Opinion
500095/2006.
Decided on December 4, 2006.
In this hotly-contested Article 81 proceeding concerning the health, care and finances of society icon Brooke Astor, which commenced in late July of this year and settled on October 13, 2006, there are now before the court numerous fee applications, encompassing the services of 56 lawyers, 65 legal assistants, six accountants, five bankers, six doctors, a law school professor, and two public relations' firms.
The total amount of the fees and expenses this court is asked to approve for a three-month period of time is a staggering $3,044,055.71, broken down as follows: (I) Annette de la Renta, temporary guardian of the person: $0.00 (at her request); (II) JPMorgan Chase Bank, N.A. ("JPMorgan"), temporary guardian of the property: $1,241,140.15; (III) Samuel Leibowitz, Esq., court evaluator: $181,852.25; (IV) Susan I. Robbins, Esq., court-appointed counsel to Brooke Astor: $123,841.34; (V) petitioner Phillip Marshall: $518,411.72; (VI) respondent/cross-petitioner Anthony Marshall: $952,983.11; (VII) Charlene Marshall: $19,427.14; and (VIII) medical experts: $6,400. Notwithstanding that no objection to any of the fee requests has been forthcoming, the court has carefully reviewed each and every fee application, and makes the following legal and factual findings.
BACKGROUND
On July 20, 2006, Philip Marshall filed, by order to show cause, a petition seeking to remove his father (and Mrs. Astor's son), Anthony Marshall, as primary care giver of Mrs. Astor, and to void the powers of attorney over her finances and health care proxy he held. Petitioner sought to name a long-time friend of Mrs. Astor, Annette de la Renta, as guardian of her person, and JPMorgan as guardian of her property. The petition contained serious and disturbing allegations of a pattern of neglect and mistreatment of Mrs. Astor over the last several years. The petition alleged that Anthony Marshall had not provided for his elderly mother and, instead, had allowed her to live in less than adequate living conditions in her Manhattan apartment and had cut back on necessary medication and doctor's visits, while enriching himself from her assets.
The court signed the order to show cause on July 21, 2006, appointing the afore-mentioned persons as temporary guardians. The order authorized JPMorgan to, inter alia, pay for Mrs. Astor's interim medical care, housing, relocation to her home in Briarcliff Manor, and other personal needs, as well as to marshal her income and assets and sign and file income tax returns and other tax documents. I am informed by Louise Milligan at JPMorgan that Mrs. Astor's assets exceed over $120 million. The July 21st order authorized compensation to JPMorgan for its services at the hourly rate of $275 for senior staff, and specifically authorized the bank to retain attorneys, accountants and similar professionals with fees subject to court approval.
The July 21st order also appointed Susan I. Robbins, Esq. as court evaluator. Shortly thereafter, the court appointed Ms. Robbins as counsel to Brooke Astor, and appointed Samuel Leibowitz, Esq. as court evaluator.
Anthony Marshall vigorously contested the allegations of the petition. By verified answer and cross-petition dated September 18, 2006, Anthony Marshall sought to have the court honor the powers of attorney given to him by Brooke Astor in 1978, 1980, 2000 and 2004 and a 2001 health care proxy.
In most guardianships, the main issue is whether or not a person's mental capacity is currently such that appointment of a guardian is necessary. In this case, all parties conceded that Brooke Astor is currently not able to manage her personal and financial affairs. The case centered on whether the powers of attorney and health care proxy that Anthony Marshall had received from his mother should be declared void by the court because he allegedly breached his fiduciary responsibilities to his mother. Thus, it was necessary for the parties to show what actions Anthony Marshall had engaged in over the last several years and Brooke Astor's capacity to make decisions at the time her son engaged in those actions. The legal issues were numerous, complex and novel. A large number of witnesses were contacted and interviewed, witnesses such as Mrs. Astor's family members, physicians, nurses, caretakers, current and former staff, friends, former attorneys and financial advisors.
