Florida Bar Journal

An Analysis of Current Florida Law in Connection with Recovering Fees on Fees

Illustration by www.istockphoto.com/koya79

Under the long-standing “American Rule,” each party in litigation is responsible for its own attorneys’ fees and costs absent a contractual or statutory basis to award fees to the prevailing party.^[1] When fees are recoverable, the general rule is that a party may recover additional attorneys’ fees for litigating the entitlement issue, but no fees as to the quantum, or reasonableness of the amount of fees. This article addresses how courts have reacted to and analyzed broad contractual prevailing party attorneys’ fees provisions when determining whether a party can recover fees for litigating the reasonableness of the amount of fees.

“Fees on Fees” Generally Disallowed

In 1993, in State Farm Fire & Cas. Co. v. Palma, 629 So. 2d 830 (Fla. 1993), the Florida Supreme Court addressed whether an insured could recover the attorneys’ fees incurred by the insured litigating the amount of attorneys’ fees the insured was entitled to as the prevailing party under F.S. §627.428(1) (1983), which provides:^[2]

Upon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer, the trial court or, in the event of an appeal in which the insured or beneficiary prevails, the appellate court shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured’s or beneficiary’s attorney prosecuting the suit in which recovery is had.^[3]

The court explained that although it had not addressed the issue of a prevailing party’s ability to recover its attorneys’ fees expended in establishing entitlement to and the amount of attorneys’ fees it is entitled to as the prevailing party, it had previously approved an award of fees for litigating entitlement to attorneys’ fees in a worker’s compensation case.^[4] The court then, agreeing with the Fourth District Court of Appeal’s reasoning in Cincinnati Ins. Co. v. Palmer, 297 So. 2d 96 (Fla. 4th DCA 1974), explained that, when an insured is compelled to sue to enforce an insurance contract based on the insurance company’s contesting of a valid claim, the relief sought is both the policy proceeds and attorneys’ fees pursuant to §627.428.^[5] Thus, the court concluded that, because litigating the issue of whether a party is entitled to prevailing party attorneys’ fees is rendered in procuring full payment of the judgment, and because the insured has an interest in the fee recovered, attorneys’ fees may be properly awarded under §627.428 for litigating the issue of entitlement to attorneys’ fees.^[6] However, the court declared that attorneys’ fees may not be awarded for litigating the amount of attorneys’ fees.^[7] In coming to this conclusion, the court reasoned that the statute does not support such a conclusion and further declared that such work inures solely to the attorney’s benefit and cannot be considered services rendered in procuring full payment of the judgment.^[8]

The court went on to recognize that the federal courts that have addressed the issue have not distinguished between entitlement to attorneys’ fees and the amount of attorneys’ fees, but have instead permitted fees for the entire time spent on the issue.^[9] The court distinguished the holdings of the federal courts by emphasizing the court’s conclusion comported with the plain language and purpose of §627.428, which the court had previously explained is “to discourage the contesting of valid claims against insurance companies and to reimburse successful insureds for their attorneys’ fees when they are compelled to defend or sue to enforce their insurance contracts.”^[10] The court then further declared that the Florida Legislature was the proper party to expand the scope of §627.428 to include attorneys’ fees for time spent litigating the amount of attorneys’ fees, as opposed to the court.^[11] Accordingly, the court quashed the decision below to the extent it authorized attorneys’ fees pursuant to §627.428 for litigating the amount of fees.^[12]

Fees Awarded for Litigating the Amount of Fees

Although Palma’s rationale was based on the plain language and purpose of F.S. §627.428, the Florida Supreme Court’s analysis and reasoning opened the door for other courts to explore the issue of recovering attorneys’ fees expended establishing the amount of attorneys’ fees. In Waverly at Las Olas Condominium Ass’n, Inc. v. Waverly Las Olas, LLC, 88 So. 3d 386 (Fla. 4th DCA 2012), after a condominium unit owner brought an action against the condominium association over parking spaces, the association filed a third-party complaint against the developer. After dismissal of the second amended third-party complaint with prejudice, the trial court awarded the developer $105,841.29 in prevailing party attorneys’ fees and costs.^[13] On appeal, the association argued the trial court erred in the amount of the attorneys’ fees and costs awarded to the developer.^[14] The award of attorneys’ fees and costs arose out of paragraph 16 of the unit owner’s purchase agreement with the developer, and provided: “Litigation. In the event of any litigation between the parties under this [a]greement, the prevailing party shall be entitled to reasonable attorneys’, paralegals’ and para-professionals’ fees and court costs at all trial and appellate levels.”^[15]

