McMullen v. Kutz

• Decision Date: 16 May 2007
• Docket Number: No. 544 MDA 2006.,544 MDA 2006.
• Parties: Marjorie R. McMULLEN, Appellant v. Ronald E. KUTZ, Appellee.
• Court: Pennsylvania Superior Court

925 A.2d 832

Marjorie R. McMULLEN, Appellant v. Ronald E. KUTZ, Appellee.

No. 544 MDA 2006.

Superior Court of Pennsylvania.

Argued November 4, 2006.

Filed May 16, 2007.

Lisa M. Coyne, Camp Hill, for appellant.

Mark F. Bayley, Carlisle, for appellee.

BEFORE: TODD, BENDER, and COLVILLE,^* JJ.

OPINION BY TODD, J.:

¶ 1 Marjorie R. McMullen ("Wife") appeals the February 21, 2006 order of the Cumberland County Court of Common Pleas awarding her $1,200, instead of the $2,931.99 she had requested, in legal fees. We affirm.

¶ 2 The relevant facts and procedural history of this case may be summarized as follows. On July 7, 2000, the parties entered into a separation and property settlement agreement under which Ronald E. Kutz ("Husband") agreed to pay Wife $1,250 a month in child support for the support of their 5 children through the age of 22 provided the children pursued a full-time college education after their 18th birthday. The agreement further specified that if either party breached any provision of the agreement, that party would be responsible for paying legal fees and costs incurred by the other party in enforcing their rights under the agreement.¹

¶ 3 On September 13, 2005, Wife filed a petition to enforce the settlement agreement, claiming that Husband had failed to pay child support for their oldest son in July and August of 2005, and that Husband had failed to pay her full share of his military pension. Wife requested the court find Husband in contempt and order him to pay in full the back child support and military pension amounts he owed, and pay her $2,931.99 in legal fees she incurred as a result of his breach. Following a hearing, on December 22, 2005, the court issued an order directing Husband to pay $500 in back child support and $281.82 in back pension pay, but deferred the issue of legal fees. On February 21, 2006, the court issued an order directing Husband to pay Wife $1,200 in counsel fees, and this appeal followed, wherein Wife presents two issues for our review:

I. Did the trial court err in substituting its own judgment of reasonable attorney's fees when the contract, previously agreed to by both parties, required payment of the legal fees and costs actually "incurred"?

II. Did the trial court err in considering settlement negotiations, or any lack thereof, as a factor in determining the reasonableness of the attorney's fees actually incurred?

(Appellant's Brief at 5.)

¶ 4 Preliminarily, we note that this Court's review of an order resolving a contempt petition is limited to deciding whether the trial court abused its discretion. McMahon v. McMahon, 706 A.2d 350, 355 (Pa.Super.1998). A trial court abuses its discretion if, in resolving the issue for decision, it misapplies the law, exercises its discretion in an unreasonable manner, or does not follow legal procedure. Glynn v. Glynn, 789 A.2d 242, 248 (Pa. Super.2001).

¶ 5 Relying on this Court's decision in Creeks v. Creeks, 422 Pa.Super. 432, 619 A.2d 754 (1993), Wife first argues that by the clear and unambiguous terms of the parties' agreement, which specified that the breaching party, in this case Husband, was responsible for the "payment of legal fees and costs incurred by [Wife] in enforcing [her] rights under [the] Agreement," (Separation and Property Settlement Agreement, 7/7/00, at ¶ 17), upon finding that Husband breached the agreement, the trial court was required to award Wife the full amount of her legal fees, regardless of whether they were reasonable. We disagree, and find Creeks to be distinguishable. In Creeks, this Court found that the trial court had erred when it concluded that the husband in that case had not breached the parties' marital contract, and in refusing to award legal fees to the wife pursuant to a provision of that contract. Unlike Creeks, here, it is undisputed that Husband breached the parties' agreement and that Wife is entitled to an award of at least some of the legal fees she incurred in pursuing this case. Moreover, contrary to the legal fees provision at issue here, which provides for the payment of such fees without specifying that they must be reasonable, the provision at issue in Creeks specifically required the fees to be "reasonably expended." See 422 Pa.Super. at 438, 619 A.2d at 757.

