             IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Charlesretta Meade, Robert N.C. Nix,      :
Honorable Russell M. Nigro, Honorable     :
Alan K. Silberstein, Anthony Lewis Jr.,   :
and Molly Goldsmith, personal             :
representative of the estate of Howard    :
M. Goldsmith, deceased                    :
                                          :
                   v.                     :
                                          :   No. 1309 C.D. 2014
City of Philadelphia,                     :   No. 1332 C.D. 2014
             Appellant                    :   Submitted: June 18, 2015


BEFORE:      HONORABLE DAN PELLEGRINI, President Judge
             HONORABLE BERNARD L. McGINLEY, Judge (P.)
             HONORABLE P. KEVIN BROBSON, Judge

OPINION NOT REPORTED

MEMORANDUM OPINION
BY JUDGE McGINLEY                             FILED: December 30, 2015
             The City of Philadelphia (City) appeals the orders of the Court of
Common Pleas of Philadelphia County (common pleas court) that granted the
summary judgment motion of Charlesretta Meade, Esq. (Meade), Robert N. C. Nix
III, Esq., Secretary (Nix); Honorable Russell M. Nigro (Nigro); Honorable Alan K.
Silberstein (Silberstein); Molly Goldsmith, personal representative of the estate of
Howard M. Goldsmith, deceased (Goldsmith); and Anthony M. Lewis, Jr. (Lewis),
(collectively, the Board Members) for attorney fees for litigation activity necessary
to restore the appellate function of the Board of Revision of Taxes (BRT), that
entered summary judgment in favor of Nix for full back pay for his statutory term
of office at the salary due and fixed for that term of office prior to the invalidated
Salary Reduction Ordinance (SO) less the City’s recoupment claim against him,
entered summary judgment in favor of the Board Members for attorney fees
relating to obtaining payment of back pay after this Court declared the SO
unconstitutional and payment became due with the amounts readily calculable,
entered summary judgment in favor of the Board Members for post-judgment
interest from the date of this Court’s determination that the SO was
unconstitutional to the date of payment of back pay at the statutory rate of six
percent, and awarded the Board Members attorney fees in the amount of
$329,085.00.


            The Board Members cross appeal from the common pleas court’s
order that failed to award attorney fees for legal work in opposition to the SO and
the denial of summary judgment as to the Board Members’ claim for compensation
for adverse tax consequences of lump sum payments.


                                 I. Background.
            The Board Members voluntarily agreed to relinquish their real
property assessment     responsibilities.       Pursuant   to   a Memorandum of
Understanding dated October 5, 2009, and executed by the Mayor’s Office of the
City, the Finance Director’s Office of the City, and the BRT, responsibility for
assessments would be vested in the Finance Director or his designee. The BRT
would be responsible for hearing and resolving appeals from those assessments.
The Memorandum of Understanding was effective October 5, 2009, and was to
cover a six month term with mutual renewals.          The renewals could total six
months. The Memorandum of Understanding was not renewed.




                                            2
            On December 17, 2009, City Council voted to remove from the BRT
the BRT’s assessment responsibilities and its appellate responsibilities. Subject to
voter referendum, City Council created two new City agencies to assume these
responsibilities – an Office of Property Assessment and a Board of Property
Assessment Appeals. City Council also voted to abolish the BRT. City Council
provided that the newly created appeal board would receive the following
compensation:     $50,000 for the chairman, $45,000 for the secretary, and
$150/meeting for the remaining members up to a maximum of $40,000 per year.


            On March 8, 2010, the Board Members sought to enjoin the
referendum. The Board Members asked our Pennsylvania Supreme Court to accept
King’s Bench jurisdiction over the suit and preclude the City from transferring the
appellate function of the BRT. On April 22, 2010, the City Council voted to
reduce the salaries of the BRT members immediately. Pursuant to this salary
ordinance, the chairman of the BRT’s salary was reduced from $75,000 to $50,000
per year, the salary of the secretary was reduced from $72,000 to $45,000 per year
and the salaries of the other members were reduced from $70,000 per year to a
payment of $150 per meeting up to a maximum of $40,000 per year.


            Our Pennsylvania Supreme Court dismissed the suit without
prejudice. Board of Revision of Taxes v. City of Philadelphia, 993 A.2d 873 (Pa.
2010). The City argued that the lawsuit was premature because the BRT would not
be abolished unless and until the voters approved the referendum.            In the
referendum, voters voted by a margin of more than two to one to transfer both the
appellate and assessment functions from the BRT.



                                         3
             The Board Members then filed suit in this Court and contended that
the City lacked authority to eliminate the BRT’s appellate function and also
complained about the reduction in salary. This Court transferred the case to the
common pleas court. The members of the Board again pursued King’s Bench
jurisdiction in the Supreme Court.      The Supreme Court declined to exercise
jurisdiction over the salary dispute but accepted jurisdiction over the appellate
function claim. The Supreme Court held that the City had authority to remove the
assessment function from the BRT but lacked authority to eliminate the appellate
function. Board of Revision of Taxes v. City of Philadelphia, 4 A.3d 610 (Pa.
2010) (BRT II).     The Supreme Court allowed the transfer of the assessment
function to proceed but enjoined the transfer of the appellate function and the
creation of the new appellate board. The case was then returned to the common
pleas court for the Board members to pursue their salary claim.


             In the salary claim, the Board Members contended that the reduction
of salary violated Article III, Section 27 of the Pennsylvania Constitution which
provides that “No law shall extend the term of any public officer, or increase or
diminish his salary or emoluments, after his election or appointment.” The Board
members claimed that they were public officers within the meaning of Article III,
Section 27 and that the City had no authority to reduce their salaries until the
completion of their current terms of office.


             On June 17, 2011, the common pleas court entered judgment in favor
of the Board Members. On June 22, 2011, the City moved for reconsideration. On
July 22, 2011, the common pleas court entered an order staying the interlocutory



                                          4
order and scheduled a mandatory settlement conference. On July 29, 2011, the
common pleas court stayed the June 17, 2011, order and expedited the filing of
summary judgment motions so that a final order could be entered on the
constitutional issue and make it ripe for appeal.


