In Re The Guardianship of John R. "Jack" Archer, An Incapacitated Person--Appeal from Probate Court No 2 of Bexar County

MEMORANDUM OPINION
No. 04-03-00260-CV
IN RE Guardianship of John R. ARCHER, an Incapacitated Person
From the Probate Court Number Two, Bexar County, Texas
Trial Court No. 2000-PC-1460
Honorable Mike Wood, Judge Presiding (1)

Opinion by: Alma L. L pez, Chief Justice

Sitting: Alma L. L pez, Chief Justice

Catherine Stone, Justice

Karen Angelini, Justice

Delivered and Filed: January 14, 2004

AFFIRMED IN PART; VACATED AND DISMISSED IN PART

Attorney Douglas D. Hearne ("Hearne") appeals a probate court's order denying his request for attorney's fees on the basis that Hearne's fee claims were barred pursuant to section 800 of the Texas Probate Code. Hearne contends that the trial court erroneously interpreted the Probate Code and presents three issues on appeal: (1) whether the claim for compensation of a lawyer representing a ward in a guardianship proceeding should be governed by provisions applicable to attorney ad litems or by provisions applicable to general claims against the guardianship; (2) whether filing an authenticated application for approval of attorney's fees constitutes "instituting suit" under the Probate Code; and (3) whether, after the probate court has rendered written orders approving payment of guardianship expenses, the probate court can bar payment of expenses on unrelated procedural grounds. Robert S. MacIntyre, permanent guardian of the estate of John R. Archer, David Archer and Carol Archer-Bugg (collectively the "Appellees") respond that the trial court did not abuse its discretion in construing the fee application as a general claim under section 800 because: (1) Hearne was never appointed as an attorney ad litem; (2) Hearne's claims do not satisfy the requirement of instituting suit; and (3) Hearne advanced money to pay fees of other attorneys at his own risk. We affirm the trial court's order in part.

Background

John R. Archer ("Archer") is the ward in the underlying guardianship. On March 4, 2002, after representing Archer for approximately two years, Hearne filed two applications for approval of attorney's fees. One application sought attorney's fees from May 2000 to February 2002, and the other sought fees from January 26, 2002 to February 26, 2002. On April 11, 2002, Hearne amended the latter application to include attorney's fees from January 26, 2002 to April 5, 2002. The probate court subsequently held a hearing on Hearne's fee applications, but the court did not consider the applications at the hearing.

In October 2002, Hearne filed another request for attorney's fees. Hearne's motion to approve attorney's fees subsumed the applications he filed in March and April, and also sought recovery of additional fees and expenses not included in the earlier filings. The request included fees paid by Hearne out of his retainer trust fund to attorneys other than Hearne, who represented Archer or other individuals involved in the guardianship proceeding. Following a hearing on Hearne's October fee motion, the probate court ordered that Hearne's claims were barred pursuant to section 800 of the probate code and denied his motion. Hearne appeals the probate court's order.

Standard of Review

The issues presented involve legal questions of statutory construction, and questions of statutory construction are reviewed de novo. City of San Antonio v. City of Boerne, 111 S.W.3d 22, 25 (Tex. 2003). Our primary objective in construing a statute is to give effect to the Legislature's intent. McIntyre v. Ramirez, 109 S.W.3d 741, 745 (Tex. 2003). If the statutory language is unambiguous, we will interpret the statute according to the "plain and common meaning of the statute's words." State ex rel. State Dep't of Highways & Pub. Transp. v. Gonzalez, 82 S.W.3d 322, 327 (Tex. 2002) (quoting Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864, 865 (Tex. 1999)). However, we must also consider the entire act, its nature and object, and the consequences that would follow from each construction. Atascosa County v. Atascosa County Appraisal Dist., 990 S.W.2d 255, 258 (Tex. 1999). Thus, we read the statute as a whole and interpret it to give effect to every part. City of San Antonio, 111 S.W.3d at 25.

