Opinion
CV136034829S
06-09-2017
Estate of Yvonne B. Cuseo, Elliot R. Warren, Executor v. Cuseo Family, LLC
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
Dale W. Radcliffe, J.
Attorney Warren was appointed Executor by order of the Probate Court for the District of Westport, on October 28, 2010. Yvonne B. Cuseo died on July 8, 2010.
On August 1, 2011, Elliot R. Warren, acting as Executor of the Estate of Yvonne B. Cuseo, filed a motion with the Westport Probate Court, seeking permission to dissolve an entity known as Cuseo Family, LLC. The reason cited for the dissolution was the inability of the LLC members to conduct business.
The motion was granted by the Honorable Daniel Caruso, on July 17, 2012.
In this action, the Executor claims that a deadlock has arisen among the members of Cuseo Family, LLC, and that the deadlock has prevented the orderly winding up of the LLC.
It is claimed that a lease agreement exists with a tenant regarding real property known as 1680 Post Road East, Westport. The tenant, A& J Farm Stand, LLC, is owned by John Cuseo and Albert Cuseo III, the grandsons of Yvonne B. Cuseo. Albert Cuseo III owns a controlling interest in A& J Farm Stand, LLC, ninety (90%) percent.
Named as Defendants in this action, are Cuseo Family, LLC, Albert R. Cuseo III, John Cuseo, and Peter Cuseo, the son of the decedent Yvonne B. Cuseo. Cuseo Family, LLC has not appeared.
An entity known as 1680 Post Road East, LLC was initially named as a Defendant, but did not appear. The entity has since been removed as a Defendant.
After this action was returned to court, A& J Farm Stand, LLC was granted status as an Intervening Plaintiff.
The Estate of Yvonne B. Cuseo can best be described as a " cash poor" Estate. At her death, the decedent owned substantial non Probate assets, which passes to her son, Peter Cuseo, outside the terms of her Last Will and Testament. Yvonne B. Cuseo, at the time of her death, controlled a joint bank account and a joint checking account with her son Peter Cuseo. The monies, which were maintained in Patriot National Bank, totaled $129,530.27.
The decedent's Probate estate included a fifty-seven (57%) percent interest in Cuseo Family, LLC. The LLC's single asset is real property known as 1680 Post Road East, Westport, a 0.688-acre parcel (29, 999 sq. ft.) with two hundred (200) feet of frontage on the Post Road. The property is situated in a GBD Zone, and is suited for commercial, retail and office development.
The remaining interest in Cuseo Family, LLC, at the time of Yvonne B. Cuseo's death, was owned by her grandsons Albert Cuseo III (34.25%) and John Cuseo (9.25%), and her son Peter Cuseo (13.50%).
Currently, in light of Yvonne B. Cuseo's death, and a codicil to her Last Will and Testament, the ownership interests in Cuseo Family, LLC are Albert Cuseo III, 45%, John Cuseo, 20% and Peter Cuseo, 35%.
In this action, the Executor of the Estate of Yvonne B. Cuseo alleges that a management deadlock involving the two brothers and their uncle has prevented the orderly winding up of the Cuseo Family, LLC, despite an " event of dissolution, " under the LCC agreement, the death of Yvonne B. Cuseo.
It is claimed that a lease agreement exists between Cuseo Family, LLC and A& J Farm Stand, LLC, the tenant in possession.
In the complaint, which was returnable April 19, 2013, Elliot Warren, as Executor of the Estate of Yvonne B. Cuseo, claims that the tenant in possession has not paid rent, and that taxes on the property owed to the Town of Westport are in arrears.
A dissolution of the LLC, and the appointment of a permanent receiver were sought by the Plaintiff.
On July 24, 2014, Elliot Warren acquired a new designation, when he was appointed Receiver of Cuseo Family, LLC, per order of the Honorable George Thim, JTR.
Judge Thim's appointment was appealed to the Connecticut Appellate Court, which affirmed Elliot Warren's appointment on May 3, 2016. Warren v. Cuseo Family, LLC, 165 Conn.App. 230, 138 A.3d 1099 (2016).
The Appellate Court opinion reviewed the history of the Cuseo Family, LLC. The LLC was formed on September 11, 1985, and 1680 Post Road East, Westport is its principal asset.
