Opinion
File No. 2014-753/B
01-12-2022
PROCEEDING BY DAVIDSON, SOCHOR, RAGSDALE & COHEN to Fix and Determine Compensation per SCPA § 2110 for work performed for the Estate of Clifford J. Hart, Deceased.
Martin Wm. Goldman, Esq., Attorney for Counterclaimants, 60 East 42nd Street, 47th Floor, New York, NY 10165 Robert J. Bergson, Esq., Abrams Garfield Margolis Bergson, LLP, Attorneys for Petitioner, 1430 Broadway, 17th Floor, New York, NY 10018 John Walsh, Esq., Walsh & Walsh, Esqs., Attorneys for Petitioner, 55 State Street, Hackensack, NJ 07601
Martin Wm. Goldman, Esq., Attorney for Counterclaimants, 60 East 42nd Street, 47th Floor, New York, NY 10165
Robert J. Bergson, Esq., Abrams Garfield Margolis Bergson, LLP, Attorneys for Petitioner, 1430 Broadway, 17th Floor, New York, NY 10018
John Walsh, Esq., Walsh & Walsh, Esqs., Attorneys for Petitioner, 55 State Street, Hackensack, NJ 07601
Keith J. Cornell, J. Before the Court is a motion by the Estate of Clifford Hart, Jake Hart, Alex Hart, and Naomi Hart (the "Counterclaimants") for partial summary judgment on the fee petition filed by Davidson, Sochor, Ragsdale & Cohen ("Petitioner") based on Petitioner's failure to comply with the 22 NYCRR § 137 mandatory fee dispute resolution procedures. Counterclaimants seek dismissal of the fee petition and severance of their malpractice counterclaims. Petitioner opposes the motion for partial summary judgment and separately moves to strike the Counterclaimants' answer with counterclaims as a sanction for failure to comply with discovery.
Background
Decedent Clifford Hart passed away on November 14, 2014. Mr. Davidson, Decedent's long-time attorney and drafter of Decedent's will, and Mr. Davidson's firm, Davidson, Sochor, Ragsdale & Cohen ("Petitioner") began performing work on behalf of the Estate on November 24, 2014. Mr. Davidson alleges that attorney Martin Goldman reached out to him on November 25, 2014 on behalf of Alex and Jake, Decedent's sons (and Mr. Goldman's godsons). Mr. Davidson alleges that he and Mr. Goldman communicated frequently in December, January, and February about the Estate. On December 10, 2014, Gregory H. Cayne, Esq., a member of Davidson, Sochor, Ragsdale & Cohen, filed a petition as attorney for Jake Hart seeking Letters of Administration c.t.a. and seeking admission of Decedent's Last Will and Testament to probate. The Will was admitted to probate by decree on January 28, 2015 and Letters of Administration c.t.a. issued to Jake Hart on the same date. Petitioner allegedly provided Jake with a retainer agreement for him to sign in his capacity as Administrator, but Jake did not sign or return it. Allegedly, in late February, Mr. Davidson was informed by Mr. Goldman that he had instructed Jake not to pay the firm's invoices.
On June 1, 2015, the instant proceeding was initiated by Petitioner seeking the fixing and determination of fees pursuant to SCPA § 2110. Petitioner sought fees of $26,532.50 and disbursements of $984.50 for services rendered from November 14, 2014 through February 26, 2015. On October 26, 2015, the Estate, Jake Hart, Alex Hart, and Naomi Hart filed an answer with affirmative defenses and counterclaims of malpractice in response to the fee petition. The Estate and the three individuals are represented by Mr. Goldman.
Naomi Hart is Decedent's ex-wife and mother of Jake and Alex. She is the Successor Trustee of the Clifford J. Hart Revocable Trust. It is not clear what role she plays in this proceeding.
On September 16, 2016, the Estate filed a motion for summary judgment in which it argued that the failure of Petitioner to maintain an office in New York in violation of Judiciary Law § 470 disqualified Petitioner from being compensated for the legal work done from November 2014 through February 2015. Counterclaimants also sought to have the malpractice counterclaim severed from the fee petition. This Court denied both the motion for summary judgment and the motion to sever the counterclaim. See In re Clifford Hart , File No. 2014-735/B (Surr. Ct. Rockland Co. April 6, 2017). Counterclaimants moved to reargue, which motion was granted, but the Court adhered to its original determination and declined to grant summary judgment in Counterclaimants' favor or sever the counterclaim. See In re Clifford Hart , File No. 2014-735/B (Surr. Ct. Rockland Co. August 28, 2017). Both decisions were appealed. Both decisions were affirmed. See In re Clifford Hart , 194 A.D.3d 931, 149 N.Y.S.3d 182 (2d Dept. 2021).
