Full Opinion

DISTRICT COURT OF APPEAL OF FLORIDA SECOND DISTRICT KOVAR LAW GROUP, PLLC, Appellant, v. BENCHMARK CONSULTING, INC., d/b/a CASTLE ROOFING AND CONSTRUCTION, INC., a Florida Corporation, a/a/o JAMES NUNLEY, Appellee. No. 2D21-885 December 1, 2021 Appeal from the Circuit Court for Pasco County; Kimberly Sharpe Byrd, Judge. Ciera L. Lipps of Kovar Law Group, South Pasadena, for Appellant. Michael V. Laurato of Austin & Laurato, P.A., Tampa, for Appellee. SLEET, Judge. Kovar Law Group, PLLC (KLG), challenges the trial court's final order entered in favor of KLG's former client, Benchmark Consulting, Inc. d/b/a Castle Roofing and Construction, Inc. (Castle), which discharged KLG's charging lien. On appeal, KLG argues that the trial court erred in holding that collateral estoppel barred KLG from litigating the enforcement of its charging lien. Because the elements of collateral estoppel were met, the judgment of the federal court on the issue of whether KLG voluntarily withdrew from its representation of Castle is given preclusive effect, and the trial court did not err. Factual Background KLG began representing Castle in insurance-related matters sometime around 2017 or 2018 pursuant to an oral contingency fee agreement. It also represented Castle's principal, Jim Lathrop, in personal legal cases. The litigation between the parties over KLG's charging lien on Castle's insurance cases began in the United States District Court for the Middle District of Florida. In both that federal case and the current case, KLG attempted to enforce a charging lien on Castle following KLG's termination of representation on all of Castle's matters. 2 To enforce a charging lien, an attorney must show (1) that there was an express or implied contract between the attorney and the client; (2) that the parties had an express or implied understanding that the attorney fees would be paid out of the recovery; (3) that the client avoided making payment or there was a dispute as to the amount of fees; and (4) that the attorney provided timely notice of his charging lien. Daniel Mones, P.A. v. Smith, 486 So. 2d 559, 561 (Fla. 1986). Proceedings in the Federal Case The federal case, like the case on appeal, began in state court as a standard breach of insurance contract case between Castle and an insurer. Unlike the case on appeal, that case was removed to federal court by the insurer on diversity grounds.1 During the pendency of the federal case, KLG withdrew from representation and filed a charging lien, claiming that it had not received full payment from Castle for the legal services it had rendered and the costs it had advanced. Castle and the insurer entered into a settlement agreement, and the federal court entered 1 The charging lien dispute between the parties was ultimately adjudicated in the federal forum, which applied Florida law. 3 an order dismissing the case without prejudice. Castle later moved to reopen the case to strike or discharge KLG's charging lien. The federal court held an evidentiary hearing on the enforcement of the charging lien, during which KLG's owner and principal, Jeremy "Jay" Kovar, testified to KLG's fee agreement with Castle, the type of work KLG performed for Castle, and the reasons KLG withdrew from representing Castle. Both parties tendered reasons behind KLG's withdrawal. KLG argued that it had become aware Castle was using its services to commit insurance fraud and decided it could no longer represent Castle under Rule Regulating the Florida Bar 4-1.16(a)(4). Specifically, KLG believed Castle was engaging in fraud because (1) Castle hired and utilized an in-house attorney who KLG believed was not able to practice law because the attorney did not belong to a Florida law firm and (2) Castle was waiving insurance deductibles and fraudulently claiming to have completed interior work it had not actually performed in violation of Florida insurance law. Because KLG was filing complaints on Castle's behalf based on allegedly phony insurance claims, KLG argued that its services were being used to facilitate the fraud. 4 Castle argued that KLG did not withdraw for ethical reasons but rather did so voluntarily. In support of this argument, Castle pointed to a series of emails between KLG and Castle. In the first email, Deanna Firlik, a KLG paralegal, emailed Castle's principal, Lathrop, under the subject line "Final Invoice–Lathrop Criminal/family matter," stating: I have attached the final invoice for the work done in your family/criminal law case. [Kovar] has requested that I convey the following to you. The invoice reflects the work that Andy [Popp] has done for your criminal case. If this invoice is paid in full by Friday, May 24th [Kovar] has advised that we will continue to do work on your other cases as we have been. If you do not want to pay the invoice then he has advised that we need to end our business relationship and you will need to immediately find a new attorney to handle all of your cases going forward. (Emphasis added.) In an email sent twelve minutes later, under the same subject line, Kovar advised Lathrop that he had been told Lathrop refused the above offer. In another email, Kovar informed Lathrop that if he "slander[ed Kovar's] name in the slightest, [Kovar would] spend the rest of [his] life coming after" Lathrop. Finally, Kovar sent Lathrop the following email: Since we have irreconcilable differences and Jim keeps insulting myself, my firm, and my staff, you need to find a new attorney asap for all your cases. 