Florida Probate & Trust Litigation Blog : Florida Probate Litigation, Will Contest Lawyer & Attorney : Juan C. Antúnez : Serving Miami, Jacksonville, Tampa Saint Petersburg, Orlando, Fort Lauderdale

Price v. Austin, --- So.3d ----, 2010 WL 3120212 (Fla. 1st DCA Aug 10, 2010)

Over the last few years probate lawyers have been scratching their heads wondering if, when and how Civ. Pro. Rule 1.525, the rule setting a 30-day post-judgment deadline for filing fee motions in civil litigation, applies to contested probate and trust proceedings. This is an important issue; the last thing any lawyer wants to do is blow a deadline for claiming fees on behalf of his client. Here's what the rule says:

Any party seeking a judgment taxing costs, attorneys' fees, or both shall serve a motion no later than 30 days after filing of the judgment, including a judgment of dismissal, or the service of a notice of voluntary dismissal.

By now there's no question the rule applies in any "adversary" probate proceeding and in all trust litigation. In 2008 the 2d DCA held here that the rule applies in Trust litigation, then in 2009 the 5th DCA held here that the rule applies in adversary probate proceedings, and now in the linked-to opinion the 1st DCA has come to the same conclusion with respect to adversary guardianship proceedings:

[A] notice that the proceeding for incapacity was adversary was served on June 12, 2008. On July 7, 2008, the court entered an order determining total incapacity. Over a year later, on September 18, 2009, appellant served a verified petition to approve payment of fees. Florida Probate Rule 5.025(d)(2) provides that, once a proceeding under the probate rules has been declared to be adversarial, it “shall be conducted similar to suits of a civil nature and the Florida Rules of Civil Procedure shall govern, including entry of defaults.” Florida Rule of Civil Procedure 1.525 requires a motion for attorney's fees to be filed “no later than 30 days after filing the judgment....” In Hays v. Lawrence, 1 So.3d 1176, 1177 (Fla. 5th DCA 2009), the court held that, in a proceeding declared as adversarial, rule 1.525 governed a motion for attorney's fees filed pursuant to section 733.106(2) and affirmed a denial of a claim for attorney's fees as untimely under the rule. Although Hays involved a different fee statute than the case before us, section 733.106(2) and section 744.108, applicable here, are similar. Both statutes are legislative expressions of the desirability of the payment of attorney's fees for services rendered under the specified proceeding. Accordingly, because the petition for attorney's fees was untimely filed under rule 1.525, the trial court's order denying fees is AFFIRMED.

Must be an "adversary" proceeding:

An important point to keep in mind with respect to contested guardianship (and probate) proceedings is that Rule 1.525 only applies to "adversary" proceedings (assume the rule applies to all trust proceedings). So if someone tries to block your fee petition by citing to this rule, make sure your judge understands it simply does NOT apply to probate and guardianship proceedings that have NOT been declared adversarial in accordance with Florida Probate Rule 5.025.

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Bessard v. Bessard, --- So.3d ----, 2010 WL 1875627 (Fla. 3d DCA May 12, 2010)

Durable powers of attorney (POAs) are an integral part of modern estate planning. The prevalence of POAs means they come up with some frequency in estate-related litigation [click here]. That's what happened in the linked-to case. What's interesting about this case is it's focus on F.S. 709.08(11), a little-known subclause of Florida's durable POA statute entitling the prevailing party in POA litigation to attorney's fees and costs. Here's what the statute says:

(11) DAMAGES AND COSTS.-- In any judicial action under this section, including, but not limited to, the unreasonable refusal of a third party to allow an attorney in fact to act pursuant to the power, and challenges to the proper exercise of authority by the attorney in fact, the prevailing party is entitled to damages and costs, including reasonable attorney's fees.

In this case a father signed a durable POA granting his son ("Joseph") authority over his property while he underwent treatment for leukemia, tuberculosis "and other medical infirmities." The POA was challenged in court by Joseph's mother and two sisters. Before the court could rule on the merits of the case, Joseph's father died. At that point Joseph sought to have the case dismissed as moot. Joseph also filed a "renunciation" of his powers under the POA.

The trial court granted Joseph's motion to dismiss, but also granted a motion for attorney's fees and costs filed by his mother and sisters as the prevailing parties. On appeal the 3d DCA affirmed the trial court's attorney's fee order as follows:

As to the attorney's fees and costs awarded to the appellees as the prevailing parties, we also affirm. Section 709.08(11), Florida Statutes (2007), provides that the prevailing party in power of attorney litigation is entitled to attorney's fees and costs. The determination of the prevailing party for the purpose of awarding attorney's fees and costs is based on whether the party seeking fees succeeded on any significant issue(s) in the litigation. See Moritz v. Hoyt Enters., Inc., 604 So.2d 807, 810 (Fla.1992) (holding “that the party prevailing on the significant issues in the litigation is the party that should be considered the prevailing party for attorney's fees”); Boxer Max Corp. v. Cane A. Sucre, Inc., 905 So.2d 916, 918 (Fla. 3d DCA 2005) (“The ‘prevailing party,’ for purposes of attorney's fees, is a party which the trial court determines prevailed on significant issues in the litigation.”).

Joseph contends that because the trial court never determined whether the signature on the power of attorney was executed by Mr. Bessard, and if executed whether it was done so knowingly and voluntarily, the trial court erred in granting the appellees attorney's fees and costs as the prevailing parties. We disagree. The appellees sought to have the power of attorney declared void, contending that the document was a fraud. When Joseph renunciated the powers granted to him under the power of attorney, agreed that the document be declared null and void, and destroyed the original and all copies, his actions necessarily mooted the complaint and was the functional equivalent of a judgment or verdict in favor of the appellees. See Augustin v. Health Options of S. Fla., Inc., 580 So.2d 314, 315 (Fla. 3d DCA 1991) (finding that when the defendant changed its position in the matter and made full payment as prayed for in the plaintiff's complaint, it necessarily mooted the complaint and was the functional equivalent of a judgment or verdict in favor of the plaintiff entitling the plaintiff to an award of attorney's fees as the prevailing party); see also Smith v. Adler, 596 So.2d 696, 697 (Fla. 4th DCA 1992) (holding that “it is [the] results, not [the] procedure, which govern the determination” of which party prevailed for purposes of awarding attorney's fees).

Lesson learned?

Litigation can be very expensive. Any time your client has a shot at getting the losing side to pay his or her attorney's fees, it's a BIG deal. Just as importantly, the downside risk of F.S. 709.08(11) needs to be understood by all at the outset. This disclosure should be prominent in your retainer agreements.

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If you're an estate planner, it's not unusual to get asked if the fees being proposed by trust company "X" are reasonable. We usually have a sense of what the going rate is in our market, but it's mostly a "guesstimate." So I was glad to see an excellent piece of market research published on The Trust Advisor Blog. In a blog post entitled Who's Charging What for Trust Services? trust advisor Jerry Cooper provides a comprehensive chart of the fee estimates he obtained from numerous well-established trust companies and an easy-to-understand explanation of how the various fees stack up. Good stuff to keep handy for the next time you're asked about corporate trustee fees.

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Morrison v. West, --- So.3d ----, 2010 WL 532792 (Fla. 4th DCA Feb 17, 2010)

The linked-to opinion above is the last gasp of bitter litigation swirling around the $100 million estate of Palm Beach socialite Pedro Morrison, who died in 2003 [click here, here].  This time around the issue was whether North Carolina sole practitioner William E. West could keep his million dollar legal fee. His former client, the decedent's widow - Carla Morrison, fired him the day after he settled her case in mediation.

At first things looked good for West. Here's how the Palm Beach Post reported on his trial-court win in Morrison widow miffed:

The Palm Beach County Circuit Court judge says Morrison "behaved despicably" toward her former lawyer, North Carolina attorney William E. West, and must pay his $1 million legal fee.

Ouch! What would prompt [Judge] Winikoff to call Morrison's testimony and demeanor "outrageous?"

How about Morrison firing her lawyer the morning a mediation settlement he hammered out was to be filed with the court. Or Morrison's refusal to pay West his $1 million legal fee, as she had agreed. Or Morrison's claim she needed the $1 mil for living expenses - then later admitting she spent the cash on a a bracelet worth between $140,000 and $250,000.

That was then, this is now. On appeal West lost it all. And all because he didn't want to spend a few bucks on associating with a Florida lawyer and getting admitted pro hac vice.

The supreme court explained its holding in [Chandris, S.A. v. Yanakakis, 668 So.2d 180 (Fla.1995)], as supporting policy concerns related to protection of the public. The prohibition on the unauthorized practice of law in Florida derives not only from the Rules of Professional Conduct, but also from statutory law. The court in Chandris noted that section 454.23, Florida Statutes (1983), provided that “[a]ny person not licensed or otherwise authorized by the Supreme Court of Florida who shall practice law ... shall be guilty of a misdemeanor of the first degree.” FN2 Relying on long established precedent requiring admission to the bar, the court said:

Florida has a unified bar, and all persons engaged in the practice of law here must be members of that bar. Petition of Florida State Bar Ass'n, 40 So.2d 902 (Fla.1949). More than thirty years ago, we enunciated why we prohibit those who are not members of The Florida Bar from engaging in professional activities in Florida which are within the boundaries of the practice of law. This Court noted in State ex rel. Florida Bar v. Sperry, 140 So.2d 587, 595 (Fla.1962), rev'd on other grounds, 373 U.S. 379, 83 S.Ct. 1322, 10 L.Ed.2d 428 (1963), that:

The reason for prohibiting the practice of law by those who have not been examined and found qualified to practice is frequently misunderstood. It is not done to aid or protect the members of the legal profession either in creating or maintaining a monopoly or closed shop. It is done to protect the public from being advised and represented in legal matters by unqualified persons over whom the judicial department can exercise little, if any, control in the matter of infractions of the code of conduct which, in the public interest, lawyers are bound to observe.

Chandris, 668 So.2d at 184. Despite the experience and qualifications of the unlicensed lawyer in Chandris, the court held that he could not recover under a contingent fee contract.

In a footnote, the court conceded that while a member of The Florida Bar may not claim attorney's fees under a void contingent fee agreement, a Florida Bar member may still be entitled to the reasonable value of his or her services in quantum meruit. Id. at 186 n. 4. While West seeks to expand this footnote to claim entitlement to his quantum meruit fee, his interpretation is clearly wrong. While a contract between a Florida Bar member and a client might be illegal, the Bar member's provision of legal services in Florida is not illegal. In contrast, the provision of legal services by a non-Florida Bar member is illegal. See § 454.23, Fla. Stat. To award fees for illegal activities is contrary to public policy. See Spence, Payne, Masington & Grossman, P.A. v. Philip M. Gerson, P.A., 483 So.2d 775 (Fla. 3d DCA 1986).

*     *     *     *     *

West argues that he anticipated securing a Florida attorney but simply did not do so before the matter settled in mediation. Although in September 2004 West drafted a motion for appearance pro hac vice and forwarded it, and a proposed order for admission, to McDonald & Crawford, that Fort Lauderdale firm was never actually retained by Morrison. After an e-mail from the firm to West discussing its fee, the Florida firm did not have further conversations with West until well after the mediation. In fact, West did not even seek pro hac vice admission to present the settlement agreement to the probate court for approval.FN4 This can hardly be deemed a technical error when he was admitted pro hac vice in another case involving Morrison and the trust right before he was terminated by Morrison. He knew that such admission was necessary. We can only assume that [West] chose to ignore [getting admitted pro hac vice] to avoid the payment of a fee to McDonald & Crawford.

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Glantz and Glantz, P.A. v. Chinchilla, --- So.3d ----, 2009 WL 1531644 (Fla. 4th DCA June 3, 2009)

An appellate court won't reverse a probate judge's ruling cutting attorneys fees unless there's been an "abuse of discretion." In other words, if reasonable minds could disagree on how the court should have ruled, then the appellate court must affirm the trial court's ruling . . . even if the appellate judges would have come to a different conclusion. Here's how the Florida Supreme Court put it in Canakaris v. Canakaris, 382 So. 2d 1197 (Fla. 1980): "the appellate court must fully recognize the superior vantage point of the trial judge . . . . If reasonable men could differ as to the propriety of the action taken by the trial court, then the action is not unreasonable and there can be no finding of an abuse of discretion.”

