IN THE MATTER OF THE ESTATES OF LOREN S. BOCKWOLDT, Deceased, and TAMMY R. BOCKWOLDT, Deceased, DALE RICHARD WILLOWS, Conservator for Brandie Renee Bockwoldt, the minor child of the Decedents, and Co-Executor for the Estates of Loren and Tammy Bockwoldt, Executor-Appellant.
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IN THE COURT OF APPEALS OF IOWA
No. 9-111 / 08-1001
Filed April 8, 2009
IN THE MATTER OF THE ESTATES OF
LOREN S. BOCKWOLDT, Deceased,
and TAMMY R. BOCKWOLDT, Deceased,
DALE RICHARD WILLOWS, Conservator
for Brandie Renee Bockwoldt, the minor
child of the Decedents, and Co-Executor
for the Estates of Loren and Tammy Bockwoldt,
Executor-Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Muscatine County, Patrick J.
Madden, Judge.
Dale Willows, conservator for child beneficiary, appeals the district court’s
award of attorney fees for counsel for the estate. AFFIRMED AS MODIFIED.
Christopher L. Surls and Timothy L. Baumann of Wm. B. Norton Law Firm,
Lowden, for appellant.
Kenza B. Nelson and Eric Knoernschild of Stanley, Lande, & Hunter,
Muscatine, for appellee.
Eric Syverud, Davenport, for minor child.
Considered by Sackett, C.J., and Potterfield and Mansfield, JJ.
2
POTTERFIELD, J.
I. Background Facts and Proceedings
Loren and Tammy Bockwoldt, husband and wife, were killed in a car
accident on March 12, 2005. They had one minor child who was a beneficiary of
both estates. Loren also had an adult son, Brock, who was a beneficiary of only
Loren’s estate. The court appointed three co-executors to serve in both estates:
(1) Dale Richard Willows, Tammy’s brother; (2) Neal Bockwoldt, Loren’s brother;
and (3) Brock.1 The co-executors designated Pete Wessels as the attorney for
both estates. Willows was appointed as conservator for the Bockwoldts’ minor
child.
On February 8, 2007, Wessels filed an application for ordinary and
extraordinary attorney fees and expenses in which he sought $67,045 for the
estate of Loren Bockwoldt.2 On February 14, 2007, Willows filed a resistance to
Wessels’s application, asserting that the fees sought were excessive and that
Wessels needed to separate his request for ordinary fees from his request for
extraordinary fees. Wessels identified seven areas in which extraordinary work
was done, but did not designate his fee itemizations as extraordinary or ordinary.
After a non-evidentiary hearing on the matter, the district court authorized
payment of the entire $67,045 from Loren’s estate. Willows appealed the district
court’s ruling regarding attorney fees.3 This court found that the district court
1
On January 18, 2007, Wessels filed a motion requesting the district court to appoint
corporate executors in place of the three co-executors. The district court removed Brock
and Willows as co-executors of both estates, finding a conflict of interest. Neal later
withdrew. The corporate executors have not participated in the fee dispute.
2
Wessels also sought fees for Tammy’s estate. However, Willows has conceded the
reasonableness of those fees, and Tammy’s estate is not at issue on appeal.
3
Willows also appealed several other rulings, which are not at issue on this appeal.
3
erred by failing to require Wessels to prove the reasonableness of his requested
fees. In re Estates of Bockwoldt, No. 07-0531 (Iowa Ct. App. Dec. 28, 2007).
We remanded the issue to the district court “for a hearing requiring the applicant
to meet his burden and for specific findings regarding the reasonableness of
ordinary fees and extraordinary fees granted.” Id.
On January 30, 2008, Wessels filed another application for fees. This
application requested previously sought fees from before the appeal, fees for
appeal matters, and reimbursement of litigation expenses from Loren’s estate
amounting to $82,776.83. Wessels later withdrew the application for post-appeal
attorney fees and expenses.
On February 25, 2008, Willows filed a new
resistance to Wessels’s application for fees, arguing that Wessels failed to
identify which entries were for ordinary work and which were for extraordinary
work.
A fee application hearing was held on February 25, 2008, to comply with
this court’s remand order.
During the hearing, the parties agreed to a
continuance to allow Wessels the opportunity to reexamine his bill. On April 11,
2008, Wessels filed an additional pleading in regard to his application for interim
ordinary and extraordinary attorney fees and expenses requesting a total of
$77,016 from Loren’s estate. Willows filed a response April 18, 2008, asking the
court to deny Wessels’s request for extraordinary fees.
The hearing on Wessels’s fee application resumed on April 24, 2008. At
the hearing, Willows accepted the reasonableness of Wessels’s request for
ordinary fees of $20,432.89 as well as expenses of $640.50.