Counterclaimants now return with another attempt to dismiss the petition based on a different theory. Counterclaimants argue that as a matter of law they are entitled to dismissal of the fee petition because Petitioner did not serve them with notice of their right to arbitrate a fee dispute per 22 NYCRR § 137.6 (a)(1). In response, Petitioner argues that SCPA § 2110 "Compensation of Attorneys" and the associated rule at 22 NYCRR § 207.45 are the governing statutes for this petition, rather than the mandatory arbitration rule found at 22 NYCRR § 137.0 et seq. Petitioner argues that this second summary judgment motion is improper, as successive summary judgment motions are disfavored. Petitioner also argues that this ground for dismissal cannot be considered because it was not alleged in the amended answer with counterclaims filed on April 26, 2016. Counterclaimants reply that this Court lacks subject matter jurisdiction over the petition because the mandatory arbitration notice was never served.
Separately, Petitioner seeks to renew its request to strike Counterclaimants' Amended Answer with Counterclaims. Petitioner argues that Counterclaimants have failed to pay the sanction ordered by this Court on August 3, 2021 and failed to comply with the discovery ordered in the May 5, 2021 decision. Petitioner seeks attorneys' fees associated with bringing this application.
In response to the motion to renew, Counterclaimants restate the substance of their summary judgment motion, primarily arguing that this Court lacks jurisdiction over the controversy. Counterclaimants do not claim to have complied with the sanction order or the outstanding discovery order. Mr. Goldman "vigorously rejects" the accusation that he is guilty of contumacious misconduct. Counterclaimants raise a previously rejected argument that they need not comply with discovery because they did not approve of the organization of Petitioner's document production. In reply, Petitioner notes Counterclaimants do not deny that they have not paid the sanction imposed by the Court or produced documents or a privilege log as directed by this Court. Petitioner argues that striking the Answer with Counterclaims is the only way for the Court to maintain the integrity of the litigation process. DISCUSSION
I. Motion for Summary Judgment for Failure to Comply with Part 137
The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law by tendering sufficient admissible evidence to eliminate any material issues of fact from the case. See Sillman v. Twentieth Century-Fox Film Corp. , 3 N.Y.2d 395, 165 N.Y.S.2d 498, 144 N.E.2d 387 (1957). The movant bears the burden of proving entitlement to summary judgment, and the failure to make such a showing requires denial of the motion, regardless of the sufficiency of the opposing papers. See Winegrad v. New York Univ. Med. Ctr. , 64 N.Y.2d 851, 487 N.Y.S.2d 316, 476 N.E.2d 642 (1985). Once sufficient proof has been offered, the burden then shifts to the opposing party who, in order to defeat the motion for summary judgment, must proffer evidence in admissible form that raises a triable issue of fact. See Zuckerman v. City of New York , 49 N.Y.2d 557, 427 N.Y.S.2d 595, 404 N.E.2d 718 (1980).
Here, Counterclaimants allege that Petitioner failed to comply with the notice provisions of 22 NYCRR § 137, which divests the Court of jurisdiction and requires dismissal of the fee petition. In the initial petition filed in this matter on December 10, 2014, the proposed engagement letter was attached as Exhibit D to the attorney affirmation. The "Agreement to Provide Legal Services" does not include the required Part 137 language. The answer with counterclaims does not specifically raise the failure to include Part 137 language in the proposed engagement letter as an affirmative defense or objection. Instead, in the first objection and point of law, the Counterclaimants allege that "Petitioner, admittedly a New Jersey law firm, is not authorized to practice law in New York State and failed to meet its responsibility to obtain from the Estate and/or administrator either a written retainer agreement and/or a letter of engagement as it was required to by NYCRR § 1215.1." Amended Verified Answer, Affirmative Defenses, and Respondents' Counterclaims to Petition at ¶6. The same issue is raised as the first affirmative defense. See id. ¶7. The second affirmative defense also cites the failure to obtain a letter of engagement in violation of NYCRR § 1215.1 and argues that Petitioner may only recover (if at all) on the basis of quantum meruit. The answer does not raise the issue that is the focus of this motion, the failure to provide the notice required by 22 NYCRR § 137.6(a)(1).
