Attorneys’ Fees on Appeal: Misapplication of the Law of the Case Doctrine Raises Procedural and Substantive Due Process Concerns
The aim of this article is to inform the reader and update practitioners about the misapplication of the law of the case doctrine that raises procedural and substantive due process concerns when appellate courts determine entitlement to appellate attorneys’ fees without the benefit of a trial court record. The article briefly reviews the law of the case doctrine. Next, the authors examine some of the cases that apply the law of the case doctrine to proposals for settlements. Based on the current state of the law, it is critical for a party to avail oneself of the opportunity to challenge the legal sufficiency of a proposal for settlement at the proper time to avoid being bound by the law of the case.
The authors contend that an appellate court should not grant or deny entitlement to appellate fees1 without the benefit of the trial court’s ruling on the validity of a proposal for settlement or contractual agreement because entitlement may depend on the trial court’s resolving factual issues. Thus, ruling on entitlement to appellate fees without the benefit of a developed trial court record raises procedural and substantive due process concerns. The authors conclude that if the appellate court decides to grant a motion for appellate fees in reviewing the final judgment, then the court should grant fees conditioned upon the trial’s court finding that the proposal for settlement or contractual agreement is valid.
The Law of the Case Doctrine
The Florida Supreme Court’s seminal case clarifying the law of the case doctrine is Florida Dept. of Transp. v. Juliano, 801 So. 2d 101, 105 (Fla. 2001). In Juliano, the court explained the doctrine as follows:
The doctrine of the law of the case requires that questions of law actually decided on appeal must govern the case in the same court and the trial court, through all subsequent stages of the proceedings. Under the law of the case doctrine, a trial court is bound to follow prior rulings of the appellate court as long as the facts on which such decision are based continue to be the facts of the case. Moreover, even as to those issues actually decided, the law of the case doctrine…provides that an appellate court has the power to reconsider and correct an erroneous ruling that has become the law of the case where a prior ruling would result in a “manifest injustice.”2
In Delta Property Management v. Profile Investments, Inc., 87 So. 3d 765 (Fla. 2012), the Florida Supreme Court was asked to resolve a conflict between a decision from the First District and its own decision in Juliano. Adhering to its prior decision in Juliano, the court concluded that the law of the case doctrine is inapplicable to a legal question that was not previously decided on appeal.3
Application of the Law of the Case Doctrine to Proposals for Settlement
Generally, when an appellate court has already determined that §768.79 of the offer of judgment statute is applicable and awarded appellate attorneys’ fees to a prevailing party, the law of the case doctrine prevents a trial court from revisiting the issues of enforceability of the offer and entitlement to attorneys’ fees. That was how the First District applied the law of the case doctrine in Crouch v. Public Service Commission, 993 So. 2d 148 (Fla. 1st DCA 2008). It is unclear in the opinion whether the offer of judgment statute applies in whistle-blower actions. What is clear is that the applicability of the offer of judgment statute has been determined through the law of the case doctrine when the court awarded appellate fees to the appellee. The First District found it unnecessary to apply the manifest injustice exception in Crouch, reasoning that the Florida Supreme Court reviewed Crouch and already determined that the offer of judgment statute was applicable and awarded appellate attorneys’ fees to the appellee.4
Florida courts are reluctant to revisit a prior ruling finding a proposal for settlement enforceable unless enforcing the prior ruling through the law of the case will cause manifest injustice. The burden is on the complaining party to show that an exception applies, and that it is necessary to alter the law of the case, especially when the legal principles on which the ruling was made or the facts of the case are no longer the same.
