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United States District Court, Eastern District of Pennsylvania

June 21, 1999


The opinion of the court was delivered by: Eduardo C. Robreno, District Judge.


AND NOW this 21th day of June, 1999, upon consideration of Michelle Stecyk's petition for approval of the Settlement for the benefit of her minor son, a supplement petition (doc. no. 304), and following two hearings at which evidence was received, and a scheduling conference with counsel for the parties, it is hereby ORDERED that the petitions are DENIED IN PART AND GRANTED IN PART.

It is further ORDERED that the proceeds of the settlement shall be apportioned and distributed as follows:*fn1

1) Mattioni Ltd. for counsel fees:      $467,905.56

2) Under the Wrongful Death Act:

Michelle S. Stecyk (spouse)          $458,002.01

Anthony L. Stecyk (son)              $452,766.87

It is further ORDERED that plaintiff's counsel is authorized to release the settlement funds held in escrow to plaintiff and to the Mattioni law firm in the amount listed above.

It is further ORDERED that plaintiff's counsel shall petition the court with appropriate jurisdiction, the Court of Common Pleas of Delaware County, for appointment of a guardian for the minor's estate to administer the distribution of the minor's share of the settlement funds. See Pa. R. Civ. P. 2206; Sosenke v. Norwood, No. 91-2623, 1993 WL 512824, at *3 (E.D.Pa. Dec.6, 1993) (Bechtle, J.) (not allowing distribution of settlement funds to minor until a corporate guardian for minor had been appointed by court with appropriate jurisdiction).

It is further ORDERED that the minor's share listed above shall be kept in the escrow account and no further distribution shall be made until further order of this court.

The decision of the court is based upon the following reasoning:


1. The present actions is one of four consolidated diversity actions that arose out of the crash of an experimental V-22 Osprey aircraft during a ferry flight near Quantico, Virginia on July 20, 1992. Each of the four cases proceeded on the theory that the defendants' negligence caused the crash. Prior to trial, two of the four plaintiffs settled — the present case for $1.5 million and the other for $1.1 million. The other two plaintiffs proceeded to trial where the jury returned a defense verdict. Before the court are Michelle S. Stecyk's (hereinafter "plaintiff") petitions for approval of the portion of the settlement for the benefit of her minor son. Specifically, plaintiff requests the distribution of the $1.5 million settlement fund in the amount $632,215.91 to herself, $245,586.10 to her minor son and $500,872.42 to her counsel. On June 14, 1999, this court entered an order finding that the settlement was fair and reasonable and in the best interest of the minor child. See Order of June 14, 1999 (doc. no. 306). In addition, the court concluded that the costs in the amount of $121,325.57, advanced by plaintiff's counsel were reasonable and necessary, and permitted counsel to deduct the costs from the gross settlement. Id. The remaining issues to be decided are: 1) the proper apportionment of the wrongful death proceeds between plaintiff and the minor child; and 2) the amount to be paid to plaintiff's counsel for attorneys' fees.

Jurisdiction and Applicable Legal Rule.

2. The court has the authority to approve the settlement under its inherent duty to protect the interests of minors and incompetents that come before it.*fn2 See Eagan v. Jackson, 855 F. Supp. 765, 775 (E.D.Pa. 1994). Because in this case the court is sitting in diversity, the court is required to apply the substantive law of the forum as would be applied by a state court. Eagan, 855 F. Supp. at 776 (concluding that approval of minor's compromise is controlled by substantive state law). Under Pennsylvania law, the law applicable in this case, the compromise or settlement of a minor's claim is allowed only upon approval of the court. See Pa. R. Civ. P. 2039;*fn3 see also Pa. R. Civ. P. 2206(a) ("No action for wrongful death in which a minor . . . has an interest shall be discontinued nor shall the interest of a minor . . . be compromised or settled until the court . . . approve[s] the compromise or settlement as being fair and equitable."). The purpose of this rule is to protect the interests of the minor. Wilson v. Bensalem Township Sch. Dist., 27 Pa. Cmwlth. 609, 367 A.2d 397, 398 (1976). Thus, "[t]he Court must be prepared to substitute its judgment in the best interest of the minor for that of the Plaintiff's counsel, the guardian, or even the minor himself." Collier v. Dailey, No. 98-3261, 1998 WL 666036, at *1 (E.D.Pa. Sept.23, 1998) (citing Roghanchi v. Rorick, 1991 WL 275626, at *3 (E.D.Pa. Dec.23, 1991)).

