Kinsale Ins. Co. v. Best Wellness U.S.

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KINSALE INSURANCE COMPANY, Plaintiff, v. BEST WELLNESS USA, et al., Defendants.

No. 21-61867-CIV-DIMITROULEAS/HUNT

United States District Court, S.D. Florida, Fort Lauderdale Division

July 8, 2022

REPORT AND RECOMMENDATION

PATRICK M. HUNT UNITED STATES MAGISTRATE JUDGE

THIS CAUSE is before this Court on Defendant's Motion for Attorneys' Fees, ECF No. 16. The Honorable William P Dimitrouleas referred the Motion to the undersigned for a Report and Recommendation. ECF No. 17; see also 28 U.S.C. § 636; S.D. Fla. L.R., Mag. R. 1. Upon thorough review of the record, applicable law, the Motion, the Response and the Reply thereto, the undersigned respectfully RECOMMENDS that Defendant's Motion for Attorneys' Fees, ECF No. 16, be GRANTED for the reasons set forth below.

BACKGROUND

Kinsale Insurance Company (“Plaintiff”) brought this action against Best Wellness USA, LLC (“Defendant”) and Erin and Patrick Gilbert seeking declaratory relief under an insurance policy that was at issue in a separate litigation (“underlying litigation”) between Defendant, the insured under the policy, and Erin and Patrick Gilbert. ECF No. 1. Plaintiff defended Defendant in the underlying action under a complete reservation of rights. See ECF No. 1. Plaintiff, as the insurer of the policy, sought declaratory relief claiming that it had no duty to defend or indemnify Defendant in the underlying litigation. ECF No. 1. Plaintiff filed a notice of voluntary dismissal due to the fact that the Gilberts dismissed the underlying action without prejudice. ECF No. 14. The District Court approved the notice, closed the case, and dismissed the case without prejudice. ECF No 15.

Defendant moved for an award of attorneys' fees. ECF No. 16. Plaintiff filed a response in opposition and Defendant filed a reply to Plaintiff's opposition. ECF Nos. 20, 21.

PARTIES' ARGUMENTS

Defendant contends that it is entitled to an award of attorneys' fees pursuant to Section 627.428(1) of the Florida Statutes because the District Court dismissed the case without prejudice. Defendant seeks attorneys' fees in the amount of $15,515.50.^[1]Defendant's counsel also contends that the hourly rates sought and the hours expended are reasonable.

Plaintiff responds that Defendant is not entitled to an award of fees. Plaintiff contends that Defendant is not the prevailing party because Defendant did not obtain any sort of recovery in the instant action. In the underlying litigation, Plaintiff claims that the Gilberts dismissed the action without prejudice and without leave from the state court. Thus, in an effort to not waste this Court's resources, Plaintiff elected to dismiss this action without prejudice. Further, Plaintiff contends that Defendant invokes the incorrect statute as a basis for fees because Plaintiff is a surplus lines insurer, and thus § 626.9373(1) applies, not § 627.428(1). However, Plaintiff asserts that Defendant is not the prevailing party even under the correct statute. Additionally, Plaintiff argues that Defendant's Motion is untimely because Defendant filed the Motion over sixty days after the Gilberts dismissed the underlying lawsuit.

Defendant replies that Plaintiff paid for the defense in the underlying litigation under a reservation of rights, and thus, Plaintiff's voluntary dismissal gave Defendant the benefit of the defense in the state court action. Defendant argues that Plaintiff could have moved to continue the instant action to allow time to decide whether it had a duty to defend and seek reimbursement for costs of the defense in the state court case. Instead, Plaintiff chose to voluntarily dismiss the action, which Defendant contends is the functional equivalent of a confession of judgment. Next, Defendant contends that even under § 626.9373 Defendant is entitled to an award of attorneys' fees because the statutes are virtually identical. Defendant argues that the Motion is timely because the Motion was filed within sixty days of the District Court's dismissal of the instant action.

ENTITLEMENT

Section 626.9373(1) of the Florida Statutes states:

Upon the rendition of a judgment or decree by any court of this state against a surplus lines insurer in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer on or after the effective date of this act, the trial court or, if the insured or beneficiary prevails on appeal, the appellate court, shall adjudge or decree against the insurer in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured's or beneficiary's attorney prosecuting the lawsuit for which recovery is awarded.

The purpose behind the statute is to “to place the insured . . . in the place she would have been if the carrier had seasonably paid the claim or benefits without causing the payee to engage counsel and incur obligations for attorney's fees.” Maloy v. Scottsdale Ins. Co., 376 F.Supp.3d 1249, 1253 (S.D. Fla. 2019) (alteration in original).

