Janice Leaman v. Gregg Wolfe

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
Nos. 17-1467 & 17-1855
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JANICE M. LEAMAN,
Appellant in 17-1855
v.
GREGG B. WOLFE,
Appellant in 17-1467
____________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 2-13-cv-00975)
District Judge: Honorable Joy Flowers Conti
____________
Submitted Under Third Circuit L.A.R. 34.1(a)
November 8, 2017
Before: SMITH, Chief Judge, HARDIMAN, Circuit Judge, and
BRANN, District Judge.*
(Opinion Filed: November 17, 2017)
____________
OPINION**
____________
*
The Honorable Matthew W. Brann, United States District Judge for the Middle
District of Pennsylvania, sitting by designation.
**
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 dispute between former business partners Janice Leaman and Gregg Wolfe
comes to us for the second time. After this Court held that Wolfe had breached his 2012
settlement agreement with Leaman, the case was remanded to the United States District
Court for the Eastern District of Pennsylvania to assess damages and attorney’s fees.
Leaman v. Wolfe, 629 F. App’x 280 (3d Cir. 2015). The District Court awarded Leaman
$38,873.32, which included $10,523.97 for prejudgment interest and $28,349.35 for
attorney’s fees.
Wolfe now appeals the District Court’s judgment, claiming the award is too high,
while Leaman has filed a cross-appeal claiming the award is too low. Because we agree
with the District Court in all respects, we will affirm.
I1
A
We begin with the District Court’s assessment of prejudgment interest. The
Court’s award of $10,523.97 was based on its conclusion that Leaman was entitled to
enforce an acceleration clause in the settlement agreement after Wolfe defaulted on his
February 2013 payment. Although the Court found Wolfe’s equitable arguments in
support of his late payment “compelling,” it held that the assessment of interest was a
1
The District Court had jurisdiction under 28 U.S.C. § 1332. We have jurisdiction
under 28 U.S.C. § 1291.
2
matter of legal right, not a matter of discretion. Leaman v. Wolfe, 2017 WL 528280, at *8
(E.D. Pa. Feb. 9, 2017).
The District Court’s legal analysis was sound. In breach of contract cases arising
under Pennsylvania law, “interest is allowable at the legal rate from the time payment is
withheld after it has become the duty of the debtor to make such payment.” Benefit Tr.
Life Ins. Co. v. Union Nat’l Bank of Pittsburgh, 776 F.2d 1174, 1178 (3d Cir. 1985)
(internal quotation marks and alteration removed in original) (quoting Palmgreen v.
Palmer’s Garage, Inc., 117 A.2d 721, 722 (Pa. 1955)); see also Cresci Constr. Servs.,
Inc. v. Martin, 64 A.3d 254, 259 (Pa. Super. Ct. 2013). Assessment of interest “is a legal
right ‘which arises upon breach or discontinuance of the contract provided the damages
are then ascertainable by computation and even though a bona fide dispute exists as to the
amount of the indebtedness.’” Benefit Tr. Life Ins. Co., 776 F.2d at 1178 (quoting
Palmer’s Garage, 117 A.2d at 722); see also Cresci, 64 A.3d at 259 (“Recovery of
prejudgment interest under this standard is a matter of law.”). Prejudgment interest is not
punitive; it merely compensates the nondefaulting party for the loss of her money. Benefit
Tr. Life Ins. Co., 776 F.2d at 1178 (citing RESTATEMENT (SECOND) OF CONTRACTS § 354
(Am. Law Inst. 1981)).
As for the amount of interest due, Wolfe claims that he owes only $26.65, which is
the accrued interest for 13 days at 6 percent on the single late payment in question of
$12,500. Leaman counters that, since she exercised her right to accelerate all payments
due after Wolfe defaulted, Wolfe became liable for interest on the entire amount, as
reduced in time by each of Wolfe’s monthly payments. See 41 Pa. Cons. Stat. § 202. The
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District Court accepted Leaman’s argument in this regard, and we find no error in its
decision. Wolfe’s February 2013 default triggered the acceleration clause, which enabled
Leaman to sue for “the entirety of the then unpaid balance of the Settlement Amount.”
App. 97. Leaman exercised that right, which triggered Wolfe’s duty to pay the full
amount. That duty was not vitiated by Wolfe’s decision to continue making monthly
payments, nor by Leaman’s decision to mitigate her damages by accepting those
payments. See Cresci, 64 A.3d at 259 (noting “interest is recoverable from the time for
performance on the amount due less all deductions to which the party in breach is
entitled” (quoting RESTATEMENT (SECOND) OF CONTRACTS § 354)). Accordingly, the
District Court did not err in awarding Leaman prejudgment interest in the amount of
$10,523.97.2
B
We next turn to the parties’ challenges to the District Court’s award of attorney’s
fees. Leaman asked the District Court to award her $70,505.92, which she claimed was
the full amount under the lodestar method. Wolfe countered that Leaman was entitled to
just $265.13, which represented the time he believed was necessary to prepare Leaman’s
complaint in confession of judgment. The District Court rejected Wolfe’s argument,
2
On appeal, Wolfe repeatedly references a letter in which he expresses his intent
to continue making monthly payments as support for his argument that Leaman waived
her right to accelerated interest. This document was not before the District Court on
summary judgment, nor was it properly presented via a motion for reconsideration.
Instead, it was attached to Wolfe’s opposition to Leaman’s motion for reconsideration,
which only questioned the District Court’s award of attorney’s fees. Accordingly, it is not
subject to review on appeal and, even if it were, it would fall well short of evidencing a
waiver.
