Opinion
2006-P-603
11-08-2010
In the Matter of Estate of Mary Harris, also known as Mary Felicita Harris, Deceased.
Joseph Edward Brady, Esq., for Joseph Edward Brady, P.C.Martin & Molinari, Esqs., LLP, (John E. Molinari, Esq., of Counsel) for Frank Harris, executor Jean M. Kestel, Esq., for Lauren Harris
Joseph Edward Brady, Esq., for Joseph Edward Brady, P.C.
Martin & Molinari, Esqs., LLP, (John E. Molinari, Esq., of Counsel) for Frank Harris, executor Jean M. Kestel, Esq., for Lauren Harris
Lee L. Holzman, J.
In this estate, there are two separate proceedings to fix legal fees. In the first, the executor, Frank Harris, the decedent's nephew, petitions to fix and determine the reasonable legal fee and disbursements to be awarded to his former counsel, Joseph Edward Brady, Esq., at an amount less than the $14,200 in legal fees and $1,415.37 in disbursements billed and sought by Brady. Brady cross petitions for an order fixing his fees and disbursements in the billed amount. The second proceeding pursuant to SCPA 2110, commenced by Brady, seeks an award of $9,590, including $340 in disbursements, for legal services rendered to a former client, Lauren Harris, the decedent's daughter-in-law. Lauren Harris opposes the petition and cross-petitions to fix and determine Brady's reasonable attorney's fees and disbursements contending, inter alia, that the legal fees, to the extent valid, should be borne by the estate. The parties agreed to submit the issues in each proceeding on the papers, without a hearing.
The decedent died on August 4, 2006. Letters testamentary issued on October 30, 2006. Lauren Harris and the decedent's two grandchildren, the decedent's only distributees, each receive one-third of the residuary estate. The share of each grandchild is to be held in trust until that grandchild reaches the age of 30 years.
Although Brady's representation of the executor in connection with this estate commenced on or about August 11, 2006 upon the filing of the petition for letters testamentary, the executor did not execute a retainer agreement, setting an hourly rate of $250, until January 14, 2007. The probate petition indicated that the estate consisted of personal property valued at $137,000 and certain Bronx realty valued at $500,000. Thereafter, the executor filed an affidavit increasing the value of the personal property to $154,360.56 and the realty to $569,000.
Brady's legal bills reveal that as of the date of the filing of the probate petition, Brady was in possession of a deed of the Bronx realty which was executed by the decedent on May 21, 2000, over six years prior to her death. The deed conveyed the realty to Lauren Harris while reserving to the decedent a life estate. Upon learning of the decedent's death, the attorney who prepared and oversaw the execution of the deed provided it to Brady, who included the value of the realty in the probate petition. Following the admission of the will to probate, the executor and Brady began collecting assets; in particular, they sought a date of death appraisal of the Bronx realty and personal property contained therein, and contacted brokers in order to sell the realty. Brady's bill reflects his involvement in meetings at the Bronx realty with the executor and appraisers, in obtaining brokers and receiving proposals from interested buyers and in drafting contracts of sale, although no closing ever occurred. During this time, it appears that disputes arose between the executor and Lauren Harris or her children concerning the sale of certain personal property, and the sales price of the Bronx realty. In addition, when the decedent's granddaughter reached the age of 30, she requested through her mother a $10,000 distribution and, in response, the executor sent $6,000 instead of the $10,000 requested. These events prompted a January 3, 2008 letter from Brady to the executor stating, inter alia, that he concurred with Lauren Harris' recent rejection of an offer on the Bronx realty, and the executor should issue a check in the requested amount to the granddaughter and provide him and Lauren Harris with an accounting and cancelled checks for all expenses.
On January 7, 2008, the executor wrote Brady indicating that his services no longer appeared to be necessary as sole ownership of the Bronx realty had passed to Lauren Harris by virtue of the May 21, 2000 deed, all personal property was sold, distributed or in the constructive possession of Lauren Harris and her daughter, and Lauren Harris indicated that she did not want to sell the Bronx realty at that time and, instead, intended to rent the Bronx realty.
By letter dated January 10, 2008, Brady responded, inter alia, by accusing the executor of concealing an offer for the Bronx realty from him and Lauren Harris, advising the executor of his duty to file an accounting and stating, that if the executor sought to resign and completed the tasks set forth by Brady, then Brady would make an application to substitute Lauren Harris as fiduciary. Brady concluded by stating that he would remain as estate attorney regardless of whether the executor continued in that capacity or was replaced by Lauren Harris. Allegations made by Brady in subsequent proceedings indicate that, at the time, it was Brady's legal opinion that there was a need to continue the estate because the real property had not transferred to Lauren Harris by virtue of the May 21, 2000 deed. By letter dated January 17, 2008, the executor terminated Brady's services, indicating he had hired his present counsel.
