The Contingency Fee Multiplier (For Insurance Coverage Disputes)

David Adelstein | Florida Construction Legal Updates | August 25, 2018

The contingency fee multiplier: a potential incentive for taking a case on contingency, such as an insurance coverage dispute, where the insured sues his/her/its insurer on a contingency fee basis.


In a recent property insurance coverage dispute, Citizens Property Ins. Corp. v. Agosta, 43 Fla.L.Weekly, D1934b (Fla. 3d DCA 2018), the trial court awarded the insured’s counsel a contingency fee multiplier of two times the amount of reasonable attorney’s fees.  The insurer appealed. The Third District affirmed the contingency fee multiplier.


Of interest, on appeal—which is reviewed under an abuse of discretion standard of appellate review–the Third District analyzed the state of Florida law on contingency fee multipliers.


To begin with, Florida has adopted the lodestar approach for determining reasonable attorney’s fees based on the following factors to consider (known the Rowe factors based on the Florida Supreme Court case):


(1) The time and labor required, the novelty and difficulty of the question involved, and the skill requisite to perform the legal service properly.

(2) The likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer.

(3) The fee customarily charged in the locality for similar legal services.

(4) The amount involved and the results obtained.

(5) The time limitations imposed by the client or by the circumstances.

(6) The nature and length of the professional relationship with the client.

(7) The experience, reputation, and ability of the lawyer or lawyers performing the services.

(8) Whether the fee is fixed or contingent.

Agosta citing Florida Patient’s Compensation Fund v. Rowe, 473 So.2d 1145 (Fla. 1985).


Based on the consideration of these factors, the trial court determines through an evidentiary hearing a reasonable hourly rate to multiply by a number of reasonable hours expended in the litigation.  This is referred to as the lodestar amount or lodestar figure.  However, the court may add to this lodestar amount by tacking on a contingency fee multiplier.  For example, assume the trial court found 100 reasonable hours were incurred at the reasonable hourly rate of $300.  This would result in an attorney’s fees award of $30,000.  But, with the contingency fee multiplier, the trial court can add to this.  A multiplier of 2 would result in an attorney’s fees award of $60,000, hence the incentive for moving for the multiplier.


In determining whether to add a contingency fee multiplier, the trial court must consider competent, substantial evidence in the record (offered at the evidentiary hearing) of these three factors:


(1) whether the relevant market requires a contingency fee multiplier to obtain competent counsel;

(2) whether the attorney was able to mitigate the risk of nonpayment in any way; and

(3) whether any of the factors set forth in Rowe are applicable [the factors mentioned above], especially, the amount involved, the results obtained, and the type of fee arrangement between the attorney and his client.


Agosta citing Standard Guarantee Ins. Co. v. Quanstrom, 555 So.2d 828 (Fla. 1990)



There has been a debate as to whether the contingency fee multiplier only applies in rare and exceptional circumstances.  The Florida Supreme Court (hopefully) put this issue to bed rejecting the argument that the contingency fee multiplier only applies in rare and exceptional circumstances.  Agosta citing Joyce v. Federated National Ins. Co., 228 So.3d 1122 (Fla. 2017).


Just as important, and perhaps the most important to me, the Florida Supreme Court held that a “fee multiplier ‘is properly analyzed through the same lens as the attorney when making the decision to take the case,’ as it ‘is intended to incentivize the attorney to take a potentially difficult or complex case.’”  Id. quoting Joyce, 228 So.3d at 1133. This is important because the complexity of a case is not determined at looking at a case in hindsight based on the actual outcome of the case, but looking at a case through the same lens as the attorney at the time the decision is made to handle the case.  Idciting Joyce.


The Florida Supreme Court also stated that the first contingency fee multiplier factor—the relevant market factor—is based on whether there are attorneys in the relevant market who have the skills to effectively handle the case and would have taken the case absent the availability of a contingency fee multiplier.  Id. citing Joyce.


