It is not Constitutionally Permissible for the Florida Legislature to Limit the Amount of Attorneys’ Fees Paid from a Guardianship Trust Established by a Legislative Claims Bill

Posted on October 9, 2017

In Grossman Roth, P.A. v. Mellen, 221 So.3d 683, (Fla. 4th DCA 2017), the District Court of Appeal, held that a claims bill’s limitation on the amount of attorneys’ fees paid from settlement unconstitutionally impaired the preexisting contract between the client and the law firm. After the legislature passed a legislative claims bill authorizing payment to the client who had settled a medical malpractice action against a hospital for $3 million but limited the law firm’s attorneys’ fees, the client brought an action for declaratory judgment seeking an award of the disputed funds which the firm had placed in escrow. The law firm then counterclaimed for a declaratory judgment asserting the unconstitutionality of the fee limitation provision of the claims bill. The Circuit Court of Broward County entered judgment in favor of the client and the law firm appealed.

The law firm was retained by Kristi Mellen, individually and as personal representative of the Estate of Michael Munson, in a medical malpractice action against a hospital. The parties entered into a contingency fee contract under which Mellen agreed to pay the firm an amount based on her gross recovery. The contract specifically cited the twenty-five percent contingency fee limitation of Section 768.28(8), Florida Statutes (2008) and stated “Certain claims against governmental entities may have statutory limits on attorney’s fees. In all cases the attorney’s fees will be the maximum amount permitted under law or by the Courts.”

Since the hospital is a state entity it enjoyed a sovereign immunity damages limitation of $200,000 per incident or occurrence under section 768.28(5), Florida Statutes (2008). Section 768.28(5) permits a claimant to seek recovery of a judgment exceeding this amount from the Florida Legislature. Such recovery may be sought through a claims bill, but pursuant to the Rules of Senate, such a bill may not be heard or considered by the Senate “until all available administrative and judicial remedies have been exhausted.” Fla. S. Rule 4.81(6) (2012). The Hospital agreed to settle the matter for $3,000,000 and to support the passage of a claims bill by the Legislature to effectuate recovery. The trial court then entered final judgment for $3 million against the hospital, ordered tender of the $200,000 statutory limit, and entered an order approving the settlement including the 25% payment of attorney’s fees and costs. The firm then obtained the claims bill on Mellen’s behalf and Mellen was awarded the remaining $2,800,000, but the claims bill included a limit on the attorney’s fees to a total of $290,000 and provided that taxable costs may additionally be recovered.

The law firm disputed the legislatively imposed fee limitation and the client agreed to the firm holding the $410,000 of fees in dispute in escrow pending a settlement. Mellen then brought an action for declaratory judgment for the award of the escrow balance and the firm counterclaimed seeking a declaratory judgment holding that the fee limitation provision of the claims bill as unconstitutional. The DCA found that when the trial court entered judgment in favor of Mellen it did not have the benefit of the Florida Supreme Court’s recent opinion in Searcy, Denney, Scarola, Barnhart & Shipley, etc. v. State, 209 So.3d 1181 (Fla. 2017), which in reference to Section 768.28 held “that the valid portion of the act may be severed from the invalid portion and still accomplish the beneficial purpose of the act in providing compensation due to the injured child” and quashed this court’s opinion. The Supreme court cited that when read collectively, “the Legislature intended in section 768.28(8) to allow fees to be charged, demanded, received, or collected up to 25 percent of the judgment amount when payment is ordered by the circuit court, as well as when payment of all or part of that judgment is ordered by the Legislature in a claims bill, as expressly provided for in section 768.28(5).” The Supreme Court also found that the fee limitation in the claims bill at issue constitutionally impaired the preexisting contract between Searcy Denney and the claimant.

The 4th District Court of Appeals therefore held that Searcy, Denney is the controlling precedent in the instant case and consequently reversed and remanded it back to the trial court to rule in accordance therewith. Essentially, the court ruled that the contingency agreement included language that was controlling in terms of the amount of attorneys’ fees to be awarded.

If you or anyone you know is in need of representation in actions involving Guardianship, Probate and/or Trust Disputes, or questions pertaining to such proceedings, please contact The Law Offices of Glenn M. Mednick, P.L., at (954) 315-1154 or gmednick@mednicklawgroup.com.

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