Jaime Gonzalez v. Owens Corning ( 2020 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 19-1538
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JAIME GONZALEZ; PATRICIA WRIGHT; KEVIN WEST; GERALD BOEHM;
EDWARD MAAG; DIANE MAAG, on behalf of themselves and all others similarly
situated,
Appellants
v.
OWENS CORNING; OWENS CORNING SALES, LLC
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On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. No. 2-13-cv-01378)
District Judge: Honorable Joy Flowers Conti
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Submitted under Third Circuit LAR 34.1(a)
April 21, 2020
Before: HARDIMAN, RENDELL, and FISHER, Circuit Judges.
(Filed: May 1, 2020)
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OPINION *
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*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7
does not constitute binding precedent.
HARDIMAN, Circuit Judge.
This appeal is the final skirmish in a long legal battle over allegedly defective
Owens Corning shingles purchased by Plaintiffs. The District Court initially granted
Owens Corning summary judgment, but we reversed, and the parties later settled.
Plaintiffs then requested attorneys’ fees, arguing their appeal of the Court’s summary
judgment benefitted the putative class. The Court denied Plaintiffs’ motion, and they
appealed again. We will affirm.
I
In 2006, the United States Bankruptcy Court for the District of Delaware
confirmed Owens Corning’s Chapter 11 plan. See Gonzalez v. Corning, 885 F.3d 186,
190 (3d Cir. 2018). Under the confirmation order and 11 U.S.C. § 1141, all “claims”
against Owens Corning as of that date were discharged. Id.At the time, our decision in Avellino & Bienes v. M. Frenville Co. (In re M.
Frenville Co.), 744 F.2d 332 (3d Cir. 1984) (“Frenville”) supplied the legal standard for
determining whether a plaintiff held a “claim” in bankruptcy. Under Frenville, courts
looked to the underlying state limitations law to determine when a claim arose. See
Gonzalez, 885 F.3d at 191 (citation omitted). “Thus, for example, a claim brought under
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the law of a state in which the discovery rule applies arises when the claimant discovers
the injury.” Id.
In 2009 and 2010, Plaintiffs Patricia Wright and Kevin West sued in the United
States District Court for the Western District of Pennsylvania, claiming Owens Corning
manufactured defective shingles. See id. at 189; App. 177. They purported to represent a
class of individuals who owned structures on which the shingles were installed. Gonzalez,
885 F.3d at 191 (citing Gonzalez v. Owens Corning, 317 F.R.D. 443, 455 (W.D. Pa.
2016)). Both Wright and West asserted state-law causes of action, and Wright—a
Pennsylvania resident—asserted a cause of action under the Pennsylvania Unfair Trade
Practices and Consumer Protection Law (PUTPCPL), 73 Pa. Stat. Ann. § 201-1 et seq.;
App. 99–110. Although Wright and West both installed their shingles before Owens
Corning’s reorganization plan was confirmed in 2006, they did not discover the shingles’
alleged defects until 2009. See Wright v. Owens Corning, 679 F.3d 101, 103 (3d Cir.
2012). Because they both resided in states in which the discovery rule applies, under
Frenville they did not hold “claims” in 2006. See id. at 104 & n. 5.
In 2010, we overturned Frenville. See JELD-WEN, Inc. v. Van Brunt (In re
Grossman’s Inc.), 607 F.3d 114 (3d Cir. 2010) (en banc) (“Grossman’s”). Under
Grossman’s, a claim arises when the claimant is exposed to the debtor’s product or
conduct, no matter when the claimant discovers the injury. See id. at 125. Applying
Grossman’s, the District Court granted Owens Corning summary judgment. It reasoned
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that Wright and West had claims in 2006 and their claims had been discharged when the
District Court confirmed Owens Corning’s reorganization plan. See Wright v. Owens
Corning, 450 B.R. 541, 557 (W.D. Pa. 2011).
Wright and West appealed, and we reversed. Citing due process concerns, we held
the Frenville rule applies to cases in which courts confirmed reorganization plans before
we decided Grossman’s. See Wright, 679 F.3d at 109. Thus, we held Wright and West’s
claims were not discharged. See id.On remand, the District Court consolidated Wright and West’s case with three
others, and Plaintiffs moved to certify a class. See Gonzalez, 885 F.3d at 189. The Court
denied the motion, see Gonzalez, 317 F.R.D. at 529, and we affirmed, see Gonzalez, 885
F.3d at 203. The parties then settled. See Gonzalez v. Owens Corning Sales, LLC, 367 F.