Finally, the Florida Supreme Court stated that the third contingency fee multiplier factor that considers the results obtained is not based on the amount of recovery, even a recovery not exceptionally large—“the Florida Supreme Court held that the trial court correctly analyze the ‘outcome’ of that case when it found that ‘[a]lthough the amount involved [$23,500] was ‘not exceptionally large,’ it was material to the Joyces [plaintiffs].”  Id. quoting Joyce, 228 So.3d at 1125.


The contingency fee multiplier adds incentive to handle certain insurance coverage disputes on contingency.  If a multiplier is obtained, it definitely rewards the risk of taking a case on contingency (and certainly one of the reasons I explore such contingency fee options!).

Beware of Actual Cash Value Endorsements

Chip Merlin | Property Insurance Coverage Law Blog | September 8, 2018

Actual cash value polices should rarely be sold on a typical home. Insurance agents who sell these policies knowing that a mortgage exists are negligent because various federal laws and regulations generally require that negotiable mortgages are to be protected by replacement cost insurance:

Property insurance for properties securing loans delivered to Fannie Mae must protect against loss or damage from fire and other hazards covered by the standard extended coverage endorsement. The coverage must provide for claims to be settled on a replacement cost basis. Extended coverage must include, at a minimum, wind, civil commotion (including riots), smoke, hail, and damages caused by aircraft, vehicle, or explosion.

Fannie Mae does not accept property insurance policies that limit or exclude from coverage (in whole or in part) windstorm, hurricane, hail damages, or any other perils that normally are included under an extended coverage endorsement.

I can visualize and hear some insurance agent educators moaning and rolling off their chairs as they read this. The truth is that there are many federal regulations involving property insurance requirements which exist for various types of properties and licensed insurance agents should learn and sell insurance in compliance with these requirements or not be in the business of selling insurance.

Merlin Law Group attorneys have been noticing a trend of actual cash value endorsements being added to insurance policies. One obvious reason for this trend is that the insurance premium is cheaper. So, while the selling of these policies may violate various mortgage requirements, federal laws and regulations, more policies are having these actual cash value endorsements added to them.

A recent case held that actual cash endorsements attached to the policy effectively made the insurance contact an actual cash value policy rather than a replacement cost policy.1 The policyholder repaired and replaced his fire damaged property but was limited to the actual cash value.

As a side note to the case, the insurance company’s brief2 indicated that the policyholder‘s ex-wife originally purchased the policyholder’s policy years before the fire and before they were divorced. The policyholder may have been surprised to learn that his now ex-wife had obtained a short-term deal on “cheap insurance.” I am certain that he probably needs a little more post-marital therapy to cope with this post-divorce surprise.

1 Hatcher v. MDOW ins. Co., — F.3d —, 2018 WL 4255603 (8th Cir Sept. 7, 2018).
2 Hatcher v. MDOW ins. Co., No. 17-2410 (8th Cir. Appellee brief, filed Nov. 17, 2017).

Wind, Flood or Storm Surge: Pick Your Peril Carefully

Geoffrey Greeves | It Pays to Be Covered | September 4, 2018

A catastrophic loss, such as a hurricane strike, can force any company out of business, even if it is insured. Although a business does not suffer any direct physical damage to its facilities, fickle natural disaster events can disrupt a company’s entire supply chain, with ripple effects for vendors, suppliers, customers and second-tier providers of services or goods.

With scorching August temperatures and the Atlantic hurricane season ramping up to full speed, the next months could, unfortunately, once again visit doom on vulnerable coastal areas, disrupting water or power services, causing evacuation and curfew orders, limiting travel, or halting operations either partially or fully. Securing insurance proceeds and FEMA assistance is crucial to business disaster recovery implementation.

1. What caused my loss?

A ubiquitous issue that arises with respect to natural disasters is how the peril is characterized – is it a hurricane, a “named storm,” a windstorm, a flood, or something else under your insurance policy? And what occasioned the particular damage at issue in the insurance claim – wind, wind-driven rain, storm surge, or flood?

