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Mid-Continent Casualty Co. v. G.R. Construction Management, Inc.

United States District Court, M.D. Florida, Fort Myers Division

May 25, 2018

MID-CONTINENT CASUALTY COMPANY, a foreign corporation Plaintiff,
v.
G.R. CONSTRUCTION MANAGEMENT, INC. and DANA M. DICARLO, Defendants. Requested Hours Recommended Reduction Attorney and Rate Remaining Hours Total Requested Hours Recommended Reduction Attorney and Rate Remaining Hours Total Requested Hours Recommended Reduction Attorney and Rate Remaining Hours Total

          REPORT AND RECOMMENDATION [1]

          CAROL MIRANDO UNITED STATES MAGISTRATE JUDGE

         This matter comes before the Court upon review of G.R. Construction Management, Inc.'s Verified Motion for Attorney's Fees (Doc. 51)[2] filed on November 10, 2017 and G.R. Construction Management, Inc.'s Supplement to its Verified Motion for Attorney's Fees (Doc. 52) filed November 16, 2017. Defendant G.R. Construction Management, Inc. (GRC) requests attorney's fees and costs in the amount of $43, 325.00[3] as the prevailing party under Florida Statutes section 627.428. Docs. 51, 52. Plaintiff Mid-Continent Casualty Company (MCC) filed Plaintiff Mid-Continent Casualty Company's Memorandum of Law in Opposition to G.R. Construction Management. Inc.'s Verified Motion for Attorney's Fees (Doc. 55) on December 8, 2017, opposing the request and disputing GRC's entitlement to attorney's fees. GRC filed a reply (Doc. 58) on December 29, 2017, and a second supplement to the Motion (Doc. 59) on January 5, 2018. The matter is ripe for judicial review.

         I. Background

         Defendant Dana M. Dicarlo, as Trustee of the Dana M. Dicarlo revocable trust dated February 1, 2006 (Dicarlo), filed suit against Defendant GRC, among others, in state court on April 23, 2015 (the “Underlying Action”), alleging GRC was negligent in performing work and supervising subcontractors performing work on its behalf to remodel Dicarlo's property. Doc. 30-4. GRC had four separate commercial general liability policies (collectively “the Policies”) from MCC that combined covered a four-year span. Docs. 30, 30-1 to 30-3. While defending GRC under a reservation of rights in the Underlying Action, MCC filed this case seeking declaratory relief regarding its obligations to indemnify GRC under the Policies based on certain exclusions, definitions, and endorsements. Doc. 30.

         On motions from both GRC (Doc. 36) and Dicarlo (Doc. 37), the district judge dismissed the case for lack of ripeness because the Underlying Action was still pending. Doc. 47 at 4-7. The district judge explained: “Because the state court case is ongoing, MCC is concerned with a potential future injury that is neither real nor immediate at this time. If GRC is found not liable then there is no need for MCC to indemnify it.” Doc. 47 at 4. The Clerk of Court then entered the Judgment dismissing the case without prejudice. Doc. 48.

         II. Analysis

         a. Entitlement to Fees

          Parties generally are required to bear their own litigation expenses regardless of who wins or loses. Fox v. Vice, 563 U.S. 826, 832 (2011). Exceptions exist, however, where Congress has authorized courts to deviate from this rule in certain types of cases by shifting fees from one party to another. Id. And “in diversity cases a party's right to attorney's fees is determined by reference to state law.” Prime Ins. Syndicate, Inc. v. Soil Tech Distributors, Inc., 270 Fed.Appx. 962, 963 (11th Cir. 2008). Section 627.428(1), Florida Statutes, provides, in pertinent part:

Upon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of any . . . insured . . . under a policy or contract executed by the insurer, the trial 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 . . . attorney prosecuting the suit in which the recovery is had.

