Opinion
No. 1D19-954
06-30-2020
Judge Wesley DOUGLAS and the Department of Health, Bureau of Vital Statistics, Appellants, v. Verdell Terria JONES; P. Dewitt Cason, in his official capacity as Clerk of the Circuit Court and Comptroller, Columbia County, Florida; and Barry A. Baker, in his official capacity as Clerk of the Circuit Court for Suwanee County, Florida, Appellees.
Ashley Moody, Attorney General, and Bilal Ahmed Faruqui, Assistant Attorney General, Tallahassee, for Appellants. No appearance for Appellees.
Ashley Moody, Attorney General, and Bilal Ahmed Faruqui, Assistant Attorney General, Tallahassee, for Appellants.
No appearance for Appellees.
Makar, J.
The issue presented is the appropriate hourly rate payable to attorneys working for the Office of the Attorney General (OAG) who litigate cases involving the filing of false instruments in official records against public officers in the judicial, legislative, and executive branches. In 2013, the Legislature enacted a new law, section 817.535, Florida Statutes, which established both criminal and civil liability against persons who file an instrument with a "materially false, fictitious, or fraudulent statement or representation" in an official record, such as the filing of a false deed. Liability applies whether the person targeted is a private citizen or a public official or employee, though criminal sanctions are increased as to the latter category.
In this civil case, a Florida circuit judge was the victim of false filings made by the defendant, including a false claim of lien and UCC financing statement alleging defendant was owed $5 billion. The OAG filed and successfully litigated on behalf of the circuit judge, who sought attorneys’ fees as the prevailing party under section 817.535(9), Florida Statutes (2020), which states:
A government agency may provide legal representation to a public officer or employee if the instrument at issue appears to have been filed to defraud or harass the public officer or employee in his or her official capacity. If the public officer or employee is the prevailing party, the award of reasonable attorney fees shall be paid to the government agency that provided the legal representation.
The statute requires an award of "reasonable" attorneys’ fees to the government agency providing legal representation, here the OAG, but does not say how the hourly rate for the government agency's attorneys is to be determined.
In support of its motion for fees, which was unopposed due to the defendant's non-appearance, the OAG provided detailed time records, legal memoranda, and the testimony of an expert in support of either (a) a rate of $300–$400/hour for senior level attorneys and a rate of $200–$250/hour for less experienced attorneys, or (b) a blended rate of $200/hour, which is a uniform rate that would apply to time expended by all attorneys without regard to experience level. Also presented were six orders entered by three different Second Circuit judges in recent section 817.535 cases, each utilizing the $200/hour blended rate.
The trial court went beyond what was presented by extensively questioning the fee expert about the OAG's billing system and requiring that additional materials be filed showing what hourly rate the OAG uses in billing other state government agencies, the attorneys’ fees that local law firms charge in tort cases overseen by the Division of Risk Management, and the rates charged in this case; OAG's counsel was also extensively questioned on these matters.
After the OAG submitted the court-ordered information and a supplemental legal memorandum, the trial court entered an order awarding fees and costs that used a blended rate of $100/hour, rather than the requested $200 (or a bi-level fee approach), based on the trial court's conclusion that the "market" for legal services was limited to only section 817.535 cases and that the fee statute was limited to only the "reimbursement for the actual cost of bringing the action." It relied on supplemental data that it ordered the OAG to provide, which showed that inter-governmental attorneys’ fees of between $76–$117/hour are charged to state agencies, but that such fees are discounted below prevailing market rates (and in some cases not charged at all).
On appeal, the OAG argues that the trial court erred (1) in limiting the attorneys’ fee award to the contractual rate charged to state governmental entities (such as the Department of Health in this case) and (2) in concluding that $100/hour was a reasonable fee under the circumstances.
As to the first issue, the trial court erred in relying upon and limiting its fee order to the below-market OAG contractual rates that the OAG was required to file. In doing so, the trial court overlooked that those rates, which are charged by OAG to its governmental clients in some cases, but not all, are artificially set below actual market rates because the OAG is partially funded from various governmental sources. The rates, which are not intended to be market driven, do not include the full costs of attorney services provided (e.g., overhead and other fixed expenses) that ordinarily appear in market rates by private firms (and some non-private firms). Moreover, the OAG provides legal services for many of its governmental clients at no charge (including the State Court System), but in such cases "reserve[ ] the right to seek attorney's fees whenever possible to offset OAG expenses and time spent on free services."
