Opinion
1-21-0316 1-21-0465
03-31-2022
IN RE ESTATE OF BASAVAPUNNAMMA K. RAO, Deceased v. MIDLAND TRUST COMPANY, Respondent-Appellee; PADMA RAO, Petitioner-Appellant and Cross-Appellee, Anita Rao, Appellee and Cross-Appellant.
This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(e)(1).
Appeal from the Circuit Court of Cook County. No. 2013 P 6243, Honorable James P. Murphy, Judge, presiding.
DELORT PRESIDING JUSTICE delivered the judgment of the court. Justices Hoffman and Cunningham concurred in the judgment.
ORDER
DELORT PRESIDING JUSTICE.
¶ 1 Held: In this decedent's estate case, the circuit court did not err in assessing various fees and costs. The court correctly awarded fees to the supervised estate administrator and attorney fees to the administrator's legal counsel. The court did not abuse its discretion in reducing the administrator's fee. The court did not err in granting certain administrator fees and costs in favor of the cross-appellee. Affirmed.
¶ 2 Petitioner Padma Rao was appointed as the independent administrator of the estate of her deceased mother, Basavapunnamma K. Rao. The circuit court later removed Padma as administrator and appointed respondent Midland Trust Company (Midland) as the successor independent administrator. Following a hearing, the court awarded $532,807.88 in fees and costs, consisting of an award in favor of Midland ($172,417.22) and an award in favor of Midland's law firm, FMS Law Group, LLC (FMS) ($306,580.66). The court further granted appellee and cross-appellant Anita Rao's petition to allocate the entirety of the fee and costs award against Padma's share of the estate. On appeal, Padma contends that the court erred in (1) violating the "American Rule" and assessing estate attorney fees against her; (2) awarding fees and costs in favor of Midland and FMS; and (3) awarding her a reduced administrator's fee of $37,500. Anita cross-appeals the administrator's $37,500 fee award in favor of Padma. We affirm on all issues.
¶ 3 BACKGROUND
¶ 4 Basavapunnamma K. Rao died on October 13, 2013, and was survived by her two daughters: Padma and Anita. The circuit court admitted decedent's will to probate and appointed Padma as the administrator of the decedent's estate.
¶ 5 A few months later, Padma filed a wrongful death and survival complaint in the Law Division of the circuit court of Cook County against NorthShore University Health System and four of her mother's treating physicians.
¶ 6 After extensive settlement discussions, the Law Division court issued an order, noting that certain defendants in the NorthShore lawsuit had offered a settlement in the amount of $2.1 million, consisting of $500,000 for the wrongful death claim and $1.6 million for the survival act claim. The court further found that Padma "has agreed to accept" the offer and that the settlement offer was fair and reasonable. A few days later, Padma signed a settlement statement indicating a gross settlement amount of $2.1 million, attorney fees and other deductions of $771,142.81 for a net settlement amount of $1,328,857.19. The statement further noted that the "[c]lient acknowledges that she has reviewed the information shown on this Settlement Statement and approves the distribution of the monies as shown above."
¶ 7 The parties later appeared before the circuit court on the malpractice case. The court noted that the NorthShore lawsuit had been settled the prior week but that it had received an "inappropriate ex parte letter from Padma. The court informed the parties that the communication stated, "I did not and do not assent to settlement. I wish to go to trial. Sincerely, Padma Rao." Padma confirmed that she had sent the letter.
¶ 8 Padma's counsel agreed that the parties had met "several times" before the circuit court memorialized the settlement order. The court added that an initial settlement offer of $ 1 million had been refused before the parties reached the agreed settlement amount of $2.1 million. Padma agreed that she had been represented by counsel during the settlement negotiations, the court made the jury room available, and that "we were here all day." The court noted that it was "intimately involved" in lengthy settlement discussions, and after it was informed that a settlement had been reached, the court discussed the terms and conditions with Padma. Padma agreed that the court discussed the settlement terms at that time, but now she said she no longer agreed to them.
¶ 9 Padma stated that she told the court in chambers that she was not being given a choice, that she was being pressured, and that the settlement was "against mom's beliefs and wishes and my own beliefs as she taught me." The court, however, disagreed, noting that there were "several other witnesses *** in open court today who were present ***." The court recounted that Padma asked whether the court was telling her that she did not "have a choice" but that the court responded, "[N]o, I'm not telling you anything of the sort." The court then stated that it allowed her to confer with her attorneys "for hours" until she decided to agree to the settlement. The court noted that her sister and the "myriad" of attorneys representing her all recommended agreeing to the settlement. When the court asked Padma why she was now changing her position, Padma stated that it was "the same reasons as before[:] religious objection *** to entering into an agreement." When asked what the beliefs were, Padma stated, "[A]ccording to Hinduism, I am not supposed to enter into an agreement."
¶ 10 The court then reiterated that this was "the first time today" that Padma brought up her specific religious beliefs against settling litigation. The court further noted that it had "talked about different numbers," including the fact that Padma had "mentioned a figure of $6 million at one point."
