be sanctioned for taking a “long shot” position for his client, even though it did not work out in court:

Pursuit of “long shot” claims cannot form the basis for assessing attorneys’ fees against an attorney under the inherent authority doctrine. Furthermore, an attorney’s failure to force his or her client to settle a colorable claim does not amount to “bad faith,” justifying the imposition of attorneys’ fees against the attorney.

The Supreme Court’s footnote should be required reading for all family lawyers:

1 As to the appropriate bounds of an attorney’s advocacy in a family law case, we cite with approval from the publication by the American Academy of Matrimonial Lawyers, Bounds of Advocacy: Goals For Family Lawyers (2000), specifically §1.3: “An attorney should refuse to assist in vindictive conduct and should strive to lower the emotional level of a family dispute by treating all other participants with respect”; and §1.5: “An attorney should attempt to resolve matrimonial disputes by agreement and should consider alternative means of achieving resolution.” p. 7-8. These goals also recognize that there is “substantial evidence of the destructive effect of divorce conflict on the children.” Id. at 9 n.13.

What Does This Mean to §57.105 Sanctions?

Both Moakley and Diaz mention and quote new §57.105, adopting its “good faith” standard for reliance on a client’s representations, for “facts” which are later shown to be untrue.

Nonetheless, the Supreme Court did not rule or comment on the constitutionality of new §57.105, under §15 of Article V of the Florida Constitution. (It was not before the court in either case, although the author argued in his reply brief in Moakley that the legislature also has no power to regulate lawyer discipline.) In fact, the Florida Supreme Court has never ruled on the constitutionality of the lawyer sanction provisions of the former §57.105. Accordingly, the constitutional question—can the legislature prescribe lawyer sanctions?—is still open.9

Probable Procedural Restraints on New §57.105

Writing before Moakley was published, the authors of the April 2002 article asked whether the courts would have to follow due process before they impose §57.105 sanctions.10 Moakley strongly suggests that trial courts will be required to follow these due process rules (specific findings of fact, a separate hearing, time to prepare and the right to call witnesses), before imposing §57.105 sanctions against lawyers or clients.

Moakley may have affected the result in the case of Forum v. Boca Burger, 788 So. 2d 1055 (Fla. 4th DCA 2001), in which the Fourth DCA awarded §57.105 sanctions against lawyers.11

There should be no objection to the courts establishing additional procedures for imposing sanctions, under §2, Article V of the Florida Constitution. Our legislature realized that parts of the tort reform act may encroach on the Supreme Court’s constitutional power to prescribe practice and procedures. Section 34 of the act provides:

[S]hould any court . . . enter a final judgment concluding or declaring that any provision of this act improperly encroaches upon the authority of the Florida Supreme Court to determine the rules of practice and procedure in Florida courts . . . . any such provision [is intended to] be construed as a request for rule change pursuant to §2, Art. 5 of the State Constitution and not as a mandatory legislative directive.

How do you defend against sanctions without breaching lawyer-client confidentiality? In Moakley and Diaz, the Supreme Court did not address the ethical dilemma facing lawyers who can only defend against sanctions, by disclosing client confidences.

Rule 4-1.6(c)(4) of the Rules of Professional Conduct may allow us to disclose our reliance on our client’s representations, in a sanctions proceeding:

A lawyer may reveal . . . information [relating to representation of a client] to the extent the lawyer reasonably believes necessary . .
. (4) to respond to allegations in any proceeding concerning the lawyer’s representation of the client . . . .
Attorneys should fully disclose this exception in retainer agreements.

The issue of lawyer-client confidentiality, and potential conflicts of interest, did not directly arise in either Moakley or Diaz. It was raised in another inherent power sanction case from the Third DCA—Smallwood v. Perez, 735 So. 2d 495 (Fla. 3d DCA 1999) (en banc), adopting Chief Judge Schwartz’ dissenting opinion in Smallwood v. Perez, 735 So. 2d 490, 494–5 (Fla. 3d DCA 1998). The Supreme Court did not accept this case for discretionary review, however.

Further decisions will guide us on this point. Until then, verifying pleadings may be the only way to defend against sanctions and uphold our oath to “maintain the confidence and preserve inviolate the secrets” of our clients.

Possible Substantive Restraints on New §57.105

Normally, the legislature prescribes substantive rules, which the courts enforce. New §57.105 only allows a “good faith” defense where the lawyer relied on his client for crucial facts (which are later decided against the client).

