Richards, R. v. Ameriprise Financial

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
RITA M. RICHARDS and CAROLINE J. IN THE SUPERIOR COURT OF
RICHARDS, Co-Executrices of the ESTATE OF PENNSYLVANIA
JAMES G. RICHARDS and RITA M. RICHARDS
and CAROLINE J. RICHARDS, Co-Executrices
of the ESTATE OF HELEN RICHARDS
v.
AMERIPRISE FINANCIAL, INC., AMERIPRISE
FINANCIAL SERVICES, INC., RIVERSOURCE
LIFE INSURANCE COMPANY and THOMAS A.
BOUCHARD
Appellants No. 265 WDA 2015
Appeal from the Judgment Entered November 14, 2014
In the Court of Common Pleas of Allegheny County
Civil Division at No(s): G.D. 01-006614
RITA M. RICHARDS and CAROLINE J. IN THE SUPERIOR COURT OF
RICHARDS, Co-Executrices of the ESTATE OF PENNSYLVANIA
JAMES G. RICHARDS and RITA M. RICHARDS
and CAROLINE J. RICHARDS, Co-Executrices
of the ESTATE OF HELEN RICHARDS
Appellants
v.
AMERIPRISE FINANCIAL, INC., AMERIPRISE
FINANCIAL SERVICES, INC., RIVERSOURCE
LIFE INSURANCE COMPANY and THOMAS A.
BOUCHARD
No. 307 WDA 2015
Appeal from the Judgment Entered November 14, 2014
In the Court of Common Pleas of Allegheny County
Civil Division at No(s): GD 01-006614
BEFORE: GANTMAN, P.J., BENDER, P.J.E., and PANELLA, J.
MEMORANDUM BY PANELLA, J. FILED NOVEMBER 9, 2016
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Appellants, Ameriprise Financial, Inc., Ameriprise Financial Services,
Inc., Riversource Life Insurance Company, and Thomas A. Bouchard, appeal
from the judgment entered in the Allegheny Court of Common Pleas, in favor
of Appellees, the Estate of James G. Richards and the Estate of Helen
Richards,1 finding Appellants violated the Unfair Trade Practices Consumer
Protection Law (“UTPCPL”), awarding treble damages and punitive damages,
and allowing Appellees’ counsel to submit a petition for their fees and costs,
which resulted in the subsequent award of attorneys’ fees and costs in favor
of Appellees. We affirm in part, reverse in part, and remand for proceedings
consistent with this memorandum.2
The relevant facts and procedural history of this case are as follows. In
1994, Thomas Bouchard (“Bouchard”), a financial advisor of IDS Life,
approached Mr. James G. Richards and Mrs. Helen Richards (collectively,
“the Richards”), who were existing customers of IDS Life, and requested to
perform a financial analysis for them. The Richards accepted Bouchard’s
request. After the analysis was complete, Bouchard and the Richards met to
discuss the results. Bouchard explained that based on Mr. Richard’s decision
1
Mrs. Helen Richards initially brought this case; however, Mrs. Richards died
on November 6, 2015, and the Estate of Helen Richards is now proceeding in
her place.
2
Appellees in this case filed conditional cross-appeals and thus are
conditional Cross-Appellants. For reasons set forth later in this memorandum
we need not address the issues raised in the cross-appeals because we have
not completely reversed the judgment of the trial court relating to the
UTPCPL claim.
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to take his pension without leaving much of a surviving pension for his
spouse, the Richards faced a pension gap, meaning Mrs. Richards would not
have enough money to cover her monthly expenses if Mr. Richards died first.
To solve this dilemma, Bouchard recommended that Mr. Richards
purchase a $100,000.00 IDS Life Flexible Premium Adjustable Whole Life
Insurance Policy so Mrs. Richards would receive the Policy’s death benefit
upon Mr. Richard’s death. The Richards agreed to purchase the Policy at a
monthly premium payment of $500.00 with an annually scheduled premium
of $6,000.00. Mrs. Richards testified that Bouchard “just said the
$100,000[.00 Policy] . . . was going to cost us $500[.00] a month.” N.T.