The trial court had found that the death of the decedent was an " event of dissolution, " and that tax returns had not been filed, and no monies had been collected from the tenant in possession. The Appellate Court also pointed out that the decedent's fifty-seven (57%) percent interest in the LLC is personal property, and includable in her gross estate. Warren v. Cuseo Family, LLC, supra, 235-36.
The Court determined that the Plaintiff had standing to bring the receivership action. It refused to decide allegations of conflict of interest raised against Elliot Warren by Albert Cuseo III, because it lacked a sufficient record.
Following his appointment as Receiver of Cuseo Family, LLC by Judge Thim, Elliot Warren did not file an Inventory, pursuant to Section 21-5 of the Connecticut Practice Book. That section reads
Every receiver, upon confirmation or permanent appointment, shall forthwith, and without any order thereof, prepare and file a sworn inventory of all assets of the estate, which shall contain an appraisal of each item therein, made by the appraisers appointed for that purpose. Every temporary receiver, upon original appointment, shall make an inventory, unless otherwise ordered.
Nor did Elliot Warren post a bond, to ensure the faithful performance of his duties, consistent with Section 21-4 of the Connecticut Practice Book, and Section 52-506 of the General Statutes. The statute reads:
All receivers, before assuming to act as such, shall file with the clerk of the court by which, or by any judge of which, they were appointed, a bond with such surety or sureties, and for such amount as such court or judge may order and approve, payable to the state and conditioned for the faithful performance of their official duties.
In January of 2017, Elliot Warren was ordered by the court (Bellis, J.), to file an accounting, covering the period of his appointment, from 2014 through December 31, 2016. In response, an Inventory, dated February 23, 2017 was filed (Ex. 1) along with a pleading entitled " Receiver Account" (#193).
The " Inventory of Receiver" (Ex. 1), listed several specific items:
1. Ownership of real property known as 1680 Post Road East, Westport, valued at one million three hundred fifty thousand ($1,350,000.) dollar, consistent with a March 14, 2011 appraisal performed by Michael B. Gold, MIA. 2. One hundred forty-five thousand ($145,000.) dollars being held as part of a purchase option regarding 1680 Post Road East. The monies were deposited pursuant to a " Right To Purchase" agreement between Albert Cuseo III and Cuseo Family, LLC. The closing did not occur, and there is a dispute over the party entitled to the deposit. 3. Back rent owed by A& J Farm Stand, LLC, which is ninety (90%) percent owned by Albert Cuseo III. One dollar has been attributed to the rent, and eviction proceedings are ongoing. 4. The LLC has no cash assets other than the option deposit. Sewer and real estate taxes have not been paid. 5. The receiver claims that in excess of three hundred thousand ($300,000) dollars in receiver fees and legal fees were expended through December 31, 2016.
It is clear from the inventory, that the only substantial asset of the Cuseo Family, LLC consists of real estate, 1680 Post Road East. The 2011 appraisal of the 0.688-acre parcel, concluded that the existing structures on the property have no value, and the 1.35 million dollar figure reflects the value of the property as raw land. No appraisal has been requested since March of 2011.
As of February 23, 2017, Elliot Warren, in his capacity as Receiver for Cuseo Family, LLC, filed a Motion for Approval of the Account (#194).
The various members of The Cuseo Family, LLC objected to the Account, and an evidentiary hearing was conducted on March 21, March 22, and March 24, 2017. The parties were given until April 28, 2017 to file proposed findings of facts, and conclusions of law. Albert Cuseo III requested additional time, until May 7, 2017, which request was accommodated.
During the course of the hearing, Elliot Warren claimed to be owed thirty-three thousand, two hundred twenty-five ($33,225.) dollars, for services rendered as Receiver for Cuseo Family, LLC. The charges (Ex. 3) run from the date of his appointment by Judge Thim, through December 29, 2016.
Prior to filing his Inventory of Receiver, and " Receiver Account, July 24, 2014 (Inception) through December 31, 2016, " both of which are dated February 23, 2017, Attorney Warren never disclosed his claimed fees to any member of the Cuseo Family, LLC. The February 23, 2017 disclosure was tendered, only after Judge Bellis ordered Attorney Warren to file the Inventory and the Accounting.