Petitioner does not claim that the Part 137 notice was sent. Instead, Petitioner argues that the Part 137 arbitration rules do not apply in this case because the Surrogate's Court Procedure Act provides an alternate process per SCPA § 2110. Therefore, there is no dispute on the one fact issue raised by Counterclaimant in the motion (whether the notice was sent), making it appropriate for a ruling on summary judgment.
A. History of SCPA § 2110
Warren's Heaton on Surrogate's Practice reviews the history of the Surrogate's authority to fix attorney's fees. See 8 Warren's Heaton on Surrogate's Court Practice § 106.01. Prior to 1916, if a fiduciary disputed the fees charged by the estate's attorney, the attorney would bring an action at law against the fiduciary in their individual capacity. However, in In re Rabell , 175 A.D. 345, 162 N.Y.S. 218 (2d Dept. 1916), the Appellate Division held that if a fiduciary refused to pay the full compensation of the attorney, the Surrogate's Court had jurisdiction to fix the amount of the fee and direct its payment from the estate in a special proceeding. In a subsequent matter, the New York County Surrogate's Court found that it had jurisdiction to determine the value of the services an attorney rendered to an estate and direct payment of fees out of the estate assets. In re Shipman , 116 Misc. 405, 189 N.Y.S. 894 (Surr. Ct. N.Y. Co. 1921), aff'd , 200 A.D. 896, 192 N.Y.S. 950 (1st Dept. 1922), aff'd , 234 N.Y. 499, 138 N.E. 422 (1922). In 1923, the Legislature enacted former Surrogate's Court Act § 231-a (the predecessor to SCPA § 2110 ), which embodied the procedure set forth in Rabell and Shipman .
SCPA § 2110 authorizes the Court to fix and determine the compensation of an attorney at any time during the administration of the estate. SCPA § 2110(2) directs that the proceeding shall be instituted by petition of, inter alia , an attorney who has rendered services to the estate. The Uniform Rules for Surrogate's Court require that an attorney file an affidavit of services in any proceeding to determine attorney's fees. See 22 NYCRR § 207.45(a). The Court bears the ultimate responsibility for approving legal fees that are charged to an estate and has the discretion to determine what constitutes reasonable compensation for legal services rendered in the course of the administration of an estate. See Matter of Stortecky v. Mazzone , 85 N.Y.2d 518, 626 N.Y.S.2d 733, 650 N.E.2d 391 (1995) ; Matter of Vitole , 215 A.D.2d 765, 627 N.Y.S.2d 444 (2d Dept. 1995) ; Matter of Verplanck , 151 A.D.2d 767, 767, 543 N.Y.S.2d 138 (2d Dept. 1989) (surrogate "bears the ultimate responsibility to decide," the reasonableness of compensation for legal services rendered to an estate); SCPA § 2110(3) (allowing Court to direct attorney to refund fees in excess of fair value of services rendered). This power of the Surrogate to set fees is superior to the parties' consent to a requested fee. See Stortecky , 85 N.Y.2d at 526, 626 N.Y.S.2d 733, 650 N.E.2d 391 ("[T]he Surrogate had the authority to inquire into the reasonableness of counsel's fee even though agreed upon by the executor and assented to by the beneficiaries."). The Court is not bound by the terms of a retainer agreement. See Matter of Williams , 168 A.D.3d 753, 753, 89 N.Y.S.3d 646 (2d Dept. 2019) ("the Surrogate bears the ultimate responsibility of deciding what constitutes a reasonable legal fee, regardless of the existence of a retainer agreement"); In re Guattery , 278 A.D.2d 738, 717 N.Y.S.2d 764 (3d Dept. 2000) (absence of written retainer agreement did not prevent Surrogate from fixing attorney's fees); Estate of Paula M. Venezia , 2008 NY Misc. LEXIS 6644, 240 N.Y.L.J. 77 (Surr. Ct. Kings Co. 2008) (citing Matter of Schanzar. , 7 A.D.2d 275, 182 N.Y.S.2d 475 (1st Dept. 1959) ).