Based on paragraph 16, the trial court awarded $80,657 for attorneys’ fees incurred through the entry of the final judgment, $21,857.50 for litigating the amount of attorneys’ fees, and $3,326.79 in taxable costs.^[16] On appeal, the association argued that the Florida Supreme Court’s analysis in Palma limited an attorneys’ fees award to time spent in litigating the issue of entitlement only and not for litigating the amount of fees incurred.^[17] The developer argued paragraph 16 of the unit owner’s purchase agreement was broad enough to encompass time spent in litigating the amount of fees, and that Palma’s statutory analysis was inapplicable in a fee claim based on a contract.^[18] In agreeing with the developer and affirming the final judgment, the court emphasized the broad nature of the contract at issue and specifically recognized that the contract allowed for recovery of attorneys’ fees for “any litigation.”^[19]

The Second District Court of Appeal has also found, after analyzing a broad contractual prevailing party fee provision, that a prevailing party is entitled to recover its attorneys’ fees spent litigating the amount of prevailing party attorneys’ fees.^[20] In Trial Practices, Inc. v. Hahn Loeser & Parks, LLP for Antaramian, Nos. 2D13-6051, 2D14-86, 2017 WL 4798944 (Fla. 2d DCA 2017) (TPI), Trial Practices, Inc., appealed a final judgment awarding attorneys’ fees, costs, and prejudgment interest to Hahn Loeser & Parks, LLP.^[21] On appeal, Trial Practices asserted the trial court erred by awarding Hahn Loeser attorneys’ fees and costs for litigating the amount of attorneys’ fees.^[22]

In deciding the propriety of the trial court’s award, the court looked to the pertinent contractual provision in the consulting agreement between Trial Practices and Jack J. Antaramian, which provided the:

prevailing party in any action arising from or relating to this agreement will be entitled to recover all expenses of any nature incurred in any way in connection with the matter, whether incurred before litigation, during litigation, in an appeal,…or in connection with enforcement of a judgment, including, but not limited to, attorneys’ and experts’ fees.^[23]

The court began its analysis by explaining that both the Florida Supreme Court and the Second District Court of Appeal have recognized that when parties are seeking attorneys’ fees pursuant to a statute, the parties are not necessarily entitled to recover attorneys’ fees for litigating the amount of fees.^[24] However, the court correctly recognized the prevailing party attorneys’ fees were awarded pursuant to the fee shifting provision in the broadly worded consulting agreement.^[25] The court specifically noted parties may freely contract on the issue of attorneys’ fees,^[26] and a court will not rewrite a contract in order to relieve a party of its obligation with respect to payment of attorneys’ fees.^[27]

In affirming the trial court on the award of attorneys’ fees incurred litigating the amount of prevailing party fees, the court specifically distinguished the cases relied on by Trial Practices,^[28] finding those cases to be unpersuasive because the parties in those cases were relying on retainer agreements with their attorneys as the basis for the parties’ recovery of fees.^[29] Rather, the court looked directly to the Fourth District Court of Appeal’s decision and analysis in Waverly.^[30] Through its reliance on Waverly, the court held, “[T]he fee shifting provision was drafted in such a way that it broadly encompasses all claims that were connected in any way to the [c]onsulting [a]greement.”^[31] Accordingly, the court found the fee-shifting provision to be broad enough to encompass fees incurred in litigating the amount of fees and affirmed the trial court.^[32]

Courts Continue to Refuse to Award Parties Fees for Litigating the Amount of Fees