At no time prior to February 23, 2017, did the Receiver disclose that he would be charging three hundred seventy-five ($375) dollars per hour for his services, or seek authorization from the appointing authority. He did not file any bond, as required by statute, and the appropriate provisions of the Connecticut Practice Book.
The sole asset of the Cuseo Family, LLC is the commercial property at 1680 Post Road East, Westport, which was last appraised in 2011. Following Elliot Warren's appointment, more than three years after the appraisal, the Receiver never sought to update the appraisal, or to collect any rent or use and occupancy payments from the tenant, A& J Farm Stand, LLC. The only rent collected was from a sub tenant, So No Bakery.
Once Albert Cuseo III filed an appeal of Elliot Warren's appointment as Receiver, counsel was engaged to defend the appeal. Nevertheless, in his capacity as Receiver, Attorney Warren charged six hundred seventy-five ($675) dollars to attend a preargument conference on January 30, 2015, and two thousand sixty-two dollars and fifty cents ($2,062.50) to attend the Appellate Court hearing on February 7, 2016.
Numerous charges reflect appearances in Housing Court for the summary process action (10-22-15; 10-13-15) during which the Cuseo family, LLC incurred charges from both the Receiver, at three hundred seventy-five ($375) dollars per hour, as well as attorneys fees by the firm chosen by Elliot Warren to represent the LLC. For three (3) days in October of 2015, concerning summary process, the Receiver charged four thousand six hundred twelve dollars and fifty cents ($4,612.50).
No use and occupancy proceeds were ever received, and when A& J Farm Stand, LLC filed for bankruptcy, additional outside legal counsel, Neubert, Pepe & Hazzard, was engaged to handle the bankruptcy case (Ex. 6). The total charge for the bankruptcy services was six thousand seven hundred twenty-five ($6,725) dollars, and the result was favorable. The summary process action resumed, following the bankruptcy proceedings.
Had the charges claimed in Exhibit 3 been brought to the attention of members of Cuseo Family, LLC prior to February of 2017, it is fair to say that eyebrows would have been raised, and vociferous objections would have been interposed by all concerned.
Furthermore, the Receiver was provided with invoices totaling in excess of one quarter of a million dollars by the law firm of Brody Wilkinson, PC, between January 30, 2015 and December of 2016. Despite his knowledge that the Estate of Yvonne B. Cuseo and the Cuseo Family, LLC were " cash poor, " Elliot Warren never disclosed the legal bills to any member of the Cuseo Family, LLC. All of the charges from Brody Wilkinson, PC were addressed to " Elliot R. Warren, Receiver."
The principal activity engaged in by the Receiver concerning 1680 Post Road East, Westport, involved overseeing litigation, including the eviction of the tenant and tax foreclosure efforts by the Town of Westport. The Receiver did not have any day to day management responsibilities concerning 1680 Post Road East, and the evidence suggests that he hired no employees or independent contractors who were charged with the management of the property.
In light of the evidence presented, it is found that the claim of thirty-three thousand two hundred twenty-five ($33,225) dollars is not supported by the evidence, and cannot be awarded. The charge is particularly egregious, in that the claimed fees were amassed without the Receiver having obtained court approval for the fees, or sharing information with individual members of the Cuseo Family, LLC.
Based upon the evidence presented, it is found that the reasonable value of the services provided by Elliot R. Warren, in his capacity as Receiver, is six thousand ($6,000) dollars.
It is further found, that the legal services provided by Neubert Pepe & Monteith, PC, in the amount of six thousand seven hundred twenty five ($6,725.) dollars, are reasonable, and were necessary, in light of the bankruptcy petition filed on behalf of A& J Farm Stand, LLC.
AGREEMENT FOR LEGAL SERVICES DATED FEBRUARY 20, 2017 (EXHIBIT 5) IS UNENFORCEABLE
While charging for his time at a rate usually associated with providing legal services, the Receiver hired the firm of Brody Wilkinson, PC to handle court and related matters. For services rendered between January 30, 2015 and December 30, 2016, (Ex. 4), the following are claimed as fees and costs associated with representing Cuseo Family, LLC:
Adjustment per Engagement Letter
$13,904.00
Total Fees and Disbursements
$279,366.69
TOTAL CLAIM
$293,270.69
The " engagement letter" referred to on Exhibit 4, is dated February 20, 2017. Therefore, it is found that the eight-page document signed by Douglas P. Brown, on behalf of Brody Wilkinson, PC was signed after all of the services itemized in Exhibit 4 had been provided. Consistent with the chronology, it is found that the letter (Ex. 5) constitutes an after the fact rationalization for the fees requested, and resulted directly from Judge Bellis' insistence on an accounting in January of 2017.
