Opinion
No. 88-2462.
February 6, 1990. Rehearing Denied May 9, 1990.
Appeal from the Circuit Court, Dade County, David L. Levy, J.
Robert A. Ginsburg, County Atty., and Robert A. Duvall, Asst. County Atty., for appellant.
Floyd, Pearson, Richman Greer, Weil, Zack Brumbaugh, and Robert L. Floyd and Scott D. Sheftall and Sally R. Doerner, for appellee.
Before SCHWARTZ, C.J., and BASKIN and FERGUSON, JJ.
Dade County challenges an award of attorney's fees to the appellee law firm for services rendered to a legislatively created and abolished independent agency. We affirm the trial court's determination that there was an entitlement to the fees.
The amount of the award, $106,760.96 plus interest, is not challenged.
A 1972 amendment to the Home Rule Charter, approved by referendum, gave Dade County the authority to expand the City of Miami Water and Sewer Board to an agency with county-wide authority. Pursuant to that authority, Dade County's Board of County Commissioners, by ordinance, created the Miami-Dade Water and Sewer Authority [WASA] with the authority to "sue and be sued, plead and be impleaded, contract and be contracted with, and have an official seal". By the same legislation, WASA board members were given "powers, duties and responsibilities customarily vested in the board of directors of a private corporation." Hundreds of millions of dollars in property were conveyed to WASA, from the City of Miami and Dade County, to operate the water and sewer agency.
In 1975, WASA entered into a contract with the City of Miami and Dade County — called the Tri-Party Agreement — which obligated WASA to, among other things, defend and perpetuate its own existence. By the terms of the Tri-Party Agreement, the governmental successor to WASA would also succeed to WASA's obligations and duties.
In pertinent part the contract provided:
[WASA] covenants to do or that it will cause to be done all things necessary to preserve and keep in full force and effect its existence and the rights and properties of it unless and until it is succeeded by a validly created successor governmental authority, created by law, which shall succeed to all rights, obligations, duties and properties to be performed and held by it hereunder. . . .
In 1983 the Board of County Commissioners decided to abolish WASA as an independent board and to make it, instead, an agency of the county. To that end, the commission, on July 5, 1983, passed Ordinance 83-54 which replaced WASA's general counsel with the county attorney effective October 1, 1983. Two days after the ordinance was passed, WASA's board of directors met to consider the ordinance and other planned action of Dade County to terminate its existence. A question raised was whether WASA, which had been authorized by referendum, although created by ordinance, could be permanently abolished without a second referendum. On July 19, 1983, the county commission passed Ordinance 83-92 (the abolition ordinance) repealing the 1972 ordinance that created WASA, restructuring it as a county department, effective November 1, 1983. A provision of the ordinance recognized Dade County as the successor to WASA, to assume all of WASA's rights and obligations. Also on July 19, 1983, WASA's governing board, in a special session, adopted Resolution 3167, which formally retained Floyd Pearson for legal services, and obligated itself to pay fees for legal representation in the course of defending itself against abolition of WASA by ordinance.
Section 2-345 of Ordinance 83-92 is captioned "Transfer of Obligations." It provides:
Immediately upon the effective date of this ordinance, Dade County, by and through its board of county commissioners, shall serve as the legally and validly organized successor to the Miami-Dade Water and Sewer Authority and shall assume all of the rights, obligations, properties, and duties of the Miami-Dade Water and Sewer Authority.
A flurry of litigation followed. Prior to the effective date of Ordinance 83-54, which substituted the county attorney for WASA's independent counsel, Floyd Pearson filed a suit challenging the validity of the attorney-substitution ordinance. On September 26, 1983, Dade County filed a declaratory judgment suit against the City of Miami asking the court "to construe, determine and declare [the county's] legal rights and power to restructure [or abolish] WASA into a County department." On September 28, 1983, the circuit court ruled, in WASA's suit challenging Ordinance 83-54, that WASA retained the right to select its own counsel because representation by Dade County posed a conflict of interest. Dade County did not appeal that ruling nor did it ever, in any of the subsequent litigation, challenge WASA's right to representation by Floyd Pearson for services rendered either before or after the effective date of the abolition ordinance.
