Opinion
No. A05-1879.
Filed August 15, 2006.
Appeal from the District Court, Washington County, File No. PX-00-400096.
Joseph F. Schmidt, Law Offices of Joseph F. Schmidt, The Kenosha, Minneapolis, Mn (for appellants)
Gerald G. Dederick, Robert L. Bach, Wendy M. Brekken, Felhaber, Larson, Fenlon Vogt, P.A., Minneapolis, Mn (for respondent)
Ronald B. Sieloff, Yankee Square Office III, Eagan, Mn (for Estate of Barbara Ann Gosnell, and Scott Wibbens and David Wibbens).
Considered and decided by Randall, Presiding Judge; Willis, Judge; Minge, Judge.
This opinions will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).
UNPUBLISHED OPINION
This is an appeal from an order allowing the final account in the probate of the estate of Joseph Gosnell. Gosnell's heirs-at-law challenge the award of more than $465,000 in attorney fees and more than $32,000 in personal-representative fees, arguing that the district court erred by (1) failing to allow discovery or grant an evidentiary hearing on the reasonableness of the claimed fees; (2) failing to make specific findings about the reasonableness of the fees under the factors listed in Minn. Stat. §§ 525.515, 524.3-717 (2004); and (3) failing to reduce allegedly excessive fees. We reverse and remand.
FACTS
Joseph H. Gosnell, III (Mr. Gosnell) and Barbara Ann Gosnell (Mrs. Gosnell) were married in 1996. Mr. Gosnell had no children. Mrs. Gosnell had two children from a previous marriage. Appellants are certain nephews, nieces, and other blood relatives of Mr. Gosnell. In October 1999, on the eve of a medical operation, Mr. Gosnell engaged George Knapp, a distant relative and an attorney, to quickly prepare a will. The will names Mrs. Gosnell as the sole beneficiary and contains a survivorship clause that requires the beneficiary to survive Mr. Gosnell by 90 days. No contingent beneficiaries were named in the will. Respondent Robert A. Erickson, a longtime friend of Mr. Gosnell, was named as the personal representative. Mr. Gosnell survived the surgery. Although attorney Knapp urged Mr. Gosnell to have his will redone to deal with various contingencies, Mr. Gosnell did not do so.
On February 23, 2000, Mr. and Mrs. Gosnell died in an automobile accident. The death certificates did not include a determination of survivorship between the couple. At the time of Mr. Gosnell's death, the assets in his estate were real estate, artwork, and a business.
Erikson, as the designated personal representative, retained the services of the Felhaber law firm to probate the estate of Mr. Gosnell (the estate). On April 17, 2000, Erickson filed a petition seeking formal probate of will and appointment of a personal representative. In the petition, Mr. Erickson renounced his right to the appointment and nominated Diane Hurley, a longtime friend and employee of Mr. Gosnell, as personal representative. After numerous objections and counter-nominations for the position of personal representative, the district court ultimately appointed Erickson as the personal representative.
Various parties filed more than 170 pleadings during the five years this probate matter was pending. In addition to the controversy regarding the personal representative, the district court heard arguments for summary judgment, dealt with numerous other motions, held a pre-trial hearing and approved a settlement of the litigation over who were the legal heirs, approved the sale of Mr. Gosnell's business, held a hearing and issued a legal opinion regarding the clarity of the will's language, and held hearings on other objections raised by appellants. Additionally, the district court ordered the estate to conduct an investigation into possible legal-malpractice claims against attorney Knapp for his drafting of Mr. Gosnell's will. Based on the results of the investigation, the estate did not pursue such a claim. Except for the appeal now before this court, the parties have settled their differences; none of the district court's rulings has been contested.
Estate administration by the personal representative and legal counsel required oversight of estate — and income-tax preparation, sale of real estate in three states, sale of other assets including a highly valuable work of art, an investigation into the validity of a divorce Mr. Gosnell obtained in Mexico more than 30 years ago, and disposition of Mr. Gosnell's business. The attorneys reported that disposition of the business required determination of ownership, inventory, and financial status of the corporate entity. The corporate records were largely incomplete.
The total value of the estate was $1,911,347.51 including non-probate assets. The attorney fees claimed were $465,939.50 and the personal representative's claimed fees were $32,307.05. Detailed legal billing records showing time and expenses were filed. Appellants challenged the fees. The respondent is the personal representative.
On February 8, 2005, respondents filed a petition for the complete settlement of the estate and decree of distribution. Four days before the scheduled April 15, 2005 hearing, appellants objected to the attorney fees and personal representative fees in the final account. Oral argument was allowed. Numerous specific objections were made as to the number of attorneys assigned, the amount of time billed, and the nature of the work included in the law firm's records. The size of the bill compared to the size of the estate was also criticized. Appellants requested time for additional discovery and a further hearing. The district court issued an order allowing the final account, settling, and distribution of the estate. As a function of this order, the attorney fees were approved. The order included no findings of fact or memorandum supporting the fees or rejecting appellant's objections to the fees. Appellant's requests for additional discovery and a further hearing were not specifically addressed and implicitly denied. This appeal follows.
DECISION
I. Additional Discovery and Hearings
The first issue is whether the district court erred in denying appellants' request to conduct additional discovery and for an additional evidentiary hearing regarding the reasonableness of the fees charged to the estate. A district court "has wide discretion to issue discovery orders and, absent clear abuse of that discretion, normally its order with respect thereto will not be disturbed." Shetka v. Kueppers, Kueppers, Von Feldt Salmen, 454 N.W.2d 916, 921 (Minn. 1990).