Deposition of Mrs. Richards, 5/9/11, at 58. Bouchard provided the Richards
with a Ledger Statement (otherwise commonly referred to as an Illustration)
indicating the terms of the Policy.
In 2000, Bouchard and the Richards met regarding the Policy.
Bouchard testified that the meeting arose because the Richards did not want
to continue paying $500.00 per month in premium payments, so they
sought Bouchard’s advice regarding their options. In preparation for the
meeting, Bouchard reviewed the Richards’ finances and the Policy and
discovered the payment of $500.00 per month was no longer sufficient to
fund the Policy and that it might lapse prematurely due to lower than
expected interest rates. Given this information, Bouchard relayed to the
Richards different options they could take regarding the Policy, which
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included a reduction of the death benefit, to make a lump sum payment into
the Policy and continue paying premiums for a shorter time, or to increase
the monthly premium payments for a period of time. The Richards opted to
pay a lump sum payment into the Policy of $15,053.09 and agreed to pay
premiums for a shorter period of time. As a part of the transaction,
Bouchard prepared a document titled “Explanation of Transaction” which
contained the following handwritten section: “We wished to add these
additional funds to our present life policy to allow us to reduce the amount of
time we will need to pay future premiums and to keep the policy in force due
to lower than expected interest rates. Also this will not be subject to
inheritance tax at our death.” Explanation of Transaction, at 3.
Mr. Richards died on February 20, 2005. Ameriprise paid the
$100,000.00 death benefit to Mrs. Richards shortly thereafter. The total
amount of premium payments the Richards paid into the Policy for the
$100,000.00 death benefit was approximately $78,500.00
This suit was filed in 2001. Mrs. Richards sought damages for the
$15,053.09 payment, plus interest, arguing that when Bouchard sold the
Policy, he represented that no payments beyond the $500.00 monthly
premium were required to fund it. The complaint asserted causes of action
against Appellants for negligent misrepresentation, fraudulent
misrepresentation, violation of the UTPCPL, breach of fiduciary duty, and
negligent supervision. Appellants moved for summary judgment claiming
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that Appellees failed to state legally sufficient claims, and on February 11,
2014, the court entered an order denying summary judgment in favor of
Appellees as to the misrepresentation claims and UTPCPL claim, but granting
summary judgment in favor of Appellants as to the breach of fiduciary duty
and negligent supervision claims. In its opinion, the court stated: “M[r]s.
Richards’ testimony [would] support a finding that [Bouchard] represented
that the insurance policy would remain in full force and effect until [Mr.
Richards’] death if [Appellees] made $500.00 per month payments until [Mr.
Richards’] death[;]” and “the document titled Explanation of Transaction
which states, inter alia, that the additional funds [would] keep the policy in
force due to lower than expected interest rates may support a finding that
the additional $15,053.09 payment was made because otherwise the policy
would not remain in full force and effect as represented.” Trial Court
Opinion, filed 2/11/14, at 1 (emphasis in original).
A bench trial was held on October 30, 2014, and November 3-4, 2014,
on Appellees’ misrepresentation claims and UTPCPL claim. On November 14,
2014, the court entered a verdict dismissing the fraudulent
misrepresentation and negligent misrepresentation claims for Appellees’
failure to sustain a burden of proof, but finding for Appellees on the UTPCPL
claim and awarding treble damages and punitive damages, and allowing
Appellees’ counsel to submit a petition for their fees and costs. Appellees’
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counsel thereafter submitted a fee petition that contained time related to
litigating the UTPCPL claim.
On November 21, 2014, Appellants filed a post-trial motion seeking
relief on the UTPCPL claim. The Estate of James G. Richards also filed a post-
trial relief motion on November 25, 2014, relating to the court’s admission of
evidence in contravention of the Dead Man’s Act, 42 Pa.C.S.A. § 5930. The
court subsequently denied both of these requests.
Following briefing on the petition for attorneys’ fees and costs, the
court entered an order on January 20, 2015, awarding counsel fees in favor
of Appellees for $84,072.50 to Behrend and Ernsberger, P.C., and costs for
$1,759.58, and counsel fees for $26,840.00 to the Massa Law Group. On
January 29, 2015, Appellants filed a post-trial motion for relief relating to
court’s award of attorneys’ fees and costs, but the court subsequently denied
Appellants’ request.