The letter of February 20, 2017, states that Brody Wilkinson, PC is representing Elliot Warren both in his capacity as Executor of the Estate of Yvonne B. Cuseo, and as Receiver for the Cuseo Family, LLC. (Ex. 5, p. 3.) The letter claims that Brody Wilkinson, PC reported " regularly" to Elliot R. Warren, although no reports of fees generated were provided to members of the Cuseo Family, LLC.
It is found based upon testimony presented at the hearing, that the refusal to disclose fees generated to members of the Cuseo Family, LLC was deliberate.
It is further found, that Exhibit 5, a document signed after all of the claimed legal services had been rendered, is not a valid contract, and cannot form the basis for the recovery of legal fees by the firm of Brody Wilkinson, PC.
Rule 1.5(b) of the Rules of Professional Conduct provides, in relevant part:
(b) The scope of the representation, the basis or rate of the fee and expenses shall be communicated to the client, in writing, before of within a reasonable time after commencing the representation, except when the lawyer will charge a regularly represented client on the same basis or rate . . "
It is found, that two years after services were first rendered, (Ex. 4) is not a " reasonable" time within which to generate a writing. Furthermore, since Brody Wilkinson, PC was representing Elliot Warren in his capacity as " Receiver" of the Cuseo Family, LLC, rather than as Executor of the Estate of Yvonne B. Cuseo, it cannot be said that Elliot R. Warren is a " regularly represented client." The two entities are separate and distinct.
In addition, because the engagement letter (Ex. 5) was not signed until February of 2017, after all services were rendered, it is not supported by consideration, as to those charges.
Furthermore, any claim that the approval of an interim accounting by the Probate Court for the District of Westport, precludes this court from scrutinizing the reasonableness of the legal fees charged to the Receiver, is utterly without merit. The reasonableness of fees charged by the Receiver were not before the Probate Court, or before Judge Thim, when Albert Cuseo III appealed the Probate Court action (CV-12-5029826 S). Any charge for attorneys fees by Brody Wilkinson, PC involved the Estate of Yvonne B. Cuseo, not the Receiver of Cuseo Family, LLC. The Receiver was not appointed until 2014.
That the fee arrangement for services to the Estate of Yvonne B. Cuseo mirrors the letter of February 20, 2017 (Ex. 5) is of no moment. The February 20, 2017 Engagement Letter is unenforceable, and is not rendered either reasonable or enforceable, based upon its similarity to fees exacted from the Estate of Yvonne B. Cuseo.
Therefore, another basis for determining reasonable legal fees must be utilized.
In Parnoff v. Yuille, 163 Conn.App. 273, 136 A.3d 48 (2016), the Appellate Court held that recovery in quantum meruit was barred, where a written contingency fee agreement had been determined to be unenforceable. The court found, that the unenforceable written agreement was the exclusive means available for the recovery of attorneys fees, pursuant to S. 52-251c(b) of the General Statutes. Therefore, quantum meruit was not available to the attorney, notwithstanding the unenforceability of the written contract. Parnoff v. Yulie, supra, 278-80.
Section 52-251c(b), G.G.S.--" In any such contingency fee agreement, such fee shall be the exclusive method for payment . . ."
Because this case does not involve a contingency fee, the S. 52-251c(b) restriction does not apply. Therefore, an attorney who provides services, in the absence of a valid written agreement, may recover the value of those services, under the equitable maxim of quantum meruit. Horner v. Bagnell, 324 Conn. 695, 717, 154 A.3d 975 (2017); Gagne v. Vaccaro, 255 Conn. 390, 407-08, 766 A.2d 416 (2001); Cole v. Myers, 128 Conn. 223, 230, 21 A.2d 396 (1941).