So it's a rare case indeed when an appellate court comes across a set of facts that compels it to step in and reverse a fee ruling that is so patently unfair it simply can't be left alone. This is one of those cases. Here are the facts:

The personal representative of an estate was a member of prepaid legal services program. The program referred her to the law firm of Glantz & Glantz, P.A., where the personal representative retained Mark Mastrarrigo to handle estate matters.

Subsequently, the personal representative wrote a letter to the court expressing her concern about the law firm's billing, prompting the trial court to conduct an evidentiary hearing. Testimony revealed that the attorney documented 123 billable hours defending a will contest, filing and pursuing a motion to disqualify another attorney based on a conflict of interest, and working with a curator in connection with the sale of the estate's property.

Pursuant to the prepaid legal services program, the attorney charged $115 per hour, a 51% discounted rate from the normal billing rate of $225 per hour. The total charges amounted to $12,400 plus costs. The law firm submitted an affidavit from an expert attesting to the reasonableness of the fees and costs, specifically that $13,500 was a reasonable fee for the services rendered. Testimony evidenced that this amount was based on the discounted hourly rate and not on the normal billing rate.

The court entered an order awarding the law firm fees in the amount of $6,885, 51% of the $13,500 reasonable fee attested to by the expert. The court denied the law firm's motion for rehearing, from which the law firm now appeals.

The 4th DCA went on to explain the legal basis for its reversal as follows:

Here, the prepaid legal services contract rate of $115 per hour is presumed to be reasonable. See, e.g., Sotolongo v. Brake, 616 So.2d 413, 413-14 (Fla.1992). The 123 hours expended is also reasonable given that the attorney testified to the services rendered by the law firm in representing the personal representative in a will contest, a motion to disqualify another lawyer, and work done with the curator. The trial court accepted the expert's affidavit that $13,500 was a reasonable, already discounted fee. The trial court did not find the hours or the discounted rate to be unreasonable. Nevertheless, the trial court inexplicably reduced the reasonable fee by another 51%. In doing so, it abused its discretion.

The exception that proves the rule.

The fact that the probate attorney won this fee dispute shouldn't embolden anyone; it's an exceptional case that only proves your fees have to be ridiculously low to begin with to have a prayer of winning on appeal. Not a good strategy for staying in business for very long. The better lesson to be drawn from this case is that fee disputes are no-win situations. And the best way to win that battle is to take the time up front to make sure your client doesn't object to your fees once you've done all the work. Billing is part science, part art. For an excellent article discussing how to get this right in the trusts and estates context, read Understanding the Legal and Emotional Aspects to Billing and Collecting for Legal Services [click here for slide show] by frequent lecturer and Chicago estate planning attorney Louis Harrison.

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Geary v. Butzel Long, P.C., --- So.3d ----, 2009 WL 1606034 (Fla. 4th DCA Jun 10, 2009)

In the commercial litigation context F.S. § 57.105 is a powerful tool for curbing abusive litigation tactics: if you engage in bad faith or frivolous litigation, not only will you eventually lose, you’ll also end up paying the other side’s legal fees. This is a commonly-used device that everyone knows about and has been the subject of multiple Florida Bar Journal articles [click here, here, here, here]. F.S. § 57.105 also occasionally pops up in the probate-litigation context [click here].

What’s often overlooked is that Florida’s probate code provides a similar remedy that’s just as powerful, but doesn’t require you to jump through any of the procedural hoops built into F.S. § 57.105. In both F.S. § 733.106(4) and F.S. § 733.6175(2), a probate judge is given the express statutory authority to determine from whose share of the estate attorneys fees incurred in frivolous or bad faith litigation will be paid. You might want to go this route in lieu of a personal judgmenet for fees against a bad actor under F.S. § 57.105 because you don't have to worry about collecting on your judgement: the probate-code route allows you to simply go after assets already available and subject to the court's authority as part of the probate estate.

Here's how the 4th DCA explained the law on when a probate judge can shift the winning side's attorney's fees against one of the estate's beneficiaries for frivolousness:

In In re Estate of Lane, 562 So.2d 352 (Fla. 4th DCA 1990), we examined the propriety of a probate court's order assessing attorney's fees from a will contest proportionally against the specific beneficiaries as well as the residuary estate. We noted that section 733.106(4), Florida Statutes, permits the court to direct from what part of an estate a fee assessment shall be paid (just as section 733.6175(2) does). However, we explained:

This section does not give the trial court unbridled discretion to award fees from any part of the estate. Before the trial court may assesses fees against a beneficiary's share of an estate there must be a finding of bad faith or wrongdoing by the beneficiary or other circumstances which would warrant such an assessment.

Id. at 353. Despite our use of “bad faith and wrongdoing,” we relied on and agreed with Cohen v. Schwartz, 538 So.2d 922 (Fla. 3d DCA 1989), in which the court suggested that in trying to close a prolonged estate, the trial court could assess attorney's fees against a beneficiary's portion of the estate for frivolous litigation consistent with section 733.106(4). We agree that if the litigation pursued is frivolous, then the court would have the authority under that section to assess fees against a specific beneficiary's portion of the estate.

The trial court found that the fees incurred in pursuing the fees on fees litigation constituted essentially frivolous litigation and were unreasonably incurred. Therefore, it acted within its discretion to apportion the fees for that litigation to Geary. However, the court did not make a finding that the personal representative engaged in frivolous litigation in its initial defense to Butzel Long's motion for fees and seeking disgorgement of fees paid. To the contrary, it noted that that defense may have been justified. It found only that the fees on fees litigation, which pushed the fees and costs awarded to Butzel Long from $19,000 to $49,000 (and subsequently even more), was unreasonable and unnecessary. Therefore, while the court could properly assess the fees on fees litigation against Geary, it should not have imposed the initial $19,000 for the fees litigation on Geary's share of the estate without a finding of wrongful conduct, bad faith, or frivolousness.

Lesson learned? Think 57.105 motion.

First, if you look over the Florida Bar Journal articles explaining F.S. § 57.105 you’ll see that the standard for determining what constitutes “frivolous” litigation in that context is identical to the frivolity standard applied under F.S. § 733.106(4) and F.S. § F.S. 733.6175(2).

Second, a probate judge can’t shift fees for frivolous litigation unless its order contains specific findings of fact establishing “wrongful conduct, bad faith, or frivolousness.” Again, this “specific findings” requirement is identical to that required under F.S. § 57.105.

Bottom line, given that there are very few appellate-court decisions discussing when and how to apply F.S. § 733.106(4) and F.S. § F.S. 733.6175(2) to curb wrongful conduct, bad faith, or frivolousness in the probate-litigation context, looking to cases discussing F.S. § 57.105 makes sense; also, “framing” the issue for your probate judge as being analogous to a “57.105 motion” is probably the best short-hand way of making clear to your judge exactly what kind of remedy you’re looking for and why. Your judge may not be all that familiar with the ins and outs of fee-shifting under F.S. § 733.106(4) and F.S. § F.S. 733.6175(2), but he or she will almost certainly know exactly what you’re talking about the moment you say, “judge, this is like a 57.105 motion.”

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Estate of Shefner v. Shefner-Holden, --- So.2d ----, 2009 WL 322153 (Fla. 3d DCA Feb 11, 2009)

When is probate litigation a compensable "service" to the estate?

There were two issues at play in the linked-to opinion. One was whether the PR's were entitled to payment of their attorneys fees after successfully defending against a claim that F.S. 732.802 (Florida's Slayer Statute) precluded them from inheriting under their father's will because they assisted in his suicide. (By the way, I previously wrote here about a similar assisted-suicide/Slayer Statute case out of Wisconsin . . . the plaintiffs lost that one too.)

As is always the case in this type of fee dispute, the question was whether this litigation "rendered services" to the estate [click here]. According to the 3d DCA the answer was . . . yes. Here's why:

In probate matters, section 733.106, Florida Statutes (2003), controls the question of attorney's fees. Subsection (3) states: “Any attorney who has rendered services to an estate may be awarded reasonable compensation from the estate.” An attorney may render services to an estate by: (1) bringing about an enhancement in value or an increase in estate assets, or (2) actions which establish and effectuate the decedent's testamentary intent. See, e.g., Estate of Brock v. Brock, 695 So.2d 714 (Fla. 1st DCA 1996); Segal v. Levine, 489 So.2d 868 (Fla. 3d DCA 1986); In re Estate of Lewis, 442 So.2d 290 (Fla. 4th DCA 1983).

.  .  .  .  .

[A]s a result of Deborah and Frank's defense of the Slayer Statute claim, the terms of the decedent's will were upheld. Thus, under section 733.106(3), Deborah and Frank are entitled to reimbursement of the attorney's fees and expenses for defending the claim. We, therefore, reverse the order denying attorney's fees. 

But can you dip into the homestead sales proceeds to pay the lawyers?

The second issue decided by the 3d DCA was whether the following clause in the decedent's will was the equivalent of a direction that the homestead property be sold and distributed to his heirs (thus stripping the sales proceeds of their creditor-protected status) or a devise of homestead property that was subsequently sold (thus preserving the creditor-protected status of the sales proceeds):

“I give my son, FRANK SHEFNER, JR. my house at 3420 SW 2nd Street, Miami, Florida. If and when the house is sold by my son, he will divide the proceeds equally among my children. My son is not to be forced to sell the house against his will.”

According to the 3d DCA, this was a devise of homestead property, so when Frank subsequently sold the house and split the proceeds with his siblings, the funds retained their creditor-protected status and were thus NOT subject to court ordered payment of probate-related attorneys fees.

It is well settled that homestead property devised to an heir is protected from forced sale to pay creditors' claims of the decedent and administrative expenses of the estate under Article X, Section 4 of Florida's Constitution. See, e.g., Pub. Health Trust of Dade County v. Lopez, 531 So.2d 946 (Fla.1988); Engelke v. Engelke, 921 So.2d 693 (Fla. 4th DCA 2006); Thompson v. Laney, 766 So.2d 1087 (Fla. 3d DCA 2000). Heirs are those persons entitled to receive property under the laws of intestacy. §§ 731.201(18), 732.103(1), Fla. Stat. (2003); Snyder v. Davis, 699 So.2d 999, 1003 (Fla.1997). Thus, when devised to a qualified heir, decedent's homestead property is not distributed as part of the decedent's estate, and passes directly to the designated heir. See McKean v. Warburton, 919 So.2d 341, 347 (Fla.2005); Estate of Hamel v. Parker, 821 So.2d 1276, 1280 (Fla. 2d DCA 2002).

The heir's sale of the property, after the decedent's death, does not change the legal consequences of the bequest from the decedent to the heir. After the decedent's death, the heir has legal ownership of the property, and he or she may sell it without regard to decedent's creditors or administrative expenses. See Thompson, 766 So.2d at 1088 (concluding that heir, to whom decedent's residence was devised, “was entitled to sell the homestead property ... and keep the proceeds of the sale); Estate of Tudhope v. Rudkin, 595 So.2d 312 (Fla. 2d DCA 1992) (holding that proceeds derived from sale of decedent's homestead property directly devised to decedent's minor children could not be reached by decedent's creditors).

When a testator directs that his or her homestead be sold and the proceeds distributed to devisees, the property loses its constitutional protection. In such cases, the decedent is devising money, not homestead property, and the proceeds may be subject to the claims of decedent's creditors and administrative expenses. Knadle v. Estate of Knadle, 686 So.2d 631, 632 (Fla. 1st DCA 1996) (finding that because decedent specifically directed that her homestead be sold and distributed as part of her residue estate, proceeds became subject to the claim of decedent's creditor); Elmowitz v. Estate of Zimmerman, 647 So.2d 1064, 1065 (Fla. 3d DCA 1994) (stating that homestead property devised to trust in favor of decedent's sister and two sons “lost its homestead status and became merely another asset of the trust”).

