Office of Disciplinary Counsel v. Pisanchyn

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OFFICE OF DISCIPLINARY COUNSEL, Petitioner v. MICHAEL JOHN PISANCHYN JR., Respondent

No. 2914 DD3

No. J-32-2024

Supreme Court of Pennsylvania

October 24, 2024

Argued: April 10, 2024

Attorney Registration No. 87542 (Lackawanna County)

Todd C.J., Donohue, Dougherty, Wecht, Mundy, Brobson, McCaffery JJ.

OPINION

DONOHUE, JUSTICE

Respondent, Michael Pisanchyn ("Pisanchyn"), challenges the recommendation of the Disciplinary Board that he should be suspended for ninety days, based on the preparation and presentation of a fee petition for attorneys' fees in a federal district court. Among his several claims,^[1] Pisanchyn challenges the application of Pennsylvania Rule of Professional Conduct 1.5(a)^[2] to his conduct. Although the Office of Disciplinary Counsel ("ODC") charged Pisanchyn with violations of seven Rules of Professional Conduct, the Disciplinary Board only found Pisanchyn in violation of Rule 1.5(a). While neither the Hearing Committee nor the Disciplinary Board found Pisanchyn in violation of Rule 8.4(d),^[3] the Hearing Committee expressed that further guidance would be helpful on the rule's application. We ordered the parties to provide argument on the application of that Rule under the circumstances of this appeal. Pursuant to our review, Rules 1.5(a) and 8.4(d) are inapplicable under the facts presented. Accordingly, the Petition for Discipline is dismissed.

I. Background

Pisanchyn was admitted to the practice of law in Pennsylvania in 2001. He owns, operates, and manages a personal injury law firm, The Pisanchyn Law Firm. On August 26, 2009, Bernie Clemens sustained injuries in a motor vehicle accident. New York Central Mutual Insurance Company ("NYCM") insured the car in which Clemens was traveling. On March 11, 2010, Clemens retained Pisanchyn's firm to represent him and his wife with respect to a claim against NYCM for underinsured motorist ("UIM") benefits. In August 2013, Pisanchyn's firm filed a civil suit in Monroe County, Pennsylvania, on behalf of Clemens and his wife ("plaintiffs"), against NYCM asserting both a contractual UIM claim, and a bad faith claim under Pennsylvania's bad faith statute, 42 Pa.C.S. § 8371. The case was removed to the United States District Court for the Middle District of Pennsylvania where it was assigned to Judge Malachy E. Mannion.

Pisanchyn was the supervising attorney on the case and lead counsel at trial. Five other attorneys at Pisanchyn's law firm assisted in the litigation of the lawsuit, including Attorney Marsha Lee Albright ("Albright"). Albright was assigned primary responsibility for the lawsuit and entered her appearance on the federal docket on October 1, 2013.

Prior to trial, the parties settled the UIM claim for $25,000, but the bad faith claim proceeded to a week-long jury trial. The jury entered a verdict in favor of the plaintiffs in the amount of $100,000 in damages. Given the finding of bad faith in favor of the insureds, the court also had discretion to award attorneys' fees, costs, and interest against NYCM. 42 Pa.C.S. § 8371. Pisanchyn had never prepared a fee petition, and he instructed Albright to seek advice from another attorney who regularly filed such petitions. Apparently, that attorney informed Albright that the presentation of a fee petition was straightforward, provided a sample petition, and indicated that The Pisanchyn Law Firm should be able to prepare the petition itself. Notably, neither Pisanchyn, nor any other attorney at his firm, had kept any time records for the federal litigation, such that, for purposes of the fee petition, the records had to be created after the fact. On November 20, 2015, Pisanchyn submitted a petition for attorneys' fees, interests and costs, along with a brief in support on behalf of the plaintiffs, requesting an award of $946,526.43 for fees and costs and $175,630 in interest, for a total of $1,122,156.43. Petition for Attorneys' Fees, Interests and Costs, 11/20/2015. NYCM filed a brief in opposition, and shortly thereafter, Pisanchyn filed a reply brief on behalf of the plaintiffs.

Given the disparity in the fees requested compared to the $125,000 obtained for the plaintiffs, Judge Mannion directed Pisanchyn to: submit a copy of the fee agreement entered into with the plaintiffs; submit a sworn verification from each attorney involved that the fees requested were accurate and reflected necessary services performed on behalf of the plaintiffs; and to maintain any time records for any client covering the period of time relevant to the plaintiffs' case. Clemens v. N.Y. Cent. Mut. Fire Ins. Co., 264 F.Supp.3d 618, 627 (M.D. Pa. 2017). On December 21, 2015, Albright delivered several items to the court for in camera inspection, including an undated contingent fee agreement entered into between the plaintiffs and The Pisanchyn Law Firm; the sworn verifications; and two sets of time logs, one for each of the plaintiffs' underlying claims. Id.

