BMW OF NORTH AMERICA, LLC vs MARIE LOUISE HENRY

• Court: District Court of Appeal of Florida
• Decided: April 8, 2022
• Docket: 21-0885
• Status: Published

Opinion

IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FIFTH DISTRICT

NOT FINAL UNTIL TIME EXPIRES TO FILE MOTION FOR REHEARING AND DISPOSITION THEREOF IF FILED

BMW OF NORTH AMERICA, LLC,

Appellant,

v. Case No. 5D21-885 LT Case No. 2016-CA-001413

MARIE LOUISE HENRY,

Appellee.

________________________________/

Opinion filed April 8, 2022

Appeal from the Circuit Court for Lake County, Brian Welke, Judge.

James H. Wyman, of Hinshaw & Culbertson LLP, Coral Gables, for Appellant.

Theodore F. Greene, III, of Law Offices of Theodore F. Greene, LC, Orlando, and Jeremy Kespohl, of Morgan & Morgan, P.A., Jacksonville, for Appellee.

PER CURIAM. BMW of North America, LLC (“BMW”) appeals the trial court’s final

judgment awarding attorney’s fees and costs to Marie Henry. BMW primarily

argues the trial court erred in determining that Henry was entitled to a

contingency multiplier pursuant to the Magnuson-Moss Warranty Act

(“MMWA”), 15 U.S.C. §§ 2301–2312. We affirm in part, reverse in part, and

remand to the trial court for correction of the attorney’s fee award.

Henry successfully sued BMW under the MMWA, and the jury awarded

her $11,549.48, reflecting diminished value of her vehicle and incidental and

consequential damages. 1 Thereafter, Henry moved for entry of final

judgment and for an award of attorney’s fees and costs as a prevailing party

pursuant to the MMWA’s fee-shifting provision. 2 She sought $134,575 in fees

as well as a contingency multiplier.

1 Henry’s complaint alleged various defects pertaining to her vehicle, which BMW failed to reasonably repair in violation of its express and implied warranties. 2 The MMWA provides, in pertinent part:

(2) If a consumer finally prevails in any action brought under paragraph (1) of this subsection, he may be allowed by the court to recover as part of the judgment a sum equal to the aggregate amount of cost and expenses (including attorneys’ fees based on actual time expended) determined by the court to have been reasonably incurred by the plaintiff for or in connection with the commencement and prosecution of such action, unless the court in its

2 After an evidentiary hearing, the trial court awarded the majority of fees

sought and applied a contingency multiplier of 1.5, resulting in a total fee

award of $178,335. 3 On appeal, BMW contends that because Henry

prevailed under a federal fee-shifting statute, federal law governs the

attorney’s fee award, which prohibits the application of a contingency

multiplier. BMW also argues the trial court abused its discretion by failing to

reduce Henry’s fee award for hours relating to her second counsel’s work

and hours expended in filing unnecessary motions. We address two

preliminary questions before turning to the merits of the contingency

multiplier issue.

The first is our standard of review. BMW argues for a de novo standard

while Henry contends the standard is abuse of discretion. We agree with

BMW that the multiplier issue calls for a de novo standard of review because

analysis of the trial court’s application of a multiplier turns on a question of

law—whether federal law applies to the attorney’s fee award, such that a

contingency multiplier would be prohibited, or whether state law controls,

discretion shall determine that such an award of attorneys’ fees would be inappropriate.

15 U.S.C. § 2310(d)(2). 3 BMW does not challenge the portion of the final judgment related to costs.

3 rendering a multiplier permissible. See Torruella v. Nationstar Mortg., LLC,

308 So. 3d 674, 676 (Fla. 5th DCA 2020) (“[T]o the extent a trial court’s order

on attorney’s fees is based on its interpretation of the law, an appellate court

employs the de novo standard of review.” (citations omitted)).