Here, Frank is a qualified heir, and the decedent's will directed that Frank not be forced to sell the house. Therefore, the homestead property passed directly to Frank, and never became a part of decedent's probate estate. Because the property was not a part of decedent's probate estate, the trial court properly concluded that the proceeds from the subsequent sale of the property could not be used to pay creditors' claims or administrative expenses of the estate.

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Hays v. Lawrence, --- So.2d ----, 2009 WL 211048 (Fla. 5th DCA Jan 30, 2009)

The probate bar has been mulling over the question of if, when and how Civ. Pro. Rule 1.525, the rule setting a 30-day post-judgment deadline for filing fee motions in civil litigation, applies to contested probate and trust proceedings.  This is an important issue; the last thing any lawyer wants to do is blow past a deadline for claiming fees on behalf of his client. Here's what the rule says:

Any party seeking a judgment taxing costs, attorneys' fees, or both shall serve a motion no later than 30 days after filing of the judgment, including a judgment of dismissal, or the service of a notice of voluntary dismissal.

Then a few months ago comes the Donkersloot opinion, a case out of the 2d DCA implying that Civ. Pro. Rule 1.525 applies to trust litigation (this was a first).  In the context of writing about that case I also linked to the excellent work being done by a subcommittee of the RPPTL section looking at possible statutory fixes [click here].

Then the Winter 2009 edition of ActionLine contained an article by Jon Scuderi, Esq., Goldman, Felcoski & Stone P.A., Naples, FL and Rebecca Y. Zung-Clough, Esq., Wealth Strategist, Northern Trust, NA, Naples FL, entitled Does Florida Rule of Civil Procedure 1.525 Apply to Probate and Trust Proceedings? Their conclusion: YES!

And now, in the linked-to case above, the 5th DCA has weighed in on whether Civ. Pro. Rule 1.525 applies to adversary probate proceedings. Their conclusion: YES!  Here's an excerpt:

Appellants filed a petition for administration, claiming, in part, that a handwritten document dated August 13, 1978, was the last will of James Douglas Lawrence. Appellants' petition requested that the court admit the handwritten document to probate and appoint them as personal representatives of Lawrence's estate. On the same day, Appellants filed a declaration that the proceeding was adversary. After a trial was held on the petition in accordance with Florida Probate Rule 5.025, the court issued a final order denying Appellants' petition for administration and refusing to admit the handwritten document to probate. Appellants appealed the decision to this Court, which ultimately dismissed the appeal on March 1, 2007.

On March 29, 2007, Appellants' attorneys filed a petition for order authorizing the payment of attorney's fees and expenses pursuant to section 733.106(2), Florida Statutes (2007). Appellees moved to strike the petition, arguing, in part, that the petition for fees and costs was untimely because it was filed seven months after the final order was entered instead of within thirty days as required by rule 1.525. The trial court granted the motion to strike.

The central issue framed by the parties is whether the rules of civil procedure applied to the proceeding below. The resolution of this issue turns on whether the underlying dispute in probate court was an adversary proceeding. In a probate action, if the case is determined to be an adversary proceeding, it “shall be conducted similar to suits of a civil nature and the Florida Rules of Civil Procedure shall govern, including entry of defaults.” Fla. Prob. R. 5.025(d)(2). Notwithstanding Appellants' prior declaration that the dispute was adversary, they urge that it was not. We disagree. See Fla. Prob. R. 5.025(b) (proceedings are adversary if declared as such).

Contrary to Appellant's argument, In re Estate of Beeman, 391 So.2d 276 (Fla. 4th DCA 1980), is distinguished. There, our sister court addressed the issue of whether the rules of civil procedure applied in a probate proceeding to determine fees of counsel for the estate. In ruling that the civil rules did not apply, the Beeman court emphasized that the proceeding below had not been “designated” an adversary proceeding. We think this finding distinguishes Beeman from this case. Here, the proceeding was declared as an adversary proceeding to determine the validity of the purported will and tried as such. Under these circumstances, the rules of civil procedure, and specifically, rule 1.525 were applicable. Therefore, the motion was not timely.
 

Lesson learned:

If anyone was hoping this trap-for-the-unwary would just go away, forget about it. Now that we have a couple of appellate decisions plus an ActionLine article plus the RPPTL section all talking about how Civ. Pro. Rule 1.525 applies to "adversary" probate proceedings and trust litigation, you need to assume everyone's heard of this issue by now and will be more than happy to spring this trap on you if you blow the 30-day deadline to file your motion for fees. You've been warned.

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Wintter & Associates, P.A. v. Kanowsky, --- So.2d ----, 2008 WL 4643358 (Fla. 4th DCA Oct 22, 2008)

If all you're asking a probate court to do is exercise its in rem jurisdiction over the assets of a trust by awarding you your attorney's fees from trust assets, then you don't have to plead this claim up front and can ask for these fees at any time by filing a motion under F.S. 736.1004.

On the other hand, if you're asking a probate court to reach into someone's pocket and make that person pay your fees with his own personal funds, that requires the court to exercise personal jurisdiction over the target of your claim, which triggers an entirely different pleading regime governed by the requirements of Stockman v. Downs, 573 So.2d 835 (Fla.1991). The different pleading requirements only make sense if you realize they rest on entirely different jurisdictional foundations: in rem v. in personam jurisdiction.

In the linked-to opinion the probate court ordered the trustee and its attorneys to personally pay for a trust beneficiary's legal fees arising out of a contested trust accounting proceeding. Based on the following surprisingly frank observation by the 4th DCA in footnote 2 of its opinion, I'm guessing the probate court's order wasn't exactly the picture of clarity:

FN2. We admit that we do not know on what legal basis fees were awarded to the beneficiary and against the law firm and trustee, nor does anything in the record elucidate this for us.

That's too bad, because I'm guessing the probate court entered its order on the assumption it was operating on the basis of its in rem jurisdiction over the trust's assets, and thus the hightened pleading requirements applicable to personal judgments simply didn't apply. Anyway, that's the clear implication of the probate court's order, and here's how the 4th DCA explained its rationale for reversal:

The law firm claims that the trial court erred in awarding attorney's fees where they were not pled as required by Stockman v. Downs, 573 So.2d 835 (Fla.1991), which held that a claim for attorneys fees, whether based on statute or contract, must be pled. Failure to do so constitutes a waiver of the claim. Id. at 837-38. The Stockman court based its decision on the need for appropriate notice and to prevent unfair surprise. Id. at 837. Further, the existence or non-existence of a motion for attorneys fees may play an important role in decisions whether to pursue a claim, dismiss it, or settle. Id. An exception to this rule applies [w]here a party has notice that an opponent claims entitlement to attorneys fees, and by its conduct recognizes or acquiesces to that claim or otherwise fails to object to the failure to plead entitlement,.... Id. at 838.

The exception to the Stockman rule does not apply, as neither the law firm nor the trustee waived its objection to the beneficiary's failure to plead entitlement to attorney's fees. The conduct of the law firm and trustee did not demonstrate acquiescence to the claim for fees. To the contrary, in the trustees own written closing argument the law firm objected to the request for attorneys fees on the grounds that it was not pled. At all times they objected to the assessment of attorneys fees.

Were these fees requested from the estate, Stockman might not apply. See In re Estate of Paris, 699 So.2d 301 (Fla. 2d DCA 1997). However, as noted, the beneficiary requested fees from the lawyer and trustee.

The beneficiary did not request attorney's fees in her objection to the final accounting. Admittedly her objection was not a pleading in the traditional sense, as it was not a complaint or answer. However, it was the first document she filed with the court in this action, and she did not request attorney's fees until her written closing argument. She requested fees not from the estate, but directly from the trustee and his attorney. Certainly, we think that the Stockman rationales of due process notice and prevention of surprise require her to reveal her intention to make such a claim.

In a companion case, Mercer v. Kanowsky, --- So.3d ----, 2009 WL 2168810 (Fla. 4th DCA Jul 22, 2009), the 4th DCA came to the same conclusions with respect to the fee order assessed against the trustee personally, and reversed that order as well.

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Donkersloot v. Donkersloot, --- So.2d ----, 2008 WL 4647415 (Fla. 2d DCA Oct 22, 2008)

Civil Procedure Rule 1.525 governs the mechanics of attorney's fee motions in general commercial litigation.  Here's what the rule says:

Any party seeking a judgment taxing costs, attorneys' fees, or both shall serve a motion no later than 30 days after filing of the judgment, including a judgment of dismissal, or the service of a notice of voluntary dismissal.

There's been confusion for some time as to how exactly this general rule should apply (if at all) within the unique context of a contested probate or trust proceeding. In an effort to address this problem a subcommittee of the Florida Bar's Probate & Trust Litigation Committee composed of  Angela Adams, Laura Sundberg and Eric Virgil has been looking into what sort of legislative fixes could be adopted to provide clarity on the issue. Regardless of what comes of their efforts, the subcommittee's latest written report is an excellent analysis of the rule as it applies (or should apply) in trust proceedings, and a great resource for any trusts-and-estates litigator confronted with a Rule 1.525 issue in real life [click here for a copy].

In light of this background the linked-to opinion is especially timely in that the 2d DCA seems to sanction application of Rule 1.525 in a contested trust proceeding.  According to the subcommittee's report I previously mentioned, this would be the first time a Florida appellate court addresses the application of Rule 1.525 within the context of a trust proceeding. So you may want to remember this case for future reference.

Anyway, in this case the 2d DCA reversed a $195,000 attorneys fee judgment entered against two co-trustees because the fee motion had only sought fees against one of the co-trustees.  Because Rule 1.525 requires the filing of a fee motion as a predicate to a judgment for fees, this was reversible error.  Here's how the 2d DCA explained its ruling:

Prior to the motion hearing, counsel for Mr. Donkersloot and Johannes Donkersloot stipulated that neither Mr. Donkersloot nor his counsel needed to be present. Mr. Donkersloot's counsel attended the hearing briefly, alerted the trial court to the stipulation, and, with leave of court, left the hearing. As the hearing progressed, Johannes Donkersloot, in response to trial court questioning, opined that the trial court “in equity” could award fees and costs against Mr. Donkersloot. Several months later, the trial court entered the amended final judgment awarding almost $195,000 in attorney's fees, costs, and interest against Ms. Hall and Mr. Donkersloot, jointly and severally. On rehearing, the trial court rejected Mr. Donkersloot's argument that the fees could not be imposed absent a proper motion. The trial court concluded that the award was warranted against Mr. Donkersloot as part of the “action in equity.”

Once a party pleads entitlement to attorney's fees, proof of the fees may be presented after final judgment upon motion made within a reasonable time. Stockman v. Downs, 573 So.2d 835, 838 (Fla.1991). However, a trial court may not award relief that has not been requested nor tried by consent. Conidaris v. Cresswood Servs., Inc., 779 So.2d 518, 519 (Fla. 2d DCA 2000) (holding that trial court was without authority to order owners to pay where equitable remedy was neither sought nor tried by consent).

Florida Rule of Civil Procedure 1.525 dictates that a party seeking an award of attorney's fees or costs must serve a motion requesting them within thirty days after entry of the judgment. Undisputedly, Johannes Donkersloot filed a timely motion. His motion did not seek fees from Mr. Donkersloot, nor was the motion served on him. Equally clear is the fact that, by stipulation, neither Mr. Donkersloot nor his counsel needed to be present at the hearing on attorney's fees and costs; there was no trial by consent. Nor was the fee award an action that the trial court could make “in equity.” Equity does not breathe into a rule 1.525 motion unrequested relief. See generally Gulf Landings Ass'n, Inc. v. Hershberger, 845 So.2d 344, 346 (Fla. 2d DCA 2003) (holding that rule 1.525 is a bright-line rule and eschewing equitable exceptions). Accordingly, we reverse the award of attorney's fees and costs as to Mr. Donkersloot.

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Duncombe v. Adderly, --- So.2d ----, 2008 WL 4489234 (Fla. 4th DCA Oct 08, 2008)

If a beneficiary of an estate wants to get his attorney's fees paid with assets of the estate, the statute he'll have to hang his hat on is F.S. 733.106(3), which provides as follows:

(3) Any attorney who has rendered services to an estate may be awarded reasonable compensation from the estate.