Appellants filed a timely notice of appeal and Appellees filed notice of
conditional cross-appeals. Thereafter, the court ordered Appellants and
Appellees to file concise statements of errors complained of on appeal,
pursuant to Pa.R.A.P. 1925(b); Appellants and Appellees timely complied.
The court then filed an opinion. The panel found the trial court’s opinion
deficient and remanded “for the preparation of a comprehensive opinion
pursuant to Rule 1925(a)….” Richards v. Ameriprise Financial, Inc.,
No(s). 265 WDA 2015 and 307 WDA 2015, at 4 (Pa. Super., filed July 19,
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2016) (unpublished per curiam memorandum). The trial court filed a
supplemental opinion on September 21, 2016.
Before we proceed to the merits, we must address the trial court’s
supplemental opinion. After its filing, Appellants filed an “Application for
Leave to File Brief in Response to the Supplemental Opinion of the Trial
Court” (“Application”). In that filing, Appellants noted that their reason for
seeking leave to file a response to the trial court’s opinion stems from the
supplemental opinion’s raising “factual and legal issues that were not
previously briefed by the parties….” Application, filed 9/26/16, at ¶ 8.
The supplemental opinion is lacking. It contains no citations to the
voluminous record. And the few legal citations provided are largely
inapposite. In this complex case, a more carefully crafted and thorough
opinion would have made for far more efficient appellate review. But the
supplemental opinion, deficient as it is, provides the court’s findings that
permit resolution of the case. We refuse to delay the resolution of this
appeal any further. We deny Appellant’s Application and proceed to the
merits.
Appellants raise the following issues for our review:
WHETHER THE TRIAL COURT ERRED IN ENTERING A VERDICT
FOR [APPELLEES] UNDER THE PRE-AMENDMENT [UTPCPL]—
WHICH REQUIRES PROOF OF THE COMMON LAW ELEMENTS OF
FRAUD—DESPITE EXPRESSLY FINDING THAT [APPELLEES]
FAILED TO PROVE EVEN A NEGLIGENT MISREPRESENTATION?
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IN THE ALTERNATIVE, WHETHER THE TRIAL COURT ERRED IN
ENTERING A NON-JURY VERDICT ON THE UTPCPL CLAIM
DESPITE NO EVIDENCE OF CAUSATION?
WHETHER THE TRIAL COURT ERRED IN ITS AWARD OF
ATTORNEYS’ FEES UNDER THE UTPCPL BECAUSE THE AMOUNT
AWARDED IS UNREASONABLE?
[WHETHER] THE TRIAL COURT ERRED BY AWARDING BOTH
PUNITIVE AND TREBLE DAMAGES UNDER THE UTPCPL?
Appellants’ Brief, at 5.3
For purposes of disposition, we address Appellants’ issues together.
Appellants argue that Appellees’ claim brought under the UTPCPL’s catch-all
provision requires application of the pre-amendment version of the statute,
which originally prohibited “engaging in any other fraudulent conduct which
creates a likelihood of confusion or of misunderstanding,” see 73 Pa.S.A. §
201-2(4)(xvii), because the Policy was sold to the Richards in 1994 and the
alleged misrepresentation occurred in 1994 before the statute was amended
in 1996. Otherwise, Appellants complain the application of the amended
statute would result in an impermissible retroactive application of the law.
Appellants contend the UTPCPL claim must fail for Appellees’ failure to
meet their burden to sustain it. Appellants explain to prove a claim under
the pre-amendment UTPCPL, Appellees were required to demonstrate the
elements of common law fraud by a preponderance of the evidence.
Appellants emphasize that the trial court expressly found Appellees failed to
sustain their burden of proof for the fraudulent misrepresentation and
3
For purposes of disposition, we have rearranged Appellants’ issues.