Notwithstanding Waverly, certain courts continue to hold that a prevailing party may not recover attorneys’ fees incurred establishing the amount of fees. For example, the U.S. District Court in the Southern District of Florida denied a prevailing party’s request for attorneys’ fees incurred litigating the amount of fees the party should be awarded. In Pretka v. Kolter City Plaza II Inc., No. 09-80706-CIV-MARRA, 2013 WL 12080754 (S.D. Fla. Dec. 10, 2013), the court began its analysis by recognizing that a party may seek fees for litigating the party’s entitlement to an award of attorneys’ fees.^[33] However, the court then declared that Florida courts have denied a prevailing party an award of attorneys’ fees incurred for litigating the amount of fees that should be awarded.^[34] The court then specifically rejected the defendant’s reliance on Waverly and held that the language in the instant agreement (“litigation to enforce” the terms and provisions of this agreement) did not encompass attorneys’ fees incurred litigating the amount of fees the prevailing party was entitled to.^[35] Just over one year after the Pretka decision, the Southern District again revisited the potential recoverability of “fees on fees” in Chavez v. Mercantil Commercebank, N.A., No. 10-23244-Civ., 2015 WL 136388 (S.D. Fla. Jan. 9, 2015).

In Chavez, the court began its analysis by referring to the Florida Supreme Court’s decision in Palma and the 11th Circuit Court of Appeal’s decision in McMahan v. Toto, 311 F.3d 1077 (11th Cir. 2002).^[36] The court then declared, “Chavez’s proposed approach runs counter to this construction of Florida law from our appellate court that was interpreting and construing a Florida Supreme Court decision.”^[37] The court further explained that it was bound by the 11th Circuit’s interpretation in McMahan unless and until a new Florida Supreme Court decision reached a different conclusion.^[38] The court then identified a string of cases that stand for the proposition that attorneys’ fees may be recovered for time spent litigating entitlement to fees, but not for time spent litigating the amount of fees, as follows:^[39]

See, e.g., National Portland Cement Co. v. Goudie, 718 So. 2d 274, 275 (Fla. 2d DCA 1998) (construing Palma as standing for the proposition that “attorney’s fees may be recovered for time spent litigating entitlement to fees but not for time spent litigating the amount of fees”); North Dade Church of God, Inc. v. JM Statewide, Inc., 851 So. 2d 194, 196 (Fla. 3d DCA 2003) (applying Palma to a fee petition arising under a contractual prevailing party fee provision, “[i]t is settled that in litigating over attorney’s fees, a litigant may claim fees where entitlement is the issue, but may not claim attorney›s fees incurred in litigating the amount of attorney’s fees.”); Paladyne Corp. v. Weindruch, 867 So. 2d 630, 634-35 (Fla. 5th DCA 2004) (Palma precluded award of fees for fees under contractual provision that “[i]n the event of any litigation or arbitration proceeding arising out of this [a]greement, the prevailing party shall be entitled to reasonable attorney’s fees and expenses from the losing party, whether incurred before suit is brought, before or at [trial] or the arbitration proceeding, on appeal or in insolvency proceedings”); Mangel v. Bob Dance Dodge, Inc., 739 So. 2d 720, 724 (Fla. 5th DCA 1999) (declining to award fees on fees in enforcement of attorneys’ fees provisions in settlement agreement and counsel’s retainer agreement that were designed to avoid the effect of Palma ); see also Ruderman ex rel. Schwartz v. Washington Nat’l Ins. Corp., 465 F. App’x 880, 882 (11th Cir. 2012); Tamar Diamonds, Inc. v. Splendid Diamonds LLC, 2011 WL 382576, at *7 (S.D. Fla. 2011) (under Palma, a party is not entitled to recover fees for fees under contractual provision that “[i]n any dispute between any party, whether in mediation, arbitration or litigation, the prevailing party shall be entitled to recover all reasonable costs incurred and the losing party shall pay all such reasonable costs, including, without limitation, attorney’s fees….”).

After identifying the above-referenced cases, the court addressed the plaintiff’s reliance on Waverly.^[40] The court first explained that Waverly was simply not enough to ignore the 11th Circuit precedent, specifically McMahan, and then further pointed out that Waverly could be construed as being inconsistent with two prior decisions from the Fourth District Court of Appeal.^[41] Thus, the court held, “[G]iven the continued validity of Palma, the failure of any other decision to follow Waverly, and the great number of state and federal cases construing Palma in a manner that runs counter to Chavez’s position, we are more comfortable applying settled Florida law here unless and until the Florida Supreme Court decides otherwise.”^[42]

