                                                                                                                           Opinions of the United
2002 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


4-3-2002

Newton v. United Co Financial
Precedential or Non-Precedential:

Docket No. 98-2130




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                                                  NOT PRECEDENTIAL

                UNITED STATES COURT OF APPEALS
                     FOR THE THIRD CIRCUIT



                          No. 98-2130



                    MARGARET NEWTON; FRAUNCINE LORA MYERS;
          JUDITH FOWLER; JASPER SUTTON; CATHERINE
          SUTTON

                                v.

                    UNITED COMPANIES FINANCIAL CORP.; UNITED
          COMPANIES LENDING CORP.,
                                             Appellants

       Before: MANSMANN, McKEE and BARRY, Circuit Judges
                 _____________________________

           Appeal from United States District Court
            for the Eastern District of Pennsylvania
                    Docket No. 97-cv-05400
             District Judge: Honorable Marvin Katz
                 ______________________________

                    Argued February 11, 2002


                (Opinion Filed:      April 3, 2002)

Alan C. Gershenson, Esq. (Argued)
Blank, Rome, Comisky & McCauley
One Logan Square
Philadelphia, Pennsylvania 19103

Joseph E. Mayk, Esq.
Blank, Rome, Comisky & McCauley
One Logan Square
Philadelphia, Pennsylvania 19103

     Attorneys for Appellants

Alan M. White (Argued)
Community Legal Services
3638 North Broad Street
Philadelphia, Pennsylvania 19140

David A. Searles
Donovan Searles
1845 Walnut Street
Suite 1100
Philadelphia, Pennsylvania 19103

     Attorneys for Appellees
                        OPINION OF THE COURT


McKEE, Circuit Judge
Mortgage lender, United Companies Lending Corp., and its parent company,
United Companies Financial Corp., (together referred to as "United") appeal from an
award of attorneys’ fees following a bench trial on several claims plaintiffs brought under
various provisions of federal and state law. The district court awarded the plaintiffs
attorneys’ fees in the amount of $375,625.50 plus $8,670.45 in expenses; the entire
amount requested. United argues that the district court abused its discretion in awarding
fees in that amount because a significant portion of the fee request represents work
plaintiffs’ attorneys did on a claim that plaintiffs did not prevail on.
For the following reasons, we will vacate the order awarding attorneys’ fees and
remand in order to afford the district court an opportunity to clarify, and explain its
rationale for awarding the full amount of attorneys’ fees.
                              I.
As we write only for the parties, we need not set forth a comprehensive factual or
procedural background of this appeal, except insofar as may be helpful to our brief
discussion.
In their suit in district court, plaintiffs alleged violations of five federal statutes,
and two Pennsylvania statutes. The federal statutes included the Truth-in -Lending Act
("TILA"), the Home Ownership and Equity Protection Act ("HOEPA"), the Equal Credit
Opportunity Act ("ECOA"), and the Real Estate Settlement Procedures Act ("RESPA").
After a six-day bench trial, the district court found that United had violated HOEPA,
ECOA, and TILA, but the court rejected plaintiffs’ claims under RESPA, as well as their
claim that United was engaged in a pattern or practice of making loans without regard to
consumers’ repayment ability; an assertion that would have constituted another violation
of HOEPA. Given the court’s ruling on the federal claims, the court concluded it was not
necessary to reach the state claims.
Based upon this verdict, the court ordered rescission of the mortgages. The court
also awarded statutory damages and awarded two of the plaintiffs the amount each had
paid on their loans. Thereafter, the plaintiffs filed a Motion for Award of Attorneys’
Fees, supported by a fifteen-page Memorandum of Law and more than one hundred pages
of exhibits and declarations. United responded with a thirty-five page memorandum in
opposition to the motion, supported by more than forty pages of exhibits. United insisted
that the court should deny attorneys’ fees for claims plaintiffs had not prevailed upon, and
reduce the amount of any award accordingly. United’s opposition focused upon fees
relating to United’s alleged practice of making loans without considering the borrowers’
ability to repay in violation of HOEPA. United alleged that this "ability to repay claim"
was the major part of plaintiffs’ case, was really the heart of plaintiffs’ suit, and
represented the bulk of the effort expended prosecuting plaintiffs’ claims. United argued
that plaintiffs therefore could not be considered "prevailing parties" to the extent that they
lost on this part of their suit.
On December 7, 1998, the district court entered a one page order awarding
plaintiffs attorneys’ fees in the full amount requested. The order contained a very terse
and conclusory statement supporting the award as follows:
          The lodestars and times spent are reasonable. The matters were
          very difficult from a technical legal analysis viewpoint.
          Plaintiffs achieved full success in terms of their realistic aims by
          all obtaining rescission of their mortgages and statutory
          damages. These cases were representative of others who
          achieved the benefit of not losing their homes to foreclosure by
          the result of this test case.

This appeal followed.

                               II.
United has not appealed the district court’s ruling on the merits of plaintiffs’
claims. Rather, United has only appealed the propriety of the court’s fee award.
Accordingly, the only issue before us is whether the district court erred in granting
attorneys’ fees in the full amount requested even though plaintiffs did not prevail on all of
their claims.
In Gunter v. Ridgewood Energy Corp., 223 F.3d 190, 196 (3d Cir. 2000) we stated:
"it is incumbent upon a district court to make its reasoning and application of the
fee-awards jurisprudence clear, so that we, as a reviewing court, have a sufficient basis to
review for abuse of discretion." Id.
As set forth above, the order awarding fees here was as conclusory as it was terse.
This is especially true when we consider the materials offered to the court in support of
the motion, and in opposition to it. Accordingly, we must first determine if the court’s
"explanation" affords us an adequate basis for review under Gunter.
The court responded to the motion to award attorneys’ fees with a one-page order
containing barely sixty words of explanation for the court’s ruling. This was in response
to nearly two hundred pages of memoranda of law, exhibits and testimonials regarding
the award of attorneys’ fees. The court’s order does reference the relevant factors that a
court must consider in ruling upon a motion for attorneys’ fees such as: the lodestar, the
technical difficulty of the case, and the representative nature of the litigation. However,
the order does not explain how the court applied those factors to the instant litigation
given United’s claims about the limited nature of the relief plaintiffs actually won, and
the relative importance and complexity of the HOEPA issues on which United prevailed.
Although we take no position as to the merits of United’s argument as to the
centrality of plaintiffs’ "ability to pay" HOEPA claim, or United’s insistence that the fee
award must be reduced, it is clear that the current award can not stand supported only by
the conclusory explanation in the district court’s order. See Gunter, 223 F.3d at 197.
That order does not provide us with sufficient explanation of the court’s reasoning to
allow us to determine if the award of attorneys’ fees in the disputed amount was an abuse
of discretion. Accordingly, we will remand so that the district court can clarify the basis
for its decision to grant the appellees’ entire fee request, and demonstrate its application
of the controlling principles.



TO THE CLERK OF THE COURT:

          Please file the foregoing Opinion.

                               /s/Theodore A. McKee
                                                      Circuit Judge
DATED: April 13, 2002
