Matter of Pratt

[*1] Matter of Pratt 2012 NY Slip Op 51127(U) Decided on June 19, 2012 Sur Ct, Schenectady County Versaci, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on June 19, 2012
Sur Ct, Schenectady County

In the Matter of the Accounting by Charlotte E. Pratt, as the Administrator of the Estate of William F. Pratt, Deceased.



2008-294/D & E



Attorneys for the Petitioner/Administratrix Charlotte E. Pratt

Richard A. Frankel, Esq.

Iseman, Cunningham, Riester & Hyde, LLP

9 Thurlow Terrace

Albany, New York 12203

William E. Pratt, Self-Represented

1016 9th Avenue

Troy, New York 12182-1504

Guardian Ad Litem for Martin Joseph Tino Pratt

Dennis W. Habel, Esq.

Cooper, Erving & Savage LLP

39 North Pearl Street

Albany, New York 12207-2797

Patrick T. Morphy, Esq.

Assistant Attorney General

Office of the Attorney General

Charities Bureau

The Capitol

Albany, New York 12224-0341

Vincent W. Versaci, J.

Within this proceeding to judicially settle the Final Accounting of the Administratrix, she requests that the Court also exercise its authority under SCPA §2225 and find that the decedent's son, Martin Joseph Tino Pratt, predeceased the decedent herein without issue. In addition, as [*2]will be discussed more thoroughly below, the Administratrix also requests that the Court decide the reasonableness of the attorneys' fees and disbursements incurred during the period of the Final Accounting in the amount of $7,500.00 and $310.98, respectively.[FN1]

Notably, no objections were filed by any of the interested parties to this proceeding, which included the Attorney General's Office nor by the Guardian Ad Litem, Attorney Dennis Habel, whose appointment was necessary because the above noted distributee's whereabouts are unknown. However, after the last return date on March 6, 2012 for submission of Attorney Habel's Guardian Ad Litem report, the Court received an unsigned letter dated February 26, 2012, from one of the distributees of the decedent, William Pratt.[FN2] This letter outlined a number of concerns and "objections" to the manner in which this estate was handled by the Attorney for the Estate, Attorney Richard Frankel, and that his attorneys' fees should be reduced because they exceed the amount the fiduciary would be entitled to as and for her statutory commissions.

Without specifically referencing the contentions made by Mr. Pratt, the Court declines to address the majority of the allegations made against Attorney Frankel and his handling of this matter for two reasons: (1) the matters raised in his letter are either untimely [FN3]; and (2) simply may not be addressed because he failed to raise these objections in admissible form on notice to all the necessary and interested parties herein. However, for the reasons set forth below, the Court will address Mr. Pratt's assertion that the attorneys' fees being requested in this Final Accounting are unreasonable and should be reduced.

During the accounting stage of an estate proceeding, the Surrogate may sua sponte inquire into the reasonableness of attorneys' fees even though no objections have been filed regarding the fee. SCPA §2301(1); In re Lanyi, 147 AD2d 644. Furthermore, the Court of Appeals has held that the Surrogate has the "inherent power to supervise the fees attorneys charge for legal services, and has the authority to inquire into the reasonableness of counsel fees even though agreed upon by the executor and assented to by the beneficiaries." Matter of Stortecky, 85 NY2d 518, 525-526. Therefore, although there is no formal objection to the [*3]remedy sought in this Petition, the Court clearly has the authority to inquire into the appropriateness of the counsel fees requested as part of its routine review of the accounting now before the Court.

In determining the reasonableness of an attorney's fee in an estate proceeding, the Court will take into consideration a number of factors, including but not limited to the "time and labor required, the difficulty of the questions involved, and the skill required to handle the problems presented; the lawyer's experience, ability and reputation; the amount involved and benefit resulting to the client from the services; the customary fee charged by the Bar for similar services; the contingency or certainty of compensation; the results obtained; and the responsibility involved." Matter of Freeman, 34 NY2d 1,9, citing Matter of Potts, 241 NY 593; Matter of Van Hofe, 145 AD2d 424, 425. None of these factors standing alone are controlling, however, and all should be considered when a court reviews an attorney's fee. In re Estate of Patchin, 106 AD2d 730.