Worker's Compensation Settlement.

3. In a separate agreement, Boeing Vertol Helicopter, the decedent's employer, agreed to pay death benefits to plaintiff on her behalf and the behalf of her minor son in the amount of $115,000. The court agrees with plaintiff that it does not have jurisdiction over the portion of the settlement that pertains to the worker's compensation settlement. See 77 Pa. Stat. Ann. § 733 (West 1992) (requiring the department of labor within the state to examine and review any agreement between an employer and the employee's dependents to determine whether it conforms to the provisions of the Pennsylvania Workmen's Compensation Act and the rules and regulations thereunder). The worker's compensation settlement involves parties and issues not before the court and is subject to review in the appropriate state agency. Thus, the court will not make a determination regarding the proper distribution of the proceeds of the worker's compensation settlement.

Allocation of wrongful death proceeds.

4. Pursuant to the terms of the settlement agreement in this case, the defendants agreed to pay $1,500,000.00 to plaintiff for herself and on the behalf of her minor son. After deducting the costs and expenses, advanced by plaintiff's counsel, from the gross settlement amount, $1,378,674.43 remains to be distributed. Plaintiff requests allocation of the net proceeds of the settlement as follows: (a) counsel fees in the amount of $500,872.42; (b) wrongful death proceeds*fn4 to plaintiff in the amount of $278,340.60; (c) $353,875.31 to plaintiff for loss of consortium and reimbursement for past support of her minor child; and (d) wrongful death proceeds to plaintiff's minor son in the amount of $245,586.10.

5. Plaintiff requested the allocations as set forth above based upon the following reasoning. First, following the deduction of $121,325.57 in costs, counsel fees in the amount of $500,872.42 were deducted, leaving a remaining balance of $877,802.01 to be apportioned between plaintiff and plaintiff's minor child. However, before this balance was distributed in accordance with state law, $296,251.31 was allocated to plaintiff for loss of consortium. Another allocation, in the amount of $57,624 was made to plaintiff for reimbursement for past support of her minor child. This reduced the net recovery apportioned to the wrongful death claim to $526,681.21. Thereafter, pursuant to the Pennsylvania Intestacy Laws, 20 Pa. Cons.Stat. Ann. § 2102 ("Intestacy Laws"), the first $30,000 was allocated to plaintiff, which further reduced the amount of the wrongful death proceeds to be allocated between plaintiff and plaintiff's minor child to $496,681.21. After these calculations, the remaining $248,340.61 was equally distributed between plaintiff and plaintiff's minor child, pursuant to state law.*fn5

6. The court will disallow plaintiffs proposed distribution. Under Pennsylvania law, beneficiaries of a wrongful death action share according to the law of intestate distribution. See 42 Pa. Cons. Stat. Ann. 8301(b) (West 1992); see also Olden v. Hagerstown Cash Register, Inc., 619 F.2d 271, 275 (3d Cir. 1980); Seymour v. Rossman, 449 Pa. 515, 297 A.2d 804, 806 (1972). Pursuant to section 2102 of the Intestacy Laws, if there are surviving issue, the surviving spouse is entitled to the first $30,000 plus one-half of the intestate share. See 20 Pa. Cons.Stat. Ann. § 2102(3) (West Supp. 1999).

7. Plaintiff argues that loss of consortium is a separate element of damages outside of wrongful death and thus may be distributed in accordance with each beneficiaries individualized loss, and not pursuant to the Intestacy Laws. In the alternative, plaintiff argues that if loss of consortium damages are part of a wrongful death recovery, the court should determine what portion of the recovery is attributable to each beneficiaries' loss of consortium damages, before the court distributes the wrongful death proceeds pursuant to the state Intestacy Laws.

