McMullen v. Kutz

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 $2,981.99 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 ¶ 8 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 834 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 im 835 plicit 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. 836 ¶ 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. Footnotes [1] Paragraph 17 of the agreement states: BREACH: If either party breaches any provision of this Agreement, the other party shall have the right, at his or her election, to sue for damages for such breach or seek such other remedies or relief as may be available to him or her, and the party breaching this contract shall be responsible for payment of legal fees and costs incurred by the other in enforcing their rights under this Agreement. (Separation and Property Settlement Agreement, 7/7/00, at ¶ 17.) [2] The agreement of sale in Duffy provided that in the event of seller’s default, the buyer could elect to: (w)aive any claim for loss of bargain, in which event Seller ... agrees to repay to Buyer the earnest money ... and, in addition, reimburse Buyer for all direct, out-of-pocket costs and expenses (i.e., title examination, survey, and attorney’s fees) and to this end Seller does ... authorize ... any attorney ... to ... confess judgment ... for said earnest money .... and for said direct, out-of-pocket costs and expenses including an attorney's commission of 10% (but not less than $200.00) together with costs of suit.... Duffy, 286 Pa.Super. at 530-31, 429 A.2d at 649. [3] The court provided the following explanation for finding some of Wife’s legal fees to be unreasonable: We did not ... feel that it was reasonable for [Wife] to incur almost $3000 in legal fees to litigate this matter. We note that there was no attempt by her counsel to resolve these issues short of involving the courts. Counsel’s first contact with [Husband] in connection with these matters was a letter which accompanied the "Petition to Enforce.” The letter demanded payment of all sums due plus counsel fees. However, there was no breakdown of what sums were due, or the counsel fees being claimed. The issues involved in this case were simple and straightforward. Further, the record is devoid of any attempt by [Wife], or her counsel, to resolve the issues or to keep counsel fees reasonable. Under those circumstances, we felt the award of $1200 for counsel fees (about 1.5 times the amount awarded for the underlying dispute) was reasonable. (Trial Court Opinion, 5/30/06, at 2.) [4] Rule 408 of the Pennsylvania Rules of Evidence provides: Evidence of (1) furnishing or offering or promising to furnish, or (2) accepting or offering or promising to accept, a valuable consideration in compromising or attempting to compromise a claim which was disputed as to either validity or amount, is not admissible to prove liability for or invalidity of the claim or its amount. Evidence of conduct or statements made in compromise negotiations is likewise not admissible. This rule does not require the exclusion of any evidence otherwise discoverable merely because it is presented in the course of compromise negotiations. This rule also does not require exclusion when the evidence is offered for another purpose, such as proving bias or prejudice of a witness, negativing a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution. Pa. R.E. 408.