Appellants were entitled under law to challenge the reasonableness of the fees charged to the estate in the manner provided in Minn. Stat. § 524.3-721 (2006). Absent an agreement with the testator, the following factors are used to evaluate attorney fees:
(1) The time and labor required;
(2) The experience and knowledge of the attorney;
(3) The complexity and novelty of problems involved;
(4) The extent of the responsibilities assumed and the results obtained; and
(5) The sufficiency of assets properly available to pay for the services.
Minn. Stat. § 525.515(b) (2006). Absent an agreement, the personal representative's fees are reviewed on the basis of factors (1), (3), and (4). See Minn. Stat. § 524.3-719 (2006). In making a determination of the reasonableness of the fees charged by the attorneys and the personal representative, the district court is given significant deference within the statutory framework.
Here, the district court apparently felt that the written objections to the fees, responses to those objections, further submissions in support of the fees, and appellant's responses to those submissions provided enough information to decide the matter of reasonableness of fees without further discovery or evidentiary hearings. Based on the district court's extensive experience with this probate and the issues involved in this case, the voluminous probate-court file, and the detailed time records submitted by the law firm handling the estate, the district court could reasonably have determined that there was an adequate record to rule on the attorney and personal representative fees. Accordingly, we conclude that the district court did not abuse its discretion when it denied appellants' request for additional discovery or evidentiary hearings.
II. Lack of Specific Findings
The second issue is whether the district court erred in failing to provide specific findings regarding the reasonableness of the fees charged by the Felhaber law firm and the personal representative. The district court's award of a reasonable amount of attorney fees is a factual determination that will not be set aside unless clearly erroneous. In re Estate of Balafas, 302 Minn. 512, 516, 225 N.W.2d 539, 541 (1975). When the district court's findings are reasonably supported by the evidence, they are not clearly erroneous and must be affirmed. Schweich v. Ziegler, Inc., 463 N.W.2d 722, 729 (Minn. 1990). The legislature has identified specific factors previously set forth that the court is to consider in determining the reasonableness of personal representative and attorney fees. See Minn. Stat. § 524.3-719(b)(1-3); § 525.515(b)(1-5). However, the statutes do not require specific findings by the district court to support its approval of the disputed fees.
Here, the probate court did not make specific findings of fact, and its order to allow the final account, settling and distribution of the estate's assets implicitly held that the attorney fees were fair and reasonable. Both parties discuss In re Estate of Bush, 304 Minn. 105, 230 N.W.2d 33 (1975), as providing an answer to whether this court may rely on the district court's order to impute a determination that the attorney fees charged to the estate were reasonable. In Bush, the Minnesota Supreme Court relied on a number of factors to find that the district court's determination regarding the appropriateness of attorney fees was fair and reasonable. 304 Minn. at 123-24, 230 N.W.2d at 44-45. Important to the Court's analysis in Bush was the district court's memorandum accompanying its findings, which discussed 18 separate factors, and the district court's intimate knowledge of the case. 304 Minn. at 117-20, 230 N.W.2d at 40-42.
Other decisions have concluded that the district court's determination of reasonableness comes directly from its findings of fact. See Balafas, 302 Minn. at 515 (laying out specific language that exhibited an intimate knowledge of the issues at hand); In re Estate of Weisberg, 242 Minn. 150, 153, 64 N.W.2d 370, 372 (1954) (affirming that consideration of the size of the total estate and the extent to which an estate is depleted by fees is appropriate in determining reasonableness). This court has looked to specific findings of the district courts in determining whether the finding of reasonableness was justified. See In re Estate of Torgersen, 711 N.W.2d 545, 555 (Minn.App. 2006) (stating that "the district court did not reach the issue of good faith or reasonableness of the fees claimed. Therefore, we reverse . . . and remand to the district court for a determination of whether appellant acted in good faith and, if so, for a determination of the reasonableness of the fees . . .").
Respondents rely on Edina Comm. Lutheran Church v. State to support their assertion that a district court's findings will be upheld if they "permit meaningful appellate review." 673 N.W.2d 517, 523 (Minn.App. 2004). But in Edina Comm. Lutheran Church, this court concluded: "[a]bsent findings, we do not know what the trial court concluded on the issues, and thus we cannot determine whether denial of [appellant's] motion constituted an abuse of discretion." Id.
The record in this matter is incomplete regarding the district court's rationale in determining that the attorney fees were fair and reasonable. Unlike Bush and Edina Comm. Lutheran Church, in this case the district court has not furnished a memorandum or justification of findings. Appellants point to the lack of a detailed memorandum as support for their contention that the district court abused its discretion in ordering attorney fees. Contrarily, respondents rely on the familiarity of the district court with the proceedings to justify the award of attorney fees without a memorandum to support the district court's decision. However, the record lacks a justification for a finding of fair and reasonable attorney fees. The only statement in the district court's order that remotely addresses the reasonableness of attorney fees is the cryptic sentence in the official probate form that reads: "The Final Account of the Personal Representative is allowed."
The factors listed in Minn. Stat. §§ 525.515 and 524.3-719 seek to assure that fees are fair and reasonable. Here, the attorney fees are substantial compared to the size of the estate. Although the district court in this case allowed the fees when it approved the final account and allowed payment of the fees, without findings or analysis by the probate court, meaningful review by this court is precluded. We cannot decide whether it correctly determined that the fees charged by the attorney and the personal representative were fair and reasonable under the legislative guidelines.
Accordingly, we do not reach the challenge to the amount of fees. We reverse and remand this matter for findings of fact and analysis of the fairness and reasonableness of the attorney and personal representative fees. Of course, the district court may in its discretion allow discovery and a hearing on the fees if it decides that would be helpful.