The next threshold question is whether an attorney’s fee award is

procedural or substantive. If procedural, Henry asserts that federal law is not

binding on Florida courts. However, the Florida Supreme Court has

determined that “a statutory right to attorney’s fees constitutes a substantive

right.” Bionetics Corp. v. Kenniasty, 69 So. 3d 943, 948 (Fla. 2011) (citations

omitted); Bitterman v. Bitterman, 714 So. 2d 356, 363 (Fla. 1998); see also

L. Ross, Inc. v. R.W. Roberts Constr. Co., 466 So. 2d 1096, 1098 (Fla. 5th

DCA 1985) (“The right to an attorney’s fee is substantive because it gives to

a party who did not have that right the legal right to recover substance

(money!) from a party who did not theretofore have the legal obligation to

render or pay that money. The right is not merely a new or different remedy

to enforce an already existing right and is, for that reason, not merely

procedural.”). Federal case law also demonstrates that an attorney’s fee

award is substantive. See Rodriguez v. Cnty. of Los Angeles, 891 F.3d 776,

809 (9th Cir. 2018) (recognizing calculation of attorney’s fees and application

of multiplier as “substantive matter”).

4 We now turn to BMW’s first argument on appeal. Because an

attorney’s fee award is substantive in nature, it follows that substantive

rulings on federal fee-shifting statutes by the U.S. Supreme Court are binding

on Florida courts. See Carnival Corp. v. Carlisle, 953 So. 2d 461, 465 (Fla.

2007) (“[S]tate courts are bound by the decisions of the United States

Supreme Court construing federal law . . . .” (citations omitted)). As a result,

the trial court’s reliance on state law in concluding that Henry was entitled to

a contingency multiplier, specifically, Joyce v. Federated National Insurance

Co., 228 So. 3d 1122 (Fla. 2017), was in error where Henry prevailed only

under a federal statute.

U.S. Supreme Court precedent addressing contingency multipliers and

attorney’s fee awards under federal fee-shifting statutes makes clear that

such enhancements are prohibited. City of Burlington v. Dague, 505 U.S.

557, 567 (1992) (holding that “enhancement for contingency is not permitted

under the fee-shifting statutes at issue”). 4 However, a trial court may

enhance a fee award based upon superior attorney performance, which

involves three types of “rare and exceptional circumstances,” including: (1)

4 The fact that Dague addressed different federal fee-shifting statutes than the MMWA is of no import. Dague, 505 U.S. at 562 (“This language is similar to that of many other federal fee-shifting statutes; our case law construing what is a ‘reasonable’ fee applies uniformly to all of them.” (internal citations omitted)).

5 where the method used in determining the hourly rate employed in the

lodestar calculation does not adequately measure the attorney’s true market

value, as demonstrated in part during the litigation; (2) if the attorney’s

performance includes an extraordinary outlay of expenses and the litigation

is exceptionally protracted; and (3) an attorney’s performance involves

exceptional delay in the payment of fees. Perdue v. Kenny A. ex rel. Winn,

559 U.S. 542, 554–56 (2010).

Since Dague, both state and federal courts have acknowledged the

prohibition against contingency multipliers under federal fee-shifting statutes,

including the MMWA. See Volkswagen of Am., Inc. v. Smith, 690 So. 2d

1328, 1332 (Fla. 1st DCA 1997) (“The trial judge applied a multiplier to

enhance the attorney’s fees awarded to Smith under the [MMWA] claim . . . .

As the court held in [Dague], it is improper to apply a multiplier to enhance

an attorney’s fee if entitlement to fees is based on a fee-shifting statute.”);

First Fed. Sav. & Loan Ass’n of Palm Beaches v. Bezotte, 740 So. 2d 589,

591 (Fla. 4th DCA 1999) (applying Dague and reversing trial court’s

application of multiplier where fee award was granted under federal fee-

shifting statute); see also Hous. Specialty Ins. Co. v. Vaughn, 749 Fed. Appx.

800, 803–04, n.4 (11th Cir. 2018) (affirming trial court’s application of

multiplier to attorney’s fee award pursuant to Florida statute but recognizing,

6 “if this issue were governed by federal law, a contingency fee multiplier would

have been forbidden” (citing Perdue, 559 U.S. at 542; Dague, 505 U.S. at

566–67)).

The Florida Supreme Court has also acknowledged that contingency

multipliers are prohibited under federal fee-shifting statutes. See Joyce, 228

So. 3d at 1131 (“While Perdue did not completely close the door on lodestar

enhancements under federal law, Perdue clarified that Dague had indeed

closed the door on any enhancements based on contingency risk.” (citing

Perdue, 559 U.S. at 558)). The court in Joyce addressed the application of

a contingency multiplier in the context of a state fee-shifting statute and in

doing so, implicitly conceded that if a federal statute were at issue, Dague

would control. See id. at 1132 (“[T]his Court is not bound, in interpreting state

statutes . . . , by United States Supreme Court precedent interpreting awards

of attorney’s fees in federal statutes.” (emphasis added)).