In October, 1983, the following month, the City of Miami brought a multi-count action against Dade County and WASA seeking, among other things, a determination as to the validity of Ordinance 83-92 purporting to abolish WASA. WASA filed a cross-claim seeking the same declaratory relief.
All the parties filed motions for summary judgment on the issue which were heard over two months after the ordinance became effective. A final judgment was entered for Dade County and against WASA and the City of Miami finding the ordinance valid. WASA's appeal from the determination on that single issue was dismissed for lack of finality. After a negotiated settlement of the City of Miami's claim against Dade County, this court heard the appeal and affirmed the trial court in an opinion filed February 24, 1987, agreeing that the county had authority under the amended provision of the Home Rule Charter to abolish WASA by ordinance.
Miami-Dade Water Sewer Authority v. Metropolitan Dade County, 469 So.2d 813 (Fla. 3d DCA 1985).
Miami-Dade Water Sewer Authority v. Metropolitan Dade County, 503 So.2d 1314 (Fla. 3d DCA 1987).
Four months later, Floyd Pearson submitted its bill to Dade County for services rendered, as an obligation of WASA which Dade County had agreed to assume by terms of the Tri-Party Agreement and the Transfer of Obligations provision of the abolition ordinance. Dade County refused payment for the services rendered after the effective date of the abolition ordinance. It appeals the circuit court judgment entered for Floyd Pearson on the law firm's claim of entitlement to fees for services provided from November 1, 1983, the effective date of the ordinance, to the date of this court's February 24, 1987, opinion upholding the validity of the ordinance.
Two dispositive issues are presented — one substantive and the other technical in nature: (1) whether the enactment of Ordinance 83-92, repealing the 1972 ordinance which created WASA as an independent corporation, nullified the provisions of a separate contract between Dade County and WASA empowering the latter to do "all things necessary to preserve . . . its existence . . . until . . . succeeded by a validly created successor governmental authority"; and (2) whether the failure of Dade County to appeal the September 23, 1983, circuit court declaratory judgment — which determined that WASA retained the right to select its own counsel in the action based on allegations that there was no valid abolition of, or valid successor to WASA — constituted a waiver of the right to contest the fee award to WASA's attorneys.
By terms of the contract between the parties, WASA had an obligation to challenge the validity of the ordinance purporting to effect its abolition. On similar facts, involving a threat by a county commission to repeal an ordinance creating a civil service board, even where there was no contractual obligation to defend the board's existence, the supreme court held:
Indeed, if repeal by the County Commission may be characterized as the ultimate violation of the Act, as we think it may, the Board would be remiss in performing its obligation to require and enforce observance of the Act if it permitted the repeal to go untested.Davis v. Gronemeyer, 251 So.2d 1, 3 (Fla. 1971). Likewise, we think WASA would have been remiss in its obligation had it not undertaken to defend its own existence with a legal challenge to the validity of the abolition ordinance commenced prior to the ordinance's effective date.
By terms of the Transfer of Obligations provision in Ordinance 83-92, whereby Dade County agreed to "assume all of the rights, obligations, properties and duties" of WASA, Dade County became liable for WASA's attorney's fee obligations to Floyd Pearson under basic creditor rights principles. A written expression of assumption by a successor, of its predecessor's debts or obligations, creates a right of action against the successor by the predecessor's creditors. Barnes v. Liebig, 146 Fla. 219, 1 So.2d 247 (1941); Baywood Furniture Mart, Inc. v. Kennedy, 295 So.2d 350 (Fla. 2d DCA 1974).