On March 13, 2008, the executor commenced an SCPA 2103 turnover proceeding seeking all estate documents in Brady's possession. Upon the cessation of his representation of the executor, Brady began representing Lauren Harris, who signed a retainer agreement in April, 2008. On May 21, 2008, while represented by Brady, Lauren Harris commenced an SCPA 711 proceeding seeking an order removing the executor and directing the turnover of all estate documents in his possession. In Lauren Harris' SCPA 711 proceeding, the executor successfully moved to disqualify Brady as her counsel based on a conflict of interest (see Matter of Harris, 21 Misc 3d 239 [2008]). Thereafter, the executor withdrew his SCPA 2103 proceeding and all parties stipulated to discontinue the SCPA 711 proceeding commenced by Lauren Harris (see Matter of Harris, NYLJ, Dec. 19, 2008, at 43, col 4). On December 10, 2008, Lauren Harris commenced an SCPA 2103 proceeding seeking a decree directing Brady to turn over the deed dated May 21, 2000 to her new counsel. A decision dated April 1, 2009 reflects that this court ruled from the bench that Brady should turn over that deed to Lauren Harris, and the executor was restrained from distributing $25,000 of estate assets until Brady's claims for legal fees were fixed. The executor executed a Real Property Transfer report, reflecting a transfer and sale of the Bronx realty, as of May 21, 2000, to Lauren Harris.
The proceeding by the executor and cross petition by Brady seeking to fix Brady's fees and disbursements in connection with his representation of the executor ensued. In addition, Brady commenced the separate proceeding to fix the legal fees and disbursements owed to him by Lauren Harris.
In his petition, the executor argues, inter alia, that: (1) Brady's legal fees of $14,200 and disbursements of $1,415.37 are excessive; (2) in preparing the probate petition, Brady wrongfully included the Bronx realty when, in fact, the decedent transferred that realty to Lauren Harris by deed six years previously and, at the time of probate, Brady knew about the deed as evidenced by his bills; (3) as a result, Brady caused the filing fee paid to this court to be inflated from $420 to $1,346.00 based on an estate valued at between $500,000 and $750,000 due to the inclusion of the Bronx realty, and Brady's bill should be reduced by $926 for that overpayment; (4) Brady's bill contains a total of 20.15 hours for contacting brokers and efforts in selling the realty and the estate paid a $1,000 appraisal fee for obtaining the date of death value of the realty; and, (5) Brady improperly represented Lauren Harris in her effort to remove him as executor, causing the estate to incur $1,255 in legal fees in moving successfully to disqualify Brady based on his conflict of interest. Therefore, the executor contends that at least the sum of $8,188.50 should be deducted from the $15,615.37 billed by Brady. The executor submits supporting affirmations by his attorney and the former attorney for the decedent concerning, inter alia, the effectiveness of the May 21, 2000 deed and Brady's contentions relating thereto.
In his cross petition and objections, Brady seeks an order fixing and awarding him the full $15,615.37 in legal fees and disbursements he billed, and directing the executor to file an account. In support, he contends that: (1) he was wrongfully discharged without cause after advising the executor of concerns expressed by beneficiaries who were not receiving money; (2) the May 21, 2000 deed was never recorded or delivered to Lauren Harris until after the decedent's death and, instead, after signing the deed the decedent gave it to her attorney who retained possession of it and the decedent directed that attorney not to record it and to hold it for safekeeping; (3) as a result, he researched the issue and determined there was no valid inter vivos gift, the realty was an asset of the estate, and he advised the executor that the deed could not be recorded without an affidavit by the seller; (4) ultimately, with the assistance of his new counsel, the executor recorded the deed by naming himself, as executor, as seller; (5) he paid all court fees and was never reimbursed for disbursements; (6) he properly billed for time spent working with numerous brokers and the executor to find a buyer for the property and in preparing and mailing contracts to three buyers who failed to close; (7) the executor himself hired the appraiser and paid the $1,000 fee; and, (8) although Lauren Harris asked him to petition to remove the executor and the parties made a subsequent deal among themselves to withdraw or discontinue those proceedings, they should not be permitted to make a deal to reduce his fee. He also contends that the executor should be directed to account.
Lauren Harris opposes Brady's cross petition asserting, inter alia, that the inclusion of the realty in the estate, notwithstanding the deed, resulted in higher probate costs and the wrongful use of trust funds to pay for an appraisal, taxes, utilities and insurance on property that never belonged to the estate. She notes that Brady refused to "bow out" gracefully when he and the executor disagreed on these issues.