In this case, it appears the trial court recognized this body of law but

failed to apply it, instead finding that Henry was not seeking a contingency

multiplier, but rather an “hourly rate multiplier” pursuant to the standard

articulated in Perdue. We disagree. The testimony at the evidentiary hearing

demonstrated that Henry’s representation was on a contingency basis.

Henry’s counsel acknowledged, “If we don’t win, we don’t get paid.” Henry’s

7 fee expert also testified that the case was taken on a contingency basis and

expressly stated, “[T]here is a factual basis for contingency risk multiplier.”

Additionally, a review of Henry’s motion for attorney’s fees and supplemental

memorandum on the issue establishes that she was seeking a contingency

multiplier pursuant to Florida law, not an hourly rate multiplier or an

enhancement under Perdue.5

The trial court appears to have misunderstood the meaning of a

contingency fee in reaching its conclusion. A contingency fee is not simply

undertaking representation with the understanding that legal fees will consist

of a percentage of the recovery. In consumer cases such as this,

representation on that basis would be uneconomical for lawyers, where the

likelihood of obtaining a substantial money judgment is relatively low.

Representation on a contingency basis also includes representation on an

hourly fee basis where it is understood that the lawyer will seek fees only

5 We also reject Henry’s assertion at oral argument that even if federal law controls, the application of a contingency multiplier should still be affirmed under Perdue. See Joyce, 228 So. 3d at 1131 (noting that “Perdue addressed lodestar enhancements in contexts other than contingency fee multipliers”). Moreover, Henry’s pleadings below focused almost exclusively on the factors articulated in Standard Guaranty Insurance Co. v. Quanstrom, 555 So. 2d 828 (Fla. 1990) and Florida Patient’s Compensation Fund v. Rowe, 472 So. 2d 1145 (Fla. 1985) and the argument that Joyce controlled over Dague.

8 from the adverse party; the client will not be responsible for paying fees in

the event of an unsuccessful lawsuit. 6 See Dague, 505 U.S. at 560–61 (“A

fee is certain if it is payable without regard to the outcome of the suit; it is

contingent if the obligation to pay depends on a particular result’s [sic] being

obtained.”).

Moreover, despite finding that it was applying an hourly rate multiplier

pursuant to Perdue, the trial court (1) did not address the three

circumstances under which Perdue found a multiplier permissible; and (2)

expressly awarded a contingency multiplier of 1.5 pursuant to Joyce. See

Perdue, 559 U.S. at 554–56; Joyce, 228 So. 3d at 1135. It did so even after

conceding that Joyce was distinguishable insofar as that case dealt with a

state fee-shifting statute. As such, the trial court erred in applying a

contingency multiplier to Henry’s fee award.

As to the second issue concerning the trial court’s alleged failure to

reduce Henry’s fee award, our standard of review is abuse of discretion.

Patricia Gail Van Diepen, P.A. v. Brown, 976 So. 2d 38, 39 (Fla. 5th DCA

2008). We find no abuse of discretion in the trial court’s decision not to

If the opposite were true, virtually no client would expend a significant 6

amount of funds for representation only to recover a minimal amount of damages upon prevailing in the suit. Using the circumstances of this case, one would not expect to spend over $100,000 in legal fees to recover a mere $11,000 in damages.

9 reduce the fee award as to Henry’s second attorney or for the motion filings

BMW categorizes as unnecessary. However, we do find the trial court erred

in failing to deduct 2.1 hours for legal work that Henry was unable to detail

or describe.

In conclusion, we find the trial court erred as a matter of law in

determining that Henry was entitled to a contingency multiplier under the

MMWA’s fee-shifting provision. We also find, with one exception, that the

trial court did not abuse its discretion in refusing to reduce Henry’s attorney’s

fee award. Accordingly, on remand the trial court shall eliminate the

contingency multiplier and thereafter reduce the lodestar 7 fee award by

$997.50.8 The resultant attorney’s fee award would be $117,892.50.

AFFIRMED IN PART, REVERSED IN PART AND REMANDED.

LAMBERT, C.J., EVANDER and COHEN, JJ., concur.

7 See Rowe, 472 So. 2d at 1150–51.

Henry’s lead counsel’s hourly rate was found to be $475, which 8

amounts to $997.50 when multiplied by 2.1 hours.