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Carmen Enterprises, Inc. v. Murpenter, LLC

Superior Court of Pennsylvania

April 25, 2018

CARMEN ENTERPRISES, INC., F/D/B/A CRUISE HOLIDAYS OF NORRISTOWN & BYEBYENOW.COM TRAVEL STORE Appellee
v.
MURPENTER, LLC D/B/A UNIGLOBE WINGS TRAVEL Appellant CARMEN ENTERPRISES, INC., F/D/B/A CRUISE HOLIDAYS OF NORRISTOWN & BYEBYENOW.COM TRAVEL STORE Appellant
v.
MURPENTER, LLC D/B/A UNIGLOBE WINGS TRAVEL Appellee

          Appeal from the Order Dated June 16, 2017 in the Court of Common Pleas of Montgomery County Civil Division at Nos.: 2002-07223, 02-07223

          BEFORE: GANTMAN, P.J., McLAUGHLIN, J., and PLATT [*] , J.

          OPINION

          PLATT, J.

         In cross-appeals, Appellant, Carmen Enterprises, Inc., f/d/b/a Cruise Holidays of Norristown & Byebyenow.com Travel Store, and Appellee, Murpenter, [1] LLC, d/b/a Uniglobe Wings Travel, both challenge the award of counsel fees in this collection case. Bruce J. Chasan, Esq., the chief litigator for Carmen in this long running suit, was also the president and sole shareholder of Carmen. The trial court awarded Carmen over $45, 000 for breach of contract. Carmen also sought legal fees, for Chasan's services, of more than a million dollars. Murpenter maintained that Chasan, as Carmen's principal counsel and owner, was essentially representing himself and Carmen is not entitled to counsel fees for pro se representation. The trial court denied the fee request, citing a similar conclusion by a preceding judge, as the law of the case. On appeal, a majority of a panel of this Court disagreed. It affirmed the rest of the trial court's verdict, but reversed the denial of fees for Chasan, and remanded for the trial court to determine a reasonable fee.[2] After hearings, the trial court awarded Carmen $450, 400 for legal fees. Both parties appealed. We discern no plain error or palpable abuse of discretion in the trial court's award. Accordingly, we affirm.

         This convoluted case has continued for sixteen years. We limit our discussion of the facts, as far as practicable, to those most relevant to the issues raised in this appeal. We derive these facts from the trial court's opinions, our predecessor panel's memorandum decision, the bankruptcy court decisions, and our independent review of the record.

         The cross-appellants were adversaries in a vigorously contested, lengthy collection case arising out of the sale and purchase of various designated assets of Carmen's travel agency, formerly the Chasan "family business."[3] (Carmen's Brief, at 30). In late 2001, Carmen sold the assets to Murpenter. The Purchase and Sale Agreement, dated October 31, 2001, set the consideration at $15, 000 (plus certain commissions), and payment by Murpenter to Carmen in more or less monthly installments of $7, 500 from September 23, 2001 to April 1, 2002. (See Purchase and Sale Agreement, 10/31/01, at ¶¶ 6, 7). The fixed payments were subject to adjustment based on multiple formulas for various categories of paid bookings.

         Of special pertinence to this appeal, the agreement also included a provision charging Murpenter with a penalty for late payments and the costs of collection for any unpaid installments, including "reasonable attorney's fees." (Id. at ¶ 13).[4]

         Included in the assets sold was an "Active Client Mailing List of over 1900 names and addresses on 'My Advanced Mail List' software." (Id. at ¶ 2.C). About a month after the sale, Murpenter (through Murphy) complained it could not access the customer list, which it also maintained was 35% short. It appears that the entire list was actually available, even though it was in two parts, one on a computer disk accessible through the "My Advanced Mail List Software" and the other on software in the office computer. (See Carmen Enterprises, 8/12/15, supra at *17).

         The trial court would eventually find that Carmen had properly performed its duty to deliver the customer list under the terms of the purchase and sale agreement. (See Trial Court Opinion, 6/09/14, at 20-21). Nevertheless, Murpenter objected that the list was deficient. It did not make the installment payment due April 1, 2002, alleging that Carmen had not provided the list of 1900 active customers, as promised in the agreement. (See Carmen Enterprises, 8/12/15, supra at *1).

