Gregg, G. v. Ameriprise Financial ( 2022 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
GARY L. GREGG AND MARY E. : IN THE SUPERIOR COURT OF
GREGG : PENNSYLVANIA
:
Appellants :
:
:
v. :
:
: No. 628 WDA 2021
AMERIPRISE FINANCIAL, INC., :
AMERIPRISE FINANCIAL SERVICES, :
INC., RIVERSOURCE LIFE :
INSURANCE COMPANY AND ROBERT :
A. KOVALCHIK
Appeal from the Order Entered April 29, 2021
In the Court of Common Pleas of Allegheny County
Civil Division at No(s): GD01-6611
BEFORE: MURRAY, J., SULLIVAN, J., and COLINS, J.*
MEMORANDUM BY SULLIVAN, J.: FILED: June 30, 2022
Appellants Gary L. and Mary E. Gregg (“the Greggs”) appeal from the
order directing Ameriprise Financial, Inc., Ameriprise Financial Services, Inc.,
Riversource Life Insurance Company, and Robert A. Kovalchik (“the insurance
companies”), to pay attorney fees to the Greggs. We affirm.
In 1999, Robert A. Kovalchik (“Kovalchik”), a financial advisor, solicited
the Greggs as clients. The Greggs followed Kovalchik’s advice and liquidated
their insurance policies, surrendered their existing IRAs, placed their assets in
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* Retired Senior Judge assigned to the Superior Court.
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an IDS Life Insurance policy (“the IDS policy”),1 and authorized an automatic
checking account withdrawal to pay the savings portion of the IDS policy and
to fund two IRAs as Kovalchik recommended.2 When it was not possible for
all of the Greggs’ liquidated prior insurance policy funds to go into the IDS
policy, Kovalchik told them that he would deposit the majority of that money
into the IDS policy. Instead, he put some of that money into the IRAs, and
later diverted the majority of the remaining money into a growth fund, without
informing them. The Greggs sent $200 every month to Kovalchik to pay for
the IDS policy. Instead of doing so, Kovalchik put the money in the growth
fund, which paid him commissions. Gregg v. Ameriprise Financial, Inc.,
195 A.3d 930, 934 (Pa. Super. 2018), affirmed, 245 A.3d 637, 641 (Pa. 2021).
The Greggs received notice in 2001 that the insurance companies had
violated the law. They sued, alleging fraudulent misrepresentation, negligent
misrepresentation, and violation of the Uniform Trade Practices Consumer
Protection Law (“UTPCPL”).3 Gregg, 195 A.3d at 934.
The fraudulent and negligent misrepresentation claims were tried by a
jury, and the insurance companies were found not liable. Relying on the same
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1 The insurance companies, the Appellants in this case, later acquired IDS.
2 At Kovalchik’s direction, the Greggs forewent enrolling in an Air Force-
provided plan that would have provided Mrs. Gregg benefits if her husband
predeceased her.
3 See 73 P.S. § 201-1.-10.
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trial record, the trial court found that Kovalchik had violated the UTPCPL by
not clearly and fully explaining the IDS policy to the Greggs, which caused
their detrimental reliance on the insurance companies.4 The trial court
ordered the insurance companies to pay approximately $50,000 in UTPCPL
damages to the Greggs. Id. at 935.
The Greggs submitted a petition for attorney fees under the UTPCPL.
After briefing and oral argument from the parties, the trial court set fees for
the Greggs’ attorneys Kenneth R. Behrend, Esquire (“Attorney Behrend”) at
$400 per hour, and Kevin M. Miller, Esquire (“Attorney Miller”) at $275 per
hour, for a total fee of approximately $70,000, to be paid by the insurance
companies. Trial Court Opinion, 4/29/21, at 2.
The insurance companies appealed the trial court’s factual finding of
UTPCPL liability. After six years of appellate litigation, this Court affirmed the
judgment on the basis that the jury’s finding that the insurance companies
were not liable on the Greggs’ common law claims did not preclude the trial
court from finding those companies liable under the UTPCPL for deceptive
conduct, and our Supreme Court affirmed. Gregg, 195 A.3d at 940, affirmed,
245 A.3d at 641.
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4 The UTPCPL’s provision for private actions allows a trial court to assess and
award actual damages for violations of the statute. See 73 P.S. § 201-9.2
(a). The statute also authorizes the trial court to award reasonable attorney
fees. Id.
