Trial Practices, Inc. v. Hahn Loeser & Parks, LLP ( 2017 )


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  •                NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING
    MOTION AND, IF FILED, DETERMINED
    IN THE DISTRICT COURT OF APPEAL
    OF FLORIDA
    SECOND DISTRICT
    TRIAL PRACTICES, INC.,                       )
    )
    Appellant,                     )
    )
    v.                                           )         Case Nos. 2D13-6051
    )                   2D14-86
    HAHN LOESER & PARKS, LLP, as                 )
    substitute party for Jack J. Antaramian,     )             CONSOLIDATED
    )
    Appellee.                      )
    )
    Opinion filed April 12, 2017.
    Appeals from the Circuit Court for
    Hillsborough County; Herbert J. Baumann,
    Jr., Judge.
    G. Donovan Conwell, Jr. of Conwell
    Business Law, P.A., Tampa, for Appellant.
    Edmond E. Koester of Coleman,
    Yovanovich & Koester, P.A., Naples, for
    Appellee.
    MORRIS, Judge.
    Trial Practices, Inc. (TPI), appeals a final judgment awarding attorneys'
    fees, costs, and prejudgment interest to Hahn Loeser & Parks, LLP (Hahn), as
    substituted for Jack J. Antaramian, who is deceased. The underlying litigation began
    when TPI brought suit against Antaramian to recover fees it alleged it was owed for
    various trial support services that TPI provided to Antaramian in his suit against a third
    party. Antaramian successfully defended against TPI's suit, and as a result, he sought
    prevailing party attorneys' fees and costs in the trial court.1 Ultimately, the trial court
    awarded him prevailing party attorneys' fees, costs, and prejudgment interest.
    On appeal, TPI argues that the trial court erred by awarding attorneys'
    fees and costs for litigating the amount of attorneys' fees. As will be discussed herein,
    we disagree with that argument and we therefore affirm that portion of the award. TPI
    also argues that Hahn is not entitled to prevailing party attorneys' fees because
    Antaramian improperly paid expert witness fees to fact witnesses. And TPI challenges
    the inclusion of overhead expenses within the cost award. While we find no error in the
    trial court's ultimate conclusion regarding the propriety of payments to the fact witnesses
    or in the trial court's award of costs for overhead expenses to Antaramian's attorneys,
    we conclude that the trial court's failure to itemize an award of $317,873.64 within the
    overall cost award requires reversal. We also agree with TPI that the trial court erred in
    awarding prejudgment interest running from the time the attorneys' fees and costs were
    incurred rather than from the time when they were awarded. Additionally, it is unclear
    whether the prejudgment interest award was based, in part, on disallowed office
    overhead expenses. Consequently, we must reverse the trial court's prejudgment
    interest award. We affirm all other issues without further comment.
    1Antaramian  also successfully defended on appeal and was awarded
    appellate attorneys' fees by this court due to his status as the prevailing party. See Trial
    Practices, Inc. v. Antaramian, 
    97 So. 3d 228
    (Fla. 2d DCA 2012) (table decision).
    -2-
    BACKGROUND
    In August 2005, TPI entered into its contract with Antaramian to perform
    litigation support services in Antaramian's lawsuit against a third party (the "Consulting
    Agreement"). TPI was required to assist Antaramian and his counsel in preparing for
    trial and in presenting the case during trial. The Consulting Agreement required
    Antaramian to compensate TPI five percent of any gross recovery that Antaramian
    obtained as a result of a verdict in his favor or settlement. Ultimately, Antaramian and
    the third party settled the lawsuit with each party agreeing to drop their claims against
    the other party. Thereafter, Antaramian refused to pay TPI the five percent fee pursuant
    to the Consulting Agreement under the theory that Antaramian did not obtain a gross
    recovery and, therefore, did not owe anything to TPI.
    In June 2006, TPI sued Antaramian for breach of the Consulting
    Agreement. The issue to be decided was whether Antaramian obtained a gross
    recovery through his settlement with the third party thereby obligating him to pay TPI its
    fee. The jury returned a verdict in favor of Antaramian. TPI appealed, but this court
    affirmed the final judgment.