4
finding Leaman to be a prevailing party because she persuaded a panel of this Court that
she was entitled to interest and attorney’s fees. Leaman, 2017 WL 528280, at *6. Because
the District Court was plainly correct in this regard, we summarily reject Wolfe’s
argument.
Although the District Court agreed with Leaman that she was a prevailing party
entitled to attorney’s fees, the Court disagreed that $70,505.92 was the proper amount.
For starters, the Court agreed with Wolfe that Leaman’s first counsel—who happened to
be her husband, William Einhorn—did not justify his claimed rate of $400 per hour.
Instead, the Court found that the appropriate rate for Einhorn was $203.95, which was the
average rate of Leaman’s second law firm (Powell, Trachtman, Logan, Carrle &
Lombardo). When Einhorn’s revised fee amount was added to the reasonable fees of the
Powell firm, the lodestar was $56,698.69. Because both sides achieved some success in
the litigation, however, the District Court reduced the lodestar by 50 percent to
$28,349.35.
Leaman insists the District Court erred when it reduced the lodestar amount, but
we are unpersuaded. The District Court’s decision in this regard was discretionary. Rode
v. Dellarciprete, 892 F.2d 1177, 1182 (3d Cir. 1990). We “may not upset a trial court’s
exercise of discretion on the basis of a visceral disagreement with the lower court’s
decision . . . [nor] where the trial court employs correct standards and procedures[] and
makes findings of fact not clearly erroneous.” Washington v. Phila. Cty. Court of
Common Pleas, 89 F.3d 1031, 1035 (3d Cir. 1996) (internal quotation marks and citation
5
omitted). Rather, we will defer where the District Court “applied the correct criteria to the
facts of the case.” Id. (internal quotation marks and citation omitted).
After determining the lodestar, the District Court adjusted it based on its
assessment of the degree to which Leaman succeeded in this litigation. See Hensley v.
Eckerhart, 461 U.S. 424, 436 (1983). Consistent with the Supreme Court’s direction, the
District Court determined whether Leaman’s unsuccessful claims were “unrelated” to the
successful claims and whether she “achieve[d] a level of success that makes the hours
reasonably expended a satisfactory basis for making a fee award.” Id. at 434. Finding the
claims to be inextricably intertwined, the Court considered the significance of the overall
relief Leaman obtained “in relation to the hours reasonably expended on the litigation.”
Id. at 435.
The Court did not abuse its discretion in performing this task. See Mancini v.
Northampton Cty., 836 F.3d 308, 321 (3d Cir. 2016). In determining the relative success
of the parties, the Court noted that Leaman obtained a finding that Wolfe breached the
contract, successfully defeated his “substantial performance” defense, obtained an order
granting summary judgment against a counterclaim for breach of contract, and was
awarded accelerated interest. For his part, Wolfe successfully reopened the confessed
judgment and extricated himself from the $100,000 liquidated damages provision. The
Court did not factor the $212,500 principal sum into its analysis, since Wolfe’s obligation
to pay this amount “was never in dispute.” Leaman, 2017 WL 528280, at *8. Thus, the
Court viewed the $100,000 liquidated damages provision—on which Wolfe prevailed—
as “the largest sum in dispute,” and it then compared this amount with the $10,523.39
6
Leaman earned in accelerated interest. Id. Based on these factors, as well as the fact that
both parties were responsible for the contentious litigation, the Court reduced the award
by 50 percent.
Leaman takes issue with the District Court’s analysis, arguing her principal claim
was for breach of contract, which included successful recovery of the $212,500 principal.
Although Leaman’s argument is not without force, the District Court’s contrary decision
was far from an abuse of discretion. Because the Court “applied the correct criteria to the
facts of the case,” we will defer to its decision. Washington, 89 F.3d at 1035; see also
Hensley, 461 U.S. at 437 (noting that “the district court has discretion in determining the
amount of a fee award” because of its “superior understanding of the litigation and the
desirability of avoiding frequent appellate review of what essentially are factual
matters”).
The same holds true for the District Court’s decision not to consider Leaman’s
three additional months of invoices attached to her motion for reconsideration. Leaman
did make the Court aware of her desire to provide additional timesheets in a footnote in
her summary judgment motion. But in the intervening two months between submission of
the motion and the Court’s decision, Leaman never attempted to supplement the record or
explain why she could not have done so. Accordingly, we agree with the District Court
that these timesheets did not provide a legitimate basis for Leaman’s motion for
reconsideration. See Lazaridis v. Wehmer, 591 F.3d 666, 669 (3d Cir. 2010) (noting that a
motion for reconsideration under Rule 59 of the Federal Rules of Civil Procedure “must
rely on one of three grounds: (1) an intervening change in controlling law; (2) the
7
availability of new evidence; or (3) the need to correct clear error of law or prevent
manifest injustice” (citation omitted)); see also Bailey v. United Airlines, 279 F.3d 194,
201 (3d Cir. 2002) (“A district court may properly refuse to consider evidence presented
in a motion for reconsideration when the evidence was available prior to summary
judgment.” (citation omitted)).
C
Finally, we agree with the District Court that Leaman’s claim for consequential
damages is without merit. Leaman’s suggestion that she could not begin working as a
court reporter until this Court determined Wolfe had breached the settlement agreement is
mistaken. The settlement agreement rendered the noncompete provision null and void
once Wolfe defaulted in February 2013. See App. 104 (adopting this interpretation in
Leaman’s notice of default). Accordingly, Leaman did not need a court determination to
begin working.
II
For the reasons stated, we will affirm the judgment of the District Court in all
respects.
8