[W] Bennett v. Morales3/21/2003
OPINION WITHDRAWN and new opinion filed May 23, 2003.
JARRATT G. BENNETT, ETC., ET AL., APPELLANTS/CROSS-APPELLEES,
v.
SUSAN MORALES, N/K/A SUSAN HOWELL, ET AL., APPELLEE/CROSS-APPELLANTS.
Appeal from the Circuit Court for Orange County, Frederick Pfeiffer, Senior, Judge.
Stephen M. Masterson and Lisa J. Augspurger of Bush, Augspurger, & Lynch, P.A., Orlando, for Appellants/Cross-Appellees.
David H. Simmons and Kenneth P. Hazouri of Drage, de Beaubien, Knight, Simmons, Mantzaris & Neal, Llp Orlando, for Appellee/Cross-Appellant.
The opinion of the court was delivered by: Sharp, W., J.
This is an appeal and cross-appeal of final judgments for attorneys fees and costs in which Susan Howell (Howell) was awarded $540,037.72 in attorneys fees and $24,284.27 in costs from IFG Network Securities, Inc. (IFG); and $55,675 in costs from Jarratt G. Bennett (Bennett), after she prevailed in a securities fraud case. We affirm in part, reverse in part, and certify a question of public importance to the Florida Supreme Court.
In April of 1990, Howell recovered $629,000 in a Virginia medical malpractice action based on her doctor's failure to diagnose an infection, which resulted in her becoming permanently disabled. She invested $580,000 of this money through Bennett, for the purpose of having additional income. Bennett was a registered broker/dealer agent who periodically changed his affiliation with different firms. He eventually became affiliated with IFG. Howell's account followed Bennett through these various changes, and was eventually transferred to IFG.
In 1997, Howell consulted with a representative from Dean Witter and discovered that the value of her account value had fallen to $350,000. She transferred her account to Dean Witter and sued, inter alia, Bennett and IFG, alleging they had engaged in questionable investing practices, which included overreaching, and Bennett's repositioning Howell into risky investments that paid large commissions.
The trial court based the attorney fee award on a demand for settlement made by Howell, pursuant to section 768.79 and Florida Rule of Civil Procedure 1.442, and it applied a 2.5 contingency risk multiplier. See Standard Guaranty Ins. Co. v. Quanstrom, 555 So. 2d 828 (Fla. 1990), modifying, Florida Patient's Compensation Fund v. Rowe, 472 So. 2d 1145 (Fla. 1985).
Appellants make various challenges to this award. They cite to our holding in Allstate Ins. Co. v. Sarkis, 809 So. 2d 6 (Fla. 5th DCA 2001), rev. granted, 806 So. 2d 992 (Fla. 2002), and raise new questions about interpretation of the factors surrounding the application of the contingency risk multiplier. In Allstate v. Sarkis, we held that a contingency risk multiplier should not be used to compute attorney's fees in an offer of judgment case. We are bound by that decision. Based on Sarkis, we hold the allowance of attorney's fees pursuant to section 768.79 was error, and we decline the parties' invitation to consider the findings and factors surrounding the imposition of the risk multiplier. However, we re-certify this issue to the Florida Supreme Court for resolution in accordance with its granting review in Allstate v. Sarkis, and conflict with the Fourth District. See Island Hoppers, Ltd. v. Keith, 820 So. 2d 967 (Fla. 4th DCA 2002).
Appellants also argue that section 768.79 should not be applied because the parties agreed the substantive law of Virginia applied to this cause and the award of fees is substantive, not procedural. On this poin
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