The Mental Hygiene Law requires that guardianship hearings be held expeditiously and take precedence over all other matters before the court. Due to the complexity of this matter and a motion by several news organizations to unseal the record, the court extended the hearing date well past the 28-day period contemplated by MHL § 81.07(b)(1), and ultimately set a hearing date of October 19, 2006. Thus, the parties were required to prepare for trial on a relatively expedited basis. According to Harvey Corn, Esq., co-counsel for Anthony Marshall, more than eighty thousand pages of documents were produced in discovery. These included many thousands of pages of financial records, estate documents and tax returns and over a thousand pages of mostly handwritten nursing and medical records.
Ms. Milligan of JPMorgan advises that Mrs. Astor's financial holdings are extremely complex, and that her investment portfolio contained non-traditional investments in derivatives, private equity funds and hedge funds. In addition to Mrs. Astor's extensive real estate holdings, she owns a considerable amount of tangible personal property — over 1500 items having a value of more than $10 million. Ms. Milligan avers that her client's financial records were poorly maintained, and thus the task of marshaling and taking control of her assets and income was time-consuming and labor intensive. JPMorgan also investigated transfers of Mrs. Astor's assets made by Anthony Marshall to himself and others while he was in control of her affairs.
Unlike the typical Article 81 guardianship proceeding, this matter had several interim applications for relief from the court both by motion and letter, and several court appearances. As stated above, shortly after the proceeding was commenced, the publishers of three daily newspapers ( New York Post, Daily News and The New York Times), along with the Associated Press, moved for leave to intervene in this proceeding, and to vacate the interim order temporarily sealing the file. By order dated August 29, 2006, the court partially sealed the court files and closed the proceeding to the public, which further complicated and added to the expense of the proceeding.
One of the most contentious applications involved a motion by JPMorgan for expanded powers to conduct wide-reaching discovery, with subpoena power. In response to this motion, Anthony Marshall cross-moved to modify the July 21st order to permit him to appear in this matter in his capacity as attorney-in-fact for his mother (presumably to seek a jury trial pursuant to MHL § 81.11) and various other items of relief. By order dated September 18, 2006, the court denied the bank's motion as well-intentioned, but overly-zealous and premature, as well as inconsistent with the extremely short time frame in which a guardianship proceeding is supposed to be conducted. The court denied Anthony Marshall's request to be recognized as the attorney-in-fact for his mother, and granted and denied the other aspects of his cross motion.
Thereafter, Susan I. Robbins, as court-appointed counsel to Brooke Astor, moved for an order requiring the law firm of Day, Berry Howard to turn over Brooke Astor's original testamentary documents and to direct that firm and Francis X. Morrissey, Esq. to each turn over all funds paid by or on behalf of Mrs. Astor in connection with legal services rendered to her in the past several years. That motion was granted only to the extent of directing Day, Berry Howard to produce all original estate planning documents for examination at their office by handwriting experts.
The proceeding was settled on October 13, 2006, only six days before the scheduled trial date, requiring the parties to prepare for trial. The attorneys met numerous times to hammer out an agreement, and many of them worked long days in the last several weeks leading up to the settlement. Under the Settlement Agreement, the temporary guardians were named permanent guardians. In addition, over $11 million in assets — consisting of cash, jewelry and art — was returned to Mrs. Astor by Anthony Marshall and his wife, Charlene Marshall. Collateral totaling over $10 million has been pledged by the Marshalls to cover any future claims brought on behalf of Mrs. Astor's estate. In addition, Anthony and Charlene Marshall, along with two of Mrs. Astor's former attorneys, Francis X. Morrissey, Esq. and Henry Christensen, Esq., agreed to renounce any right to be appointed a fiduciary under Mrs. Astor's last will and testament, codicils or other testamentary documents.
The settlement did not involve any admission of wrongdoing by any party; it specifically provided that it could not be construed and did not represent any finding against Anthony Marshall and that it would not be admissible in any later proceeding for any purpose. It was a settlement joined in by all for the benefit of Mrs. Astor and her estate, bringing this matter to a close in this court and preserving for another day the issues concerning her testamentary plan.