The Surrogate also has the jurisdiction to determine attorney malpractice issues in a SCPA § 2110 proceeding to fix attorney's fees. See In re Estate of Tarka , 293 A.D.2d 396, 396, 740 N.Y.S.2d 627 (1st Dept. 2002) ("The court's jurisdiction extended to ... allegations of malpractice inasmuch as such claims allegedly arose in connection with the administration of the estate."); Haskel & Lancaster , 2001 NYLJ LEXIS 160, NYLJ, Jan. 5, 2001 at Pg. 2, (col. 6) (Surr. Ct. Nassau Co. 2001) (Radigan, J.). B. History of 22 NYCRR § 137
Effective March 4, 2002, the Rules of the Chief Judge were amended to require attorneys to provide clients with a written letter of engagement. See NYCRR § 1215.1. The regulation instructs that the engagement letter address three topics: the scope of services to be provided; an explanation of the fees to be charged; and, "where applicable," a notification that the client may have a right to arbitrate fee disputes pursuant to 22 NYCRR § 137. Part 137 contains the regulations for the New York State Fee Dispute Resolution Program, which "provides for the informal and expeditious resolution of fee disputes between attorneys and clients through arbitration and mediation." 22 NYCRR § 137.0. To ensure that clients are aware of their right to arbitrate, 22 NYCRR § 137.6(a)(1) requires an attorney to forward a written notice to their client called "Notice of Client's Right to Arbitrate."
The rules are found in the New York Codes, Rules & Regulations, Title 22 "The Judiciary" Subtitle B. Courts, Chapter IV. Supreme Court, Subchapter E. All Departments. Part 1215.
The rules are found in the New York Codes, Rules & Regulations, Title 22 "The Judiciary" Subtitle A. Judicial Administration, Chapter I. Standards and Administrative Policies, Subchapter C. Rules of the Chief Administrator of the Courts. Part 137.
Certain matters are exempted from the Part 137 rules. Included among the exemptions are "claims involving substantial legal questions, including professional malpractice or misconduct" and "disputes where the fee to be paid by the client has been determined pursuant to statute or rule ... or where the fee has been determined pursuant to a court order." § 137.(b)(3),(5). Failure to provide the client with written notice of their right to elect to submit the fee dispute to arbitration, and the failure to allege in the complaint that either the notice was served or that arbitration is inapplicable, has been held to require dismissal of the complaint. See Zisholtz & Zisholtz, LLP v. Mandel , 165 A.D.3d 1312, 86 N.Y.S.3d 221 (2d Dept. 2018) ; Pascazi Law Offices, PLLC v. Pioneer Natural Pools , Inc., 136 A.D.3d 878, 25 N.Y.S.3d 325 (2d Dept. 2016). However, dismissal is without prejudice to refile after the proper service of the notice, should the offer of fee arbitration not be accepted by the client.
Incredibly, only three published cases have considered the interplay of SCPA § 2110 and the Part 137 Rules. In the Estate of Marie A. Henriques , the New York County Surrogate's Court dismissed without prejudice a fee petition filed by a law firm that had represented a respondent party, Antonio Henriques, because the estate and the firm agreed to pursue arbitration per Part 137. See 2014 NYLJ LEXIS 2051, NYLJ, Aug. 20, 2014 at Pg. p.22, col.1 (Surr. Ct. NY Co. 2014). A second case found the Part 137 Rules inapplicable because the fees in dispute were over $50,000, and therefore exempt from the Dispute Resolution Program. See Estate of Clarke , 2004 NYLJ LEXIS 3128, NYLJ, Jul. 15, 2004 at Pg. 21, col. 3 (Surr. Ct. Bronx Co. 2004). Finally, in a Surrogate's Court case in New York County, the Court denied a client's motion to compel arbitration of a fee dispute. See Estate of Julia Elizabeth Taschereau , 2006 NY Misc. LEXIS 6303 (Surr. Ct. NY Co. July 31, 2006). The Taschereau decision noted that the attorney's retainer agreement referred to the option for arbitration per Rule 137 but did not have all of the required language. See id. *11. However, the Court also noted that arbitration would not be available because there were claims of malpractice. See id. *12. Finally, the Court dismissed the attorney's cross-motion for determination of his fees because he had not brought the petition per SCPA § 2110. See Taschereau *13. In a matter more akin to the one before this Court, the Kings County Surrogate's Court rejected a respondent's argument that the petitioning law firm was required to submit to fee dispute arbitration prior to filing an SCPA § 2110 application. See Estate of Rose Mary McGushin , 2013 NYLJ LEXIS 7294, NYLJ, Apr. 1, 2013 at p.23, col.4 (Surr. Ct. Kings Co. 2013). The Court distinguished between a fee dispute and "a petition that is an application to determine the reasonableness of the petitioner's compensation," noting that the Surrogate's Court had both the authority and the obligation to determine legal fees. Id. at *7. The opinion did not specifically mention the Part 137 Rules, but flatly rejected the argument that any type of mandated fee arbitration must precede filing of a SCPA § 2110 petition.