As demonstrated above, there are a number of factors and criteria that the Court must apply when reviewing the reasonableness of an attorney's fee. However, Attorney Frankel and Mr. Pratt each assert different standards as to how the Court should determine if the fee requested is reasonable under the circumstances. First, Mr. Pratt suggests that the proper "bench mark" for determining the reasonableness of Attorney Frankel's fee is that it be "aligned" and presumably not exceed the statutory commission the fiduciary is entitled to by statute. In opposition, Attorney Frankel asserts, based in part upon the Guardian Ad Litem report submitted by Attorney Habel, that it is customary for a reasonable attorney's fee to be within 3-8% of the gross probate estate. Although the Court is aware that the Bar may use these percentages as "rules of thumb", the Court declines to apply these percentages in a vacuum without considering the other factors mandated by the courts before making a decision on the reasonableness of an attorney's fee.

Attorney Frankel filed his billing records with the Court in order to detail the time spent and the services his firm provided on behalf of this estate. The records cover the entire period of his firm's representation of the fiduciary, however, I will focus primarily on the period from the Decree approving the Intermediate Accounting to the last date any services were provided. Although Courts generally view the amount of time spent on behalf of the estate as the least important factor when determining the reasonableness of a fee requested, it is a logical point to start our analysis.

Attorney Frankel's billing records indicate that from November 5, 2009, after the Intermediate Account was judicially settled, to March 23, 2012, Attorney Frankel spent over 145 hours on behalf of the estate. This number of hours does not factor in the time purportedly spent by his staff or law partners on this matter. For this accounting period, he is requesting $7,500.00 as and for his legal fees on behalf of his firm. Attorney Frankel indicates that he charges $285.00 per hour for his services which is lower than what is charged by other attorneys in this area with the same background, experience and standing in the Bar as Attorney Frankel. Notably, when you calculate the amount of time Attorney Frankel spent on this estate since the Intermediate Accounting was judicially settled and divide that time into the total fee he is requesting, Attorney Frankel is only receiving $51.49 per hour for his services. Furthermore, if you calculate Attorney Frankel's time and multiply it by his hourly rate, he could have presumably requested a fee of $41,510.25 for just the services he rendered since the Intermediate Accounting was judicially [*4]settled. Therefore, the fee his firm is now requesting amounts to more than $34,000 less than he presumably would be entitled to under the retainer agreement signed between Attorney Frankel and the fiduciary of the estate.[FN4]

Next, the Court will examine the size of the estate. Reviewing the value of the assets that the fiduciary received, she represents that she received principal and income in the amount of $1,034,416.23.[FN5] As noted above, a common practice of attorneys is to base their fee on a percentage of the probate estate. In Schenectady County, many firms customarily request a fee equaling 5% of the probate or testamentary assets. In this case, this would result in a fee of $51,720.81.

With respect to the difficulty of the issues presented in this estate proceeding and the labor required to address them, the Court acknowledges that this estate did present some challenges. Counsel was required to file both an Intermediate and Final Accounting, in part, because one of the decedent's distributees could not be located. In turn, as will be discussed in detail below, Counsel made application to the Court for it to find that the decedent's son predeceased him without issue so as to not delay the final disposition of this matter. For these reasons, this estate cannot be considered routine and required additional time and expertise to insure that the closing of the estate was not unnecessarily delayed.

Accordingly, within the broad discretion given to this Court by the statutory and common law cited above, I hereby find Attorney Frankel's request for attorneys' fees in the amount of $7,500.00, plus disbursements in the amount of $310.98, to be fair and reasonable, and hereby award such amounts to Attorney Frankel's firm as and for their attorneys' fees on this Final Accounting.

With respect to the application pursuant to SCPA §2225, the Administratrix claims that she has performed a diligent search and made sufficient inquiry with respect to the whereabouts of the decedent's son, Martin Joseph Tino Pratt. For these reasons, the Administratrix requests that the Court find that he predeceased his father leaving no issue which would result in his distributive share lapsing and these proceeds being distributed according to the laws of intestacy.

Under SCPA §2225(a), a Court may find under the appropriate circumstances that a distributee has predeceased the decedent without issue. The purpose of this "legal fiction" is for the limited goal of accelerating the distribution of estates where distributees have been identified but whose whereabouts are unknown. In order for the Court to find that a "person is presumed dead and that he or she predeceased the decedent without issue", SCPA §2225(a) requires that the Petitioner demonstrate "to the satisfaction of the court that a person who would be a distributee. . .has not been heard from for a period of at least three years since the death of the decedent, . . . that a diligent search has been made to discover evidence that such person is still [*5]living, and that no such evidence has been found. . ."