The undersigned finds Capitol Specialty Insurance Corp. v. Ortiz to be instructive on whether Defendant is entitled to fees. No. 17-233329-CIV-SCOLA/TORRES, 2019 WL 383868, at *3 (S.D. Fla. Jan. 15, 2019), report and recommendation adopted, 2019 WL 367916 (S.D. Fla. Jan. 30, 2019). In Ortiz, the insurer sought to amend its complaint after the plaintiff in the underlying litigation amended its complaint against the insured. Id. The court dismissed the case without prejudice and granted the insurer leave to refile in a separate litigation. The court noted that the procedural posture of the case was the mirror image of a similar case in this district and that “the overarching principle . . . is that a dismissal without prejudice for lack of subject matter jurisdiction triggers the application of § 626.9373.” Id. at *4; see also Prime Ins. Syndicate, Inc. v. Soil Tech Distribs., Inc., 270 Fed. App'x 962, 963 (11th Cir. 2008) (“By its very terms [Fla. Stat. §627.428(1)] does not require an insured party to succeed on the merits of a case in order to recover attorney's fees.”)^[2].

Further, in Atain Specialty Ins. Co. v. Henry's Carpet & Interiors, Inc., the court held:

[Plaintiff's] first argument-that it properly filed the declaratory-judgment action based on the original complaint in the Underlying Action-has some practical appeal. Why, after all, should we penalize an insurance company for filing a meritorious lawsuit and then backing out of that lawsuit once the underlying complaint, as amended, proves the lawsuit's unviability? Ultimately, though, the argument assumes too much. We, after all, never had occasion to say whether the allegations of the original complaint (in the Underlying Action) triggered the duty to defend-though we note that the standard is generally quite favorable to the insured.

Either way, the plain language of the statute requires that, “upon the rendition of a judgment in favor of” the insured, the trial court “shall adjudge or decree against the insurer in favor of the insured . . . a reasonable sum as fees or compensation for the insured's . . . attorney prosecuting the lawsuit for which recovery is awarded.” ....

[Plaintiff] counters that, given its acquiescence to [Defendant's] motion to dismiss, our Dismissal Order didn't amount to a “rendition of judgment” within the meaning of Florida law.... We disagree-not only because [Plaintiff] doesn't cite (and we cannot find) any authority for this proposition, . . . but also because any dismissal in favor of the insured-even one without prejudice-constitutes a “rendition of judgment in favor of” the insured for purposes of the [§ 626.9373].

564 F.Supp.3d 1265, 1270 (S.D. Fla. 2021) (“[B]ecause we dismissed the case . . . the statute compels us to enter an award of attorneys' fees.”) (citations omitted). Even an insurer's decision to voluntarily dismiss its case constitutes a “judgment” for the insured. See id. (citing O'Malley v. Nationwide Mut. Fire. Ins. Co., 890 So.2d 1163, 1164 (Fla. 4^th DCA 2004)).

Here, the undersigned finds that Defendant is the prevailing party. Courts within this District and Florida state courts have held that voluntary dismissals and dismissals without prejudice entitle the insured to an award of attorneys' fees under § 626.9373.

Thus, the undersigned finds that the District Court's Order dismissing the action without prejudice constitutes a “rendition of judgment” in favor of Defendant. As a result, the statute compels this Court to enter an award of attorneys' fees.

Next, turning to Plaintiff's argument that Defendant's Motion is untimely, the undersigned finds that the Order dismissing the action in this Court is the Order that gave rise to Defendant's claim for attorneys' fees. See S.D. Fla. R. 7.3(a)(1) (The Local Rule requires that motions for attorneys' fees and costs be filed within 60 days of “the final judgment or order giving rise to the claim.”). Defendant's Motion was filed within 60 days of the Order of Dismissal and therefore, the undersigned finds that the Motion is timely.

FEE AMOUNT

This Court uses the lodestar method to calculate reasonable attorneys' fees, multiplying a reasonable hourly rate by the number of hours reasonably expended. Norman v. Hous Auth. of Montgomery, 836 F.2d 1292, 1299 (11th Cir. 1988). A reasonable hourly rate for attorneys' fees is determined by evaluating “the prevailing market rate in the relevant legal community for similar services by lawyers of reasonably comparable skills, experience, and reputation.” Id. (citing Blum v Stenson, 465 U.S. 886, 895 (1984)); see also ACLU v. Barnes, 168 F.3d 423, 438 (11th Cir. 1999) (“The significant disparity in their experience should be reflected in the rates awarded.”); Brown v. Sch. Bd. of...