J-A05041-17

                                2017 PA Super 256

ENTERPRISE BANK                                     IN THE SUPERIOR COURT OF
                                                          PENNSYLVANIA
                           Appellant

                      v.

FRAZIER FAMILY L.P., A PENNSYLVANIA
LIMITED PARTNERSHIP

                           Appellee                      No. 1171 WDA 2016


               Appeal from the Order Entered August 3, 2016
             In the Court of Common Pleas of Allegheny County
                    Civil Division at No(s): GD 14-001375


BEFORE: BENDER, P.J.E., SHOGAN, J., and MOULTON, J.

OPINION BY MOULTON, J.:                                  FILED AUGUST 8, 2017

      Enterprise Bank (“Enterprise”) appeals from the August 3, 2016 order

entered in the Allegheny County Court of Common Pleas in favor of Frazier

Family   L.P.,   a   Pennsylvania      Limited   Partnership   (“Frazier”)   denying

Enterprise’s request for counsel fees. We agree with the trial court that the

relevant loan documents do not authorize Enterprise to collect counsel fees

for work performed by its in-house counsel. Accordingly, we affirm.

      On December 28, 2012, Frazier executed and delivered in favor of

Enterprise three loan documents in the principal amount of $421,000.

Frazier first signed a Business Loan Agreement (“Loan Agreement”), which

contains the following provision:

            Attorneys’ Fees; Expenses. Borrower agrees to pay
         upon demand all of Lender’s costs and expenses, including
         Lender’s reasonable attorneys’ fees and Lender’s legal
         expenses, incurred in connection with the enforcement of
         this Agreement. Lender may hire or pay someone else to
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         help enforce this Agreement, and Borrower shall pay the
         costs and expenses of such enforcement.         Costs and
         expenses include Lender’s reasonable attorneys’ fees and
         legal expenses whether or not there is a lawsuit, including
         reasonable attorneys’ fees and legal expenses for
         bankruptcy proceedings (including efforts to modify or
         vacate any automatic stay or injunction), appeals, and any
         anticipated post-judgment collection services. Borrower
         also shall pay all court costs and such additional fees as
         may be directed by the court.

Loan Agreement, 12/28/12, at 5.

      Second, Frazier signed a Promissory Note (“Note”), which contains the

following provision:

             ATTORNEYS’ FEES; EXPENSES. Lender may hire or pay
         someone else to help collect this Note if Borrower does not
         pay. Borrower will pay Lender that amount. This includes,
         subject to any limits under applicable law, Lender’s
         reasonable attorney’ fees and Lender’s legal expenses,
         whether or not there is a lawsuit, including reasonable
         attorneys’ fees, expenses for bankruptcy proceedings
         (including efforts to modify or vacate any automatic stay
         or injunction), and appeals. If not prohibited by applicable
         law, Borrower also will pay any court costs, in addition to
         all other sums provided by law.

Note, 12/28/12, at 2.

      Third, Frazier signed an Open-End Mortgage and Security Agreement

(“Mortgage”) for the premises at 100 Highland Pines Court, Pittsburgh,

Pennsylvania (“Mortgaged Premises”) as security for repayment of the Note.

The Mortgage contained the following provision:

            Attorneys’ Fees; Expenses. If Lender institutes any
         suit or action to enforce any of the terms of this Mortgage,
         Lender shall be entitled to recover such sum as the court
         may adjudge reasonable as attorneys’ fees at trial and
         upon any appeal. Whether or not any court action is
         involved, and to the extent not prohibited by law, all


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        reasonable expenses Lender incurs that in Lender’s opinion
        are necessary at any time for the protection of its interest
        or the enforcement of its rights shall become a part of the
        Indebtedness payable on demand and shall bear interest
        at the Note rate from the date of the expenditure until
        repaid. Expenses covered by this paragraph include,
        without limitation, however subject to any limits under
        applicable law, Lender’s reasonable attorneys’ fees and
        Lender’s legal expenses, whether or not there is a lawsuit,
        including reasonable attorneys’ fees and expenses for
        bankruptcy proceedings (including efforts to modify or
        vacate, any automatic stay or injunction), appeals, and
        any anticipated post-judgment collection services, the cost
        of searching records, obtaining title reports (including
        foreclosure reports), surveyors’ reports, and appraisal fees
        and title insurance, to the extent permitted by applicable
        law. Grantor also will pay any court costs, in addition to all
        other sums provided by law.

Mortgage, 12/28/12, at 12.

     On January 30, 2014, Enterprise filed a complaint in mortgage

foreclosure in the amount of $418,030.93 requesting, among other things,

that Frazier pay Enterprise’s reasonably incurred counsel fees. On May 2,

2014, Frazier filed preliminary objections, asserting that the language “pay

or hire someone else” in the Note did not include Enterprise’s in-house

counsel. On January 13, 2015, the trial court appointed Kuzneski & Lockard,

Inc., as receiver for the Mortgaged Premises.

