COMPANION PROPERTY & 

CASUALTY INSURANCE CO.,

Appellant/Cross-Appellee,

v.

CATEGORY 5 MANAGEMENT 

GROUP, LLC,

Appellee/Cross-Appellant.

IN THE DISTRICT COURT OF APPEAL

FIRST DISTRICT, STATE OF FLORIDA

NOT FINAL UNTIL TIME EXPIRES TO 

FILE MOTION FOR REHEARING AND 

DISPOSITION THEREOF IF FILED

CASE NO. 1D14-5863

_____________________________/

Opinion filed March 17, 2016.

An appeal from the Circuit Court for Escambia County.

J. Scott Duncan, Judge.

Peter D. Webster and Christine Davis Graves of Carlton Fields Jorden Burt, P.A., 

Tallahassee, for Appellant/Cross-Appellee.

Mark A. Newell, Mobile, Alabama and Kevin F. Masterson, Daphne, Alabama, for 

Appellee/Cross-Appellant.

SWANSON, J.

This is an appeal and cross-appeal from a final judgment awarding 

attorney’s fees to Category 5 Management Group, LLC (“Category 5”) in an 

insurance coverage action. We affirm without discussion the trial court’s decision 
2

to apply a contingency fee multiplier to enhance the attorney’s fee award.

However, for the reasons that follow, we reverse the trial court’s determination that 

the contingency fee agreement did not contemplate payment of attorney’s fees for 

the defense of Category 5 in the underlying Alabama personal injury lawsuit, 

which was the subject of this insurance coverage action.

Category 5, a company located in Pensacola, purchased a commercial 

general liability policy from Companion Property & Casualty Insurance Company 

(“Companion”) for a one-year period commencing June 1, 2007, and ending June 

1, 2008. In the summer of 2007, Companion was hired to supervise subcontractors 

and their crews performing cleanup operations in New Orleans following 

Hurricane Katrina. One of these subcontractors was Colonel McCrary Trucking, 

which performed certain transportation-related services at the project site. Joe 

Johnson, an employee of Colonel McCrary Trucking, worked at the site. On July 

11, 2007, while driving a pickup truck owned by R.D. Construction (a 

subcontractor of Colonel McCrary Trucking), Johnson ran a stop light in Alabama 

and struck a car occupied by the Stewart family, severely injuring three family 

members.

On December 31, 2007, the Stewart family filed a five-count personal injury 

lawsuit in Alabama state court against several defendants, including Category 5. 

Companion denied Category 5’s request for defense and indemnity, citing the 
3

“auto exclusion” of the policy as the sole basis for denial. Category 5 

subsequently retained Masterson & Newell, LLC, to defend Category 5 against the 

allegations of the Alabama lawsuit and to seek insurance coverage from 

Companion. The contingency fee agreement between Category 5 and its counsel 

provided in pertinent part:

Attorney Fees. This representation is made upon a 

contingency-fee basis. Therefore, if no recovery is made, 

Client will not be indebted to Attorneys for any sum 

whatsoever as Attorney’s Fees. If a recovery is made, 

the compensation to be paid to said Attorneys by Client 

shall be a reasonable attorney’s fee as determined by the 

Court or any appointed Master pursuant to Fla. Stat. Sec. 

627.428, as supplemented by any multiplier which may 

be awarded thereon pursuant to Florida law, and all 

accrued interest thereon. Attorneys may associate with 

other attorneys to assist with these matters. However, 

under no circumstances will Client be responsible for 

attorney’s fees in excess of the fees specified above.

Eventually, a consent judgment was entered against Category 5 and in favor of the 

Stewart family for $6,000,000.00 in the Alabama lawsuit. The Stewart family 

agreed not to record or execute the judgment against Category 5 in exchange for 

Category 5’s promise to continue to prosecute its coverage action against 

Companion and to pay the Stewarts any insurance proceeds collected from 

Companion. 

On July 15, 2008, Category 5 filed a complaint seeking a declaratory 

judgment that the insurance policy issued by Companion provided coverage to 
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Category 5 for the personal injury action brought by the Stewart family in 

Alabama. Companion filed a motion for summary judgment on the ground that 

Category 5 was not entitled to a defense or indemnity due to the “automobile 

exclusion” contained in the policy. The trial court granted Companion’s motion 

for summary judgment and dismissed Category 5’s complaint with prejudice. On 

appeal, this court reversed and remanded for further proceedings after concluding 

that Companion breached its duty to defend. Category 5 Mgmt. Group, LLC v. 

Companion Prop. & Cas. Ins. Co., 76 So. 3d 20 (Fla. 1st DCA 2011).

On remand, the trial court granted Category 5’s motion for summary 

judgment on the issue of coverage. However, the trial court granted Companion’s 

motion for partial summary judgment, finding in pertinent part:

4. The Court concludes the contingency fee 

agreement is plain and unambiguous in all respects. 

Category 5 hired Masterson and Newell to represent it in 

all litigation that related to the Alabama case and in any 

claims involving liability insurance coverage. However, 

the attorney fee section of the agreement plainly states 

that “If a recovery is made, the compensation to be paid 

to said Attorneys by Client shall be a reasonable 

attorney’s fee as determined by the Court or any 

appointed Master pursuant to Fla. Stat. Section 627.428, 

as supplemented by any multiplier which may be 

awarded thereon pursuant to Florida law, and all accrued 

interest thereon.” The Court finds that the phrase “as 

determined by the Court” is modified by the phrase 

“pursuant to Fla. Stat. Section 627.428.” Thus, the plain 

meaning of the contingency fee agreement is that the 

attorney’s compensation is to be determined by the Court 

pursuant to Section 627.428. Further, there is nothing in 
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the contingency fee agreement that addresses the 

compensation that may be owed to Category 5’s 

attorneys for defending the company in the Alabama 

litigation. In fact, the agreement clearly states that 

“under no circumstances will Client be responsible for 

attorney’s fees in excess of the fees specified above.”