DISCUSSION
Section 81.28(a) of the Mental Hygiene Law requires the court to establish a plan for the "reasonable compensation" of the guardians. Section 81.09(f) provides that the court may award "reasonable compensation" to a court evaluator payable by the estate of the incapacitated person. Likewise, Section 81.10(f) provides that the court shall determine the "reasonable compensation" for the attorney it appoints to represent the interests of the incapacitated person, also payable by the estate of the incapacitated person. Finally, Section 81.16(f) provides that when a petition is granted, or where the court otherwise deems appropriate, the court may award "reasonable compensation" for the attorney for the petitioner, again, presumably from the estate of the incapacitated person.
The Supreme Court has broad discretion in determining the reasonable amount to award as an attorneys' fee in a guardianship proceeding. Matter of Martha O.J., 22 AD3d 756, 757 (2nd Dept 2005). The factors the court must consider are:
(1) the time and labor required, the difficulty of the questions involved, and the skill required to handle the problems presented, (2) the attorney's experience, ability, and reputation, (3) the amount involved and the benefit flowing to the ward as a result of the attorney's services, (4) the fees awarded in similar cases, (5) the contingency or certainty of compensation, (6) the results obtained, and (7) the responsibility involved.
Id., citing Matter of Freeman, 34 NY2d 1, 9 (1974).
The Supreme Court has the inherent power to supervise the fees charged by attorneys, even in the absence of any party's objection thereto. Stortecky v Mazzone, 85 NY2d 518, 525 (1995); Ricciuti v Lombardi, 256 AD2d 892, 893 (3rd Dept 1998). The court must ascertain the nature and extent of the services supplied by the attorneys from billing records indicating the date, number of hours, and tasks performed. Rahmey v Blum, 95 AD2d 294, 300 (2nd Dept 1983). The court is not required to accept the attorney's representations of the time expended. Matter of Arnold O., 256 AD2d 764, 765 (3rd Dept 1998); Matter of Vitole, 215 AD2d 765 (2nd Dept 1995); Rahmey v Blum, supra.
The first issue that must be addressed is who is entitled to seek payment of their legal fees and expenses from Mrs. Astor's estate. As noted above, there is no question that the guardians, the court evaluator, and her court-appointed counsel are so entitled by statute.
Petitioner Phillip Marshall seeks payment of his legal bills and expenses. As stated above, MHL § 81.16(f) authorizes a court to award a petitioner reasonable legal fees when their petition is granted or where the court otherwise deems appropriate. Although this matter voluntarily settled before the hearing, I find that the petitioner Philip Marshall was the prevailing party, that the efforts of his legal counsel benefitted Mrs. Astor, and that he be awarded a reasonable fee from her estate.
Respondent/cross-petitioner Anthony Marshall also seeks court approval of his attorneys' fees and expenses. In Matter of Ruth Q. ( 23 AD3d 479 [2nd Dept 2005]), the court ruled that Article 81 of the Mental Hygiene Law does not authorize an award of attorneys' fees to a respondent who opposed a petition for the appointment of a guardian for an alleged incapacitated person. Despite the fact that Anthony Marshall opposed the petition and the settlement did not include any of the relief sought in his cross-petition, I find that he should be awarded half of his legal fees (excluding disbursements and expenses), after adjustment for hours the court finds objectionable, as further discussed below. I make this ruling based on the conclusion of the court evaluator that the allegations in the petition regarding Mrs. Astor's medical and dental care, and the other allegations of intentional elder abuse by the Marshalls, were not substantiated. I am further influenced by the fact that the settlement did not involve any admission of wrongdoing by any party, by the fact that Anthony Marshall is still the sole presumptive distributee of his mother's estate and that the settlement to which he voluntarily agreed was in his mother's best interests.
Mrs. Charlene Marshall, however, is not named as a cross-petitioner in this proceeding. The court can only surmise that separate counsel was hired to represent Mrs. Marshall in late September 2006 due to a potential conflict of interest arising from the property transfers between Mr. and Mrs. Marshall. Thus, any legal work performed on behalf of Mrs. Marshall was solely for her own benefit, did not inure to the benefit of Mrs. Astor, and is not recoverable from her estate.