     On February 26, 2016, the receiver filed an amended motion for order

of distribution. The order of distribution included a $512,777.15 payoff from

Enterprise, dated December 2, 2015 (“Payoff”).      “The Payoff contained an

itemization for fees and expenses due and owing [Enterprise], including

[counsel] fees through November 25, 2015 for $34,569.25.         The basis for


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J-A05041-17


these [counsel] fees is the time spent by [Enterprise]’s in-house legal

counsel Joseph A. Fidler and paralegal Justina Fuller. . . .].               Opinion,

10/3/16, at 1-2 (unpaginated) (“1925(a) Op.”). On February 29, 2016, the

trial court entered a consent order directing the receiver to make

distributions of the funds resulting from the sale of the Mortgaged Premises

to Enterprise, Frazier, and other interested third parties. The consent order

also directed the parties to submit to the trial court proposed findings of fact

and conclusions of law regarding whether the contract permitted recovery of

Enterprise’s in-house counsel fees and, if so, whether the fees were

reasonable.

         In its proposed findings of fact and conclusions of law, Enterprise

offered its interpretation of the relevant language from the Loan Agreement,

the Note, and the Mortgage. It also included its in-house counsel’s and in-

house paralegal’s billable rate and time entries.           Enterprise asserted that

these documents “clearly encompass [counsel] fees generated by in-house

counsel.”     Enterprise’s Proposed Findings of Fact and Conclusions of Law,

3/10/16, ¶ 27. Specifically, regarding the language “hire or pay someone

else,”    Enterprise   explained     that    it   was   “broad   and   not   open   to

interpretation.”   Id. ¶ 28.       Enterprise further asserted that it “hired” in-

house counsel “to collect the debt and in this case, file a mortgage

foreclosure” action. Id.




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J-A05041-17


       Frazier, in contrast, argued that the language “hire or pay someone

else” did not include “general counsel and vice president of Enterprise Bank,

Joseph Fidler.” Frazier’s Proposed Findings of Fact and Conclusions of Law,

3/10/16, ¶¶ 58, 61. Frazier understood this language as “clearly stat[ing]

the intention of Enterprise Bank to ‘hire’ ‘someone else’ if needed.”    Id. ¶

79.   It claimed that because in-house counsel was in Enterprise’s employ

prior to the execution of the loan documents, Enterprise “did not hire or pay

‘someone else’ to recover any alleged obligation.” Id. ¶ 81. Frazier stated

that at the very least, the language was ambiguous.1

       On August 3, 2016, following the parties’ submissions, the trial court

accepted Frazier’s interpretation of the language in question and therefore

denied Enterprise’s request for counsel fees. Enterprise timely appealed to

this Court.

       Enterprise raises the following issue on appeal:    “Whether the Trial

Court erred in concluding that Enterprise, as mortgagee[,] was not entitled

to be reimbursed its in-house [counsel] fees and costs as provided for in

loan documents executed by Frazier, as mortgagor?” Enterprise’s Br. at 4.

       “Pennsylvania law embodies the American rule, per which there can be

no recovery of [counsel] fees from an adverse party in litigation, absent

____________________________________________


       1
       Frazier further pointed out that Enterprise obtained a receiver who
retained outside counsel, and that Frazier paid the receiver’s counsel fees.
See Consent Order, 2/29/16; Frazier’s Br. at 5.



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express statutory authorization, clear agreement by the parties, or some

other established exception.”   Doctor’s Choice Physical Med. & Rehab.

Ctr., P.C. v. Travelers Pers. Ins. Co., 128 A.3d 1183, 1189 (Pa. 2015).

Enterprise claims that the language in the loan documents covers payments

to in-house counsel and, therefore, the contract serves as an exception to

the American Rule.

        Because “a mortgage is a contract,” it is subject to principles of

contract law.    See Phila. Trust Co. v. Northumberland Cty. Traction

Co., 101 A. 970, 974 (Pa. 1917).         We have explained that “contract

interpretation is a question of law” over which our standard of review is de

novo.    Miller v. Poole, 45 A.3d 1143, 1145 (Pa.Super. 2012) (quoting

Ragnar Benson, Inc. v. Hempfield Twp. Mun. Auth., 916 A.2d 1183,

1188 (Pa.Super. 2007)).     Therefore, “this Court is not bound by the trial

court’s interpretation” of a contract.   Id. (quoting Ragnar, 916 A.2d at

1188).

        “When the words of an agreement are clear and unambiguous, the

intent of the parties is to be ascertained from the language used in the

agreement . . . .”    Id. at 1146 (quoting LJL Transp., Inc. v. Pilot Air

Freight Corp., 962 A.2d 639, 647 (Pa. 2009)). “[G]enerally, courts must

give plain meaning to a clear and unambiguous contract provision unless to

do so would be contrary to a clearly expressed public policy.” Allstate Fire

and Cas. Ins. Co. v. Hymes, 29 A.3d 1169, 1172 (Pa.Super. 2011)


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J-A05041-17


(quoting Prudential Prop. & Cas. Ins. Co. v. Colbert, 813 A.2d 747, 750

(Pa. 2002)).

