Fees on Fees: How to Handle a Fee Award Against Your Client

By December 14, 2012

By Alan J. Kluger
It is well-settled that in Florida you can only recover attorneys fees pursuant to a statute or by agreement of the parties.  Many business disputes arise over a contract, which contains a provision awarding attorneys fees to the prevailing party.  A strategic question that often arises in litigation is whether to contest the issue of entitlement to fees and whether to litigate over the amount of fees the prevailing party seeks to recover.

Under the Florida Supreme Court’s ruling in State Farm Fire & Casualty Co. v. Palma, 629 So. 2d 830 (Fla. 1993), courts have previously held that parties can recover attorneys fees for time spent litigating entitlement to attorneys fees.  However, until recently, courts held that parties could not recover attorneys fees for the time spent litigating the amount of attorneys fees.  See, e.g., Yakavonis v. Dolphin Petroleum, Inc., 934 So. 2d 615 (Fla. 4th DCA 2006).  However, the courts have reasoned that where a party is awarded attorneys fees for the time spent litigating the amount of fees as a sanction for improper behavior, a fee award for the time spent litigating the amount of fees may be appropriate.  See, e.g., Bates v. Islamorada, 939 So. 3d 171 (Fla. 3d DCA 2006).
The recent case of Waverly at Las Olas Condominium Association, Inc. v. Waverly Las Olas, LLCsuggests a shift towards courts allowing recovery for fees incurred litigating the amount of fees.  In Waverly, the court held that Palma, which dealt with the entitlement to attorneys fees pursuant to an insurance statute, was inapplicable to prevailing party provisions in a contract between the parties.  In Waverly, the contract that entitled the parties to attorneys fees stated that “In the event of any litigation between the parties under this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees….”  Id.  Relying on the provision that provided for fees in ANY litigation, the court reasoned that the prevailing party could recover fees for the time spent litigating the amount of fees.
What does this mean?  Prior to Waverly, when my clients were clearly not the prevailing party in a dispute, I encouraged them to concede the issue of entitlement and spent time litigating the amount of fees because those fees were not recoverable.  However, this case may be an indication of a new trend.  If other districts follow Waverly, and the attorneys fee clause is broadly drafted, as most are, then the other district courts may follow suite and allow prevailing parties to collect fees for time spent litigating that amount of fees.
At this time the Fourth DCA is the only district to rule this way.  The American rule has long been different from the English rule, which provides for prevailing parties to recover fees in all cases.  After 250 years, is America becoming England?