Susan I. Robbins, Esq. has submitted a bill totaling $123,841.34 for her work, briefly as the court evaluator, and then, from July 24th forward, as the court-appointed counsel to the alleged incapacitated person. However, Ms. Robbins is requesting reimbursement of time billed by three other attorneys employed by the law firm with which she is associated, Miller, Canfield, Paddock and Stone, P.L.L.C. Although my July 24th order named only Ms. Robbins as counsel to the alleged incapacitated person, and not her law firm, I approve ex post facto the fees incurred by her colleagues as reasonable and in accord with the complexity of the case, the time frame and the excellent services rendered on behalf of her client.
I must consider the attorneys' experience, ability, and reputation as well as the fees awarded in similar cases. All parties agree that this was a unique guardianship proceeding, and consequently the amount of fees awarded in other cases is not particularly informative or helpful. However, in assessing the reasonableness of the hourly rates charged by various legal counsel, I find that all rates should be comparable to the hourly rates charged by experts in the field of elder law and guardianship proceedings. Rahmey v Blum, 95 AD2d at 302. In setting a cap, I have considered the fees charged by: (i) Samuel Leibowitz, Esq., whose rate is $325; (ii) David A. Smith, Esq., whose rate is $350; (iii) the firm of Goldfarb, Abrandt, Salzman Kutzin, LLP, whose rates for partners with many years of experience in this field do not exceed $375; (iv) Daniel G. Fish, Esq., whose rate is $400; (v) Margaret Bomba, Esq., whose rate is $400; and (vi) Harvey E. Corn, Esq., whose rate is $450. While I realize that this case involved other areas of the law such as litigation, tax and real estate, and that some of the other attorneys involved are highly renowned, at the end of the day, this was still a guardianship proceeding, and thus I find it appropriate to cap the hourly rate at $450.
With the exception of Anthony Marshall, I find that the time spent by the parties, their lawyers and non-legal advisors, as demonstrated by the detailed billing records supplied to the court, is commensurate with the complexity, novelty and seriousness of the numerous issues raised by this proceeding, as well as the value of Mrs. Astor's estate and the favorable results obtained by the settlement. Nevertheless, I have identified several areas of time expended that I find were not appropriate or in the best interests of Mrs. Astor: (I) discussions with the media and media strategy; (ii) a proposed motion by cross-petitioner Anthony Marshall to disqualify Susan Robbins as appointed counsel for Mrs. Astor; (iii) work by Paul, Weiss, Rifkind, Wharton Garrison LLP following my September 18th order that I believe exceeds their role as legal counsel to the temporary guardian of the property; (vi) petitioner's legal bills for opposing the motion to unseal the record; and (v) the preparation of the fee requests themselves.
The media attention this proceeding engendered is undeniable, and resulted in a contested motion by several news organizations to unseal the record. However, I do not find it appropriate to reimburse any of the parties for "media strategy" or discussions between counsel and members of the press. This proceeding was to be litigated in my courtroom, not in the court of public opinion. Any information imparted to the media was solely for the benefits of parties other than the alleged incapacitated person, and the costs incurred for such public relations efforts have no place in these fee applications. I am, therefore, declining to reimburse both the petitioner and cross-petitioner for hiring public relations' firms. Wherever possible, I have attempted to identify and disallow any time charges for communications with the press. I have reduced the hours of Daniel G. Fish, Esq., co-counsel to JP Morgan, for 2.4 hours for calls with the press on August 7th and September 1st. I am reducing Ira Salzman, Esq.'s hours on July 27th by 2.5 hours for "[p]hone conversations with various members of the press." I have reduced the hours expended by Kenneth E. Warner, Esq. by 10% for numerous conversations and communications with members of the press, particularly Serge F. Kovaleski of The New York Times, and with the public relations firm hired by Anthony Marshall.
Second, I am cutting all time charged by David A. Smith, Esq. in mid-September (55.75 hours) for researching and drafting a motion to disqualify Susan Robbins. I have no reason to believe that this motion, which ultimately was not filed, was related to the best interests of Mrs. Astor.