¶ 11 Following additional discussions between Padma and her counsel, counsel informed the court that Padma no longer wished to agree to the settlement. When the court asked Padma why she had changed her mind after "lengthy discussions," Padma reiterated that her mother's religious beliefs prohibited Padma from "entering] into an agreement with those who are responsible for my mother's death, with wrongdoers." Padma claimed that she was unaware that "the settlement would be an agreement." The court, after again noting that this was the first time that Padma had raised a religious objection to any type of settlement, stated that its order memorializing the settlement would stand, and that the case was continued for consideration of a distribution order. The court again admonished Padma that any subsequent communication with the court should be done through her attorneys.
¶ 12 The circuit court later entered an order dismissing the NorthShore lawsuit with prejudice and finding again that the $2.1 million settlement was fair and reasonable. After deducting attorney fees and costs of $771,447.81, the court noted that "by agreement" the net proceeds attributable to the wrongful death claim ($316,328.75) would be divided into a 70% share to Padma ($221,430.13) and a 30% share to Anita ($94,898.62), a division which the court found was fair and reasonable. The remaining net proceeds from the survival act claim of $1,012,223.44 were awarded to the estate, subject to approval and disbursement by the court hearing the estate case. The court further ordered that the order would be effective "only after the entry in the probate division of an order approving the bond or other security required to administer the settlement and distribution provided in this Order." The court also ordered, "given [Padma's] refusal to sign the Release document and agreement to withdraw as Independent Administrator, that a Bank be substituted in by the probate Court to further effectuate the terms of this agreement including the execution of a Release."
¶ 13 Padma then filed a motion before the Law Division court to vacate the orders approving the settlement, reaffirming the settlement, and approving the distribution of proceeds. Padma attached a lengthy affidavit to her motion repeating her earlier claims of a religious objection, her demand to take the claims to a full trial, and denigrating her attorneys.
¶ 14 About the same time, Anita moved to remove Padma as independent administrator of the estate and convert it to supervised administration. The circuit court granted Anita's motion over Padma's objection and appointed Midland as the supervised administrator of the estate. The court found that Padma committed waste and mismanagement of the estate, and that she was incapable and unsuitable to discharge her duties.
¶ 15 On January 15, 2019, the circuit court directed Padma to file an inventory and an estate accounting by specified dates. Padma did not do so, and the petition was continued from time to time.
¶ 16 On February 15, 2019, Padma filed a complaint against Midland with the Illinois Department of Financial and Professional Regulation (IDFPR). Padma's complaint alleged that Midland was merely "a pawn that will kowtow to [the estate attorney's] and [Anita's attorney's] violations of Mom's and my rights for its [and] their profit." Among other things, Padma wanted Midland to be removed from all matters involving her or her mother, for Midland not to receive any payment for its supervision of her mother's estate, as well as other relief. FMS, counsel for Midland, gave IDFPR a voluminous and thorough response. FMS sent a copy of its response to Padma. The IDFPR took no further action on Padma's complaint.
¶ 17 On April 2, 2019, Midland filed a "Report to the Court and Request for Direction" (1) concluding that the $2.1 million settlement was fair, reasonable, and in the best interests of the estate, warranting the court's approval; and (2) seeking "direction and authority" from the court to withdraw Padma's earlier motion in the Law Division case to vacate the settlement order. The circuit court authorized Midland to withdraw Padma's motion to vacate in the Law Division case. The Law Division court granted Midland leave to withdraw the motion to vacate on July 3, 2019. The settlement order, distribution order, and "payout of the settlement proceeds" were also approved on that same day.
This court may take judicial notice of the public documents that are included in the records of other courts. In re Linda B., 2017 IL 119392, ¶ 31; Ill. Rs. Evid. 201 (eff. Jan. 1, 2011)), 803(8) (eff. Sept. 28, 2018)).
¶ 18 On June 26, 2019, Midland filed a second petition for a rule to show cause against Padma for her continued failure to provide an inventory and accounting of the estate. On the next day, Padma filed an estate accounting as of December 19, 2018. On July 2, 2019, the court set a briefing schedule on objections to the accounting and noted in an order that Midland's second petition for a rule to show cause was withdrawn.
¶ 19 On July 11, 2019, Padma, individually and not as the estate administrator, filed a notice of appeal of the circuit court's orders of May 22, 2019 (granting Midland's motion to withdraw Padma's motion to vacate the settlement order), July 2, 2019 (denying Padma's motion to reconsider the court's May 22, 2019, order), and July 3, 2019 (approving the settlement order and distribution order in the law division). See In re Estate of Rao, No. 1-19-1427. This court granted Midland's motion to dismiss this appeal for lack of standing. Padma's petition for rehearing in this court, petition for leave to appeal in the Illinois Supreme Court, her petition for writ of certiorari in the United States Supreme Court, and petition for rehearing regarding the denial of the petition for writ of certiorari were all unsuccessful. See Rao v. Midland Trust Co., 141 S.Ct. 2626 (Mem.).