             Nigro and Goldsmith moved for summary judgment. The City also
moved for summary judgment as did the remaining Board Members. The common
pleas court granted Nigro and Goldsmith’s summary judgment motion. By order
dated December 2, 2011, the common pleas court denied the summary judgment
motion of the remaining Board Members. In a separate order also dated December
2, 2011, the common pleas court denied the summary judgment motion of the City.


             The common pleas court concluded that Nigro and Goldsmith were
“public officers” with respect to Article III, Section 27. The common pleas court
further determined that because the Board Members were public officers, their
salaries could not be reduced in the middle of their terms.


             The City appealed to this Court and contended that the constitutional
prohibition against a mid-term diminution in salary did not apply to government
officials who serve at the pleasure of their appointing authority1 and also did not
apply to government officials who experienced a lawful and substantial mid-term
diminution in their statutory responsibilities.



      1
            The appointing authority here was a majority of the judges of the Court of
Common Pleas of Philadelphia County.



                                           5
            This Court determined that the Board Members were public officers
within the meaning of Article III, Section 27 of the Pennsylvania Constitution.2
The Board Members’ duties were set by statute, and the Board members served for
a set term. Further, the Pennsylvania Supreme Court held in BRT II that the
BRT’s duties were quasi-judicial in character. Additionally, the BRT’s services
are an essential part of the real estate taxation system. This Court agreed with the
common pleas court that Article III, Section 27 of the Pennsylvania Constitution
prohibited the reduction in salary in the middle of their terms for Board members
Nigro and Goldsmith. Meade v. City of Philadelphia, 65 A.3d 1031 (Pa. Cmwlth.
2013).


            The case then returned to the common pleas court for a resolution of
all outstanding issues with respect to the remaining Board Members. The City
withdrew all defenses against Silberstein and settled all claims with Meade which
left only the claims of Nix and Lewis as well as the City’s counterclaim against
Nix. On April 25, 2013, the City began processing back pay payments to Nigro,
Goldsmith, and Silberstein. The payments were made on June 2, 2013.


                         II. Summary Judgment Motions.
            On July 22, 2013, the parties renewed their summary judgment
motions in the common pleas court. The common pleas court had previously
denied the motions without prejudice while the case was on appeal to this Court.




      2
            The common pleas court certified its order as final pursuant to Pa.R.A.P. 341(c).



                                             6
           A. The Board Members’ Motion.
In their motion for summary judgment, the Board members alleged:

11. As a result of the recent Commonwealth Court
decision . . . the City finally handed over to three of the
individual plaintiffs (Board members Nigro, Goldsmith
and Silberstein) the base amount of back pay that was
illegally withheld from them since April 2010 due to the
invalid SO [Salary Ordinance].

12. However, the City has refused to make those
Plaintiffs whole by continuing to withhold interest for the
three-year-plus delay, economic losses directly
attributable to the illegal delay and payment of attorneys
fees needed to vindicate the requirements of the laws and
the Constitution of the Commonwealth.

13. The City has also shockingly refused to deliver any
base backpay or forward pay at all to Plaintiffs Lewis and
Nix, by instead continuing to apply to them during their
respective terms the invalidated unconstitutional SO and
in utter rejection of the applicable constitutional,
statutory and case law establishing an absolute ban
against the City’s midterm tampering with the salary and
emoluments of the BRT plaintiffs as public officers.

14. As set forth in the accompanying Memorandum,
Plaintiffs Nigro, Silberstein and Goldsmith are entitled to
full restitution in order to make them truly whole and
without any loss due to the City’s unconstitutional
behavior.

15. Those Plaintiffs are entitled to interest at the legal
rate on their backpay, economic loss due to the increased
taxes they incurred as a result of the City’s delay in
payment, as set forth in the reports of their respective
accountants, and, on the occasion of the conclusion of all
matters pertaining to them, to an award of attorneys fees
and expenses.




                            7
16. Without an award of interest at the legal rate on the
backpay which wrongfully was withheld from them,
those Plaintiffs will continue to suffer wrongful
economic loss solely due to the City’s forbidden midterm
tampering with their fixed salary and emoluments.

17. Without compensation for the economic loss due to
the increased taxes they have incurred as a result of the
City’s delay in payment, as set forth in the reports of
their respective accountants, those Plaintiffs will continue
to suffer legally impermissible economic loss solely due
to the City’s mid-term tampering with their fixed salary
and emoluments.

18. Without an award for the attorneys’ fees and
expenses made necessary by the City’s illegal conduct
and by its refusal to provide independent outside counsel
despite the conflict of interest of the City Law
Department, the Constitutional guarantee of fixed pay
and emoluments during a public officer’s fixed term
would be illusory, because it would drain the value of the
salary and emoluments being guaranteed anytime a
paying authority chose to violate the constitutional
prohibition.

19. Pursuant to Article III, §27, the City’s Defense and
Indemnification Ordinance and otherwise, therefore,
BRT Plaintiffs are entitled to an award for their
attorneys’ fees and costs lest they be made to continue to
suffer economic loss due solely to the City’s midterm
tampering with their fixed salary and emoluments.

20. BRT members Nix and Lewis likewise are entitled to
full restitution in order to make them completely whole
and without loss due to the City’s violation of Article III,
Section 27 of the Pennsylvania Constitution.

21. At the moment it is not possible to calculate interest
and additional economic losses of Plaintiffs Lewis and
Nix because the City is determined as of this date
vexatiously to disregard the clear and unanimous judicial
adjudication that its SO was itself invalid and
unconstitutional.

                             8
            22. As to Plaintiffs Lewis and Nix, therefore, the City
            continues contemptuously and in bad faith to evolve
            pretexts and excuses for overruling the Constitution and
            the Judiciary.

            23. It does so through asserted set-offs against the pay of
            Mr. Nix, and a legally untenable so-called ‘acquiescence’
            defense against him and Mr. Lewis.

            24. While none of these pretexts has any substantial
            basis, as demonstrated in the Memorandum and through
            supporting Declarations, they cannot serve as a reason to
            withhold the specific pay that the Constitution mandated
            and that the City had no right to reduce under the
            inherently unconstitutional and invalid 2010 SO.

