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CYNTHIA GREGORY v. HARLEYSVILLE MUTUAL INSURANCE COMPANY. APPEAL CYNTHIA GREGORY (05/18/88)

filed: May 18, 1988.

CYNTHIA GREGORY, ADMINISTRATRIX OF THE ESTATE OF CHARLES GREGORY, DECEASED, AND CYNTHIA GREGORY, INDIVIDUALLY, ON BEHALF OF HERSELF AND ALL OTHER PERSONS SIMILARLY SITUATED
v.
HARLEYSVILLE MUTUAL INSURANCE COMPANY. APPEAL OF CYNTHIA GREGORY, ADMINISTRATRIX OF THE ESTATE OF CHARLES GREGORY, DECEASED, AND CYNTHIA GREGORY, INDIVIDUALLY, ON BEHALF OF HERSELF AND ALL OTHER PERSONS SIMILARLY SITUATED, AND ANGINO & ROVNER, P.C.



Appeal from the Order of the Court of Common Pleas, Civil Division, of Allegheny County, No. GD 83-05012.

COUNSEL

Richard C. Angino, Harrisburg, for appellants.

Rowley, McEwen and Popovich, JJ.

Author: Rowley

[ 374 Pa. Super. Page 34]

This appeal of Cynthia Gregory, as the administratrix of the estate of Charles Gregory and on behalf of herself and a class of persons similarly situated, and Angino & Rovner, P.C., counsel for the class of persons represented by Gregory (Appellants), is from the trial court's order of May 20, 1987, denying the request of Angino & Rovner for reimbursement of expenses, other than taxable costs, incurred during their successful representation of the class in an action under the now-repealed Pennsylvania No-fault Motor Vehicle Insurance Act, 40 P.S. §§ 1009.101 et seq. The sole

[ 374 Pa. Super. Page 35]

    issue on appeal is whether Appellants are entitled to recover counsel's out-of-pocket and paralegal expenses from the class members themselves. For the reasons set forth below, we hold that they are. We reverse, therefore, and remand for further proceedings.

This action was begun when Cynthia Gregory filed a complaint in assumpsit as a class action on March 24, 1983, against Harleysville Mutual Insurance Company (herein-after "Harleysville"). Ms. Gregory asserted that Harleysville engaged in the practice of denying maximum work loss benefits available to its insureds by setting off the maximum available survivor's loss benefits against the work loss benefits. She sought to represent all of Harleysville's insureds who had been denied maximum work loss and/or survivor's loss benefits under this practice. Ms. Gregory was represented by the law firm of Litman, Litman, Harris, Brown & Watzman, P.C. On July 30, 1986, the trial court entered an order certifying the action as a class action, the proceedings having been stayed in the interim at the request of Harleysville to await the outcome of a similar class action lawsuit against Harleysville. During the stay, Appellants entered an appearance as co-counsel. The case went to trial on December 8, 1986. After a half day of testimony, the parties reached a settlement.

After failing to reach agreement with Harleysville concerning payment of attorney's fees and expenses, Appellants petitioned the trial court to order Harleysville to pay all of the plaintiffs' counsel fees and expenses or, alternatively, to order Harleysville to pay the majority of the fees and expenses and class members to pay a significantly smaller amount. On May 20, 1987, following hearings on the petition, the trial court ordered Harleysville to pay plaintiffs' counsel fees. The court made the award of counsel fees pursuant to § 1009.107(3) of the No-fault Act, which provides for such an award where "the court determines that the obligor has denied the claim or any significant part thereof without reasonable foundation . . . ." Harleysville was also directed to pay all taxable costs (i.e.,

[ 374 Pa. Super. Page 36]

    docket costs). The request for reimbursement of expenses other than taxable costs was denied, however, with the trial court stating that "[w]e find no authority whatsoever . . . which authorize[s] as costs to a party the expenses for photocopies, telephone calls, express mail delivery, supplies, meals, or computer or paralegal charges herein sought by the plaintiff" (Trial Court Opinion at 54). Appellants repeated their request for reimbursement of out-of-pocket and/or paralegal expenses in a motion for reconsideration filed on June 2, 1987. The motion was denied the following day, and this timely appeal followed.

In this appeal Appellants assert that they are entitled to recover from the members of the class reimbursement for their out-of-pocket expenses and costs of paralegal time, the total of which is an amount approximately equal to three percent of the class members' recoveries. These expenditures were incurred, they contend, in the process of investigating the claims of 152 potential class members and thoroughly documenting the claims of the 119 estates identified as being entitled to recover through the class action. They contend that the trial court confused "costs" with "expenses" and that recovery of the latter from the class members out of the settlement proceeds is not only not barred by the No-fault Act but is in fact allowed under the "common fund" doctrine and mandated by Disciplinary Rule 5-103(B). They do not challenge the trial court's ruling that out-of-pocket and paralegal expenses cannot be recovered from Harleysville. Harleysville has declined to participate in the appeal. Furthermore, no brief in opposition to Appellants' request has been filed by the class representative or any member thereof.

The trial court identified § 106(b)(1) of the No-Fault Act, 40 P.S. § 1009.106(b)(1), as the provision of the Act that provides for recovery of costs where, as in this case, the action has been settled by ...


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