Floyd Pearson's fee contract was not contingent upon WASA's prevailing in the action against Dade County. Indeed the law firm held a rare "win-win" status. If WASA had prevailed it would have been around to pay the firm's fee. WASA's ultimate loss in the judicial proceeding, in the suit commenced before but not concluded until after its legislative unraveling by the opposition, did not disentitle the firm to a reasonable fee. It meant only that the fee would be the obligation of Dade County pursuant to its takeover contract with WASA. In either case the source of payment would be the public kitty. Dade County's theory, in opposing the fee award, is an exercise in circuity which, probably, is what confounds the dissent.
Assuming that WASA no longer existed as a corporation after November 1, 1983, it does not follow that its obligations to third parties also vanished. Because WASA was created with the powers and duties of a private corporation, we look to Florida's law of corporations for an answer to the question whether WASA could maintain an attorney-client relationship with Floyd Pearson after that date. Dissolution of a corporation, whether by legislative act, court decree, or expiration of its period of duration, does not eliminate or impair any right, claim, or obligation of the corporation. See § 607.297, Fla. Stat. (1987); McGlynn v. Rosen, 387 So.2d 468 (Fla. 3d DCA 1980), rev. denied, 392 So.2d 1376 (Fla. 1981). The board of directors of a dissolved corporation may maintain a legal action, to include taking appeals from a final judgment, on a suit which was in progress prior to the corporation's dissolution. Ainsley Realty Co. v. Kramer, 189 So.2d 609 (Fla. 1966). We therefore reject Dade County's argument that WASA could not incur liability for attorney's fees after November 1, 1983.
From our determinations that WASA was contractually obligated to defend against its abolition, and that it was legally empowered to maintain the lawsuit that was in progress when the ordinance abolishing the agency became law, we conclude that all reasonable costs of the litigation were an obligation Dade County was required to assume. In response to the substantive question, we hold that a government may not, by a legislative enactment, constitutionally exonerate itself from a contractually assumed obligation to pay a debt to a private third-party beneficiary. See State v. City of Coral Gables, 72 So.2d 48 (Fla. 1954) (municipal creditors' rights cannot be impaired by subsequent legislation).
Having reached the dispositive substantive question it is unnecessary to discuss the technical, although easier, waiver issue which would have led us to the same result.
Affirmed.
The court has held that the taxpayers must pay for the services of an attorney in unsuccessfully attempting to resuscitate a then-nonexistent entity which the county had itself both created and properly abolished. Merely to state the result in this way, I believe, is to demonstrate its complete indefensibility.
I.
The operative facts are not in dispute. In 1983 the Board of County Commissioners passed ordinance 83-92, effective November 1, 1983, abolishing the Miami-Dade Water and Sewer Authority (WASA) as an independent agency, and restructuring it as a county department. On July 19, 1983, necessarily prior to its abolition, WASA retained Floyd Pearson to represent it in challenging the ordinance. The ensuing litigation eventually resulted in a final judgment for Dade County upholding the validity of the ordinance which was affirmed by this court in Miami-Dade Water Sewer Auth. v. Metropolitan Dade County, 503 So.2d 1314 (Fla. 3d DCA 1987). The litigation obviously continued well past November 1, 1983, the date of WASA's abolition. Floyd Pearson, however, supposedly representing the by-now-defunct WASA, continued its challenge of the ordinance to reinstate its by-now-former client. Only after this court administered the final death blow, the firm for the first time billed Dade County for the post-abolition services it had purportedly rendered WASA. This appeal is from a decision that the county must pay. I cannot agree with that determination.
WASA itself fully paid Floyd Pearson for the services rendered before it went out of existence on November 1, 1983.
II.
The majority apparently bases its decision largely on the 1975 Tri-Partite Agreement between WASA, Dade County, and the City of Miami which empowered WASA
to do or . . . cause to be done all things necessary to preserve and keep in full force and effect its existence and the rights and properties of it, unless and until it is succeeded by a validly created successor governmental authority, created by law, which shall succeed to all rights, obligations, duties and properties to be performed and held by it hereunder . . .
There are several things wrong with the court's position on this question.