¶ 20 On August 1, 2019, Midland objected to Padma's estate accounting. Midland noted that, although the estate was the main beneficiary of the estate of Musunuru S. Rao (Basavapunnamma Rao's husband and Padma's father) and Padma was also the independent administrator of the father's estate, there was no information explaining the decrease in value of the father's estate from $9 million to $5.6 million within one year. In addition, Padma never filed a final accounting for the father's estate, and Padma's listing of disbursements were deficient because "none of the amounts are visible, making it impossible to ascertain the reasonableness of the amounts." Midland further observed that the father's estate showed $155,000 in administrator fees that Padma paid to herself and $262,068.80 in attorney fees for what Midland described as an "uncontested probate estate." Midland sought leave to file a petition to reopen the father's estate to determine whether the father's estate was properly administered. Midland further noted that Padma's accounting did not reflect (1) the correct balances for her mother's PNC and Chase accounts or numerous stock and bond investments; (2) a $156,000 administrator's fee that Padma paid herself from the estate, with no detail as to its calculation or reasonableness; and (3) reimbursement to herself totaling $5,854.51, also without any information as to its justification. Midland further objected to $159,059.44 in fees paid to various estate attorneys, which Midland stated were unreasonable because both the estate and the father's estate were uncontested probate estates up to the point when the NorthShore lawsuit was settled.
¶ 21 On August 28, 2019, Midland filed a third petition for a rule to show cause against Padma based upon her failure to respond to Midland's objections to her accounting. Padma then filed a lengthy response to Midland's objections. After Midland replied, the circuit court directed Padma to provide various documents (including those related to the PNC and Chase accounts as well as various stock and bond investments) within seven days. On January 23, 2020, Midland filed another report stating that Padma produced "voluminous amounts of incomplete documentation" which were unorganized, contained little to no explanation, and were generally unresponsive to Midland's objections. On the next day, the court ordered Padma to produce "all outstanding requested information and documentation" by a set date.
¶ 22 On July 17, 2020, the court entered a written order indicating that, due to Padma's compliance with the court's prior orders regarding Midland's objections to Padma's estate accounting, Midland's three pending petitions for a rule to show cause were dismissed as moot.
¶ 23 Midland's Administrator Fees
¶ 24 On October 8, 2019, Midland filed a petition for supervised administrator fees. Midland noted that the initial collection of estate assets ($5,590,309.04) and the net settlement proceeds ($1,330,552.19) resulted in a total estate account balance of $6,920,861.23. Based upon the value of the estate assets and its "published Wealth Management Schedule of Charges," Midland sought a one-time estate administration fee of $172,417.22. The Schedule of Charges generally assesses estate administration fees on a tiered schedule based upon the market value of the estate assets. Midland further sought an additional $2,400 in administrator fees "due to the extensive litigation being pursued by Padma in both the Law Division Proceedings and Probate Proceedings," which Midland stated required its representative to expend "countless hours" preparing for and attending 16 separate court hearings. Midland elaborated that it had to work with its counsel reviewing "voluminous litigation pleadings, addressing all litigation issues" in both the Law Division and probate proceedings, as well as preparing for the court hearings. Midland, however, asked that it be compensated only for the 16 court appearances that a Midland representative attended at a reduced hourly rate of $150 per hour. Midland characterized these additional services as "extraordinary."
¶ 25 Following briefing by the parties, the circuit court found that Midland's petition was premature because it was not only based upon work Midland had performed but also for "services not yet rendered." The court, however, granted Midland leave to refile the petition at a later date.
¶ 26 Midland later filed its amended petition for supervised administrator fees. The amended petition sought the same amount as in its initial petition ($172,417.22). The petition was substantially the same as the initial petition, but it provided additional detail regarding the work it performed administering the estate since the filing of the initial petition. Midland included a list of legal tasks performed in this case, the malpractice case, and in this court and the Illinois Supreme Court. Midland stated that it spent an extraordinary amount of time, over a 22-month period, all of which it stated was the "direct result of the removal of Padma, for cause, due to waste and mismanagement of the estate," as well as the "numerous pleadings filed" in the various courts noted above. Midland further noted that it had to coordinate the response to Padma's "meritless" complaint filed against it with the IDFPR, which Midland characterized as Padma's attempt to "circumvent" the probate court's order appointing Midland to be the supervised administrator of the estate.
¶ 27 After a hearing on Midland's petition, the court initially stated that it would use the fee schedule as a "starting point" to determine a reasonable fee After finding that Midland's work benefitted the estate, the court further stated that "the sheer amount of work, its complexity and density supports a finding of reasonableness."
¶ 28 The circuit court recounted that Midland replaced Padma after she was "removed for waste and mismanagement." The court observed that Padma was objecting to Midland's fees that "were generated due to her waste and mismanagement," whereas Anita, who "did not waste or mismanage this estate, does not object." The court then asked, "Do I find more compelling objection of a beneficiary who mismanaged the estate or the judgment of one who did not?" The court added that Midland, as a professional administrator, "brought stability and focus to this Estate at a chaotic time in its administration," "righted the ship," which, according to the court, was "rudderless when they came on." The court finally noted that Midland also brought with it "a standing, a weight, a gravitas that an amateur simply can't bring to estate administration." The court then awarded Midland $172,417.22, the full amount it sought.