One instructive case that deals with the complicated issues in enforcing a legally insufficient proposal for settlement through the law of the case doctrine is Specialty Restaurants Corp. v. Elliott, 924 So. 2d 834 (Fla. 2d DCA 2005). In that case, SRC filed a motion for appellate attorneys’ fees and costs based on the proposal for settlement served on Elliott pursuant to §768.79 and Rule 1.442.5 Although Elliott opposed the motion on the ground that the motion failed to state a substantive basis for entitlement, the response failed “to challenge the legal sufficiency of the proposal for settlement.”6 The appellate court affirmed the summary judgment, granted appellate fees to SRC based on the unchallenged proposal for settlement, and remanded to the trial court to determine the amount. On remand, the trial court ultimately found that SRC was not entitled to attorneys’ fees because the proposal for settlement was legally insufficient.
On the second appeal, the court reversed, finding that “absent extraordinary circumstances, this court’s earlier order which implicitly found the proposal for settlement enforceable is binding on [Elliott].”7 In reaching its finding, the Second District relied on Tiede v. Satterfield, 870 So. 2d 225, 227-28 (Fla. 2d DCA 2004), which “held that by awarding fees pursuant to the offer of judgment, this court necessarily determined the legal sufficiency of the offer of judgment, and that determination of legal sufficiency was binding on the trial court in any subsequent proceedings.”8 The court distinguished Tiede from Specialty Restaurants, recognizing that it was appropriate to alter the law of the case in Tiede because the supreme court decision that invalidated a joint offer for settlement was not issued until after the award of appellate attorneys’ fees was made in Tiede, whereas the law of the state of Florida had been clearly established when the court entered its order granting appellate attorneys’ fees to Specialty Restaurants Corporation. Because the same situation in Tiede was not present in Specialty Restaurants, the court declined to alter the law of the case.9
The court noted that although it may seem inequitable to hold Elliott responsible for attorneys’ fees based on a legally insufficient proposal for settlement, Elliott failed to challenge the legal sufficiency of the proposal for settlement at the proper time.10 Because it implicitly found the proposal for settlement to be enforceable in the earlier appeal, the Second District concluded that the earlier ruling became the law of the case and was bound on the trial court, which erred when the trial court found the proposal for settlement to be unenforceable on remand.11
The above line of cases teaches two important lessons practitioners should consider when it comes to appellate attorneys’ fees awarded based on a proposal for settlement. The first is that a trial court is powerless when it comes to determining entitlement to appellate fees on remand. If the reviewing court grants appellate attorneys’ fees and remands to determine the amount, then the trial court must follow the mandate without deviation. But if the prevailing party did not ask the appellate court to award fees, the trial court would be still without authority to award appellate fees absent a mandate from the appellate court.12
The second important lesson is that on appeal, a party must challenge the validity of a proposal for settlement or a contractual agreement at the proper time to avoid being bound by the law of the case. While the court, for example, may rely on the manifest injustice exception to alter the law of the case, the court will decline to apply the exception when the applicability of the proposal for settlement or offer of judgment statute was established by a higher court. Thus, under the current state of the law, a party may not complain that a proposal for settlement is invalid if one fails to avail oneself to the opportunity to challenge the legal sufficiency of the proposal for settlement at the proper time.
Misapplication Raises Procedural and Substantive Due Process Concerns
The misapplication of the law of the case doctrine violates a litigant’s fundamental appellate procedural and substantive due process rights. The Third District’s decision in Florida Diversified Films, Inc. v. Simon Roofing and Sheet Metal Corp., 118 So. 3d. 240 (Fla. 3d DCA 2013),13 is a prime example of why an appellate court should not decide entitlement to appellate court fees without the benefit of a developed record. In that case, the Third District ordered Simon Roofing to pay FDF’s trial attorneys’ fees. Simon Roofing filed a motion for reconsideration, informing the court that a successor judge entered a new fee order that was the subject of the second appeal filed by FDF. The successor judge found that FDF was not entitled to attorneys’ fees because FDF’s offer of judgment was not made in good faith. That was a question of fact, which the appellate court was not positioned to address in the first appeal.14 The issue of whether FDF’s offer of judgment was enforceable because it was not made in good faith, or, alternatively, because it was procedurally defective or ambiguous was not part of the first appeal. Relying on Specialty Restaurants, the court denied the motion for reconsideration, noting that the law of the case applied and that the parties were bound by the court’s earlier ruling.