            25. The City’s acquiescence defense is a last ditch and
            vexing excuse for the City to declare victory over the
            Courts and the Constitution and to deny pay precisely
            under the terms of the SO regardless of its
            unconstitutionality and judicial invalidation.
            ....
            27.    Accordingly, this Court should dismiss with
            prejudice the affirmative defenses against plaintiff Nix of
            acquiescence, unclean hands and recoupment; the
            affirmative defenses against plaintiff Lewis of
            acquiescence; the counterclaims associated with the
            affirmative defenses against both those Plaintiffs; and
            make those Plaintiffs whole by compelling the City to
            pay full backpay and forward pay respectively.
            (Emphasis in original.)
Motion for Summary Judgment of Plaintiffs Honorable Russell M. Nigro,
Honorable Alan K. Silberstein, Robert C. Nix III, Esq., Howard M. Goldsmith,
Esq., and Anthony Lewis, June 22, 2013, Paragraph Nos. 11-25, and 27 at 3-6;
Reproduced Record (R.R.) at RR391a-RR394a.


            The Board Members requested that summary judgment be granted in
their favor to direct the City to pay interest at the legal rate on the backpay,


                                        9
economic loss due to increased taxes that they incurred as a result of the City’s
delay in payment, and a full award of attorneys fees and expenses to Nigro,
Silberstein, and Goldsmith. The Board Members requested that Nix receive full
backpay for his entire statutory term of office at the salary and emoluments due
and fixed for the term of office prior to the invalidated SO minus the pay he
actually received as well as interest and any economic loss he suffered. Further,
the Board Members sought the dismissal of any claims by the City against Nix.
With respect to Lewis, the Board Members sought full backpay as well as forward
pay until the end of his statutory term at the salary and emoluments due and fixed
for the term of office prior to the invalidated SO minus $2,100.00 actually received
by him during that period as well as interest and economic loss he suffered as well
as the dismissal of the City’s affirmative defense of acquiescence against Lewis.


                              B. The City’s Motion.
            In its motion for summary judgment, the City sought summary
judgment on all remaining counts of Lewis’s complaint, partial summary judgment
in its favor and against Nix on all remaining counts of Nix’s complaint, and
summary judgment in favor of the City in its counterclaims against Nix. After the
deduction of $53,475 in recoupment with respect to Nix, the City would agree to
pay Nix $24,015.00.


                           C. Disposition of Motions.
            Following oral argument and the submission of briefs, by order dated
January 2, 2014, the common pleas court entered summary judgment in favor of
the Board Members for attorney fees for litigation activity necessary to restore the



                                        10
appellate function of the BRT, denied any remaining claims for attorney fees,
entered summary judgment in favor of Nix for full backpay for his statutory term
of office at the salary due and fixed for that term of office prior to the invalidated
SO, and granted summary judgment on the City’s recoupment claim against Nix.
The common pleas court entered summary judgment in favor of the Board
Members for attorney fees related to obtaining payment for backpay after this
Court declared the SO unconstitutional and the payment came due with the
amounts readily calculable. The common pleas court entered summary judgment
in favor of the Board Members for post-judgment interest from the date of this
Court’s decision that declared the SO unconstitutional to the date of the payment of
backpay at the rate of six percent. The common pleas court granted summary
judgment in favor of the City with respect to pre-judgment interest. The common
pleas court denied summary judgment for the Board Members’ claim for
compensation for the adverse tax consequences of lump sum payments.               On
January 13, 2014, the common pleas court amended its January 2, 2014, order and
ruled that the Board members were entitled to pre-judgment interest from the time
their salaries were illegally reduced until the time of full payment.


             On March 5, 2014, the Board Members moved to mold the award of
interest and attorney fees and sought an attorney fee award of $329,085.00 based
on a rate of $450.00 per hour for services rendered by their two attorneys. The
Board Members also sought interest in the following amounts: Robert C. Nix, III,
Esquire $9,100.00, Honorable Russell M. Nigro $25,200.00, Honorable Alan K.
Silberstein $7,500.50, Howard M. Goldsmith, Esquire $25,300.00, and Anthony
Lewis, Jr. $40,000.80.



                                          11
             The City responded with a lengthy brief and provided line by line
analysis of the timesheets prepared by the Board Members’ attorneys and argued
that the bulk of the hours claimed were not encompassed by the common pleas
court’s fee award, that the requested rates were not supported, and that the Board
Members’ interest calculations were mistaken.


             By order dated June 19, 2014, the common pleas court awarded the
interest the Board Members sought as well as the amount of attorney fees they
requested, $329,085.00.


                          III. Issues before this Court.
                                   A. The City.
             The City contends that the common pleas court erred when it held that
the City had an obligation to provide the individual Board Members with counsel
to contest the constitutionality of the reorganization of the BRT, when there was no
statutory source that requires such fee shifting to the Board Members in their
individual capacities. The City also contends that the common pleas court erred
when it held that the City owed attorney fees to Nix and Lewis for time spent
seeking prompt payment of their backpay award after it became due, when the City
had valid affirmative defenses pending. The City contends that the common pleas
court erred when it quantified the fee award where that award reimbursed the
Board Members for non-reimbursable time, including litigating a different case on
behalf of a different plaintiff, pursuing unreasonable litigation strategies, seeding
attorney fees, and litigation matters which were not covered by the common pleas
court’s fee order, and where the Board Members offered no proof of counsel’s



                                         12
actual billing rates. The City further asserts that the common pleas court erred
when it adopted the Board Members’ proposed interest calculations, when the
Board Members offered no support whatsoever for their calculations.3


1. Attorney Fees for Litigation to Restore the Appellate Function of the BRT.
              Initially, the City contends that the common pleas court awarded
attorney fees for litigation activity necessary to restore the appellate function of the
BRT (Category One Fees).