         This provision applies regardless of which party brought suit. Prime Ins. Syndicate, 270 Fed.Appx. at 963 (citing Roberts v. Cater, 350 So.2d 78, 79 n.6 (Fla. 1977)). It also does not require the insured to prevail on the merits. Id. at 964. Nor does it require a finding of coverage or money judgment in favor of the insured. Rodriguez v. Government Employees Ins. Co., 80 So.3d 1042, 1044-45 (Fla. 4th DCA 2011). Instead, a dismissal of an insurance company's claim or counterclaim against an insurer is “the rendition of a judgment” against an insurer in favor of an insured referenced in section 627.428(1). Dawson v. Aetna Cas. & Sur. Co., 233 So.2d 860, 861 (Fla. 3d DCA 1970).

         Section 627.428's purpose “is to discourage the contesting of valid claims against insurance companies and to reimburse successful insureds for their attorney's fees when they are compelled to defend or sue to enforce their insurance contracts.” Ins. Co. of N. Am. v. Lexow, 602 So.2d 528, 531 (Fla. 1992). It therefore “is a one-way street offering the potential for attorneys' fees only to the insured or beneficiary.” Danis Indus. Corp. v. Ground Improvement Techniques, Inc., 645 So.2d 420, 421 (Fla. 1994).[4] Because the statute is penal in nature, courts strictly construe its language. Fireman's Fund Ins. Co. v. Tropical Shipping & Constr. Co., 254 F.3d 987, 1010 (11th Cir. 2001) (citing Great Southwest Fire Ins. Co. v. DeWitt, 458 So.2d 398, 400 (Fla. 1st DCA 1984)). But where a suit fits within section 627.428, the entry of an award of attorney's fees is mandatory and non-discretionary. Citizens Property Ins. v. Bascuas, 178 So.3d 902, 904 (Fla. 3d DCA 2015); see also Lexow, 62 So.2d at 531 (“If the dispute is within the scope section 627.428 and the insurer loses, the insurer is always obligated for attorney's fees.”). In determining the amount of the fee award, the Court “may take into account the fact that the insured or beneficiary has not prevailed on all issues and the degree to which this has extended the litigation or increased its costs.” Danis Indus. Corp, 645 So.2d at 421.

         GRC contends that the district court's Order and subsequent judgment in its favor entitles it to attorney's fees under the plain language of section 627.428. MCC responds that a motion for attorney's fees is premature, arguing this case is no different than ones in which the courts chose to stay cases rather than dismiss them. Doc. 55 at 1-2. It argues it should not be penalized because the district court chose to dismiss its case. Doc. 55 at 1-2. MCC contends that awarding attorney's fees in this case where courts have declined to do so in cases where the actions are stayed would violate the Equal Protection Clause. Doc. 55 at 2-4. It also contends that all but one of the cases GRC cites to support GRC's entitlement to fees are distinguishable. Doc. 55 at 4.

         MCC's arguments are unavailing. As to equal protection, even if MCC were attempting to make a genuine equal protection argument, which it does not appear to be based on its acknowledgement that such a claim is not properly before the Court and its failure to fully brief the issue, the basis of the claim in incorrect: that entitlement to attorney's fees depends on whether a court decides to stay or to dismiss a case. The fact that a resolution on the merits of an insurer's claim will be made later or in another forum does not eliminate entitlement to fees under section 627.428. In Travelers Home and Marine Insurance Company v. Calhoun, 2014 WL 1328968 (M.D. Fla. April 2, 2014), the district court dismissed the action on abstention grounds, and the defendant was entitled to fees having succeeded on a motion to dismiss, regardless of whether it met the prevailing party standard, or there had not yet been a determination that the insurer acted in bad faith. Id. at *6-7; see also Nat'l Union Fire Ins. Co. of Pittsburgh, PA v. F. Vicino Drywall II, Inc., No. 10-60273-CV, 2011 WL 13214289, at *2-3 (S.D. Fla. Aug. 22, 2011), report and recommendation adopted, No. 10-60273-CV, 2011 WL 13214290 (S.D. Fla. Sept. 13, 2011) (rejecting argument that fee issue was premature where the district court dismissed the case for failing to present a “case or controversy”).