Supp. 3d 381, 383 (W.D. Pa. 2019).
Following the settlement, Plaintiffs moved for attorneys’ fees. See id. at 382. They
argued that, under any of three theories—(1) the common fund doctrine; (2) the common
benefit doctrine; and (3) the catalyst theory—they deserve “compensat[ion] for lifting the
federal bankruptcy bar and voiding the bankruptcy injunction thereby creating a common
benefit for millions of shingle owners.” Id. The District Court denied the motion, and this
appeal followed. Id. at 387.
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II 1
We review the standards and procedures the District Court applied in determining
attorneys’ fees de novo and the facts it found for clear error. See Planned Parenthood of
Cent. N.J. v. Att’y Gen. of N.J., 297 F.3d 253, 265 (3d Cir. 2002). We also pay a “great
deal of deference to a district court’s decision to set fees.” Gunter v. Ridgewood Energy
Corp., 223 F.3d 190, 195 (3d Cir. 2000) (citations omitted).
The District Court did not err in holding the common fund and common benefit
doctrines do not apply. Both doctrines give courts discretion to award fees to attorneys
whose work substantially benefits an ascertainable class of beneficiaries. See Polonski v.
Trump Taj Mahal Assocs., 137 F.3d 139, 145 (3d Cir. 1998); In re Diet Drugs, 582 F.3d
524, 546 n. 44 (3d Cir. 2009) (explaining the common benefit doctrine derives from the
common fund doctrine). Plaintiffs suggest that our decision in Wright “reviv[ed] millions
of warranties” and “prohibited [Owens Corning] from asserting the bankruptcy bar ab
initio to avoid warranty claims.” Opening Br. 1; Reply Br. 4. But this description of
Wright is unfounded. In Wright, we merely held that the Frenville rule applies to cases in
which courts confirmed reorganization plans before Grossman’s. See Wright, 679 F.3d at
109. So Wright benefitted only plaintiffs whose claims would have been discharged
under Grossman’s but not Frenville. That class of plaintiffs is not ascertainable, because
1
The District Court had jurisdiction under 28 U.S.C. § 1332. We have jurisdiction
under 28 U.S.C. § 1291.
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the Frenville analysis is so fact intensive. See Polonski, 137 F.3d at 145. Even if we could
ascertain these plaintiffs, however, Wright benefitted them only by removing one
obstacle to overcoming summary judgment—not by helping them prove their shingles
were defective. Such a “minimal” benefit cannot support an award of fees under either
the common fund or common benefit doctrine. Gonzalez, 367 F. Supp. 3d at 385–86; see
also Sprague v. Ticonic Nat. Bank, 307 U.S. 161, 167 (1939) (holding common fund
doctrine applies “only in exceptional cases and for dominating reasons of justice”);
Polonski, 137 F.3d at 145–147 (citing Mills v. Electric Auto-Lite Co., 396 U.S. 375, 396
(1970)) (explaining common benefit doctrine requires plaintiff to render a “substantial
service” to an ascertainable class of beneficiaries).
Nor did the District Court err in holding the catalyst theory inapplicable. That
theory gives courts discretion to award attorneys’ fees if a plaintiff’s litigation activity
“pressured a defendant to settle or render to a plaintiff the requested relief.” Templin v.
Indep. Blue Cross, 785 F.3d 861, 866 (3d Cir. 2015). But see Buckhannon Bd. and Care
Home, Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S. 598, 610 (2001) (holding
catalyst theory unavailable if statute has “prevailing party” requirement). In Templin, we
held a plaintiff asserting claims under the Employee Retirement Income Security Act
(ERISA) could pursue a catalyst theory, in part because ERISA's fee-shifting provision
lacks a “prevailing party” requirement. See 785 F.3d at 864–66 (citing Hardt v. Reliance
Standard Life Ins., 560 U.S. 242 (2010)). Plaintiffs argue that because the PUTPCPL’s
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fee-shifting provision also lacks a prevailing party requirement, they too should be able to
pursue a catalyst theory. Even if the catalyst theory applies to the PUTPCPL, it cannot
support an award of fees here. The catalyst theory requires “some degree of success on
the merits.” Templin, 785 F.3d at 864 (citing Hardt, 560 U.S. at 254). But as the District
Court concluded, Plaintiffs’ victory in Wright was purely procedural; it shed no light on
the merits of any putative plaintiff’s claim. See Gonzalez, 367 F. Supp. 3d at 387.
* * *
For the reasons stated, we will affirm the District Court’s order denying the
motion for attorneys’ fees.
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