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At the conclusion of the appellate litigation, the Greggs filed petitions
seeking additional attorney fees incurred in the appellate litigation. Attorney
Behrend petitioned for an hourly rate of $700. Attorney Miller requested $550
per hour. The insurance companies proposed a range between $400 and $500
for Attorney Behrend, and $235 to $318 for Attorney Miller. Each side
submitted affidavits from experts stating their opinions of reasonable fees in
a UTPCPL case in Western Pennsylvania for appellate litigation attorneys with
comparable experience to Attorneys Behrend and Miller. The trial court
conducted a hearing at which it heard the testimony of the parties’ experts.
The Greggs’ expert advocated for higher fees based on Attorneys Behrend’s
and Miller’s experience, the limited number of attorneys willing to take on
UTPCPL contingent fee cases, society’s interest in the prosecution of such
cases, and the difficulty of such cases. See N.T., 4/23/21, 36-44. The
insurance companies’ expert advocated for lower fees consistent with annual
increases for law firm associates in Western Pennsylvania. See N.T., 4/23/21,
86-93.
On April 29, 2021, the court issued its memorandum opinion, ordering
an hourly fee for Attorney Behrend of $550, and $375 for Attorney Miller, for
a total of approximately $301,000, a figure it found proportional to the
damages award to the Greggs. See Trial Court Opinion, 4/29/21, at 12-13.
The court also struck a total of 3.8 hours of Attorney Behrend’s time as
unbillable administrative time. Id. at 8-10. The trial court found that the
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complexity and novelty of the issues in the case and the uncertainty of
compensation supported the grant of a significant fee increase above the rate
it had granted Attorneys Miller and Behrend for their trial work. Id. at 7. It
found, however, that despite the complexity of the case, the uncertainty of
compensation, and Attorneys Behrend’s and Miller’s continuing work in the
UTPCPL field, the attorneys had not demonstrated that it was reasonable to
award the “dramatic increases” in hourly rates they sought for their appellate
work: a requested increase from $400 to $700 per hour for Attorney Behrend,
and a requested increase from $275 to $550 per hour for Attorney Miller. Id.
at 6-7.
The Greggs filed a timely notice of appeal.5 The trial court did not order
a Rule 1925(b) statement of errors complained of on appeal, and did not file
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5 On July 30, 2021, this Court issued a rule to show cause why the appeal
should not be quashed pursuant to Pa.R.Civ.P. 227.1 (“Rule 227.1”), because
the Greggs had not filed post-trial motions. The Greggs filed a response. The
rule was discharged and referred to this panel for disposition.
To determine whether Rule 227.1 mandates post-trial motions after a
“proceeding,” appellate courts consider whether: (1) the plain language of the
rule requires the motion; (2) case law requires the motion; and (3) practicing
attorneys would reasonably consider the motion necessary. G&G Investors,
LLC v. Phillips Simmons Real Estate Holdings, LLC, 183 A.3d 472, 477
(Pa. Super. 2018). Neither Rule 227.1 nor the case law explicitly requires a
post-trial motion in fee-shifting petitions filed post-hearing. Thus, it is unclear
whether practicing attorneys would reasonably consider a Rule 227.1 motion
necessary in this case. Because the trial court here referred to the proceeding
as a “hearing,” and because fee petitions are ancillary to trials, see Samuel-
Bassett, v. Kia Motors America, Inc., 34 A.3d 1, 49 (Pa. 2011), we decline
to find that the parties would reasonably have expected the need to file post-
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a 1925(a) opinion. Its opinion and order awarding attorney fees disposes of
all claims and parties, and constitutes a final order from which appeal may be
taken. See Pa.R.A.P. 341(b)(1).