Finally, the treatise most frequently cited on Surrogate's Court practice, Warren's Heaton, concludes that SCPA § 2110 fee petitions should be exempt from Part 137. See 9 Warrren's Heaton on Surrogate's Court Practice § 119.04[8] "Legal Fees Not Subject to Arbitration." The treatise notes that enforcement of an arbitration award for legal fees performed on behalf of an estate would likely be referred to Surrogate's Court, where an independent inquiry into the reasonableness of the award would be conducted. The treatise concludes that it is "unlikely that the Surrogate's Court would defer to the arbitrator's award for legal fees." Id. (citing Raymond v. Davis' , 248 N.Y. 67, 161 N.E. 421 (1928) ).
C. Conclusion
While this Court certainly appreciates the benefits of alternative dispute resolution, and in fact, routinely orders matters to mediation per the 2020 Presumptive Mediation rules, this Court must agree with the Kings County Surrogate's Court that failure to comply with the Part 137 Rules for arbitration of fees disputes does not require dismissal of a SCPA § 2110 petition nor divest this Court of subject matter jurisdiction over the petition. First, as that Court pointed out, Part 137 Rules are aimed at "fee disputes" filed by complaint. A fee petition in Surrogate's Court is not necessarily a fee dispute at all. It is a petition for the setting of fees, which is frequently uncontested.
Second, § 2110 gives the Surrogate the obligation to ensure that fees charged to an estate are fair and reasonable, regardless of the fiduciary's consent to the fees. Given the Surrogate's obligation to supervise the fees paid by an estate to its attorneys, the requirement that the matter be sent to arbitration would directly conflict with the Surrogate's duty. In fact, there are a number of subjects where an arbitration agreement is not enforceable because arbitration would be improper delegation of the Court's authority. See Matter of Aimcee Wholesale Corp. (Tomar Prods.) , 21 N.Y.2d 621, 289 N.Y.S.2d 968, 237 N.E.2d 223 (1968) (enforcement of NYS antitrust laws); Bidermann Indus. Licensing, Inc. v. Avmar N.V., 173 A.D.2d 401, 570 N.Y.S.2d 33 (1st Dept. 1991) (disqualification of an attorney from representing a particular party); Durst v. Abrash , 22 A.D.2d 39, 253 N.Y.S.2d 351 (1st Dept. 1964), aff'd 17 N.Y.2d 445, 266 N.Y.S.2d 806, 213 N.E.2d 887 (1965) (usury claims asserted by borrowers); Glauber v. Glauber , 192 A.D.2d 94, 600 N.Y.S.2d 740 (2d Dept. 1993) (custody of and visitation with children). Specifically within the field of trusts and estates, the probate of a will, distribution of the estate, appointment of an administrator, accounting proceedings generally, kinship proceedings, will construction, guardianships, and controversies relating to the conduct of a fiduciary are all areas where New York Courts have held arbitration agreements unenforceable. See 9 Warren's Heaton on Surrogate's Practice § 119.04[1]-[7].
Arbitration of a matter that ends in an unenforceable settlement does not serve the goals of a "more efficient, affordable and meaningful civil justice process." "Court System to Implement Presumptive, Early Administrative Dispute Resolution for Civil Cases," Unified Court System Press Release, May 14, 2019. This Court concludes that since it has the duty to review and approve fees even in the face of the consent of the parties, an arbitration agreement on fees would be similarly unenforceable. Therefore, a party cannot be penalized for failure to offer participation in an alternate dispute resolution process that would still require application to the Surrogate's Court for approval of fees.