Our only apparent defense, to being found “wrong” on the law, is telling the court, in the beginning, that we are seeking a change or extension of existing law. (This is unlikely to help us win in the trial court, because the judge is required to follow existing law.) We will all probably do more research, before we file any pleading.

The courts still have to interpret what the legislature meant in new §57.105, within the constitution. With the Supreme Court’s opinions in Moakley and Diaz, the legislative language in §34 of the act, and the constitutional concerns set forth below, courts may be wary of enforcing new §57.105 in ways that impinge on Florida’s separation of powers or on our professional obligations as lawyers.

New §57.105 Sanctions Are Unconstitutional Under Article V

New §57.105’s “sanctions” are the same as the sanctions under subsections 2.8(a) and 2.8(b), Florida Standards for Imposing Lawyer Sanctions—Restitution of legal fees and assessment of costs.

Fla. Const. Art. V, §15 states the Supreme Court shall have exclusive jurisdiction to regulate the admission of persons to the practice of law, and the discipline of persons admitted.12

“In 1950, a young lawyer, defending a black man in Florida, had the audacity to refer to his client as ‘mister,’ an act that so outraged the justice of the peace, the lawyer was cited for contempt and jailed.”13

In 1956, Florida voters approved Article V to Florida’s Constitution. Article V guaranteed independent courts, and an independent Bar. For an independent Bar, Article V, §15 gave the Florida Supreme Court and its delegates the sole power to discipline Florida lawyers.

Article V of the Florida Constitution ended—for then—Florida’s struggle for an independent judiciary, and an independent, integrated Bar. By vesting exclusive disciplinary jurisdiction in our Supreme Court, Article V divested our legislature (and the lower courts) from the power to discipline lawyers.

In State ex rel. Arnold v. Revels, 109 So.2d 1, 3 (Fla. 1959) a unanimous Florida Supreme Court stated this “absolutist” view:

Article V of the Florida Constitution [ousted] the circuit courts . . . of whatever inherent disciplinary power over attorneys they had previously held, as well as the statutory power derived from Ch. 454, Fla. Stat. 1955 . . . . This necessarily follows from the clear and unambiguous language of §23 of revised Article V, vesting in the Supreme Court of Florida “exclusive jurisdiction over the admission to the practice of law and the discipline of persons admitted.” . . . The legislature was likewise divested of any legislative control in this field by §23 of Article V.

With the exception of contempt (and the “rarely applicable . . . inequitable conduct doctrine” of Bitterman, enlarged to include “bad faith conduct” by Moakley), the Supreme Court consistently insisted on its exclusive jurisdiction to discipline lawyers, which can only be exercised through its delegates.

[Disciplinary Rule 3-3.1] The exclusive jurisdiction of the Supreme Court of Florida over the discipline [of lawyers] . . . . shall be administered in the following manner, subject to the supervision and review of the court. The following entities are hereby designated as agencies of the Supreme Court of Florida . . . . The board of governors [of The Florida Bar], grievance committees and referees [and Circuit Courts under Disciplinary Rule 3-3.5].

The Preamble to the Rules of Professional Conduct states:

It is a lawyer’s duty, when necessary, to challenge the rectitude of official action . . . . An independent legal profession is an important force in preserving government under law, for abuse of legal authority is more readily challenged by a profession whose members are not dependent on the executive and legislative branches of government for the right to practice.

Accordingly, the Supreme Court should overturn the punitive aspects of §57.105 on constitutional grounds—if it does not adopt them as a rule. If it adopts some or all of the act as a rule, it should give particular consideration to the profound ethical problems which sanctions give lawyers, and to the problems unique to family law.14

Conclusion

The district courts of appeal have proceeded carefully, but have interpreted §57.105 as written. Lawyer sanctions will become more common. Though §57.105 is not a fee-shifting device, and something more than mere “losing” appears to be required for sanctions, it is unclear exactly where the courts will draw the line.

A prudent concern about sanctions should make us careful, and will probably improve the practice of law, in most cases. Nonetheless, sanctions may change our basic ethical duties to our clients–to zealously represent them, and to keep their secrets.

The new requirement of a “21-day letter” and the Supreme Court’s procedural requirements in its recent opinions in Moakley and Diaz should provide an orderly framework to avoid and assess sanctions.

