Florida only recently authorized arbitrators to assess attorney fees, changing a significantly more cumbersome process for obtaining that item of damages that previously required the intervention of the courts.
As we explained in SAAs 2016-21 and 2013-42, under Florida case law, arbitrators were for many years prohibited from awarding attorney fees. They could rule on a party’s entitlement to attorney fees and state a legal basis for such an award, but only the courts could determine the amount and award it.
The New Statutory Regime
However, the Revised Florida Arbitration Code (RFAC) adopted by the Florida legislature effective July 1, 2013, provides: “An arbitrator may award reasonable attorney fees … if such an award is authorized by law in a civil action involving the same claim or by agreement of the parties to the arbitration proceeding.” The RFAC initially applied only if the arbitration agreement was entered into on after the effective date or if the parties to the arbitration stipulated to the applicability of the statute, but extended its scope to all arbitrations as of July 1, 2016.
Now that the first anniversary of the latter date has passed, we wondered how often Florida arbitrators take advantage of their new authority? “Most of the time, but not always,” it turns out. In this survey, we identified 18 Awards with Florida situses decided in favor of claimants since July 1, 2016 (all of which, as it happens, issued within one year of that date) in which the panels either awarded attorney fees or authorized “a court of competent jurisdiction” to do the honors. The former accounted for 78% (14/18) of that total. Two types of dispute account for more than one award or finding each: Customer-Member (5/6 or 83%) and Member-Employee (8/9 or 89%, all of them promissory note cases).
Why would arbitrators decline to assess attorney fees to a prevailing party? Looking at the four holdouts, we found that three arbitrators based their findings on contracts: a customer agreement in a Member-Customer Award, COR Clearing LLC v. Williams, FINRA ID #15-01933 (Tampa, 10/14/16)); an employment offer in the Member-Employee Award, SunTrust Investment Services Inc. v. Van Ormer, FINRA ID #15-01423 (Jacksonville, 9/30/16)); and a “Seller Representation Agreement” in CEA Atlantic Advisors LLC v. Broadhand Fiber LLC, FINRA ID #16-03713 (Tampa, 5/17/17), identified by FINRA as a Member-NonMember case. The Awards, as usual, do not provide enough information to know, but if those contracts predated the RFAC, then they might specifically require courts to award the fees.
The Customer-Member Award, Matus v. UBS Financial Services, Inc., FINRA ID #13-03717 (Miami, 2/14/17), based its finding on the Florida Securities and Investor Protection Act. The relevant provision, §517.211(6), states: “In any action brought under this section, … the court shall award reasonable attorneys’ fees to the prevailing party unless the court finds that the award of such fees is unjust” (emphasis in original). Although two other Customer-Member Awards applying the same provision did award attorney fees, the Matus Panel might have viewed its hands as tied by the statutory language.
(ed: *The RFAC is Florida’s version of the Revised Uniform Arbitration Act. **In one Member-Employee Award, Morgan Stanley Smith Barney LLC v. Cebert, FINRA ID #14-01088 (Orlando, 8/1/16), summarized in SLA 2017-11, the claimants and respondent both received attorney fee awards, with an offset amount to the latter of $726,331. That was the single largest attorney fee award by a Florida panel during the period covered by this survey. ***We realize 18 awards is a relatively small sample, but the data are valid nonetheless. We will revisit this topic in a year to see if the results hold.) (SAC Ref. No. 2017-35-01)
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