8. The court is not persuaded that it has the authority to allocate to the surviving spouse a separate recovery for loss of consortium aside from the wrongful death action proceeds and other than as directed under the Intestacy Laws. It is true that Pennsylvania law recognizes a spouse's separate loss of consortium action, as a derivative of the injured spouse's claim. See Linebaugh v. Lehr, 351 Pa. Super. 135, 505 A.2d 303, 304 (1986). However, a surviving spouse may not "maintain a separate cause of action for loss of consortium in addition to the action brought on behalf of the deceased spouse under the wrongful death statute." Mease v. Commonwealth, 145 Pa.Cmwlth. 407, 603 A.2d 679, 682 (1992). The reason for this is that "[t]o allow a surviving spouse to maintain a separate cause of action for loss of consortium in addition to the action brought on behalf of the deceased spouse under the wrongful death statute would permit a double recovery for the same death." Linebaugh, 505 A.2d at 305. Thus, any loss of consortium damages to which a surviving spouse may be entitled are recoverable only pursuant to the wrongful death statute and are to be distributed according to the mandates of the Intestacy Laws.

9. Slaseman v. Myers, 309 Pa. Super. 537, 455 A.2d 1213 (1983), is not to the contrary. In Slaseman, the issue was whether the trial judge's award in a non jury trial of a wrongful death and survival action was adequate. Id. at 1215. Before vacating the verdict and remanding the case back to the trial court for the determination of a new award, the Pennsylvania Superior Court noted, when describing the wrongful death damages, that $8,000 of an approximately $11,000 award for wrongful death damages represented the surviving spouse's "pecuniary loss" because of her husband's death. Id. at 1218. The Pennsylvania Superior Court defined pecuniary losses as including the value of services the victim would have rendered to his family if he had lived. Id. However, neither the superior court nor the trial court ever made an allocation in the case on that basis, nor did either court conclude that the pecuniary loss was a separate element of damages outside of the wrongful death damages. In fact, the Pennsylvania Superior Court specifically recognized that wrongful death damages include an amount "to compensate the decedent's survivors for the pecuniary losses they have sustained as a result of decedent's death." Id.

10. The court also disagrees with plaintiff's alternative argument that because loss of consortium type damages are damages contemplated within the wrongful death statute,*fn6 the court should determine what portion of the wrongful death recovery is attributable to each beneficiary as loss of consortium damages, before it makes the distribution pursuant to the Intestacy Laws.

11. In requiring a court to follow the laws of intestate distribution, see 42 Pa. Cons.Stat. Ann. 8301(b),*fn7 the Pennsylvania legislature has decided how to allocate wrongful death proceeds. In doing so, the Intestacy Laws do not provide for a separate or an individualized distribution for loss of consortium damages. Thus, in a wrongful death action, any loss of consortium damages, which may be part of the entire wrongful death recovery, are to be distributed among all beneficiaries under the statutory formula for distribution of wrongful death proceeds. While other jurisdictions have utilized an individualized loss formula in determining how to apportion wrongful death damages among beneficiaries, see N.Y. Jur.2d Death § 416 (1984) (explaining that under New York law, wrongful death damages are usually proportioned according to the life expectancy of the widow and the period of minority of a any surviving child), Pennsylvania has not adopted such a formula and instead relies on the Intestacy Laws for a distribution formula.*fn8