Willows also
4
agreed to $18,413 of extraordinary expenses.4 The district court did not require
Wessels to break down his bill to show which fees were extraordinary as
opposed to ordinary, as requested by Willows. The district court determined that
Wessels would be unable to perform such a task given the passage of time and
the difficulty of separating ordinary from extraordinary services in a single
telephone call or conference.
The district court also found that such a
breakdown was not what the court of appeals expected when it remanded. The
district court awarded Wessels all fees and expenses he requested: $55,942.61
of extraordinary fees, $20,432.89 of ordinary fees, and expenses of $640.50.
Willows appeals, asserting: (1) the district court erred by declining to require
Wessels to separate ordinary fees from extraordinary fees on his fee application;
(2) the district court’s award of extraordinary attorney fees was excessive and
unreasonable; and (3) the district court erred by awarding Wessels the entire
ordinary fee before the estate is closed.
II. Standard of Review
A hearing on allowance of attorney fees is in equity, and our review is de
novo. Bass v. Bass, 196 N.W.2d 433, 435 (Iowa 1972).
III. Ordinary and Extraordinary Attorney Fees
An award of attorney fees in probate cases in Iowa is governed by statute
and the Iowa Rules of Probate Procedure. Iowa Code section 633.197 (2005)
provides:
4
Willows arrived at this amount by reviewing Wessels’s bill line by line and attempting to
determine which hours had been billed for any of seven matters that Wessels had
identified as extraordinary.
5
Personal representatives shall be allowed such reasonable
fees as may be determined by the court for services rendered, but
not in excess of the following commissions upon the gross assets
of the estate listed in the probate inventory for Iowa inheritance tax
purposes, which shall be received as full compensation for ordinary
services:
For the first one thousand dollars, six percent;
For the overplus between one and five thousand dollars, four
percent;
For all sums over five thousand dollars, two percent.
Iowa Code section 633.198 allows payment of attorney fees to the personal
representative’s attorney, subject to the fee schedule provided in section
633.197. This fee is a “maximum fee for the customary work in estates.” In re
Estate of Bolton, 403 N.W.2d 40 43 (Iowa Ct. App. 1987).
The code also
provides,
Such further allowances as are just and reasonable may be
made by the court to . . . attorneys for actual necessary and
extraordinary expenses or services. Necessary and extraordinary
expenses shall be construed to also include services in connection
with real estate, tax matters, and litigated matters.
Iowa Code § 633.199.
What constitutes reasonable fees depends upon a host of factors,
including the competence and efficiency exercised in the estate,
size of the estate, actual time devoted to the estate, nature and
difficulty of the services performed, fee customarily charged for
similar services, results obtained, and experience of the attorney or
executor.
Estate of Randeris v. Randeris, 523 N.W.2d 600, 607 (Iowa Ct. App. 1994).5
When an allowance for extraordinary expenses or services is
sought pursuant to Iowa Code section 633.199, the request shall
include a written statement showing the necessity for such
expenses or services, the responsibilities assumed, and the
amount of extra time or expense involved. In appropriate cases,
the statement shall also explain the importance of the matter to the
estate and describe the results obtained. The request may be
5
Similar factors have since been codified in Iowa Code section 633.199.
6
made in the final report or by separate application. It shall be set for
hearing upon reasonable notice, specifying the amounts claimed,
unless waivers of notice identifying the amounts claimed are filed
by all interested persons. The applicant shall have the burden of
proving such allowance should be made.
Iowa R. Prob. P. 7.2(3).
This court previously determined that Wessels had followed the proper
procedure described in rule 7.2(3) when he designated the subject matters
involved in his extraordinary fee request. However, we found that the district
court failed to follow rule 7.2(3) when it heard Willows’s objection without first
requiring Wessels to carry his burden of proving that his requested fees were
reasonable and necessary. We remanded for Wessels to “go forward to prove
his fees . . . to meet his burden” and for the district court to make “specific
findings regarding the reasonableness of ordinary fees and extraordinary fees
granted.”
On remand, the district court held an evidentiary hearing on the
resisted fee application, and Wessels presented his case with the help of
counsel.
We find that the district court failed to follow our instructions on remand to
require Wessels to prove the reasonableness of his fee request and to make a
specific finding that the claimed extraordinary fees were reasonable. Wessels
identified seven areas of work performed for Loren’s estate that required
“additional time”: (1) litigation as to the guardianship of the minor child; (2)
ownership of farm land interests and farm-related business interests, and sale of
personal property/farm real estate; (3) co-executors that resided in three different
states; (4) wrongful death litigation; (5) issues as to whether Loren had a valid
will; (6) income tax issues; and (7) obtaining information on nine insurance
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policies.
