In GEICO General Ins. Co. v. Hollingsworth, 2015 WL 376406 (Fla. 5th DCA January 30, 2015), the Fifth District Court of Appeal considered whether GEICO’s automobile insurance policy provided additional coverage for attorney’s fees awarded against the insured pursuant to section 768.79, Florida Statutes. The plaintiff had served a proposal for settlement to the insured, which was not accepted. Because plaintiff’s judgment exceeded his proposal by more than 25%, the trial court awarded attorney’s fees to the plaintiff. The trial court later held that the attorney’s fee judgment was covered by GEICO’s policy. In addition to the policy limit for damages, the policy covered “all court costs charged to an insured in a covered lawsuit.”

The Fifth District agreed that the attorney’s fee judgment was covered. Based on other DCA precedent, involving sanctions awarded against insureds, the Fifth District held that plaintiff’s attorney’s fees constituted “costs” for purposes of GEICO’s policy.

The Fifth District found that the term “costs” was ambiguous, and it faulted GEICO for not providing a definition. But, under Florida law, a term is not ambiguous simply because there is no definition. Swire Pacific Holdings, Inc., v. Zurich Ins. Co., 845 So. 2d 161, 166 (Fla. 2003). Florida law holds that, when there is no definition, “common everyday usage determines its meaning.” Siegle v. Progressive Consumers Insurance Company, 819 So. 2d 732, 735 (Fla. 2002).

In Hollingsworth, the court did not discuss the “common everyday” meaning of “costs,” other than to note the DCA cases involving sanction awards. In the “everyday” judicial system, “costs” and “attorney’s fees” are treated as separate and distinct matters. For example, Civil Rule 5.525 addresses the procedure to tax “costs, attorneys’ fees, or both.” The taxable cost statute, section 57.071, does not include attorney’s fees. The Statewide Uniform Guidelines For Taxation Of Costs In Civil Actions do not include attorney’s fees, but do provide that travel time and travel expenses of attorneys should not be taxed as costs.

The language of the proposal for settlement statute demonstrates that costs and fees are considered separate. Section 768.79(1) expressly allows the successful plaintiff to recover “reasonable costs and attorney’s fees” Although the statute defines costs to include investigative expenses, in subsection (6)(b), it always treats fees as separate from and in addition to the costs; and nowhere does the statute say that costs include attorney’s fees. The statute has specific factors to determine the reasonableness of an award of attorney’s fees, in subsection (7)(b), but has no similar set of factors regarding costs.

Also, precedent from the Florida Supreme Court treats costs and attorney’s fees as separate matters for insurance coverage purposes. In Spiegel v. Williams, 545 So. 2d 1360 (Fla. 1989), the Florida Supreme Court considered whether the defendants’ insurance policy covered an award of attorney’s fees to the prevailing plaintiff in a medical malpractice action. The plaintiff contended that the fees were covered under the policy which covered “all costs of defending a suit.” The Court recognized that a liability policy covers the “payment of taxable costs over and above the policy limits.” Thus, the Court recognized that plaintiff’s attorney fees would be covered if they “could be considered a species of taxable costs.” The Court held that Florida law rejected that approach:

Yet, ever since this Court’s decision in State ex rel. Royal Insurance Co. v. Barrs, 87 Fla. 168, 99 So. 668 (1924), attorneys’ fees recoverable by statute are regarded as “costs” only when specified as such by the statute which authorizes their recovery. Indeed, there are some statutes which provide for an award of attorney’s fees to be taxed as costs.

Id. at 1362. The Court cited section 713.29 as an example; that section addresses fees in lien proceedings and expressly provides that “the prevailing party is entitled to recover a reasonable fee for the services of her or his attorney for trial and appeal or for arbitration, …, which fee must be taxed as part of the prevailing party’s costs.”

In Florida Patient’s Compensation Fund v. Moxley, 557 So. 2d 863, 864 (Fla. 1990), the Florida Supreme Court applied Spiegel when the liability policy covered “all costs taxed against the named insured in any suit defended by the company.”   The Court repeated that attorney’s fees are considered “costs” only when specified by the authorizing statute.

The result and analysis in Hollingsworth conflict with Spiegel and Moxley.   The Spiegel court did not find the term “costs” ambiguous. The Spiegel analysis requires a review of the fee authorizing statute to determine if it specifies that fees are taxed as costs. Here, section 768.79 does not tax the attorney’s fees as costs. And the statute does not combine fees and costs into one lump. Instead, the statute treats attorney’s fees and costs as separate items of recovery. As a result, cost and attorney’s fees should be treated separately for purposes of an insurance policy.