         For a portion of the time relevant to this litigation, Chasan was employed as a patent lawyer in a Center City Philadelphia intellectual property law firm.[5]On April 17, 2002, Chasan filed suit against Murpenter on behalf of Carmen. The complaint contained fifteen allegations ranging from non-payment of the April installment to spilled coffee.[6] As our predecessor panel diplomatically put it, "[e]xtensive discovery and motions proceedings ensued." (Id. at 5). An avalanche of motions, answers, supplements to motions, demands for discovery, demands for sanctions, motions in limine and counterclaims ensued. Murpenter counterclaimed, inter alia, for fraud. It also moved unsuccessfully to have Chasan removed as counsel for Carmen. Carmen's motion for summary judgment was denied. And so on.

         Annoyed at what he appears to have viewed as Murpenter's overly-aggressive defense tactics, early on in the suit Chasan wrote Murpenter's chief counsel, Ely Goldin, Esq., and in effect, threatened him with the prospect of a "very large award of attorney's fees" at the "very substantial" hourly rate set for him at his law firm. (Carmen's Brief, at 14) (record citation omitted).[7]

         A week before trial was originally set to begin, Murpenter filed for bankruptcy. After seven weeks or so, the automatic stay was lifted. The bankruptcy court ultimately found that Murpenter had filed its petition in bad faith.[8]

         Eleven years after the original complaint, and numerous delays, (including the bankruptcy), the parties proceeded to a three-day bench trial in April of 2013. Chasan testified as a witness. Otherwise, he acted as Carmen's chief trial counsel.

         The trial court awarded Carmen $45, 057.47.[9] Carmen filed a motion to mold the verdict to include attorney fees for Chasan's legal services, in excess of one million dollars.[10] The trial court denied the motion. The parties cross-appealed.

         On that appeal, as previously mentioned, a predecessor panel of this Court reversed the denial of legal fees for Chasan's services, and remanded for the trial court to determine a reasonable fee. (See Carmen Enterprises, 8/12/15, supra at *11). Notably, in all other respects, this Court affirmed. (See id. at *18).[11] On remand, after two days of hearings, the trial court set Chasan's fees at $405, 400.00. (See Memorandum and Order, dated June 15, 2017, filed 6/16/17, at 10).

         The award reflected a deduction of billable hours for a variety of activities claimed by Chasan (e.g., 45.9 hours at $450 an hour, or $20, 655, for in-person hand delivery by Chasan to the courthouse of motions and other documents for filing). Among numerous other claims, Carmen sought $226, 215 in fees (over five times the underlying award) for services rendered by Chasan following the trial (even though he had engaged other counsel for the appeal). The trial court observed that "[t]he amount of hours Chasan is claiming he performed on appeal strains credulity." (Id. at 9) (emphasis added).

         The trial court also reduced, sua sponte, Chasan's claimed hourly billing rate from $450 an hour to $200.00 an hour. Two hundred dollars an hour was the hourly rate Chasan paid to other lawyers, (e.g., Gary Mezzy, Esq. and Alan Kane, Esq.), who assisted him in this case. (See Id. at 6; see also Carmen's Brief, at 27).

         Chasan testified (and continues to maintain through Carmen on appeal) that $450.00 an hour was the billing rate set for his work as a patent lawyer in 2009 when he made partner in the Center City Philadelphia intellectual property law firm. (See Appellant's Brief, at 15).[12] He testified further that he did the work for Carmen on evenings and weekends, to avoid problems with other members of his firm.[13] (See Memorandum and Order, supra at 6 n.13).

         After the trial court filed its order on the fee issue, Murpenter filed a notice of appeal. Carmen filed a motion for reconsideration and a self- designated "protective" notice of appeal.

         Both parties filed a statement of errors pursuant to Pennsylvania Rule of Appellate Procedure 1925. The trial court filed a letter on September 20, 2017, directing the attention of this Court to its Memorandum and Order dated June 15, 2017 for the reasons underlying its decision. See Pa.R.A.P. 1925.

