IN THE MATTER OF THE CONSERVATORSHIP OF JOHN THOMAS KLEIN, Plaintiff-Appellee/Cross-Appellant, vs. DONALD N. LAING, as Conservator and Individually, D. SCOTT RAILSBACK, As Attorney for Conservatorship and Individually, and LAING & RAILSBACK LAW FIRM, Defendants-Appellants/Cross-Appellees.
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IN THE COURT OF APPEALS OF IOWA
No. 9-757 / 09-0124
Filed December 30, 2009
IN THE MATTER OF THE
CONSERVATORSHIP OF
JOHN THOMAS KLEIN,
Plaintiff-Appellee/Cross-Appellant,
vs.
DONALD N. LAING, as Conservator
and Individually, D. SCOTT
RAILSBACK, As Attorney for
Conservatorship and Individually, and
LAING & RAILSBACK LAW FIRM,
Defendants-Appellants/Cross-Appellees.
________________________________________________________________
Appeal from the Iowa District Court for Keokuk County, Mary Ann Brown,
Judge.
Donald N. Laing, D. Scott Railsback, and the Laing & Railsback Law Firm
appeal, and John Thomas Klein cross-appeals, from the district court order
setting attorney and conservator fees. AFFIRMED AS MODIFIED.
Stephen N. Greenleaf of Lynch, Greenleaf & Michael, L.L.P., Iowa City, for
appellant.
Garold F. Heslinga of Heslinga, Heslinga, Dixon & Moore, Oskaloosa, for
appellees.
Considered by Vogel, P.J., and Doyle and Mansfield, JJ.
2
DOYLE, J.
This appeal and cross-appeal concern over twenty years of fees and
expenses awarded to Donald N. Laing and the Laing & Railsback Law Firm for
reported services performed and monies expended in the administration of the
John Thomas Klein conservatorship. Defendants Laing, D. Scott Railsback, and
the Laing & Railsback Law Firm appeal, and John Thomas Klein cross-appeals,
from the district court order that reduced certain amounts of fees previously
awarded to Laing and the law firm. Upon our de novo review, we affirm as
modified.
I. Background Facts and Proceedings.
John Thomas Klein was born in 1950. He served in the armed forces and
was honorably discharged in April 1973. Klein‟s mother died a few months later,
and he received an inheritance including money and numerous acres of
farmland.
In approximately 1974, Klein was diagnosed with paranoid
schizophrenia. Klein also has a history of substance abuse. At the time of trial,
Klein had no close living relatives or any individuals for whom he was concerned
about preserving his estate upon his death.
In 1974 Klein sought to establish a voluntary conservatorship for himself
because he believed he could not manage his financial affairs due to his mental
condition.1 Klein asked attorney Donald Laing, who had handled some legal
affairs for Klein‟s family, to serve as his conservator. On May 21, 1974, the
1
Klein also is the beneficiary of a trust. The trust is managed separately by a
bank and is not at issue here.
3
district court appointed Laing conservator of Klein‟s property and required a
$50,000 surety bond, which Laing obtained.
Laing filed annual reports for the conservatorship, and he annually sought
compensation for his services as conservator, and as attorney for the
conservatorship, as well as for out-of-pocket expenses spent administering the
conservatorship.
In the beginning years of the conservatorship, the annual
reports did not report specific hours worked or the amount of expenses claimed
by Laing.
Rather, the reports requested that the court “fix and allow the
reasonable compensation” for his services. The district court in the early years
approved the annual reports and awarded fees in a lump sum with no delineation
of conservator or attorney fees.
In approximately 1979, Laing‟s law partner, D. Scott Railsback, began
performing services for the conservatorship. Although Railsback was generally
identified as the attorney for the conservator, both Laing and Railsback
performed both conservator and legal services for the conservatorship. In the
fifth annual report, filed in 1979, Laing sought and received compensation for
both himself and Railsback.2
In May 1983, Laing filed the ninth annual report for the conservatorship.
Attached to the report were affidavits of compensation for Laing and Railsback,
reporting that together they had spent in excess of 300 hours with respect to
Klein. The reported 300 hours included 120 hours spent traveling to Connecticut
to visit Klein, who was at that time residing in a treatment facility there. The court
2
Laing reported an approximate combined number of hours he and Railsback
spent providing services to the conservatorship.
4
initially approved the report and awarded Laing and the law firm $12,000 for
services rendered. However, on August 11, 1983, the court set the matter for
hearing for reconsideration. Further, the court appointed another attorney to act
as interim conservator for the purpose of the hearing. The court ordered the
conservator and attorney for the conservatorship to have present at the hearing
“all receipts, vouchers and other proofs of payment of expenditures as well as all
evidence of income received by the Conservator during the period of the Report.”
