Bernie Clemens v. New York Central Mutual Fire IBernie Clemens v. New York Central Mutual Fire I
(Opinion Filed: September 12, 2018)
James C. Haggerty
Haggerty Goldberg Schleifer & Kupersmith
1835 Market Street, Suite 2700
Philadelphia, PA 19103
Michael R. Mey
Mey & Sulla
1144 East Drinker Street
Dunmore, PA 18512
Michael J. Pisanchyn
Pisanchyn Law Firm
524 Spruce Street
Scranton, PA 18503
Counsel for Appellants
Charles E. Haddick, Jr.
Dickie McCamey & Chilcote
425 North 21st Street
Plaza 21, Suite 302
Camp Hill, PA 17011
Counsel for Appellee
OPINION
After a jury awarded him $100,000 in punitive damages under the Pennsylvania Bad Faith Statute,
I. BACKGROUND
Dissatisfied with NYCM‘s handling of his insurance claim related to a serious car accident, Clemens filed suit against the company in the Court of Common Pleas of Monroe County, asserting a contractual underinsured motorist (“UIM“) claim and a claim under the Bad Faith Statute,
As the prevailing party under the Bad Faith Statute, Clemens then submitted a petition for attorney‘s fees, in which he requested an award of $946,526.43 in fees and costs.1 The District Court denied this request in its entirety, however. In a thorough and well-reasoned one-hundred-page
II. JURISDICTION
The District Court had jurisdiction under
III. DISCUSSION
The Pennsylvania Bad Faith Statute provides that
[i]n an action arising under an insurance policy, if the court finds that the insurer has acted in bad faith toward the insured, the court may take all of the following actions:
(1) Award interest on the amount of the claim from the date the claim was made by the insured in an amount equal to the prime rate of interest plus 3%.
(2) Award punitive damages against the insurer.
(3) Assess court costs and attorney fees against the insurer.
In exercising their discretion under the statute, courts are guided by Pennsylvania Rule of Civil Procedure 1717, which provides that the relevant considerations include “the time and effort reasonably expended;” “the quality of the services rendered;” “the results achieved and benefits conferred upon the class or upon the public;” “the magnitude, complexity and uniqueness of the litigation;” and “whether the receipt of a fee was contingent on success.” See Polselli, 126 F.3d at 532 (discussing Pennsylvania Rule of Civil Procedure 1716, which was subsequently renumbered as Rule 1717).
Like with federal fee-shifting statutes, the calculation of an attorney‘s fee award under Rule 1717 begins with the lodestar method: the multiplication of the actual number of hours spent in pursuing the claim by a reasonable rate.4 Birth Ctr. v. St. Paul Cos., Inc., 727 A.2d 1144, 1160–61 (Pa. Super. 1999), abrogated on other grounds by Mishoe v. Erie Ins. Co., 824 A.2d 1153, 1156–57 & n.3 (Pa. 2003); City of Burlington v. Dague, 505 U.S. 557, 562 (1992) (“The ‘lodestar’ figure has, as its name suggests, become the guiding light of our fee-shifting jurisprudence.“).
Under the lodestar method, “[t]he party seeking attorney‘s fees has the burden to prove that its request ... is reasonable.” Rode v. Dellarciprete, 892 F.2d 1177, 1183 (3d Cir. 1990). “When the applicant for a fee has carried [its] burden of showing that the claimed rates and number of hours are reasonable, the resulting product is presumed to be the reasonable fee to which counsel is entitled.” Maldonado v. Houstoun, 256 F.3d 181, 184 (3d Cir. 2001) (quoting Pennsylvania v. Del. Valley Citizens’ Council for Clean Air, 478 U.S. 546, 564 (1986)). But courts “have a positive and affirmative function in the fee fixing process, not merely a passive role.” Id. “In calculating the hours reasonably expended, a court should ‘review the time charged, decide whether the hours set out were reasonably expended for each of the particular purposes described and then exclude those that are “excessive, redundant, or otherwise unnecessary.“‘” Id. (quoting Pub. Interest Research Grp. of N.J., Inc. v. Windall, 51 F.3d 1179, 1188 (3d Cir. 1995)).
As noted above, the District Court‘s lodestar calculation here reduced Clemens‘s requested fee by eighty-seven percent. After making that reduction, the court then decided to award no fee at all in light of the excessive nature of the request.
Although it was unusual, we cannot say that this decision was an abuse of discretion. Review of the record and the District Court‘s comprehensive opinion makes clear that denial of a fee award was entirely appropriate under the circumstances of this case. Counsel‘s success at trial notwithstanding, the fee petition was severely deficient in numerous ways.
As a starting point, counsel did not maintain contemporaneous time records for most of the litigation. Instead, by their own admission, counsel “recreate[d]” all of the records provided as part of the fee petition, using an electronic case management system that did not keep track of the amount of time expended on particular tasks. App. 503. Even worse, the responsibility of reconstructing the time records was left to a single attorney, who retrospectively estimated not only the length of time she herself had spent on each individual task, but also the amount of time others had spent on particular tasks, including colleagues who could not be consulted because they had left the firm by the time the fee petition was filed.5 We have never strictly required that fee petitions be supported by contemporaneous records, but
Here, it does not even require added scrutiny to discover further problems with the fee petition. For one, many of the time entries submitted were so vague that there is no way to discern whether the hours billed were reasonable. Counsel‘s time records included, for instance, entries billing for attorney services described as “Other,” “Communicate,” or “Communicate-other.” E.g., App. 327, 329, 336, 338, 342–43. Similarly, the fee petition included a number of entries for “Attorney review,” “Analysis/Strategy,” or “Review/analyze” with no additional explanation regarding the subject or necessity of the review. E.g., App. 300–07, 331, 334–35, 338, 347. We are mindful of confidentiality obligations, but time entries still must “be specific enough to allow the district court to determine if the hours claimed are unreasonable for the work performed.” Washington v. Phila. Cty. Ct. of Com. Pl., 89 F.3d 1031, 1037 (3d Cir. 1996) (internal quotation marks omitted) (quoting Keenan, 983 F.2d at 472). These entries, as well as many others, were nowhere near specific enough.