         In contrast, in Founders Insurance v. Cortes-Garcia, No. 8:10-cv-02286-T-17AEP, 2013 WL 461731 (M.D. Fla. Feb. 7, 2013), the district court had entered partial summary judgment as to the duty to defend but had not yet resolved the duty to indemnify when the insured moved for attorney's fees. Even though the claims were severable, the court denied the motion for fees as premature, because that same court would have had to rule on a second motion for fees if it later entered judgment as to the duty to indemnify. Id. at *7. The court explained, “[I]t appears that while technically a judgment has been entered in the case and can be the basis for an insured to recover fees under the statute, that if an appeal is pending or other issues remain unresolved, the proper procedure is to deny the motion for fees and costs pending a final resolution in the case.” Id. In Axis Surplus Ins. Co. v. Contravest Constr. Co., 877 F.Supp.2d 1268 (M.D. Fla. 2012), the district court similarly ruled the motion for attorney's fees was premature because the insured sought fees for both its claim on the duty to defend and the duty to indemnify, even though the latter claim was unresolved. Id. at 1270-71. If the court had not deferred ruling, it would have been to avoid ruling twice, and if the insured lost the indemnity issue, it would have to reduce the insured's award. Here, MCC will have to refile if necessary to determine coverage upon resolution of the Underlying Action. As the court noted in Founders, there is a distinction between unresolved issues that will take place in a wholly separate proceeding, and in that circumstance, attorney's fees should be decided on the conclusion of the current proceeding. Founders, 2013 WL 461731, at *9.

         MCC also attempts to distinguish Prime Insurance Syndicate based on the grounds for dismissal-lack of diversity instead of lack of ripeness. Doc. 55 at 4. Such an argument is based on a distinction without a difference. In either case, the insurer's suit will be litigated again-one in a different time (after resolution of the underlying action) and the other in a different place (state court). If the second suit results in liability against the insurer, it will again be liable for additional attorney's fees under section 627.428. Similarly, there is no significant difference in the case of GEICO Gen. Ins. Co. v. Gould, No. 8:12-CV-1066-T-35TBM, 2014 WL 12617796 (M.D. Fla. Oct. 20, 2014). There, the insurer's case was dismissed because the insured was an improper party. Id. at *1-2. Although MCC is correct the insured will not later become a proper party in that proceeding, it ignores the critical fact determinative of entitlement to fees: that the insured “successfully defended [its] case and ‘obtained ‘total and complete' recovery through the dismissal of the action.” Gould, 2014 WL 12617796, at *3. As in Gould, the insured here was compelled to defend itself and obtained complete recovery by way of dismissal of MCC's case. See Id. The purpose of the statute is to discourage lawsuits in which insureds have to litigate against their own insurance companies, either prosecuting a lawsuit to obtain payment under a policy or having to defend against an unnecessary lawsuit. Here, MCC chose to file a case before it was ripe for review. There is no reason for the Court to distinguish this case from cases in which an insurer chose to file a case in a court that did not have jurisdiction or against an improper party. Based on section 627.428, as between the insurance company and the insured, the insurance company should bear the cost of that ultimately unnecessary suit. Accordingly, the Court recommends finding GRC is entitled to fees under section 627.428.

         b. Reasonableness of Fees[5]

         A reasonable attorney fee is calculated by multiplying the number of hours reasonably expended by the reasonable hourly rate, Hensley v. Eckerhart, 461 U.S. 424, 433 (1983), and a “reasonable hourly rate” is “the prevailing market rate in the relevant legal community for similar services by lawyers of reasonably comparable skills, experience, and reputation, ” Norman v. Housing Auth. of Montgomery, 836 F.2d 1292, 1299 (11th Cir. 1988). In determining the reasonable amount of hours, the Court may conduct an hour-by-hour analysis or it may reduce the requested hours across the board. Bivins v. Wrap It Up, Inc., 548 F.3d 1348, 1350 (11th Cir. 2008). The court must exclude hours that were not reasonably expended and hours that are redundant, excessive, or otherwise unnecessary. Hensley, 461 ...


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