Opinion
J-S22030-13 No. 1595 MDA 2012 No. 1664 MDA 2012
04-12-2013
In re: ESTATE OF JOSEPH H. KUHN APPEAL OF: DORIS KING, In re: ESTATE OF JOSEPH H. KUHN APPEAL OF: THOMAS L. KUHN.
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
CONSOLIDATED
CROSS-APPEALS
Appeal from the Order entered August 7, 2012,
in the Court of Common Pleas of York County,
Orphans' Court, at No(s): 67-05-0708
BEFORE: DONOHUE, ALLEN, and PLATT, JJ. MEMORANDUM BY ALLEN, J.:
Retired Senior Judge assigned to Superior Court.
At docket 1595 MDA 2012, Doris King ("Doris"), executrix of the Estate of John H. Kuhn ("Decedent"), appeals from the trial court's order denying her attorney's charge of $31,903.50 against the estate or against Decedent's son, Thomas L. Kuhn ("Thomas"). Doris further appeals from the trial court's limitation of her attorney's fees for administering the estate to $12,500, and to $5,162.50 for defending Doris against a surcharge action by Thomas. At docket 1664 MDA 2012, Thomas cross-appeals from the trial court's order denying his petition to surcharge Doris, and allowing the estate to be charged the aforementioned amounts for Doris' attorney's fees. We affirm.
The trial court summarized the facts of this case as follows:
Before the Court are several issues concerning the Estate of Joseph H. Kuhn. Thomas L. Kuhn ("Thomas") has requested that this Court impose a surcharge against Doris King ("Doris"), decedent's sister and the Executrix of the Estate. Additionally, Attorney Woodbury has requested compensation for attorney's fees relating to the representation of the Estate, defense of the objections, and the representation of Doris against the surcharge.Trial Court Opinion, 8/7/12, at 1-2.
Joseph Kuhn was Thomas Kuhn's father and died on April 28, 2005, owning property on the Susquehanna Trail in York, Pennsylvania, some personal property, and a bank account. The beneficiaries of the Estate are Thomas Kuhn and his three brothers.
The surcharge requested against Doris King mainly deals with the loss of value of the property located at 1862 Susquehanna Trail North, York, Pennsylvania, excess payments of utilities, taxes and insurance arising out of the failure to expeditiously administer the Estate, and excessive attorney's fees.
A hearing was held on August 3, 2011, regarding the surcharge; however, the Court found that this hearing was premature and would continue after a First and Final Account had been filed for this Estate. The First and Final Account was filed on August 17, 2011, along with the Petition for Adjudication and Statement of Proposed Distribution. Counsel for Thomas Kuhn filed objections to the Account alleging that the Executrix improperly administered the Estate by taking more than a reasonable amount of time, negligently failing to keep an accounting of the Estate, and commingling personal and Estate assets.
As a result of these allegations, Thomas objects to the payment of all Estate expenses after April 28, 2006, the payment of excessive attorney's fees and executrix
commissions, and payment of attorney's fees for the defense of the Petition for Citation for Accounting, Removal, and Surcharge. The August 17, 2011 Hearing was continued and concluded on June 12, 2012.
On August 7, 2012, the trial court issued its order and opinion denying Thomas' petition to surcharge Doris, and limiting the attorney's fees payable to Doris' attorney for her defense against Thomas' surcharge action. Thomas and Doris filed timely appeals. The trial court and the parties complied with Pa.R.A.P. 1925.
At docket 1595, Doris presents the following issues for our review:
A. Was [Thomas'] Petition for Citation, for Accounting, Removal and Surcharge frivolous, vexatious and without merit?Doris' Brief at 3.
B. Should the attorney fees and costs incurred by [Doris] in defending [Thomas'] Petition for Citation, for Accounting, Removal and Surcharge be assessed against [Thomas] if the Petition is found to be frivolous, vexatious and without merit?
At docket 1664, Thomas presents the following issue for our consideration:
I. Whether the whole record at trial supports the Trial Court's finding that [Doris'] actions and omissions constituted good faith errors of judgment rather than negligence affording [Thomas] relief.Thomas' Brief at 4.
II. Whether the whole record at trial supports a surcharge against [Doris] for her negligent administration of the Estate and, if so, what should be the amount of the surcharge.