Appropriate Claims Procedures

In his first issue, Hearne contends that his requests for attorney's fees were not time barred by the Probate Code, because he had been fulfilling the role of attorney ad litem. Accordingly, Hearne asserts that his compensation should have been analyzed under statutory provisions applicable to attorneys ad litem, rather than being analyzed under provisions applicable to general claims against the guardianship. Hearne asks this court to adopt the reasoning of Oldham v. Calderon, No. 14-95-01426-CV, 1998 WL 104819 (Tex. App.-Houston [14th Dist.] March 12,1998, pet. denied) (not designated for publication). In Oldham, the court of appeals reasoned that because the trial court "allowed [the appellee attorneys] to fulfill the role that would otherwise have been served in the guardianship proceeding by an appointed attorney ad litem," the trial court was authorized under section 665A of the Texas Probate Code to compensate the appellee attorneys for satisfying the attorney ad litem requirement. 1998 WL 104819, at *2; see Tex. Prob. Code Ann. 646, 665A (Vernon 2003).

Hearne frames his first issue in terms of the Oldham decision. Relying on Oldham, Hearne asks the court to consider the issue of whether an attorney "fulfilling the role of attorney ad litem" can be compensated as a court appointed attorney ad litem under section 665A. In this case, we need not consider this issue, because Hearne did not fulfill the role of an attorney ad litem. First, Hearne's March and April fee applications cover services provided by Hearne while Archer still had a court appointed attorney ad litem. Chris Heinrichs, Archer's court appointed attorney ad litem, was not formally discharged until May 23, 2002. Second, after Heinrichs was discharged, Hearne did not fulfill the role of an attorney ad litem because an attorney ad litem was no longer necessary. The Oldham court affirmed an award of attorney's fees to the ward's chosen counsel "because the trial court: (a) was required to appoint an attorney ad litem to represent [the proposed ward's] interests and to compensate that attorney for doing so; and (b) allowed appellees to fulfill the role of that attorney ad litem." 1998 WL 104819, at *3. Here, the probate court discharged Heinrichs because the role of the attorney ad litem was no longer required. Section 646(a) of the probate code provides that "in a proceeding under [Chapter XIII of the Texas Probate Code] for the appointment of a guardian, the Court shall appoint an attorney ad litem to represent the interests of the proposed ward." Tex. Prob. Code Ann. 646(a) (Vernon 2003) (emphasis added). A proposed ward is defined as "a person alleged to be incapacitated in a guardianship proceeding." Tex. Prob. Code Ann. 601(27) (Vernon 2003). In the order discharging Heinrichs, the probate court noted that "the incapacity of Jack Archer was stipulated in open court and in a writing filed with this Court." Accordingly, the trial court appointed temporary guardians of Archer's person and estate, and there was no longer a section 646 requirement for an attorney ad litem.

Since an attorney ad litem was not required, we need not construe Hearne's representation of Archer as a fulfillment of the role of a section 646 attorney ad litem. As a result, Hearne's fee applications (2) were subject to the general claims procedures. Hearne's first issue is overruled.

Instituting Suit under Probate Code Section 800

In his second issue on appeal, Hearne contends that if his requests for attorney's fees are general claims governed by sections 797 and 800 of the Probate Code, then the fee applications themselves timely instituted suit, as required by section 800. Appellees respond that a single fee application cannot serve the dual purposes of satisfying the statutory requirements of presentment and instituting suit.

The failure of a guardian of an estate "to endorse on or annex to a claim" or "to allow or reject the claim" within 30 days after the claim is presented to the guardian constitutes a rejection of the claim. Tex. Prob. Code Ann. 797 (Vernon 2003). If the guardian fails to act on the claim within 30 days after it is filed with the clerk, the claim is presumed to be rejected. Tex. Prob. Code Ann. 795 (Vernon 2003). Failure of the clerk to give notice to the guardian of the estate or the guardian's attorney does not affect the validity of the presentment or the presumption of rejection of the claim because the claim is not acted on within the 30-day period. Tex. Prob. Code Ann. 795 (Vernon 2003). When a claim or a part of a claim has been rejected by the guardian, the claimant shall institute suit on the claim in the court of original probate jurisdiction in which the guardianship is pending or in any other court of proper jurisdiction not later than the 90th day after the date of the rejection of the claim or the claim is barred. Tex. Prob. Code Ann. 800 (Vernon 2003). The trial court denied Hearne's fee applications on the grounds that his claims were barred under section 800 of the probate code because Hearne did not institute suit within the 90 days after his claims were rejected by operation of law.