         Carmen presents nine questions for our review:

1. Whether the Order appealed from is a final, appealable order[?]
2.Whether the [c]ourt erred in not adding other contractual damages including the post-2/10/2014 attorney's fees of Messrs. Scutti, Backstrom and Judge Klein (Ret.), and also expenses, and in not re-molding the verdict (decision)[sic][?]
3. Whether the [c]ourt erred in reducing Chasan's billing rate from $450/hour to $200/hour because (a) there was substantial evidence supporting the $450 rate; (b) Murpenter did not contest the $450 rate; (c) Murpenter offered no evidence to support any other rate; and (d) other grounds enumerated in Plaintiff's Motion and Brief in Support for Partial Reconsideration[?]
4. Whether the [c]ourt erred in reducing Chasan's claimed hours by 15.5 hours in connection with an interlocutory appeal because Carmen did not, in fact, claim the 15.5 hours[?]
5. Whether the [c]ourt erred in reducing Chasan's claimed hours by 25 hours for preparation of jury instructions "in a nonjury case, " and by 71.7 hours for preparation of motions in limine "in a bench trial, " because the work was timely performed pursuant to scheduling orders by Judge Bertin for a jury trial, and it was only later the parties agreed to a non jury trial[?]
6. Whether the [c]ourt erred in reducing Chasan's claimed hours by 13.1 hours for review of documents in preparation for depositions of Murpenter's principals (Murphy and Carpenter) in October 2002 where 94 exhibits were marked and inquired about[?]
7. Whether the [c]ourt erred in reducing Chasan's claimed hours by 244.8 hours for "excessive, serial and unsuccessful" motions for sanctions (quoting Murpenter's brief on "reasonableness") because the [c]ourt misapprehended the record; because it held it was necessary for Carmen to file discovery motions due to Murpenter's disregard of discovery rules and multiple violations of court orders; because the 244.8 hours were not sufficiently identified by Murpenter, and said hours also included hours that Carmen did not claim (e.g., post-trial sanctions motions); and because Murpenter concealed the Nov. 28 disk and misled the [c]ourt[?]
8. Whether the [c]ourt erred in reducing Chasan's claimed hours by 14.3 hours for preparation for a sanctions hearing in June-July 2004[?]
9. Whether the [c]ourt erred in reducing Chasan's hours spent on the appeal from 308.5 hours to only 150 hours because the [c]ourt misapprehended the record (regarding the 502.7 hours on the timesheet between 3/8/2014 and 9/4/2016); because the [c]ourt erred by excluding 92.5 hours that were unrelated to the appeal, and because the 401 hours that were claimed included both trial court work and appellate work (not 502.7 hours as misstated by the [c]ourt, as the [c]ourt overlooked that 102.9 hours were not claimed by Carmen because they related to the post-trial sanctions motions that were denied)[?]

         (Carmen's Brief, at 3-4).

         Murpenter presents five counter-questions on appeal:

1. Did the [t]rial [c]ourt commit an error of law or abuse its discretion in awarding Carmen an amount of attorney's fees above zero dollars for Mr. Bruce J. Chasan ("Chasan") when Carmen and Chasan had no written fee agreement, no invoices were sent by Chasan to Carmen, no fees were charged by Chasan, and such fees were not actually incurred or paid by Carmen as costs?
2. Did the [t]rial [c]ourt commit an error or [sic] law or abuse its discretion in awarding Carmen an amount of attorney's fees for Chasan that applied to non-contractual claims for which Carmen did not recover at trial and defenses to Murpenter's counterclaims?
3. Did the [t]rial [c]ourt commit an error or [sic] law or abuse its discretion in failing to adopt the correct test for evaluating fee requests and awarding Carmen an amount of attorney's fees for Chasan that Carmen did not prove to be reasonable, grossly exceeded the underlying contractual damages in this case, and did not properly account for all of the factors recognized by the Pennsylvania Supreme Court for evaluating fee requests?
4. Was the [t]rial [c]ourt within its discretion to reduce Chasan's hourly rate in determining the attorney's fees awarded to Carmen for Chasan's time?
5. Is the Fee Order a final and appealable order when this Court remanded this matter to the [t]rial [c]ourt for a reasonableness determination of Chasan's fees and the ...

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