The big question under this statute is always: what's it mean to "render services" to an estate? In the linked-to case the probate court ruled that the winning side in litigation involving who gets appointed personal representative didn't qualify for fees under F.S. 733.106(3). Wrong answer. Here's how the 4th DCA summarized the law on this point in its reversal of the probate court's order denying attorneys fees:

Duncombe . . . sought attorney's fees incurred during these proceedings under section 733.106(3), which provides “any attorney who has rendered services to an estate may be awarded reasonable compensation from the estate.” The trial court believed that there had to be an enhancement in value or an advancement of the testator's intent as set forth in the will, citing Samuels v. Estate of Ahern, 436 So.2d 1096, 1097 (Fla. 4th DCA 1983), . . .

We do not read Samuels that narrowly. Preventing the appointment of a personal representative named in the will is a basis for the award of attorney's fees, Baumer v. Howard, 542 So.2d 400 (Fla. 1st DCA 1989), as is obtaining the removal of a representative, In re Estate of Eisenberg, 433 So.2d 542 (Fla. 4th DCA 1983).

Appellees argue that we should affirm because no abuse of discretion has been demonstrated, but that is not the standard of review. Under the undisputed facts in this case, neither Adderly, a transferee of some of the property, nor her lawyer, could have served as personal representative if an interested party objected. The error in this case involved the interpretation of the words “benefit to the estate” in section 733.106(3). We review statutory interpretation de novo. San Martin v. DaimlerChrysler Corp., 983 So.2d 620 (Fla. 3d DCA 2008). Reversed.

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Demello ex rel. Jerome Adams Trust, Irene V. Adams Trust v. Buckman, --- So.2d ----, 2008 WL 2906652 (Fla. 4th DCA Jul 30, 2008)

In the linked-to case the beneficiary of a trust successfully sued her trustee for breach of trust. As a result of this win the trial court awarded her attorneys' fees and costs. Although unstated, I am assuming the statutory basis for the trial court's fees/costs award was the then-applicable version of F.S. 736.1004(1)(a), which provides as follows:

(1)(a) In all actions for breach of fiduciary duty or challenging the exercise of, or failure to exercise, a trustee's powers . . . the court shall award taxable costs as in chancery actions, including attorney fees and guardian ad litem fees.

This, in essence, is a “prevailing party” provision. See In re Estate of Simon, 549 So.2d 210 (Fla. 3 DCA 1989) ("In chancery or equity actions, the well-settled rule is that 'costs follow the judgment unless there are circumstances that render application of this rule unjust.'"). I am also assuming the trial-court's ruling as to costs was guided by the recently revised Uniform Guidelines for Taxation of Costs [click here].

NO Evidence = NO Fees

In the linked-to case that old nemesis of the trusts-and-estates bar - an appellate worthy evidentiary record (or lack thereof) - reared its ugly head on appeal, undercutting the trust beneficiary's trial-court win. While a trustee may not have to put on expert-witness testimony in support of an attorney's fee/cost award [F.S. 736.0206(5)], a trust beneficiary certainly does . . . at least according to the 4th DCA.  Here's how the 4th DCA made this point:

This court has previously recognized that “an award of attorney's fees must be supported by expert evidence, including the testimony of the attorney who performed the services.” Rodriguez v. Campbell, 720 So.2d 266, 267 (Fla. 4th DCA 1998).

Generally, when an attorney's fee or cost order is appealed and the record on appeal is devoid of competent substantial evidence to support the order, the appellate court will reverse the award without remand. However, when the record contains some competent substantial evidence supporting the fee or cost order, yet fails to include some essential evidentiary support such as testimony from the attorney performing the services, or testimony from additional expert witnesses, the appellate court will reverse and remand the order for additional findings or an additional hearing, if necessary.

Id. at 268 (citations omitted).

In this case, Jay Schwartz, who was Buckman's trial counsel, testified regarding his fee. Buckman also presented the expert testimony of Henry Zippay, Esq. Zippay testified that he was hired to evaluate the materials presented to him by Schwartz for the purpose of evaluating a reasonable hourly rate and fee in the case. Zippay testified:

I don't have an actual reasonable attorney's fee. I can only suggest as to reasonable hours, and what I've read through here, you had somewhere around 340 some hours, and you're the only one that I really can testify as to having knowledge of. I find that your 346 or 344, or whatever figure it was, is a reasonable fee or reasonable amount of hours subject to certain qualifications.

Demello correctly argues that the expert witness only testified to the reasonableness of attorney Schwartz's hours and rates. The expert witness offered no testimony regarding any of the other attorneys and paralegals who worked on the case. There is no expert testimony to support the award of attorney's fees for work other than that performed by Schwartz. Accordingly, the attorney's fee order is vacated and this case is remanded for entry of an order awarding only those attorney's fees that were supported by the expert testimony.

Lesson learned?

If you're litigating attorney's fees and costs, a trial court ruling based on a solid evidentiary record is almost invincible on appeal. The linked-to case + the underlying statutory authority cited above should provide a solid road map for building that record. On the other hand, if your record has holes in it, you (and your client) may be in for a rude awakening on appeal.

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Payment of trustee attorneys' fees when defending breach-of-duty claims has been a hot topic over the last few years due to appellate decisions out of the 3rd and 4th DCA's that were decidedly non-trustee friendly [click here, here].  The Florida Bankers Association swung into action, proposing new legislation that would make it more difficult to cut off a trustee's access to trust funds when defending against a breach-of-duty claim. The end product is new F.S. 736.0802(10), which became effective July 1, 2008.

Access to trust funds to pay for litigation - vs. the substance of the claim - often determines the outcome of the case. If you're suing a trustee or defending a trustee, you need to be aware of this new legislation. Trustees also need to be aware of the new affirmative notice obligation created by this change in the law.

736.0802 Duty of loyalty.--

(10) Payment of costs or attorney's fees incurred in any proceeding from the assets of the trust may be made by the trustee without the approval of any person and without court authorization, unless the court orders otherwise as provided in paragraph (b).

(a) If a claim or defense based upon a breach of trust is made against a trustee in a proceeding, the trustee shall provide written notice to each qualified beneficiary of the trust whose share of the trust may be affected by the payment of attorney's fees and costs of the intention to pay costs or attorney's fees incurred in the proceeding from the trust prior to making payment. The written notice shall be delivered by sending a copy by any commercial delivery service requiring a signed receipt, by any form of mail requiring a signed receipt, or as provided in the Florida Rules of Civil Procedure for service of process. The written notice shall inform each qualified beneficiary of the trust whose share of the trust may be affected by the payment of attorney's fees and costs of the right to apply to the court for an order prohibiting the trustee from paying attorney's fees or costs from trust assets. If a trustee is served with a motion for an order prohibiting the trustee from paying attorney's fees or costs in the proceeding and the trustee pays attorney's fees or costs before an order is entered on the motion, the trustee and the trustee's attorneys who have been paid attorney's fees or costs from trust assets to defend against the claim or defense are subject to the remedies in paragraphs (b) and (c).

(b) If a claim or defense based upon breach of trust is made against a trustee in a proceeding, a party must obtain a court order to prohibit the trustee from paying costs or attorney's fees from trust assets. To obtain an order prohibiting payment of costs or attorney's fees from trust assets, a party must make a reasonable showing by evidence in the record or by proffering evidence that provides a reasonable basis for a court to conclude that there has been a breach of trust. The trustee may proffer evidence to rebut the evidence submitted by a party. The court in its discretion may defer ruling on the motion, pending discovery to be taken by the parties. If the court finds that there is a reasonable basis to conclude that there has been a breach of trust, unless the court finds good cause, the court shall enter an order prohibiting the payment of further attorney's fees and costs from the assets of the trust and shall order attorney's fees or costs previously paid from assets of the trust to be refunded. An order entered under this paragraph shall not limit a trustee's right to seek an order permitting the payment of some or all of the attorney's fees or costs incurred in the proceeding from trust assets, including any fees required to be refunded, after the claim or defense is finally determined by the court. If a claim or defense based upon a breach of trust is withdrawn, dismissed, or resolved without a determination by the court that the trustee committed a breach of trust after the entry of an order prohibiting payment of attorney's fees and costs pursuant to this paragraph, the trustee may pay costs or attorney's fees incurred in the proceeding from the assets of the trust without further court authorization.

(c) If the court orders a refund under paragraph (b), the court may enter such sanctions as are appropriate if a refund is not made as directed by the court, including, but not limited to, striking defenses or pleadings filed by the trustee. Nothing in this subsection limits other remedies and sanctions the court may employ for the failure to refund timely.

(d) Nothing in this subsection limits the power of the court to review fees and costs or the right of any interested persons to challenge fees and costs after payment, after an accounting, or after conclusion of the litigation.

(e) Notice under paragraph (a) is not required if the action or defense is later withdrawn or dismissed by the party that is alleging a breach of trust or resolved without a determination by the court that the trustee has committed a breach of trust.

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Wagner, Vaughn, McLaughlin & Brennan, P.A. v. Kennedy Law Group, --- So.2d ----, 2008 WL 2668801 (Fla. 2d DCA Jul 09, 2008)

Ever wonder why your friendly neighborhood plaintiff's lawyer gets a bit tense when he hires you to get his client appointed personal representative . . . PRONTO! Easy, because under F.S. 768.20 only the PR has standing to bring a wrongful death suit on behalf of the estate and the survivors. If your guy's client doesn't get appointed PR, he's out of the game.

But just because the PR is the only party with standing to prosecute the liability phase of the wrongful-death suit, doesn't mean the survivors may not need independent counsel when it comes time to litigating the damages phase of the case and apportioning damages among them. Under F.S. 768.22 the jury apportions damages among the survivors if there's a trial. If there's no trial, then the survivors can hire their own lawyer to negotiate their own individual share of the damages payout to the extent there's a conflict of interest between them and the PR.

With that background in mind the following excerpt from the linked-to case should make sense. In this case two firms were litigating entitlement to the contingency fee resulting from $1.23 million in settlement proceeds. The 2d DCA awarded 100% of the fee solely to the PR's counsel because there was NO conflict of interest between the PR and the survivors when it came time to divvying up the damages pie. Here's how the 2d DCA explained its ruling:

As we stated previously, when survivors have a conflict of interest with the personal representative, the attorney for the personal representative is precluded from collecting fees out of the survivors' portions of the recovery. Wiggins, 850 So.2d at 450. In this case, the probate court denied the Wagner firm's objection to KLG's request for fees based on its determination that Larry and Robert did not have a competing claim or conflict of interest with Gary. The Wagner firm argues that the probate court's finding on this issue is erroneous because “[t]he record contains compelling and uncontroverted evidence of a deep-seated divide between Gary, on the one hand, and Larry and Robert on the other, which came to the fore as a result of their parents' tragic deaths.” The Wagner firm argues that KLG was placed on notice of the conflict when the Wagner firm objected to the one-third apportionment of the bodily injury settlement and attempted to remove Gary as the personal representative.

It is true that the Wagner firm's objection to the apportionment of the bodily injury settlement would have established a conflict of interest between Larry and KLG had it been pursued. However, Larry abandoned his objection to the apportionment after his petition to remove Gary was dismissed. While there was certainly a potential conflict of interest between Larry and Robert and KLG, an actual conflict never arose because Larry and Robert never objected to the amount or apportionment of the UM settlement. Larry and Robert may have believed that the settlement was a bit low and that they were entitled to a greater portion of the settlement proceeds, but they waived any objection to the settlement by accepting their equal shares.

*   *   *   *   *

As the Fourth District has stated, “counsel retained individually by survivors, and not by the personal representative, cannot expect to be compensated for work on those aspects of the case on which counsel for the personal representative has no conflict of interest.” In re Estate of Catapane, 759 So.2d at 11 n. 1. Because the Wagner firm did not perform any work on any aspect of the case in which KLG had a conflict of interest, the probate court did not abuse its discretion in declining to award the Wagner firm a share of the attorney's fees in this case.