In support of his argument that his fee applications should be considered to be instituting suit, Hearne relies on In Re Estate of Ayala, 19 S.W.3d 477 (Tex. App.-Corpus Christi 2000, pet. denied). In Ayala, the creditor simultaneously filed a claim and a motion to require sale of property, and the court concluded that the substance of the motion, construed liberally, could constitute a "suit" within the meaning of section 313 of the probate code, which is the analogous section of the probate code governing suits on rejected claims against a decedent's estate. Id. at 479; see Tex. Prob. Code Ann. 313, 800 (Vernon 2003). Although Ayala involves a dependent administration of a decedent's estate, the reasoning is applicable in analyzing section 800 of the probate code. Tex. Prob. Code Ann. 603 (Vernon 2003) (stating that to "the extent applicable and not inconsistent with other provisions of [the probate] code, the laws and rules governing estates of decedents apply to and govern guardianships.").

Appellees counter that unlike Ayala, Hearne did not file a claim and another pleading seeking to institute suit on a rejected claim. Hearne acknowledges that in Ayala, the claimant filed its claim along with a motion, whereas Hearne filed a single document (a fee application or a motion) to serve as both his claim and suit for each set of requested attorney's fees. Hearne argues that the Probate Code does not demand separate filings to satisfy the requirements of presentment of claims and instituting suit.

The structure of the statutory claims procedure signals the Legislature's intent to impose two distinct requirements upon creditors with rejected claims: (1) presentment of claims; and (2) instituting suit on the rejected claims. The purpose of presentment is the avoidance of delay and prevention of dissipation of assets of the estate in useless litigation. Dempsey v. Gibson, 105 S.W.2d 423, 427 (Tex. Civ. App.-Waco 1937, writ dism'd). It affords the guardian an opportunity to allow and pay just claims in an orderly course of administration. See Reily v. Hare, 280 S.W. 543, 544 (Tex. Comm'n App. 1926). Under the statutory construction advocated by Hearne, claimants would be encouraged to develop their claims so that they could be construed to institute suit. This would cause additional expense to the estate and delay in the course of administration because guardians would have to treat each claim as a potential suit. Without notice of which rejected claims had simultaneously instituted suit, guardians would have to take additional measures in monitoring rejected claims and responding to potential suits. Thus, the purpose of presentment would be defeated.

Furthermore, under the Texas Probate Code, different procedures govern liquidated and unliquidated claims against an estate. See Cross v. Old Republic Sur. Co, 983 S.W.2d 771, 774 (Tex. App.-San Antonio 1998, pet. denied) (regarding decedent's estate). Neither presentment nor the ninety day period in which to file suit applies to unliquidated claims. Id. at 775. Hearne does not assert that his claim is unliquidated. However, holding that a single document, such as a fee application, can serve both to present a claim and to institute suit on the claim would in effect treat his claim as an unliquidated claim, thereby extinguishing the distinction between liquidated and unliquidated claims. Considering the entire act, its nature and object, and the consequences that would follow from the construction advocated by Hearne, we conclude that the Probate Code requires two distinct filings: a claim and a pleading instituting suit.

Hearne advances two additional arguments with regard to instituting suit. First, Hearne argues that the appellees' request for a jury in response to his fee application is fundamentally inconsistent with their argument that the fee application was just a claim and that he was required to institute suit. Hearne, however, cites no authority in support of this apparent waiver argument. Second, Hearne urges this court to liberally construe his fee applications as instituting suit in satisfaction of section 800. We need not address this issue because Hearne's individual fee applications could not serve the dual purpose of presentment and instituting suit.

Because the probate court rendered an overall denial of Hearne's October fee motion, we will consider and analyze the claims in Hearne's October fee motion by dividing them into two categories: (1) claims newly asserted in Hearne's October Motion to Approve Fees ("October New Fee Claims"); and (2) claims previously asserted in Hearne's March and April fee applications ("March and April Fee Claims").

