Third District Court of Appeal at 2001 SW 117th Ave., in Miami. Photo: J. Albert Diaz/ALM

A March 27 ruling by Florida's Third District Court of Appeal clarified the correct manner of applying contingency risk multipliers when determining attorney fees.

The appellate court affirmed a Miami-Dade trial court's award of $213,548 in attorney fees to litigant Lidia Gonzalez in her legal action against Rene and Grace Pazmino. A defendant in a foreclosure, Gonzalez — who borrowed money and purchased real estate through the Pazminos in 2007 — alleged that she had been a victim of fraud. She claimed that although she had borrowed and bought the piece of real estate for $230,000, the Pazminos had given the property owners, on whose behalf they had sold the house, the impression that the property would be traded for $150,000.

The lower court found the Pazminos had committed fraud and violated the Florida Deceptive and Unfair Trade Practices Act. It also found Gonzalez's loan criminally usurious, rendering her mortgage null and void.

According to Gonzalez's lawyer, Coral Gables litigator G. Frank Quesada, the trial judge based the amount awarded in attorney fees on the risk the lawyer had taken, working on a contingency basis.

“(Gonzalez) had nothing, no bank account, no assets,” Quesada said. Despite the risk of not receiving compensation if they lost, the attorney said he stuck with the case in part because the fraud “was so blatant.”

Read the opinion:

The Pazminos' legal counsel, Miami attorney Luis Navarro, did not respond to requests for comment, but the pair appealed the order awarding $13,356 in appellate attorney fees and $213,548 billed for work at the trial court level. They contended in part that the $213,548 in trial court fees had been reached through an improper application of contingency fees and a 2.0 multiplier.

Quesada said opposing counsel argued “a multiplier does not apply if you win under a statute that awards attorney fees.” This element of their argument was framed around Gonzalez's prevailing claim under the Florida Deceptive and Unfair Trade Practices Act.

The appellate court dismissed this contention because the final judgment was also hinged around the other charges against the Pazminos.

“There is active disagreement in recent case law as to whether there is a 'rare' and 'exceptional' circumstances requirement in Florida for such a multiplier,” the opinion noted, before concluding Gonzalez's case was “a textbook example of one in which a multiplier is warranted, even if the 'rare' and 'exceptional' standards are applied.”

The appeals court cited “Gonzalez's inability to obtain legal assistance, based on her income and the foreclosure,” as well as “the complete elimination of the fraudulently-obtained $230,000.00 mortgage” and “the judgment for money damages for principal and interest paid by Gonzalez” as justification for the use of a multiplier in determining appropriate attorney fees.

Quesada applauded the opinion.

“I'm glad they took their time,” he said of the appellate court judges. “A multiplier is justified when you have someone who has no money and the lawyer got a great result for them. [Opposing counsel] didn't question the time, the hourly rate … the usual things that people say [against] getting attorney fees.”

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