The Greggs present the following issues for our review:
1. The legal standards for setting hourly rates in UTPCPL cases
was [sic] set forth by this Court in Sewak v. Lockhart, 699
A.2d 755 (Pa. Super. 1997). The trial court determined that
since it awarded an hourly rate six years ago, the method for
determining the current hourly rate was limited to an annual
percentage increase from the prior rate to the exclusion of the
Sewak factors. Did the trial court err?
2. Counsel fees are awarded for preparing a fee petition. While
preparing the fee petition, attorneys must use their experience
and skill to perform a “billing judgment” review to qualitatively
analyze the time entries and remove any which are redundant,
excessive, or administrative. Attorneys’ use of experience and
skill is not an administrative function. Did the trial court err by
denying counsel fees for time associated with “billing
judgment” on the basis that it was administrative?
Greggs’ Brief at 6.
The Greggs’ first issue asserts that the trial court erred by constraining
its award of fees to an annual percentage increase from its 2015 award to the
exclusion of the Sewak factors. They argue that the trial court failed to
consider their attorneys’ increase in expertise between trial and the conclusion
of the appellate process. They also assert that in their trial fee petition,
Attorneys Behrend and Miller deliberately undervalued their services in the
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trial motions. We therefore decline to quash the appeal on the basis of Rule
227.1.
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hopes of forestalling appellate litigation, and that undervaluation should not
limit the award of appellate attorney fees.
Appellate review of a trial court’s order awarding attorney fees is limited
to determining whether the trial court palpably abused its discretion in making
a fee award. If the record supports a trial court’s finding of fact that a litigant
violated the conduct provisions of the relevant statute providing for the award
of attorney fees, such award should not be disturbed on appeal. See
Thunberg v. Strause, 682 A.2d 295, 299 (Pa. 1996) (citations omitted).
The purpose of the UTPCPL is to protect the public from fraud and unfair
or deceptive business practices. See 73 P.S. §§ 201-2., 201-3. To facilitate
that goal, in addition to other relief, the statute permits a court to award
costs and reasonable attorney fees. See 73 P.S. § 201-9.2(a); see also
Krishnan v. Cutler Group, Inc., 171 A.3d 856, 871 (Pa. Super. 2017). In
cases involving a lawsuit that includes claims under the UTPCPL, a trial court
considers the following factors when assessing the reasonableness of counsel
fees:
(1) [t]he time and labor required, the novelty and difficulty of the
questions involved and the skill requisite properly to conduct the
case; (2) [t]he customary charges of the members of the bar for
similar services; (3) [t]he amount involved in the controversy and
the benefits resulting to the clients from the services; and (4)[t]he
contingency or certainty of the compensation.
Sewak v. Lockhart, 699 A.2d 755, 762 (Pa. Super. 1997), abrogated on
other grounds, 245 A.3d 637, 648 (Pa. 2021).
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The determination of reasonable attorney fees is a case-specific
endeavor. See Braun v. Wal-Mart Stores, Inc., 24 A.3d 875, 978 (Pa.
Super. 2011). A trial court’s fee award will not be disturbed absent a clear
abuse of discretion. See Sewak, 699 A.2d at 762. To demonstrate an abuse
of discretion, an appellant must show manifest unreasonableness, partiality,
prejudice, bias, ill-will, or a lack of support in the law or record for a fee award
to be clearly erroneous. See Samuel-Bassett, 34 A.3d at 51.
The trial court considered the Greggs’ first argument and concluded that
it lacked merit in light of its consideration and application of the Sewak
factors. See Trial Court Opinion, 4/29/21, at 4, 13. Concerning the first
Sewak factor, “the time and labor required, the novelty and difficulty of the
questions involved and the skill requisite properly to conduct the case,” the
trial court expressly stated that it had rejected the insurance companies’
proposed attorney fee range because it failed to take into account the fact
“that fee-shifting cases under the UTPCPL involve complex and sometimes
novel issues that can take many years to resolve through the appellate
courts. . ..” Id. at 7. The trial court also found the number of hours the
Greggs’ attorneys worked on the case to be reasonable “in light of the
complexity and novelty of the issues.” Id. at 13.