    Antaramian then sought prevailing party attorneys' fees and costs
    pursuant in part to a provision in the Consulting Agreement. The provision provided in
    relevant part that the
    prevailing party in any action arising from or relating to this
    agreement will be entitled to recover all expenses of any
    nature incurred in any way in connection with the matter,
    whether incurred before litigation, during litigation, in an
    appeal, . . . or in connection with enforcement of a judgment,
    including, but not limited to, attorneys' and experts' fees.
    -3-
    Antaramian sought $2,551,796.26, exclusive of prejudgment interest. After a hearing,
    the trial court granted Antaramian's motion, though in a reduced amount of
    $2,004,432.58. The trial court also awarded prejudgment interest in the amount of
    $462,709.81 "from the date the attorneys' fees and costs were incurred." Thus the total
    award was $2,467,142.39.
    In making the award, the trial court found that the majority of Antaramian's
    witnesses were fact witnesses and that Antaramian had improperly paid them as if they
    were expert witnesses, which was prohibited by section 92.142(1), Florida Statutes
    (2013). The trial court also found that the prevailing party provision in the Consulting
    Agreement did not entitle Antaramian to recover the full amount paid to the fact
    witnesses because TPI could not have foreseen that Antaramian would have paid the
    witnesses at a rate higher than what they were entitled to be compensated. However,
    the court noted that the fact witnesses also "assisted in both case and discovery
    preparation" thereby rendering them consulting experts. Consequently, the trial court
    permitted Antaramian to recover "certain fees charged." Those fees were apparently
    part of a $317,873.64 cost award.
    Additionally, the trial court found that Antaramian could recover attorneys'
    fees and costs for his attorneys' litigation of the issues of entitlement to and the amount
    of attorneys' fees and costs. The trial court explained that the attorneys' fees and costs
    provision in the Consulting Agreement was broad enough to encompass such an award.
    The trial court also found that Antaramian was entitled to recover his costs
    incurred in connection with the action, but the court noted that the Consulting
    Agreement did not extend so far as to require payment for "an 'overhead allocation' of
    -4-
    [Antaramian's] staff and rent paid on [his] behalf." While the trial court awarded
    separate cost awards for various attorneys who represented Antaramian, TPI contends
    that the $317,873.64 cost award erroneously includes or at least fails to indicate
    whether it includes $255,000 of Antaramian's office overhead expenses which the trial
    court expressly disallowed.
    ANALYSIS
    I.     Award of Attorneys' Fees and Costs for Litigating the Amount of
    Attorneys' Fees and Costs
    TPI challenges the award of $40,346 which was the portion of the final
    judgment attributed to Antaramian's attorneys' litigation of the issue of the amount of
    attorneys' fees and costs. TPI contends that Antaramian was not entitled to recover
    attorneys' fees and costs for litigating the amount of fees to be recovered,2 even though
    a fee-shifting provision in the parties' contract provides that such fees and costs may be
    recovered.
    Both the Florida Supreme Court and this court have recognized that when
    parties are seeking attorneys' fees pursuant to a statute, the parties are not necessarily
    entitled to recover attorneys' fees for litigating the amount of fees. See, e.g., State Farm
    Fire & Cas. Co. v. Palma, 
    629 So. 2d 830
    , 833 (Fla. 1993); Wight v. Wight, 
    880 So. 2d 692
    , 694 (Fla. 2d DCA 2004). However, in this case, the attorneys' fees and costs were
    not awarded pursuant to a statute but were instead awarded pursuant to the fee-shifting
    provision in the Consulting Agreement. And we agree with the trial court that the
    provision was broad enough to encompass the award of fees and costs for litigating the
    2TPI   presents no argument on the propriety of awarding attorneys' fees
    and costs for litigating entitlement to attorneys' fees. Since there is no dispute on this
    issue, we do not address it.
    -5-
    amount of attorneys' fees. Parties may "freely contract on the issue of attorney[s'] fees,"
    Precision Tune Auto Care, Inc. v. Radcliffe, 
    815 So. 2d 708
    , 710 (Fla. 4th DCA 2002),
    and we will not rewrite a contract in order to relieve TPI of the result of its obligation
    under the Consulting Agreement, see Beach Resort Hotel Corp. v. Wieder, 
    79 So. 2d 659
    , 663 (Fla. 1955).
