WALL et al v. CORONA CAPITAL, LLC et al

Filing 108

MEMORANDUM: We grant the Walls' petition for attorneys' fees in part. We award attorneys' fees and court costs under the Agreement. Under the retainer agreement, the Walls are entitled to fees equal to their contractual obligation of 33% of the recovery. We award $33,935.01 in attorneys' fees. We award $478.50 in court costs under the Agreement and we award $18,831.18 in prejudgment interest. Signed by Judge Mark A. Kearney on 5/10/2017. (kly)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA

ROBERT WALL and
LINDA WALL

CIVIL ACTION

v.
NO. 16-1044
ALTIUM GROUP, LLC

KEARNEY,J.

May 10, 2017
MEMORANDUM

Contracts signed by investors allowing a financial company to invest their money often
allow an investor winning a breach of contract dispute to seek reimbursement for court costs and
reasonable attorney's fees incurred in enforcing the contract. When they want to bring a breach
of contract claim, the same investors may then sign a contract hiring a lawyer to bring the breach
of contract claim against the money management firm and agreeing to pay a contingency fee
upon recovery. As a matter of contract law, we strictly enforce the investors' agreements with
their money management company and then their lawyers.
Today, we address these two agreements signed by the investors: first with their money
management company and then a retainer agreement with their lawyers. On March 28, 2017, we
granted summary judgment to the investors on their breach of contract claim against their money
managers on a restitution basis. They now move for prejudgment interest on this restitution
award. They also seek an award of reasonable attorney's fees and costs under their retainer
agreement which provides only one payment obligation: upon winning a recovery, the attorneys'
recovery is limited to one third of the recovery. We affirm the right to attorney's fees and
prejudgment interest under the two agreements.

I.

Facts

Robert and Linda Wall purchased structured annuities from personal injury victims as an
investment strategy. On November 8, 2011 , the Walls and Altium Group LLC signed a "Master
Structured Settlement Receivable Purchase and Sale Agreement and Non-Circumvention
Agreement" ("Agreement") to purchase an annuity. The Agreement provides for attorneys' fees.
"In any action to enforce this Agreement, the prevailing party shall be awarded all ... court costs
and reasonable attorney's fees incurred." 1 The Walls are entitled to recover attorneys' fees for
enforcing its Agreement with Altium.
Due to underlying fraud with the personal injury victim, Altium could no longer provide
the Walls ' the annuity payment streams. Altium did not pay back the money to the Walls.
The Walls then retained the lawyers employed by The Chiacchio Firm to represent them
in their breach of contract claim against Altium. Under their June 27, 2014 retainer agreement,
the Walls paid a $15,000 non-refundable retainer and the attorneys are thereafter entitled to 33%
of the Walls ' recovery.
On March 28, 2017, we granted summary judgment to the Walls on their breach of
contract claim against Altium representing the restitution amount of $152,833.37. On April 18,
2017, we amended judgment to $102,833 .37 to reflect amounts the Walls received from other
settling parties. The Walls now move for an award of attorneys ' fees, costs, and prejudgment
interest under the Agreement.
II.

The Walls are entitled to recover reasonable attorneys' fees.

The governing New Jersey law "disfavors the shifting of attorneys ' fees ." 2 New Jersey
law does, however, allow a prevailing party to recover attorneys ' fees if the fees are "expressly

2

provided for" by the parties' contract. 3 In line with New Jersey law' s disfavor of attorneys' fees,
we "strictly construe" an agreement to pay opposing party's attorneys' fees. 4
Altium object to the Walls recovery of attorneys' fees because the Walls offer no
evidence of "fees actually incurred." 5

In his reply, Attorney Chiacchio declares the "fee

agreement with [the Walls] consisted of a $15,000 non-refundable payment, and that payment is
credited against a 33% contingency. 6 New Jersey courts allow the prevailing party to recover
attorneys' fees where the prevailing party has a contingency agreement and even where the
prevailing party is not obligated to pay its attorneys' fees. 7
We overrule Altium's objection.
incurred under the Agreement.

The Walls are entitled to recover attorneys' fees

Their attorney ' s fees incurred are defined by the retainer

agreement with The Chiacchio Firm.
III.

We award attorneys' fees under the retainer agreement.

In the retainer agreement, the Walls and their attorneys agreed to a contingency fee
arrangement. The Walls paid The Chiacchio Firm a non-refundable $15,000 retainer fee and the
attorneys are entitled to "33% of any recovery, less a credit, against the contingent fee, of the
initial $15,000 retainer advanced by you." The parties agreed The Chiacchio Firm attorneys
would recover 33% of the Walls' recovery. The retainer agreement does not contemplate the
possibility of recovering higher attorneys' fees under the Agreement.
In Specialized Medical, an attorney represented a plaintiff on a contingency agreement in
the contract dispute. In the retainer agreement, the parties agreed the attorney would be paid a
third of the recovery and defend the counterclaim for free. 8 Plaintiff then sought to recover
attorneys' fees under the parties' contract provision for attorneys' fees. 9

The New Jersey

Superior Court held "where the retainer agreement contemplates the possibility of recovery of

3

counsel fees in lieu of payment from the client, counsel may endeavor to collect them even
though the client may not be obligated for the entire amount. " 10
The Walls ' retainer agreement does not contemplate the recovery of attorneys' fees from
any source other than 33% of the Walls ' recovery. There is no basis to find the Walls owe any
fees other than the contract terms in the retainer agreement. They incurred an obligation to pay
33% of their recovery to The Chiacchio Firm.