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Hoegh v. Estate of Johnson, --- So.2d ----, 2008 WL 2605068 (Fla.App. 5 Dist. Jul 03, 2008)

In this case there's no question whom the courts considered to be the villain of the story.

According to the trial court Hoegh, the appellant and pro se litigant, attempted to "perpetrate a fraud on the court" by knowingly seeking to have a forged will admitted to probate. According to the 5th DCA, Hoegh didn't do herself any favors on appeal, acting in "bad faith" because her appeal failed to raise any justiciable issue of law. And just to make sure everyone got the point, the 5th DCA charged the estate's reasonable appellate attorney's fees against Hoegh through application of the "inequitable conduct" doctrine.

So far so good for the estate.  But then the 5th DCA reversed the trial court's award of $37,125 in appellate fees, loping off $15,125 of the trial court's original fee award (a 41% reduction)!! So what happened? Sometimes a slam dunk can work against you. On appeal the court asked why the estate was claiming 135 hours worth of attorney time (over three weeks of full-time labor) on an appeal that was baseless? Apparently the estate couldn't come up with a convincing answer.

Notwithstanding Hoegh's misconduct, the estate is only entitled to recover reasonable appellate attorney's fees. Here, pursuant to Florida Rule of Appellate Procedure 9.400(c), Hoegh has filed a motion to review the trial court's award of $37,125 for appellate attorney's fees. (It appears that the trial court's award of $37,125 was based on multiplying 135 hours by an hourly rate of $275 .) She contends that this award was excessive. We agree.

The amount of appellate attorney's fees awarded by a trial court is reviewed by an abuse of discretion standard. Pellar v. Granger Asphalt Paving, Inc., 687 So.2d 282, 284 (Fla. 1st DCA 1997). However, an appellate court has a greater ability to review the reasonableness of an appellate attorney's fee award than an award for trial court work because the legal work was done in the appellate court. Id. at 285; see also G.H. Johnson Const. Co. v. A.P.G. Elec., Inc., 656 So.2d 566 (Fla. 2d DCA 1995); Dalia v. Alvarez, 605 So.2d 1282 (Fla. 3d DCA 1992). As previously noted, Hoegh did not raise any justiciable issue of law in her appeal. No oral argument was held. The primary issue presented to us was whether there was substantial competent evidence to support the trial court's decision. We find no error in the trial court's determination that $275 per hour was a reasonable rate for the estate's attorneys. However, after a thorough review of the record, we find that it was an abuse of discretion to find that more than 80 hours of attorney time was reasonably necessary for this appeal. Accordingly, we reverse the trial court's award of appellate attorney's fees and remand for entry of an order awarding the estate appellate attorney's fees of $22,000.

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In re Guardianship of Shell, --- So.2d ----, 2008 WL 1757211 (Fla. 2d DCA Apr 18, 2008)

When it comes to guardianship cases the court is not simply adjudicating a dispute, it is the party with ultimate/primary authority to determine, in its discretion, what is in the "best interests" of the ward. I think this perspective is crucial to understanding the level of scrutiny courts give to guardianship fee petitions. It is this special role of the court in guardianship matters that was also the basis of the 2d DCA's grandparent-visitation-rights opinion in 2005 [click here].

Competent Substantial Evidence: Litigation of Guardian's and attorney's fees and expenses.

The statute governing contested guardian fee petitions is F.S. 744.108. In this case the court-appointed guardian was Lutheran Services Florida, Inc. In a contested hearing on its fees the only evidence was the testimony of Lutheran Services' representative, Sharon Van Wart. She, of course, testified that the fee was appropriate. The trial court disagreed and Lutheran Services appealed. The issue on appeal was whether your own witness's testimony can constitute "competent, substantial evidence" to rule against you. The answer: of course! For me, the big lesson from this case is that fee disputes are always bad news.

Here are the key excerpts from the linked-to opinion:

    In this appeal, Lutheran Services relies on Sitter for the proposition that a probate court's decision to reduce a guardian's fee must be based on competent, substantial evidence. 779 So.2d at 348. We do not disagree with this general statement. However, we note that no presumption of reasonableness attaches to a guardian's petition for fees, and no statute or case law requires the probate court to simply accept the guardian's fee petition at face value and rubberstamp it. Nor is the probate court required to accept a guardian's personal assertion of the time he or she spent performing a common task as dispositive of the issue of reasonableness. Indeed, such would be an abdication of the probate court's responsibilities to the ward. Instead, the probate court may question the guardian concerning the tasks performed and the time spent performing those tasks, and the guardian's responses to those questions constitute competent evidence upon which the probate court may rely when determining whether the fee requested is reasonable. Moreover, when the probate court accepts such testimony from the guardian, it may assess the credibility of that testimony in light of the court's experience and common sense, and this court must defer to the probate court's credibility assessment.

    .   .   .   .   .

    Here, the probate court elicited, or attempted to elicit, evidence from Van Wart to support the disputed fee entries. Had Van Wart provided a reasonable explanation for why the claimed time was necessary to accomplish the disputed tasks in this case, we might have had some basis to find that the probate court abused its discretion in rejecting that testimony and reducing the fee. However, when Van Wart failed to provide any testimony, reasonable or not, to support the time claimed for the specific tasks at issue, the probate court was within its authority to reduce the fees accordingly. Therefore, we hold that the probate court did not abuse its discretion in reducing the fees claimed by Lutheran Services in this case and in denying the objections raised by Lutheran Services to the reduced fee.

SOAPBOX SOUND OFF:

Are courts really helping wards by forcing top-tier providers, like Lutheran Services, out of the guardianship business?

In the linked-to opinion the court alludes to its special role in contested guardianship proceedings - especially when the guardian is litigating its own fees - in the following footnote:

[FN1.]    At the start of the hearing, the probate court expressed its concerns that no one at the hearing was representing the ward, whose interests on the fee reduction issue might well conflict with the guardian's interests since the guardian's fees were being paid from the ward's assets. We share the probate court's concern that no one is truly representing the ward's interests when objections to fee reductions are filed and brought to hearing by the guardian. We also note that section 744.391, Florida Statutes (2005), requires the probate court to appoint a guardian ad litem to represent the interests of the ward “if the interest of the guardian is adverse to that of his or her ward.” However, we recognize that appointing a guardian ad litem for the ward each time the guardian petitions for an award of fees is impractical. Therefore, we must rely on the probate court to exercise its authority responsibly to protect the interests of the ward in these situations.

Based on their role in guardianship cases and the perceived conflict of interest noted above, courts feel authorized - perhaps even compelled - to micromanage guardians to an extent other fiduciaries commonly before probate courts - personal representatives/ trustees - are never subjected to. However, enforcing a "managed care" pricing structure on fees in guardianship proceedings could ultimately hurt, rather than help, wards because well-meaning, well-managed, professional organizations such as Lutheran Services will inevitably get priced out of the market. Here's a revealing quote from the linked-to opinion:

Lutheran Services' counsel responded that Lutheran Services was feeling “micromanaged” and that this type of micromanagement would force it out of business.

Managed-care pricing only works if service providers are guaranteed a sufficient volume of patients/wards to produce the economies of scale that make managed care economically viable. Insurance companies make this model work because they have the power to steer patients to their network of doctors in sufficient numbers to make it economically feasible for those doctors to stay in business billing at very low per-patient rates. Probate courts have the authority to steer wards to particular service providers/guardians in only very limited circumstances. Probate courts simply cannot create the economies of scale that are needed to sustain guardians providing top-quality service at the very low fees some courts demand. Bottom line, managed-care pricing without managed care economies of scale will inevitably lead to lower quality care for wards. I don't think this outcome is in the "best interest" of wards.

Having diagnosed the problem, I don't think a courtroom is the cure for the public policy problem I've described above. Courts are good at adjudicating discreet disputes, they're institutionally incapable of collecting and analyzing the data needed to craft broadly applicable public policy solutions of the type needed to deliver top quality care to minors and incapacitated adult wards subject to guardianship proceedings. An organization like Lutheran Services is ideally positioned to play a role in crafting good public policy, and perhaps the organization would have been better off going that route vs. the litigation route? The 2d DCA made this point at the conclusion of its opinion:

Lutheran Services is a renowned nonprofit organization with impeccable credentials for providing guardianship services. Certainly it would be in Lutheran Services' best interest to work with the court system to improve this system rather than seeking to end it.

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Bud Newman of the Daily Business Review reported in Attorney Unlicensed in Florida Still Awarded $1 Million in Fees in Messy Probate Case on a case I first wrote about last year [click here].  Here's an excerpt:

A Palm Beach Circuit judge has awarded a North Carolina attorney $1 million in fees for representing a wealthy Palm Beach, Fla., widow in a messy probate case even though the attorney was not licensed to practice law in Florida.

Judge Jeffrey Winikoff ruled Winston-Salem, N.C., solo practitioner William West was entitled to the fee for his work protecting and improving the financial interests of Palm Beach resident Carla Morrison in a complex probate case in 2004 and 2005.

Morrison is the widow of Pedro Morrison, who died of a heart attack in 2003 at 49 shortly after filing for a divorce, leaving an estimated $100 million estate, according to court documents. His three beneficiaries were his widow, his brother Carlos Morrison and Carlos' son Tommy.

*     *     *     *     *

Winikoff also ruled West should get his fee despite the fact the paperwork he submitted to practice law in Florida had not yet been approved. The judge said West's failure to get his paperwork certified on time made him an unlicensed practitioner on the date the financial settlement was signed.

Even though West "engaged in the unlicensed practice of law" throughout his representation of Morrison, "the public policy of the state of Florida would not be compromised by allowing West recovery" of his fee, the judge wrote.

Four months after the probate settlement was approved in 2005, Winikoff noted the Florida Supreme Court changed the rules on appearances by out-of-state lawyers in disputes in Florida. The Florida Bar had already recommended the change, and "the American Bar Association had authorized conduct similar to West's since 2002," the judge wrote.

For those reasons, the judge ruled "there was no public policy violation that would justify" denying the fee to West.

The complicated case has another potentially bizarre twist that could have two big-name law firms battling each other over who should pay West.

West Palm Beach attorney Gerald Richman of Richman Greer Weil Brumbaugh Mirabito & Christensen, who represented West, said the total award with interest would be about $1.15 million after deducting the $41,000 he has already received. However, Richman said he may sue the Edwards Angell firm to collect some or all of West's $1 million award.

Morrison authorized $1 million to be set aside for West and held in an Edwards Angell trust account until the fee dispute with West was resolved, Richman said. Instead, he claimed the law firm returned the money to Morrison before the dispute was resolved and she spent at least $250,000 of it on a diamond bracelet and may have spent all of it.

Palm Beach Circuit Judge Karen Martin, who presided over the probate settlement, ordered Morrison in 2006 to return the money to the Edwards Angell trust account. Richman said she has not yet done so. Richman said he will first try to get West's money from Morrison, but if her assets -- including a $90,000 monthly payment from her late husband's estate -- are legally protected from being attached, "obviously we're going to look at the Edwards Angell firm" to try and collect the money.

"They made a mistake here," Richman said of Edwards Angell.

Lesson learned?

There are two sets of lawyers sweating bullets in this case. 

First, I was surprised to learn that an otherwise very astute out-of-state attorney (he apparently was instrumental in crafting a settlement agreement involving a complex $100 million estate) put his own $1 million fee at risk by apparently failing to file a timely pro hac vice motion.  Although these motions "should" be perfunctory in nature, as another out-of-state attorney recently learned, even something as simple as a pro hac vice motion can trip you up when you least expect it [click here].

I think everyone involved in this case probably assumes the fee-order reported on above will be appealed, so Mr. West's $1 million pay day remains uncertain.  This poor guy is probably kicking himself for not getting that darn pro hac vice motion filed when he first stepped into the case.

Second, the Edwards Angell attorneys are probably wishing someone in accounting had stood up and said "are you kidding me??!!" before they released the $1 million in estate funds they were supposed to retain in their escrow account pending final resolution of the fee dispute.  You can just imagine how upset the trial-court judge must have been when he learned these funds had been released to the client and she in turn testified that she blew $250,000 of those funds on a diamond bracelet and "may have spent all of it."  Oops!!