How the mechanism of loss is characterized has critical implications for insurance recovery. Policies commonly provide different amounts of available limits (and sub-limits) for different types of losses (e.g., State Farm Florida Ins. Co. v. Moody, considering policy that limited coverage for damage caused by “hurricane” but that did not limit coverage for damage caused by “tornado”). And in some cases, policies may not provide coverage at all for losses that occurred as a result of certain causes (e.g., In re Katrina Canal Breaches Litig., considering whether damage to property was caused by flood or by the negligent design and construction of levees; flood being an excluded peril under the policy, while negligent construction was covered). For example, a commercial property insurance policy may provide coverage for damage caused by wind or a named storm but exclude coverage for damage caused by flood (e.g., Bradley v. Allstate Ins. Co.).  Complicating this analysis, policies often contain overlapping ill-defined concepts of “flood” vs. “named storm.” One may question whether a storm surge resulting from a named storm is treated as part of the named storm or as a flood.

The net effect is that the scope and amount of coverage can vary dramatically depending on how the cause of loss is characterized up front to the carrier at the proof of loss stage – a critical juncture that is rarely straightforward and that usually benefits from thoughtful legal analysis. To hold carriers to their promises of disaster recovery, policyholders need to have a thorough understanding of the coverage provided under their policies, the relevant case law, and the mechanism or mechanisms that caused their loss. Properly determining the peril at the time of claim submission can allow a policyholder to achieve the benefit of its bargain with its carrier.

2. What if there is no physical damage to my property?

Assuming no physical damage to your insured premises, how does a business function without electricity, telephone, email or water service? Utility service interruption coverage (if purchased) indemnifies, for example, against loss due to lack of incoming electricity affected by damage from a covered cause (fire or named storm) to property away from the insured’s premises — usually the utility generating station. This type of insurance is commonly referred to as “off-premises power coverage.” Service interruption coverage is not standard, or even common but a policy could be endorsed to cover any of the following:

  • Water services – pumping stations and water mains.
  • Communications services – property used to supply telephone, radio, microwave or television services. Includes communication transmission lines, coaxial cables and microwave relays.
  • Power services – electricity, gas and steam, utility generating plants, switching stations, substations, transformers, and transmission lines. Typically the policyholder must elect either to include or exclude overhead transmission lines.

The value of goods, including raw goods under refrigeration, is often challenged by the carrier when presented for coverage. The issue is further complicated in large scale operations by several commonly found exclusions that limit the inherent risks associated with perishables, including mechanical defect, failure to maintain systems and consequential losses.

3. What if my loss resulted from both covered and non-covered events?

Given that property policies may provide coverage only for certain causes of loss, or may provide different amounts of coverage depending on the cause of loss (e.g., named storm vs. flood), a debatable issue often involves the extent to which a loss is covered when it is caused concurrently or sequentially by both covered and non-covered perils.

Some courts apply an “efficient proximate cause” test, under which a dominant cause is determined and coverage hinges upon whether that cause is covered, or alternatively whether the covered cause set the chain of events in motion. Other courts apply one of two “concurrent cause” analyses: (1) Some courts have ruled that when two causes combine to produce an indivisible loss, there is coverage as long as one of the causes was a covered peril under the policy, and (2) other courts have ruled that the policyholder bears the burden of differentiating damage attributable to covered and non-covered causes, and if the policyholder cannot meet that burden there is no coverage.

This analysis turns on the policy language as well. Insurers have sought to eliminate coverage in instances involving concurrent causes by incorporating “anti-concurrent causation” language in their policies that purports to bar coverage when an uncovered cause is involved in any way, whether directly or indirectly. For example, the policy may state: “We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.” Some courts have enforced these anti-concurrent cause provisions while others have held that they are unenforceable, predominantly on public policy grounds. Where and how this language appears in the policy is also important and factors into how a court will view it. If the language is buried deep in a definition or an exclusion, for example, the situation might be distinguishable from existing case law.