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negligent misrepresentation claims. These claims, Appellants contend, have
identical elements except that negligent misrepresentation has a lesser
scienter requirement than fraudulent misrepresentation. So, Appellants aver
because the court expressly found that they did not prove the elements of
even the negligent misrepresentation claim by a preponderance of the
evidence, the UTPCPL claim should likewise fail for Appellees’ failure to meet
their burden of proof.
Alternatively, Appellants assert the UTPCPL claim must fail because
Appellees failed to prove an ascertainable loss was caused by the alleged
misrepresentation. Specifically, Appellants maintain Appellees were required
to show that “but for” the prohibited actions, Appellees would not have
suffered an ascertainable loss. Appellants complain the record is devoid of
evidence indicating that the lump sum payment occurred as the result of
Bouchard’s alleged misrepresentation and the court impermissibly inferred
causation simply because the Richards tendered the lump sum payment into
the Policy after Bouchard recommended they do so.
Appellants urge the trial court improperly granted Appellees’ petition
for attorneys’ fees for all of the time requested because Mr. Behrend,
counsel for Helen Richards, has been involved in insurance litigation for
thirty years; only three witnesses were called to testify at the bench trial;
Appellees’ claims are identical to a number of claims litigated by Mr.
Behrend; and the court failed to analyze the fee petition for reasonableness.
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Appellants submit the UTPCPL does not confer the right to punitive
damages, so the trial court’s imposition of $50,000.00 in punitive damages
against Appellants constitutes reversible error. Alternately, Appellants
contend the lump sum payment was not such “outrageous” conduct as that
prohibited under the statute so as to award additional fees to Appellees.
Appellants conclude this Court should reverse the verdict of the trial court
and enter a verdict for Appellants on the UTPCPL claim, and reverse the trial
court’s award of punitive damages and its award of attorneys’ fees. We
disagree in part and agree in part.
Our appellate role in cases arising from non-jury trial verdicts is
to determine whether the findings of the trial court are
supported by competent evidence and whether the trial court
committed error in any application of the law. The findings of
fact of the trial judge must be given the same weight and effect
on appeal as the verdict of a jury. We consider the evidence in a
light most favorable to the verdict winner. We will reverse the
trial court only if its findings of fact are not supported by
competent evidence in the record or if its findings are premised
on an error of law. However, [where] the issue . . . concerns a
question of law, our scope of review is plenary.
The trial court’s conclusions of law on appeal originating from a
non-jury trial are not binding on an appellate court because it is
the appellate court's duty to determine if the trial court correctly
applied the law to the facts of the case.
Wyatt, Inc. v. Citizens Bank of Pennsylvania, 976 A.2d 557, 564 (Pa.
Super. 2009) (citation and internal quotations omitted; brackets in original).
Preliminarily, we address Appellants argument that the pre-amended
version of the UTPCPL applies to the instant case. Statutory interpretation
presents a question of law. See Snead v. Soc'y for Prevention of Cruelty
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to Animals of Pa., 985 A.2d 909, 912 (Pa. 2009). Thus, our standard of
review is de novo, and our scope of review is plenary. See id. Here, the
allegedly deceptive practices that support Appellees’ UTPCPL claim all
occurred prior to the date on which the UTPCPL was amended. 4 Accordingly,
the pre-amended version of the statute controls. See Yenchi v. Ameriprise
Fin., Inc., 123 A.3d 1071, 1083-84 (Pa. Super. 2015), appeal granted, 134
A.3d 51 (Pa. 2016) (finding the date on which IDS Life Insurance policy was
issued occurred prior to the UTPCPL amendment and therefore the pre-
amendment version of the statute controlled).
The UTPCPL is Pennsylvania’s consumer protection law. It seeks to
prevent “[u]nfair methods of competition and unfair or deceptive acts or
practices in the conduct of any trade or commerce….” 73 P.S. § 201–3. Its
aim is to protect the public from unfair or deceptive business practices. See
Agliori v. Metropolitan Life Ins. Co., 879 A.2d 315, 318 (Pa. Super.
2005). Our Supreme Court has stated courts should liberally construe the
UTPCPL in order to effect the legislative goal of consumer protection. See
Com., by Creamer v. Monumental Properties, Inc., 329 A.2d 812, 816-
17 (Pa. 1974).