¶ 29 FMS's First Petition for Attorney Fees
¶ 30 On November 12, 2019, FMS filed a petition for authority for the estate to pay its attorney fees of $144,980.04 for legal work from December 20, 2018, through September 30, 2019. FMS stated that it spent a total of 341.6 hours providing legal services to the estate during that time period, and attached an exhibit detailing the dates, activities, and time spent.
The petition erroneously states the beginning date as December 20, 2019.
¶ 31 Following arguments on the fee petition, the circuit court observed that, although the amount requested was "significant," the court recounted that it had been informed that, out of the approximately 10, 000 cases on its docket, it had spent "more time on this case than probably any other case on the call except one." The court added that this case was "constant litigation," "intense," "complicated," and "clearly a lot of [attorney] hours spent." Although the court approved of the requested hourly rates over Padma's objection, it found that there were three areas that "neither gained advantage for the Estate nor sought attainable advantages," so the court deducted those amounts. The court explained that the three areas all involved work on Padma's father's estate: the petition for authority to reopen the father's estate, "the sanctions motion or the joining in of that sanctions motion," and various conferences involving FMS's attorneys discussing the father's estate that were billed to the estate in this case (Padma's mother's estate). The court reduced the amount sought by $12,639.55, leaving a net fee award to FMS of $132,340.49.
¶ 32 Padma's Administrator Fees
¶ 33 On July 29, 2020, Padma filed a petition for administrator fees, in which she sought $156,000 in fees for administering the estate for over five years until December 2018. She explained that she had successfully disputed a $274,419 claim against the estate by Evanston Hospital. Padma stated that she had "numerous" telephone conversations with her mother's medical insurance provider as well as individuals at Evanston Hospital, and she conducted further "research" regarding payments from her mother's insurance carrier, which ultimately resulted in Evanston Hospital dismissing a claim against the estate. Padma stated that her initial refusal to settle the NorthShore lawsuit resulted in an increase in the settlement from $ 1 million to the final amount of $2.1 million. Padma further noted that a prior attorney for the estate wrote to Padma in support of her fee request.
¶ 34 In response to a question from the court at the hearing on her fee petition, Padma's attorney confirmed that she paid herself $155,000 to administer her father's estate, but the attorney explained that her father's estate "was a very complex estate with accounts all over the world," "[t]here was a lot of work to do," and "[i]t was very complicated." Following the arguments of the parties, the court made extensive comments.
¶ 35 The circuit court reiterated that it was considering Padma's request only a starting point and added, "Ultimately the analysis is whether *** the work she did benefitted the Estate, and if so, what is reasonable compensation for the efforts involved." Regarding the hospital's claim, the court found that it was clear at some point that her mother's estate would not have been responsible for the hospital's claim, which was a "loser", but, "Instead of realizing maybe it's simply a matter of delayed paperwork or processing, Padma digs in, concludes the claim is fraudulent and goes to work, I think, unnecessarily. *** In my opinion there was nothing to do."
¶ 36 The circuit court further found that, even if Padma "could be paid for all of her work," her request for $156,000 was excessive. The court stated that it was unknown what work Padma did for her father's estate, and that it was "just a little unsettling" that Padma approved her own fees as a representative of that estate for $155,000 in "a case that was off the court's call for five years and with a single page of incomplete accounting." Finally, the court found that an accurate estimate of Padma's time spent on the estate in this case was 1, 500 hours (300 hours per year- "about an hour a day"-for the past five years) at a rate of $25 per hour. Accordingly, the court granted Padma an administrator fee of $37,500.
¶ 37 FMS's Second Petition for Attorney Fees
¶ 38 On November 4, 2020, FMS filed a petition for attorney fees of $184,010.17 for the period from October 2, 2019, through October 26, 2020. FMS stated that it spent a total of 467.2 hours providing legal services to the estate during that time period and attached an exhibit detailing the dates, activities, and time spent. Padma objected, and the fee petition was fully briefed and argued. The court sustained some of Padma's objections and reduced the fee award by $9,770 from the amount requested.
¶ 39 The court, however, rejected Padma's objections regarding work done on (1) her father's estate, (2) the response to Padma's motion for Rule 137 sanctions (concerning a purportedly false allegation against Padma), and (3) the response to Padma's petition for leave to appeal before the Illinois Supreme Court. As to Padma's Rule 137 sanctions motion, the court noted that the issue arose "because of an accounting objection which was Padma's obligation or burden to resolve, and her failure to resolve it in a timely manner, I believe, compelled the Estate, Mr. Singler, to investigate that objection which is not their responsibility." The court continued that, "They received false information in doing so and then became the target of a [Rule] 137 sanctions motion." The court found that FMS's response to Padma's motion benefitted the estate because it kept them working on the estate. The court reiterated that FMS would not have been subject to that motion had Padma resolved the accounting objection in a timely manner.