It is well settled that "[a] client has an absolute right to discharge an attorney at any time" (Teichner v W & J Holsteins, Inc., 64 NY2d 977, 979 [1985]), with or without cause (see Cohen v Grainger, Tesoriero & Bell, 81 NY2d 655, 658 [1993]). If the discharge is with cause, the attorney has no right to compensation or to a retaining lien, notwithstanding a specific retainer agreement; however, if the discharge is without cause before the completion of services, then the amount of the attorney's compensation must be determined on a quantum meruit basis (see Cohen, 81 NY2d at 658; Teichner, 64 NY2d at 979).
The Surrogate's Court has broad discretion to determine what constitutes a reasonable attorney's fee after consideration of various factors including the time and money involved, the degree of difficulty of the matter in which services were rendered, the extent of the attorney's experience and the results obtained (see SCPA 2110; Matter of Freeman, 34 NY2d 1 [1974]; Matter of Wallace, 68 AD3d 679 [2009]). Services which are wholly executorial in nature, that is, those capable of being performed by a layperson, are not recoverable from the estate (see Matter of Passuello, 184 AD2d 108 [1992]; Matter of McCranor, 176 AD2d 1026 [1991]; Matter of Schoonheim, 158 AD2d 183 [1990]; Matter of Verplanck, 151 AD2d 767 [1989])
Here, there is no evidence that Brady was terminated by the executor for cause and, therefore, Brady is entitled to be compensated on a quantum meruit basis for his services rendered to the executor (see Cohen v Grainger, Tesoriero & Bell, 81 NY2d at 658; Teichner v W & J Holsteins, Inc., 64 NY2d at 979). Nonetheless, the executor claims that the estate was damaged when Brady included the realty as an asset of the estate and assumed the representation of Lauren Harris, and that those actions resulted in damages consisting of an increased filing fee and legal fees stemming from the motion to disqualify Brady or other inappropriate billing (see e.g. Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1, 10-11 [2008]).
At the time of the filing of the probate petition, it appears that Brady, in good faith, believed that the real estate should be included as an asset of the estate. While the parties continue to debate the legal merits of that position (see Saltzsieder v Saltzsieder, 219 NY 523 [1916]; Munoz v Wilson, 111 NY 295 [1888]; cf. Manhattan Life Ins. Co. v Continental Ins. Co., 33 NY2d 370 [1974]; Whalen v Harvey, 235 AD2d 792 [1997], lv denied 89 NY2d 816 [1997]; Goldbourne v Williams, 175 AD2d 860 [1991]), the record clearly indicates that the executor and the distributees acquiesced in this course of action up to the time that the executor consulted and retained new counsel and terminated Brady's services. It also appears that both the executor and Lauren Harris wished to utilize Brady's services in connection with the sale of the realty.
As a result, the difference in the filing fee incurred by the estate as a result of the inclusion of the realty will not be deducted from Brady's legal fees, and Brady is entitled to reasonable compensation for time he spent drafting contracts for the sale of the realty.
Nonetheless, once the executor terminated Brady's representation while simultaneously indicating he no longer wished to follow Brady's advice with respect to the realty and other matters, Brady could not, in good faith, independently pursue a course of action contrary to that desired by his former client and, in the process, place himself in a conflict of interest with that former client, the executor. As a result, all legal fees incurred in connection with the motion to disqualify Brady based on that conflict of interest and breach of fiduciary duty are deducted from the reasonable compensation payable to Brady (see Ulico Cas Co., 56 AD3d at 9-10).
Brady's submissions indicate that he billed for services that are executorial in nature and could be performed by a layperson. Brady's time breakdown reveals legal fees charged for, inter alia, going online to obtain a form and faxing a form, conversing with appraisers, traveling time to personally deliver documents, going to the realty and taking photographs, discussions with brokers and realtors generally and not in relation to offers to purchase, conversing with clients for unidentified reasons, and discussions concerning the sale of the personal property at the realty. Such acts and functions cannot be charged to the estate as legal fees (see Matter of Passuello, 184 AD2d at 108; Matter of Schoonheim, 158 AD2d at 183). Furthermore, Brady spent more time than necessary on some issues because he failed to recognize that he represented the executor of the estate, and not the estate itself or the beneficiaries of the estate (see CPLR 4503 [a] [2]; Matter of Hof, 102 AD2d 591, 593 [1984]; Matter of Schrauth, 249 App Div 847 [1937]; Matter of Harris, 21 Misc 3d at 239; Matter of Scanlon, 2 Misc 2d 65, 69 [1956]).
Accordingly, based upon a consideration of all of the relevant factors, including the retainer hourly rate (see Matter of Freeman, 34 NY2d at 9), the executor's petition and the cross petition by Brady are granted only to the extent that after deducting the legal fees incurred in the application to disqualify Brady, the court fixes the legal fee to be paid to Brady in the amount of $8,000, and fixes disbursements of $1,415.37 and, otherwise, the applications are denied. As Brady has no interest in this estate, his request for an order directing the executor to account is denied.