    We are not persuaded by the cases cited by TPI: Oquendo v. Citizens
    Property Insurance Corp., 
    998 So. 2d 636
    , 638 (Fla. 3d DCA 2008), Paladyne Corp. v.
    Weindruch, 
    867 So. 2d 630
    , 634 (Fla. 5th DCA 2004), and Mangel v. Bob Dance
    Dodge, Inc., 
    739 So. 2d 720
    , 723-24 (Fla. 5th DCA 1999). In those cases, the parties
    seeking the awards of fees relied on retainer agreements with their attorneys as the
    basis for their recovery of fees from the opposing parties. But here, Antaramian did not
    rely on a retainer agreement with his counsel as the basis for recovery of attorneys' fees
    and costs. Rather, he relied on the Consulting Agreement, which was an agreement
    between himself and TPI. As already discussed herein, the Consulting Agreement
    includes a very broad fee-shifting provision which permits an award of fees that were
    incurred by the prevailing party in any matter that is connected with the Consulting
    Agreement.
    We find Waverly Las Olas Condominium Ass'n v. Waverly Las Olas, LLC,
    
    88 So. 3d 386
    (Fla. 4th DCA 2012), to be instructive to our case. In Waverly, a tenant
    sued a condominium association in a dispute over parking spaces, and the association
    filed a third-party complaint against the developer. 
    Id. at 387.
    After the third-party
    complaint was dismissed, the developer sought prevailing party attorneys' fees against
    the association pursuant in part to an agreement between the developer and the
    -6-
    individual unit owners. 
    Id. As part
    of the fee request, the developer sought to recover
    fees that were expended on litigating the amount of fees. 
    Id. at 388.
    Because the trial
    court concluded that the association's claims were all inextricably intertwined with one
    set of core facts, the trial court awarded all fees incurred to the developer, including fees
    for time spent on litigating the amount. 
    Id. On appeal,
    the Fourth District upheld the fee award. The Fourth District
    explained that "[t]he various third-party complaints focused on a common core set of
    facts" and that although it might have been possible to apportion the fees between the
    breach of contract claims and the other claims, "the broad language in the fee provision
    contemplates its application to more than breach of contract claims." 
    Id. Specifically, the
    fee provision at issue in Waverly "provided for an award of fees for 'any litigation
    between the parties under this Agreement.' " 
    Id. The Fourth
    District also upheld the
    trial court's decision to award fees for litigating the amount of attorneys' fees. The court
    concluded that the contractual provision was "broad enough to encompass fees
    incurred in litigating the amount of fees." 
    Id. at 389
    (footnote omitted). In doing so, the
    court distinguished Palma on the basis that it involved a request for fees pursuant to a
    statute. 
    Id. Similarly here,
    the fee-shifting provision was drafted in such a way that it
    broadly encompassed all claims that were connected in any way to the Consulting
    Agreement. Further, the fee-shifting provision permitted recovery of "all expenses of
    any nature incurred in any way" including attorneys' fees. Consequently, as the Fourth
    District did in Waverly, we conclude that the language in the fee-shifting provision was
    "broad enough to encompass fees incurred in litigating the amount of fees." 
    Id. We -7-
    hold that the trial court did not err in including an award of attorneys' fees and costs for
    time spent on litigating the amount of fees.
    II.    The Cost Award's Inclusion of Recoverable Payments to Fact
    Witnesses for Trial Testimony and Possible Inclusion of
    Antaramian's Office Overhead Expenses
    TPI argues that payment to the fact witnesses of more than $5 per day
    violates section 92.142(1) and constitutes sanctionable conduct. Thus TPI contends
    that the trial court should have rejected Antaramian's total request for prevailing party
    attorneys' fees and costs based on this alleged misconduct. TPI also asserts that
    payment of prevailing party attorneys' fees and costs under these circumstances was
    not reasonably contemplated by the parties at the time they entered into the Consulting
    Agreement. TPI further contends that the trial court's award of costs improperly
    included Antaramian's office overhead expenses.