¶ 40 The court further rejected Padma's "catchall" objection that alleged the attorneys acted recklessly, they breached their fiduciary duty, and that application of the Halas factors would show that FMS's work either didn't benefit the estate or was an unreasonable amount. The court found that the Halas factors supported the amount (net of the court's prior reduction) as well as the hourly rate. See In re Estate of Halas, 159 Ill.App.3d 818, 832 (1987) (citing In re Estate of Brown, 58 Ill.App.3d 697 (1978)). The court added, "The complexity and density and frequency of litigating in this estate justifies this result."
¶ 41 In addition to the Halas factors, the court observed that the estate was now under supervised administration following Padma's removal, so every task Midland had to perform to administer the estate required prior court approval, which necessitated more legal work. The court also noted that the "sheer volume of work" in administering the estate was "unique and justifies a finding of reasonableness." The court explained, that in 80-90 percent of its cases, the "record from petition opened to order of discharge *** is about eight to ten pages of computer record. In this case, we currently sit on page 123." The court further observed that, from the date the petition to open the estate was filed (October 25, 2013) to the date Padma was removed as the independent administrator (December 19, 2018), there were 28 pages. The court then noted that, in the subsequent two years, there were an additional "95 pages of documented computer record in this case of filings and orders," which is said was about "three times *** the volume of work in about a third of the time [and] doesn't account for the Appellate Court or the Supreme Court work." The final factor the court pointed out was that Anita was not objecting, from which the court inferred that Anita did not consider the amount requested to be unreasonable. The court concluded, "In consideration of all of these unique factors and circumstances as well as the Halas factors, the petition for fees is granted in the amount of $174,240.17."
¶ 42 Anita's Petition to Allocate Fees
¶ 43 On November 6, 2020, Anita filed a petition seeking to allocate the following fees against Padma's share of the estate: (1) FMS's award of attorney fees ($132,340.49), (2) "all future fees payable to FMS," (3) "all fees payable to Midland," and (4) fees paid to experts by Midland to approve the settlement ($16,957.50). Anita argued that, pursuant to In re Estate of Elias, 408 Ill.App.3d 301 (2011), the circuit court had the authority to allocate fees to Padma either under the doctrine of equitable contribution, or as punitive damages. Anita further noted Elias's holding that the Probate Act of 1975 (Act) mandates the payment of reasonable attorney fees, but does not require that they be paid from the Estate. Anita contended that, since Padma's interest was focused solely on her own rights, it would be fundamentally unfair to require the estate or Anita to pay for Padma's personal decisions and actions.
¶ 44 The circuit court entered a detailed order granting Anita's petition. The court agreed that it had the power to allocate fees to Padma pursuant to Elias, the Act, and the doctrine of equitable contribution. The court rejected Padma's argument that the "American rule" (i.e., the general rule that each party to a litigation must bear its own costs and fees) prohibited the allocation. The court first pointed out that Midland's fees were not a litigation expense, but rather an administrator's fee. Regarding FMS's fees, the court noted that Padma failed to identify the specific litigation that would invoke the American rule. The court then stated that, regardless of this failure on Padma's part, it found FMS's work "since December 2018" to be administrative and not litigation expenses. The court explained that the estate did not (1) file or defend a lawsuit against Padma "outside of probate court," (2) defend the will against Padma in a supplemental proceeding, or (3) "bring a citation to recover cause of action against Padma."
¶ 45 The court then found that assessing fees and costs against Padma was a proper exercise of its authority because "Padma caused the fees and costs by rejecting the settlement *** to satisfy her own personal interests," which, according to the court, "solely and directly" caused the financial losses on the estate since December 2018. The court initially noted that, in September 2018, the estate, which had only two beneficiaries and had been open for five years, was on the verge of closing with Padma as the independent administrator. The court noted that the only matter remaining was the resolution of the Law Division suit, which the parties had agreed to settle. The court then stated that, had Padma not reneged on the settlement, she could have promptly moved to close the estate after obtaining approval from this court to disburse the funds, but instead, she challenged the settlement, which precipitated "over two years now of financial hemorrhaging," resulting in fees and costs of $537,807.88. The court found that only $5,000 in attorney fees would have been necessary to distribute the proceeds and close the estate if Padma had accepted the settlement. Consequently, the court granted Anita's motion and allocated $532,807.88 of those fees and costs against Padma. This appeal follows.
¶ 46 ANALYSIS
¶ 47 On appeal, Padma raises five contentions of error, which we distill into the following three: the circuit court erred in (1) violating the "American Rule" by allocating various estate attorney fees against her; (2) awarding various fees and costs in favor of Midland and FMS, and (3) awarding her a reduced administration fee of $37,500. In addition, Anita cross-appeals the court's prior award of $37,500 in fees in favor of Padma. We address that issue in our discussion of Padma's claim regarding her administration fee.
¶ 48 Jurisdiction
¶ 49 We have an independent duty to consider whether we have jurisdiction and to dismiss an appeal for lack of jurisdiction. Williams Montgomery & John Ltd. v. Broaddus, 2017 IL App (1st) 161063, ¶ 32 (citing Archer Daniels Midland Co. v. Barth, 103 Ill.2d 536 (1984)). Although the general rule is that a party can appeal a case "only after the circuit court has resolved all claims against all parties," there are exceptions to that rule. See State Farm Fire & Casualty Co. v. John J. Rickhoff Sheet Metal Co., 394 Ill.App.3d 548, 556 (2009).