Finally, the Court finds that even if the Part 137 Rules did apply to Surrogate's Court fee petitions, Counterclaimants cannot raise failure of the Petitioner to comply with the Part 137 Rules at this late date in this matter. The purpose of Part 137 is to provide an informal and expeditious resolution of disputes. This matter has been before the Court for seven years. The fee dispute has already been to the Appellate Division and has been the basis for eight motions before this Court. The failure to provide the Part 137 Notice was first raised in the last year. It was not mentioned in the Answer or in the many, many prior motions. Dismissing the fee petition because the Petitioner failed to serve a notice for optional arbitration, which would have been declined by the Counterclaimants so that they could pursue their malpractice claims, and which would have resulted in an unenforceable agreement, if accepted, would be a waste of time, money, professional resources, and paper of almost epic proportions. In fact, the Court suspects that this entire motion is an effort at wasting Petitioner's time and money. Therefore, even if the Part Rule 137 applied, in the interest of justice, the Court declines to dismiss this SCPA § 2110 fee petition for failure to provide notice of the Part 137 Rules.
This matter is a sad example of what happens when neither side directly bears the cost of their litigation strategy. Counterclaimants are represented by their godfather, Mr. Goldman, whose work is a fair proof of the cliché that "you get what you pay for." Petitioner is primarily represented by malpractice counsel, so at least they have no financial constraint on responding to Counterclaimant's successive motions.
II. Motion to Renew Motion to Strike the Answer with Counterclaims
On a motion to renew per CPLR § 2221(e), a movant must present new facts and a valid excuse for failure to previously submit such facts. See Halliday v. Halliday , 218 A.D.2d 729, 630 N.Y.S.2d 767 (2d Dept. 1995). Here, Petitioner renews the motion because of the new fact that Counterclaimants have again failed to comply with discovery deadlines. Petitioner also points out that the Counterclaimants have failed to pay the sanction of $8,995.50 imposed by this Court in its Order of August 3, 2021.
Amazingly, Counterclaimants do not deny either allegation. Instead, they argue that the Court lacks jurisdiction to decide the matter, rehashing the arguments about Part 137 made in their summary judgment motion. Counterclaimants have chosen a perilous litigation strategy.
As this Court stated in pages 9-10 of the Decision and Order of May 5, 2021, when a party fails to comply with court ordered discovery and frustrates the liberal disclosure rules of the CPLR, the court may strike a pleading as a sanction. See CPLR § 3126(3) ; Stone v. Zinoukhova , 119 A.D.3d 928, 990 N.Y.S.2d 567 (2d Dept. 2014) (affirming striking of answer). Before a court imposes "the drastic remedy of preclusion for disclosure violations, it must determine that the offending party's lack of cooperation with disclosure was willful, deliberate, and contumacious." Tung Wa Ma v. NY City Tr. Auth. , 113 A.D.3d 839, 839, 979 N.Y.S.2d 162 (2d Dept. 2014) (reversing preclusion).
In the Decision and Order of May 5, 2021, this Court reviewed Counterclaimants' years of non-compliance with Petitioner's discovery demands and offered Counterclaimants a final opportunity to respond. See In re Clifford Hart , File No. 2014-735/B (Surr. Ct. Rockland Co. May 5, 2021). The Decision and Order directed Counterclaimants to turn over responsive documents and a privilege log within 14 days or face preclusion. See id. at 11. For reasons that are not known, Counterclaimants did not comply and turned over no information to Petitioner.
"The willful and contumacious character of a party's conduct may be inferred from the party's repeated failure to comply with court-ordered discovery, and the absence of any reasonable excuse for those failures, or a failure to comply with court-ordered discovery over an extended period of time." Hasan v. 18-24 Luquer St. Realty, LLC , 144 A.D.3d 631, 632, 45 N.Y.S.3d 98 (2d Dept. 2016) (internal quotations omitted) (affirming decision striking pleadings). Here, Counterclaimants repeatedly failed to comply with court-ordered discovery, failed to provide any reasonable excuses for their non-compliance, and continued their non-compliance over an extended period of time. There is no reason to believe that Counterclaimants will comply with discovery demands if given more time, and there is no reason to offer them any more time.
