Thought Leadership

Alan Little and Bath & Kitchen Boutique, LLC (BKB) entered into an agreement wherein BKB would design and renovate Little’s master bathroom. A portion of BKB’s work failed to pass city inspections, after which the parties executed a contract amendment giving BKB additional time to pass final inspection and establishing that BKB would owe Little $1,000 per day for each day it went beyond this additional time. The amendment also contained a provision requiring BKB to pay 100% of Little’s legal fees for preparing the amendment and enforcing it. BKB’s work ultimately passed final inspection 67 days beyond the amendment’s completion date.

Little then filed suit against BKB alleging breach of contract and seeking $67,000 in liquidated damages. BKB filed countersuit alleging it was entitled to a judgment declaring the $1,000 per day fine to be an unenforceable penalty, and that Little had breached the agreement by failing to pay BKB for its work. Both parties alleged entitlement to attorneys’ fees based on the fee provision in the amendment, with BKB alleging the provision was reciprocal pursuant to Fla. Stat. 57.105(7).

Little obtained the issuance of a $35,000 prejudgment writ of garnishment. BKB moved to dissolve the writ. Two hearings were held on BKB’s motion, but the court never issued final adjudication. Little then filed a notice extending the writ for an additional six months.

BKB filed a petition for writ of certiorari challenging the lower court’s discovery order, which was granted. Both parties filed motions for appellate level fees based on the fee provision, and the appeals court then denied Little’s appellate fees motion and conditionally granted BKB’s, provided BKB prevailed in the trial court action and the trial court found the fee provision valid.

Both parties then filed competing summary judgment motions in the lower court, which entered partial summary judgment in BKB’s favor, concluding the daily fine was unenforceable. The parties entered a settlement agreement as to BKB’s remaining counterclaim seeking payment for its work, with Little stipulating to BKB’s entitlement to attorney’s fees and costs and requesting an evidentiary hearing to set the amount of fees and costs.

A two-day evidentiary hearing was held with the court considering live testimony from BKB’s owner, trial attorney, and fees expert. The court then awarded BKB attorney’s fees for the time spent litigating issues relating to the prejudgment writ of garnishment, at both trial and appellate levels, pursuant to Fla. Stat. 77.032(3) and 57.105(7). It applied a 1.5 contingency risk multiplier. Little then appealed.

On appeal, the court analyzed Fla. Stat. 57.105(7), and specifically its use of the language “with respect to the contract,” through the lens of the FL Supreme Court’s opinion in Ham v. Portfolio Recovery Associates, LLC. The Ham court found that even actions that are not “based on” or “pursuant to” the underlying contract may still have a clear and direct relationship so as to fit the statute’s language. Here, the court similarly found there was a clear and direct relationship between the proceedings on Little’s writ and the parties’ contract litigation.

However, as to the contingency risk multiplier, the court found that BKB did not offer any direct evidence that, absent availability of a contingency risk multiplier, BKB would have faced substantial difficulty finding an attorney to represent it. BKB merely argued that construction attorneys in the relevant market rarely took on breach of contract actions under a contingency fee. As such, the contingency fee instituted by the trial court was not supported by the requisite evidence and thus improper.

The court therefore affirmed the award of costs and fees to BKB, but reversed the application of the contingency risk multiplier to the fees award and remanded for amended judgment consistent with this opinion.