Limiting recovery to below-market or discounted rates used for inter-governmental agency purposes does not comport with the statutory requirement that a "reasonable fee" be awarded to the government agency providing successful representation. Hatcher v. Roberts , 538 So. 2d 1300, 1302 (Fla. 1st DCA 1989) ("One legitimate reason [for allowing recovery at market rate] occurs if the lawyer, as in this case, gives a discounted rate to a continuing business client."); see also Sotolongo v. Brake , 616 So. 2d 413, 414 (Fla. 1992) (holding that a party may receive reasonable rate by showing fee agreement was set "below the customary and reasonable rate").
Doing so bears no relationship to a true market rate; instead, it has a closer resemblance to merely reimbursing the government agency for its out-of-pocket labor expense, which is not what the statute requires. See Leibowitz v. City of Miami Beach , 683 So. 2d 204, 205 (Fla. 3d DCA 1996) (holding that the trial court erred by awarding fees based on its calculation of hourly rate using city attorney's salary rather than market rate); City of Boca Raton v. Faith Baptist Church of Boca Raton, Inc. , 423 So. 2d 1021, 1022 (Fla. 4th DCA 1982) ("The mere fact that the plaintiff was represented by its house counsel who was paid an annual salary does not militate against the allowance of reasonable attorney's fees as provided by law."); see also State of Ill. v. Sangamo Constr. Co. , 657 F.2d 855, 858 (7th Cir. 1981) (rejecting argument that because representation was provided by the state attorney general, an award of attorney's fees to the state "should be limited to the actual costs incurred by the state" for the lawyers’ salaries); Cent. States, Se. & Sw. Areas Pension Fund v. Cent. Cartage Co. , 76 F.3d 114, 117 (7th Cir. 1996) ("[T]he court should make an award representing the cost the victorious litigant would have incurred to buy legal services in the market, no matter how the litigant actually acquired those services."). If the trial court's view applied, the OAG could not recover a reasonable fee in cases where it does not receive compensation for its services from its clients, which runs contrary to the general rule of recovery. See generally 1 Robert L. Rossi, Attorneys’ Fees § 6:14 (3d ed. 2019) ("Where a litigant incurs no legal fees because he or she is represented without charge by a legal services organization, the courts have generally held that an award of attorneys’ fees to the party is proper, providing, of course, that the party is otherwise entitled to such an award.").
For similar reasons, competent substantial evidence does not support that a blended rate of $100/hour is reasonable. The OAG presented unrebutted expert testimony and evidence that a blended rate of $200/hour was reasonable and, indeed, approved by three different Second Circuit judges in six recent section 817.535 cases. That was sufficient to meet its evidentiary burden. See Smith v. Sch. Bd. of Palm Beach Cty. , 981 So. 2d 6, 9 (Fla. 4th DCA 2007) ("[T]he trial court abused its discretion in determining that $200.00 was a reasonable hourly rate in this case as this determination is not supported by competent and substantial evidence" because the rate was based on government and insurance defense attorneys who charge below market rates.); Leibowitz, 683 So. 2d at 205 ("[S]ince the uncontroverted testimony showed that $150 is a reasonable hourly rate, we reverse and remand for a recalculation of the attorney's fee award at a rate of $150 per hour.").
No contrary evidence exists other than the below market OAG rates and those of firms vying for in-roads into government work (provided at the court's request). We don't fault the trial court for seeking more information beyond what the OAG initially presented (particularly when the court failed to get previously requested information in a similar case), but limiting a "reasonable fee" under the statute to only the below-market rates the OAG charges some of its state agency clients would systemically result in the OAG recovering less than what is "reasonable," as the statute requires, in every section 817.535 case. And the OAG would have a disincentive to provide representation if the fees it is ultimately awarded are merely the below-market rates upon which the fee order in this case are based. Moreover, the use of "an objective standard of reasonableness, i.e., generally prevailing market rates, is far preferable to extensive judicial scrutiny of private fee arrangements or of the internal economics of the Attorney General's office." Sangamo Constr. Co. , 657 F.2d at 862.
REVERSED .
Wolf and B.L. Thomas, JJ., concur.