The UTPCPL provides a private right of action for anyone who “suffers
any ascertainable loss of money or property” because of an unlawful
method, act or practice. See 73 P.S. § 201–9.2(a). Upon a finding of
4
The Policy was issued in 1994.
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liability, the court has the discretion to award “up to three times the actual
damages sustained” and provide any additional relief the court deems
proper. Id. However, the statute does not “confer a right to [impose]
punitive damages.” McCauslin v. Reliance Fin. Co., 751 A.2d 683, 685
(Pa. Super. 2000). Section 201–2(4) lists twenty enumerated practices
which constitute actionable “unfair methods of competition” or “unfair or
deceptive acts or practices.” 73 P.S. § 201–2(4)(i)–(xx). The UTPCPL also
contains a catchall provision at 73 P.S. § 201–2(4)(xxi). The pre–amended
catchall provision prohibited “fraudulent conduct” that created a likelihood of
confusion or misunderstanding. 73 P.S. § 201–2(4)(xvii).5
To bring a private cause of action under the pre-amended version of
the catchall provision of the UPTCPL, a plaintiff must establish common law
fraud by a preponderance of the evidence. See Weinberg v. Sun Co., Inc.,
777 A.2d 442, 446 (Pa. 2001) (“Nothing in the legislative history suggests
that the legislature ever intended statutory language directed against
consumer fraud to do away with the traditional common law elements of
reliance and causation.”); Boehm v. Riversource Life Ins. Co., 117 A.3d
308, 323 (Pa. Super. 2015), appeal denied, 126 A.3d 1281 (Pa. 2015)
(holding to establish a claim for common law fraud under the pre-amended
catchall provision of the UTPCPL, the elements must be proven by a
preponderance of the evidence). The elements of common law fraud include:
5
Prior to 1996, the catchall provision was codified at 73 P.S. § 201–
2(4)(xvii). It was recodified at 73 P.S. § 201–2(4)(xxi).
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(1) a representation; (2) which is material to the transaction at
hand; (3) made falsely, with knowledge of its falsity or
recklessness as to whether it is true or false; (4) with the intent
of misleading another into relying on it; (5) justifiable reliance
on the misrepresentation; and (6) the resulting injury was
proximately caused by the reliance.
Gibbs v. Ernst, 647 A.2d 882, 889 (Pa. 1994) (footnote omitted). In other
words, “a plaintiff must show that he justifiably relied on the defendant’s
wrongful conduct or representation and that he suffered harm as a result of
that reliance.” Yocca v. Pittsburgh Steelers Sports, Inc., 854 A.2d 425,
438 (Pa. 2004) (citations omitted). Justifiable reliance in the non-commercial
life insurance context is typically a question of fact and often involves
credibility determinations for the fact-finder to decide, because the fact-
finder must consider “the relationship of the parties involved and the nature
of the transaction” to determine whether the purchasers justifiably relied
upon the agent’s representations to the extent necessary to support their
UTPCPL claim. DeArmitt v. New York Life Ins. Co., 73 A.3d 578, 592-93
(Pa. Super. 2013) (citing Drelles v. Manufacturers Life Ins. Co., 881
A.2d 822, 841 (Pa. Super. 2005)). To recover damages under the UTPCPL, a
plaintiff must demonstrate “an ascertainable loss as a result of the
defendant's prohibited action.” Weinberg, 777 A.2d at 446 (emphasis in
original).
Instantly, the trial court provided the following reasoning for its
disposition:
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[The Richards] became clients of [Bouchard] in 1994. They
retained Bouchard as their financial advisor on an annual basis
for an annual fee of $300.00. [Bouchard] was also an agent of
IDS [Life] Insurance, which eventually became Ameriprise.
In July of 1994, the Richards met with Bouchard at his office in
Washington, PA. Bouchard warned them that they were facing a
potential pension trap, wherein Mrs. Richards could suffer a
substantial reduction in income should Mr. Richards pass first.
[Bouchard] presented the Richards with a financial plan, which
included the proposed purchase of a $100,000.00 [IDS Life
Flexible Premium Adjustable Whole Life Insurance Policy] on Mr.