              With respect to this issue, the common pleas court determined:

              By letter dated January 15, 2010, the BRT Members
              requested the City Solicitor appoint them conflict-free
              counsel to contest the legality of the abolition of their
              offices. . . . The City Solicitor responded that the BRT
              Members ‘are apparently seeking to pursue a position in
              their own person [sic] interest, not in their official
              capacity.’ . . . . Clearly this is factually inaccurate, or at
              best incomplete, because the Members sought to restore
              the BRT to its rightful authority for all citizens and to
              enjoin the unlawful activity of the City Council, the
              Mayor, and the vote. The City Solicitor also purported to
              preclude the Board from instituting legal action, because
              they could only do so with the authorization of the Law
              Department. . . . Accordingly, Plaintiffs [Board
              Members] hired private counsel at their own expense to
              contest the legality of the abolition of the appellate
              function of the BRT. This was clearly an action taken for

       3
               This Court’s review of a common pleas court’s grant of summary judgment is
limited to determining whether the common pleas court made an error of law or abused its
discretion. Salerno v. LaBarr, 632 A.2d 1002 (Pa. Cmwlth. 1993), petition for allowance of
appeal denied, 644 A.2d 740 (Pa. 1994). Summary judgment should only be granted in a clear
case and the moving party bears the burden of demonstrating that no material issue of fact
remains. The record must be reviewed in the light most favorable to the non-moving party. Id.



                                             13
the public, to enforce the public right to an independent
and not an administration-appointed entity to hear real
estate appeals as required by state law. . . .

The City’s Defense and Indemnification Ordinance
requires the City Solicitor to represent City officers in
any action taken against them in the scope of their
official duties. . . .

Contrary to the City Solicitor’s assertion in her January
22, 2010 letter that Plaintiffs [Board Members] were
solely pursuing their individual interests, Plaintiffs
[Board Members] requested counsel for their action to
contest the constitutionality of the abolition of the BRT’s
review function. The City’s action to abolish the BRT
Members’ offices in their entirety is an action against the
Members in their official capacity, although it also has
personal implications. The BRT Members brought the
action to determine whether state law gave Philadelphia
citizens the right to appeal to the BRT, members of
which were appointed by the Board of Judges for a term
of office, and not by an administrative entity appointed
by the Mayor.

The City Solicitor precluded individual BRT Members
from bringing a claim on behalf of the BRT. Clearly, the
City Solicitor, in her varied roles, had a conflict of
interest but refused to provide alternative, non-conflicted
counsel. The Members were forced to advocate for the
reinstatement of the appellate function of the BRT at
their own expense.

The City Solicitor of Philadelphia has three distinct roles,
as a mayoral appointee the City Solicitor should support
the Mayor’s policy positions such as changing the City
Charter to abolish the BRT. As the City’s lawyer, the
City Solicitor’s office defends all lawsuits against the
City including this one, but pursuant to the authority
granted in the City Charter §8-410, the City Solicitor
may issue private or public opinions on legal matters
‘binding’ on City departments. In this latter role, the
City Solicitor may challenge unconstitutional actions by


                            14
             City Council even when approved by the charter change
             referendum.

             No opinion of the City Solicitor was ever produced in
             evidence that the Reorganization Ordinance was
             constitutional. . . . The City Solicitor’s letter of January
             22, 2010 was written, not as counsel to the BRT . . . but
             as a member of the Administration advocating a political
             position, not stating a neutral legal opinion. If the City
             Solicitor can preclude litigation in her cabinet or
             advocacy role, illegality and unconstitutional City
             behavior will go unchallenged. The City’s Defense and
             Indemnification Ordinance is designed for this exact
             situation – precluding the Solicitor from becoming
             dictatorial in policy matters. Summary judgment was
             granted in favor of Plaintiffs [Board Members] for
             attorney fees for all litigation which was necessary to
             establish the appellate function of the BRT. (Footnotes
             omitted).
Common Pleas Court Opinion, September 3, 2014, (Opinion) at 8-10.


             The City asserts that the Defense and Indemnification Ordinance does
not support a right to attorney fees.


             The Defense and Indemnification Ordinance provides as follows:

             The City Solicitor shall defend and the City of
             Philadelphia shall indemnify and hold harmless the
             officers and employees of the City, whether currently
             employed by the City or not, against and from any and all
             personal liabilities, actions, causes of action, and any and
             all claims made against them for acts performed within
             the scope of their employment.
Philadelphia Code §20-702.




                                         15
            The City argues that the indemnification language is generic and is
historically understood to require employers to provide representation and
indemnification to employees in lawsuits by third parties against employees where
the employee was performing his job. While the common pleas court determined
that the City’s action to abolish the Board Members’ offices was an action under
Section 20-702 of the City Code that required the City to reimburse the Board
Members for their legal fees, the City asserts that Section 20-702 does not apply
for two reasons: first, the City’s decision to abolish the BRT’s function was not an
“action” within the meaning of Section 20-702, and, second, the ordinance only
applies to interactions between an employee and third parties.


            Section 1991 of the Statutory Construction Act of 1972 (Act), 1
Pa.C.S. §1991, defines an “action” as “any suit or proceeding in any court of this
Commonwealth.” Although the Act applies to statutes enacted by the General
Assembly, our Pennsylvania Supreme Court has held that the principles contained
in the Act are to be employed when a court attempts to construe a local ordinance.
Patricca v. Zoning Board of Adjustment, 590 A.2d 744, 747-748 (Pa. 1991).


            With respect to whether the abolishment of the BRT is an “action”
within the meaning of Section 20-702 of the City Code, the City argues that the
terms “action” and “cause of action” within the Defense and Indemnification
Ordinance only suggest an intent to defend an employee against lawsuits in court.
This Court agrees that the plain language of the Defense and Indemnification
Ordinance which applies to lawsuits against city officials for acts performed in the
course and scope of their employment does not apply to defending against a suit to



                                        16
change the course and scope of that employment. Further, the City did not bring
an “action” in court against the Board Members when it sought to abolish their
offices. Applying the definition of an “action” contained in the Act to the Defense
and Indemnification Ordinance does not support the Board Members’ position.
Furthermore, it does not make sense for the indemnification portion of the
ordinance to apply to suits between the City and its employees.4 Under Section
1922 of the Act, 1 Pa.C.S. §1922, courts are to interpret acts under the assumption
that the General Assembly did not intend an absurd result. As the City points out,
it would be absurd for the City to indemnify its adversary in the very suit between
those adversaries. This Court agrees with the City that the common pleas court
erred when it awarded the Category One Fees.