5. The Court further finds that Section 627.428 is 

not a basis to award those attorney fees which would be 

classified as the damages suffered by an insured when its 

insurance company breaches its duty to defend. While 

the statute clearly permits Category 5 to recover the 

attorney fees incurred in prosecuting its Florida suit 

against Companion for coverage and duty to defend 

issues, it does not provide for a recovery of the fees 

incurred in defending the Alabama lawsuit (the 

underlying litigation). When Category 5 signed the fee 

agreement it only obligated itself to pay its attorneys 

those fees that were awarded by a court pursuant to 

Section 627.428. Because the fees incurred for the 

Alabama litigation could not be awarded based upon 

Section 627.428, Category 5 would not be obligated to

pay such fees to its attorneys.

After holding hearings on the award of attorney’s fees pursuant to section 627.428, 

the trial court entered a final judgment awarding attorney’s fees to Category 5. 

This appeal followed.

The intent of the parties to a contract should govern the construction of the 

contract. Am. Home Assurance Co. v. Larkin Gen. Hosp., Ltd., 593 So. 2d 195, 

197 (Fla. 1992). To determine the intent of the parties, a court should consider the 

language in the contract, the subject matter of the contract, and the object and 

purpose of the contract. Id. A court must construe a contract in a manner that 

accords with reason and probability and avoids an absurd construction. Kipp v. 
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Kipp, 844 So. 2d 691, 693 (Fla. 4th DCA 2003). The interpretation of a contract is 

a question of law subject to de novo review. City of Tampa v. Ezell, 902 So. 2d 

912, 914 (Fla. 2d DCA 1995).

In this case, Category 5 claims the trial court erred in construing the 

contingency fee agreement as not contemplating payment of attorney’s fees for 

defense of the Alabama tort litigation. Below, Companion argued the language of 

the contingency fee agreement limited the recovery of attorney’s fees to those 

incurred in litigating the Florida coverage action thereby allowing no recovery for 

attorney’s fees incurred in defending Category 5 in the Alabama tort action. Even 

though Category 5 and its counsel disputed that this was their intent when they 

entered the contingency fee agreement, the trial court agreed with Companion and 

granted partial summary judgment in Companion’s favor on this issue. 

This ruling was in error because Companion had no standing to advance a 

construction of the contingency fee agreement to which it was neither a party nor a 

third-party beneficiary. See Gallagher v. Dupont, 918 So. 2d 342, 347 (Fla. 5th 

DCA 2005) (“When a contract is designed solely for the benefit of the contracting 

parties, a third party cannot enforce its provisions even though the third party may 

derive some incidental or consequential benefit from the enforcement.”). Because 

there is nothing in the contingency fee agreement demonstrating any intent to 

benefit Companion, it cannot impose an interpretation of the agreement that runs 
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counter to the intent of the parties to the contract, who agree that they 

contemplated recovery of attorney’s fees incurred in defending the Alabama tort 

action. 

The inclusion of such fees is consistent with the subject matter and the 

object and purpose of the contract, which contemplated bringing a lawsuit in 

Florida against Companion for a breach of its duty to defend Category 5 in the 

Alabama tort action. “The law is well established that when an insurer 

unjustifiably refuses to defend its insured, the insurer is liable to the insured for the 

reasonable attorney’s fees and other expenses incurred in defending the action 

brought by the third party as damages for the breach of contract.” Fla. Ins. Guar. 

Ass’n v. All the Way with Bill Vernay, Inc., 864 So. 2d 1126, 1129 (Fla. 2d DCA 

2003). Thus, by bringing suit against Companion for breach of its duty to defend 

Category 5 in the Alabama tort action, Category 5 and its counsel were seeking 

damages from Companion in the form of attorney’s fees incurred in the Alabama 

tort action. However, under Companion’s interpretation of the contingency fee 

agreement, Category 5 and its counsel waived the legal right to recover these 

damages, depriving counsel of substantial attorney’s fees and gifting Companion 

with an unwarranted windfall by excusing it from the legal consequences of its 

failure to defend Category 5. Such an interpretation is not compelled by the 

language of the contingency fee agreement, is contrary to the intent of the parties 
8

to the contract, is not consistent with the subject matter or object and purpose of 

the contract, and borders on the absurd insofar as it would compel counsel to 

represent Category 5 pro bono in the Alabama tort action.

Concluding the trial court erred in construing the contingency fee agreement, 

we reverse and remand for an award of reasonable attorney’s fees incurred by 

Category 5 in defending the Alabama tort action. At this point, we decline to 

address (1) whether Companion waived its right to a jury trial on the issue of the 

reasonable amount of attorney’s fees incurred by Category 5 in the Alabama tort 

action or (2) whether fees expended in pursuit of a defense and indemnity from 

Colonel McCrary Trucking were a reasonable and necessary part of Category 5’s 

defense in Alabama. Because they involve factual issues, these matters should be 

resolved by the trial court on remand.

AFFIRMED in part; REVERSED in part; and REMANDED for further 

proceedings.

LEWIS and WINOKUR, JJ., CONCUR.