5 [Listing six other attorneys' names] all do this kind of work. We will be placing fee liens for the work we have already done on every case. Do not contact me, do not contact my firm, or any of my employees, unless it is about transferring your cases to a new firm. Jay Kovar, Esq. At the hearing, Kovar testified that he did not instruct the paralegal to convey the message in the first email and that the "irreconcilable differences" to which he referred in the last email pertained to Castle's use of KLG's services to commit insurance fraud, which prevented KLG from continuing to serve as Castle's counsel under rule 4-1.16(a)(4). The federal court entered an eighteen-page order thoroughly covering the elements at dispute in the enforcement of the charging lien—(1) that there was an express or implied contract between the attorney and the client and (2) that the parties had an express or implied understanding that the attorney fees would be paid out of the recovery. The federal court held that KLG could satisfy the requirement of an express or implied contract between it and Castle 6 but not that there was an understanding that the fees would be paid out of the recovery. The federal court cited Faro v. Romani, 641 So. 2d 69, 71 (Fla. 1994), for the proposition that an attorney's voluntary withdrawal from representation before the occurrence of the contingency contemplated by the parties' agreement forfeits that attorney's claim to compensation. It then concluded that KLG failed to meet its burden of demonstrating that its withdrawal was involuntary because there [was] no indication that Castle's alleged fraud involving the waiving of deductibles and the claiming of non-existent interior work was present in the instant case [and] the evidentiary weight of the . . . contemporaneous emails between [KLG] and Castle on the matter of [KLG's] withdrawal [overcame] whatever persuasive value [Kovar's] testimony may have. Proceedings in the Instant Case In the instant case, Castle, as assignee of James Nunley, retained KLG to represent it in a breach of contract action against Citizens Property Insurance.2 On June 12, 2019, KLG filed a Notice 2 In March 2018, Nunley's house sustained wind damage. He received wind remediation services from Castle and agreed to submit the bill to Citizens, the homeowner's insurance company that issued Nunley's policy, to pay for services rendered. The 7 of Attorney's Charging Lien, alleging that Castle did not pay for the legal services KLG had provided and requesting that KLG be advised of any settlement, trial, or judgment in the case. On June 20, 2019, a Joint Stipulation for Substitution of Counsel was filed, indicating that the law firm of Smith Thompson Law would be substituted as Castle's counsel of record. The trial court ratified the substitution with an order and relieved KLG of any further responsibility in the matter. Castle, through its new counsel, moved to strike and/or discharge KLG's charging lien a few months later, on October 24, 2019. In the motion, Castle alleged that the notice was deficient on its face and that KLG voluntarily terminated representation of Castle on all files prior to filing its Notice of Attorney's Charging Lien, thus forfeiting all rights to compensation. In its response to the motion, KLG disputed the date of termination and claimed that it did not voluntarily withdraw but rather did so to ensure it would not violate any ethical rules or Florida statutes receipt for Castle's services was provided to Citizens, who failed to pay the amount in full, thus triggering the underlying breach of contract suit. 8 upon discovering that Castle was engaging or attempting to engage in insurance fraud. On January 6, 2020, KLG filed a motion to enforce the charging lien, claiming that Castle and Citizens had settled the underlying breach of contract lawsuit in September 2019 and that KLG had not been consulted about its fees or the satisfaction of its lien prior to the settlement. KLG claimed an entitlement to attorney fees and reimbursement for expenses it had advanced in its initial representation of Castle in the matter. Citing rule 4-1.16(a)(4), which states that a lawyer must terminate representation of a client if "the client persists in a course of action involving the lawyer's services that the lawyer reasonably believes is criminal or fraudulent, unless the client agrees to disclose and rectify the crime or fraud," KLG claimed that it had withdrawn from representation upon discovering that Castle was engaging in insurance fraud and that Castle hired in-house counsel who KLG believed was not able to practice law because the attorney did not belong to a Florida law firm. KLG also addressed in its motion the other requirements for imposing a charging lien. 9 In its response to the motion, Castle alleged that Kovar sent email correspondence voluntarily terminating KLG's representation due to irreconcilable differences and raised the same arguments it had raised in its motion to strike and/or discharge the charging