Opinion
95487/A.
Decided June 11, 2010.
Paul Hyl, Esq., Genser, Dubow, Genser, Cona, LLP, Attorneys for Executrix, Melville, New York.
Douglas F. Wicks, Esq., Walsh, Wicks Salisbury, Former Attorneys for Executrix, Red Hook, New York.
Robert J. Lackaye, Esq., Attorney for Michael Hantout, Poughkeepsie, New York.
The decedent died testate on July 21, 2006. Her will, dated October 6, 2003, was admitted to probate by a decree, dated January 25, 2007.
The decedent designates her niece, Miriam C. Hantout ("Miriam"), and her nephew, Michael J. Hantout ("Michael"), as the primary objects of her bounty. Miriam received a specific devise of real property and its improvements located at 73 Old Post Road, Town of Red Hook, Dutchess County, New York in paragraph SECOND of the will. Michael is the recipient of a specific devise of real property and its improvements located at 300 Pitcher Lane, Town of Red Hook, Dutchess County, New York in paragraph THIRD of the will. Miriam and Michael share equally in the residuary estate under paragraph FOURTH.
Miriam is the primary executrix. Michael is the alternate.
The inventory of assets filed on June 13, 2007 pursuant to 22 NYCRR § 207.20 identifies the two (2) parcels of real estate and cash as comprising the entire probate estate (for tax purposes). The estimated value of the real estate in Schedule A is listed as $355,000.00, and Schedule C (mortgages, notes, cash, etc.) estimates the value at $5,930.94, for a total of $360,930.94.
On September 24, 2009, Miriam filed an accounting with this court. The executrix subsequently filed an amendment to the accounting on October 21, 2009. Michael filed objections to the accounting on or about January 7, 2010. On or about February 4, 2010, Miriam filed an amended accounting.
The parties thereafter filed a stipulation settling objections. Among its salient provisions are:
"1. Miriam withdraws her claim seeking reimbursement for the fees paid to Mr. Leonard Rachmilowitz, CPA, in the amount of $14,475.00, and Mitchell R. Katzman, Esq., in the amount of $750.00, and the corresponding request that the fees for such professionals be fixed and determined by the Court;
2. Miriam withdraws her claim seeking $2,500.00 in administrative reimbursement for postage, travel expenses, etc.;
3. Michael withdraws his objections to the failure of the accounting to include "any sums received on sale of the motor vehicle and other personal property owned by the decedent at the time of her death";
4. Miriam withdraws her claim seeking reimbursement of $280.81 post-death mortgage payment on 300 Pitcher Lane;
5. Parties agree that any attorneys' fees paid or otherwise being sought from the estate by Genser, Dubow Genser Cona, LLP ("Genser") and Walsh, Wicks and Salisbury, Esqs. ("Wicks") shall be submitted to the Court for fixation;
6. Parties agree that the commissions of Miriam shall be recalculated in accordance with the funds received and paid out as determined after the fixation of the necessary attorneys' fees; and,
7. The parties shall execute and deliver general releases releasing each other from any and all claims or causes of action arising out of the estate of Susan L. Barich or any alleged transactions with the said Susan L. Barich during her lifetime."
It is number 5 of the stipulation which requires the court's determination.
THE REAL ESTATE
Title to the 73 Old Post Road and 300 Pitcher Lane parcels vested in each beneficiary at the moment of the decedent's death. ( Waxson Realty Corporation v. Rotshchild, 255 NY 332, 336 [1931]; Matter of Seviroli , 31 AD3d 452 , 454 [2d Dept. 2006].) Unless the will provides otherwise (not present here), an executrix takes no title to the property since title vests in the devisee subject to the expenses of administration of the estate. ( Matter of Seviroli, supra, pg. 454; Matter of Ballesteros , 20 AD3d 414 , 415 [2d Dept. 2005]; Matter of Burke, 129 Misc 2d 145, 147 [Sur Ct, Cattaraugus Cty, 1985].) Moreover, the executrix may not take possession of, sell, lease, mortgage, manage, and collect the rents from specifically devised property without leave of the court. (EPTL § 11-1.1[b][5][E]; 42 NYJur2d § 2088.)
"If there are sufficient assets in the estate to pay all estate obligations' (i.e., administration and funeral expenses, debts, estate taxes and general dispositions . . .) without invading property specifically devised or bequeathed, such general assets must be used to pay those obligations; but if the estate assets exclusive of the property specifically devised or bequeathed are insufficient to pay the administration, funeral expenses, debts and estate taxes, the specific dispositions are subject to abatement to pay them." ( Matter of Maron, 49 AD2d 244, 246 [4th Dept. 1975]; 5 Warren's Heaton on Surrogate's Court Practice, 7th edition, § 68.04[9].)