Simon Roofing moved for rehearing, arguing that when the court found that its prior ruling on attorneys’ fees was bound on the parties, in essence, the initial appellate order granting appellate fees reversed the trial court’s decision on a question of fact without the record on appeal. The motion for rehearing further argued that the initial order granting appellate fees was unconditional even though the effect of the predecessor judge’s order denying attorneys’ fees was that there was no legal basis for an award of attorneys’ fees.15 At most, the initial award of appellate attorneys’ fees to FDF in the first appeal should have been conditioned upon the court’s determination that FDF’s proposal for settlement met the conditions of §768.79 and Fla. R. Civ. P. 1.442.16 The Third District agreed, finding that its “March 9, 2012 order granting FDF’s motion for appellate attorneys’ fees should have been conditioned upon FDF ultimately prevailing in the instant appeal of [the successor judge]’s order denying FDF’s entitlement to attorneys’ fees.”17 The court further concluded that the successor judge did not abuse her discretion by determining that FDF is not entitled to attorneys’ fees based on its proposal for settlement. Based on the unusual circumstances of this case, the court, therefore, concluded that reversing the predecessor judge’s order based solely on the law of the case doctrine would result in manifest injustice, as Simon Roofing wrongfully would be required to pay trial level attorneys’ fees to FDF. Accordingly, the court granted rehearing, withdrew its prior opinion finding the law of the case applies, and substituted it with a revised opinion that affirmed the successor judge’s decision on the fee issue.18
The Law of the Case Doctrine Has Limited Bounds
The Florida Supreme Court explained that the law of the case doctrine is constrained “to questions of law actually presented and considered on a former appeal…[and that a] lower court is not precluded from passing on issues that ‘have not necessarily been determined and become the law of the case.’”19 The issue of whether a proposal for settlement or contractual agreement is enforceable is not before the appellate court in the first appeal. Mostly, that proceeding concerns whether the final judgment should be reversed. On the other hand, the validity of a proposal for settlement is an issue properly raised in the second appeal. the time the appellate court reviews the trial court’s order considering the validity of the proposal for settlement or contractual agreement, the underlying issues would be fully briefed in the second appeal.
The authors understand that an appellate court is on the same footing with the trial court when reviewing a proposal for settlement or a contractual agreement and that whether the proposal for settlement or contractual agreement is procedurally defective or ambiguous would be reviewed by the appellate court de novo.20 But under Applegate v. Barnett Bank of Tallahassee, 377 So. 2d 1150 (Fla. 1979),and Sierra v. Sierra, 505 So. 2d 432 (Fla. 1987), it is impossible for an appellate court to decide, in the first appeal, the factual issue of whether a party’s proposal for settlement was not made in good faith, without the trial court record from the post-judgment attorneys’ fees proceedings. Therefore, it is imperative that the appellate court let the trial court make the initial determination of entitlement because the trial court is always in a better position to determine factual issues after an evidentiary hearing.
If the law remains as established, a party challenging a motion for appellate attorneys’ fees will be stuck in a procedural trap and will likely face two impossible choices in the first appeal. First, both parties will be compelled to argue in their appellate motions for or against appellate attorneys’ fees in the first appeal, all possible attorneys’ fees issues even when all of the issues may be unknown. the time the trial court makes a decision on any motion for attorneys’ fees, both sides have already filed their appellate motions for and against appellate attorneys’ fees. Thus, it is understandable why either side may fail to address the underlying basis for the trial court’s order because neither party could anticipate an order that had not yet been written. Second, a record on appeal must be provided to the appellate court in the first appeal, but there is no available record about attorneys’ fees at the time the parties file their motions for appellate fees in the first appeal, especially where the issue of entitlement has not been decided by the trial court.
