Searcy, Denney, Scarola, Barnhart & Shipley, etc. v. State of Florida
2017 Fla. LEXIS 234, 209 So. 3d 1181, 42 Fla. L. Weekly Supp. 92 (2017)
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Rule of Law:
When the Florida Legislature enacts a claims bill to pay an excess judgment against a state entity, it may not unconstitutionally impair a preexisting attorney-client contingency fee contract that is consistent with the fee limitations set forth in Florida’s statutory waiver of sovereign immunity.
Facts:
- In 1997, Aaron Edwards sustained a catastrophic brain injury at birth due to the negligence of employees at Lee Memorial Health System, an independent special district of the State of Florida.
- Searcy Denney Scarola Barnhart & Shipley, P.A. (Searcy Denney) was retained by Aaron’s family under a standard contingency fee agreement that provided for a payment of 40% of any recovery if a lawsuit was filed, plus costs.
- The contingency fee agreement also specified that if a governmental agency was a party, the fees owed would be “the amount provided by law.”
- A jury trial in 2007 found Lee Memorial Health System's employees negligent and awarded Aaron $28.3 million, his mother $1.34 million, and his father $1 million in damages.
- Due to Florida's sovereign immunity limitations (Section 768.28(5)), the family's recovery from the judgment was limited to $200,000.
- Searcy Denney and other law firms spent over two years lobbying the Florida Legislature for a claims bill to secure the excess judgment amount for the family.
- In 2012, the Legislature passed a claims bill (Chapter 2012-249) directing Lee Memorial to pay $10 million, with an additional $5 million in annual installments, to Aaron Edwards' guardianship, to be placed in a special needs trust.
- The claims bill included a provision stating that the total amount paid for attorneys’ fees, lobbying fees, costs, and similar expenses relating to this claim “may not exceed $100,000.”
Procedural Posture:
- Searcy Denney (and other firms) filed a medical malpractice lawsuit against Lee Memorial Health System.
- The case proceeded to a jury trial in 2007, where the jury found Lee Memorial Health System's employees negligent and awarded significant damages to Aaron Edwards and his parents.
- The trial court enforced the sovereign immunity damage limitations in Section 768.28(5), entering a judgment against Lee Memorial Health System for $200,000.
- The Second District Court of Appeal affirmed the trial court's judgment per curiam in Lee Memorial Health System v. Edwards, 22 So.3d 81 (Fla. 2d DCA 2009).
- After the Legislature passed the claims bill in 2012, Aaron’s mother petitioned the guardianship court to establish a guardianship over Aaron's property.
- Searcy Denney petitioned the guardianship court to approve a closing statement allowing $2.5 million for attorneys' fees and costs, contending the fee limitation in the claims bill was unconstitutional.
- The State of Florida intervened in the guardianship proceeding to defend the constitutionality of the claims bill.
- The guardianship court denied Searcy Denney’s request for $2.5 million in fees, concluding it lacked judicial authority to contravene the legislative fee limit and denied the request to find the fee limitation invalid.
- Searcy Denney and the other firms appealed the guardianship court's order to the Fourth District Court of Appeal.
- The Fourth District Court of Appeal affirmed the guardianship court's decision, finding the fee limitation in the claims bill valid based on separation of powers principles and relying on Gamble v. Wells; the district court also certified a question of great public importance to the Supreme Court of Florida.
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Issue:
Does the Florida Legislature unconstitutionally impair an existing contract when, after the enactment of Section 768.28, Florida Statutes, and Florida Senate Rule 4.81(6), it limits the amount of attorneys’ fees paid from a guardianship trust established by a legislative claims bill to an amount below the statutory 25% cap on fees?
