Citizens Property Insurance Corp. v. River Oaks Condominium II Association, Inc. , 190 So. 3d 1110 ( 2016 )

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING
MOTION AND, IF FILED, DETERMINED
IN THE DISTRICT COURT OF APPEAL
OF FLORIDA
SECOND DISTRICT
CITIZENS PROPERTY INSURANCE )
CORP., )
)
Appellant/Cross-Appellee, )
)
v. ) Case No. 2D13-4331
)
RIVER OAKS CONDOMINIUM II )
ASSOCIATION, INC., a/k/a RIVER )
OAKS II CONDO ASSOCIATION, )
INC., )
)
Appellee/Cross-Appellant. )
________________________________ )
Opinion filed March 30, 2016.
Appeal from the Circuit Court for
Hillsborough County; Christopher C.
Sabella, Judge.
Kara Berard Rockenbach of Methe &
Rockenbach, P.A., West Palm Beach,
for Appellant/Cross-Appellee.
George A. Vaka and Nancy A. Lauten
of Vaka Law Group, Tampa, for
Appellee/Cross-Appellant.
NORTHCUTT, Judge.
Citizens Property Insurance Corp. appeals a final order awarding over
$1.4 million in fees, costs, and prejudgment interest to River Oaks Condominium II
Association, Inc., following the latter's successful lawsuit on a sinkhole claim. River
Oaks is dissatisfied with the amount, and it cross-appeals. We affirm in part and
reverse in part.
River Oaks is a multi-building condominium property that was insured by
Citizens under a policy that included sinkhole coverage. Damage was initially noted in
one building in February 2005. In April, River Oaks hired an attorney (Richard Wilson),
a public adjuster (Transco American Claims), and a property management company
(University Properties, Inc.) to address this issue. About two weeks later, Transco gave
notice to Citizens of possible sinkhole losses at the property. After some delay, Citizens
sent an independent adjuster to perform an inspection. The adjuster was shown the
building with the most noticeable damage and was informed that other buildings in the
complex were also showing signs of sinkhole activity. Although the adjuster agreed that
a geotechnical engineer was needed for a sinkhole investigation, Citizens did not retain
one. Instead, Citizens took the position that the insurance policy did not cover the cost
of filling sinkholes.
River Oaks retained Central Florida Testing Laboratories, which confirmed
sinkhole activity as a cause of damage. In September 2005, it filed suit against
Citizens. The complaint alleged breach of contract based in part on Citizens' failure to
conduct the investigation required by section 627.707, Florida Statutes (2004), for
sinkhole claims. It also sought a declaration that the insurance policy provided sinkhole
coverage, including stabilization costs.
River Oaks made specific allegations of damage to the one building and
general allegations regarding the other buildings. For example, the complaint alleged:
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On or about March 2005, River Oaks discovered
substantial damage occurring to Building 19[1] caused by
sinkhole activity, as well as damage occurring to other
buildings insured by Citizens. . . .
Despite numerous requests by representatives of
River Oaks, Citizens has failed to engage an engineer or
professional geologist as required by law to determine the
cause of the loss to the subject building and to investigate
possible damage to River Oaks other buildings. . . .
The geotechnical engineering firm retained by River
Oaks has concluded that Building 19 has been damaged by
sinkhole activity and has recommended that the other
buildings be investigated for possible loss caused by
sinkhole activity. . . .
WHEREFORE, River Oaks demands judgment for
damages, including investigative costs to determine if
sinkhole activity is occurring, costs to repair, restore or
replace the subject buildings . . . , together with all
engineering or architectural fees to repair or replace the
subject buildings . . . .
Citizens sought an appraisal without admitting coverage. By the time of a
hearing on Citizens' motion to dismiss or abate, River Oaks had furnished a list
identifying more buildings that showed sinkhole damage. The court ordered appraisal
for all affected buildings and required Citizens to conduct inspections and subsurface
testing. Over the next two years, the testing and appraisal process resulted in awards
totaling $4,777,607 for damage to twelve buildings in the complex.
Midway through this process, the River Oaks' board of directors was
replaced with a board that was inexplicably hostile to the sinkhole claims, despite the
experts' confirmation of sinkholes. The new board terminated attorney Wilson, Transco,
1 Known locally as 19, this building was identified in the policy as building
7, a fact that was clarified in an amended complaint.
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and University Properties without compensating them as required under their individual
contracts; this resulted in third-party claims.
The original board was later restored. The board hired attorney Kennan
Dandar in November 2008. By this point, Citizens had paid the appraisal awards. River
Oaks then settled or concluded the third-party claims. It also sought attorneys' fees,
costs, and prejudgment interest from Citizens, which brings us to this appeal.