1. While I agree that WASA was authorized "to defend and perpetuate its own existence" and thus to retain counsel initially, this authority terminated on November 1, 1983. By the contract's own terms, WASA's power in this regard terminated upon the creation of a valid successor. And there can be no doubt that such a successor came into existence on November 1, 1983. Since that date, Dade County, as that entity, has provided all the services which had been previously supplied by WASA. Thus, there was nothing left for WASA to do or to defend.
2. The majority's decision also apparently hinges on the fact that the courts had yet to decide the constitutionality of the ordinance and that WASA, having been contractually authorized to defend itself, was within its legal right to continue to do so until a final judicial resolution of that issue. It is well settled, however, that an ordinance is presumptively valid and that the burden of establishing otherwise is placed on the challenging party. Seaboard Air Line R.R. v. Hawes, 269 So.2d 392, 396 (Fla. 4th DCA 1972) (rejecting a similar argument on ground that "a regularly enacted municipal ordinance is presumed to be valid until the contrary is shown by the party challenging it"), cert. denied, 272 So.2d 816 (Fla. 1973); see, e.g., State ex rel. Office Realty Co. v. Ehinger, 46 So.2d 601 (Fla. 1950); City of Miami Beach v. Texas Co., 141 Fla. 616, 194 So. 368 (1940); see also 12 Fla.Jur.2d Counties and Municipal Corporations §§ 195-96 (1979). These authorities demonstrate that when a valid successor was created upon the effective date of the ordinance — which we explicitly decided in Miami-Dade Water Sewer Auth. v. Metropolitan Dade County, 503 So.2d 1314 (Fla. 3d DCA 1987) — any arguable authority to continue with the pending litigation ended as of that time. The claim that this conclusion would unfairly deprive WASA of the opportunity to challenge an ordinance which sought to end its existence ignores the fact that WASA, as purely a creation of the county, was therefore likewise subject to termination at its will. As we held again, in this very case, "[w]hen a legislative body has the power to create by ordinance, it has by implication, the power to amend, modify or repeal by ordinance." Water Sewer, 503 So.2d at 1316. See State v. Dade County, 142 So.2d 79 (Fla. 1962); Parker v. Evening News Publishing Co., 54 Fla. 544, 45 So. 309 (1907); Blotter v. Farrell, 42 Cal.2d 804, 270 P.2d 481 (1954); Upper Penns Neck Tp., Salem County v. Lower Penns Neck Tp., Salem County, 20 N.J. Super. 280, 89 A.2d 727 (1952); Stemmler v. Borough of Madison, 82 N.J.L. 596, 83 A. 85 (1912). Compare City of Jacksonville v. Smoot, 83 Fla. 575, 92 So. 617 (1922); City of Miami v. Rodriguez-Quesada, 388 So.2d 258 (Fla. 3d DCA 1980). On several grounds, it is thus incorrect to construe the language of the Tri-Partite Agreement so broadly as to grant WASA powers which clearly contravened the authority of the entity which created it.
3. Even if the provision could be interpreted as authorizing WASA to continue with the litigation after its abolition, the facts show that WASA, through its board members, never asserted that authority. As of November 1, 1983, the attorney-client relationship between Floyd Pearson and the agency came to an end. Buttressing this position is the fact that after that date, neither WASA itself nor any member of the board took any further action in this matter; specifically, there was no communication whatever with Floyd Pearson. The majority ignores this fact in relying on Ainsley Realty Co. v. Kramer, 189 So.2d 609 (Fla. 1966) to support its position that Floyd Pearson was entitled to continue with the litigation after WASA's abolition. While that case stands for the proposition that pending litigation can be continued after a corporation's dissolution, the court clearly stated that such action is to be continued by the directors of the dissolved corporation as trustees. Ainsley, 189 So.2d at 610. Here, Floyd Pearson maintained no contact with anyone connected with WASA after November 1, 1983. Indeed, it avowed that it continued the litigation only because of what it considered to be its ethical obligation — although to what client remains unclear. Obviously, since the firm was not acting in representation of WASA's board of directors, either collectively or independently, it cannot benefit from the Ainsley decision.