III. Whether the $12,500.00 allowed by the Trial Court as attorney's fees for estate administration should include the Estate funds paid the original attorney.
IV. Whether any funds should be paid from the Estate for [Doris'] attorney's fees incurred by her to defend the Petition and the Objections filed as a result of her negligent administration of the Estate.
All of the issues raised by Doris and Thomas require our review under an abuse of discretion standard. See In re Estate of Cherwinski , 856 A.2d 165, 167 (Pa. Super. 2004). An abuse of discretion exists where the trial court's determination overrides or misapplies the law, its judgment is manifestly unreasonable, or the result of partiality, prejudice, bias, or ill-will. See Majczyk v. Oesch , 789 A.2d 717, 720 (Pa. Super. 2001).
Doris summarizes her claims of trial court error as follows:
The Court erred in characterizing the attorney fees incurred in defending the Petition as "excessive" by relating them to the size of the Estate. [Doris] had to defend the Petition knowing that she would have to bear the cost of its defense unless the Court assessed them against [Thomas] for having filed a frivolous and vexatious action. The Trial Court never addressed [Doris'] request to assess her attorney fees against [Thomas]. The Court chose to award [Doris] only those attorney fees she incurred for work done in defending the Objections rationalizing that because [Thomas] had repeated his allegations for surcharge in his Objections, there was an overlap in the work done. Yet all of the work defending the surcharge had been done before the Objections had been filed.Doris' Brief at 6-7.
Initially, we note that Doris' brief is woefully unsupported by legal authority. Doris contends that her attorney fees should be assessed against Thomas, and not the estate, for Thomas' filing of a vexatious petition. Doris' argument section addressing this contention does not contain a single citation to a statute or case law to support Doris' contention. Id. at 9-10. Likewise, Doris fails to set forth any legal authority to support of her argument that "[t]he court failed to award [Doris] attorney fees incurred in defending the petition"; the attorney's fees charged were "reasonable"; and the trial court erred in limiting the attorney's fees award to $12,500. Id. at 10-15. Doris only cites limited case law for the general proposition that an "innocent litigant" may be awarded reasonable attorney fees incurred in opposing a vexatious opponent. Id. at 15. Doris' failure to substantiate her claims of error effects waiver. See Giant Food Stores, LLC v. THF Silver Spring Development, L.P. , 959 A.2d 438, 444 (Pa. Super. 2008) ("Appellant's issue on appeal is waived because [Appellant] has failed to set forth in its appellate brief any citation to legal authority pertaining to [Appellant's] argument.").
Waiver notwithstanding, Doris' claims lack merit. Doris contends that "[w]here it is clear that the Estate is practically insolvent, equity would seem to demand that the expense of defending an obviously frivolous and meanspirited Petition be assessed against the wrongdoing Petitioner ([Thomas]) since it was his conduct that caused the innocent litigant ([Doris]) to incur this considerable expense." Id. at 16 (emphasis added). However, Doris disregards that the trial court's exercise, or lack thereof, of its equitable powers, will not be disturbed absent an abuse of discretion, which is a finding that Doris' unsupported arguments do not substantiate. See Coldren v. Peterman , 763 A.2d 905, 907 (Pa. Super. 2000); see also Korn v. Epstein , 727 A.2d 1130, 1135 (Pa. Super. 1999) ("arguments not appropriately developed are waived") (emphasis in original) (internal citations omitted).
In limiting the award of Doris' attorney's fees, the trial court offered the following analysis:
[Thomas] objects to the fees charged by Attorney Woodbury for the representation of Doris in the litigation against the surcharge and defending Doris against the objections to the account. [Thomas] also requests that the attorney's fees charged by Attorney Woodbury should not exceed what is deemed reasonable under the Johnson Estate, 4 Fiduc. Rep.2d 6 (O.C. Div. Chester 1983). It has been held that the attorney seeking the compensation is responsible for presenting facts that show he or she is entitled to such compensation. In re Estate of Preston, 560 A.2d 160, 164 (Pa.Super. 1989). Additionally, the Orphans' Court Division "has both the power and duty on its own motion to pass upon the reasonableness of compensation." In re Thompson's Estate, 232 A.2d 625, 628 (Pa. 1967). In determining the reasonableness of attorney's fees, Pennsylvania courts have looked to the Johnson Estate, 4 Fiduc. Rep.2d 6 (O.C. Div.Chester 1983) for guidance and also consider the following factors:Trial Court Opinion, 8/7/12, at 7-10 (footnote omitted). We agree with the trial court. See In re Novosielski , 992 A.2d 89, 104 (Pa. 2010) ("Absent extraordinary circumstances, an appellate court will not substitute its judgment for that of the fact finder."). Here, no extraordinary circumstances exist to warrant our reversal of the trial court's order regarding Doris' attorney's fees.