¶ 50 Pursuant to Rule 304(b)(1), a judgment or order entered "in the administration of an estate *** which finally determines a right or status of a party" is appealable without a Rule 304(a) finding. Ill. S.Ct. R. 304(b)(1) (eff. Mar. 8, 2016). The committee comments to this provision explain that Rule 304(b)(1) "applies to orders that are final in character although entered in comprehensive proceedings that include other matters" and cites as an example "an order *** allowing or disallowing a claim." Ill. S.Ct. R. 304, Committee Comments (rev. Sept. 1988).
¶ 51 Here, in appeal number 1-21-0316, Padma seeks appellate review of the circuit court's order of December 22, 2020, pursuant to Rule 304(b)(1). This order finally determined the administrator's fees sought by Padma and Midland, as well as the attorney fees sought by FMS. Since this order was clearly related to the administration of an estate and made a final determination as to those fee requests, we have jurisdiction over this particular appeal. See also, In re Trusts of Strange ex rel. Whitney, 324 Ill.App.3d 37, 42 (2001) (holding that an attorney fee award is appealable under Rule 304(b)(1)).
¶ 52 In appeal number 1-21-0465, Padma appeals the circuit court's order of March 26, 2021, which granted Anita's motion to allocate various administrator and attorney fees to Padma. This order also related to the administration of the estate and made a final determination regarding a claim on the estate-in particular, the source of funds to satisfy that claim. We therefore have jurisdiction over this appeal and the related cross-appeal, as well. We now turn to the questions presented.
¶ 53 The American Rule and the Allocation of Fees
¶ 54 We first address Padma's contention that the circuit court lacked the authority to allocate FMS's attorney fees and Midland's estate administration fees to her. Regarding FMS's fees, Padma relies upon the American Rule, and she emphatically contends that there has never been a case "in the entire history of Illinois law" in which "a party was forced to pay for the opposing party's fees absent a contract, statutory or Supreme Court Rule authority, or where fraud occurred [and] fees were awarded as punitive damages." Although she does not specifically cite the American Rule regarding Midland's fees, she nonetheless makes a similar argument that the court could require a "losing litigant" to pay the costs and expenses of her adversary. Padma further argues in the alternative, that the court abused its discretion in allocating the fees to her. Padma's claim is meritless.
¶ 55 In general, Illinois follows the American Rule, which provides that, in the absence of "statutory authority or a contractual agreement between the parties, each party to litigation must bear its own attorney fees and costs and may not recover those fees and costs from an adversary." Morris B. Chapman & Associates, Ltd. v. Kitzman, 193 Ill.2d 560, 572 (2000) (citing Scholtens v. Schneider, 173 Ill.2d 375, 384 (1996); Saltiel v. Olsen, 85 Ill.2d 484, 488-89 (1981)). This has been the practice in this state "from the earliest time." Ritter v. Ritter, 381 Ill. 549, 552-53 (1943) (citing A dams v. Payson, 11 Ill. 26 (1849)).
¶ 56 There are, however, exceptions to that general rule. Sections 27-1 and 27-2 (a) of the Act provide that a representative of a decedent's estate and the attorney for the representative are entitled to reasonable compensation for their services. 755 ILCS 5/27-1 (West 2020) (representative); 755 ILCS 5/27-2(a) (West 2020) (attorney for representative); see also In re Estate of Martin, 2020 IL App (2d) 190140, ¶ 58; In re Estate of Elias, 408 Ill.App.3d 301, 323 (2011). In addition, there is a "long-standing precedent" allowing the allocation of attorney fees in probate cases under the doctrine of equitable contribution. See id. at 324 (citing Jackman v. North, 398 Ill. 90 (1947)).
¶ 57 Whether the circuit court has the authority to award attorney fees is a question of law which we review de novo. See Martin, 2020 IL App (2d) 190140, ¶ 57.
¶ 58 Padma's claim fails for the simple reason that, here, she was not forced to pay the fees of an adversary. Rather, she was allocated fees that the estate had already paid for the additional administrative matters following her refusal to abide by a settlement-that she had agreed to and signed-and the subsequent blizzard of meritless filings that she herself instigated. Midland's fees were neither the fees of an adversary nor the fees related to litigation. They were fees for the supervised administration of the estate that it earned following Padma's removal as the independent administrator of the estate for waste and mismanagement. With respect to FMS's fees, Padma failed to identify to the circuit court which of FMS's fees related to litigation and were adversarial to her. As the court noted, the estate, which FMS represented, did not file a lawsuit against Padma, did not defend against one brought by her, did not defend the will against her, and did not file a "citation to recover cause of action" against her. For these reasons alone, Padma's claim is meritless.