Article V, §15 of the Florida Constitution should restrain the courts from imposing lawyer sanctions arbitrarily. It may even offer a way to overturn lawyer sanctions entirely, or a way for the Supreme Court to mold lawyer sanctions into a less-intrusive form.

Until this happens, a small client with an unpopular cause may come to our office and ask us to help him or her obtain justice. We will then have to confront the tension between our professional obligations and these new lawyer sanctions.

Fear of sanctions should make us careful, but should not make us cowardly. We should be better than that. We took an oath.

1 Gary S. Gaffney and Scott A. Mager, Section 57.105’s New Look: The Florida Legislature Encourages Courts to Sanction Unsupported Claims and Dilatory Actions, 76 Fla. B.J. 8 (April 2002).

2 Bane v. Bane, 775 So. 2d 938, 940 (Fla. 2000).

3 Andzulis v. Montgomery Road Acquisitions, 831 So. 2d 237 (Fla. 5th D.C.A. 2002), ruled that courts must assess half of §57.105 sanctions against the losing lawyer. Neustein v. Miami Shores Village, 28 Fla. L. Weekly D83 (Fla. 3d D.C.A. Dec. 26, 2002), also required a 50-50 split, unless the court found “bad faith litigation” under Moakley v. Smallwood, 826 So. 2d 221 (Fla. 2002).

4 Joint Committee of Fla. Trial Lawyers Section of the Bar and Conferences of Circuit and County Court Judges, p. 4.

5 Bridgestone/Firestone, Inc. v. Herron, 828 So. 2d 414 (Fla. 1st D.C.A. 2002); Gahn v. Holiday Property Bond, Ltd., 826 So. 2d 423 (Fla. 2d D.C.A. 2002); O’Grady v. Potash, 824 So. 2d 904 (Fla. 3d D.C.A. 2002); Read v. Taylor, 832 So. 2d 219 (Fla. 4th D.C.A. 2002); and Andzulis, 831 So. 2d 237 (decided under former §57.105, but stating that the result would be the same, under new §57.105). All but Read upheld or imposed §57.105 sanctions against lawyers.

6 See also Andzulis, 831 So. 2d 237, which held that the lawyer had the burden of proof, to establish a good faith defense, to the lawyer’s 50 percent of sanctions.

7 The Third DCA’s footnote 2 also states Mr. Potash had been sued when some plaintiffs “alleged that as a result of a wave of litigation initiated by Potash and others, the [real estate] deal had gone sour.” Potash had filed a voluntary dismissal against O’Grady, whom Potash had impleaded.

8 The Fourth DCA applied Moakley, reversing lawyer sanctions in T/F Systems v. Malt, 814 So. 2d 511 (Fla. 4th D.C.A. 2002). The Fourth DCA remanded, so that the trial court could comply with Moakley’s requirement that lawyers may call witnesses in their defense.

9 The entire act survived a constitutional attack, based on the “Single-Subject” part of Fla. Const. art. III, §6, Enterprise Leasing Co. South Central v. Hughes, 833 So. 2d 832 (Fla. 1st D.C.A. 2002). Even had this attack been successful, our legislature would quickly re-pass a new §57.105, unless the Bar makes a reasoned appeal to the appropriate legislative committees.

10 Gaffney and Mager, supra note 1.

11 See also the Fourth DCA’s opinion in T/F Systems, 814 So. 2d 511, an “inherent authority” sanction case. There, the Fourth DCA quoted Moakley, and required an evidentiary hearing.)

12 See Hechtman v. Nations Title Ins. of New York, 28 Fla. Law Weekly S119 (Fla. Feb. 6, 2003).

13 Mark D. Killian, Wagner Wins Tobias Simon Pro Bono Service Award, The Florida Bar News, April 1, 2002, at 1.

14 Some of these problems are discussed in the author’s December 1999 article in The Florida Bar Famil y Law Commentator, First, Let’s Sanction All the Lawyers, on “inherent authority” and new §57.105.

John P. Fenner practices in appeals, business and securities law, real estate, and business litigation in Boca Raton. He graduated from the University of Pennsylvania Law School in 1972 and from Wesleyan University in Connecticut, with honors. Mr. Fenner also practiced in New York and Illinois. He argued Moakley before the Florida Supreme Court, opposing “inherent authority” sanctions. Mr. Fenner gratefully acknowledges working with the late J. Lewis Hall, Sr., and with the late G. Cleveland Herring.

[Revised: 02-10-2012]