In his SCPA 2110 petition and supporting papers seeking a legal fee for services performed for Lauren Harris, Brady asserts that he is entitled to all fees and disbursements requested because, solely as a result of his prior efforts to revoke the letters testamentary that issued to the executor, his former client, and to substitute Lauren Harris as administratrix c.t.a., those parties quickly "made a deal among themselves" and settled all proceedings pending at that time. In support, he notes that the parties withdrew a prior SCPA 2103 turnover proceeding by the executor against Brady, discontinued Lauren Harris' prior SCPA 711 proceeding to remove the executor, without costs to either party, and decided not to pursue his and Lauren Harris' prior demands for an accounting by the executor.
Notwithstanding that Lauren Harris' retainer agreement with Brady is dated April, 2008, Brady's bill for legal services to her encompass the period from February 5, 2008 through August
29, 2008. Those legal services are billed at a rate of $250 per hour and total $9,250. Disbursements total $340, consisting of a filing fee for the petition to revoke the letters testamentary that issued to the executor ($75), and the service of three citations in connection with that petition ($265).
In opposition to Brady's petition and in support of her cross petition, Lauren Harris asserts that the legal fees reflect either services rendered in the SCPA 711 proceeding seeking to remove the executor, which concluded when Brady was disqualified from serving as her counsel due to a conflict of interest, services rendered in the turnover proceeding relating to the transfer of files upon the cessation of Brady's representation of the executor, or services rendered to the estate. She urges that Brady should have recognized the inherent conflict of interest in representing her and in seeking to remove the executor, and if the court determines that Brady is entitled to any legal fee, the fee awarded should be reasonable. Brady replies, inter alia, that Lauren Harris never rejected the bill for services that he sent in October, 2008, it was she who objected to the actions of the executor, and any bills relating to the sale of the realty are properly chargeable to her, as the realty was never part of the estate.As previously noted, if the discharge of an attorney is with cause, the attorney has no right to compensation or to a retaining lien, notwithstanding a specific retainer agreement; however, if the discharge is without cause before the completion of services, then the amount of the attorney's compensation must be determined on a quantum meruit basis (see Teichner v W & J Holsteins, Inc., 64 NY2d at 979). Where the discharge is with cause and is based on misconduct, the attorney automatically forfeits all rights to compensation only where "the misconduct relates to the representation for which the fees are sought" (Matter of Wingate, Russotti & Shapiro, LLP v Friedman, Khafif & Assoc., 41 AD3d 367 [2007], lv denied 10 NY3d 702 [2008], quoting Decolator, Cohen & DiPrisco v Lysaght, Lysaght & Kramer, PC, 304 AD2d 86 [2003]). Where serious misconduct in violation of the Disciplinary Rules is committed in connection with the actual legal services performed on behalf of a client, counsel may be precluded from recovering any fees for such services (see Matter of Winston, 214 AD2d 677 [1995][legal fee denied in will contest proceeding for period of representation against former client]; see also Realuyo v Diaz, 2006 US Dist LEXIS 11420, 2006 WL 695683 [SD NY Mar. 17, 2006], citing, inter alia, Garcia v Teitler, 2004 US Dist LEXIS 13854, 2004 WL 1636982 [ED NY 2004], affd 443 F3d 202 [2d Cir 2006][denying legal fee to attorney who persisted in his efforts to represent co-defendants in a criminal case "despite the obvious conflict of interest that created"]; In re Bruno, 327 BR 104 [Bankr ED NY 2005][denying legal fee due to conflict of interest in dual representation of debtor who was passenger in car and driver of car]; Quinn v Walsh, 18 AD3d 638 [2005][similar]).
Here, Brady should have known there was a conflict of interest in his representation of Lauren Harris in a proceeding seeking to remove the executor, his former client (see Matter of Harris, 21 Misc 3d at 239). The disqualification of Brady as attorney for Lauren Harris due to his contravention of the duty of loyalty to his former client, the executor, is tantamount to a discharge for cause (see Sokoloff v Sokoloff, 82 Misc 2d 797 [1975]). As the serious misconduct and conflict of interest relate to the representation at issue (see Quinn v Walsh, 18 AD3d at 638; Matter of Winston, 214 AD2d at 677), Brady forfeited his right to seek any legal fee from Lauren Harris. Nonetheless, Brady may recoup from Lauren Harris the disbursements of $340 that he expended during the course of that representation.
Accordingly, Brady's SCPA 2110 petition against Lauren Harris and her cross petition are granted only to the extent of awarding Brady $340 in disbursements and, otherwise, are denied.
Settle decrees.
SURROGATE