When a party refuses to obey an order for disclosure or willfully fails to disclose information which the court had ordered disclosed, the court may make such orders as are just. See JNG Constr., Ltd. v. Roussopoulos , 170 A.D.3d 1136, 96 N.Y.S.3d 655 (2d Dept. 2019) (affirming preclusion and entering default judgment). Given Counterclaimants willful and contumacious failure to comply with Court ordered discovery, this Court is left with no option but to strike Counterclaimants' Answer with Counterclaims. Further, as this Court has repeated in the past, " CPLR § 3126 permits imposition of a monetary sanction, including costs and counsel fees, for failure to properly engage in discovery. See Maxim, Inc. v. Feifer , 161 A.D.3d 551, 78 N.Y.S.3d 98 (1st Dept. 2018) ; Lucas v. Stam , 147 A.D.3d 921, 48 N.Y.S.3d 150 (2d Dept. 2017) ; Matter of Rogers (Bell) , 2021 N.Y. Slip Op. 50329(U), 2021 WL 1536566 (Surr. Ct. Orange Co. 2021) (imposing $3500 as a sanction)." In re Clifford Hart , File No. 2014-735/B at 12 (Surr. Ct. Rockland Co. May 5, 2021). Fees are awarded as a sanction to Petitioner's counsel for the cost of bringing the motion to renew, and such sanction shall be payable personally by Counterclaimants Jake Hart and Alex Hart, and their godfather/attorney Martin Goldman. And so, the perilous litigation strategy met its doom.
III. Unopposed Petition for Attorney's Fees
Having struck the answer and counterclaims, the fee petition is now unopposed. Petitioner seeks $26,532.50 in fees based on 74.30 hours of work and $984.50 in disbursements. Per the contemporaneously prepared bills, Mr. Davidson performed 15.9 hours of the work, which he billed at $475/hour. An associate attorney, Gregory Cayne, performed the other 58.4 hours, which were billed at $325/hour. As discussed at length, supra , the determination of the reasonableness of attorneys' fees is within the sound discretion of the Surrogate. See Stortecky , 85 N.Y.2d 518, 626 N.Y.S.2d 733, 650 N.E.2d 391 (1995). The factors to be taken into account in the fixing of fees, known as the "Potts/Freeman" requirements, include the time expended by the attorney, the size of the estate, the billing practices in the community, the difficulties involved in the matter, the skill required, the attorney's experience, ability and reputation, the responsibilities involved, and the benefit resulting to the estate from the services rendered. See Matter of Freeman , 34 N.Y.2d 1, 355 N.Y.S.2d 336, 311 N.E.2d 480 (1974) ; Matter of Potts' , 213 A.D. 59, 209 N.Y.S. 655 (4th Dept. 1925), aff'd 241 N.Y. 593, 150 N.E. 568 (1925).
The Surrogate is obligated to limit attorney's fees to reasonable amounts. See In re Cook , 41 A.D.2d 907, 343 N.Y.S.2d 189 (1st Dept. 1973), aff'd , 33 N.Y.2d 919, 352 N.Y.S.2d 935, 308 N.E.2d 451 (1973). In addition to being reasonable, the legal services must be necessary. An attorney cannot be compensated from an estate for performance of routine executorial tasks, i.e., work that could have been done by a layperson. See Leffler v. Schwartz , 222 A.D.2d 332, 635 N.Y.S.2d 605 (1st Dept. 1995) ; In re Estate of Passuello , 184 A.D.2d 108, 591 N.Y.S.2d 542 (3d Dept. 1992) ; In re Jones , 168 A.D.2d 448, 562 N.Y.S.2d 568 (2d Dept. 1990) ; In re Estate of Mok , 2021 NYLJ LEXIS 616, NYLJ, Jun. 29, 2021 at p.17, col.3 (Surr. Ct. Monroe Co. 2021) (reducing legal fee from $32,070.00 to $12,732.50 based on finding that much of the time billed was "for calls to the financial institutions that held the decedent's assets; for correspondence with the same institutions; for setting up an estate account and receiving signature cards; and correspondence with decedent's family").
