Raising and Lowering the Bar: Attorney's Fees Under Florida Statute Section 57.105

Insurance Law Alert

April 23, 2015



Related Practices
Insurance

Florida Statute §57.105, enacted by the Legislature in an effort to deter frivolous litigation, provides courts with the ability to award reasonable attorney’s fees in the appropriate case. Florida courts increasingly are using the statute to hold litigants accountable for the filing of unsupported claims or defenses and baseless motions and pleadings.

 

In Pronman v. Styles, 40 Fla. L. Weekly D572a (2015), the Fourth District Court of Appeal affirmed the trial court’s award of attorney’s fees against the appellants, finding that the arguments made for improper jurisdiction and venue in their motion to dismiss were unsupported by existing facts and law and that the appellants knew or should have known that the motion had no merit. Significantly, the court also affirmed the trial court’s order holding counsel jointly liable with their clients for attorney’s fees, even without an express finding that there was no justiciable issue or that counsel was not acting in good faith based upon his client’s representations, departing from prior case law (decided under the pre-1999 version of the statute) which required a specific finding of bad faith before an attorney could be held liable for fees.

Under the prior version of §57.105, a court could award attorney’s fees if it found that there was “a complete absence of a justiciable issue of either law or fact raised by the complaint or defense of the losing party; provided, however, that the losing party’s attorney is not personally responsible if he or she has acted in good faith, based on the representations of his or her client.” As amended, the statute no longer requires the court to determine whether counsel acted in good faith, but only that “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 those material facts.” Counsel no longer can escape liability for sanctions by establishing that they relied on the representations of their clients in good faith if they should have known that a claim or defense was not supported by the facts or would not be supported by then-existing law. Thus, good faith reliance on a client’s representations no longer will serve as a defense.

 

Attorneys served with a notice under Section 57.105 would be wise to conduct a vigorous and independent factual investigation to verify their clients’ account of the facts supporting a claim or defense before continuing the litigation. In West Hollywood Pain & Rehabilitation Inc., v. Star Casualty Insurance Company, FLWSUPP 2206WEST (2014), a medical provider filed suit, seeking to be reimbursed for its services under an insured’s policy. Since it had paid all amounts due and owed pursuant to the policy, the defendant served notice upon the plaintiff advising of its intent to seek attorney’s fees pursuant to the statute, attaching a copy of the policy and referencing the controlling policy language. The County Court for the 17th Judicial Circuit in and for Broward County granted the defendant’s motion, even though the defendant filed the motion for §57.105 fees almost 10 months after filing its notice and had not provided the plaintiff with a copy of a check evidencing full payment until two months later at mediation. The plaintiff filed a voluntary dismissal thereafter.

 

In considering the defendant’s application for sanctions, the court considered whether the policy contained the appropriate payment language and whether the defendant had paid the amounts due. The court easily found that the policy contained the appropriate language and that no further discovery was required. The plaintiff argued in its defense, however, that due to a bookkeeping error, it did not know that the claim had been paid until it had received a copy of the cashed check at mediation. The court rejected the plaintiff’s position, stating that the plaintiff had cashed the check and that it would “not lay the burden of investigation” on the defendant, “particularly when the evidence suggested little if any effort” on the plaintiff’s part to investigate the issue. The court found that the plaintiff should have known that its claim was unsupported as of the end of the 21-day safe harbor period afforded under the statute after notice was served. Despite the fact that approximately 11 months had passed before the insurer produced the cashed check at mediation, the court held that the plaintiff had sufficient time to review the language of the insurance policy and investigate whether the plaintiff had received and cashed the check.

 

These rulings emphasize the duties imposed under Florida Statute §57.105 and highlight the need for litigants to work quickly and diligently when served with a notice under the statute. Attorneys instituting litigation have the duty to make a reasonable effort to ensure that a claim or defense presented is supported by the facts and law and will be held liable for fees where they do not.

 

For more information, please contact Aaron M. Ahlzadeh.