[1] the amount of work performed; [2] the character of the services rendered; [3] the difficulty of the problems involved; [4] the importance of the litigation; [5] the amount of money or value of the property in question; [6] the degree of responsibility incurred; [7] whether the fund involved was 'created' by the attorney; [8] the professional skill and standing of the attorney in his profession; [9] the results he was able to obtain; [10] the ability of the client to pay a reasonable fee for the services rendered; and, very importantly, [11] the amount of money or the value of the property in question.In re LaRocca's Trust Estate, 246 A.2d 337, 339 (Pa. 1968).
Additionally, Courts have held that "the estate was obligated to pay the reasonable costs of defending against the
attempted surcharge of the executors by the residuary beneficiaries [because it would be] unjust to require them personally to bear the reasonable costs of the defense of the suits brought against them solely by reason of their positions as executors." In re Estate of Browarsky, 263 A.2d 365, 366 (Pa. 1970). This Court has extended the rationale in Browarsky to cases involving the defense of objections to an Account for an Estate. In re Estate of Wingert (C.P. York December 3, 2009). However, the Estate is still only obligated to pay what is reasonable based on the factors listed in La Rocca Estate, in the defense of surcharges and in the defense of objections.
The Court holds that Attorney Woodbury is entitled to the $12,500.00 for his administration of the Estate. Although the Johnston Estate would offer a lower rate for compensation in an Estate of this size, it is clear that this Estate provided some complex obstacles that Attorney Woodbury had to overcome. Attorney Woodbury had to resolve many issues such as: the fiduciary's payments out of her personal checking accounts because no Estate funds were available, the real estate needed to be promptly sold, prior counsel did not fully advise Doris on her duties has [sic] executrix, and Attorney Woodbury had to prepare for the litigation against Doris for a surcharge and removal as executrix. Additionally, Attorney Woodbury stated several times that he has [sic] a fee agreement with Doris in advance, placing a cap on the administration at $12,500.00. Furthermore, the Court will not involve itself in the payment of $4,000.00 from the fiduciary commission because that was a separate agreement between Doris and Attorney Woodbury and does not concern this Court for purposes of reducing or eliminating it. However, the Court takes this into consideration in determining the reasonableness of Attorney Woodbury's other fees.
Attorney Woodbury requests that the Court allow his attorney's fees for defending Doris in the surcharge litigation and in defending the objections to the First and Final Account come from the Estate. The Court will allow the $5,162.50 in defense of the objections but will not allow a charge against the Estate of $31,903.50 for the defense of the surcharge. As mentioned above, an executor should not be penalized for defending the suits brought against them based on their positions as executors; however, the fees must still be reasonable. The fees charged by Attorney Woodbury are excessive and unreasonable
for the work done. Attorney Woodbury would essentially be taking over half of the worth of the Estate in his fees.
Additionally, Attorney Woodbury was already compensated $4,000.00 out of the fiduciary commission by Doris for his assistance in selling the real estate, seeking out potential buyers and negotiating its sale. Further, the record does not include the actual fee agreement between Attorney Woodbury and Doris that indicates a cap was placed on attorney's fees which excluded any litigation fees incurred during the administration of the Estate. Most importantly, the Court finds that the surcharge allegations and the objections to the account are almost identical. Both the surcharge and objections relate to allegations of mismanagement of the Estate, taking too long to sell the real estate, and excessive attorney's fees. Therefore, preparation and resolution of these issues clearly overlap. Accordingly, Attorney Woodbury is not entitled to fees for both defending the objections and defending the surcharge because the fees are unreasonable.