The district court addressed one of the articulated extraordinary
services before summarily concluding, “The other items noted by Wessels all
support the fee recovery he seeks.” This does not constitute a specific finding
that all claimed extraordinary fees are reasonable.
The district court stated in its ruling after remand that:
Willows has a larger obligation after Wessels specifically and
extensively explained the unusual issues with which he had to
come to grips . . . than to allege only in general terms without
reference to specific services, some of the services Wessels
provided were only “ordinary.”
This improperly shifted the burden of proof from Wessels to Willows. Wessels
had the burden of proving that a fee allowance should be made. Iowa R. Prob.
P. 7.2(3).
Further, we disagree with the district court that Wessels “specifically and
extensively explained the unusual issues with which he had to come to grips.”
Before the first appeal to this court, Wessels had identified seven areas of work
that could be considered extraordinary. This court remanded for Wessels to
prove his fees.
Thus, this court expected Wessels to go beyond merely
enumerating the seven areas requiring extraordinary work. Wessels failed to
designate or even estimate the time or expense he spent on any or all of these
seven issues. Rather, he testified that his extraordinary fees were all of those left
after subtracting the maximum ordinary fees permitted by statute. Wessels’s
total fees were more than three times the statutory maximum for ordinary fees.
A review of the record shows that, even after remand, Wessels did not
specify which fees represented work on extraordinary matters. Wessels testified
by deposition that he was not “making an extraordinary application for any
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specific item listed” because it was all for “ordinary work until it’s taken as a
conglomerate.” Wessels refused to “pick out any particular provision and say
that it’s extraordinary versus ordinary,” claiming that he had “no clue as to what
was put forth on . . . specific issues.” Wessels’s interpretation of the relevant
code sections was that so long as he provided some extraordinary services, all
his fees above the section 633.197 cap became presumptively compensable
under section 633.199. This is not how the code sections operate.
Section 633.198 authorizes payment of reasonable attorney fees “as full
compensation for all ordinary services.” The fee schedule provided in section
633.197 provides the maximum any attorney can collect on fees for ordinary
services, regardless of the amount of time spent to perform such services.
However, if an attorney performs “actual necessary and extraordinary” services,
compensation will be provided under section 633.199. Section 633.199 does not
automatically allow payment of any fees requested by the attorney that exceed
the cap set by section 633.197.
Rather, section 633.199 provides for the
payment of extraordinary fees, fees for non-ordinary services including but not
limited to “services in connection with real estate, tax matters, and litigated
matters.” “We have defined extraordinary services as those which in character
and amount [are] beyond those usually required.” In re Estate of Mabie, 401
N.W.2d 29, 31 (Iowa 1987).
Wessels must prove that all fees claimed under section 633.199 are
necessary and extraordinary in character. “It is not the role of this court or the
district court to divine those services that are extraordinary from an attorney’s
itemization of services.”
Id. at 32.
Rule 7.2 “requires an attorney seeking
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extraordinary fees to inform the court of . . . the time involved for these matters . .
. .” Id. Wessels failed to provide the district court with a sufficient record on
which it could have found that his claimed extraordinary fees were reasonable.
We conclude that the district court did not have an adequate basis to
determine whether Wessels’s claimed extraordinary fees were “just and
reasonable,” nor did the district court make the required finding. We therefore
set aside the district court’s award. Willows conceded at trial that all of the
ordinary fees, in the amount of $20,432.89, a portion of the extraordinary fees, in
the amount of $18,413, and expenses of $640.50 were warranted. Willows made
that concession after a painstaking review of Wessels’s itemization of fees. We
accept Willows’s concession and approve those fees and expenses but no
others, awarding Wessels a total of $39,486.39.
IV. Timing of Fee Award
Willows also argues that the district court erred by awarding the entire
ordinary fee at this time. He asserts that Wessels’s award should be limited
pursuant to Iowa Rule of Probate Procedure 7.2(4) because the estate is still
open. Rule 7.2(4) states:
One half of the fees for ordinary services may be paid when the
federal estate tax return, if required, and Iowa inheritance tax
return, if required, are prepared. When a federal estate tax return
is not required, the one-half fee may be paid when the Iowa
inheritance tax return is prepared or, when it is not required, when
the probate inventory required by the Iowa Probate Code is filed.
The remainder of the fees may be paid when the final report is filed
and the costs have been paid.
We find that the district court properly awarded attorney fees at this time.
Rule 7.2(4) governs the timing of payment of attorney fees from the estate.
10
However, attorney fees may be awarded before the final report is filed. “It is
customary . . . for the attorney and executor fees to be set by the court on
application by the executor prior to the final report, usually following the
submission of the probate inventory.” Randeris, 523 N.W.2d 600, 606 (Iowa Ct.
App. 1994). We affirm the district court’s award of ordinary attorney fees.
AFFIRMED AS MODIFIED.
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