The attorneys ' fee award is limited to 33% of

$102,833.37 from Altium totaling $33 ,935.01. 11 The Chiacchio Firm cannot receive fees absent
a contractual right. They elected not to include the more expansive language in Specialized

Medical.

The lawyers could have included fee language, often seen in fee shifting cases,

allowing them to recover the greater of a percentage of recovery or the amount of court-awarded
fees under the Agreement. We cannot compel Altium to reimburse attorney' s fee which the
Walls do not owe to their lawyers. Instead, Altium must pay $33 ,935.01 in attorneys ' fees.

IV.

We award court costs under the Agreement with Altium.
The Walls request costs of $4,309.03 for court filing fees, court reporting services,

investigative services, and counsel's travel from Philadelphia to Pittsburgh.

The Agreement

states the "prevailing party shall be awarded all. .. court costs and reasonable attorney' s fees
incurred." 12
Altium objects to the award of costs except the Mercer County filing fees because the
parties only agreed to "court costs." We agree. The Agreement specifies reasonable attorneys'
fees and court costs only.

Under New Jersey law, we must strictly construe attorneys ' fee

provisions.
The Walls argue our Court of Appeals allow non-local counsel to recover travel costs.
In Interfaith, the district court awarded costs of travel and travel time under a federal statute

4

which allowed the court to "award costs of litigation (including reasonable attorney and expert
witness fees). "

13

The Walls' recovery is not based on a statutory fee shifting provision. Instead,

they agreed to limit recovery for contract enforcement action to two items, attorneys' fees and
court costs.

We deduct attorneys' additional costs and award the undisputed court costs of

$478 .50.

V.

We award pre-judgment interest on the Judgment since the April 1, 2014 Demand.
The parties dispute whether prejudgment interest should be awarded on Pennsylvania law

as a procedural matter or under New Jersey law as a substantive matter. Under New Jersey law,
prejudgment interest is a procedural matter because the New Jersey court will apply New Jersey
prejudgment interest law '"even when a different state' s substantive law must govern' the
dispute." 14 We apply the substantive law of New Jersey but the procedural rules of the Western
District of Pennsylvania. Because New Jersey law views prejudgment interest as a procedural
matter, we apply Pennsylvania' s prejudgment interest rate. We award prejudgment interest from
April 1, 2014 15 at 6% under 41P.S . §202 totaling $18,831.18.
VI.

Conclusion

We grant the Walls ' petition for attorneys ' fees in part. We award attorneys' fees and
court costs under the Agreement. Under the retainer agreement, the Walls are entitled to fees
equal to their contractual obligation of 33% of the recovery. We award $33 ,935 .01 in attorneys '
fees . We award $478.50 in court costs under the Agreement and we award $18,831.18 in
prejudgment interest.
1

2

ECF Doc. No. 81at9.

Litton Industries, Inc. v. IMO Industries, Inc., 982 A.2d 420, 427 (N.J. 2009) (citing N Bergen
Rex Transp., Inc. v. Trailer Leasing Co., 730 A.2d 843 , 848 (NJ. 2009)).

5

3

Id. (citing Packard-Bamberger & Co., Inc. v. Collier, 771 A.2d 1192, 1202 (N.J. 2001)).

4

Id. (citing N. Bergen, 730 A.2d at 848).

5

ECF Doc. No. 105 at 7.

6

ECF Doc. No. 106 at 21~10.

7

See Specialized Medical Systems, Inc. v. Lemmerling, 599 A.2d 578, 581 (N.J. App. 1991) (in a
contract allowing prevailing party to recover attorneys' fees where counsel agreed "to represent
plaintiff on a contingency of one-third of plaintiffs recovery under the complaint and to defend
the counterclaim without a charge"); see also Illinois Nat. Ins. Co. v. Wyndam Worldwide
Operations, Inc., No. 09-1724, 2011 WL 1078006 at *2 (D.N.J. March 21 , 2011) (the district
court surveyed cases noting "New Jersey law generally does not require, as a condition
precedent to an award of attorneys' fees, that the prevailing party actually paid for the attorneys'
fees incurred during the course of litigation" and held defendant can recovery attorneys' fees
even when it does not fund its own defense.).

8

Specialized Medical, 599 A.2d 581.

9

Id.

IO Id.
11

The Walls' request $158,000 in attorneys' fees from Altium. Using this lodestar as a
comparator, an award of $33 ,935.01 in attorneys' fees under the contingency agreement is
reasonable.
12

ECF Doc. No. 81 at 9.

13

Interfaith, 426 F.3d at 701.

14

Kerns v. Logicworks Systems Corp., No. 12-4146, 2015 WL 4548733 at *2 (D.N.J. July 28,
2015) (quoting N. Bergen, 730 A.2d at 848).
15

The Walls issued their first demand against Al ti um for the return of their investment under the
Agreement on April 1, 2014.

6