¶ 59 Moreover, the circuit court was able to allocate the fees and costs to Padma under the doctrine of equitable contribution. In Jackman, our supreme court affirmed the allocation of a guardian ad litems fee equally between the plaintiff and the decedent's estate, noting that the relevant statute provided that the guardian "shall be allowed a reasonable sum for his charges, to be fixed by the court and taxed in the bill of costs." Jackman, 398 Ill. at 107-08 (citing Ill. Rev. Stat. 1945, chap. 22, ¶ 6). Contrary to Padma's argument, the statute at issue in Jackman did not "directly authoriz[e] such GAL costs to be taxed against parties"; rather, the statute at issue in Jackman is strikingly similar to the statute at issue here. They both merely codify an entitlement to payment of a reasonable sum for their work. The court's allocation of these fees and costs to Padma was therefore a proper exercise of its equitable power under established precedent. This claim of error is also meritless.
¶ 60 The Fee Awards to Midland and FMS
¶ 61 Padma next contends that the circuit court erred in awarding administrator fees to Midland and in awarding attorney fees to FMS. Padma argues that the court erroneously awarded Midland's fees even though Midland's fee petition allegedly failed to show that "Midland had done any actual work." As to FMS, Padma asserts that the court wrongfully awarded fees to FMS for work that did not benefit the estate.
¶ 62 As noted above, sections 27-1 and 27-2 (a) of the Act stated that an estate representative and the attorney for the representative are entitled to reasonable compensation for their services. 755 ILCS 5/27-1 (West 2020) (representative); 755 ILCS 5/27-2(a) (West 2020) (attorney for representative). There is no set formula for determining a reasonable fee; each determination turns upon the particular facts and circumstances of each case. Estate of Brown, 58 Ill.App.3d 697, 706 (1978). The factors a court should consider, however, are the following: the size of the estate, the work done and the skill with which it was performed, the time required, the advantages gained or sought by the services rendered, as well as good faith, diligence, and reasonable prudence. Id.; see also In re Estate of Halas, 159 Ill.App.3d 818, 832 (1987) (reiterating Brown factors and adding "the novelty and complexity of the issues confronted"). The determination of what constitutes an estate administrator's or estate attorney's reasonable compensation is "a matter peculiarly within the discretion of the Probate Court." Brown, 58 Ill.App.3d at 706. We therefore will uphold the circuit court's fee determination unless it abused its discretion, which is "the most deferential standard of review-next to no review at all." In re D.T., 212 Ill.2d 347, 356 (2004). A court abuses its discretion when its ruling is "arbitrary, fanciful, or unreasonable," or where "no reasonable person would take the view adopted by the trial court." In re Marriage of Lindman, 356 Ill.App.3d 462, 467 (2005).
¶ 63 The circuit court did not abuse its discretion in awarding these fees. Padma argues that the court mechanically applied Midland's 3% fee from its preprinted schedule to the estate assets based solely upon its determination that Midland brought "stability" and "gravitas" to the administration of the estate. The record demonstrates otherwise. The court began its analysis by noting that Midland's request of 3% of assets were merely a starting point. The court then heard lengthy arguments and found that the substantial amount of work, as well as the complexity and "density" supported a finding of reasonableness. The court later noted that, although its docket showed 28 pages of "entries" from the date the petition to open the estate was filed until Padma's removal (just over five years), the subsequent two years generated an additional 95 pages, which excluded appellate and supreme court activity and which the court equated to triple the volume of work in only one-third of the time. Based upon these facts and our review of the record on appeal, we cannot hold that the court's ruling was arbitrary, fanciful, or unreasonable, or one where no reasonable person would take the court's viewpoint; accordingly, the court did not abuse its discretion in awarding Midland its administration fees. See id.
¶ 64 With respect to FMS's fee award, the circuit court also explained that it was using FMS's initial fee request only as a starting point. In addition to a full briefing, the court also had the benefit of arguments from the parties, and it read the multiple pleadings at least twice. The court's findings reflected a meticulous analysis of FMS's individual claims as well as the overall factors enumerated in Brown and Halas. Notably, the court sustained Padma's objections to FMS's billing regarding (1) its work addressing the failure to comply with the court's January 24th order (directing payment to Padma of $60,000), (2) its work redacting personal information from certain documents it had already filed, and (3) those instances in which a junior attorney observed court proceedings.
¶ 65 The court rejected Padma's challenge to the charges which FMS requested for responding to Padma's IDFPR complaint against Midland and to her Rule 137 motion for sanctions. As the circuit court observed, Padma initiated the IDFPR complaint, which centered on an attempt to have Midland removed as the supervised estate administrator. In addition, the court noted that Padma's Rule 137 motion for sanctions related to Midland's erroneous belief that she had added herself as a payable-on-death beneficiary to her mother's bank account while her mother was incapacitated. The court correctly found that this erroneous finding was precipitated by Padma's refusal-for several months-to provide a proper estate accounting to Midland. Midland thus had to investigate the matter on its own, even though it was Padma's responsibility to provide this information, and that she was able to obtain this information with a simple phone call but nonetheless failed to make this small effort. Finally, the court recounted the massive amount of docket entries compared to its other cases and reiterated that the "sheer volume of work," the "complexity and density and frequency of litigating in this estate," justified the fee award. As noted above, a court abuses its discretion only where its ruling is arbitrary, fanciful, or unreasonable, or where no reasonable person would take the view adopted by it. Id. On these facts, the court did not abuse its discretion, so we must reject Padma's claim of error.