Recent Developments

The law with respect to this issue continues to develop. The Fifth District Court of Appeal analyzed this issue in Bayview Loan Servicing, LLC v. Cross, 286 So. 3d 858 (Fla. 5th DCA 2019). In Bayview, the trial court awarded a mortgagor prevailing party attorneys’ fees and costs in litigating the amount of the award, based on fee provisions contained in the note and mortgage, after the mortgagee’s involuntary dismissal of its foreclosure action.^[43] The court began its analysis by noting the general rule that attorneys’ fees incurred in litigating the amount of attorneys’ fees to be awarded are not recoverable.^[44] The court then explained that an exception to the general rule applies “where an attorney’s fees provision in a contract is ‘broad enough to encompass fees incurred in litigating the amount of fees.’”^[45] The court then went on to explain that the Waverly and TPI decisions as they relate to prevailing party attorneys’ fees and costs were premised on broad language used in the respective agreements, such as “[i]n the event of any litigation between the parties under [the agreement]” and permitting recovery of “all expenses of any nature incurred in any way.”^[46] In finding that the Waverly and TPI decisions did not support the application of the exception to the general rule against “fees for fees,” the court analyzed the narrow language contained in the attorneys’ fees and costs provisions in the note and mortgage.^[47] The court emphasized that none of the attorneys’ fees and costs provisions in the note and mortgage contained broad and undefined language analogous to “any litigation” or “all expenses of any nature incurred in any way.”^[48]

The court compared the language in the note and mortgage to that found in the Waverly and TPI cases and noted that the first fee provision simply provided for the recovery of attorneys’ fees incurred in “enforcing th[e] [n]ote” and “to the extent not prohibited by applicable law.”^[49] The court explained that the second fee provision authorized recovery of attorneys’ fees incurred in pursuing the remedies provided in §22 of the mortgage, which §22 defined as “acceleration” and “foreclosure,” and that the third provision simply provided for the recovery of attorneys’ fees incurred on appeal and in a bankruptcy proceeding.^[50] After a review of the applicable attorneys’ fees and costs provisions, the court concluded that none of the provisions were broad enough to encompass attorneys’ fees incurred in litigating the amount of attorneys’ fees to be awarded, and, thus, the general rule prohibiting such fees applied.^[51]

The First District Court of Appeal also addressed this issue in Windsor Falls Condominium Association, Inc. v. Davis, 265 So. 3d 709 (Fla. 1st DCA 2019). In that case, the trial court awarded prevailing party attorneys’ fees and costs, including fees litigating the amount of fees, to a condominium association.^[52] In reversing the trial court on this issue, the court first looked to the contractual fee provision, which provided that the appellee was responsible for condominium assessments and the “costs of collection thereof, including [l]egal [f]ees.”^[53] The court then held that, because the trial court had already determined that the association was the prevailing party, and the parties had stipulated to the association’s entitlement to legal fees and costs, the ensuing litigation over the amount of reasonable attorneys’ fees did not constitute litigating the collection of condominium assessments.^[54] The court concluded on this issue by stating: “[A]lthough we do not reject the argument that a contract can provide for an award of attorneys’ fees, including fees incurred for litigating the fee amount itself, we hold that the trial court did not err in denying [a]ppellant such an award.”^[55]

The Florida Third District Court of Appeal reached a different result when a contract expressly provided for the recovery of fees for litigating the amount of fees. In Burton Family Partnership v. Luani Plaza, Inc., 276 So. 3d 920 (Fla. 3d DCA 2019), the court affirmed the trial court’s award of attorneys’ fees incurred in litigating the amount of prevailing party attorneys’ fees based on a provision in the governing declaration that allowed for the recovery of fees “for litigating the issue of the amount of fees to be awarded.”^[56] Other cases from Florida courts have landed on both sides of the coin on this specific issue.^[57]

Conclusion

As is demonstrated by the Fourth District Court of Appeal’s decision in Waverly, the Second District Court of Appeal’s decision in TPI, and the Third District Court of Appeal’s decision in Burton Family Partnership, courts in Florida are willing to award a prevailing party attorneys’ fees it has incurred litigating the amount of fees to which it is entitled if the appropriate contractual language is in place. Parties who wish to ensure that the prevailing party be entitled to attorneys’ fees incurred in litigating the amount of fees should expressly provide so by contract, and, in doing so, may want to take a careful look at the fee provisions at issue in the Waverly, TPI, and Burton Family Partnership cases.