lien. At the October 7, 2020, evidentiary hearing on the motion, Castle raised collateral estoppel as a preliminary matter, arguing that the hearing would not be appropriate because the issues had been litigated between the parties in the federal case, which resulted in a final order. After hearing KLG's response, the trial court ordered briefing on whether collateral estoppel and/or res judicata would preclude any further litigation of the KLG charging lien. The trial court reviewed the memoranda from both parties and ultimately entered an order granting Castle's motion to discharge and denying KLG's motion to enforce the lien because collateral estoppel applied in this case. Analysis Collateral estoppel generally "comes into play in a case when, in an earlier proceeding involving a different cause of action, the 'same parties' litigated the 'same issues' that are presented once 10 again for decision." M.C.G. v. Hillsborough Cnty. Sch. Bd., 927 So. 2d 224, 226 (Fla. 2d DCA 2006) (quoting Cook v. State, 921 So. 2d 631, 634 (Fla. 2d DCA 2005)). Under Florida law,3 collateral estoppel applies if the following elements are met: (1) an identical issue must have been presented in the prior proceeding; (2) the issue must have been a critical and necessary part of the prior determination; (3) there must have been a full and fair opportunity to litigate that issue; (4) the parties in the two proceedings must be identical; and (5) the issues must have been actually litigated. Goodman v. Aldrich & Ramsey Enters., Inc., 804 So. 2d 544, 546-47 (Fla. 2d DCA 2002). On appeal, the only element KLG does not contest is number two, that the issue must have been a critical and 3 The parties disagree over whether state or federal collateral estoppel law is applicable here. However, the only real difference between the two is that federal law is more lenient with respect to the requirement of mutuality of parties. Cook, 921 So. 2d at 635 ("Notwithstanding the federal decisions in which collateral estoppel has been applied despite the absence of mutuality of parties, the rule in Florida has been—with limited exceptions—that collateral estoppel only 'applies when the "identical issue has been litigated between the same parties or their privies . . . ." ' " (footnote omitted) (citations omitted) (quoting State v. McBride, 848 So. 2d 287, 291 (Fla. 2003))). Regardless, even if we were to apply federal collateral estoppel law, we would still reach the same conclusion. 11 necessary part of the prior determination. Still, we conclude that the elements of collateral estoppel were met. While the parties to the underlying breach of contract lawsuits in the federal and instant cases are not identical because the defendant insurers are different insurance companies, the parties litigating the charging lien dispute are the same—KLG and Castle. Thus, the existence of a different defendant insurer in the underlying lawsuits is immaterial. Furthermore, because KLG terminated its representation of Castle on all matters via Kovar's email to Lathrop, the underlying facts surrounding the withdrawal in the federal case and the instant case are one and the same. In the federal case, KLG and Castle had a full and fair opportunity to litigate the basis for KLG's withdrawal. KLG offered the testimony of its owner, Kovar, and employee, Austin Fowler, and both parties offered exhibits to support their arguments. Ultimately, the federal court determined that the evidentiary weight of the contemporaneous emails between KLG and Castle overcame any persuasive value Kovar's testimony had regarding his reason for the withdrawal. The federal court ruled that KLG voluntarily withdrew from representation before the occurrence of the contingency 12 contemplated by the parties' agreement and thus forfeited its claim to compensation. KLG's argument on appeal that the federal court did not consider issues raised in the instant case is incorrect. Specifically, it argues that the federal court did not consider whether Castle used KLG's services to commit fraud in the instant action or whether KLG was required to withdraw from representation of Castle under rule 4-1.16(a)(1) and (5). However, KLG mischaracterizes these new arguments as new issues. Rather, they are simply KLG's attempt to relitigate the same issue—whether KLG voluntarily withdrew from representation—with new arguments that it failed to raise in the federal case. According to an August 8, 2019, letter from Castle's new counsel to KLG, KLG filed charging liens in each of the ninety matters it represented Castle in prior to its withdrawal of representation. It would be unfair to Castle and an unnecessary burden on the courts to allow repeated litigation of the same issue in what is essentially the same controversy. The judgment of the federal case is conclusive on the issue of whether KLG voluntarily withdrew from its representation of Castle. 13 Therefore, because the enforcement of a charging lien requires the satisfaction of all elements and the federal case's determination is given preclusive effect, KLG cannot meet its burden for enforcing the charging lien. Accordingly, we affirm the order on appeal. Affirmed. KHOUZAM and BLACK, JJ., Concur. Opinion subject to revision prior to official publication. 14