Stay tooned for more . . .

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Nasser v. Nasser, --- So.2d ----, 2008 WL 239073 (Fla. 4th DCA Jan 30, 2008)

Fees and costs.  Attorneys say those words all the time, and we can all agree on what we mean by the word "fees," even when we don't agree on the amount of fees; what's usually much less clear is what mean by the word "costs" for purposes of a costs order.  Understanding the scope of the word "costs" is important because it enables parties to better weigh the pros/cons of seeking a costs order (i.e., will the expense of getting a costs order exceed the benefit) as well as assessing the economic risks when you're being threatened with a costs order.

The linked to case is useful on two fronts: (i) it gives probate counsel a ready resource for anticipating which expenses are likely to be included within a costs order; and (ii) it explains the proponent's burden of proof when seeking costs.  In this case the personal representative appealed an order taxing costs that did not include deposition costs.  Here's how the 4th DCA addressed this point:

As to the award of costs, appellant contends that the trial court erred in failing to tax as costs the expense of two depositions. Pursuant to the recently revised Uniform Guidelines for Taxation of Costs, deposition expenditures are included in the category of items that should be taxed. In re Amendments to Unif. Guidelines for Taxation of Costs, 915 So.2d 612, 616 (Fla.2005). It is the moving party's burden to show that the requested costs were reasonably necessary to defend the case at the time the action precipitating the cost was taken. Id. During the hearing on the motion for attorney's fees and costs, it does not appear that there was ever any inquiry into whether the requested costs were reasonably necessary to defend the case at the time the action precipitating the cost was taken. As the appellant failed to meet her burden in the trial court to show that the requested costs were reasonably necessary, we must affirm the court's denial of these additional costs.

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The Florida Bar ethics rules governing contingent fee agreements are found in Rule 4-1.5(f).  Other than in divorce and criminal-defense cases [Rule 4-1.5(f)(3)], contingent fees are acceptable in any form of litigation, including contested probate proceedings.  Another point to keep in mind is that the percentage ceilings applicable to personal injury and medical malpractice cases, do NOT apply to probate cases [Rule 4-1.5(f)(4)].  In my experience, a straight 40% seems to be the norm for non-PI contingent fee agreements.

There's not a lot of Florida case law out there addressing contingent fees in probate cases.  The one Florida appellate opinion addressing this specific issue I am aware of is Brooks v. Degler, 712 So.2d 419 (Fla. 5th DCA 1998).  In Brooks the 5th DCA reversed a trial-court order enforcing a contingent fee in a contested probate matter because the contingent-fee agreement was poorly drafted, NOT because contingent fee arrangements are per se invalid.  Brooks provides solid guidance on how NOT to draft a contingent fee agreement for a probate case.

Late 40 Percent Retainer Pact Survives Widow's Dismissal Bid: Lawyers Seek $42 Million Fee

A recent NY Law Journal article entitled Late 40 Percent Retainer Pact Survives Widow's Dismissal Bid, reports on a NY case in which a 40% contingency in a contested probate matter resulting in a $42 million payday for the lawyers was challenged as being "unconscionable on its face."  The WSJ Law Blog also reported on this case here [the comments to the WSJ blog post are a fun read].  For a more colorful take on the case the NY Post delivers - as always - with: WAR OVER $40 MIL LEGAL BILL.

I previously wrote about this case here.

The NY appellate opinion in this case is worth noting by Florida probate litigators.  If someone ever tries to get out of your probate/contingency fee agreement, the arguments played out in this NY case just may surface in yours.  The following excerpt from the linked-to NY Law Journal article should give you a sense of the operative facts and law at play in this case:

A 40 percent contingent-fee agreement between New York law firm Graubard Miller and Alice Lawrence, the 83-year-old widow of real estate developer Sylvan Lawrence, was not unconscionable on its face, an appellate court said Tuesday, even though the agreement was executed in the final months of a decades-long estate litigation in which the firm had already received $18 million in hourly fees and three partners had further requested and received $5 million in "gifts."

In Lawrence v. Graubard Miller et al., a 4-1 majority of the New York Appellate Division, 1st Department denied Ms. Lawrence's motion to dismiss Graubard Miller's petition to compel payment of the contingent fee and said further proceedings would be needed to determine the propriety of the arrangement.

"[W]hile at first blush such agreement might arguably seem excessive and invite skepticism, before any determination regarding unconscionability can be made, the circumstances underlying the agreement must be fully developed, including any discussions leading to the agreement, as well as the prospects at that time of successfully concluding the litigation in favor of Mrs. Lawrence," Justice Richard T. Andrias wrote for a majority that included Justices David Friedman, George D. Marlow and Eugene Nardelli.

But in a blistering dissent, Justice James M. Catterson said he would not only have found the fee agreement invalid on its face but would also have referred the Graubard Miller lawyers to the Departmental Disciplinary Committee.

"Regardless of the procedural aspects of the parties' negotiations, no court can condone such an exorbitant fee," Catterson wrote.

Ms. Lawrence first retained the law firm, then known as Graubard Moskovitz McGoldrick Dannett & Horowitz in 1983, to represent her in a suit against Seymour Cohn, her late husband's brother, business partner and executor.

At the time of Mr. Lawrence's death in 1981, the brothers held a 12-million-square-foot real estate portfolio that included the former Port Authority building at 111 Eighth Ave. and a number of Wall Street office towers. It was estimated to be worth over $1 billion. Ms. Lawrence, who inherited 75 percent of her husband's interest, sought the portfolio's sale, but Cohn, who died in 2003, long opposed her.

Over the next 20 years, some $350 million was distributed from the estate, but the litigation dragged on until a final settlement was reached in May 2005 by which Cohn's estate would pay Ms. Lawrence and her children $105 million. Graubard Miller is seeking 40 percent of this amount, or around $42 million. Ms. Lawrence has sought rescission of the agreement as well as the return of all previous fees on the grounds of unjust enrichment and breach of fiduciary duty.

Though contingent fees of such magnitude are not uncommon in personal injury cases, they are rarer in estate cases. Moreover, such deals normally date from the beginning of the litigation and are in lieu of hourly fees, meaning a law firm bringing a case on a contingent-fee basis normally faces a risk of nonrecovery.

But Graubard Miller's contingent-fee deal was signed in January 2005, only months before the settlement. The 1983 retainer agreement in effect prior to that only specified hourly billing. In his dissent, Justice Catterson said the contingent fee might have been reasonable if agreed upon at the beginning of the case or if the firm had agreed to refund its previous fees.

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J.P. Morgan Trust Co., N.A. v. Siegel, --- So.2d ----, 2007 WL 2710957 (Fla. 4th DCA Sep 19, 2007)

Anytime trust beneficiaries object to a trust accounting or any aspect of a trust's administration the trustee is potentially subject to claims for damages.  This theoretical risk of damages arguably places the trustee's individual interests in conflict with those of the trust's beneficiaries, thus requiring the trustee to seek court approval under F.S. § 736.0802(10) prior to using trust funds to pay its attorney's fees.  Here's the text of the statute:

(10) Payment of costs or attorney's fees incurred in any trust proceeding from the assets of the trust may be made by the trustee without the approval of any person and without court authorization, except that court authorization shall be required if an action has been filed or defense asserted against the trustee based upon a breach of trust. Court authorization is not required if the action or defense is later withdrawn or dismissed by the party that is alleging a breach of trust or resolved without a determination by the court that the trustee has committed a breach of trust.

I recently wrote about this rule in the context of a 2006 case out of the 3d DCA [click here].

But how clear must the conflict of interest be before the trustee's obligation to seek court approval prior to paying legal fees is triggered?  In the linked-to case the trial court determined that answers to interrogatories filed by trust beneficiaries in the context of an accounting proceeding hinting at possible future breach-of-trust claims were enough.  The corporate trustee in this case, J.P. Morgan, cried foul, arguing that in the absence of a breach-of-trust action being filed, it shouldn't be obligated to seek court approval prior to paying its legal fees with trust funds.  The 4th DCA saw it differently, and upheld the trial court's ruling:

J.P. Morgan argues that under the trial court's ruling all trustees are placed in a position of uncertainty as to when to seek court approval before paying attorneys' fees from trust assets. However, we hold that in this case J.P. Morgan should have known from the Siegels' answers to interrogatories in the 2003 action that it would face an action based on the alleged breaches of fiduciary duty and trust mismanagement. At the very least, J.P. Morgan should have realized it was in a position of conflict at that point. Based on the foregoing, we affirm.

Lesson learned:

What's most important about the linked-to case is that it's a prime example of the type of ambiguity the legislature was seeking to avoid when it amended F.S. 737.403(2)(e) in 2005 (this was the predecessor statute incorporated verbatim into new F.S. § 736.0802(10)).  Here's how the new legislation was addressed in the linked-to case:

Section 737.403(2), Florida Statutes, was amended effective July 1, 2005. Section 737.403(2)(e) now provides, in pertinent part:

(2) If the duty of the trustee and the trustee's individual interest or his or her interest as trustee of another trust conflict in the exercise of a trust power, the power may be exercised only by court authorization.... Court authorization is not required for any of the following:
....

(e) Payment of costs or attorney's fees incurred in any trust proceeding from the assets of the trust unless an action has been filed or defense asserted against the trustee based upon a breach of trust. Court authorization is not required if the action or defense is later withdrawn or dismissed by the party that is alleging a breach of trust or resolved without a determination by the court that the trustee has committed a breach of trust.

§ 737.403(2)(e), Fla. Stat. (2005) (emphasis supplied).

The legislature has resolved the issue in favor of the interpretation urged by J.P. Morgan that requires a pleading be filed. However, as J.P. Morgan acknowledges, the new statute was not in effect for the vast majority of the time period at issue.[FN1]

[FN1.] The Siegels' 2006 lawsuit against J.P. Morgan and Judith Novak asserted various causes of action relating to the time period of January 1, 2003 through September 1, 2005.

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Greene v. Borsky, --- So.2d ----, 2007 WL 2119215 (Fla. 4th DCA Jul 25, 2007)

Whether a particular type of order is subject to appeal can have a huge impact on how a case is litigated.  In this case, the issue was whether a trial court's order permitting trustees to pay their legal fees with assets of the trust was subject to appeal.  The 4th DCA said YES.  Thankfully!

Here's how the 4th DCA explained it's ruling:

The orders in this case are appealable non-final orders under Florida Rule of Appellate Procedure 9.130(a)(3)(C)(ii). Rule 9.130(a)(3)(C)(ii) provides that appealable non-final orders include those that determine “the right to immediate possession of property .” This Court has previously held that a sum of money is property to which Rule 9.130(a)(3)(C)(ii) can apply. In Florida Discount Properties, Inc. v. Windermere Condominium, Inc., 763 So.2d 1084 (Fla. 4th DCA 1999), a lessor filed a motion to have disputed rent paid into the registry of the court. Id. at 1084. The trial court denied the motion, and the lessor appealed. Id. On appeal, this Court concluded that the order was an appealable non-final order under Florida Rule of Appellate Procedure 9.130(a)(3)(C)(ii), because it determined “the right to immediate possession of property, i.e., the rent payments.” Id. Likewise, in the present case, the trial court orders determined the right to immediate possession of property, here trust assets to be used by trustees to pay for attorney's fees and witness fees expended in defense of the trust. As such, we conclude that this Court possesses jurisdiction over this appeal under Florida Rule of Appellate Procedure 9.130(a)(3)(C)(ii) and affirm in all respects without further comment.

Careful readers of this blog will recognize the name of one of the attorneys on the winning side of the linked-to case: Amy B. Beller of Miller & O'Neill, P.L.  (see here for prior post).  Well done Amy.

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As reported in Politician's Heirs Snare Thelen Reid in Complex Estate Battle, a New York firm successfully opposed a subpoena to turn over its files in connection with contested probate proceedings in Texas because the estate hadn't paid its bills.  The basis of the New York firm's retaining lien was described as follows in the linked-to piece:

In a Feb. 9 decision, Manhattan Supreme Court Justice Carol Robinson Edmead said Thelen Reid was entitled to a retaining lien allowing it to keep documents relating to Martinez's estate pending payment of outstanding legal bills. She quashed Gonzalez's deposition subpoenas on the same grounds.

