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Houston Specialty Insurance Co. v. Vaughn

United States District Court, M.D. Florida, Tampa Division

July 9, 2019

HOUSTON SPECIALTY INSURANCE COMPANY, Plaintiff,
v.
ENOCH VAUGHN, ALL FLORIDA WEATHERPROOFING & CONSTRUCTION, INC., RICHARD FULFORD and ROBERT MENDENHALL, Defendants.

          REPORT AND RECOMMENDATION

          Julie S. Sneed, Judge

         THIS MATTER is before the Court on Defendants All Florida Weatherproofing & Construction, Inc. (“All Florida”), Richard Fulford (“Fulford”), and Robert Mendenhall's (“Mendenhall”) Motion for Determination of Appellate Attorney's Fees (Dkt. 264) and Motion for Attorney's Fees. (Dkt. 271.) Plaintiff, Houston Specialty Insurance Company (“HSIC”), opposes the motions. (Dkt. 266; Dkt. 264-4; Dkt. 273-1.) Upon consideration, it is recommended that the motions be granted in part.

         BACKGROUND

         In 2014, HSIC filed this declaratory judgment action (the “Declaratory Judgment Action”) against its insureds, All Florida, Fulford, and Mendenhall, to determine coverage in connection with Enoch Vaughn's (“Vaughn”) personal injury lawsuit against All Florida, Fulford, and Mendenhall in Enoch Vaughn et al. v. All Florida Weatherproofing & Construction, Inc., No. 14-000198-CI, in the Sixth Judicial Circuit, in and for Pinellas County, Florida. (Dkt. 28.) The case proceeded to a jury trial and the presiding District Judge ultimately entered a declaratory judgment (the “Declaratory Judgment”) in favor of All Florida, Fulford, Mendenhall, and Vaughn. (Dkts. 199, 201.)

         HSIC appealed the Declaratory Judgment to the Eleventh Circuit (the “Declaratory Judgment Appeal”). (Dkt. 214.) While the Declaratory Judgment Appeal was pending, the Court awarded attorney's fees in favor of All Florida, Fulford, Mendenhall, and Vaughn, under Fla. Stat. § 627.428. (Dkts. 246, 247.) HSIC separately appealed the award of attorney's fees (the “Attorney's Fees Appeal”), arguing that the award of attorney's fees was premature and that the Court abused its discretion in applying a contingency fee multiplier. (Dkt. 251.)

         The Eleventh Circuit affirmed the Declaratory Judgment entered in favor of All Florida, Fulford, Mendenhall, and Vaughn. Houston Specialty Ins. Co. v. Vaughn, 726 Fed.Appx. 750 (11th Cir. 2018). Based on their status as the prevailing parties in the Declaratory Judgment Appeal, All Florida, Fulford, and Mendenhall moved for appellate attorney's fees and also moved the Eleventh Circuit to transfer the issue to this Court. (Dkt. 264-3.) HSIC responded in opposition to the Motion for Appellate Attorney's Fees. (Dkt. 264-4.) On September 13, 2018, the Eleventh Circuit transferred the Motion for Appellate Attorney's Fees to this Court. (Dkt. 264-6.) All Florida, Fulford, and Mendenhall thereafter filed their Motion for Determination of Appellate Attorney's Fees in this Court. (Dkt. 264.) HSIC again responded in opposition to the Motion for Appellate Attorney's Fees.[1] (Dkt. 266.)

         The Eleventh Circuit also affirmed this Court's award of attorney's fees in favor of All Florida, Fulford, and Mendenhall. Houston Specialty Ins. Co. v. Vaughn, 749 Fed.Appx. 800 (11th Cir. 2018). All Florida, Fulford, and Mendenhall then moved for appellate attorney's fees expended in litigating the entitlement to attorney's fees on appeal. (Dkt. 271.) On January 8, 2019, the Eleventh Circuit transferred this separate attorney's fees motion to this Court. (Dkt. 270.) The presiding District Court Judge thereafter referred both motions to the undersigned for the issuance of a report and recommendation. (Dkt. 274.)

         APPLICABLE STANDARDS

         In determining the amount of attorney's fees to be awarded, courts apply the following three-step process: (1) determine whether the party prevailed in the litigation; (2) determine the lodestar amount, which is calculated by multiplying the number of hours reasonably expended in litigating the claim by the reasonable hourly rate; and (3) adjust the lodestar, if necessary, to account for the results obtained by the prevailing party. Atlanta J. & Constitution v. City of Atlanta Dep't of Aviation, 442 F.3d 1283, 1289 (11th Cir. 2006).

         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. Hous. Auth. of City of Montgomery, 836 F.2d 1292, 1299 (11th Cir. 1988). Generally, the relevant market for purposes of determining the reasonable hourly rate for an attorney's services is “‘the place where the case is filed.'” ACLU of Ga. v. Barnes, 168 F.3d 423, 437 (11th Cir. 1999) (quoting Cullens v. Ga. Dep't of Transp., 29 F.3d 1489, 1494 (11th Cir. 1994)).

         The party applying for fees bears the burden of establishing the reasonableness of the proffered rate, which can be met by setting forth direct evidence of rates charged under similar circumstances or submitting opinion evidence of reasonable rates. Norman, 836 F.2d at 1299. In addition, the court may use its own expertise and judgment to make an appropriate independent assessment of the reasonable value of an attorney's services. Id. at 1303-04. In calculating the hours reasonably expended on litigation, the court should exclude excessive, unnecessary, and redundant hours and any time spent litigating discrete and unsuccessful claims. Id. at 1301-02.