Based on the affirmation of legal services and itemized contemporaneous time records provided by Petitioner, the Court finds that a significant amount of the work performed by Petitioner was executorial in nature rather than legal. All of the time spent calling and emailing various financial institutions to marshal assets, obtaining taxpayer identification numbers, organizing Decedent's papers, corresponding with NJ Bonding, corresponding with doctors, and filing claims were properly the responsibility of the fiduciary, and should have been performed by the Administrator c.t.a. or the Successor Trustee of the Clifford J. Hart Revocable Trust.
The attorney billing records do not differentiate between work for the Trust and work for the Estate. Only fees earned for legal work for the Estate can be approved and fixed in this proceeding.
When a fiduciary delegates to an attorney tasks that are the fiduciary's responsibility, the Court may surcharge the fiduciary's commissions in the amount of the attorneys' fees for such tasks. See In re Shen , 157 A.D.2d 731, 551 N.Y.S.2d 786 (2d Dept. 1990) (affirming order of surrogate's court directing executor to pay part of attorney's fees from his statutory commission because "a substantial portion of the services performed by the attorney were executorial in nature"). Here, the fiduciary has not filed his account or petitioned for settlement, so it is not clear how much he is owed in commissions (if anything). Therefore, the Court cannot order that commissions be used to pay for attorney time spent on executorial matters on this record.
Of the 15.9 hours billed by Mr. Davidson, the Court finds that 2.4 hours were executorial, leaving 13.5 hours and a total approved fee for him of $6,412.50. Of the 58.4 hours attributed to Mr. Cayne, the Court finds that 33.4 of the hours were executorial. Therefore, this Court sets and approves the fees of Mr. Cayne based on 25 hours of legal work for a total of $8,125. Together, the Court approves a legal fee for Petitioner of $14,537.50.
Petitioners seek repayment for disbursements of $984.50. Of that, $869 are described as "admin fees." Unfortunately, that description is not sufficient for the Court to determine if the fees are properly charged to the estate. The filing fee for the Administration Petition was $625. It is not clear what the other $244 covers, so that expense must be disallowed. An additional filing fee of $30 is approved as a charge to the estate. The expenses for FedEx, which totaled $85.50, are disallowed, as such expenses constitute office overhead and are expected to be absorbed by counsel. See, e.g., In re Marsh , 1990-1606/A, N.Y.L.J., Jul. 14, 2015 at Pg. 26 (Surr. Ct. Westchester Co. 2015) (specifically disallowing expenses for travel, mailing, telephone, photocopies, and faxes); In re Muhlemann , N.Y.L.J., Mar. 13, 1997 at Pg. 6, (col. 3) (Surr. Ct. Westchester Co. 1997). The total approved disbursements are $655.
The time has come for this matter to be closed. The construction of the Will has been fully litigated. See In re Clifford Hart , 194 A.D.3d 933, 149 N.Y.S.3d 179 (2d Dept. 2021). A decree settling most of the issues has been signed. The only work left to be completed is for Petitioner's counsel to submit a affirmation of legal services with contemporaneously prepared time entries so that this Court may set the second sanction and for the fiduciary to petition to settle the estate account. Therefore, it is
ORDERED that the motion by Counterclaimants for summary judgment in their favor is DENIED; and it is further
ORDERED that the motion to renew is GRANTED; and it is further
ORDERED that the motion to strike the Answer with Counterclaims for failure to comply with discovery is GRANTED; and it further
ORDERED that the request per CPLR § 3126 for Petitioner's fees and costs for bringing the motion to renew is GRANTED; and it further
ORDERED that Petitioner's attorney Mr. Bergson shall file an affirmation of legal services (with contemporaneously prepared time entries) for the time spent preparing this motion and its reply so that the Court may impose the sanction which shall be personally payable by Counterclaimants Jake Hart and Alex Hart and their attorney Martin Goldman; and it is further
ORDERED that the petition for fees is GRANTED, and the legal fees of Davidson, Sochor, Ragsdale & Cohen are set at $14,537.50 in fees and $655 in disbursements, which amounts shall be a charge against the Estate of Clifford Hart; and it is further
ORDERED that the Administrator c.t.a. shall file his account and petition for judicial settlement within 30 days of the date of this Decision and Order.