    Below, the trial court agreed that attorneys who testify at trial as fact
    witnesses are not entitled to the same hourly fee as an expert witness and, instead, that
    they are entitled only to $5 per day, the amount of witness compensation provided for in
    section 92.142. The trial court also agreed that the fee-shifting provision in the
    Consulting Agreement did not entitle Antaramian to recover the full amount paid to the
    attorney witnesses because TPI could not have foreseen that the witnesses would have
    been paid at a rate higher than that to which they were entitled. However, the trial court
    did permit recovery of "certain fees charged" by the witnesses to the extent that they
    "also assisted in both case and discovery preparation."
    At the time of trial, rule 4-3.4(b) of the Rules Regulating the Florida Bar
    provided that a lawyer could pay the following expenses of witnesses: "reasonable
    -8-
    expenses incurred by the witness in attending or testifying at proceedings; a
    reasonable, noncontingent fee for professional services of an expert witness; and
    reasonable compensation to reimburse a witness for the loss of compensation incurred
    by reason of preparing for, attending, or testifying at proceedings." Subsequently, in
    2014, the rule was amended to omit the reference to payment for loss of compensation.
    The relevant portion of the rule now provides that a lawyer may pay "reasonable
    compensation to a witness for time spent preparing for, attending, or testifying at
    proceedings." R. Regulating Fla. Bar 4-3.4(b); In re Amendments to the Rules
    Regulating the Fla. Bar, 
    140 So. 3d 541
    , 566-67 (Fla. 2014).3 While the amended rule
    does not govern this case, we emphasize that neither version of the rule makes it
    unethical or illegal for a party to pay fact witnesses reasonable compensation for their
    preparation for, attendance at, or testimony at trial.
    In this case, Antaramian requested $715,467.61 for legal expenses,
    litigation support, lodging, fuel, and airfare as listed in the spreadsheet attached to the
    affidavit of Robert Frazitta, Antaramian's controller. Of this amount, $255,000 appears
    to be litigation support expenses as incurred by Antaramian Development Corporation
    of Naples (ADCN) which TPI argues were Antaramian's office overhead expenses that
    were nontaxable. This leaves an amount of $460,467.61 in fees, expenses, and costs
    that were charged to Antaramian by other entities for legal services, litigation support,
    3Notably,    while eliminating the portion of the provision that permitted
    payment for the loss of compensation, the court left intact the portion of the rule
    permitting payment of reasonable compensation for the witness's time spent preparing
    for, attending, or testifying at the proceedings. Such payments have long been
    permitted as long as the payment is not conditioned on the content of the testimony.
    See ABA Comm'n on Ethics & Prof'l Responsibility, Formal Op. 96-402 (1996) (titled
    Propriety of Payments to Occurrence Witnesses).
    -9-
    and related charges (such as lodging, fuel, and airfare). However, after considering this
    amount as well as the assistance provided by the fact witnesses in case and discovery
    preparation, the trial court found—consistent with rule 4-3.4(b)—that Antaramian could
    not recover all of the requested costs for the payments to the witnesses. Thus the trial
    court awarded Antaramian costs to recover his payments to the fact witnesses but did
    so in a reduced amount. The trial court awarded $317,873.64 "with . . . respect [to]
    fees, costs[,] and expenses for which Antaramian is indebted or has paid as testified to
    by Robert Frazitta and as introduced at the evidentiary hearing."
    We agree with the trial court's analysis of section 92.142 as well as the
    trial court's conclusion that Antaramian was entitled to recover (as costs) the fees paid
    to witnesses for their assistance with case and discovery preparation. In doing so, we
    reject TPI's argument that Antaramian's conduct of paying the attorney fact witnesses
    anything more than $5 per day constituted illegal conduct that negated his right to
    recover prevailing party attorneys' fees and costs. And to the extent that TPI argues
    that it could not have reasonably foreseen that Antaramian would pay the attorney fact
    witnesses anything more than $5 per day, we likewise reject that assertion based on the
    fact that rule 4-3.4(b) permits the payment of reasonable compensation to witnesses for
    preparing for, attending, and testifying at proceedings.
