Opinion ID: 3010967
Heading Depth: 3
Heading Rank: 1

Heading: e., the additional fees themselves.

Text: The District Court did not abuse its discretion here either. One of the situations in which a court may award attorney's fees is where the litigation results in a benefit to the trust as whole. See Trimble. Here, as a result of Dardovitch's objections to the account, Haltzman was ordered to return certain fees to the Trust, and will not be permitted in the future to withdraw additional fees. Furthermore, the District Court appropriately ordered the trustee himself, as opposed to the Trust, to pay the fees. By accepting the additional fees for the collection actions, Haltzman, an attorney, not only breached his fiduciary duty, but did so in a way that resulted in a direct benefit to himself. This case is thus unlike those in which a trustee breaches his duty by making an improper investment, which causes a loss to the trust estate but no corresponding gain to the trustee. Although, as discussed above, Haltzman did not engage in per se impermissible self-dealing, his breach of trust resulting in a direct profit to him justifies the District Court's award of attorney's fees in favor Dardovitch to be paid by Haltzman. Accordingly, we will affirm the District Court's decision that Haltzman should be liable for Dardovitch's attorney's fees, at least in part. C. Calculation of the Fee Award Amount Although we will affirm the District Court's decision to award attorney's fees, we will vacate the order and remand the matter because the District Court did not properly determine the amount of attorney's fees to be awarded. Dardovitch requested $60,712.78 in pre-Accounting fees, and $35,649 in post-Accounting fees. Without holding a 34 hearing, the District Court found that the hourly rates were reasonable, but reduced the awards to $50,000 and $9,000 respectively. It calculated these amounts as follows: the $50,000 pre-Accounting award was reduced from the $60,000 Dardovitch requested based on the fact that Dardovitch's attorneys had performed some work before the accounting unrelated to establishing Dardovitch's status as a beneficiary, and so as to reflect more accurately the value conferred on the Trust by the accounting. It based the $9,000 post-Accounting award on a roughly 75% reduction of the requested fee, which it derived from Dardovitch's lack of success on his pre-Trust claims and several of his objections to the accounting, along with his substantial success on a major objection to the accounting. We think that our recent decision in Security Mutual Life Insurance Co. of New York v. Contemporary Real Estate Associates, 979 F.2d 329 (3d Cir. 1992), controls. There, in an action for collection on a mortgage note that included a provision for attorney's fees, the district court ordered the debtor to pay the lender's attorney's fees without holding a hearing, making a finding as to the reasonableness of the fees, and without explaining the rationale for the award. We vacated the award: Defendant requested discovery regarding attorney's fees. The district court implicitly denied this request by approving the second proposed form of judgment submitted by Security Mutual. . . . [I]t conducted no hearing and made no findings of fact as to the reasonableness of the fees requested and gave no statement as to the standard governing its award. Thus, we cannot adequately review the reasonableness of the action of the district court in awarding counsel fees under the circumstances. We conclude that its action was not consistent with a sound exercise of discretion under Pennsylvania law. Security Mut., 979 F.2d at 332; see also Estate of Brockerman, 480 A.2d 1199, 1204 (Pa. Super. Ct. 1984) (remanding fee award where record did not indicatewhat hourly rate the firm charged, what the prevailing rate in the general area was at the time, what services were performed, or how much time those services consumed); cf. Estate of 35 Baker, 401 A.2d 737 (Pa. 1979) (no remand necessary where trial court heard lengthy testimony and made extensive findings regarding the services rendered by the attorney, the difficulty of the actions undertaken, and the reasonableness of the fee request as a whole); Sewak v. Lockhart, 699 A.2d 755 (Pa. Super. Ct. 1997). The District Court's fee award in this case is like that in Security Mutual. In determining the fee award, the District Court relied only upon Dardovitch's submission, which included statements from the attorneys and their time records. The court held no hearing on this issue, and Haltzman had no opportunity to challenge on a factual basis the fee requested. Haltzman in fact identifies several contested factual issues concerning the attorney's fee award, including whether the fees were incurred in response to abusive conduct, whether Dardovitch presented adequate documentation for the fees, and whether Dardovitch is entitled to fees for preparation of the fee petition.15 Furthermore, the reasoning supporting the District Court's decision to reduce the fee awarded below that requested is sketchy. For instance, the court reduced the fee award for pre-Accounting litigation by $10,000to account for activity unrelated to the trustees' malfeasances and [to] reflect more accurately the value conferred to the Trust as a result of the account. We cannot determine from the record whether this reduction was supported. Likewise, the District Court awarded Dardovitch only 25% of his request for post-Accounting fees, because many of his objections to the account failed. But we cannot determine from the record whether the 25% figure accurately represents the amount of work expended on the successful claim. The District Court was fully familiar with the record and perhaps instinctively reached the correct result; because it did not hold a hearing and set forth an adequate explanation of its calculations, however, we cannot be sure that its award of attorney's fees was _________________________________________________________________ 15. In identifying these issues, we express no opinion whether and the extent to which they are significant in the determination of attorney's fees. 36 consistent with the exercise of sound discretion. Accordingly, we will vacate the attorney's fee award and remand this matter to the District Court for further proceedings.