      A contract provision is ambiguous when “it is reasonably susceptible

[to] different constructions and capable of being understood in more than

one sense.”    Miller, 45 A.3d at 1146 (quoting Ins. Adjustment Bureau,

Inc. v. Allstate Ins. Co., 905 A.2d 462, 468 (Pa. 2006)).             “Where a

provision of a [contract] is ambiguous, [it] is to be construed . . . against . .

. the drafter of the agreement.”      Prudential Prop. & Cas. Ins. Co. v.

Sartno, 903 A.2d 1170, 1174 (Pa. 2006) (quoting Standard Venetian

Blind Co. v. Am. Empire Ins. Co., 469 A.2d 563, 566 (Pa. 1983)).

Further, when “an ambiguity exists, parol evidence is admissible to explain

or clarify or resolve the ambiguity, irrespective of whether the ambiguity is

patent, created by the language of the instrument, or latent, created by

extrinsic or collateral circumstances.” Miller, 45 A.3d at 1146 (quoting Ins.

Adjustment Bureau, Inc., 905 A.2d at 468).

      Enterprise argues that the language “hire or pay someone else”

unambiguously includes its “hiring” of its own in-house counsel and

paralegal.    Frazier, on the other hand, argues that “hire or pay someone

else” unambiguously excludes in-house counsel and paralegal fees. In the

alternative, Frazier contends that any ambiguity should be construed against

Enterprise.




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        The trial court found that the phrase “‘someone else’ . . . can be

construed in a few different ways” and “none of the loan documents at issue

define who ‘someone else’ is.”     1925(a) Op. at 5.    The trial court further

stated that because Enterprise drafted the loan documents, “any ambiguity

should be construed against it.” Id. We agree.

        After careful consideration, we conclude that the language “hire or pay

someone else” is, at best, ambiguous. Frazier makes a strong case for the

proposition that “someone else” necessarily means someone not then in

Enterprise’s employ.     Otherwise, the meaning of the term is difficult to

discern.   For example, does the use of other in-house staff to recover the

debt, before the involvement of any attorneys, constitute the hiring by

Enterprise of “someone else”?       If so, then all of Enterprise’s employees

would appear to be “someone else,” a particularly peculiar reading of the

term.

        Nevertheless, especially in the Loan Agreement, when the phrase “hire

or pay someone else” is read in conjunction with the broad authorization of

the collection of “Lender’s reasonable attorneys’ fees,” the phrase might

plausibly be read to allow Enterprise to recover its in-house counsel fees.

We therefore conclude that the language in the counsel fees’ provisions is

ambiguous. As such, it must be construed against the drafter, Enterprise.

See Prudential, 903 A.2d at 1174; Egyptian Sands Real Estate, Inc. v.




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J-A05041-17


Polony, 294 A.2d 799, 803 (Pa.Super. 1972).2 Accordingly, the trial court

properly denied Enterprise’s request for counsel fees.3

____________________________________________


       2
       In PNC Bank, N.A. v. Kimbrough & Assocs., LLC, by contrast, the
loan document included language that specifically allowed the lender to
recover the cost of in-house counsel and its staff.

           We may hire or pay someone else to help us collect this
           account if you fail to pay in accordance with this
           Agreement. You agree to pay our collection costs
           (including, without limitation, the cost of in-house
           attorneys and staff), whether or not we hire anyone else
           to help us collect this account. This includes, subject to
           any limits under applicable law, our attorneys' fees and
           legal expenses whether or not there is a lawsuit . . . .

No. 6:13-CV-1558-orl-28KRS, 2015 WL 327533, at *12 (M.D. Fla. Jan. 23,
2015) (emphasis added).
       3
          Because we find the contract language ambiguous, and construe it
against Enterprise, we need not reach the broader question, briefed by the
parties, of whether a lender in Pennsylvania may recover for the work of
salaried, in-house counsel. Compare Prison Legal News v. Stolle, 129
F.Supp.3d 390, 398 (E.D. Va. 2015) (in-house counsel may recover fees for
“litigation tasks that ordinarily would have been performed by outside
counsel,” but not “when merely acting as a liaison or corporate contact or
representative”) (quotation omitted), and AMX Enterprises, L.L.P. v.
Master Realty Corp., 283 S.W.3d 506, 517 (Tex. App. 2009) (holding
successful claimant may recover in-house counsel fees); with Burger King
Corp. v. Mason, 710 F.2d 1480, 1499 (11th Cir. 1983) (“[T]here is no
Florida authority to justify, much less mandate, [counsel fees for the
services of in-house counsel.]”), and In re Cummins Util., L.P., 279 B.R.
195, 207 (Bankr. N.D. Tex. 2002) (denying motion for in-house counsel fees
on the ground that “[t]his item should be included in . . . overhead”). See
also Nicholas N. Nierengarten, Fee-Shifting: The Recovery of In-House
Legal Fees, 39 Wm. Mitchell L. Rev. 227 (2012) (discussing the controversy
over whether in-house counsel fees are recoverable).



(Footnote Continued Next Page)


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      Order affirmed.



Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 8/8/2017




                       _______________________
(Footnote Continued)




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