12. Similarly, the court also concludes that in an action for wrongful death, a surviving spouse is not entitled to a credit from the proceeds of a wrongful death action for past support of a minor child. The court notes that Pennsylvania imposes an independent common law duty upon the parent to support a minor child, see Blue v. Blue, 532 Pa. 521, 616 A.2d 628, 632 (1992) (holding that a parental duty of support is owed until child reaches 18 or graduates from high school, whichever event occurs later), and that nothing in the wrongful death statute modifies such a duty. The only case cited by plaintiff, Allison v. Powers, 179 Pa. 531, 36 A. 333 (1897), is not apposite. The question in Allison was "whether the money recovered by the widow for the death of her husband may be retained by her for the use of herself and family, or is it to be distributed among herself and children under the intestate law." Allison, 179 Pa. at 532-33, 36 A. 333. The Pennsylvania Supreme Court found that the children had an interest in the money received by their mother and thus the money should be distributed to them in the proportion they would take under the intestate law. Id. at 535, 36 A. 333. While, in the final order, the Pennsylvania Supreme Court did "allow [the mother] credit for the several amounts charged in her account against the interest of [her son] . . .", id. at 536, 36 A. 333, it is entirely unclear why such a credit was given as the Pennsylvania Supreme Court offered no further explanation. Finally, the court notes that the issue of reimbursement for past support was never discussed in the Pennsylvania Supreme Court's opinion.

13. Thus, in the face of the clear and unambiguous statutory mandate providing the framework for the distribution between the spouse and surviving issue, the court will follow the distribution formula and distribute the proceeds equally between plaintiff and plaintiff's minor child, after allocating the first $30,000 to plaintiff. See Seymour, 297 A.2d at 806 (concluding that because the legislature has chosen the intestate method of distribution of wrongful death proceeds, court must follow the mandates of the act).

Counsel fees.

14. In approving the settlement, the court must also fix counsel fees. See Pa. R. Civ. P. 2039(b);*fn9 see also Pa. R. Civ. P. 2206(c) ("In approving a compromise or settlement . . . the court may also approve an agreement for the payment of counsel fees and other proper expenses out of the share of damages to which the minor . . . is entitled."). In this case, plaintiff entered into an agreement with counsel to allow counsel to recover 36.33% of the settlement proceeds, if counsel was required to advance more than $75,000 in costs, which in this case counsel did. "Under Pennsylvania law, when a trial judge determines the amount of reasonable attorneys' fees in cases involving minors, the judge is not bound to all the terms of a contingency fee agreement." Sosenke v. Norwood, No. 91-2623, 1993 WL 512824, at *3 (E.D.Pa. Dec.6, 1993) (citing Estate of Murray v. Love, 411 Pa. Super. 618, 602 West Page 801 A.2d 366 (1992); Gilmore v. Dondero, 399 Pa. Super. 599, 582 A.2d 1106 (1990)), aff'd, 37 F.3d 1489 (3d Cir. 1994). The task of the court is "[to] strike a balance between being a `passive pro forma rubber stamp' . . . and being too intrusive in its consideration of the fairness of counsel fees." Collier, 1998 WL 666036, *2 (quoting Gilmore, 582 A.2d at 1109).

15. In determining the amount of counsel fees that should be awarded, the court will apply the two step process approved by the Pennsylvania Superior Court in Gilmore. Id. at 1109-10 (approving trial court's application in determining fee award, of the then in place Chester County Court of Common Pleas local rule providing for a 25% presumptive lodestar, in addition to the LaRocca factors). The court will first consider whether the court of common pleas in the county with jurisdiction over the minor, has adopted an appropriate presumptive lodestar for such cases and whether the requested fee is reasonable in light of such a rule. Collier, 1998 WL 666036, *3.*fn10 In this case, the Court of Common Pleas of Delaware County is the court with jurisdiction over the minor. The local Delaware County rule governing settlements of minor's actions provides for a presumptive lodestar of 25%.*fn11 See Delaware County Local Civil Court Rule 2039(b)(1) (stating that "[i]f the proposed distribution includes a claim for counsel fees in excess of 25 percent of net (after expenses incurred by counsel) settlement, evidence shall be presented as to the nature and extent of services rendered."); cf. Philadelphia Ct. of C.P. Local Civil Rule 2039.1(F) (presumption that counsel fees "in the amount of one-third of net fund recovered" reasonable).