Strict Adherence Strips Litigants of Their Right to Meaningful Appellate Review
The principle of due process “extends into every proceeding, [and] requires th[at] the opportunity to be heard be full and fair, [and] not merely colorable or illusive.”21
Due process guarantees to every citizen the right to have that course of legal procedure which has been established in our judicial system for the protection and enforcement of private rights. It contemplates that the defendant shall be given fair notice [ ] and a real opportunity to be heard and defend [ ] in an orderly procedure, before judgment is rendered against him.22
There is danger in making a determination on entitlement in the first appeal without the benefit of the trial court record. In particular, the trial court has the power to reconsider its prior rulings and may ultimately make a finding contrary to the appellate court’s finding. That is what happened in Florida Diversified Films. In that case, the predecessor judge’s initial order granting entitlement, which was the very basis for appellate attorneys’ fees in the first appeal, was later reversed by the successor judge. Ultimately, the Third District corrected its own error by granting rehearing, finding that the miscarriage of justice exception to the law of the case doctrine applies. Because a trial court has the power to correct its own errors by reconsidering its prior nonfinal orders, strict adherence to the law of the case doctrine strips litigants of their due process rights, especially when a litigant fails to receive fair notice and a meaningful opportunity to challenge the legal sufficiency of a proposal for settlement prior to the appellate court’s determination of entitlement to fees.
Appellate court orders deciding entitlement to fees without the benefit of a developed record raise substantive due process concerns. While the “offer of judgment statute…creates a substantive right to attorneys’ fees upon satisfaction of certain conditions,”23 the statute and rule must be strictly construed because an award of attorneys’ fees is in derogation of the common law principle that each party pays its own attorneys’ fees.24 Therefore, the logical corollary is that there is a due process right of a party not to be held liable for its adversary’s attorneys’ fees, unless there has been a determination that the proposal for settlement or contractual agreement is enforceable. That determination is best left with the trial court in the first instance as it is better equipped to deal with factual issues and to develop an adequate trial record.
Appellate court orders deciding entitlement to fees without the benefit of a developed record raise substantive due process issues with profound consequences, in particular because such fee orders deprive litigants of substantive due process, as they require litigants to lose a significant property interest by paying their adversary’s attorneys’ fees for the underlying trial and subsequent appeals. The problem is that sometimes there is no underlying legal basis for attorneys’ fees when the trial court finds a proposal for settlement was not made in good faith.25 But a party should not be deprived of its due process right to a meaningful, full, and fair hearing before it is held liable for its opponent’s attorneys’ fees.
An appellate court should not grant or deny entitlement to appellate fees without the benefit of the trial court’s ruling on the validity of a proposal for settlement or contractual agreement because it is premature for the appellate court to rule on a motion for attorneys’ fees without the benefit of a developed record. If the appellate court decides to grant a motion for appellate fees in the first appeal, then the court should grant fees conditioned upon the trial court’s finding that the proposal for settlement or contractual agreement is valid. Otherwise, appellate orders granting fees unconditionally, when the issue of entitlement has not been decided at the trial court, will infringe on litigants’ rights to procedural and substantive due process.
1 In Florida, attorneys’ fees are awardable pursuant to a statute or a contract between the parties. See Dade County v. Pena, 664 So. 2d 959 (Fla. 1995). To be entitled to fees, a party must plead entitlement to such fees. Stockman v. Downs, 573 So. 2d 835, 838 (Fla. 1991). Under Fla. R. Civ. P. 1.525, a party seeking fees must file a motion no later than 30 days from the date the final judgment is rendered. See Fla. R. Civ. P. 1.525.
