• Florida Supreme Court Holds Fee Recovery Clause in Indemnity Agreement Valid
  • July 22, 2013 | Author: George B. Hall
  • Law Firm: Phelps Dunbar LLP - Houston Office
  • The Florida Supreme Court has approved provisions in indemnity agreements that require an indemnitor to pay defense costs in an amount higher than was actually paid for the defense. First Baptist Church of Cape Coral, Florida, Inc. v. Compass Construction, Inc., 2013 WL 2349380 (Fla. May 30, 2013).

    A church and construction company were sued in an action arising from a construction accident. The church defended the main action and cross-claimed for contractual indemnity against the construction company. The church prevailed in both. The construction company conceded that the church was entitled to its attorneys’ fees as part of the indemnity judgment, but a dispute arose over the appropriate hourly rate for the church’s defense attorney. The construction company argued that the fee should be limited to the hourly rate actually billed. The church argued that the indemnity agreement provided that in the event anyone other than its insurer is required to pay attorneys’ fees, the hourly rate would be the higher rate set in the agreement or a rate determined by the court. The trial court awarded a fee higher than the amount the church’s defense counsel charged. The appellate court reversed.

    The Florida Supreme Court reversed, finding that the alternative fee recovery clause that used a higher hourly rate was valid. It stated that the agreement did not violate the existing case law banning fee awards that exceed the fee agreement because the arrangement also stated that the court may award a higher attorney fee if a third party pays. A dissent noted that the majority opinion contradicts rulings from several Florida courts that have ruled that attorneys’ fees assessed to a prevailing party in an indemnification action cannot exceed the expenses incurred.