Third, JPMorgan hired both Daniel Fish, Esq. of Freedman Fish Grimaldi, LLP and the law firm of Paul, Weiss, Rifkind, Wharton Garrison LLP to represent its interests in this proceeding. As stated above, on September 18, 2006, the court denied the bank's motion for expanded powers. Specifically, I ruled that "[w]hile the propriety of the transfers of money and property to Anthony and Charlene Marshall is a key subject of the guardianship proceeding, it is not the Bank's role to prove or disprove any of the allegations of the Petition . . ." Despite this ruling, Paul Weiss spent a great deal of time starting on or about October 7th engaged in trial strategy, trial preparation, legal research on the authentication of documents, and the creation of exhibits lists, demonstrative exhibits, witness outlines, trial subpoenas and even notices to admit. There can be no doubt that Paul Weiss should have been involved in the preparation of any of JPMorgan's employees and agents for trial, particularly Louise Milligan and Joel Barth of Eisner LLP. However, I find that the extent of Paul Weiss' trial preparation exceeded the scope of its representation of JPMorgan as temporary guardian of the property, and must be disallowed. Mr. Fagen's recollection that at the October 6th pre-trial conference, "the Court instructed the Bank that it would be required to present evidence at trial," is incorrect. There was no transcript that day, but I recall I said only that the guardians were both "parties" and could participate in the hearing. Accordingly, I am reducing the hours of Leslie G. Fagen, Esq. by 7 hours; David Marcus Cave, Esq. by 50 hours, and 100 hours of paralegal time. I am also reducing the $14,484.61 bill for duplicating expenses by 20%.
Fourth, the law firm of Millbank Tweed, Hadley McCloy, LLP ("Millbank") had eight lawyers and three legal assistants, billing at rates ranging from $825 to $170, spend 233.2 hours and incur $14,738.29 in disbursements for a total fee of $115,438.79, to basically assist Ira Salzman in responding to the news organization's motion to unseal the record, a motion that involved a single, albeit important, legal issue. Charging this kind of money for the preparation of a four-page notice of cross motion, a eleven-page memorandum of law and a seven-page reply memorandum of law appears excessive to the court. Accordingly, despite the fact that Mr. Sligar did not bill for his time on the matter and I have capped the hourly rate at $450, I find that Millbank's hourly fee request should be further reduced by 50%.
Fifth, I am disallowing any time charges after October 13, 2006 related to the preparation of these fee applications since most of the firms did not charge for this activity. Thus, with respect to the application of Goldfarb Abrandt Salzman Kutzin LLP, I have eliminated 11.1 hours from Ira Salzman, 13 hours from Peter Aronson and 3.0 hours from Danny Goldfarb. The .20 hours expended by Sander Bak of Millbank on October 24th for work on the proposed order approving the fee applications is likewise disallowed.
Finally, I am sua sponte sealing Exhibit B to Mr. Fish's affirmation of legal services (part of exhibit C to the Louise Milligan affidavit) on the ground that it contains confidential medical and nursing information about Mrs. Astor.
At the hearing held on October 13, 2006, at which I approved the settlement and found Mrs. Astor in need of guardians by clear and convincing evidence, counsel for several of the parties brought to my attention the extraordinary efforts made by the court evaluator, Samuel Leibowitz, in bringing about this settlement. Paul C. Saunders, Esq. of Cravath Swaine Moore LLP had this comment for the record:
I think I speak on behalf of all of the parties to this proceeding in reporting to the Court how much we appreciate the very hard work, tireless work of the Court's appointed evaluator in this case, Mr. Sam Leibowitz. We are very much in his debt.
(Tr. at 23). I commend Mr. Leibowitz for his efforts in bringing about this settlement, and find that he has acted in the highest traditions of the court and bar in this proceeding.
Attached hereto as Appendix A is a chart outlining the fee applications. The amounts awarded are listed in bold print directly underneath the amounts sought. Separate orders approving the fee applications, which I have reduced from $3,044,055.71 to $2,223,284.42 in accordance with this decision, are filed herewith.
APPENDIX A — ADJUSTED FEE APPLICATIONS
APPENDIX A