Citizens challenges several items taxed as costs in addition to the use of a
multiplier for calculating attorney Dandar's fee. We agree with the circuit court that the
wrongful act doctrine is inapplicable in this case. Cf. Reiterer v. Monteil, 98 So. 3d 586,
588 (Fla. 2d DCA 2012) (explaining that the doctrine allows for the recovery of certain
costs and expenses as an element of damages when the defendant's wrongful act has
involved the claimant in litigation with others, necessitating the expenses).
Citizens argues that $759,578.56 in reimbursement for the public adjuster
and property management fees was improperly awarded to River Oaks as a taxable
cost. The Statewide Uniform Guidelines for Taxation of Costs in Civil Actions provides
guidance for trial courts, which have broad discretion in the taxation of costs. In re
Amendments to Uniform Guidelines for Taxation of Costs, 915 So. 2d 612, 614 (Fla.
2005) ("The guidelines . . . are not intended to be mandatory, and the appropriate
assessment of costs in any particular proceeding remains within the discretion of the
trial court."). We conclude that the trial court abused its discretion in taxing the property
management fees and public adjuster fees because they were not litigation costs.
Further, as compared to expert witnesses, a public adjuster is more akin to a consulting
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expert, whose costs should not be taxed according to the guidelines. We agree with
Citizens that these were not proper taxable costs, and we reverse on this issue.
Citizens argues that $99,741.55 was improperly awarded to River Oaks as
a taxable cost for various expenses and fees in the appraisal process. But under the
insurance policy, River Oaks was required to pay its own appraiser and bear an equal
share of the umpire and other appraisal expenses. We reverse on this issue.
Finally, Citizens challenges the fee award to attorney Dandar, specifically
the use of a 2.0 multiplier in calculating his fee. A multiplier is appropriate when
(1) the relevant market requires a contingency multiplier to
obtain competent counsel; (2) the attorney was unable to
mitigate the risk of nonpayment in any other way; and (3)
use of a multiplier is justified based on factors such as the
amount of risk involved, the results obtained, and the type of
fee arrangement between attorney and client.
Bell v. U.S.B. Acquisition Co., 734 So. 2d 403, 412 (Fla. 1999) (citing Standard Guar.
Ins. Co. v. Quanstrom, 555 So. 2d 828, 834 (Fla. 1990)). The fee agreement in this
case was not a true contingency contract. Instead, it guaranteed payment at a lesser
hourly rate, which mitigated the risk of nonpayment, and the evidence showed that
Dandar had indeed been paid under the contract. See id. at 407 ("[W]e recognized the
economic reality that attorneys who work on a contingent fee basis only receive
compensation when they prevail, and thus must charge a higher fee than if they had
been guaranteed an hourly rate." (citing Fla. Patient's Comp. Fund v. Rowe, 472 So. 2d
1145, 1151 (Fla. 1985), holding modified by Quanstrom)). A multiplier was not
appropriate here, and we reverse on this issue.
On cross-appeal, River Oaks argues that the court erred by limiting its
recovery of attorneys' fees and prejudgment interest to only building 19. We agree that
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the suit encompassed the other buildings in the condominium complex, and we reverse
on this issue. As explained above, River Oaks sued in part to enforce Citizens'
obligation to investigate the sinkhole claim.2 Its complaint clearly alleged that buildings
other than building 19 were damaged, and it sought to recover damages, including
"costs to repair, restore or replace the subject buildings [plural]." We conclude that the
allegations were sufficient to include the other buildings in the condominium complex
because they were sufficient to state a claim "with sufficient particularity for a defense to
be prepared." Arky, Freed, Stearns, Watson, Greer, Weaver & Harris, P.A. v. Bowmar
Instrument Corp., 537 So. 2d 561, 563 (Fla. 1988). Accordingly, we reverse on this
issue and remand for the court to award prejudgment interest and attorney's fees
connected with the other buildings.
2Section 627.707 provided in part as follows:
(1) Upon receipt of a claim for a sinkhole loss, an insurer
must meet the following minimum standards in investigating
a claim:
(a) Upon receipt of a claim for a sinkhole loss, the
insurer must make an inspection of the insured's premises to
determine if there has been physical damage to the structure
which might be the result of sinkhole activity.
(b) If, upon the investigation pursuant to paragraph
(a), the insurer discovers damage to a structure which is
consistent with sinkhole activity or if the structure is located
in close proximity to a structure in which sinkhole damage
has been verified, then prior to denying a claim, the insurer
must obtain a written certification from an individual qualified
to determine the existence of sinkhole activity, stating that
the cause of the claim is not sinkhole activity, and that the
analysis conducted was of sufficient scope to eliminate
sinkhole activity as the cause of damage within a reasonable
professional probability. The written certification must also
specify the professional discipline and professional licensure
or registration under which the analysis was conducted.
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On the issue of an expert witness fee for the fee hearing, we affirm without
further discussion.
Affirmed in part, reversed in part, and remanded for further proceedings.
KELLY and BLACK, JJ., Concur.
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