¶ 66 Nonetheless, Padma argues that the circuit court committed a "direct violation of equal protection requirements" when it noted that Anita did not object to Midland's fee petition. Padma relies upon In re K.L.P. v. R.P., 198 Ill.2d 448 (2002), to support this argument. Our supreme court framed the issue in K.L.P. as "whether an indigent respondent parent may be treated differently depending on whether termination of her rights is sought by the State or by the person who obtained custody or guardianship of the child as a result of state action." Id. at 466. State action is a precondition for a valid equal protection claim. In re Adoption of L. T.M., 214 Ill.2d 60, 73-74 (2005) (citing Edmonson v. Leesville Concrete Co., 500 U.S. 614, 619 (1991)). Here, of course, the parties are private entities, so there is utterly no state action that would give rise to an equal protection claim. Therefore, this claim is without merit.
¶ 67 The Fee Award to Padma / Anita's Cross-Appeal
¶ 68 Padma further contends that the circuit court erred in awarding her only $37,500 in administrator fees, instead of the $156,000 she requested. Anita cross-appeals on this point, contending that the court should have denied Padma's request entirely because of her removal for "wasting estate assets and breaching her fiduciary duties to the estate and [Anita]."
¶ 69 As noted above, the determination of an administrator's reasonable fee is not subject to a fixed formula. Rather, it depends upon the unique facts of each case and is "peculiarly within" the court's discretion. Brown, 58 Ill.App.3d at 706. The factors a court should consider include the size of the estate, the work done and the skill with which it was performed, the time required, the advantages gained or sought by the services rendered, as well as good faith, diligence, and reasonable prudence. Id.; Halas, 159 Ill.App.3d at 832. We review a fee award for abuse of discretion, a most deferential standard. There can be no abuse of discretion unless the court's ruling was arbitrary, fanciful, or unreasonable, or if no reasonable person would have taken the view of the court. Lindman, 356 Ill.App.3d at 467.
¶ 70 The circuit court did not abuse its discretion with respect to this fee award. As with the administrator and estate attorney fee petitions, the court had the benefit of substantial pleadings and the exhaustive arguments of the parties. The court emphasized that Padma's request was merely a "starting point." The court stated that Padma divided her work into four categories: creating and maintaining the estate, analyzing tax issues, disputing a hospital's claim, and overseeing the estate attorneys. The court acknowledged that some of Padma's actions benefitted the estate, but it further found that some of her work was either unnecessary or counterproductive. In particular, the court found that her work to defeat the hospital claim was unnecessary because (1) the estate did not have the burden to disprove the hospital's claim and that it would be the hospital's burden to prove its claim and (2) she admitted in an affidavit that her mother's health insurer had assured her that the hospital's claim was fully covered and had already been paid. The court then considered the remaining work that Padma had performed for the estate. It reiterated that the reasonableness of a fee depends upon the facts and circumstances of each case, and that it was "troubling" that Padma had paid herself a similar fee for administering her father's estate, which the court said comprised a "single page of incomplete accounting" and had been off of the court's "call" for five years. The court thus found that a reasonable estimate of her time for the remaining compensable work would be "about an hour a day" for the previous five years, or 1, 500 hours, to be paid at $25 per hour.
¶ 71 Although the court freely admitted that Padma's compensable time was an estimate, we nonetheless cannot hold that it was arbitrary or unreasonable. The court carefully considered each of the four general categories of work in Padma's petition, and it removed the work that it found to be unnecessary. Reasonable decision-makers may have come to a different conclusion regarding the reduction of Padma's requested fees and the allocation of additional administrative fees from her share of the estate, but we nonetheless cannot say that the court's ruling was arbitrary, fanciful, or unreasonable such that no reasonable person would have made such a ruling. Accordingly, we have no basis for overturning the circuit court's ruling on those issues. Id. Therefore, the court's award to Padma does not constitute an abuse of discretion.
¶ 72 Anita's reliance upon Matter of Minsky's Estate, 59 Ill.App.3d 974 (1978), does not alter our conclusion. There, the court held that, based upon the executor's conduct in administering the decedent's estate, allowing compensation to the executor would" 'disregard the plain rules of law and shock that sense of natural justice that dwells in the breast of every honest man.'" Matter of Minsky's Estate, 59 Ill.App.3d at 979 (quoting Whittemore v. Coleman, 239 Ill. 450, 455 (1909)). Although Padma's behavior in administering this estate was substantially flawed, we cannot hold that the court's award of a somewhat modest fee would meet the standard of Minsky's Estate. Therefore, we affirm the circuit court's judgment on Anita's cross-appeal.
¶ 73 CONCLUSION
¶ 74 The circuit court did not err in assessing various fees and costs against Padma. The court did not abuse its discretion in its award of fees to Midland and FMS. We reject Padma's contention that the court erroneously reduced her award of administrator fees. We also reject Anita's claim on cross-appeal that the court erred in granting certain administrator fees and costs in favor of Padma. Accordingly, we affirm the judgment of the circuit court.
¶ 75 Affirmed.