            2. Attorney Fees for Lewis and Nix (Category Two Fees).
              The City next contends that the common pleas court erred when it
awarded attorney fees for Lewis and Nix related to time spent obtaining payment
after this Court declared that the SO was unconstitutional. The City asserts that
four of the Board Members received immediate payment. Lewis did not receive
his payment immediately because the City asserted that Lewis had agreed to a
lower salary. However, once this defense was resolved, the City paid Lewis his
backpay. Nix did not receive immediate payment because the City raised two
issues. One of these issues, recoupment, ultimately negated a substantial portion of



       4
              Although the City makes a lengthy argument concerning the application of the
Philadelphia City Charter to the issue of representation of the Board Members, the Board
Members and the City both agree that the Charter did not serve as a basis for the imposition of
fees.



                                              17
the amount due to Nix.      Nix suggested that the City pay him $24,015, the
difference between the backpay owed to him and the City’s recoupment defenses.


            With respect to the payment of these attorney fees which the City
describes as Category 2 fees, the common pleas court reasoned:

            On March 20, 2013, the Commonwealth Court declared
            the Salary Reduction Ordinance unconstitutional. As of
            that date, the payment to Plaintiffs [Board Members] of
            full backpay at the pre-Ordinance fixed rate became due.
            The sums were readily calculable. Plaintiffs Nigro,
            Goldsmith, and Silberstein received their appropriate
            amounts of backpay. However, Plaintiff Lewis had only
            received his awarded payments on October 3, 2013 at the
            time of Oral Argument. . . . Only after Oral Argument did
            Plaintiff Nix receive the portion of Court-mandated
            backpay owed and not contested by the City. . . .

            [42] Pa.C.S. §2503 provides,

            ‘The following participants shall be entitled to a
            reasonable counsel fee as part of the taxable costs of the
            matter: (7) Any participant who is awarded counsel fees
            as a sanction against another participant for dilatory,
            obdurate, or vexatious conduct during the pendency of
            the matter.’

            As of the Commonweath’s [sic] March 20, 2013
            decision, payment to all BRT Members whose salaries
            had been illegality [sic] reduced was due and readily
            calculable. Regardless of any recoupment or other
            claims the City had against the Plaintiffs [Board
            Members], the difference which was owed and
            uncontested should have been paid. Even though the
            City presented no defense, the City required Plaintiffs
            Lewis and Nix to continue legal action to obtain backpay
            owed and calculable. The failure to pay judicially-
            determined, owed amounts without any justification other
            than bald tactical litigation refusal is ‘dilatory, obdurate,


                                         18
            and vexatious conduct during the pendency’ . . . of an
            action. Summary Judgment was properly entered on
            behalf of Plaintiffs Lewis and Nix for all money fees they
            accrued to obtain their already established and due
            backpay from the City. (Footnotes omitted.)
Opinion at 14-15.


                                      a. Lewis.
            With respect to Lewis, the City argues that the common pleas court
made a factual mistake in that the City presented an acquiescence defense for
Lewis which if successful would have resulted in the payment of no backpay.
However, the Board Members point out that the City deprived Lewis of the full
salary to which he became entitled from the imposition of the SO. By September
20, 2013, the City had withheld from Lewis the sum of $229,355.85.              See
Declaration of Valerie D. Hayes, March 31, 2014, at 1; R.R. at RR376a.


            The “acquiescence defense” presented by the City states that where an
employee accepts a reduced salary payment after signing and submitting a
requisition for that amount and labels the requisition as the “amount payable,” the
City is then entitled to an inference that the employee acquiesced to the lower rate
of pay, even if the employee were otherwise entitled to a higher rate. See Schwartz
v. Philadelphia, 12 A.2d 294 (Pa. 1940). The City believed that Lewis signed his
timesheet which authorized a lower rate of pay.        When the Board Members
informed the City that Lewis had not in fact signed the timesheet on July 22, 2013,
the City withdrew its defense and submitted a payment requisition by August 12,
2013, and paid Lewis a month later.




                                         19
             It is unclear why the City could not make the determination that Lewis
did not sign the timesheet before the Board Members pointed it out to it. As a
result, the City had no defense for its failure to pay Lewis the backpay to which he
was entitled. The common pleas court did not err when it determined that the
City’s conduct was dilatory, obdurate, and vexatious conduct with respect to
Lewis.


                                       b. Nix.
             With respect to Nix, the City asserts that it had no obligation to make
a partial payment to Nix until Nix demanded a partial payment. The City argues
that when it withdrew its argument concerning the Sunshine Act, 65 Pa.C.S.
§§701-716, it understood that it owed Nix $77,490 in backpay less $53,475 which
was the value of the recoupment. However, the City argues that it had no duty to
make a partial payment until Nix demanded payment.


             Regarding the payment to Nix, the common pleas court determined
that once this Court determined that the Board Members’ salaries could not be
altered mid-term because the SO was unconstitutional, Nix was entitled to full
payment for his statutory term of office at the salary amount fixed for that term
prior to the City’s unconstitutional modification:

             During the course of Plaintiff Nix’ [sic] term in office, he
             received three improper salary increases. In 1997, the
             Chair of the BRT recommended to the City
             Administration that Plaintiff Nix receive a raise of $3,100
             per year. This increased amount was paid to Plaintiff Nix
             from 1997 until 2005. On January 25, 2005, Major [sic]
             Street signed into law the Salary Increase Ordinance
             which increased the salaries of all BRT Members by


                                         20
            $10,000 per year, to be applied retroactively to July 1,
            2004. Plaintiff Nix’s salary was increased retroactively
            to $72,000 per year. Finally, from July 2005 until March
            2007 the City’s Payroll Unit mistakenly granted Plaintiff
            Nix an unauthorized cost of living increase, which raised
            his salary from $72,000 to $73,440 in fiscal year 2005-
            06, and to $75,643 in the fiscal year 2006-07. In March
            2007, the Payroll unit recognized the error and reverted
            the salary back to the previous amount.