The judge noted that, while all the firm's bills had been paid while Martinez was alive, Gonzalez had retained the firm after his death. Justice Edmead ruled that Gonzalez had retained Thelen Reid on behalf of Martinez's estate, not in her individual capacity.

"Since the Law Firm's rendition of services at the request of Ms. Gonzalez was made on behalf of the Estate of Dr. Martinez, such services entitle the Law Firm to a common-law retaining lien on any of the Estate's books, papers, money and securities which are in the attorney's possession," the judge wrote in In the Matter of the Application of Letizia Martinez de Gonzalez, 114877/06.

Florida Law: Ethics Opinion 88-11

Florida law also recognizes an attorney's right to a retaining lien over client files when bills go unpaid.  Here's how Florida Bar Ethics Opinion 88-11 summarized Florida law on this point:

Many attorneys are unaware that in Florida a case file is considered to be the property of the attorney rather than the client. Dowda and Fields, P.A. v. Cobb , 452 So.2d 1140, 1142 (Fla. 5th DCA 1984); Florida Ethics Opinion 71-37 [since withdrawn]. Under normal circumstances, an attorney should make available to the client, at the client's expense, copies of information in the file where such information would serve a useful purpose to the client. Opinion 71-37 [since withdrawn].


*     *     *     *     *

Florida common law recognizes two types of attorney's liens: the charging lien and the retaining lien. The charging lien may be asserted when a client owes the attorney for fees or costs in connection with a specific matter in which a suit has been filed. To impose a charging lien, the attorney must show: (1) a contract between attorney and client; (2) an understanding for payment of attorney's fees out of the recovery; (3) either an avoidance of payment or a dispute regarding the amount of fees; and (4) timely notice. Daniel Mones, P.A. v. Smith, 486 So.2d 559, 561 (Fla. 1986). The attorney should give timely notice of the asserted charging lien by either filing a notice of lien or otherwise pursuing the lien in the underlying suit. The latter approach is preferred.

Unlike a charging lien, a retaining lien may be asserted with respect to amounts owed by a client for all legal work done on the client's behalf regardless of whether the materials upon which the retaining lien is asserted are related to the matter in which the outstanding charges were incurred. A retaining lien may be asserted on file materials as well as client funds or property in the attorney's possession, and may be asserted whether or not a suit has been filed. Mones, 486 So.2d at 561.

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Harding v. Rosoff, --- So.2d ----, 2007 WL 461381(Fla. 4th DCA Feb 14, 2007)

This is the second appellate opinion arising out of this piece of probate litigation.  I wrote about the first appeal here.  In this sad case a 95 year old woman inadvertently failed to comply with the technical  requirements necessary to effectively exercise a power of appointment she had under a trust created by her brother over 30 years ago.

The default beneficiary under brother's trust sued the probate estate over the attempted exercise of the power of appointment and won.  Rather than being content with this win, default trust beneficiary then sued the personal representative of sister's estate for attorneys' fees.  The trial court said NO WAY, and the 4th DCA agreed as follows:

• Court: You can't sue someone else's personal representative for breach of fiduciary duty:

The personal representatives argue that there can be no surcharge, which is a charge against a fiduciary to compensate a beneficiary for the breach of fiduciary duty, Merkel v. Guardianship of Jacoby, 862 So.2d 906 (Fla. 2d DCA 2003), because there was no fiduciary duty to Harding. They point out that they are fiduciaries only of the Teresa Rosoff estate and that Harding is not a beneficiary of that estate. Harding is a beneficiary of the Molinari Trust, but the personal representatives are not fiduciaries of the trust. We are not persuaded by Harding that there is a fiduciary duty to her, but we need not decide that issue because the pursuance of the litigation by the personal representatives was consistent with the testator's intent. Although they lost and we affirmed, we noted that “Teresa's apparent intent has been thwarted.” Rosoff, 901 So.2d at 1010. The trial court was correct in finding no impropriety by the personal representatives.

• Court: You don't get fees for thwarting the testatrix's intent:

Harding also contends that she should have been awarded attorney's fees and costs for prevailing in the litigation under section 733.106, Florida Statutes (2005), because the litigation benefited the estate. In re Estate of Udell, 501 So.2d 1286 (Fla. 4th DCA 1986). Harding has cited no cases, however, which would support her theory that there was a benefit to the estate under these specific facts. She relies on In re Estate of McCune, 223 So.2d 787 (Fla. 4th DCA 1969), in which we stated that services which carry out the intent of the testator as expressed in the will are compensable from the estate. As we previously noted, however, this litigation thwarted the testator's intent. Harding also cites Robinson v. Robinson, 805 So.2d 94 (Fla. 4th DCA 2002), in which this court affirmed an award of attorney's fees to a beneficiary who successfully reformed a trust. In Robinson, however, the fees were awarded from the trust, not the estate. Under these facts, in which the litigation determined only who would be the beneficiary of the Molinari Trust, the trial court did not err in finding that there was no benefit to the estate.

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I previously wrote here about the very public litigation involving guardianship proceedings for legendary New York socialite Brooke Astor.  Well, it's almost inevitable that part 2 of any guardianship case will be a fight over fees (see generally), and this case is no exception.  The following is an excerpt from In Aftermath of the Astor Case, How the Final Fees Piled Up, a New York Times piece reporting on the case:

The legal drama over the health care and finances of Brooke Astor, New York’s legendary socialite and philanthropist, played out for nearly three months amid allegations and recriminations of financial duplicity, greed and outright forgery.

The case against her son, Anthony D. Marshall, came to a halt on Oct. 13 when the parties in the feud reached a settlement, averting what could have been an expensive and sensational trial scheduled to begin less than a week later.

But everything comes with a price. In the seven weeks since the agreement, those involved in the case have filed bills with Justice John E. H. Stackhouse of State Supreme Court in Manhattan for fees totaling about $3 million for the services of 56 lawyers, 65 legal assistants, 6 accountants, 5 bankers, 6 doctors, 2 public relations firms and a law school professor. Under state law, such payments would come out of Mrs. Astor’s assets, valued at over $120 million.

But yesterday, Justice Stackhouse issued an order that approved a smaller amount, $2.22 million, calling the original figure “staggering” and saying that some charges were for work that was not in the best interest of Mrs. Astor, who is 104. The justice denied payments for the public relations firms, the time lawyers spent talking with reporters and the hours logged preparing the fee applications themselves.

Yikes!!  According to my math the court refused payment of close to $800,000 in fees.  Unless these professionals have fee agreements in place requiring the litigants/their clients to pay their fees, they just did a whole lot of free work for a $120 million+ guardianship estate.

Lesson learned:

In a guardianship case, either you need to be ready to work on a pro bono basis or you need to have an engagement agreement in place requiring whomever hires you to personally pay your fees if the court wont authorize payment of your fees from the guardianship estate.  The risk of the court refusing payment of fees will be borne by someone, just make sure that if it's going to be you the decision is a conscious one.

Source: Death and Taxes - The Blog

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In almost all estate litigation cases attorneys' fees become an issue.  This law.com article shines the spot light on one case in particular because Greenberg Traurig, one of the country's largest and well known law firms, is involved.  But the issues in dispute are part and parcel of almost all such litigation -- which means parties need to anticipate them and plan accordingly.

Here are excerpts from the linked-to story:

Greenberg Traurig has become enmeshed in a bitter family feud between two sisters, one of whom is married to a senior partner at the law firm.

The estranged sisters, Linda J. Spector and Barbara Berlin, had both been named beneficiaries of a trust created in November 2003 by their mother, Eleanor Spector. Eleanor and Linda served as co-trustees until Eleanor's death in January 2004.

Shortly after her mother's death, Linda sought to have her then-fiancé, Albert Jacobs, the senior chair of Greenberg Traurig's national intellectual property practice, appointed co-trustee, arguing that the successor designated in trust, attorney Joel Sankel, had told her over dinner he would step aside.

*     *     *     *     *

Greenberg Traurig billed the estate almost $130,000, which is now at issue in a pending contempt motion. Sankel claims the amount should be repaid to the trust since Greenberg Traurig's services were retained for the personal benefit of Linda Spector and Jacobs, whom she eventually married.

In the contempt motion, Sankel also noted the disparity between the fees paid to Greenberg Traurig and his own firm in the course of the dispute. He noted that his firm had billed the trust $22,000 in the same time period. He is requesting invoices from Greenberg Traurig to back up charges, some of which he claims were "wholly frivolous."

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Brigham v. Brigham, __ So.2d __ (Fla. 3d DCA May 31, 2006)

This case should be printed out and kept in the desk drawer of every probate litigator in Florida. Whether you find yourself defending a trustee being sued for breach of trust or prosecuting this type of claim on behalf of trust beneficiaries, you will need to be aware of this case and its profound implications.

The law in Florida is clear: a trustee defending himself in litigation involving any form of breach of trust cannot pay his legal defense fees with trust funds in the absence of a prior authorizing court order. That was Miami-Dade Judge Rothenberg's ruling at the trial court level, and here's how the Third DCA summed up this rule when it affirmed his order:

Appellees brought suit against Appellants in their trust roles and as individuals for trust mismanagement. Because Appellants defended against individual liability, their personal interests conflicted with their position as trustees. See Shriner v. Dyer, 462 So.2d 1122, 1124 (Fla. 4th DCA 1984). When a trustee's individual interests conflict with his or her duties to a trust, court approval is necessary before a trustee can use trust funds to pay his or her own attorneys' fees. § 737.403, Fla. Stat. (2003).

By the way, this rule is retained under Florida's new trust code as new F.S. § 736.802(10) (see here).

Although every case is different, this opinion provides one possible road map for getting to a final ruling on this issue. Here is an extended excerpt from the opinion tracking the procedural steps and time-line in this case:

The settlor died in 2002. In June 2003, Appellees filed a multi-count complaint against Appellants alleging, among other things, undue influence, breach of fiduciary duty, self-dealing, conversion of trust assets, mismanagement of trust assets, intentional interference, fraud, and conspiracy. Appellants were sued in their individual capacities as well as their capacities as trustee and successor trustee.

After receiving an accounting, Appellees discovered that Appellants were using trust funds to pay their legal fees in the underlying litigation. In November 2004, Appellees filed a Motion to Restrict Payment of Attorneys' Fees, arguing that Appellants were prohibited from paying their individual attorneys' fees with the trust funds and without prior Court approval.

On January 18, 2005, the trial court, after a hearing, granted Appellees' motion in part, finding that Appellants were prohibited from paying their individual attorneys' fees with trust funds, and concluding that court approval was necessary to pay litigation expenses out of the trust, as a personal conflict may exist since Appellants were sued in their individual capacities as well as in their trustee roles.

In March 2005, upon motion by Appellants, the trial court appointed a Special Master to assist the court in determining which of the attorneys' fees and costs, already paid by the trust, were for the benefit of Appellants as trustee and successor trustee rather than as individuals.

In June 2005, the Special Master issued his Report and Recommendation, noting that he "does not believe that any of the fees incurred to date can be separated into [Dana Brigham's] individual defense as opposed to [Dana Brigham's] defense as trustee," and recommending that Appellants personally pay all attorneys' fees necessary to defend themselves against the litigation, and return all monies taken out of the trust for payment of attorneys' fees in the underlying litigation.

After a hearing on Appellants' Objection to the Report and Recommendation, the trial court adopted the Report and Recommendation and held that Appellants must pay the attorneys' fees back to the trust and refrain from paying further attorneys' fees and costs with trust assets without court approval.

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McMonigle v. McMonigle, __ So.2d __ (Fla. 2d DCA Feb 17, 2006)

Note: on its own motion the Second DCA withdrew its February 17, 2006, opinion and substituted the following in its place: McMonigle v. McMonigle, __ So.2d __ (Fla. 2d DCA Mar 29, 2006)

POP QUIZ: What do you do if you're the beneficiary of an estate and you think the personal representative owes the estate a debt he's not paying up on?

