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PA Appeals Court: No ‘Fees for Fees’ in Trust’s $2.9M Fee Request

November 27, 2019 | Posted in : Billing Practices, Expenses / Costs, Fee Award, Fee Award Factors, Fee Dispute, Fee Entitlement, Fee Issues on Appeal, Fee Jurisprudence, Fee Reduction / Fee Denial, Fee Request, Fees for Fees, Hourly Rates / Hourly Billing, Legal Bills / Legal Costs

A recent Law 360 story by Matthew Santoni, “Pa. Appeals Court Snuffs Trust’s $2.9M Bid for ‘Fees on Fees’,” reports that a trust that sought $4 million in legal fees over a $9,000 property condemnation was not entitled to another $2.85 million in "fees on fees" to cover the cost of fighting for the first fee award, a Pennsylvania appellate court ruled.  A Pennsylvania Commonwealth Court panel said an Erie County judge was right to slash the Angela Cres Trust's request for fees by 90% because the trust had not sufficiently justified its 2015 request for the $2.85 million, and state law said property owners were not guaranteed to have their legal bills paid in condemnation proceedings if they were not justified.

"The Eminent Domain Code does not require that a condemnee be made whole, as the trust seems to presume," wrote President Judge Mary Hannah Leavitt for the unanimous panel.  "It was the trust's burden to prove that its fees and costs in litigating the fee petition were reasonable, and it did not do so."

The panel upheld the Erie County Court of Common Pleas' award of $285,000 in costs and fees, agreeing that winning just $682,000 of the underlying $4 million request for fees and costs was a "limited success" for the trust, and ruling that there had been no error in the judge's findings that the large request for fees-on-fees had not been fully supported.

Millcreek, Pennsylvania, had sought to condemn a piece of trust-owned property valued at $9,000 in 2005, but after four years the court sustained the trust's preliminary objections on the grounds that the township lacked authority to condemn the land for a water channel.  Appeals and an amended declaration of taking kept the underlying dispute going through 2012, and by 2014, the trust sought to make the township pay $3.4 million in attorney fees and costs and another $650,000 for its experts' testimony and reports.  The trial court awarded only $682,000 in total, which the Commonwealth Court affirmed in 2016.  While that appeal had been pending, the trust made its request for the fees-on-fees in 2015, according to the opinion.

After a three-day hearing on the trust's petition for the additional fees, the court awarded just $285,000, citing work that was allegedly duplicated or done by expensive partners when it could have been handled by less expensive attorneys; hourly rates for attorneys and paralegals that were higher than the market rate for Erie County; and vague "block billing" where a single time entry on the record covered multiple tasks.  The trust had claimed the trial court's award of 10% of its request was arbitrary and capricious, but the appellate court disagreed.

"Simply, the award of 10 percent of the actual fee incurred was the best the trial court could do given the block billing practice of the trust's attorneys and its inability to provide the court with the expected 'amplification,'" the court said, referring to a term used by the township's expert in the trial phase.  "Because the trust's witnesses did not provide a clarification of each task and the time spent, the trial court lacked the evidence needed to conclude that the fees and costs paid by the trust were reasonable."

The trial court had also found that the trust was billed for a "speculative" motion for reconsideration, a "superfluous" post-trial motion and a mediation process that dealt with stormwater problems, not the underlying condemnation or fee dispute, so the Commonwealth Court deferred to the lower court's judgment on those proceedings being unnecessary and ineligible to be charged to the township.

"We agree with the trust that the Eminent Domain Code should be given a broad reading when determining whether a particular legal task was caused by the condemnor's action," the appellate court said.  "However, causation is a matter for the trial court to decide. It decides whether certain tasks constitute a reasonable legal response to a condemnor's action or have an attenuated relation to the condemnation."

The Commonwealth Court also said the Erie County judge made no error in giving more credit to the township's expert on legal billing than the trust's expert and had properly considered the factors for whether a fee request is reasonable as set forth by the Supreme Court of Pennsylvania's 1968 ruling In re: LaRocca's Trust Estate.

The trust complained that the court improperly weighed the trustee's wealth as part of the "client's ability to pay," one of the 11 LaRocca factors that also include the amount of work done, the complexity of the task and the amount of money or property value in question.  The Commonwealth Court said that factor was ultimately irrelevant to the finding that the fee request was not adequately supported.

"In the end, it was not the trustee's wealth that caused the trial court to reduce the trust's request ... it was the trial court's holding that the trust did not prove that any specific part of that $2.85 million was reasonable," according to the opinion.  "The real point is that not every LaRocca factor is relevant and required to be considered by the court."

The appellate court noted that while the township claimed the trust wasn't entitled to any fees at all for litigating its earlier fee petition, the trial court disagreed and gave the trust its 10% award.  "The trust was entitled to pursue all means and any cost to save its land and recover its attorney fees.  It does not follow, however, that all those fees, costs and expenses were reasonable, as required by the Eminent Domain Code before the condemnor must reimburse the condemnee for fees and costs," the court said.