The measure of damages in quantum meruit is the value of the services rendered. Rossetti v. New Britain, 163 Conn. 283, 292, 303 A.2d 714 (1972). Quantum meruit is not limited by any formula, such as hours spent times hourly rate. Time and labor expended is but one factor to be considered in determining a reasonable attorneys fee, based upon principles of quantum meruit. Shapero v. Mercede, 262 Conn. 1, 6-7, 808 A.2d 666 (2002); Andrews v. Gorby, 237 Conn. 12, 24, 675 A.2d 449 (1996).
Because a trial court has a general knowledge of what would be reasonable compensation for services which are fairly stated and described; Shapero v. Mercede, supra, 9; it is in a position to evaluate the complexity of the issues presented, and the skill with which counsel dealt with the issues. Miller v. Kirshner, 225 Conn. 185, 201, 621 A.2d 1326 (1993); St. Onge, Stewart, Johnson and Reens, LLC v. Media Group, Inc., 84 Conn.App. 88, 93-94, 851 A.2d 1242 (2004). Expert testimony is not required, and, if offered, is not binding on the court. Appliances, Inc. v. Yost, 186 Conn. 673, 680-81, 443 A.2d 486 (1982).
A court may rely upon its own general knowledge, in assessing the reasonableness of a claim for attorneys fees. Smith v. Snyder, 267 Conn. 456, 471-72, 839 A.2d 589 (2004). However, an appropriate evidentiary showing must be made, and no award may be made, where the evidence is insufficient. Appliances, Inc. v. Yost, supra, 680.
In this case, Brody Wilkinson, PC successfully defended an appeal to the Appellate Court brought by Albert Cuseo III. The appeal challenged Judge Thim's appointment of Elliot Warren to serve as Receiver for the Cuseo Family, LLC.
Although the issues presented by the appeal were not particularly novel or complex, briefs were filed, preargument conferences were attended, and oral argument before the Appellate Court occurred. The defense of the appeal involved more than mere motion practice, but concerned issues of standing, and allegations of conflict of interest.
It is found, that the reasonable value of the services rendered in connection with the appeal, is thirty-five thousand ($35,000) dollars.
Brody Wilkinson, PC also represented the Cuseo Family, LLC, at the request of the Receiver, in a summary process matter. Eviction of A& J Farm Stand, LLC from 1680 Post Road East, and exclusive possession of the property for Cuseo Family, LLC, were the objectives.
Although it cannot be doubted that the actions of Albert Cuseo III, the ninety (90%) percent owner of A& J Farm Stand, LLC, were dilatory, and designed to delay the process, the court is nevertheless of the opinion that the fees claimed are wildly excessive.
The same behavior by Albert Cuseo III was also present during negotiations concerning the option to purchase applicable to 1680 Post Road East, which, the court finds, was emotionally taxing to all involved.
It is found, that Brody Wilkinson, PC should be awarded the sum of four thousand ($4.000.) dollars for its Housing Court work in the summary process action. An additional sixteen thousand ($16,000.) dollars is awarded for work concerning Albert Cuseo III's failed attempt to exercise the Option To Purchase applicable to 1680 Post Road East.
Although litigation generated numerous pleadings, many of which lacked merit and may have been frivolous, the amounts charged (Ex. 4) are grossly excessive. All legal fees claimed were rendered on behalf of a single asset LLC, of which the decedent, Yvonne B. Cuseo, owned fifty-seven (57%) percent.
Brody Wilkinson, PC is also entitled to receive three thousand ($3,000) dollars for its defense of the tax foreclosure initiated by the Town of Westport. The matter has not been resolved.
It is found, that Brody Wilkinson, PC should be compensated in the total amount of fifty-eight thousand ($58,000) dollars for work performed at the request of the Receiver, on behalf of the Cuseo Family, LLC, through December 30, 2016.
CONCLUSION
IT IS FOUND, after hearing, concerning the Inventory of Receiver (#192) and the Receiver Account (#193), and considering the objections raised in response to the filings, that the following fees for services rendered to Cuseo Family, LLC are awarded:
Elliot R. Warren, Receiver
$6,000.00
Neubert Pepe & Monteith, PC
$6,725.00
Brody Wilkinson, PC legal fees
$58,000.00
TOTAL:
$70,725.00