Opinion
No. 2015–155.
01-13-2016
In the Matter of the Application of David F. LEWIS Executor of the Estate of Doris M. Lundy, Deceased, for leave to compromise and settle a certain cause of action for personal injury of the decedent and for Judicial Settlement of the Account with respect to proceeds.
Napoli Bern Ripka Shkolnik, LLP by Jaquay B. Felix, Esq. and Jed Kirsch, Esq., of counsel.
Napoli Bern Ripka Shkolnik, LLP by Jaquay B. Felix, Esq. and Jed Kirsch, Esq., of counsel.
David H. Guy, S.
Doris M. Lundy died August 21, 2012, leaving a Last Will and Testament dated June 22, 2011, which was Will was duly admitted to probate by this Court on March 30, 2015. Limited Letters Testamentary were issued on that date to David F. Lewis, one of Ms. Lundy's sons and the named executor of her Will. The limitation in the executor's letters precludes compromise of any wrongful death or related proceedings without Court approval. A personal injury/wrongful death claim relating to decedent's ingestion of the oral medication Pradaxa was pending at the time letters were issued.
A petition has now been filed by the executor, requesting authority to settle the claim, and for Court approval of the payment of expenses and distribution of the net proceeds related to the claim. The executor's petition is supported by an affirmation of counsel and exhibits.
A retainer agreement was entered into by the executor on October 22, 2012 for the handling of this lawsuit. At the time the retainer agreement was entered into, the fiduciary had no authority to do so, his letters not being issued until 2015. The retainer agreement provides for a contingency fee of 40% of the gross settlement, before deduction of any expenses. The lawsuit settled through the Pradaxa Product Liability Litigation Master Settlement Agreement (MSA), ordered by the United State District Court for the Southern District of Illinois (Hon. David R. Herndon) by Order dated December 29, 2014. In a Case Management Order dated May 27, 2014, the District Court also ordered the withholding from settlement funds of 4% for “common benefit fees” and 2% for “common benefit expenses”. While it is not clear from the District Court's Order, it appears that the 4% common benefit fees are deducted from the plaintiff attorney portion of the settlement proceeds and the 2% common benefit expenses are withheld from the client portion of the settlement proceeds.
The Surrogate has jurisdiction and responsibility to review attorneys' fees, even though no party objects to them. Stortecky v. Mazzone, 85 N.Y.2d 518, 626 N.Y.S.2d 733, 650 N.E.2d 391 (1995). Petitioner's retainer agreement with counsel is not binding on this Court. Matter of Lanyi, 147 A.D.2d 644, 538 N.Y.S.2d 183 (2nd Dept., 1989) ; Matter of Warhol, 165 Misc.2d 726, 629 N.Y.S.2d 621 (Surrogate's Court, New York County 1995); Matter of Duke, N.Y.L . J., May 3, 2000, page 28 column 6 (Surrogate's Court, New York County); Roberts v. Moore, 74 Misc.2d 709, 346 N.Y.S.2d 75 (App. Term 1973).
In each Department, the amount of legal fees under a contingency fee arrangement in a personal injury or wrongful death proceeding is limited by Court Rule. In the Third Department, that Rule is 22 NYCRR § 806.13. The retainer agreement between plaintiff's counsel and petitioner provides for a payment of 40% of the gross sum recovered, before disbursements, in excess of the fee computed under either schedule of Rule 806.13(b). The Rule specifically provides that where a contingency arrangement calls for a 1/3 fee, counsel cannot be paid more than that amount, even under what might be deemed extraordinary circumstances. Matter of Bender, 2015 N.Y. Slip OP 51929(U) (Surrogate's Court Broome County, 2015); Matter of Falu, NYLJ, January 22, 2015, page 24, column 5 (Surrogate's Court, Kings County); Matter of Kulaya, NYLJ, 1/18/13 p. 22 column 4 (Surrogate's Court, New York County).
The other Departments have identical rules: 22 NYCRR § 603.7 (1st Dept.); 22 NYCRR § 691.20(e) (2nd Dept.); 22 NYCRR § 1022.31 (4th Dept.).
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The Court sees no basis to allow a fee to plaintiff's counsel for this matter in excess of 1/3 of the recovery. The retainer agreement between counsel and the petitioner cannot be used to circumvent the Rule. Matter of Bender, supra; Matter of Falu, supra; Matter of Kulaya, supra. Based on the language of the retainer agreement, that the plaintiffs would not be responsible for any expenses in the event of recovery, the Court will apply Rule § 806.13(c)(2). The 4% common benefit fee will be deducted from counsel's fees, the 2% common benefit expense from the estate's net recovery.
The petition neglects to request reimbursement of the Surrogate's Court filing fee for this proceeding. That disbursement is also allowed.
This Decision constitutes the Order of the Court. The Court will modify petitioner's submitted Decree accordingly.