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Attorney’s Fees as an Element Damages in an Uninsured Motorist Bad Faith Lawsuit Make the Plaintiff Whole, not His or Her Attorneys

May 11, 2022

A plaintiff cannot recover attorney’s fees in a Florida lawsuit for Uninsured Motorist (“UM”) benefits unless there is a dispute about whether the insurance policy provides coverage.1  However, attorney’s fees from the underlying lawsuit can be recovered as an element of damages in a lawsuit for statutory bad faith, which is brought after the lawsuit for UM benefits resolves favorably to the insured.2  Like any other consequential damage, to be recovered, these attorney’s fees must be “the natural, proximate, probable, or direct consequence of the insurer’s bad faith actions.”3  This is distinct from prevailing party attorney’s fees, which can be recovered for the time spent litigating a successful bad faith lawsuit.4 

In one of the first cases attempting to recover attorney’s fees from the underlying UM litigation in a subsequent bad faith case, the plaintiff argued that the attorney’s fees were recoverable under Florida’s insurance fee shifting statute—section 627.428, Florida Statutes.  The Court rejected the plaintiff’s argument, holding that section 627.428 does not provide a basis to recover attorney’s fees from the underlying UM claim because “any other reading of the applicable statutes would result in a ruling rendering Fla. Stat. § 627.727(8) meaningless in a case where attorney fees are recoverable under Fla. Stat. § 627.727(10), i.e., any bad faith case premised on an underlying uninsured motorist claim where coverage was not contested.”5 

Later, in Milling v. Travelers Home & Marine Ins. Co.,6, the plaintiff argued the underlying fees were recoverable as a consequential damage, but were calculated using the federal lodestar approach.7  The court rejected that argument.  Importantly, the court set forth a few rules.  First, a plaintiff “is only entitled to recover as compensatory damages those attorney’s fees that would make her whole.”8  Second, unless the plaintiff “was obligated to pay her UM Attorneys for their legal services, she wasn’t damaged at all, and any fees for such services are therefore not awardable as damages even if she was the prevailing party in the bad faith action.”9  Third, whether a plaintiff can recover “fees as bad-faith damages depends on whether she is actually liable for the UM Attorney’s Fees that she claims are the consequence of [the] failure to settle her claim in good faith.10   

The Court analyzed the fee agreement and concluded the insured was only responsible to pay her attorneys 40% of the recovery.  This determined the extent of potential fees-as-damages that could be recovered. 

On May 5, 2022, the Eleventh Circuit Court of Appeals applied the Milling decision in Levesque v. Gov’t Employees Ins. Co.11  The Eleventh Circuit held that “attorney’s fees in a bad-faith action are to be treated as compensatory damages (rather than as fees subject to a fee-shifting provision).”12  These fees-as-damages are intended to make the plaintiff whole.  Thus, fees as damages are limited to the contingency percentage taken from the recovery of UM benefits—in that case, 40% of the recovery.13 

The plaintiff in Levesque argued against this result, citing to an alternative fee recovery clause that obligated the plaintiff to pay their attorneys the amount awarded by a court if greater than the contingency amount.  The Eleventh Circuit rejected that argument: “This is circular reasoning. To be sure, the Levesques would have to pay their attorneys a recovery of reasonable attorney’s fees based on the lodestar method if the court awarded those fees in the UM Case. But the Levesques’ alternative fee recovery clause cannot create its own basis for fee-shifting.”14  There had been no court awarded fee in the UM case, so that alternative fee agreement did not apply. 

The court held that attorney’s fees as an element of damages was limited to the 40% contingency fee taken from the recovery of the UM limits.  In that case, the UM limits were $100,000 so the most the plaintiff could recover for attorney’s fees as an element of damages was 40% of that amount, or $40,000.15  

The Eleventh Circuit explained that a plaintiff can recover damages to make him or her whole.  “They cannot make their attorneys whole for time and expenses above the amount that the attorneys agreed the Levesques would pay them.”16 

Under Milling and now Levesque, attorney’s fees from an underlying lawsuit as an element of damages in a later-filed bad faith lawsuit is limited to the percentage of the recovery of insurance proceeds taken by the attorney.  Fees as damages are not calculated based on the federal lodestar approach.   

 

 

1 § 627.727(8), Fla. Stat.   

2 § 627.727(10), Fla. Stat.   

3 McLeod v. Cont’l Ins. Co., 591 So. 2d 621, 626 (Fla. 1992). 

4 § 624.155(4), Fla. Stat.   

5 Novak v. Safeco Ins. Co. of Illinois, 615CV215ORL41DCI, 2016 WL 8849018, at *9 (M.D. Fla. Nov. 18, 2016), report and recommendation adopted, 615CV215ORL41DCI, 2017 WL 1552091 (M.D. Fla. May 1, 2017). 

6 311 So. 3d 289 (Fla. 2d DCA 2020). 

7 Under the federal lodestar approach, courts multiply the number of hours reasonably expended by the reasonable hourly rate of the attorney. 

8 Id. at 294. 

9 Id. 

10 Id. 

11 No. 21-12257, 2022 WL 1423477 (11th Cir. May 5, 2022). 

12 Id. at *5.   

13 Id. 

14 Id. 

15 Id. at *6. 

16 Id.