    However, TPI has raised another argument related to the costs that were
    awarded to Antaramian which requires us to reverse the $317,873.64 cost award. From
    the record before us, we cannot conclude that the award is supported by competent,
    substantial evidence. This is because the trial court failed to itemize the award, and we
    cannot determine which costs the trial court deemed taxable and which it deemed
    - 10 -
    nontaxable. Although the trial court made the finding that Antaramian was not entitled
    to recover costs for " 'overhead allocation' of the normal staff and rent paid" on his
    behalf, the trial court's order also awarded costs to Antaramian as set forth in his
    hearing exhibits 1 and 13. A comparison of the two exhibits reveals that Antaramian's
    prejudgment interest calculation spreadsheet contained figures matching figures on the
    attachment to Frazitta's affidavit and that attachment included Antaramian's office
    overhead expenses. Thus Antaramian's prejudgment interest calculation appears to be
    based on an amount which includes the disallowed office overhead expenses. And if
    the trial court awarded prejudgment interest that was calculated based on amounts that
    included Antaramian's office overhead expenses, that fact necessarily implies that those
    office overhead expenses are part of the cost award itself. Although Antaramian's
    prejudgment interest calculation spreadsheet indicates that there was an adjustment
    made discounting Frazitta's costs, that fact does not save the $317,873.64 cost award.
    Absent an itemization, the award on its face could be interpreted to include costs for the
    disallowed office overhead expenses.4 Similarly, we are unable to discern what portion
    of the award was for the payment to fact witnesses for their trial testimony.
    Where a trial court reviews a motion to tax costs, it "should consider each
    item of cost and determine whether it should be allowed in whole or in part or
    disallowed." Northbrook Life Ins. Co. v. Clark, 
    590 So. 2d 528
    , 528 (Fla. 2d DCA 1991).
    And a trial court's failure to itemize costs, especially where a motion to tax costs is
    denied in part, can result in a reversal. See 
    id. ("Because [the
    appellant] failed to
    4We  acknowledge that the award could also be interpreted to exclude the
    office overhead expenses, but it is precisely because the award could be construed in
    two different ways that renders the award problematic.
    - 11 -
    itemize these costs, there was no way to determine whether they were all taxable.");
    Winn-Dixie Stores, Inc. v. Reddick, 
    954 So. 2d 723
    , 730 (Fla. 1st DCA 2007) (holding
    that the trial court erred by failing to itemize which costs it chose to allow or disallow,
    thereby precluding intelligent appellate review of the awarded costs); Kirkland v.
    Thurmond, 
    519 So. 2d 717
    , 718 (Fla. 1st DCA 1988) (explaining that "unless the trial
    court grants or denies [a] motion to tax costs in its entirety," the trial court "should
    itemize those [costs] allowed and those disallowed[]and the amounts approved for each
    item" in order to facilitate appellate review). Thus, because the trial court failed to
    itemize the $317,873.64 cost award and because it could be construed to include
    disallowed costs, we must reverse this award and remand for the trial court to determine
    which costs were taxable and which costs were nontaxable.
    III.    Challenge to Inclusion of Costs to Counsel for Overhead
    TPI also challenges the various cost awards to Antaramian's attorneys in
    the total amount of $89,415.48 to the extent that the awards include overhead expenses
    such as postage, Westlaw research, office supplies, an iPad, travel expenses,
    telephone calls, courier service, and photocopies. TPI cites cases that stand for the
    proposition that such overhead expenses are nontaxable unless there is evidence that
    they are reasonably necessary to prosecute or defend the case. See Lewis v.
    Thunderbird Manor, Inc., 
    60 So. 3d 1182
    , 1182 (Fla. 2d DCA 2011); Bolton v. Bolton,
    
    412 So. 2d 72
    , 73 (Fla. 2d DCA 1982); Landmark Winter Park, LLC v. Colman, 
    24 So. 3d
    787, 789 (Fla. 5th DCA 2009). However, courts have acknowledged that a party
    may recover overhead expenses as part of a cost award where a contract between the
    parties permits such an award. See In re Amendments to Unif. Guidelines for Taxation
    - 12 -
    of Costs, 
    915 So. 2d 612
    , 614 (Fla. 2005) (recognizing that "guidelines are advisory
    only" and "are not intended to . . . limit the amount of costs recoverable under a
    contract or statute"); Panama City-Bay Cty. Airport & Indus. Dist. v. Kellogg Brown &
    Root Servs., Inc., 
    136 So. 3d 788
    , 788 n.1 (Fla. 1st DCA 2014) ("The parties' contract
    broadly allows for the prevailing party to recover on 'any and all claims[,] actions,
    damages, losses and costs' and 'all costs, expenses, and attorney's fees,' without
    specifying limits, such as those provided under the Statewide Uniform Guidelines of
    Taxation of Costs in Civil Cases."). And here, we construe the fee-shifting provision in
    the Consulting Agreement to be broad enough to include such expenses. Our
    treatment of these overhead expenses—versus Antaramian's personal office overhead
    expenses—is different because the fee-shifting provision here permits the recovery of
    "all expenses of any nature incurred in any way in connection with the matter," and the
    attorneys' overhead expenses as described fall within that definition. But the reason
    why we (and presumably the trial court) concluded that Antaramian's personal office
    overhead expenses were not recoverable is because the expenses related to his staff
    and rent are expenses that exist independently of the action. We find no error in the
    distinct treatment of the types of overhead expenses, and we conclude that the trial
    court did not err in awarding costs related to Antaramian's attorneys' overhead
    expenses that were related to this action.