Richards’ life. [Bouchard] showed the Richards an Illustration
and application. The application [became] part of the contract.
The Illustration demonstrated that the [annually scheduled]
premium payments on the Policy would remain $6,000.00 per
year, for the life of the Policy . . . and then go to zero payments.
The monthly [premium] payments would remain at $500[.00]
per month for the life of the Policy. The Illustration also assumed
that the interest rates would be 8% for the life of the Policy,
although the [applicable interest rate] in July of 1994 was
6.75%. The application indicated the same. Neither [e]xhibit
contained any information that would alert any consumer that a
fluctuation of interest rates of any other occurrence could result
in an extra payment or an increase in premiums at a future date.
When examined at trial [Bouchard] and corporate witness Mr.
Freiler could not ascertain that either the Illustration or
application contained any information indicating that the Policy
may not continue at the same premiums for its life.
Further, Mrs. Richards testified that [Bouchard] assured her and
Mr. Richards that the level of payments of $500[.00] per month
would be all that was needed to keep the Policy in force for life.
The Richards made the application for the [Policy] in reliance
upon [Bouchard’s] recommendations….
The Richards’ application was accepted and they received their
Policy in August of 1994. The Policy itself set forth no
information which would conflict with the information contained
in the Illustration and the application. Mr. Freiler, a
representative of Ameriprise, could not identify any section of
the exhibits which would alert a consumer that anything more
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than the scheduled payments would be needed to keep the
Policy in force. He testified that the average person would not
understand the features in this type of insurance policy. He could
not condone an agent’s misrepresentation that an [IDS Life
Flexible Premium Adjustable Whole Life Insurance Policy] would
remain in at a level premium for the life of the policy.
The Richards made their monthly premiums of $500[.00] for the
next seven (7) years, and [Bouchard] remained their financial
advisor. In 2000, in preparation for the Richards’ annual review,
[Bouchard] conducted an in force Illustration [which indicated]
that the Policy might lapse within the next [five (5)] years due to
fluctuation of interest rates. The interest rates had fallen to
6.25%.
When [Bouchard] met with the Richards in 2000, he informed
them of the indications that the Policy may lapse in the future.
This would have been the first time the Richards were made
aware that the policy was not as it had been represented by
[Bouchard] at the time of purchase.
While [Bouchard] testified at trial that it was Mr. Richards who
first approached [Bouchard] stating that he wanted to pay a
lump sum into the [Policy] so that he could pay off his premiums
sooner than scheduled, this testimony was rejected. Bouchard
prepared illustrations demonstrating how various lump sum
payments would affect the Policy performance, but it was
decided that a [$15,053.09] prepayment was needed. This
necessity was evidenced by . . . a document titled “Explanation
of Transaction,” and the fact that there was no advantage in
paying [$15,053.09] into the [Policy] that one would never get
back, only to make the cost of the Policy higher.
The “Explanation of Transaction” is an internal document
showing where the [$15,053.09] payment is coming from, in this
case, [Appellees’] mutual fund. At the bottom of the document
are Mr. Richards’ and [Bouchard’s] signatures and [Bouchard’s]
handwritten note explaining the reason for the movement of the
mutual funds into the [Policy]: “added to life chase value to
allow a reduction of future premiums,” but also “to keep the
Policy in force due to lower than expected interest rates.” While
[Bouchard] insisted that a lapse was not the main reason for the
[$15,053.09] payment, that testimony was not believed. Paired
with the Illustration indicating a future policy lapse and the
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absence of any advantage in making the lump sum payment for
the reason Bouchard proffered, the possibility of the Policy
lapsing after the Richards had paid tens of thousands [of dollars]
in premiums would have been catastrophic.
After signing the “Explanation of Transaction” the Richards
received the funds from the mutual fund account and wrote a
$15,053.09 check to [Appellant’s] corporation . . . with the noted
reason: “for Jim’s insurance.” Having been advised by their
financial advisor that their insurance policy was in trouble of
lapsing and it needed a lump sum payment to keep it in force,
[the court] found that the Richards relied on [Bouchard] in
making that payment.