            When a defendant has a claim against plaintiff arising out
            of the same transaction as plaintiff’s claim against
            defendant, recoupment operates to reduce any recovery
            owed to plaintiff by the amount of defendant’s claim
            against plaintiff. . . .
            ....
            Plaintiff Nix received a mid-term salary increase in the
            good faith belief that such increase was proper.
            However, despite his good faith belief in its validity,
            even bolstered by existing court authority, the funds must
            be returned upon a finding that the raise had been in fact
            unconstitutional. Plaintiff Nix must return the $26,667
            he received in improper mid-term salary increases. . . .

            The salaries of BRT Members can only be established by
            ordinance. . . . The raises administratively given to
            Plaintiff Nix by the City Administration and the cost of
            living increase were not done by Ordinance, and
            therefore were unauthorized under state law. A public
            official who receives unauthorized payments must return
            the funds to the public entity, regardless of good faith or
            mistake. . . . Plaintiff Nix’s recovery must be reduced by
            the amounts he received in unauthorized raises and cost
            of living increases. (Footnotes omitted.)
Opinion at 11-13.


            Further, the City argues that it had no obligation to pay Nix until he
made a demand for payment. The City analogizes this circumstance to insurance
law. This Court cannot agree with the City that this case is akin to insurance law.


                                        21
Once this Court ruled that the SO was unconstitutional, the City had a duty to
promptly pay the amount owed minus the recoupment claim.


             The City also argues that because the Board Members did not spend
time attempting to compel the City to make payment that there can be no fee award
for such time. The City argues that it is only responsible for the fees the Board
Members incurred as a result of the City’s failure to make payment. A review of
the record reveals that the City asserted in its response to the Board Members’
motion to mold that the Board Members did spend significant time in the summary
judgment proceedings seeking backpay. The City contradicts itself. This Court
determines that the common pleas court did not err when it awarded payment for
these attorney fees.


                          3. Amount of Attorney Fees.
             The City next contends that even if this Court does affirm the award
of attorney fees, the quantification of those fees should be reversed. The Board
Members requested $329,085.00 in attorney fees with $141,885.00 coming from
Category One fees and $187,200.00 in Category Two fees. The City argues that
the common pleas court erred when it adopted the Board Members’ proposed fees
in total. The City asserts that this Court should significantly reduce the hours
claimed and should hold that the Board Members have not established the
reasonableness of the claimed rates.


             With respect to the Category One fees, this Court has already agreed
herein with the City that the common pleas court erred when it assessed the



                                       22
Category One Fees. This Court further agrees with the City that the amount of
attorney fees of $329,088.00 should be reduced by the amount of Category One
Fees, $141,885.00, which reduces the total to $187,200.00.


            With respect to the Category Two fees, the City asserts that this Court
should significantly reduce these fees. The Board Members claim fees for all the
time spent on this case after this Court’s decision regardless of whether the time
was spent attempting to procure partial payment for Nix. According to the City,
the claim for 416 hours of time for a total of $187,200.00 is inherently
unreasonable given that only $24,015 was recovered on Nix’s behalf.


            Specifically, the City argues that no time spent from March 20, 2013,
until June 3, 2013, should constitute part of the fees because the City cannot be
responsible for any time spent prior to July 2013, because there was no ripened
partial payment until the City withdrew its Sunshine Act argument at that time.
Further, the City argues that the Board Members received attorney fees for time
spent analyzing the Commonwealth Court Order (52.7 hours), on the Meade
settlement (3.7 hours), developing an argument that was never made (11.1 hours),
and preparing for a conference in the common pleas court (5.4 hours) and to which
the Board Members were not entitled because the time would have been spent
regardless of any delays in payment.


            The City ignores the fact that it agreed in its Response to Plaintiffs’
Motion to Mold that 61.6 hours spent reviewing this Court’s opinion and preparing
for a conference in the common pleas court were compensable.            As to the



                                       23
remaining hours, the common pleas court awarded attorney fees based on 42
Pa.C.S. §2503(7) for dilatory, obdurate, or vexatious conduct. In reviewing a trial
court’s award of attorneys’ fees, this Court may only consider “whether the trial
court palpably abused its discretion in making a fee award.” Thunberg v. Strause,
682 A.2d 295, 299 (Pa. 1996). This Court will not disturb the award if the record
supports the common pleas court’s finding that the sanctioned party violated
Section 2503 of the Judicial Code, 42 Pa.C.S. §2503, absent an abuse of discretion.
In re Estate of Schram, 696 A.2d 1206, 1213 (Pa. Cmwlth.), petition for allowance
of appeal denied, 705 A.2d 1313 (Pa. 1997). “Conduct is ‘dilatory’ where the
record demonstrates that [a participant] displayed a lack of diligence that delayed
proceedings unnecessarily and caused additional legal work.”       In re Estate of
Burger, 852 A.2d 385, 391 (Pa. Super. 2004), affirmed, 898 A.2d 547 (Pa.
2006).


            Although the City argues that all of this time spent on the Meade
settlement and in developing an argument that was never made would have been
spent regardless of any delays in payment, the City provided no evidence that that
was the case. This Court finds that the common pleas court did not abuse its
discretion when it awarded attorney fees for these 14.8 hours.


            The City next contends that the common pleas court erred when it
awarded $140,400 for the 312.0 hours of time spent between June 6, 2013, and
November 20, 2013. The City asserts that almost all of this time was spent seeking
attorney fees, seeking additional make-whole relief from the common pleas court,




                                        24
and refuting the City’s defenses to the payment of backpay. The City asserts that
none of this time was related to prompt payment.


               With respect to seeking attorney fees, the City contends that under
Pennsylvania law time spent seeking attorney fees is not compensable. In Brose v.
Keystone, 710 A.2d 637 (Pa. Cmwlth. 1998), this Court held that an attorney was
only entitled to fees where the work performed is on behalf of the client’s interest
and not the attorney’s. In an affidavit, Nigro stated that the Board Members agreed
to assign to their counsel their right to be compensated for the expense of outside
counsel. Declaration of Honorable Russell M. Nigro, July 17, 2013, at 3; R.R. at
RR91a.


               Once again, the City ignores the fact that it conceded in its Response
to the Motion to Mold that 124.8 hours were compensable as they related to
backpay and 7.8 hours5 were related to the implementation of an order of the
common pleas court.          In addition, the City conceded that 18.9 hours were
compensable for meeting with Nix and preparing a stipulation for the common
pleas court.


