United States Court of Appeals,
Eleventh Circuit.
No. 95-3216.
FOODTOWN, INC. OF JACKSONVILLE, a Florida Corporation, Plaintiff-
Appellant,
v.
ARGONAUT INSURANCE COMPANY, a foreign corporation, Argonaut-
Midwest Insurance Company, a foreign corporation, Defendants-
Appellees,
Travelers Express, Movant.
Dec. 30, 1996.
Appeal from the United States District Court for the Middle
District of Florida. (No. Wm. Terrell Hodges, Judge.
Before TJOFLAT and COX, Circuit Judges, and VINING*, Senior
District Judge.
PER CURIAM:
Foodtown, Inc. of Jacksonville ("Foodtown") appeals the
district court's order awarding attorneys' fees to Foodtown
pursuant to a Florida fee-shifting statute, section 627.428,
Florida Statutes.1 The district court determined the maximum
amount of attorneys' fees it could award based solely on a written
contingent fee agreement between Foodtown and its attorneys and
refused to recognize a different oral agreement between those two
parties. We affirm.
*
Honorable Robert L. Vining, Jr., Senior U.S. District Judge
for the Northern District of Georgia, sitting by designation.
1
Foodtown also appeals the district court's order relating
to damages. In that order, the court denied Foodtown's claim for
income loss under its insurance policy and for consequential
damages allegedly resulting from a denial of its insurance claim.
Pursuant to 11th Cir.R. 36-1, we affirm that order without
discussion.
I. BACKGROUND
In 1989, a fire damaged Foodtown's grocery store. After
Foodtown's insurer, Argonaut-Midwest Insurance Company
("Argonaut"), denied coverage for Foodtown's losses resulting from
the fire, Foodtown hired a law firm to represent it in a claim
against Argonaut. As compensation for representation, Foodtown and
the law firm orally agreed that the law firm would receive the
greater of either a sliding scale percentage of any recovery it
obtained for Foodtown or a court-determined reasonable amount.2
Although this particular agreement was not reduced to writing,
Foodtown and the law firm did sign a written agreement which stated
that as compensation for representation, the law firm would receive
a sliding scale percentage of any recovery it obtained for
Foodtown.
Subsequently, the law firm assumed representation and filed
suit against Argonaut. Following a non-jury trial, the district
court found that Foodtown was entitled to both recovery under its
insurance policy and attorneys' fees under section 627.428. The
court then referred the specific issue concerning the amount of
attorneys' fees to the magistrate judge.
To calculate the maximum amount of attorneys' fees to which
Foodtown would be entitled under its fee agreement with the law
firm, the magistrate judge examined the oral and written agreements
and determined that the oral agreement violated the Florida ethical
2
Under this type of agreement, a court may apply a
contingent risk multiplier and award reasonable attorneys' fees
which exceed the amount of the fees under the
percentage-of-recovery alternative. See Kaufman v. MacDonald,
557 So.2d 572, 573 (Fla.1990).
rule requiring that contingent fee agreements be in writing. For
this reason, the magistrate judge refused to enforce the oral
agreement, adding that "[t]o enforce oral contingent fee agreements
in the fee-shifting context would needlessly expend scarce judicial
resources to determine the actual terms of the agreement despite a
clear written agreement which provides otherwise. There is also a
great potential for abuse...." R. 7-204-16.
After refusing to recognize the oral agreement, the magistrate
judge employed the written agreement to set the maximum amount of
fees and recommended that the amount of fees be equal to this
maximum amount; specifically, 40% of recovery as prescribed by the
written agreement's sliding percentage scale. Over Foodtown's
objections, the district court adopted the recommendation.
Foodtown appeals that decision, contending that the oral and
written agreements together substantially comply with the Florida
ethical rule governing contingent fee agreements and therefore the
district court erred in setting the maximum amount of fees
according to the written agreement alone. Alternatively, Foodtown
contends that the written and oral agreements together make up one
indivisible fee contract and the district court should not have
enforced any part of that contract after refusing to enforce the
oral portion. Instead, Foodtown argues that the district court
should have determined attorneys' fees using the lodestar method.
Argonaut contends that the oral agreement violated the Florida
ethical rule requiring that contingent fee agreements be in writing
and therefore should be unenforceable as against public policy.
Further, Argonaut contends that the district court properly
recognized the written agreement as divisible from the
unenforceable oral agreement to determine the maximum amount of
fees.
This court must decide whether the district court properly
refused to recognize the oral agreement, and, if so, whether the
court properly employed the written agreement to establish the
maximum amount of attorneys' fees it could award.3
II. DISCUSSION
This court reviews an attorneys' fee award for abuse of
discretion. Clark v. Housing Auth. of City of Alma, 971 F.2d 723,
728 (11th Cir.1992). Nevertheless, "that standard of review still
allows us to closely scrutinize questions of law decided by the
district court in reaching [the] fee award." Id.
A fee agreement entered into between a prevailing party and
its attorneys does not substantially control a court's
determination of reasonable fees to be awarded under fee-shifting
statutes such as section 627.428. Florida Patient's Compensation
Fund v. Rowe, 472 So.2d 1145, 1151 (Fla.1985). Rather, the fee
agreement merely establishes the maximum amount that the court can
award. Id.
In this case, the district court refused to recognize the
oral fee agreement between Foodtown and its attorneys which avoided
setting a maximum amount by providing for attorneys' fees based on
the higher of either a percentage of recovery or court-determined
amount. We conclude that the district court properly refused to
3
Argonaut does not argue that Foodtown is not entitled to
the maximum amount determined by the written contingent fee
agreement.
recognize the oral agreement under Chandris, S.A. v. Yanakakis, 668
So.2d 180 (Fla.1995).
In Chandris, the Florida Supreme Court held that "a contingent
fee [agreement] entered into by a member of the Florida Bar must
comply with the rule governing contingent fees in order to be
enforceable.... [T]he requirements for contingent fee [agreements]
are necessary to protect the public interest." Id. at 186. Under
the rule governing contingent fees, a contingent fee agreement
"must be reduced to a written contract" and "each participating
attorney or law firm [must] sign the contract or agree in writing
to be bound by the terms of the written contract with the
client...." R. Regulating Fla. Bar 4-1.5(f)(1), (2). Because the
oral agreement between Foodtown and the law firm violated the rule
governing contingent fees, the district court properly refused to
recognize it.
After refusing to recognize the oral agreement, the district
court limited the amount of attorneys' fees to the maximum amount
set forth in the written agreement. In so doing, the district
court properly employed the clear, enforceable, written contract
between the parties which complied fully with the rule governing
contingent fee agreements. As stated inMedical Center Health Plan
v. Brick, 572 So.2d 548, 551 (Fla.Dist.Ct.App.1990), "[a] party is
bound by ... the clear and unambiguous terms of a voluntary
contract."
We reject Foodtown's contention that the district court should
not have employed the written agreement after finding the oral
agreement unenforceable. As the magistrate judge recognized, a
great potential for abuse would arise in the fee-shifting context
(where the party paying the fee has not participated in making the
fee agreement) if the court refused to recognize a clear,
enforceable, written agreement because of the existence of an
unenforceable oral agreement. Further, the Florida Supreme Court's
Chandris decision leaves no doubt that a law firm which does not
ensure that an oral contingent fee agreement is included in its
written contingent fee agreement does so at its own risk. See
Chandris, 668 So.2d at 185-86.
III. CONCLUSION
Finding that the district court did not abuse its discretion
for the above reasons, we affirm the district court's order
relating to attorneys' fees.
AFFIRMED.