    IV.    Prejudgment Interest Award
    In awarding prejudgment interest on the award of attorneys' fees and
    costs, the trial court found that the attorneys' fees and costs were an element of
    damages. The trial court therefore found that the interest accrued from the date that the
    - 13 -
    fees and costs were incurred. However, fees awarded pursuant to a prevailing party fee
    provision in a contract are not damages because the party requesting them is not
    entitled to the fees until he becomes the prevailing party, and therefore, interest does
    not accrue prior to the date that entitlement to attorneys' fees is fixed by agreement, an
    arbitration award, or by a court determination. See Butler v. Yusem, 
    3 So. 3d 1185
    ,
    1186 (Fla. 2009); Quality Engineered Installation, Inc. v. Higley S., Inc., 
    670 So. 2d 929
    ,
    930-31 (Fla. 1996). We reject Hahn's argument that entitlement to fees was fixed on
    the date that the Consulting Agreement was signed in this case. While the fee-shifting
    provision is broad and establishes a right to prevailing party attorneys' fees, that right
    was not vested on the date that the Consulting Agreement was signed. Rather, that
    right was established on the date that the trial court determined that Antaramian was the
    prevailing party. Consequently, the trial court erred by awarding prejudgment interest
    running from the date that the fees were incurred rather than from the date that
    Antaramian was deemed to be the prevailing party.
    There is an additional reason for reversal relating to the prejudgment
    interest award. In rendering its order, the trial court expressly relied on Antaramian's
    prejudgment interest calculation spreadsheet. In fact, the trial court's prejudgment
    interest award amount of $462,709.81 is the exact amount of interest listed on
    Antaramian's prejudgment interest calculation spreadsheet. But as we discussed in
    relation to the award of costs, the prejudgment interest calculation spreadsheet appears
    to include the disallowed office overhead expenses as the basis for the prejudgment
    interest calculation, and it is unclear whether the trial court's $317,873.64 cost award
    included all or a portion of Antaramian's disallowed office overhead expenses. If the
    - 14 -
    cost award included such disallowed expenses, then the award of prejudgment interest
    was incorrectly calculated. Accordingly, we reverse the trial court's award of
    prejudgment interest, and we remand for a recalculation of the award running from the
    date that the attorneys' fees and costs were awarded rather than from when they were
    incurred. Additionally, if the trial court's prejudgment interest calculation included
    interest on disallowed office overhead expenses, it should omit that portion of the award
    on remand.
    CONCLUSION
    The trial court correctly determined that Antaramian was entitled to
    recover his attorneys' fees and costs for time spent litigating the amount of attorneys'
    fees. Similarly, the trial court was correct in its finding that Antaramian's fact witnesses
    were entitled to receive compensation for their assistance with case and discovery
    preparation. However, because the trial court failed to itemize the cost award of
    $317,873.64, thereby precluding effective appellate review, we must reverse that
    portion of the cost award and remand for further proceedings. We likewise reverse the
    prejudgment interest award because the trial court erred in its method of calculation and
    because it is unclear if the interest award is based, in part, on disallowed office
    overhead expenses. In all other respects, we affirm.
    Affirmed in part, reversed in part, and remanded for further proceedings.
    WALLACE and SLEET, JJ., Concur.
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