For this reason it is important to review your endorsements at the time coverage is bound as well as analyze the policy exclusions that may be applicable to any loss to determine whether they are subject to anti-concurrent causation language.

4. How is storm surge different than wind?

After a catastrophic weather event in coastal areas, insurers and insureds frequently litigate whether property damage was caused by wind, on the one hand, or storm surge, on the other. Such litigation arises because property policies often cover damage caused by wind, while excluding coverage for damage caused by flood.

Courts considering such claims tend to characterize the peril of wind and the peril of storm surge separately. Courts have noted that storm surge is “little more than a synonym for a ‘tidal wave’ or wind-driven flood” and have held that damage from storm surge falls squarely within the bounds of flood exclusions, even where the flood exclusions do not expressly include the term “storm surge.” See, e.g., Leonard v. Nationwide Mut. Ins. Co.Tuepker v. State Farm Fire & Cas. Co.; or Bilbe v. Belsom (“We have repeatedly held that the term ‘flood’ includes storm surges.”). By contrast, property policies generally cover damage caused solely by wind (i.e., wind that doesn’t interact with water). See e.g., LeonardTuepker v. State Farm Fire & Cas. Co.; or State Farm Florida Ins. Co. v. Moody (determining that insureds were not entitled to recover because hurricane spawned the tornado that caused the damage and hurricane sublimit applied).

Recovery may rise or fall based on whether the property damage at issue resulted from wind alone (for example, a structure was blown over by wind) or whether the damage resulted from storm surge (i.e., flooding caused by wind). Insureds who buy a master property policy are wise to keep the distinction between wind and storm surge—and the impact of such distinction—top of mind when considering coverage issues post-hurricane. Legal analysis of the wording of any coverage grants or exclusions and choosing a peril wisely must become part of the recovery planning implementation strategy businesses rely on to maximize the insurance claim.

Slow As A Turtle? “No Damages For Delay” Clause Inapplicable To Contractor’s Claim Against Architect

Matthew DeVries | Best Practices Construction Law | September 5, 2018

On Saturday, I took the kids to the zoo for a day-long adventure.  Faith’s favorite attraction was the turtle compound that was filled with about 20 slowpokes walking a circle.  Like watching paint dry, we sat on the sidelines as these mini-dinosaurs trekked the park at a whopping .25 mph.

When we think of delays on a construction project, the first inquiry is to identify the turtle—the one party holding up progress or causing the delay.  Many times, the parties’ contract will dictate whether the contractor can recover delay damages or will be limited to a time extension for delays beyond the contractor’s reasonable control.  In Perez-Gurri v. McLeod, 238 So.3d 347 (Fl. Ct. App. 2018), the court examined whether a “No Damages for Delay” clause extended to parties other than the owner.

The general contractor in McLeod filed a malpractice action against the architect on a public contract for the City of Miami.  The renovation project was located in the Caribbean Marketplace in an area known as Little Haiti.  When the construction project was delayed, the general contractor filed suit against the numerous designers, architects, engineers and subconsultants.

The architect filed a motion for summary judgment, arguing that the general contractor’s delay claim was contractually barred by a “No Damages for Delay” clause in the contract between the general contractor and the City of Miami.  The trial court granted summary judgment in favor of the architect.  The appellate court reversed, finding that the owner-contractor agreement did not insulate the architect from liability.

The appellate court agreed with the trial—and so should you for that matter—that the general contractor waived any rights to seek delay damages from the owner. But the question is whether that waiver of delay damages extended to other parties such as the architect. The clause read as follows:

No claim for damages or any claim, other than for an extension of time, shall be made or asserted against City by reason of any delays except as provided herein. Contractor shall not be entitled to an increase in the Contract price or payment or compensation of any kind from City for direct, indirect, consequential, impact or other costs, expenses or damages, including but not limited to costs of acceleration or inefficiency, arising because of delay, disruption, interference or hindrance from any cause whatsoever, whether such delay, disruption, interference or hindrance be reasonable or unreasonable, foreseeable or unforeseeable, or avoidable or unavoidable . . .