2 Juliano, 801 So. 2d at 106 (internal citations omitted).
3 The court followed its decision in U.S. Concrete Pipe Co. v. Bould, 437 So. 2d 1061, 1063 (Fla. 1983), “which determined that the doctrine of the law of the case is limited to rulings on questions of law actually presented and considered on a former appeal.” It expressly receded from Airvac, Inc. v. Ranger Insurance Co., 330 So. 2d 467 (Fla. 1976), “to the extent that decision implied that the law-of-the-case doctrine could be applied to an issue not previously decided on appeal.”
4 Crouch v. Public Serv. Comm’n, 993 So. 2d 148, 149 (Fla. 1st DCA 2008).
5 Specialty Restaurants, 924 So. 2d at 836.
6 Id. at 837.
7 Id. at 838.
8 Id. (quoting Tiede v. Satterfield, 870 So. 2d 225, 228 (Fla. 2d DCA 2004)).
9 Id. at 839.
10 Id. at 840.
12 Devido v. Curry, 973 So. 2d 1287 (Fla. 4th DCA 2008) (noting that it is well settled that a “trial court may not award appellate attorneys’ fees absent a mandate from the appellate court”) (citations omitted).
13 Ms. Davidson represented Simon Roofing on appeal.
14 Gen’l Mech. Corp. v. Williams, 103 So. 3d 974 (Fla. 1st DCA 2012); Sharaby v. KLV Gems Co., Inc., 45 So. 3d 560, 563 (Fla. 4th DCA 2010).
15 Nat’l Educ. Ctrs. v. Kirkland, 678 So. 2d 1304, 1306 (Fla. 4th DCA 1996) (holding no basis for attorneys’ fees when demand for judgment was stricken).
16 See, e.g., Guadagno v. United Auto Ins., 88 So. 3d 246, 247 (Fla. 3d DCA 2011); State Farm Fire & Cas. Co. v. Rembrandt Mobile Diagnostics, Inc., 93 So. 3d 1161 (Fla. 4th DCA 2012) (holding that grant of appellate attorneys’ fees in first appeal must be conditioned upon proposal for settlement satisfying the proposal for settlement statute); Allstate Ins. Co. v. De La Fe, 647 So. 2d 965 (Fla. 3d DCA 1994).
17 Fla. Diversified Films, 118 So. 3d at 242-43.
19 Juliano, 801 So. 2d at 106 (internal quotations omitted) (emphasis added).
20 Miami-Dade County v. Ferrer, 943 So. 2d 288, 290 (Fla. 3d DCA 2006).
21 Moser v. Barron Chase Sec., Inc., 783 So. 2d 231, 236 (Fla. 2001) (holding that due process requires “a meaningful, full, and fair hearing to the affected individual”).
22 Philip Morris USA, Inc., v. Douglas, 110 So. 3d 419 (Fla. 2013) (internal omissions in original) (internal quotations omitted).
23 Southeast Floating Docks, Inc. v. Auto-Owners Ins. Co., 82 So. 3d 73, 82 (Fla. 2012).
24 Diamond Aircraft Indus., Inc. v. Horowitch, 107 So. 3d 362, 367 (Fla. 2013); Willis Shaw Express, Inc. v. Hyler Sod, Inc., 849 So. 2d 276, 278 (Fla. 2003).
25 Dep’t of Law Enforcement v. Real Prop., 588 So. 2d 957, 960 (Fla. 1991)
Larry R. Fleurantin is a member of the Appellate Practice Section of The Florida Bar and holds a B.A., summa cum laude, (2000) from Florida International University Honors College and J.D., cum laude, (2003) from the University of Florida Levin College of Law. He is the managing member of Larry R. Fleurantin & Associates, P.A., in North Miami Beach, where he concentrates his practice on civil and appellate litigation.
Manu Leila Davidson graduated from Nova Southeastern University, Shepard Broad Law Center, and is of counsel at Braverman Greenspun, P.C., in New York, NY.
This column is submitted on behalf of the Appellate Practice Section, Christopher V. Carlyle, chair, and Brandon Christian, editor.