Thomas summarizes his claims of trial court error as follows:
The Orphans' Court erred in not finding that [Doris] breached her fiduciary duty to the Estate. The whole record at trial, exhibits and testimony, proved that [Doris] failed to administer the Estate in a timely manner, commingled funds, and failed to keep an accounting of her actions from May, 2005 to the summer of 2010. [Doris'] breach of duty resulted in an estate of approximately $165,000.00 being squandered to the extent that it was rendered insolvent and no distribution will be made to the beneficiaries.Thomas' Brief at 7.
As a result of [Doris'] negligence, a surcharge lies to compensate the Estate and the heirs in an amount sufficient to do equity and justice in this case.
In declining to surcharge Doris, the trial court explained:
The Court finds that [Doris] will not be surcharged for her actions as Executrix of the Estate. Pennsylvania courts have measured the duty of an executor to be "[t]he measure of diligence and care that which a man of ordinary prudence would practice in the care of his own estate. . . [a] reasonable degree of vigilance and the exercise of good faith is the standard of the [executor's] duty." In re Lux's Estate, 389 A.2d 1053, 1057 (Pa. 1978) (citing Fahnestock's Appeal, 104 Pa. 46, 52 (1883). A surcharge is the "penalty imposed by the Court for the failure of a fiduciary to meet his [or her] duty of care owed [to the] Estate and for the failure to exercise common prudence, common skill and common caution in the performance of the fiduciary's duty and is imposed to compensate beneficiaries for loss caused by the fiduciary's want of due care." Id.Trial Court Opinion, 8/7/12, at 2-6 (footnotes omitted).
[Thomas] argues that [Doris] should be surcharged because the property was not sold until five years after the death of [Decedent] and was sold at a price...which Thomas argues to be inadequate. Additionally, Thomas requests a surcharge for the unnecessary expenses relating to the Estate, the unnecessary attorney's fees that have been paid from the Estate, reimbursement for expenses incurred by [Thomas'] attorney, and costs in bringing this action. Thomas requests the surcharge based on allegations that Doris used a personal account to pay Estate bills, the Estate had to pay unwarranted property taxes for executrix's failure to quickly sell the real estate, and for the failure to use a realtor or auctioneer to sell the property.
The Court finds that [Doris] made a good faith effort to administer the Estate. She exercised common prudence, skill and caution based on the circumstances she was placed in and should not be surcharged for her actions. First, the Court notes that [Doris] originally sought counsel to help with the administration of the Estate and heavily relied on the help and advice of counsel. Although this effort did not turn out to be
advantageous to neither Doris as the Executrix nor the beneficiaries of the Estate; it demonstrates to the Court that Doris made a good faith effort to competently and efficiently complete the administration. Further, Doris had several obstacles to overcome in the administration of [Decedent's] Estate including: a house in a state of disrepair, a mentally challenged nephew still living on the property that no other family member would take in, and prior counsel that did not specialize in the area of estate administration and was transitioning out of her private practice.
The testimony shows Thomas substantially participated in many attempts to sell the property. Specifically, [Thomas] testified that advertisements were placed on Craig's List, a sign was posted in the yard on a heavily traveled road, and several advertisements were placed in the paper; however, no realtor or auctioneer was hired to sell the property. Thomas, however, was the individual to place the ads on Craig's List on more than one occasion, placed a sign in the yard and showed the property to people who saw the sign. It appears to the Court that Thomas intermittently participated in the [attempted] sale of the real estate throughout the five year time span. Furthermore, [Thomas'] testimony indicates that there was clean-up work in the basement and other areas of the property that required several people to help and took the entire period of five years.
Because the house was in a state of disrepair and major clean-up was necessary, the Court cannot find Doris failed to exercise common prudence and skill to administer the Estate because she had to take the time to clean the house before showing it to potential buyers. After the property was fixed up and [the mentally ill nephew] vacated the property, Doris showed the property to interested purchasers and took the steps necessary to sell the property.
Doris admits that sometimes people came to see the property, and she had to tell them it was not clean inside; she however, took them through the property anyway. Moreover, the price Doris asked for the real estate was based on advice from realtors. It was not an arbitrary number that Doris came up with for this particular parcel of property.