               The City estimates that ten percent of the attorney time was allocable
to obtaining attorney fees because approximately ten percent of the Board
Members’ brief to the common pleas court dealt with this issue.




      5
               Inexplicably, the City now argues that these 7.8 hours are now not compensable.



                                              25
             This Court does not agree. First, although the Board Members may
have assigned their rights to attorney fees to their counsel, it is not clear from the
record, what the reason was, if any, for the assignment. Given the scant record
before us, this Court cannot make such a determination.            Second, the City
estimates that ten percent of the hours were allocable to obtaining attorney fees
because approximately ten percent of the Board Members’ brief to the common
pleas court dealt with this issue. This Court cannot rely on this estimate because
the number of pages in a brief devoted to an issue does not necessarily equate to
the amount of time spent on research, writing, and discussing an issue. The City
does not cite to any case law to support this calculation. Further, given that the
City previously conceded that over 150 hours of the 312 at issue were
compensable, it is unclear whether the ten percent is based on the total of 312 or
the remaining 162.


             As to the remaining hours, the City disputes the Board Members’
request for reimbursement for the amount of time spent seeking additional make
whole relief under Article III, Section 27 of the Pennsylvania Constitution. The
City states that the common pleas court, with respect to the Category Two fees
only, awarded attorney fees for time spent in pursuit of backpay. The City alleges
that fifty percent of the pages of the summary judgment motion were attributable to
their make whole argument. Again, this Court cannot rely on this estimate for the
same reasons set out with respect to the attorney fee issue in the summary
judgment motion.




                                         26
             The City also argues that the Board Members were not entitled to fees
for time spent refuting the City’s defenses to the payment of backpay. Considering
that the common pleas court ordered that attorney fees be paid relating to the
backpay issue, this Court does not agree with the City. The City makes the same
generalization about the time spent as forty percent. This Court finds that the
common pleas court did not abuse its discretion.


             The City next contends that the common pleas court erred when it
awarded fees based on a billing rate of $450.00 per hour because there is no
evidence of record to establish the rate was reasonable. It appears that the common
pleas court determined, on its own, that this was a fair billing rate. The City raised
this issue before the common pleas court in its response to the motion to mold the
award of interest and attorney fees. The party seeking the award of attorney fees
bears the burden of establishing that the requested hourly rates meet the standard of
reasonableness based on the prevailing market rate in the relevant community. The
attorney’s skill, experience, and reputation are also factors.           Loughner v.
University of Pittsburgh, 260 F.3d 173, 180 (3d Cir. 2001). “The starting point in
ascertaining a reasonable hourly rate ‘is the attorney’s usual billing rate but this is
not dipositive.’” Id. citing Public Interest Research Group of N.J., Inc. v. Windall,
51 F.3d 1179, 1185 (3d Cir. 1995). Given that the record does not contain the
billing rate of the Board Members’ attorneys, this Court vacates the portion of the
order that calculated the attorney fee award and remands to the common pleas
court for a resolution of this issue.




                                          27
             The City next contends that the Category One fees should only reflect
the claims of the parties before the common pleas court. Because only three of the
six Board Members were still before the common pleas court when it made its
award, the City argues that the award should be reduced. As this Court has already
determined that the trial court erred when it awarded the Category One fees, this
Court need not address this issue.


                                     4. Interest.
             Finally, the City contends that the common pleas court erred when it
awarded the amount of interest to the Board Members that it did. On March 5,
2014, the Board Members sought interest in the following amounts: Nix - $9,100,
Nigro-$25,200, Goldsmith-$25,300, Lewis-$40,000.80, and Silberstein-$7,500.50
for a total of $107,101.30. On March 10, 2014, the City responded to the Board
Members with its own calculation of interest: Nix - $6,854.07, Nigro- $19,816.41,
Goldsmith - $19,828.13, Lewis - $24,353.85, and Silberstein - $9,329.19 for a total
of $80,181.65. On April 1, 2014, the City issued a formal response to the Board
Members’ motion that requested interest and asserted that the Board Members had
failed to respond to the City’s calculations, that the City had documentation to
support its calculations, and that the parties hoped to resolve their differences.


             The common pleas court adopted the interest amounts set forth by the
Board Members. The common pleas court determined:

             Under Pennsylvania law, prejudgment interest may be
             recovered for a breach of contract only if ‘(1) a defendant
             commits a breach of a contract to pay a definite sum of
             money; or (2) a defendant commits a breach of contract
             to render a performance the value of which is


                                          28
             ascertainable by mathematical calculation from a
             standard fixed in the contract; or (4) [sic] a defendant
             commits a breach of contract to render a performance the
             value of which in money is ascertainable from
             established market prices of the subject matter. . . .
             ‘Except as otherwise provided by another statute, a
             judgment for a specific sum of money shall bear interest
             at the lawful rate from the date of the verdict or award, or
             from the date of the judgment, if the judgment is not
             entered upon a verdict or award.’ . . . .
             When the City passed the Salary Reduction Ordinance
             and slashed the BRT Members’ salaries, it breached its
             contract to pay the members at their previously
             established salary rates. The amount owed to Plaintiffs
             [Board Members] prior to the illegal reduction is a
             definite and readily calculable sum of money. Summary
             Judgment was properly entered in favor of Plaintiffs
             [Board Members] for interest at the statutory rate of six
             percent. . . from the date of the illegal salary decrease
             until the date of the full payment by the City. (Footnotes
             omitted.)
Opinion at 13-14.


             The Board Members assert that the City waived the argument that
there was no support for the Board Members’ calculation of interest because the
City did not object to the calculations in the common pleas court. The City asserts
that it did object in its April 1, 2014, response to the Board Members’ motion.
Specifically, a review of the record indicates that the City set forth its interest total
for the five Board Members which was the same as the interest total that the City
previously supplied to the Board Members. The City stated that it had received no
response from the Board Members but it was not surprised because the calculations
were difficult to perform. The City did not request that the common pleas court
get involved because it believed that the Board Members would agree to their
calculations once they had a chance to review them. The City’s response was


                                           29
unusual in that it acknowledged that there were differences in the interest amounts
submitted by the two sides but did not seek to have the common pleas court resolve
the matter. This Court does not construe this response as a waiver.