COUNSEL FEE ISSUE
The Surrogate bears the ultimate responsibility of deciding what constitutes a reasonable attorney's fee, irrespective of the existence of a retainer agreement. ( Matter of Tendler , 12 AD3d 520 [2d Dept. 2004].) Additionally, "[i]n evaluating what constitutes a reasonable attorney's fee, factors to be considered include the time and labor expended, the difficulty of the questions involved and the required skill to handle the problems presented, the attorney's experience, ability and reputation, the amount involved, the customary fee charged for such services, and the results obtained." ( Matter of Massey, NYLJ, 06/01/10 at 32 col. 5 [2d Dept. 2010]; Matter of Szkambara , 53 AD3d 502 [2d Dept. 2008].) The Court may also consider the custom and practice which obtains in the community with respect to such matters. ( Matter of Smolley, 188 AD2d 535, 537 [2d Dept. 1992].) The size of the estate is another factor to be considered. ( Matter of Goliger , 58 AD3d 732 [2d Dept. 2009].) "If the size of the estate is limited, compensation to an [executrix's attorneys] may be less than what the services would otherwise command." ( In re Judicial Settlement of Second Intermediate Account of Chase Manhattan Bank [Matter of Dumont], 68 AD3d 1670 [4th Dept. 2009].)
Some thirty-five (35) years ago, the United States Supreme Court held that the minimum fee schedule published by the Fairfax County Bar Association violated Section 1 of the Sherman Act. ( Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, rehearing den'd 423 U.S. 886, 96 S.Ct 162; 8 Warren's Heaton on Surrogate's Court Practice, 7th edition, § 106.03[1][d].) As a result of the Goldfarb decision, many Bar Associations discontinued the use of fee schedules. (8 Warren's Heaton, supra at 106-48.)
On the other hand, "customary fees charged" continues to be a factor to be considered in determining reasonable compensation as cited in the Massey and Szkambara decisions.
It appears from this record that the Wicks firm created a fixed percentage schedule in its retainer agreement which is not customary in this area but harks back to disfavored minimum fee schedule. The customary fee charged in Dutchess County by attorneys experienced in trusts and estates law is hourly, ranging from $300.00 to $200.00 per hour.
Procedurally, 22 NYCRR § 207.45(a) provides:
"In any proceeding in which the relief requested includes the determination of compensation of an attorney or the allowance of expenses of counsel, there shall be filed with the petition an affidavit of services which shall state when and by whom the attorney was retained; the terms of the retainer; the amount of compensation requested; whether the client has been consulted as to the fee requested; whether the client consents to the same or, if not, the extent of disagreement or nature of any controversy concerning the same; the period during which services were rendered; the services rendered, in detail; the time spent; and the method or basis by which the requested compensation was determined. The affidavit also shall state whether the fee includes all services rendered and to be rendered up to and including settlement of the decree and distribution, if any, thereunder and whether the attorney waives a formal hearing as to compensation."
The Wicks firm has offered two (2) submissions in support of its request for counsel fees. The first is a summary of services covering the time period July 27, 2006 through on or about February 21, 2008. The summary includes conferences with various named individuals and entities; review of various debts owed by the decedent; preparation of documents connected to the probate of the decedent's will, preparation of an inventory of assets; preparation of tax forms; preparation of contracts of sale and related documents in connection with the sale of 73 Old Post Road and 300 Pitcher Lane properties; and attending the closing of title as to each. The fee for the foregoing as billed to the estate is $15,000.00 (Wicks Petition, Ex. P). This fee far exceeds the hourly charges which would apply to the itemized legal services submitted by the Wicks firm. No specific method of computation is provided, although attorney Wicks avers that his "firm seeks fees on a percentage basis."
The second submission is an affidavit provided by attorney Douglas F. Wicks. Its sets forth dates, time spent and a description of the legal services rendered for the time period February 19, 2008 through August 20, 2009. Noticeably absent from the itemized presentation is any indication as to who within the firm performed the particular service and the usual hourly rate ascribed to the services.
The Wicks firm entered into a retainer agreement with the executrix on August 2, 2006. That agreement provides in relevant part:
". . . attorney's fees will be charged at the rate of 5% of the gross taxable estate to $100,000.00; at the rate of 4% for the next $200,000.00; at the rate of 3% up to $700,000.00; at the rate of 2% for additional sums not exceeding $4,000,000.00. Non-probate assets will be billed at the rate of 2%, plus out-of-pocket disbursements. A statement for services rendered will be issued at the time of the settlement of the estate unless there is a need to have a partial payment of legal fees to offset income to the estate." (Wicks Petition Ex. B).