Opinions:
Majority - Per Curiam
No, the Florida Legislature unconstitutionally impairs an existing contract when, in a claims bill, it limits attorneys' fees to an amount below the statutory cap, thus violating both constitutional contract impairment prohibitions and the intent of the sovereign immunity waiver statute. While a claims bill is an 'act of grace,' it cannot override constitutional protections against contract impairment. Section 768.28(5) expressly anticipates legislative claims bills for excess judgments against the state, and Section 768.28(8) sets a 25% cap on attorneys' fees for 'any judgment or settlement.' Reading these provisions together, the Legislature intended that the 25% fee cap would apply to funds recovered through a claims bill, as this mechanism is expressly provided for in the statute. The preexisting contract between Searcy Denney and the Edwards family explicitly acknowledged that fees would be limited by 'law,' and the parties reasonably expected the 25% cap under Section 768.28(8) to apply. The claims bill's $100,000 fee limit, which amounted to less than 1% of the total award, severely impaired these reasonable contractual expectations. Applying the Pomponio balancing test, the Court found the impairment severe and no significant or legitimate public purpose to justify such a drastic limitation, especially when the Legislature itself deemed up to 25% reasonable in Section 768.28(8). Such a 'draconian limitation' also chills the fundamental constitutional right of access to courts and the ability of injured parties to obtain effective counsel. The Court distinguished Gamble v. Wells because Gamble arose before Section 768.28 was enacted, meaning claimants then were 'remediless' and relied purely on legislative grace. With Section 768.28, there is now a statutory framework that requires prior judicial or administrative action and sets fee limits. Finally, the unconstitutional fee limitation can be severed from the claims bill because the Legislature's primary intent to provide substantial compensation to Aaron Edwards for his injuries can still be fully accomplished without the invalid fee provision.
Dissenting - Canady, J.
Yes, the Florida Legislature constitutionally can limit the amount of attorneys’ fees paid from a guardianship trust established by a legislative claims bill. The majority’s decision regarding the certified question and severability is incorrect. The Court should adhere to its prior decision in Gamble v. Wells, which established the Legislature's broad constitutional power to condition acts of grace like claims bills. Section 768.28 in no way undermines Gamble's reasoning that the Legislature can 'allow compensation, decide the amount of compensation, and determine the conditions, if any, to be placed on the appropriation.' Parties cannot enter into a contract that binds the state's sovereign power, and the Legislature was not bound to conform to the prior contingency fee contract. Furthermore, the majority’s conclusion regarding severability is flawed. Severance is only permissible if the legislative purpose can be accomplished independently, and the Legislature would have passed the bill without the invalid part. Here, the Legislature expressly prohibited funds from being used for fees exceeding $100,000. Severance thwarts legislative intent by diverting appropriated funds for a prohibited purpose, providing less funds to the trust and more for attorneys' fees than the Legislature intended.
Dissenting - Polston, J.
Yes, the Florida Legislature constitutionally can limit the amount of attorneys’ fees paid from a guardianship trust established by a legislative claims bill because the existing contract specifically contemplated such a limitation. It is well-settled law that the Legislature has complete discretion in granting a claims bill, which is an act of grace. The claims bill specifically stated that fees 'may not exceed $100,000.' The fee agreement between Searcy Denney and the Edwards family explicitly provided that 'in the event that one of the parties to pay my claim for damages is a governmental agency, I understand that Federal and Florida Law may limit the amount of attorney fees charged by [Searcy Denney], and in that event, I understand that the fees owed to [Searcy Denney] shall be the amount provided by law.' Since the claims bill is a Florida law limiting fees, and Lee Memorial Health System is a governmental agency, there is no impairment of contract because the contract expressly anticipated and agreed to such a limitation. The majority’s ruling, by severing the fee limitation, imposes a $2.5 million attorneys' fee award from Aaron Edwards’ guardianship, a result explicitly rejected by the Legislature and contrary to its clear intent.
Analysis:
This case significantly clarifies the intersection of legislative claims bills, sovereign immunity waivers, and constitutional contract impairment in Florida. It reaffirms the strength of the Contract Clause, even against legislative acts of 'grace,' when a statutory framework for recovery and fees (like Section 768.28) is already in place. The ruling limits the Legislature's ability to retroactively alter reasonable contractual expectations, particularly those aligned with existing statutes. This decision has broad implications for access to justice, as it ensures that victims of government negligence can more readily secure competent legal representation, knowing that legitimate contingency fee agreements won't be arbitrarily undercut by claims bill provisions. It establishes that the Legislature's discretion in granting a claims bill does not extend to unconstitutionally impairing contracts for services essential to obtaining that relief.