Although Ainsley was decided under Section 608.30, Florida Statutes, which has since been amended and renumbered, its successor, Section 607.297, Florida Statutes (1987), is very similar in nature. That provision states:
[t]he dissolution of a corporation either:
(1) By issuance of a certificate of dissolution by the Department of State;
(2) By a decree of court; or
(3) By expiration of its period of duration shall not take away or impair any remedy available to or against such corporation or its directors, officers, or shareholders for any right or claim existing, or any liability incurred, prior to such dissolution if action or other proceeding thereon is commenced within 3 years after the date of such dissolution. Any such action or proceeding by or against the corporation may be prosecuted or defended by the corporation in its corporate name. The shareholders, directors, and officers shall have power to take such corporate or other action as shall be appropriate to protect such remedy, right, or claim. (emphasis added).
In fact, all subsequent actions taken challenging the abolition ordinance, were taken by Floyd Pearson independently — without the direction or control of a client. Floyd Pearson's arrangement was, if anything, no more than a contingent fee arrangement — in which, anomalously enough, the contingency of success was whether the lawyer's client would have come into legal (and fee-paying) existence. If successful, it would have had a client — WASA — and that client would have paid for the legal services it had so fortuitously received. However, recovery under such arrangement is predicated upon the successful completion of litigation. Since the challenge proved to be ultimately unsuccessful, Floyd Pearson could recover nothing from anyone, much less its successful opponent. Thus, even the supposed client, WASA, had no obligation to pay for the services of counsel. (If it did, Floyd Pearson would surely have sued it.)
In this respect, it is doubtful that Floyd Pearson had standing to continue with the action. Florida law requires that a claim be brought either by the party who has a "sufficient stake" in the litigation or by "someone other than, but acting for, th[at] real party in interest." Kumar Corp. v. Nopal Lines, 462 So.2d 1178, 1182-83 (Fla. 3d DCA 1985), review denied, 476 So.2d 675 (Fla. 1985). While the latter qualification of the rule indicates that someone other than the real party in interest can institute an action, it is clear that that other party must represent the concerns of the real party in interest. Fla.R. Civ.P. 1.210(a); see Durrant v. Dayton, 396 So.2d 1225 (Fla. 4th DCA 1981); 39 Fla.Jur.2d Parties § 9 (1982). Floyd Pearson does not qualify, however, as such an agent or representative. On November 1, 1983, upon WASA's abolition, its relationship with the firm terminated. Cf. Brickell v. McCaskill, 90 Fla. 441, 106 So. 470 (1925) (the death of the client terminates the attorney-client relationship). Thus, all its subsequent efforts were made voluntarily on its behalf and not, as required, on behalf of WASA, the alleged party in interest.
The failure of the appellee firm to do so is perhaps the best practical demonstration of the fact that, after November 1, 1983, WASA no longer existed for any purpose.
Finally, and most importantly, the law firm and the court have utterly failed to bridge the logical gap between the argument — which I believe to be itself fallacious — that WASA was somehow empowered or authorized to retain counsel on its own behalf and the result of this case, which is that the county, having abolished WASA and beaten it in court, must pay for those services. I do not believe it is possible to do so.
III.
Even assuming arguendo — and over the objections upon which this opinion insists — that Floyd Pearson's efforts on WASA's behalf after November 1, 1983, gave rise somehow to an obligation by WASA to pay for them, the duty was not, as the court argues, assumed by Dade County under the Transfer of Obligations clause of the abolition ordinance. That provision states:
Immediately upon the effective date of the ordinance from which this article derives, Dade County, by and through its board of county commissioners, shall serve as the legally and validly organized successor to the Miami-Dade Water and Sewer Authority and shall assume all of the rights, obligations, properties, and duties of the Miami-Dade Water and Sewer Authority. (emphasis added).