The [c]ourt found negligent misrepresentation inapplicable here
because the corporation’s documents used in the sales
presentation as well as the financial advisor’s misrepresentation
as to the cost of the [Policy] were not negligent
misrepresentations. They were intentional misrepresentations as
to the cost of the [Appellees Policy]. [The court found] that the
misrepresentations made by the financial advisor were
fraudulent. Under the [UTPCPL, Appellants] succeeded in proof of
fraud by a preponderance of the evidence.
Trial Court Opinion, filed 9/21/16, at 4-6.
The record supports the court’s conclusion. It was within the province
of the court as the fact-finder to believe Mrs. Richards’s testimony and
deduce from the Policy Illustration, insurance application, and the corporate
representative that in 1994 Bouchard misrepresented that the cost of the
Policy would only be $500.00 per month. See Wyatt; Yocca. It was also
within the province of the court as the fact-finder to find the Richards
justifiably relied upon Bouchard’s 1994 misrepresentation and his
subsequent 2000 representation that a lump sum payment into the Policy
was necessary to prevent it from lapsing, especially given the relationship
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between the parties as financial planner and client. See Wyatt; DeArmitt.
The Richards’ suffered an ascertainable loss at the payment of $15,053.09
into the Policy. See 73 P.S. § 201–9.2(a).
With regard to Appellants’ specific claim that Appellees failed to prove
they suffered an ascertainable loss as a result of Bouchard’s representation,
this contention is without merit. Appellees met their burden by a
preponderance of the evidence. See Weinberg; Boehm. The “Explanation
of Transaction” stated the Richard’s payment was designed to “keep the
policy in force due to lower than expected interest rates” and Bouchard’s
testimony indicated that the Policy would not increase its cash value upon
the payment of the lump sum:
[The court]: Am I missing something here? Because I think you
said yesterday he doesn’t get that added cash value.
[Bouchard]: No.
[The court]: If he dies, he doesn’t get the added cash value and
the 100,000.
[Bouchard]: Exactly.
[The court]: He only gets the 100,000.
[Bouchard]: And he knew that.
N.T., Trial, 11/4/14, at 252. The court interpreted this testimony as support
for the reasoning behind why the Richards made a lump sum payment into
the Policy—to keep the Policy in force and prevent it from lapsing. See
Weinberg; Boehm. In a light most favorable to Appellees as the verdict
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winner, we observe Appellees met their burden of proof on causation under
the UTPCPL. See Wyatt; Monumental Properties, Inc..
To the extent Appellants argue that the court’s dismissal of Appellees’
fraudulent misrepresentation and negligent misrepresentation claims
necessarily precludes a verdict on the UTPCPL claim because the elements of
each offense are similar, this claim fails. Under the pre-amended version of
the UTPCPL, a plaintiff must establish common law fraud by a preponderance
of the evidence by showing that she justifiably relied on the defendant’s
wrongful conduct or representation and that she suffered harm as a result of
that reliance. See Yocca. The burden of proof to demonstrate common law
fraud, on the other hand, must be shown by clear and convincing evidence.
See Weissberger v. Myers, 90 A.3d 730, 735 (Pa. Super. 2014)
(explaining that a party proving fraud must meet the more exacting
standard of clear and convincing evidence, which is a higher standard of
persuasion than mere preponderance of the evidence). And negligent
misrepresentation requires the existence of a duty owed by one individual to
another. See Heritage Surveyors & Engineers, Inc. v. Nat'l Penn Bank,
801 A.2d 1248, 1252 (Pa. Super. 2002) (“The elements of negligent
misrepresentation differ from intentional misrepresentation in that the
misrepresentation must concern a material fact and the speaker need not
know his or her words are untrue, but must have failed to make a
reasonable investigation of the truth of these words. Moreover, like any
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action in negligence, there must be an existence of a duty owed by one
party to another.”) Thus, each claim has separate and distinct elements that
must be proven according to its applicable burden of proof. Based on the
foregoing, the trial court correctly found Appellees met their burden for the
UTPCPL claim, but failed to meet their burden for the misrepresentation
claims.