The appellate court reasoned that the above emphasis language expressly state that the City is protected from delay damage claims, and there was no language that extends that protection to other parties. The court concluded: “If M2G2 Architects were intended to be protected by the no delay damages provision, one would expect some reference to that idea in this provision which otherwise precludes any third party beneficiaries to the contract.”

The McLeod decision reiterates yet one more time that “words have meaning.” More importantly, it is always advisable to think about and negotiate key provisions at the start of the project, rather than litigating the meaning of the provision during a dispute after the project is complete.  Take a look at my Top 20 series where I blogged about key contract clauses and their meanings.

Appellate Court Disagrees with Sister Court on Assignment of Benefits

Erin Dunnavant | Property Insurance Coverage Law Blog | September 9, 2018

In December of last year, my colleague Ashley Harris discussed Security First Insurance Co. v. Florida Office of Insurance Regulation,1 where the Florida Fifth District Court of Appeal (Fifth DCA) upheld the Office of Insurance Regulation (“OIR”) prohibition of proposed language in an insurance policy that would require “all insureds, all additional insureds and all mortgagees” named on a policy to consent to any post-loss assignment of benefits (“AOBs”) to a third party.

In upholding the prohibition on such language, the Fifth DCA cited to a decision from the Fourth DCA, One Call Property Services. Inc. v. Security First Insurance Company,2 that discussed the competing public policy concerns regarding AOBs:

Turning to the practical implications of this case [which involved an assignment of a claim in the face of a provision barring the assignment of a policy], we note that this issue boils down to two competing policy considerations. One the one side, the insurance industry argues that assignments of benefits allow contractors to unilaterally set the value of a claim and demand payment for fraudulent or inflated invoices. On the other side, contractors argue that assignments of benefits allow homeowners to hire contractors for emergency repairs immediately after a loss, particularly in situations where the homeowners cannot afford to pay the contractors up front.

For more on the One Call case, see our blog post, “Assignment of Benefits,” from July 1, 2015.

Ultimately, the Fifth DCA deferred such public policy arguments to the legislature,3 but upheld the Hearing Officer’s Order (adopted by the OIR Commissioner) that upheld the OIR’s decision to disapprove of the provision finding he had correctly interpreted the law on the subject. For instance, the Hearing Officer explained that “a restriction on the right of a policyholder to freely assign his or her post-loss benefits is prohibited under Florida law” and “the incorporation of such a restriction [requiring all insureds and mortgagees to consent] on an assignment of post loss rights in an insurance policy would be misleading for policyholders.” [which would contravene Fla. Stat. 627.411 (e)].

However, just this past week in Restoration 1 of Port St. Lucie a/a/o John and Liza Squitieri v. Ark Royal Insurance Company, Case No. 4D17-1113 (Fla. 4th DCA Sept. 5, 2018), the Fourth DCA changed lanes on this issue and affirmed dismissal of an assignee’s case where there was an identical assignment provision involved, “no assignment of claim benefits, regardless of whether made before a loss or after a loss, shall be valid without the written consent of all insureds, all additional insureds and all mortgagee(s) named in this policy.”

The underlying facts in this case were that policyholders John and Liza Squitieri (the insureds) took out a policy with Ark Royal. The policy contained the above-referenced assignment provision. The insureds suffered a water loss and had Restoration 1 of Port St. Lucie to perform clean-up services. Ms. Squiteiri signed an assignment of benefits to Restoration 1, but neither the mortgagee or her husband ever executed the assignment.

Ark Royal would not pay the full $20,305.74 that Restoration 1 claimed was due and owing for the work, which ultimately resulted in Restoration 1 suing Ark Royal for the remaining damages in a Count for Breach of Contract, and in a Count for Declaratory Judgment alleging that the provision in the policy limiting the AOB was illegal. Ark Royal then moved to dismiss the complaint alleging that the assignment was invalid under Ark Royal’s insurance contract with its insureds. Although Restoration 1 filed a response and a cross-motion for summary judgment, the trial court dismissed the case and Restoration 1 appealed the dismissal.

