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Attorneys can petition to recover fees under the Unfair Trade Practices and Consumer Protection Law for time they spent preparing and litigating fee petitions—but only within reason, the Pennsylvania Superior Court has ruled in a case that could prove instructive for litigators across the state.

In Richards v. Ameriprise Financial, a case involving claims under the UTPCPL against Ameriprise Financial over alleged misrepresentations made by one of its financial advisers, a three-judge panel of the appeals court ruled that fee awards for hours spent pursuing fee awards can be proper. However, the panel added, the $200,363 an Allegheny County trial judge awarded to plaintiffs counsel, Kenneth Behrend of Behrend & Ernsberger in Pittsburgh, for preparing and litigating two fee petitions was excessive.

Judge Mary Jane Bowes, writing for the panel, noted there was a "dearth of Pennsylvania authority addressing the propriety of a fee award for hours spent preparing and litigating fee petitions." She added, however, that "federal courts generally permit such fees, but the hours assigned to that task must be reasonable."

"We find that an award of reasonable attorney fees under the UTPCPL for preparing fee petitions is consistent with the legislature's aim of encouraging experienced attorneys to litigate such cases, even where the damages are small," Bowes said in the precedential Aug. 21 opinion, but added, "Nonetheless, we agree with Ameriprise that Mr. Behrend spent an inordinate number of hours preparing the second and third fee petitions."

While the panel said there was evidence in the record to support Behrend's requested hourly rate of $600, Bowes, joined by Judge Jacqueline Shogan and Senior Judge Eugene Strassburger III, said the panel found it to be "presumptively unreasonable" that a seasoned UTPCPL litigator like Behrend would need to spend 85 hours researching entitlement to attorney fees under the statute and conducting bill review.

"Mr. Behrend admittedly has expertise and vast experience in UTPCPL litigation and in preparing fee petitions," Bowes said. "Indeed, the attorney affidavits he offered in support of his increased hourly rate, as well as his own affidavit in support of his fees in the underlying litigation, were recycled from a 2013 fee petition previously submitted in Boehm [v. Riversource Life Insurance Co.]."

Ameriprise also objected to four specific entries in the fee petitions, including an entry for 11 hours of research and drafting on the subject of "restitution and treble damages," which was not at issue in that appeal. The trial court, however, did not specifically address Ameriprise's arguments regarding those four line items, which rankled the appellate court.

"It is our expectation that a trial court assessing the reasonableness of attorney fees will thoroughly scrutinize the specific line items that are challenged, generally evaluate the reasonableness of the expenditure of time for the services listed in the fee petition, make adjustments when they are warranted, and explain its reasons for the award," Bowes said. "The broad-brush approach taken by the trial court impedes our ability to perform proper appellate review. Thus, we vacate the orders awarding attorney fees based on the second and third fee petitions, and remand for reconsideration of those fees in light of the foregoing."

The panel also reversed the trial court's decision to award $12,000 in attorney fees to the plaintiffs for time spent drafting an unopposed petition to publish the Superior Court's memorandum opinion on the case's first trip up to the appeals court in 2017.

"The publication of this court's memorandum opinion in Richards I did not enhance the likelihood that plaintiffs would ultimately prevail or advance the litigation or benefit them in any way," Bowes said. "Moreover, the record establishes that plaintiffs' counsel almost exclusively litigates UTPCPL insurance cases, and may have had at one time as many as 29 cases involving similar facts against Ameriprise. Publication of our memorandum decision in Richards I rendered it precedential, a benefit to plaintiffs' counsel and other clients involved in ongoing and future UTPCPL cases, but not plaintiffs herein."

Ultimately, the appellate court remanded the case to the trial court "for an overall reduction in the hours/fees attendant to preparation of the fee petitions themselves, a circumspect assessment of the accuracy and reasonableness of the complained-of line items, and the entry of a new attorney fee award consistent with this opinion."

The appellate panel did uphold the trial court's award of treble damages to the plaintiff in the amount of $102,019, but tossed out an additional $34,006 in "'restitution'" damages.

"Herein, the trial court found no liability for negligent and fraudulent misrepresentation," Bowes said. "Damages were awarded solely for violation of the catchall provision of the UTPCPL. Having ascertained that plaintiffs sustained actual damages of $34,006.44 under the UTPCPL, the trial court had the discretion to award damages up to three times that amount, i.e., a maximum of $102,019.32. By awarding $34,006.44 plus $102,019.32, the trial court erroneously awarded quadruple damages and exceeded its discretion under the UTPCPL."

Reached for comment on the decision, Behrend said the ruling provided some much-needed guidance on how fee petitions are supposed to be prepared.

He also pointed out that the court's ruling clarified that fee petitions for work done on appeal can be filed with the trial court, rather than the Superior Court.

The panel found that Pa.R.A.P. 2744 provides only that an appellate court "'may award'" attorney fees and delay damages as "'further costs damages … if it determines that an appeal is frivolous or taken solely for delay or that the conduct of the participant against whom costs are to be imposed is dilatory, obdurate or vexatious.'"

"Plaintiffs made no claim that Ameriprise's first appeal was frivolous or taken solely for purposes of delay," Bowes said. "Rather, they based their entitlement to appellate attorney fees solely upon the UTPCPL."

Counsel for the defendants, Kathy Condo of Babst, Calland, Clements and Zomnir in Pittsburgh, could not be reached for comment.