            In its opinion the common pleas court explained why it awarded
interest but did not explain its reasoning for choosing the amounts put forth by the
Board Members over those of the City. The difference in the amounts and the
common pleas court reasoning must be explained. Therefore, on this issue, this
Court will vacate that portion of the order of the common pleas court and remand
to the common pleas court for a determination of the basis for the award of
interest.


                            B. The Board Members.
                                1. Attorney Fees.
            Turning to the Board Members’ cross-appeal, initially they argue that
the common pleas court erred when it declined to extend its award of attorney fees
to encompass legal work for the litigation to invalidate the 2010 Salary Ordinance.
Specifically, the Board Members sought compensation for 11.7 hours for time
spent initially researching the SO claim immediately after its enactment and for
621.4 hours for time spent litigating the invalidity of the SO between the time of
the Supreme Court’s Reorganization Ordinance decision in September 2010, and
the time of this Court’s decision in March 2013.


            First, the Board Members argue that the absolute constitutional
prohibition in Article III, Section 27 of the Pennsylvania Constitution against



                                        30
cutting the midterm pay of officers requires an award of attorney fees for litigation
related to the invalidation of the SO.


             While Article III, Section 27 was the basis for the determination of the
unconstitutionality of the SO, there is no provision in it regarding the payment of
attorney fees.   Similarly, the Board Members cite to no case law, either in
Pennsylvania or in other jurisdictions where courts awarded attorney fees as a
remedy for an unlawful salary reduction.


             The Board Members also put forth arguments that forcing the Board
Members to pay for their own attorney fees is in effect a violation of Article III,
Section 27, because it would reduce the compensation coming to them. This Court
declines to extend the reach of Article III, Section 27 that far. The common pleas
court did not err when it declined to award attorney fees in this instance.


             The Board Members also contend that the common pleas court erred
when it rejected an award of attorney fees for legal work in defeating the illegal SO
under the City’s Defense and Indemnification Ordinance. As this Court already
determined that the Defense and Indemnification Ordinance did not apply to the
Category One fees, similarly the salary reduction by the City did not constitute an
“action” under the Defense and Indemnification Ordinance.


             Next, the Board Members contend that the common pleas court erred
when it foreclosed a trial on the full extent of the City’s alleged vexatious conduct
in relation to the SO. The Board Members concede that the “American Rule”



                                          31
requires each side to pay for its own litigation fees and costs absent some
exception or showing of bad faith or vexatious conduct.                 Lucchino v.
Commonwealth, 809 A.2d 264 (Pa. 2002). The Board Members assert that the
“systematic course by which the City doggedly applied the SO for years of
litigation presents a prima facie case of bad faith, obdurate, dilatory, and vexatious
conduct.” The Board Members’ Brief at 64-65. The Board Members argue that
the alleged vexatiousness of the City was a factually disputed matter and the
common pleas court erred when it granted summary judgment in the favor of the
City. The Board Members ask that this Court remand this matter to the common
pleas court for reconsideration of this issue.


             The Board Members point to their brief to the common pleas court
that lists the alleged vexatious conduct. However, a review of that brief reveals
that many of the alleged vexatious acts have no relationship to the 633.1 hours that
the Board Members spent litigating the SO’s validity. This Court finds no error on
the part of the common pleas court on this issue.


                       2. Economic Loss for Income Taxes.
             Next, the Board Members contend that the common pleas court erred
when it disallowed compensation for the Board Members’ economic loss due to
higher income taxes that resulted from a combined, multi-year lump sum payment.
The Board Members assert that the City’s decision to pay all of the amounts due
from the illegal mid-term reduction of salaries under the Salary Ordinance in one
lump sum resulted in the Board Members earning more in the year they were paid
such that they paid more in income taxes than if the salaries had been paid when



                                          32
they were supposed to have been paid. The Board Members argue that this result
was contrary to Article III, Section 27 because it served as a further diminution of
the salaries that were due the Board Members.


             The common pleas court determined, “Although it may be true that
Plaintiffs’ [Board Members] will incur higher tax income liability as a result of
receiving backpay in one lump sum rather than spread over three years, Plaintiffs
[Board Members] did not provide any authority for awarding compensation for
such consequences.      This award is not cognizable under Pennsylvania law.”
Opinion at 15.


             This Court agrees with the common pleas court.


                                     IV. Conclusion.
             Accordingly, this Court reverses the award of Category One attorney
fees, vacates and remands this case to the common pleas court for a determination
of the proper amount of interest due each Board Member, vacates and remands this
case to the common pleas court for a determination of the hourly rate for the Board
Members’ attorneys for use in calculating an award of reasonable attorney fees,
and affirms in all other respects.




                                         ____________________________
                                         BERNARD L. McGINLEY, Judge




                                           33
          IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Charlesretta Meade, Robert N.C. Nix,      :
Honorable Russell M. Nigro, Honorable     :
Alan K. Silberstein, Anthony Lewis Jr.,   :
and Molly Goldsmith, personal             :
representative of the estate of Howard    :
M. Goldsmith, deceased                    :
                                          :
                   v.                     :
                                          :   No. 1309 C.D. 2014
City of Philadelphia,                     :   No. 1332 C.D. 2014
             Appellant                    :

                                    ORDER

             AND NOW, this 30th day of December, 2015, the orders of the Court
of Common Pleas of Philadelphia County are reversed with respect to the
imposition of Category One Attorney Fees. With respect to the award of interest,
the orders of the Court of Common Pleas of Philadelphia County are vacated, and
this case is remanded to the common pleas court for a determination of the interest
due each member of the Board of Revision of Taxes.             With respect to the
calculation of attorney fees, the orders of the Court of Common Pleas of
Philadelphia County are vacated, and this case is remanded to the common pleas
court for a determination of the hourly rate to be used for the calculation of
attorney fees based in part on the actual rate of the attorneys used by the members
of the Board of Revision of Taxes. The orders of the Court of Common Pleas of
Philadelphia County are affirmed in all other respects. Jurisdiction relinquished.


                                          ____________________________
                                          BERNARD L. McGINLEY, Judge