The record does not indicate that either federal or state tax returns were required for this estate.
The executrix parted ways with the Wicks firm and subsequently entered into a retainer agreement with the Genser firm (Hyl Reply Affirmation Ex. A) on June 1, 2009. That agreement provides for an initial retainer payment of $5,000.00. Once the retainer is depleted, the firm would bill the executrix on an hourly basis at rates then in effect. The hourly rates of partners, senior associates, law clerks and paraprofessionals are identified in the agreement. The executrix is also charged with the responsibility of ". . . all disbursements incurred by [the] firm . . . including, but not limited to, such items, if applicable, as court filing fees, title company fees, messenger and other delivery fees, long distance telephone charges, photocopy charges, postage fees, facsimile transmission charges, and travel expenses."
The Genser firm has submitted a fifteen page itemized statement of services rendered plus disbursements advanced. The statement contains a detailed description of the date of service, the initials of the person providing the service, the service undertaken, the time involved and the corresponding hourly charge or portion of it attributable to the service performed. The bulk of the substantive services provided by the Genser firm involved allowance or rejection of creditor claims, the accounting and the stipulation settling objections. In all, the Genser firm has submitted a bill for 92.50 hours for services rendered and requests a fee of $21,950.00 plus disbursements of $1,257.81.
This estate did not present any novel, exceptional or difficult problems. It entailed two parcels of real estate and a very small amount of cash. There were insufficient funds to pay the funeral bill and claims of various creditors. A matter pertaining to an annuity contract owned by the decedent at her death passed outside of the will and in no way benefitted the estate. There are only two beneficiaries under the will. Once the two parcels of real estate were sold, all that was required to conclude the estate was to determine which claims and administration expenses would be paid, allocate the financial responsibility between the beneficiaries and submit either an informal or formal accounting. In a sense, the two beneficiaries accomplished some of the allocation responsibility with the execution of their stipulation settling objections.
This Court rejects the percentage fee schedule employed by the Wicks law firm and will proceed on a quantum meruit basis. Applying the customary charge of $300.00 per hour, the Wicks firm would have had to perform fifty (50) hours of legal services to attain the fee they request. Notably included in its bill are legal services performed exclusively for the benefit of both devisees in connection with the real estate, the title to which passed directly to them upon the decedent's death. ( Waxson Realty Corporation v. Rothschild, supra.) The Wicks firm fee request is excessive. The reasonable value of its services rendered to the executrix is fixed at $3,000.00. Each beneficiary is directed to be responsible for one-half of the approved amount.
The Genser firm's bill contains a plethora of charges characterized as paralegal services billed at the rate of $145.00 per hour. In reality, those services may be properly characterized as secretarial or clerical in nature. Some of the services were necessary to assist bringing about closure to this uncomplicated, modest estate. The Genser firm fee request is also excessive. The reasonable value of its services rendered to the executrix is fixed at $7,500.00. The executrix is directed to be responsible for three-fourths of the approved fee, and Michael Hantout shall be responsible for the remaining one-quarter. The Wicks and Genser firms are directed to refund any sums paid by the executrix over and above the approved amounts to her within ten (10) days from the date of the decree to be entered based upon this decision.
DISBURSEMENTS
Specifically disallowed are itemized disbursements for overnight mail packages, title search, postage, facsimile transmissions, copying, FedEx charges, certified mail, travel, tolls, and train fare. These items constitute office overhead. They are expected to be absorbed by counsel in the performance of serving the client. ( Matter of Butler, NYLJ, 11/20/1998, at 35 col. 1 [Sur Ct, Westchester County]; Matter of Diamond, NYLJ, 07/14/1993, at 30 col. 1 [Sur Ct, Westchester County], aff'd 219 AD2d 717, 718 [2d Dept. 1995]; 7 Warren's Heaton on Surrogate's Court Practice, 7th edition, § 93.07[8].)
This charge is attributable to the specifically devised real estate. It is not an estate charge but one the devisee is responsible for paying.
Therefore, the Wicks charge for overnight mail packages in the sum of $238.52 and the title search charge of $105.00 are disallowed. The disbursements of the Genser firm under the categories described above in the aggregate amount of $677.81 are disallowed. The remaining disbursements of the two firms are approved.
Each beneficiary's share of financial responsibility for fees and disbursements allowed shall be paid from the net sum derived from the sale of real estate originally devised to such beneficiary under the decedent's will.
Counsel for the executrix is directed to submit a decree judicially settling the account based upon the foregoing within ten (10) days of service of a copy of this decision.
The foregoing constitutes the decision of the Court.