Following an evidentiary hearing, Judge Mannion denied the request for attorneys' fees in its entirety because it was "outrageous and abusively excessive."^[4] Clemens, 264 F.Supp.3d at 658. The court reached this conclusion after finding that the petition contained duplicative, vague, unnecessary, and excessive entries. Id. at 635. The petition also claimed attorneys' fees for clerical functions, including file maintenance and document management. Id. at 639. The court noted that Pisanchyn charged the same hourly rate for all attorneys without providing any supporting evidence, such as usual billing rates or descriptions of experience for each of the attorneys, which impeded its ability to determine the reasonableness of the hourly fees. Id. at 662-65 & n.59. The court determined that only about 13% of the claimed attorneys' fees were supported by the evidence, making the fee petition "anything but a good [] faith representation of [the attorneys'] actual billing rate and the hours reasonably expended on this case." Id. at 666-67. In addition to denying the fee petition in its entirety, the court directed that a copy of its opinion be served on the Pennsylvania Chief Disciplinary Counsel. Id. at 667. Pisanchyn self-reported the opinion to ODC on the same day of its issuance.

On appeal, the Third Circuit affirmed, reasoning that district courts have the discretion to deny a fee petition in its entirety when the requested amount is "outrageously excessive" under the circumstances. Clemens v. N.Y. Cent. Mut. Fire Ins. Co., 903 F.3d 396 (3d Cir. 2018). Explaining that counsel must make a good faith effort to avoid claiming fees for hours that are excessive, redundant, or otherwise unnecessary, the Third Circuit concluded that the district court provided a thorough explanation in its one-hundred-page opinion of how Pisanchyn failed to fulfill this duty, which justified the denial of the fee request. See id. (observing that the submission of a fee petition is not the "opening bid in the quest for an award … . Rather, it is the duty of the requesting party to make a good faith effort to exclude hours that are excessive, redundant, or otherwise unnecessary").

On October 1, 2019, ODC filed a Petition for Discipline charging Respondent with violating Pennsylvania Rules of Professional Conduct 1.1, 1.5(a), 5.1(a), 5.1(b), 5.1(c)(1), 5.1(c)(2), and 8.4(d).^[5] Petition for Discipline, 10/1/2019. The Disciplinary Board appointed a Hearing Committee to decide the matter, and prior to the hearing, ODC filed a motion to apply the doctrine of offensive collateral estoppel based on the federal court opinions so that it would be able to satisfy its burden of proof as to all of the charged violations without independent evidence. The Hearing Committee denied the motion and held disciplinary hearings on August 24, August 25, and September 9, 2020. On February 1, 2021, the Hearing Committee filed its report, wherein it recommended no discipline be imposed because ODC "failed to establish a prima facie case of at least one violation" of the rules it charged Pisanchyn with violating. Hearing Committee's Report, 2/1/2021, at 3.

With respect to the fee petition, the Hearing Committee found that "[w]hile the testimony at the hearing … supported the conclusion that [Pisanchyn] and the Firm actually spent the time and effort detailed in the fee petition," it was troubled by Pisanchyn's business practices. Id. at 12-13. Namely, Pisanchyn and his law firm "spent an enormous amount of time and expense on a relatively small recovery" without measuring its effort "in a commercially normal fashion[.]" Id. Nonetheless, the Hearing Committee found that Pisanchyn did not violate any of the rules charged, including Rules 1.5(a) and 8.4(d). Id. at 13. Regarding Rule 1.5(a), it found that "the amount requested reflected actual time spent in preparing the case, and may even have been on the conservative side[.]" Id. at 16. As to Rule 8.4(d), the Hearing Committee found it to be a "catch-all Rule" that may apply where several other violations are found, but as no other violation was found, the Hearing Committee found no Rule 8.4(d) violation occurred. Id. at 18. Ultimately, the Hearing Committee stated that "greater guidance on the elements" of Rule 8.4(d) would be helpful. Id. Accordingly, the Hearing Committee recommended that no discipline be imposed. Id.

Both ODC and Pisanchyn filed a brief on exceptions to the Hearing Committee's decision.^[6] On April 16, 2021, the Disciplinary Board issued an order that stated, without further explanation, that Pisanchyn violated Rule 1.5(a) and remanded to the Hearing Committee for a new hearing to determine the appropriate discipline. Disciplinary Board Order, 4/16/2021. The Hearing Committee conducted another hearing and issued supplemental reports...