The criteria used by the courts to determine whether the fiduciary's search was sufficiently diligent includes the Court considering "the size of the estate, the amount of time which has elapsed since any other possible distributees were heard from, and the lack of any leads as to their whereabouts." Matter of Weiss, N.Y.L.J., December 28, 2004, at 24, col. 2 (Surrogate's Court, Bronx County). "Under SCPA §2225, all that a successiful petitioner need prove is that within the context of what can reasonably be involved, despite a reasonably diligent search, no information about the missing potential distributee, or his issue, was ascertained". Estate of Schillington, 2006 NY Misc. Lexis 8930; 235 N.Y.L.J. 5, citing, Matter of Schrake, 129 Misc 2d 671, 672 [emphasis added].

Specifically in her Petition requesting this relief, the Administratrix indicates that neither the decedent before his death, nor anyone else in her immediate family, has had any contact with the decedent's missing son for more than thirty (30) years. In order to comply with the statute, however, the fiduciary outlines her efforts to discover the whereabouts of the missing distributee. The methods the fiduciary undertook included, but were not limited to, reviewing records and paperwork kept by the decedent, hiring a document search firm which reviewed a number of online databases which included records kept by the New York State Department of Motor Vehicles, and hiring a private investigator who accessed other national databases and social networking sites in an attempt to locate the missing distributee. Nevertheless, none of these efforts lead to any information useful in locating the missing distributee. In addition, Attorney Habel had the opportunity to review the efforts of the fiduciary and opined in both of his Guardian Ad Litem reports during the Intermediate and Final Accounting stages that the fiduciary had conducted a reasonably diligent search considering the amount of his ward's distributive share.

In light of what can be reasonably expected in relation to the sum of money involved, it appears that the fiduciary here has done all that can be expected under the circumstances. Therefore, I find that she has satisfied the "diligent search" requirement under both SCPA §2225 (a) and applicable common law precedent. See, Matter of Schrake, 129 Misc 2d 671, 672.

For these reasons, I will grant the Administratrix's request pursuant to SCPA §2225(a) and find that Martin Joseph Tino Pratt, the decedent's son, is presumed dead and that he predeceased the decedent herein without issue. As a result, Martin Joseph Tino Pratt's distributive share will be distributed according to the laws of intestacy amongst the surviving distributees now on record before the Court which are the decedent's spouse, Charlotte E. Pratt, and three children, Peggy Bagdriwicz, William Pratt and Joanne Tino Pratt LaBarge.

I have also had the opportunity to review Attorney Habel's Affidavit of Legal Services in relation to the work he performed on behalf of his ward, Martin Joseph Tino Pratt. After reviewing his affidavit, the Second Supplemental Guardian Ad Litem Report he submitted for the Court's consideration, and after applying the same criteria outlined above that was applied to the services provided by Attorney Frankel on behalf of the estate, the Court hereby awards Attorney Habel the sum of $1,275.00 as and for his fees for the services provided as Guardian Ad Litem in this matter.

The parties' remaining arguments, to the extent not specifically addressed herein, have been considered and found to be unavailing. [*6]

The foregoing shall constitute the Decision and Order of this Court. Counsel for the estate shall submit a revised proposed Decree in accordance with the above decision.

Signed at Schenectady, New York, this 19 day of June, 2012.

____________________________________

HON. VINCENT W. VERSACI

Surrogate

ENTER: Footnotes

Footnote 1: Notably, Counsel for the Administratrix complied with the requirements of §207.45(b) of the Uniform Rules of the Surrogate's Court by stating in the Petition and requisite citation that application was being made for determination of both counsel fees and expenses.

Footnote 2: Although this letter was dated February 26th, it was not filed into Court and considered until March 7, 2012 when Mr. Pratt submitted proof of service of his letter upon all interested parties.

Footnote 3: Due to the fact that the Court has already reviewed and approved Attorney Frankel's attorneys' fees and disbursements as part of a Decree dated September 7, 2010 Judicially Settling the Administratrix's Intermediate Accounting, the Court's review here will be limited to only the attorneys' fees and disbursements being requested for the period covered by the Final Accounting, to wit, from September 29, 2009 to July 25, 2011. Notably, Mr. Pratt's rights were reserved to object to the Intermediate Accounting, but he failed to do so.

Footnote 4: Notably, if Counsel were to have requested compensation for all the hours he allegedly spent on this estate, his bill would have totaled $89,803.50. Counsel's total fee request is $36,500.00.

Footnote 5: Significantly less was distributed to the distributees because of significant losses incurred due to the loss in value of General Electric stock which comprised a significant percentage of the probate estate.