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Legal Updates for Lawyers' Professional Liability

Seismic Changes May Soon Be Coming to Florida Statutes for Comparative Negligence, Lodestar Fee, Statute of Limitations and One-Way Attorney’s Fees Against Insurers

Legal Updates for Lawyers’ Professional Liability – April 2023

April 1, 2023

by Jonathan E. Kanov

With the support of Governor Ron DeSantis, Florida House Bill 837 was filed on February 15, 2023, which would bring comprehensive reforms to civil litigation in Florida. In an attempt to try to stomp out Florida’s notoriety as being one of the nation’s leaders in frivolous lawsuits, this legislation would dramatically change the state’s framework for comparative negligence, lodestar fees, statute of limitations and one-way attorney’s fees against insurers. “For decades, Florida has been considered a judicial hellhole due to excessive litigation and a legal system that benefitted the lawyers more than people who are injured,” said Governor DeSantis. “We are now working on legal reform that is more in line with the rest of the country and that will bring more businesses and jobs to Florida.” The bill also has the support of Florida Senate President Kathleen Passidomo and House Speaker Paul Renner. 
 
Florida Statute 768.81, which addresses comparative fault, would be amended to read that for negligence actions, “any party found to be greater than 50 percent at fault for his or her own harm may not recover any damages.” Under current law, a plaintiff could still obtain a recovery even if a jury found him or her to be primarily at fault. For example, a plaintiff who is found to be 80% responsible by a jury can be awarded 20% of the damages based on an allocation of fault. With the new law, that same plaintiff would be barred from recovery, as would any plaintiff found to be at least 51% liable for their damages. 
 
To calculate an attorney’s fee award, Florida courts follow the lodestar method established by the federal courts. Fees are calculated using the number of attorney hours reasonably expended multiplied by the reasonable hourly rate. However, courts may decide that the lodestar figure is insufficient and award a multiplier of between 1.5 to 3.0 in light of the contingency risk. The proposed revised Fla. Stat. 57.104, titled “Computation of Attorney Fees,” would create a “strong presumption that a lodestar fee is sufficient and reasonable” in any action in which attorney’s fees are awarded by the court. This presumption may only be overcome “in a rare and exceptional circumstance with evidence that competent counsel could not otherwise be retained.” If passed, plaintiffs’ attorneys will no longer regularly see fee awards that are doubled or tripled. 
 
House Bill 837 would reduce the statute of limitations for negligence actions from four years to two years in Fla. Stat. 95.11. This would result in all negligence actions having the same time limitations as the current more restrictive two-year period to bring a professional malpractice action (other than medical).
 
Additionally, the bill would eliminate one-way attorney’s fees in lawsuits against insurers, which provide for a fee award to a plaintiff who obtains a judgment against an insurer, no matter how small. One-way attorney’s fees were eliminated last year by the Florida Legislature for lawsuits against property insurers, and the new law would expand that prohibition to all lines of insurance. 
 
The House Civil Justice Subcommittee voted to approve the bill, and it moved forward in the legislative session started on March 7, 2023. 
 

 

Legal Update for Lawyers’ Professional Liability – April 2023 is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2023 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.

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Ohio Supreme Court Holds That a Binding Appraisal Award May Not Be Set Aside Absent Specific Evidence of Manifest Mistake or Fraud

On July 23, 2026, the Ohio Supreme Court issued a rare opinion on the binding effect of an appraisal award in a property insurance policy.  The Court in One Church held: A binding appraisal award will not be set aside unless an error is so palpably wrong that it undermines the intent of the agreement, such as corruption or gross mistake, not a mere error of judgment—To plead a claim of mistake with particularity as required by Civ.R. 9(B), facts alleged in a complaint must constitute the elements of mistake—Allegation that additional, hidden damage was discovered after appraisal award failed to state a claim of mistake that could justify setting aside binding appraisal.  The case arose out of a claim brought by One Church against its insurer, Brotherhood Mutual Insurance Company for roof damage from a storm. Pursuant to the terms of the insurance policy, the parties agreed to submit the matter to appraisal. The two appraisers inspected the building, and both appraisers agreed that the damages were $313,271.98. The insurer paid the agreed appraised amount.  Thereafter, the insured submitted a claim for an additional $206,663.09 in damages. The insured argued that these additional damages were not discovered until after the repairs began, and that they should be permitted to submit an additional claim, even though there had already been a binding appraisal of damages. The insurer refused to pay the additional damages, and the insured sued for breach of contract and bad faith.  In the trial court, the insurer moved to dismiss for failure to state a claim, arguing that the binding appraisal award barred any further claims. The insured took the position that additional hidden damages could not be discovered until after the repairs began, and therefore there was a mutual mistake. The trial court dismissed the case on the insurer’s motion, because there was no “evidence of fraud, misfeasance, or mistake”. The Court of Appeals agreed that appraisal awards are generally binding, but noted that an appraisal award can be set aside for fraud or manifest mistake. The Court of Appeals reversed and remanded the case to the trial court, finding that the insured had pled mistake with sufficient particularity. The insurer appealed to the Ohio Supreme Court. On appeal, the Ohio Supreme Court reversed the Court of Appeals, and reinstated the trial court decision dismissing the case for failure to state a claim upon which relief can be granted. The Supreme Court found that since the insured had already demanded appraisal, and the appraisal award was binding, “something more than error of judgement, such as corruption in the arbitrator, or gross mistake” must be pled with particularity, and proven for the insured to override the appraisal award. Since the complaint did not allege fraud or manifest mistake with sufficient particularity, something more than a mere error of judgment, the complaint was insufficient to state a claim.  The complaint in this case did not challenge the appraisal award. It pled that additional damages were discovered that were not apparent when the appraisal was done. It did not specify “who discovered the damages, how they were discovered, where they were found, why they were previously hidden, or why they rise to the level of a manifest mistake that the “appraiser would have corrected...had it been called to his attention”. Id at ¶22 citing Lakewood Mfg. Co. v. Home Ins. Co. of New York, 422 F.2d 796, 798 (6th Cir. 1970). Cases deciding the effect of appraisal awards are unusual. The Ohio Supreme Court’s decision in One Church relies primarily on 19th century case law for its conclusion. This emphasizes the fact that there is minimal case law deciding the effect of binding appraisal clauses in property insurance policies, and makes this case all the more significant. A lengthy dissent was written by Justice Fisher, who would have affirmed the Court of Appeals decision reversing and remanding the case for a decision on the merits. Of course, the decision works both ways, and an insurer dissatisfied with a binding appraisal award will likewise be without further recourse absent evidence of corruption, fraud, misfeasance, or manifest mistake, which must be pled with particularity. To constitute manifest mistake, “the mistake must be of such character that the arbitrator or appraiser would have corrected it had it been called to his attention.”  Lakewood Mfg. Co. v. Home Ins. Co. of New York, 422 F.2d 796, 798 (6th Cir. 1970).  The majority opinion does not specifically identify what would have been sufficient to plead mistake with particularity, or if the insured could have amended the complaint to overcome the deficiencies. The dissent argues that this was not really a case alleging mistake, but rather a question of contract interpretation. The insured did not challenge the appraisal, but argued that the hidden damage was not part of the appraisal, and the appraisal only covered the known damages.  However, this argument did not carry the day with the majority.  *Thomas F. Glassman, a shareholder in Marshall Dennehey’s Cincinnati office, filed a brief in the Ohio Supreme Court on behalf of the Ohio Association of Civil Trial Attorneys, in support of the insurer’s position.

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