Concerning the second Sewak factor, “the customary charges of the
members of the bar for similar services,” the trial court considered the Greggs’
expert’s testimony that they were entitled to a substantially higher appellate
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fee rate than their trial fee and the insurance companies’ proposed fee
structure, which suggested that the proper benchmark was the annual salary
increases at a fifty-five-person law firm. See N.T., 4/23/21, 123-25. The trial
court declined to accept either proposed method of calculation. It found that
the Greggs’ expert had not shown Attorneys Behrend’s and Miller’s entitlement
to increases of $300 per hour and $250 per hour respectively above their trial
fees. See Trial Court Opinion, 4/29/21, at 5-6. It also found that the
insurance companies’ expert’s proposed fee rate, based on annual law firm
salary increases, failed to account for the novelty of UTPCPL cases and the
contingent nature of recovery. Id. at 7. Moreover, at the fee hearing, the
trial court demonstrated that the insurance companies’ expert had
recommended an hourly fee lower than that suggested by his own statistical
model. See N.T., 4/23/21, 117-121. To set reasonable attorney fees, the
court also looked to the range of reasonable attorney fees that had been
awarded in recent UTPCPL cases, see id. at 122-123 (noting that three courts
in recent UTPCPL cases had awarded hourly rates of $400, $600, $550,
respectively). Having conducted its review, the trial court concluded that the
hourly attorney fees it set - $550 for Attorney Behrend and $375 for Attorney
Miller - were “reasonable and comparable to the hourly rates approved for
[the Greggs’ counsel] in similar cases involving UTPCPL claims.” See Trial
Court Opinion, 4/29/21, at 6.
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Concerning the third Sewak factor, “the amount involved in the
controversy and the benefits resulting to the clients from the services,” a
factor that also involves an assessment of the proportionality between the
award of damages and the attorney fees, see Richards v. Ameriprise
Financial, Inc., 217 A.3d 854, 870-71 (Pa. Super. 2019), the trial court
declared that its award was consistent with the legislature’s goal to punish
and deter unfair and deceptive business practices. See Trial Court Opinion,
4/29/21, at 13. The trial court also explained that its award was consistent
with awards in other UTPCPL cases. See id. at 5-6. Finally, it found that its
attorney fees award would pass a test of the proportionality of the damages
and fee awards, even though such test was less relevant here where the fees
arose not from trial litigation but appellate litigation the insurance companies
occasioned. See id. at 12.
The trial court applied the final Sewak factor, “the contingency or
certainty of the compensation,” when it faulted the insurance companies’
proposal’s failure to consider the complex and sometime novel nature of
UTPCPL cases and “that recovery is not guaranteed in these cases.” Id. at 7.
See also id. at 13 (citing the UTPCPL’s goal to punish and deter unfair and
deceptive business practices “and to encourage experienced attorneys to
litigate such cases, even where recovery is uncertain”) (citation omitted).
The trial court specifically considered that Attorneys Behrend and Miller
were “well-seasoned at the top of their field of UTPCPL cases” when it first
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awarded attorney fees in 2015 for the trial. See Trial Court Opinion, 4/29/21,
at 6. However, their continued work on UTPCPL rates did not, in the trial
court’s view, support the significant increase in attorney fees they sought in
2021. See id. The trial court rejected the Greggs’ argument that counsel had
previously undervalued their legal services when applying for attorney fees
incurred before and through trial. Id.
We discern no abuse of discretion in the trial court’s ruling. The trial
court’s opinion and the hearing on the attorney fees petition both demonstrate
that the trial court did not rely on a purely mathematical formula in setting
Attorney Behrend’s and Attorney Miller’s hourly rates in this case, and properly
weighed all four Sewak factors. Specifically, the trial court acknowledged the
novelty and complexity of the issues in this case, considered numerous
proposed methods for determining reasonable rates, recognized the benefits
to the Greggs of the case, and rejected the insurance companies’ proposed
rates that failed to factor in the contingency and uncertainty of recovery in a
UTPCPL case. See Sewak, 699 A.2d at 762.
The Greggs’ own expert testified that a trial court has the ultimate
responsibility to determine a reasonable fee: “[I] can certainly see why one
judge might see it one way and another judge see it the other way. In some
respects, it is more of an art than a science.” N.T., 4/23/21, at 62-63
(testimony of expert Honorable Ralph J. Cindrich).