A. October New Fee Claims

With regard to claims not asserted in the March and April fee applications, Hearne fulfilled the requirement of presentment a claim by filing his October fee motion. The record reveals that within the 30 days after the October New Fee Claims were presented or filed, the guardian of Archer's estate failed to "endorse or annex to a claim a memorandum signed by the guardian stating the time of presentation or filing of the claim and that the guardian allows or rejects the claim, or what portion of the claim the guardian allows or rejects," as required by section 796 of the probate code. Tex. Prob. Code Ann. 796 (Vernon 2003). If a guardian fails to act on a claim within 30 days after it was filed, the claim is presumed to be rejected. Tex. Prob. Code Ann. 795 (Vernon 2003). Thus, the October New Fee Claims were deemed rejected on November 2, 2002, (3) and the deadline for instituting suit on the rejected New October Fee Claims was January 31, 2003. See Tex. Prob. Code Ann. 795, 800 (Vernon 2003). Therefore, at the October 7, 2002 hearing, the merits of Hearne's October New Fee Claims were not ripe for consideration by the probate court, since these claims had not been rejected by the guardian. Furthermore, even if the merits had been before the court, the claims were not time barred under section 800. Pursuant to a tolling agreement with the guardian of Archer's estate, Hearne may institute suit on the October New Fee Claims within 60 days after this court decides this appeal. We note that the merits of the October New Fee Claims must be properly decided by the probate court. We will only review the merits of these claims upon appeal if Hearne institutes suit on these claims, and a final judgment in the suit is appealed. See Breaux v. Allied Bank of Tex., 699 S.W.2d 599, 601 (Tex. App.-Houston[14th Dist.] 1985, writ ref'd n.r.e.) (noting proper appellate procedure where attorney presented claims for attorney's fees, filed suit on the rejected claims, and then appealed summary judgment granted in suit instituted on the rejected claims). Because the merits of the October New Fee Claims are not ripe for our consideration, we vacate the probate court's order with regard to the October New Fee Claims and dismiss the appeal with regard to these claims.

B. March and April Fee Claims

With regard to the March and April Fee Claims, Hearne fulfilled the requirement of presenting a claim by filing his March and April fee applications. Because the record reveals that the guardian of Archer's estate failed to act on the claims within 30 days after the March and April Fee Claims were filed, these claims were deemed rejected in April and May of 2002, respectively. Tex. Prob. Code Ann. 795, 796 (Vernon 2003). Hearne was required to institute suit on the March and April Fee Claims within 90 days following the deemed rejection of the claims. Tex. Prob. Code Ann. 800 (Vernon 2003). Since Hearne's fee applications could not serve the dual purpose of presentment and instituting suit, Hearne failed to institute suit on the March and April Fee Claims within the section 800 deadline. Therefore, Hearne's March and April Fee Claims were barred, and the probate court properly denied these claims. Hearne's second issue is overruled.

Reimbursement of Guardianship Expenses

In his third issue on appeal, Hearne contends that once the probate court has rendered written orders approving payment of guardianship expenses, it is improper for the probate court to subsequently bar payment of those exact expenses on unrelated procedural grounds. The record shows that the advanced payments on the court-approved guardianship expenses were listed solely in Hearne's October motion. Since Hearne's third issue is solely relevant to the October New Fee Claims, and we dismissed this appeal with regard to those claims, we need not address the issue. Hearne's third issue is overruled.

Conclusion

With regard to the March and April Fee Claims, we affirm the probate court's order denying Hearne's Motion to Approve Fees. With regard to the October New Fee Claims, which were not ripe for consideration by the probate court or this court, we vacate the probate court's order denying these claims and dismiss the appeal.

Alma L. L pez, Chief Justice

1. Assigned as visiting judge to this case after recusal of sitting judge.

2. When we refer generally to the "fee applications," we are collectively referring to the March 4, 2002 fee application, April 11, 2002 fee application, and October 3, 2002 motion to approve fees.

3. Although Appellant's brief and the trial court's order state that the October fee motion was filed October 2, the file stamp reveals that the fee motion was filed October 3.