In affirming the dismissal, the Fourth DCA disagreed with the Fifth District’s opinion in Security First, finding that its reliance on West Florida Grocery, v. Teutonia Fire Insurance Company, 77 So.209 (Fla. 1917) is overbroad, and that really, West Florida Grocery only stands for the proposition there need not be “insurer consent” when there is a post loss AOB.4

In disagreeing with its sister Court, the Fourth DCA ultimately held:

“We affirm the trial court’s dismissal of the complaint and declaratory judgment action and hold that the language of the assignment of benefits provision in the instant insurance contract is enforceable. The central reasoning and holding of West Florida Grocery does not extend to the facts of this case. To the extent that the Fifth District in Security First has expanded upon West Florida Grocery, we certify conflict. Finally, with respect to the public policy concerns of both parties, they are best addressed by the legislature, not the Courts.”

This is a relatively narrow ruling that does not invalidate assignments. If upheld however, it may limit insureds’ assignment rights, particularly regarding having to obtain a mortgagee’s signature.

Let’s use Mrs. Squitieri as an example of the foreseeable issues associated with needing to obtain the mortgagee’s signature on an assignment:

Mrs. Squitieri has water intrusion at her home. She, not the mortgagee, has her “boots on the ground” dealing with the loss first-hand. She must act quickly so the water intrusion does not get worse, cause mold issues, and do even more serious damage to her home. She calls Restoration 1, but does not have an extra $20,000.00+ sitting on her dining room table to pay Restoration 1 right when they come out and perform their dry-out services. She is also not sure what the insurance company will cover at this point. As such, Mrs. Squitieri enters into an AOB with Restoration 1 as a practical solution. This way, Restoration 1 can go back and get reimbursed from Ark Royal, the Squitieris’ home is dried out and they have mitigated their damages (preventing them from getting worse) as required under their policy. Now imagine adding the step of obtaining the mortgagee’s signature into the mix? At minimum, the insureds will generally be required to submit several pieces of paperwork regarding the claim, such as the claim determination letter and the claim adjuster’s summary. In a scenario like the Squitieris, the mortgage company will also want to review Restoration 1’s estimate and/or bid and then may have to go up the chain to approve it. Then they would have to figure out who actually has the authority to sign it on behalf of the mortgagee. The point is, it’s hardly ever a process that can be performed overnight, and when emergency repairs are needed, that’s a serious concern for insureds and their families.

In addition to Florida case law in favor of AOBs, perhaps many of these practical considerations were behind the OIR and the Fifth DCA’s decision to bar such language from Security First’s policies.

We will keep you posted on the status of this case as it is not final until the time for rehearing has expired. If that happens, we may then see the issue come before the Florida Supreme Court due to what will then be conflicting opinions from the Fourth and Fifth DCAs on this issue.
1 Security First Ins. Co. v. Florida Office of Ins. Regulation, 232 So.3d 1157 (Fla. 5th DCA 2017).
2 One Call Property Services v. Security First Ins. Co., 165 So.3d 749, 753 (Fla. 4th DCA 2015).
3 Although there was legislation proposed on the AOB issue in 2017 and 2018 (Senate Bill 62), it apparently died while before the banking and insurance committee.
4 The Fourth DCA also makes a distinction between the West Florida Grocery case –where the point was made that once the AOB is post loss, “insurer consent” becomes “superfluous” as the insurer will still have to cover the loss at that point, while in this case, mortgagees and other insureds do have a vested interest in what happens to the property post loss. On the other hand, there is also an indication the West Florida Grocery court believed that partial payment by the insurance company gave “tacit consent” to the assignment. Could this mean that if an insurer makes a partial payment even in the face of an otherwise invalid assignment there could be a waiver argument? In addition, in West Florida Grocery, the assignment containing “insurer consent” was a standard blank form attached to the policy that the assignor had filled out, rather than a separate AOB document or a provision in the policy itself.