         ANALYSIS

         All Florida, Fulford, and Mendenhall request an award of appellate attorney's fees incurred in responding to HSIC's unsuccessful appeal of the Declaratory Judgment. (Dkt. 264; Dkt. 264-3.) All Florida, Fulford, and Mendenhall also request an award of appellate attorney's fees incurred in responding to HSIC's separate appeal of this Court's order awarding attorney's fees incurred in obtaining the Declaratory Judgment. (Dkt. 271.)

         I. The Declaratory Judgment Appeal

         A. Entitlement to Attorney's Fees

          In its Order Granting Insureds' Motions for Determination of Entitlement to Reasonable Attorney's Fees Under Section 627.428 of the Florida Statutes (Dkt. 229), the Court previously found that All Florida, Fulford, and Mendenhall were entitled to an award of attorney's fees under Fla. Stat. § 627.428 based on their status as the prevailing parties in the Declaratory Judgment Action. Specifically, the Court first observed that Fla. Stat. § 627.428 provides for the award of attorney's fees 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. (Dkt. 229 at 5.) As the Court explained, “[t]he Declaratory Judgment in this case constitutes such a judgment in favor of an insured, the Insureds, and against an insurer, the Plaintiff.” (Id. at 5.) As the Court concluded, “looking no further than the statute itself, the Declaratory Judgment in their favor entitles Insureds to reasonable attorney's fees.” (Id.) As previously noted, the Eleventh Circuit affirmed the award of attorney's fees in favor of All Florida, Fulford, and Mendenhall. Houston Specialty, 749 Fed.Appx. at 802-03 (“Because the district court rendered ‘a judgment . . . against an insurer and in favor of any named or omnibus insured . . . under a policy or contract executed by the insurer,' the district court did not err in awarding attorney's fees to the defendants[.]” (quoting § 627.428(1)).

         It is recommended that All Florida, Fulford, and Mendenhall are similarly entitled to an award of appellate attorney's fees after having defended HSIC's unsuccessful appeal of the Declaratory Judgment to the Eleventh Circuit. Florida substantive law applies in this diversity case. See, e.g., All Underwriters v. Weisberg, 222 F.3d 1309, 1311 (11th Cir. 2000). The operative provision of Florida law, Fla. Stat. § 627.428, states, in pertinent part:

(1) 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 . . . 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 the recovery is had.

(Emphasis added.) Thus, the applicable provision of Florida law expressly contemplates the award of attorney's fees in favor of an insured who prevails on appeal against the insured's insurance company. Moreover, the Eleventh Circuit has acknowledged that under § 627.428, an insured is entitled to recover appellate attorney's fees incurred where the insured prevails on appeal. Steelmet, Inc. v. Caribe Towing Corp., 842 F.2d 1237, 1245 (11th Cir. 1988).

         Here, a review of the Eleventh Circuit's decision in Vaughn confirms that All Florida, Fulford, and Mendenhall prevailed on appeal. 726 Fed.Appx. at 753. Specifically, HSIC challenged this Court's decision declining to rule as a matter of law that Mendenhall was an independent contractor of All Florida. Id. at 751. If, as HSIC argued, Mendenhall was an independent contractor of All Florida, then HSIC would have had no duty to defend or indemnify Mendenhall against Vaughn's state law tort claims. Id. The Eleventh Circuit rejected HSIC's argument, concluding that although there was some evidence at trial suggesting that Mendenhall was an independent contractor, the evidence did not compel that conclusion as a matter of law. Id. at 752. HSIC also challenged some of the jury instructions given at trial. Id. at 753. The Eleventh Circuit also rejected this argument, concluding that any errors in the jury instructions were not preserved or were invited and that, in any event, the instructions accurately stated Florida law. Id.

         In sum, All Florida, Fulford, and Mendenhall prevailed as to all of the issues HSIC raised in the Declaratory Judgment Appeal. The undersigned finds that under the language of Fla. Stat. § 627.428(1), All Florida, Fulford, and Mendenhall are entitled to an award of attorney's fees reasonably incurred in the appeal.

         B. Amount of Attorney's Fees

         Having determined that All Florida, Fulford, and Mendenhall are entitled to an award of attorney's fees incurred in responding to the Declaratory Judgment Appeal, the undersigned next addresses the appropriate amount of that fee award.

         “Just as a federal court must apply state law to determine whether a party is entitled to fees, it must also apply state law to resolve disputes about the reasonableness of the fees.” Kearney v. Auto-Owners Ins. Co., 713 F.Supp.2d 1369, 1373 (M.D. Fla. 2010). “The Florida Supreme Court, however, has turned the law full circle by adopting the federal lodestar method, rather than a state rule, to determine what constitutes ‘reasonable' attorney's fees.” Id. As the Florida Supreme Court has stated with respect to what makes fees reasonable, “the federal lodestar approach, . . . provides a suitable foundation for an objective structure.” Florida Patient's Comp. Fund v. Rowe, 472 So.2d 1145, 1150 (Fla. 1985). However, “the Florida Supreme Court has carved out some differences to the federal approach.” Kearney, 713 F.Supp.2d at 1374. Specifically, while federal courts look to the prevailing market rates in the relevant community, Florida courts may consider subjective factors, as set out by the Florida Rules of Professional Conduct, as well as factors provided in the Florida Statutes. Id. “Thus, while the Court can largely rely on federal law to award attorney's fees, it must follow Florida law to the extent that state law differs.” Id.

         Under the lodestar method, the first step in calculating attorney's fees is determining a reasonable hourly rate. Under Florida law, factors to be considered ...


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