Water loss case fee awards got a hard look in Universal Property & Casualty Insurance Co. v. Deshpande, No. 3D19-1566 (Fla. 3d DCA Nov. 12, 2020), where Florida’s Third District Court of Appeal reversed a $441,805.14 attorney’s fee and cost award entered after a first-party water loss claim settled for $25,000. The court held the record lacked competent, substantial evidence to support 469 billed hours, cut the compensable hours to 101, and struck a 2.0 contingency multiplier. A PDF copy of the water loss case opinion is linked at the end of this post.
Facts of the Water Loss Case
This water loss case began when the policyholders’ claim was denied by their insurance carrier. They filed suit, and the parties engaged in “minimal discovery.” No substantive motions or expert reports were filed, and there was no trial. The insurer served a Proposal for Settlement of $25,000.00, exclusive of attorneys’ fees, which the policyholders accepted. (Entitlement was likely found upon the payment of policy benefits post-denial and post-suit, or as a function of the PFS.)
The policyholders’ lawyers submitted bills reflecting 469 hours for five attorneys and one paralegal. At the evidentiary hearing, the trial court accepted an across-the-board 10% reduction of the hours per the testimony of the policyholders’ fee expert, without making a finding as to which entries were unreasonable. The same expert opined that a 2.0 multiplier was appropriate based on the favorable outcome and the likelihood of recovery at the outset of the case. The defense fee expert testified that the hours should be reduced from 469 to 101, and identified objections to specific itemized entries for trial preparation, deposition preparation, duplicative billing by multiple attorneys, and ministerial tasks. The trial court disregarded that testimony.
After applying the 2.0 lodestar multiplier, the trial court awarded $415,495.00 in attorney’s fees, plus $12,510.14 in costs and $13,800.00 in expert fees, for a total of $441,805.14. The insurer appealed.
Issue
Whether a water loss case fee award of 469 hours (reduced 10% across the board) with a 2.0 contingency multiplier is supported by competent, substantial evidence where the first-party property case settled after minimal discovery, no substantive motions, and no trial, and the fee applicant offered no evidence that competent counsel could not have been obtained without a multiplier.
Rationale
Hourly rates. The Third DCA approved the trial court’s findings as to the reasonable hourly rates.
Hours. The fee applicant bears the burden of presenting satisfactory evidence that the hours claimed were reasonably expended. The record contained no competent, substantial evidence that 469 hours were reasonably expended by five attorneys in a relatively simple first-party water loss case that settled after minimal discovery and in which no significant motions were litigated. An unexplained 10% across-the-board reduction is not a substitute for findings on which entries were “excessive, redundant, or otherwise unnecessary.” The only itemized, entry-by-entry evidence in the record was the defense expert’s analysis reducing the hours to 101, and the court adopted it.
Multiplier. Under Standard Guaranty Insurance Co. v. Quanstrom, 555 So. 2d 828 (Fla. 1990), a contingency multiplier requires evidence that (1) the relevant market requires a multiplier to obtain competent counsel; (2) the attorney was unable to mitigate the risk of nonpayment; and (3) the Rowe factors (amount involved, results obtained, fee arrangement) support it. The policyholders’ expert never testified that competent counsel could not have been retained absent a multiplier, and the relevant market for first-party property claims is saturated with firms handling such cases on contingency. Favorable results and likelihood of success at the outset do not satisfy the first Quanstrom prong.
Expert costs. Fees for experts who neither testified nor were deposed are generally not taxable. To the extent preparation costs may be recoverable, the trial court must determine which expenses would have been reasonably necessary for an actual trial and make specific findings.
No second bite. Because the policyholders were afforded a full evidentiary hearing, they were not entitled to a second evidentiary hearing on remand to supplement the record.
Holding
In this water loss case, the Third DCA reversed and remanded with directions to (1) reduce the compensable hours from 469 to 101 consistent with the defense expert’s itemized testimony; (2) strike the 2.0 multiplier, as the Quanstrom factors were not supported by the evidence; and (3) reconsider the expert costs, limiting any award to expenses reasonably necessary for trial, with specific findings.
Takeaways for Fee Motions in a Water Loss Case
Deshpande is a reminder that entitlement and amount are separate battles. Winning the first does not lower the bar on the second, and an evidentiary hearing is the fee applicant’s one opportunity to build the record. Points worth carrying into the next fee hearing in a water loss case or any other first-party property matter:
- Match the hours to the work actually done. Five attorneys and 469 hours on a file with minimal discovery, no substantive motions, and no trial invited scrutiny. Staffing and time entries should track the complexity of the case, and the applicant should be prepared to explain why each timekeeper was necessary.
- A flat percentage cut is not a finding. The trial court’s across-the-board 10% reduction was reversed because it did not identify which entries were excessive, redundant, or unnecessary. Both sides should push for entry-level findings; a percentage haircut leaves the award exposed on appeal.
- Itemized expert testimony wins. The insurer’s fee expert walked through specific entries for trial preparation, deposition preparation, duplicative attorney billing, and ministerial tasks. Because that was the only entry-by-entry evidence in the record, the Third DCA adopted it wholesale and directed a reduction to 101 hours.
- Put Quanstrom prong one on the record. A multiplier requires testimony that the relevant market required a multiplier to obtain competent counsel. Testimony about a favorable result and the likelihood of success at the outset does not satisfy that prong, and the court noted the first-party property market is saturated with contingency-fee firms.
- Tie expert costs to trial. Fees for experts who neither testified nor were deposed are generally not taxable. If preparation costs are sought, the applicant must show which expenses would have been reasonably necessary for an actual trial, and the court must make specific findings.
- No second bite at the apple. A party that has had a full evidentiary hearing will not get another on remand to shore up the record. Bring the complete case the first time.
Full Opinion
Third DCA source: 3dca.flcourts.org – Opinion No. 3D19-1566