It is clear that, fairly read, this clause applies only to WASA's on-going obligations for utility services, supplies and the like, rather than to a personal terminable relationship like the attorney-client one involved here. Moreover, the majority does not recognize that, even assuming its applicability, the term provides for the county's assumption not only of WASA's obligations, but its rights as well. Since WASA clearly would have had the right to direct Floyd Pearson's representation and to discharge the firm, Fla.R.Prof. Conduct, Rules 4-1.2(a); 4-1.16(a)(3) comment (1989), Dade County could have asserted and must be deemed to have asserted that very same right.
Equally, if not more importantly, the law permits an award of fees against a non-client only when there is a specific authorization by statute or contract. E.g., Campbell v. Maze, 339 So.2d 202 (Fla. 1976); Dade County v. Grossman, 354 So.2d 131 (Fla. 3d DCA 1978). That is clearly not the case here. No such authority was granted either by the provision in question or by any approval obtained by Floyd Pearson from Dade County itself.
Finally, the suggestion that Dade County waived its right to challenge the payment of Floyd Pearson's fees is also incorrect. Waiver is defined as the voluntary or intentional relinquishment of a known right. 22 Fla.Jur.2d Estoppel and Waiver § 86 (1980). While it is true that Dade County failed to object to the lower court's judgment declaring WASA's right to retain independent counsel and later to dispute the firm's standing to continue with the pending action, the county made no agreement or assumption of the obligation to pay attorney's fees, which is the only matter now in issue. Indeed, because Floyd Pearson never made so much as a claim in this regard before the end of the WASA case, the county had neither notice of its existence nor even an occasion to "waive" its objection to payment. The appellant can hardly be held to have "knowingly" given up the right to contest a claim of which it was completely unaware.
In addition, the waiver-estoppel argument is also infected by an inherent confusion between WASA's alleged obligations and powers, that is, its "right" to maintain the action and to retain counsel to do so, on the one hand, and the county's obligation to pay the bill, on the other. In this regard, it is unquestioned that Floyd Pearson did not expend its efforts in reliance upon such a representation. Quite the contrary is the case. The firm candidly acknowledged that it was handling the case solely in pursuit of a nobly conceived, if probably unjustified, sense of professional responsibility. The admitted absence of any such detrimental reliance precludes the existence of an estoppel or effective waiver of the county's assertion that it should not pay. State v. Hadden, 370 So.2d 849 (Fla. 3d DCA 1979); Jefferson Nat'l Bank v. Metropolitan Dade County, 271 So.2d 207 (Fla. 3d DCA 1972), cert. denied, 277 So.2d 536 (Fla. 1973); see Warren v. Department of Admin., 554 So.2d 568 (Fla. 5th DCA 1989).
It is fortunate for Floyd Pearson, although unfortunate for the citizens that, even though it lost, its nobility has now been financially rewarded.
IV.
As may have been indicated by the perhaps less than meticulous structure of this dissent, I believe that the majority's conclusion is so inherently incorrect that one falls all over oneself in attempting to point out exactly how. The most basic flaw, however, seems to me to lie in the fact that any obligation to pay for another's attorney's fees must be founded on a duty to make indemnity for the fees owed by that client to his lawyer. Trustees of Cameron-Brown Inv. Group v. Tavormina, 385 So.2d 728 (Fla. 3d DCA 1980). In this case, not even the most basic parts of this requirement exist: there is no opposing client, who has no lawyer, and thus admittedly has no obligation to pay him. When we add to this total absence of any indemnitee or indemnifiable obligation the fact that this non-existent debt must be paid by the successful party, we enter a realm of inverted logic which can prevail only in a galaxy to which not even the Starship Enterprise has penetrated. I doubt there is any previous instance in which, while there is no "client" with even a theoretical obligation to pay a lawyer's fee, his victorious adversary is required to do so. I would not make this case the first.
In a case rife with ironies, it is a supreme one that, if the county had lost the case, WASA, and not the taxpayer would have paid Floyd Pearson's fees. The county must pay those fees only because it won.