[A.] File a statement of claim in the estate.

[B.] File a separate cause of action seeking declaratory relief in the form of a determination of what interests the estate has in the funds allegedly owed by the personal representative to the estate.

[C.] File a petition seeking removal of the personal representative on conflict of interest grounds and appointment of a successor personal representative to file an action to recover the alleged debt.

[D.] All of the above.

If you picked any answer other than [C.], not only would you be wrong, but according to Pasco County Judge Stanley R. Mills, you'd be liable for the other side's attorney's fees under F.S. § 57.105. The grounds for such sanctions would be that because claims pursued under options [A.] and [B.] were dismissed on lack-of-standing grounds, they lacked "justiciable issues of law or fact."

Not so says the Second DCA, which reversed the trial court's sanctions order. The beneficiary in this case was legitimately attempting to protect the interests of the estate. The fact that he initially went about it the wrong way doesn't mean his actions rise to the level of warranting attorneys-fees sanctions.

The Second DCA explained its ruling as follows:

Although [Tiedeman v. City of Miami, 529 So.2d 1266 (Fla. 3d DCA 1988)] does suggest that the lack of standing may be the basis of an award of section 57.105 fees, it does not require that the fees be awarded. Clearly, Robert did not have standing to bring the separate civil action. However, the factual issues raised in the civil action were the same factual issues litigated in the probate action seeking the removal of Ronald as Personal Representative. To award fees under section 57.105, the trial court must conclude there is a total absence of a justiciable issue of either fact or law. Haas v. Roe, 696 So.2d 1254 (Fla. 2d DCA 1997); Fernandez v. Chiro Risk Mgmt., Inc., 700 So.2d 65 (Fla. 2d DCA 1997). Since the factual issues here were actionable, the trial court abused its discretion by finding a total lack of justiciable issue of fact. Because we conclude there was a justiciable issue of fact, fees should not have been awarded under section 57.105.

Furthermore, we find the facts of this case to be similar to those in O'Brien v. Sarka, 613 So.2d 47 (Fla. 2d DCA 1993). In O'Brien, Sarka, who was serving as the guardian of the deceased at the time of the deceased's death, filed an independent action against the estate to collect guardianship fees allegedly owed by the estate. O'Brien was a beneficiary of the estate and concluded that the personal representative had a conflict due to her business relationship with the guardian. Accordingly, O'Brien moved to intervene in the independent action, and the motion was granted. The guardian, Sarka, then moved for a judgment on the pleadings, which was granted. She then moved for section 57.105 fees against O'Brien, arguing that O'Brien should not have been allowed to intervene in the action as the estate already was represented and O'Brien's interest was but a claim under the estate. The trial court awarded the fees, but this court reversed. "As a beneficiary, [O'Brien] was attempting to protect the assets of the estate. Although her intervention was invalid, the action was not so frivolous as to require that she and her attorney be punished for attempting it." Id. at 48.

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In re Estate of Wejanowski, __ So.2d __ (Fla. 2d DCA February 15, 2006)

It's not unusual for a personal representative to seek explicit prior approval from the probate judge when contemplating some sort of litigation involving the estate - even is such authority is not required. This type of pre-approval is sought pursuant to F.S. § 733.602(2), which removes liability for any act of administration of the state if the act was "authorized" at the time.

This case is an example of what can go wrong when asking a probate judge for prior approval. You may not like the answer you get. Here the personal representative filed a motion with the probate court seeking approval of costs and fees associated with prosecuting an appeal of a wrongful-death judgment pending against the estate.

The trial court denied the personal representative's motion without prejudice to resubmit the request at the conclusion of the appeal upon a showing of monetary benefit to the estate and ordered him not to expend estate funds for prosecution of the appeal, to include attorney's fees and costs.

The Second DCA reversed, essentially holding that a monetary benefit (i.e., prevailing party) standard was too high a bar for approval of fees and costs associated with an appeal, stating as follows:

Requiring [the personal representative] to show a monetary benefit to the estate before he is entitled to reimbursement for appellate expenses narrows the definition of "benefit to the estate" to an unworkable level in this appellate context. An appellate attorney has an ethical duty not to prosecute a baseless or frivolous appeal. Payment of appellate fees and costs cannot be contingent upon prevailing on appeal because neither party can guarantee the outcome. The true benefit to an estate provided by an appellate attorney is the presentation of a good-faith appeal and its ultimate resolution. Our system affords litigants the right to resolve disputes with due process, safeguarded by appellate review of the trial court's decisions. Cf. Brake v. Murphy, 693 So.2d 663 (Fla. 3d DCA 1997) (reversing an order that required the personal representative and her husband to post a bond in order to file further pleadings in a surcharge proceeding because the order violated the access to the courts provision and due process clause of the state constitution).

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Demayo v. Chames, 2005 WL 3180187, 30 Fla. L. Weekly D2692 (Fla. 3d DCA Nov 30, 2005)

In December 2002 Henry DeMayo retained Deborah Chames and her law firm, Heller and Chames, P.A., to represent him in a post-dissolution proceeding to modify his child support and alimony obligations. The retainer agreement included the following clause:

It is specifically agreed that Heller & Chames, P.A. shall have and is hereby granted all general, possessory and retaining liens and all equitable, special and attorney's charging liens upon the client's interests in any and all real and personal property within the jurisdiction of the court for any balance due, owing and unpaid as well as a lien in any recovery whether by settlement or trial; and such lien or liens shall be superior to any other lien subsequent to the date hereof and that the client hereby knowingly, voluntarily and intelligently waives his rights to assert his homestead exemption in the event a charging lien is obtained to secure the balance of attorney's fees and costs. (Emphasis added.)

In October 2003 Miami-Dade Judge Robert N. Scola, Jr. granted Heller and Chames' request to withdraw from representing Mr. DeMayo and shortly thereafter entered a final judgment in the sum of $33,207.76 in favor of the law firm. The trial court expressly enforced the waiver provision of the retainer agreement.

On appeal, the Third DCA upheld the trial court's ruling on the following grounds:

[W]e see no reason why an owner of homestead property should not be able to waive [his constitutional right under Article X, Section 4 of the Florida Constitution against divestment of homestead property via a forced sale] if he so desires. As the Florida Supreme Court stated in Caggiano, 605 So.2d at 59,"the homestead exemption *** was intended simply to guarantee that the homestead would be preserved against any involuntary divestiture by the courts****" See also Havoco, 790 So.2d at 1022 ("The homestead guarantee uses broad language protecting the homestead from involuntary divestiture****"). Absent a plain and unambiguous statement in the Florida Constitution to the contrary, we decline to imply a prohibition against a voluntary divestiture of one's constitutional right to homestead protection.

Warning: see this post: on is own motion Third DCA reconsidered this case en banc and then completely reversed itself!

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As I previously reported here, two heirs to the Gannett newspaper sued West Palm Beach, Fla.-based Gunster Yoakley & Stewart alleging that the firm colluded with its client JPMorgan Trust Co., a subsidiary of New York City-based JPMorgan Chase & Co., in running up fees for planning and administering the estate of their father, Charles McAdam Jr., a Wellington resident who was worth more than $57 million when he died in 2003.

Well, as reported in this Palm Beach Post article, the suit has not gone well for Gunster Yoakley. In a move that sent Circuit Judge Jonathan Gerber back to the books to do legal research, the jury awarded the brothers $1.2 million -- $331,496 more than the heirs requested as damages for this portion of the case. The jury found that the firm breached its fiduciary responsibility and committed legal malpractice in its handling of the estate.

And there may be more bad news to come. In a related upcoming trial the Gannett heirs will be claiming another $7 million that they had to pay in taxes and fees because of other oversights made by Gunster Yoakley. "I'm confident that we will be successful," said attorney Steven Katzman, who represented the heirs. Calling the verdict "an aberration," Donald Beuttenmuller, the managing shareholder of Gunster Yoakley, said it will be appealed.

Lesson Learned:

Estate planning and probate administrations can be complex, high-stakes affairs that even the largest and most well respected law firms get burned by on occasion. This is no place for amateurs.

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On September 23, 2005 the Daily Business Review reported that Broward County probate judge Mel Grossman ordered Fort Lauderdale attorney Stephen Rakusin to return $1.6 million in fees and costs that were challenged by Holy Trinity Orthodox Seminary, a Russian Orthodox monastery. The Monastery was represented by Robert Judd, a partner at Gunster Yoakley in Fort Lauderdale, in connection with the fee dispute.

According to the Daily Business Review, judge Grossman ruled that under the "Maxcy rule" (see Maxcy v. Citizens National Bank of Orlando, 240 So.2d 93 (Fla. 2d DCA 1970)), after four years of work on the case attorneys Stephen Rakusin and Craig Donoff (both of whom were engaged by the personal representative of the estate) would have to contend themselves with a $151,500 flat-fee originally negotiated by Donoff. Judge Grossman ruled that Rakusin's billing was a violation of the Maxcy rule because he was contracted to perform the same legal services on an hourly basis that Donoff had agreed to do for a flat fee.

Lesson learned: In probate, winning is only half the battle. Getting paid for your work is often just as difficult and hotly contested as the underlying litigation.

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As reported in this New York Law Journal article, Manhattan law firm Graubard Miller has been hit with a suit claiming some of its partners tried to extract almost $50 million in "gifts" and unearned fees from a longtime client, the 80-year-old widow of one of New York City's largest real estate developers, Sylvan Lawrence, who died in 1981. Mr. Lawrence's estate has been embroiled in litigation ever since. Mark Zauderer of DLA Piper Rudnick Gray Cary, who represents Graubard Miller, said Ms. Lawrence's suit against the firm is aimed at avoiding paying a "well-earned fee." Ms. Lawrence, who is represented by Leslie D. Corwin of Greenberg Traurig, is seeking rescission of her retainer agreement and the return of all fees previously paid to the firm and all gifts paid to the partners. The complaint also requests punitive damages and attorney fees.

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Foreman v. Northern Trust Bank of Florida, N.A., 2005 WL 1553963 (Fla. 2d DCA July 6, 2005) (Trial Court Reversed)

For obvious reasons, compensation cases are always of interest to practitioners. In this latest Second DCA opinion addressing claims for attorneys fees by former counsel for a personal representative (see here for the prior Second DCA case this year involving a compensation dispute), the court reversed Sarasota County Judge Nancy K. Donnellan and held as follows:

• Former counsel for personal representative is entitled to fees for services he performed if they benefitted the estate . . . even if those services were rendered after the date he withdrew as counsel.
• Former counsel for personal representative is entitled to fees for the time he spent trying to obtain payment for services he rendered to the estate.
• Former counsel for personal representative is entitled to an award of reasonable expert witness fees. The Second DCA also noted that F.S. § 733.6175(4) "makes such an award mandatory if expert testimony is offered."

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Butler v. Guardianship of Peacock, 30 Fla. L. Weekly D889 (Fla. 5 DCA April 1, 2005) (Compensation Disputes)

Marion County Circuit Court Judge Brian D. Lambert ruled that under F.S. § 744.108(1) a petitioner seeking an order to determine the incapacity of her mother was entitled to an award of attorney's fees and costs incurred in the guardianship proceedings up to the date the petitioner's siblings objected to her being appointed guardian . . . fees and costs incurred thereafter were not for "services rendered on [the ward's] behalf."

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Baumann v. Estate of Blum, 30 Fla. L. Weekly D842 (Fla. 2 DCA March 30, 2005) (Trial Court Reversed)

Getting paid fairly for the work you do is sometimes merely an "aspirational" goal for attorneys. It doesn't have to be that way . . . especially when the law says you're entitled to payment. In this case, the personal representative objected to the fees his own attorney petitioned for. Hillsborough County Circuit Court Judge Susan Sexton referred the matter to a general master and then simply adopted the general master's report and recommendations wholesale without conducting a hearing.

In the course of reversing the trial court, the Second DCA provides very valuable guidance for any attorney trying to make sure he or she gets paid for services rendered.

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