16. Once the presumptive lodestar, if any, is established, the court then adjusts the presumptive lodestar by weighing certain factors which the Pennsylvania Supreme Court has directed should be considered in determining if a request for attorney's fees is reasonable: (1) the amount of work performed; (2) the character of services rendered; (3) the difficulty of problems involved; (4) the importance of litigation; (5) the degree of responsibility incurred; (6) whether the fund involved was "created" by the attorney; (7) the professional skill and standing of the attorney in his [or her] profession; (8) the result the attorney was able to obtain; (9) the ability of the client to pay a reasonable fee for the services rendered; and (10) "very importantly" the amount of money in question. See In re Trust Estate of LaRocca, 431 Pa. 542, 246 A.2d 337, 339 (1968).

17. In this case, plaintiff's counsel requests fees in the amount of $500,872.42, pursuant to a fee agreement signed by plaintiff on her behalf as well as on behalf of the minor. The court, of course, is not free to inquire into the reasonableness of the private agreement reached between counsel and plaintiff as it applies to plaintiff herself. Thus, plaintiff's counsel is entitled to 36.33% of plaintiff's own net recovery. However, the court has a duty to determine the reasonableness of the fees requested by counsel as applied to plaintiff's minor child's share of the wrongful death proceeds.

18. Applying the factors articulated by the Pennsylvania Supreme Court, the court considers the following calculus: On the one hand, this is an aviation crash case involving complicated legal and factual issues. Counsel invested more than 7,000 hours in this case over a seven year period. The case was very labor intensive, requiring in excess of 45 depositions, the briefing of numerous summary judgment motions and participation at Daubert hearings. In addition, counsel incurred a considerable risk of loss, as it is clear that the outcome of this type of litigation, in general, and this case in particular, was uncertain.*fn12 Furthermore, counsel advanced more than $240,000 in costs to successfully prosecute this case.*fn13 Lastly, counsel was able to successfully negotiate a significant recovery for the plaintiffs.

19. However, on the other hand, the expenses in this case were shared with two other law firms representing the other plaintiffs. See supra n. 13. In addition, counsel recovered approximately $261,000 from Ms. Stecyk's share of the recovery and over $200,000 in additional fees from one other settling plaintiff whom counsel represented in this case. Thus, counsel's total recovery will be in excess of $600,000 for essentially the same work involved in the prosecution of this case. Lastly, by settling before trial, counsel short-circuited a significant amount of time and expenses that would have been incurred during a long trial.*fn14

20. Beginning with a presumptive lodestar of 25% and after applying the LaRocca factors, the court concludes that a reasonable attorney's fee in this case, as applied to the minor child, is 31.33%. This figure represents a significant upward adjustment from the presumptive lodestar of 25%, but less than the 36.33% agreed upon by plaintiff and counsel in the contingent fee agreement.

21. In conclusion, the court finds that it does not have jurisdiction over the proceeds from the worker's compensation settlement and will make no determination regarding the proper distribution of those proceeds. In addition, the court concludes that the proceeds from the wrongful death action must be distributed, after deducting costs and expenses, in accordance with the Pennsylvania Intestacy Laws. Thus, plaintiff is entitled to the first $30,000 plus one-half of the remainder with the balance to be distributed to plaintiff's minor child. Lastly, the court concludes that plaintiff's counsel is entitled to 36.33% of plaintiff's own recovery and 31.33% of plaintiff's minor child's share.



Total Settlement Amount (Gross Recovery):             $1,500,000.00

    Costs:                                                - $121,325.57
        Net Recovery:                                      $1,378674.43
    Recovery for Michelle Stecyk:               Recovery for Anthony Stecyk:

      $689,337.22                               $689,337.22
       $30,000.00                             - $30,000.00
      ____________                              ____________
      $719,337.22                               $659,337.22

    Attorneys' Fees:
      $719,337.22                               $659,337.22
      × 36.33% = $261,335.21                     × 31.33% = $206,570.35

Total Recovery:

Michelle Stecyk:                              Anthony Stecyk:

$458,002.01                                     $452,766.87

Total Attorneys' Fees (at 36.33%/31.33%):

$261,335.21 $206,570.35 = $467,905.56*fn15

*fn15 Plus approximately $200,000 to be paid to counsel as share of the counsel fees in related case.

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