***
Thomas also requests a surcharge for unnecessary expenses paid. The record shows, however, that the bills paid
were not unnecessary and were paid from [Doris'] personal account when the funds she had available in the Estate diminished. Specifically, Doris had to personally pay the income taxes, utilities, insurance, and all of the costs involved with maintaining this property. Although Thomas argues that Doris should be surcharged for commingling assets, the Court finds it credible that Doris kept track of which monies were hers and which belonged to the Estate. The Court also finds that Doris was not sufficiently advised to open an Estate account when she became executrix even though she sought counsel to advise her on these types of matters.
Our review of the record comports with the trial court's assessment that Doris did not negligently discharge her duties as executrix of Decedent's estate. We have explained that "where the executor of an estate fails to fulfill his fiduciary duty of care, the court may impose a surcharge against him." See In re Estate of Westin , 874 A.2d 139, 144 (Pa. Super. 2005) (internal citations omitted). Here, the record is devoid of any evidence of bad faith in Doris' performance of her duties as executrix. While Thomas assails Doris' placing estate monies in her own account and in an estate account, Thomas concedes that "[Doris] used these accounts to pay the Estate bills." Thomas' Brief at 5 (emphasis supplied). As evidence that Doris squandered estate assets, Thomas reports that the estate's "real estate was sold...for...$74,000.00" and its buyer later resold the property for $169,900. Id. However, Thomas acknowledges that the "estate's buyer made repairs" prior to the sale, id., and the record indicates that the estate was financially capable of undertaking such renovations. Further, the testimony presented at the surcharge hearings does not support a finding of any negligence in Doris' handling of the estate. Accordingly, we will not disturb the trial court's order declining to surcharge Doris. See Cherwinski , 856 A.2d at 167.
Our affirmance of the trial court's determination not to surcharge Doris recognizes:
Because the Orphans' Court sits as the fact-finder, it determines the credibility of the witnesses, and on review, we will not reverse its credibility determinations absent an abuse of that discretion. In re Estate of Presutti, 783 A.2d 803, 805 (Pa. Super. 2001) (quoting In re Estate of Angle, 777 A.2d 114, 122-23 (Pa. Super. 2001)). If the court's findings are properly supported, we may reverse its decision only if the rules of law on which it relied are palpably wrong or clearly inapplicable. Owens v. Mazzei, 847 A.2d 700, 706 (Pa. Super. 2004) (citing In re Estate of Harrison, 745 A.2d 676, 678-79 (Pa. Super. 2000), appeal denied, 563 Pa. 646, 758 A.2d 1200 (2000)).In re Estate of Fritts , 906 A.2d 601, 606 (Pa. Super. 2006).
In this case, the trial court considered the testimony adduced at trial by Thomas and his expert, and determined:
The Court finds [Thomas'] testimony disingenuous when he states that a person would not be appalled to buy a home when it is in a state of disrepair. Moreover, it is obvious that the real estate market is not at its peak, nor has it been for several years; which most likely added to [Doris'] inability to quickly sell the real estate for a considerable price. The Court also notes that Thomas avoided many questions and dodged answers that could have potentially damaged his case. His lack of cooperation deprived the Court as to what price he thought the house should have been sold. Rather, he stated that it was not his decision, so he did not have an opinion on it.Trial Court Opinion, 8/7/12, at 5.
Additionally, the expert on estate matters testified regarding the correct way to administer an Estate. The Court finds it is irrelevant because Doris sought counsel to help with the administration and did not undertake this feat on her own. Additionally, Thomas was sporadically helping Doris with the sale of the property. Clearly, she did not rely solely on her own abilities and knowledge of administration. The real estate appraisal expert witness's testimony carries little weight because he never entered the inside of the building, which testimony suggested the inside to be deplorable and in a state of disrepair. These attributes would certainly have lowered the value of the property. His appraisal was based on photographs not in evidence and descriptions given to him by [Thomas].
We are not persuaded by Thomas' contention that the trial court erred or abused its discretion in failing to credit the testimony and arguments set forth by Thomas to support the surcharge against Doris. See Fritts , 906 A.2d at 606; see also Commonwealth v. Boczkowski , 846 A.2d 75, 82 (Pa. Super. 2004) citing Commonwealth v. Tharp , 830 A.2d 519, 527 (Pa. 2003) (a fact finder "[is] not obligated to accept" evidence submitted by a party). Given the foregoing, we affirm the trial court.
Order affirmed.