Regarding Appellants claim that the trial court erred in awarding all of
Appellees’ attorneys’ fees and costs under the UTPCPL, this argument is
meritless. We are mindful that we may not disturb a trial judge’s assessment
of these amounts unless there has been an abuse of discretion. See Neal v.
Bavarian Motors, Inc., 882 A.2d 1022, 1029 (Pa. Super. 2005). Under the
UTPCPL, the following factors should be considered when assessing the
reasonableness of counsel fees:
(1) The time and labor required, the novelty and difficulty of the
questions involved and the skill requisite properly to conduct the
case; (2) The customary charges of the members of the bar for
similar services; (3) The amount involved in the controversy and
the benefits resulting to the clients from the services; and (4)
The contingency or certainty of the compensation.
Sewak v. Lockhart, 699 A.2d 755, 762 (Pa. Super. 1997) (quoting Croft v.
P. & W. Foreign Car Service, 557 A.2d 18, 20 (Pa. Super. 1989)).
Subsequently, in McCauslin, this Court held that prior to awarding
counsel fees to a plaintiff on a UTPCPL claim, the defendant must have “a
fair opportunity to address” the legitimacy of the claim. In remanding the
case for further proceedings, this Court made the following observations: (1)
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there should be “a sense of proportionality between an award of damages
[under the UTPCPL] and an award of attorney’s fees,” and (2) whether
plaintiff has pursued other theories of recovery in addition to a UTPCPL claim
“should [be] given consideration” in arriving at an appropriate award of fees.
751 A.2d at 685–686.
Here, the trial court provided the following reasoning for the award of
Appellees’ attorneys’ fees and costs:
The present case was filed in 2001. One of the [Appellees], Mr.
James Richards, passed away in February of 2005. Proof of
misrepresentation became much more difficult after that
occurrence. It was essential that [Appellees] obtain from
[Appellants] the corporate documents establishing, in addition to
witness testimony, that [Appellants’] sales practices were more
than just misleading, but that the consumer was deceived and
defrauded as to the nature of the product they sold. Much
pretrial discovery was required, and [Appellees] needed to
withstand a [m]otion for [s]ummary [j]udgment. The case was
complex.
There is precedent for a similar award of attorneys’ fees in
Boehm. [Appellees’] counsel in the present case was the same
Plaintiff’s counsel in Boehm. [Appellees’] counsel requested the
same hourly rate which was approved in Boehm at $400.00 per
hour. [Appellees’] counsel removed the non-UTPCPL [work in
their petition] as required by Neal.
Trial Court Opinion, filed 9/21/16, at 7.
We agree. And the record supports the court’s conclusion. This case
involved the sale of a universal life insurance policy, which is a complicated
instrument, and the complaint allegations required that counsel understood
how these policies work and the regulations that apply to them. Customary
charges from other members of the bar range from $275 to $400 per hour.
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Appellees received $34,006.44 in restitution and $102,019.32 in treble
damages as a result of counsels’ services in the face of corporate
adversaries with greater resources than Appellees, and counsel did so on a
contingent basis for approximately thirteen years. See Sewak. Based on the
foregoing, there seems to be proportionality between the award of damages
and attorneys’ fees and costs. See McCauslin. Accordingly, the trial court
properly imposed the attorneys’ fees and costs in the amounts of
$84,072.50 to Behrend and Ernsberger, P.C., and costs in the amount of
$1,759.58, and counsel fees in the amount of $26,840.00 for the Massa Law
Group. See Neal.
With respect to Appellants’ assertion that the court improperly
imposed both punitive damages and treble damages upon Appellants in
contravention to the UTPCPL, we agree. The trial court had the discretion to
award to treble damages, but the trial court was prohibited from imposing
punitive damages under the statute. See 73 P.S. § 201–9.2(a); see also
McCauslin. Here, the trial court imposed $50,000.00 in punitive damages
against Appellants. This action was improper, and accordingly we reverse
the award of punitive damages and remand this issue to the trial court for a
recalculation of damages excluding the $50,000.00.
Judgment affirmed in part and reversed in part. Motion denied. Case
remanded for proceedings consistent with this memorandum. Jurisdiction
relinquished.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/9/2016
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