In addition to the vague entries, some entries were, on their face, unnecessary or excessive. For example, over the course of one week, and at the same time counsel were billing for trial preparation, counsel billed a total of sixty-four hours for “Transcripts/clips.” See App. 360. Whatever this means, we are confident that it was not necessary to spend sixty-four hours on it given the straightforward nature of the case. Of a similar vein are the frequent entries that requested attorney rates for “File maintenance,” “File management,” and “Document management,” e.g., App. 330–34, 336, 338–42, some of which were for as long as seven hours in a single day. App. 333, 336. Without more information, these tasks appear “purely clerical” in nature and should not be billed at a lawyer‘s rate—nor for many hours at a time. Missouri v. Jenkins ex rel. Agyei, 491 U.S. 274, 288 n.10 (1989).
Then there are the staggering 562 hours that counsel billed for “Trial prep” or “Trial preparation” with no further description of the nature of the work performed. See App. 358–63. We agree with the District Court that this is an “outrageous” number under the circumstances. App. 630. As the District Court put it, “[i]f counsel did nothing else for eight hours a day, every day, [562 hours] would mean that counsel spent approximately 70 days doing nothing but preparing for trial in this matter.” App. 630. Yet the trial consisted of only four days of substantive testimony, and involved a total of only five witnesses for both sides. The sole issue was whether NYCM had acted in bad faith in its handling of Clemens‘s UIM claim. Counsel certainly have an obligation to be prepared, but we simply cannot fathom how they could have reasonably spent such an astronomical amount of time preparing for trial in this case, and we highly doubt they would have billed their own client for all of the hours claimed, see Maldonado, 256 F.3d at 184 (“Hours that would not generally be billed to one‘s own client are not properly billed to an adversary.” (quoting Pub. Interest Research Grp., 51 F.3d at 1188)).
All the more troubling is the fact that counsel‘s (supposedly) hard work did not
Aside from the problems with the hours billed for individual tasks, counsel also neglected their burden of showing that their requested hourly rates were reasonable in light of the prevailing rates “in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation.” Maldonado, 256 F.3d at 184 (quoting Rode, 892 F.2d at 1183). Indeed, counsel bore “the burden of establishing by way of satisfactory evidence, in addition to [their] own affidavits, ... that the requested hourly rates [met] this standard.” Id. (omission in original) (internal quotation marks omitted) (quoting Washington, 89 F.3d at 1035). Here, the five billing attorneys did not even submit their own affidavits identifying their usual billing rates or describing their levels of experience. And only one of the five attorneys testified at the hearing on the fee petition about her background and experience. Thus, for four of the five billing lawyers, including lead trial counsel, the District Court was provided no information whatsoever on which it could make a determination as to whether the requested hourly rate was reasonable.
The District Court would have liked to disallow any hours billed by those four lawyers, see App. 646–47, and it would have been within the court‘s discretion to do so. But the court was not able to because the fee petition did not indicate which attorney performed each particular task. The District Court therefore disallowed all hours billed prior to the one testifying lawyer‘s arrival at the firm, those billed for multiple attorney “roundtables,” and all trial hours billed by more than one lawyer. App. 647 n.62. Other than those hours, however, the court gave counsel the “benefit of the doubt” and assumed that the one testifying lawyer had performed all of the hours billed after she had joined the firm that had not already been disallowed for some other independent reason. App. 646.
As a result, the District Court‘s lodestar calculation, if anything, overestimated the amount of hours to which counsel were entitled. And still, the court concluded—based on the disallowances described above, as well as other reductions—that counsel were entitled to only thirteen percent of the fees they requested. The court thus found the request “outrageously excessive” and exercised its discretion to award no fee at all. App. 649.
Although we have never had the opportunity to formally endorse such an approach, other circuits have, holding that district courts have the discretion to deny a fee request in its entirety when the requested amount is “outrageously excessive” under the circumstances. Brown v. Stackler, 612 F.2d 1057, 1059 (7th Cir. 1980); see also, e.g., Scham v. District Courts Trying Criminal Cases, 148 F.3d 554, 556–59 (5th Cir. 1998), abrogated on other grounds as recognized in Bailey v. Mississippi, 407 F.3d 684, 686–87 (5th Cir. 2005); Envtl. Def. Fund, Inc. v. Reilly, 1 F.3d 1254, 1258–60 (D.C. Cir. 1993); Fair Hous. Council of Greater Wash. v. Landow, 999 F.2d 92, 97 (4th Cir. 1993); Lewis v. Kendrick, 944 F.2d 949, 956–58 (1st Cir. 1991).6
Here, the District Court provided a thorough explanation of how counsel failed to fulfill their duty to the court. This failure, coupled with the other deficiencies in the petition and counsel‘s substandard performance, justified the District Court‘s decision to deny the fee request in its entirety. That decision was not an abuse of discretion.
IV. CONCLUSION
For the foregoing reasons, we will affirm the order of the District Court.