¶ 6 The issue in this case, which was not before us in Creeks, is whether legal fees must be reasonable even though the contract providing for the award of such fees does not specify that they must be reasonable—that is, whether a reasonableness requirement is implicit in the agreement. Based on our decision in Duffy v. Gerst, 286 Pa.Super. 523, 429 A.2d 645 (1981), we find that it is. In Duffy, the parties had entered into a contract for the sale of real estate, and the buyer was awarded $3,500 in counsel fees under the agreement after the seller defaulted.² Relevant to this case, although the agreement in Duffy provided for the award of attorneys fees, it did not specify that they must be reasonable. This Court read such a requirement into the agreement, however, noting: "It may be assumed that implicit in this provision is the condition that the attorney's fee must be a reasonable fee." See Duffy, 286 Pa.Super. at 531, 429 A.2d at 650.

¶ 7 Our finding on this issue is bolstered by decisions from our sister state of Maryland, most notably, the Maryland Court of Special Appeals decision in Rauch v. McCall, 134 Md.App. 624, 761 A.2d 76 (2000). As in this case, the issue in Rauch involved whether the trial court was precluded from examining a counsel fee request for reasonableness when the agreement in question provided for the award of counsel fees but did not specify that they must be reasonable. Despite the lack of the specific word "reasonable" in the agreement, the Rauch court found it implicit in the agreement that the fees awarded were to be reasonable and that the fees were to be reviewed accordingly. This approach was subsequently adopted by the Maryland Court of Appeals. See Atlantic Contr. & Material Co., Inc. v. Ulico Cas. Co., 380 Md. 285, 844 A.2d 460, 478 (2004) (citing Rauch, court held that when a contract entitles a party to recover counsel fees, the trial court must examine the fee request to determine whether it is reasonable even in the absence of a provision requiring that the fee request be reasonable).

¶ 8 Based on Duffy and the decisions from our sister state, we conclude that when a contract provides for the award of counsel fees, but does not specify that they must be reasonable, the trial court must nonetheless examine the fees for reasonableness. In other words, the prevailing party is only entitled to recover reasonable fees, even if the contract does not have a provision specifying that the fees must be reasonable. In this case, even though paragraph 17 of the parties' agreement does not specify that whatever fees are incurred must be reasonable, we read that requirement into the agreement and reject Wife's contention that the trial court erred by examining Wife's legal fees for their reasonableness.

¶ 9 Wife next argues that the trial court erred in considering the lack of settlement negotiations in determining the reasonableness of the legal fees she incurred.³ While we agree that offers of settlement or compromise of a disputed claim are not admissible in evidence to prove liability for or invalidity of the claim or its amount, see Pa.R.E. 408,⁴ the failure of Wife's counsel to attempt to resolve Wife's claim short of litigation is not an offer of settlement under this rule. This rule is also inapplicable because the court was considering the lack of settlement efforts to assess the reasonableness of Wife's legal fees, not the validity of her underlying claim.

¶ 10 As Husband points out, the factors considered by the court in determining the reasonableness of Wife's legal fees, including that the issues involved in the case were simple and straightforward, and its consideration of the amount awarded in the underlying dispute, are relevant considerations in determining the reasonableness of attorneys fees. See Estate of Murray v. Love, 411 Pa.Super. 618, 626-27, 602 A.2d 366, 370 (1992); Rule of Professional Conduct 1.5. Following our review of the record before us, and in consideration of these factors, we find no abuse of discretion in the court's determination that an award of $1,200 for legal fees incurred in this case was reasonable.

¶ 11 For all of these reasons, we affirm the trial court's order awarding Wife $1,200 in legal fees.

¶ 12 Order AFFIRMED.

¶ 13 COLVILLE, J. files a Dissenting Opinion.

DISSENTING OPINION BY COLVILLE, J.:

¶ 1 In my view, the trial court erred in the manner in which it assessed Appellant's counsel's fees for reasonableness. I, therefore, dissent.

¶ 2 Pursuant to the clear and unambiguous terms of the parties' settlement agreement, Appellee was required to pay to Appellant the "legal fees and costs incurred by [Appellant] in enforcing her rights under th[e] Agreement." Separation and Property Settlement Agreement, 7/7/00, at ¶ 17. I have no quarrel with the Majority's conclusion that Appellant's counsel was required to charge Appellant a reasonable fee. See Majority Opinion, at 834 ("It may be assumed that implicit in this provision is the condition that the attorney's fee must a reasonable fee.") (quoting Duffy v. Gerst, 286 Pa.Super. 523, 429 A.2d 645, 650 (1981)).⁵

¶ 3 The test for assessing the reasonableness of an attorney's fee has been stated as follows:

[T]he trial court must consider:

. . . . the amount of work performed; the character of the services rendered; the difficulty of the problems involved; the importance of the litigation; the amount of money or value of the property in question; the degree of responsibility incurred; whether the fund involved was "created" by the attorney; the professional skill and standing of the attorney in his profession; the results he was able to obtain; the ability of...