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Similarly, we do not find an abuse of discretion in the trial court’s
rejection of the Greggs’ assertion that their attorneys deliberately undervalued
their services when petitioning for trial fees, and that that undervaluing
supported the grant of a higher appellate attorney fees. The record shows
that the Greggs’ attorneys expressly requested the precise trial fee rates they
received: $400 for Attorney Behrend and $275 for Attorney Miller. See
Greggs’ Post-Verdict Motion, 1/6/15, at 9. In fact, Attorneys Behrend and
Miller affirmatively argued that the rule of coordinate jurisdiction mandated
that they receive those rates because they had received them in another case
against the same parties. See Greggs’ Reply Brief, 2/6/15, at 2. The record,
therefore, refutes the assertion that the attorneys had previously undervalued
their services.
Because the hourly appellate fees the trial court awarded – $550 for
Attorney Behrend and $375 for Attorney Miller – represented a significant
increase over their prior fee request, we find no basis in the record to conclude
that the trial court failed to properly weigh their additional UTPCPL experience
between trial and appeal. Rather, the record supports the trial court’s
conclusion that the Greggs did not adequately explain or justify the requested
hourly increases of $300 for Attorney Behrend and $275 for Attorney Miller,
where the court had already recognized them as being at the top of the field
of UTPCPL cases when it awarded trial fees. See Trial Court Opinion, 4/29/21,
at 6.
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The trial court’s attorney fees determination considered all of the Sewak
factors and did not constrain its award to an annual percentage increase to
the exclusion of those factors. Thus, we conclude that the trial court did not
abuse its discretion in awarding hourly attorney fees of $550 to Attorney
Behrend and $400 to Attorney Miller.
In their second issue, the Greggs assert that the trial court abused its
discretion by striking 4.7 hours6 of Attorney Behrend’s requested time as
billing judgment review. Greggs’ Brief at 61.
It is an appellant’s duty to comply with our rules of appellate procedure,
and non-compliance may result in dismissal of the appeal. Commonwealth
v. Drew, 510 A.2d 1244, 1245 (Pa. Super. 1986). An appellant’s duty
requires it to present arguments that are sufficiently developed for our review.
See Pa.R.A.P. 2119(a). An appellant’s brief must support its claims with
pertinent discussion, references to the record, and citations to legal
authorities. See id.; see also Commonwealth v. Hardy, 918 A.2d 766,
771 (Pa. Super. 2007). “This Court will not act as counsel and will not develop
arguments on behalf of an appellant.” Hardy, id. If a deficient brief hinders
this Court’s ability to address any issue on review, the issue will be regarded
as waived. See Commonwealth v. Gould, 912 A.2d 869, 873 (Pa. Super.
2006) (holding that an appellant’s failure to support his claim with factual
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6The actual amount of time excluded on that basis was 3.8 hours. See Trial
Court Opinion, 4/29/21, at 8-9.
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background and citations to the record represented “serious deviations from
the briefing requirements of the Rules of Appellate Procedure,” waiving review
of the claim) (citation omitted).
The Greggs’ brief fails to conform to our appellate rules, thereby
hindering our review of this issue, and resulting in waiver. Gould, 912 A.2d
at 873. The Greggs’ only discussion of the facts of the case is their assertion
that Attorney Behrend used the time excluded by the trial court to remove
time not chargeable to the insurance companies. However, the brief does not
provide a factual background of the claim or citations to the record.
Specifically, it provides no factual assertions about: the nature of Attorney
Behrend’s billing judgment review, how many hours Attorney Behrend
excluded as a result of that billing review, or how much of the time Attorney
Behrend devoted to billing review the trial court determined was properly
billable. We decline to act as counsel for the Greggs and to relate the facts of
their case to the law. Their failure to provide factual background and citations
to the record hinders our ability to assess their claim that the trial court abused
its discretion in its selective excision of attorney time relating to billing.
Accordingly, the claim is waived.
Judgment affirmed.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 6/30/2022
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