In a letter to Laing and Railsback, the judge indicated that since Laing‟s firm was
also the attorney for the conservatorship, “it is a much better practice where the
fees are substantial that the matter be set for hearing and notice prescribed.”
The judge suggested that the attorneys provide an itemization of all fees paid to
the firm as well as an itemization of funds spent on the trips to visit Klein. Notice
was sent to the conservator, the interim conservator, and to the ward‟s aunt, all
of whom appeared at the hearing. Following a hearing on the matter, the court
approved the ninth report except for the matter of fees, in which the allowance of
$12,000 was rescinded. The court found the evidence submitted failed to show
the trip to Connecticut was necessary and reduced the fees allowed to $8500.
In July 1984, Laing filed the tenth annual report for the conservatorship.
Attached to the report were affidavits of compensation for Laing and Railsback,
along with an itemized statement of the hours worked by the attorneys.
However, the statement was not separated out by the attorney performing the
service or type of service performed, i.e. legal versus conservator services. The
attorneys requested compensation at the rate of sixty dollars per hour for all
services.
5
The court set the tenth report for hearing, provided notice to Klein, and
appointed an attorney to represent Klein pursuant to Iowa Code section 633.118
(1984). Following a hearing, the court entered an order reducing Laing and
Railsback‟s fees. The court stated:
It is obvious from the outset that the conservator in this case is
acting in a dual capacity [as both guardian and conservator], and
this has caused some of the misunderstandings and problems
which have arisen in regard to the allowance of fees. . . .
....
. . . As part of the tenth report, the conservator states that
he believes the court should appoint a guardian for the ward and
that the conservator would decline to further serve in that
capacity. . . . A petition should be presented to the court pursuant
to sections 633.552 of the Iowa Probate Code so a guardian may
be properly appointed. The conservator testifies that there is no
one else present and able to undertake these duties. He also
indicates a promise made to the ward‟s mother to continue to look
after the property. If the conservator declines to serve, he should
make it known so that future misunderstandings as to the
allowance of fees will not arise. If the conservator determines that
no one else is available and continues to serve in that capacity, he
should at least segregate his accounts and time records so that
separate applications could be presented to the court. This court
still believes that the latter method is the less acceptable method
and that it would be preferable to have a separate guardian and
conservator.
The court, after reviewing the attorneys‟ statement of services, reduced both the
time charged and the fees for the conservator services from sixty dollars an hour
to thirty dollars an hour.
Despite the court‟s suggestion that a guardian be appointed, Laing
continued to perform both guardian- and conservator-type duties for Klein. On
February 10, 1986, Laing filed the conservatorship‟s eleventh annual report.
Notice was given to Klein, and an attorney was appointed to represent him. It
appears the court awarded Laing and Railsback‟s requested hours for both
6
conservator and legal fees at the rate of sixty dollars an hour; however, notice
was given to Klein, and it does not appear that Klein‟s attorney objected to the
hourly fees.
The eleventh report was the last report of which Klein received notice.
Annual reports twelve through thirty-three (June 1986 through June 2007) were
approved by the district court, including the exact fees and expenses requested
by Laing and Railsback in their affidavits attached to the reports, without notice to
Klein or the appointment of an attorney for Klein. Although their compensation
attachments gave a total of hours to be billed as conservator fees and legal fees,
the individual charges were not separated by the attorney performing the service
or by the type of service until the thirty-fourth report.
For reporting periods twelve through thirty-three, the conservator charged
between $42 per hour and $125 per hour for fulfilling the general conservatorship
and guardianship duties.3 The conservator‟s reported time for reports nineteen
through thirty included numerous hours managing the ward‟s investments,
among other things.
For reporting periods twelve through thirty-three, the average hourly legal
fee for legal services provided to the conservatorship by Laing and Railsback
was $108.59 per hour.4 The reported legal services performed by Laing and
Railsback included preparation of the annual reports, tax returns, social security
3
The conservator‟s hourly fee started at $61.57 per hour for the twelfth reporting
period. The fee dropped as low as $42 per hour during the seventeenth report period,
and rose as high as $125 per hour for the thirtieth reporting period
4
The hourly legal fee in the twelfth report was $61.57 per hour. The hourly fee
steadily increased over the years, reaching $150 per hour for the twenty-seventh
reporting period. The fee fell to $135 per hour during the thirty-first reporting period.
7
payee reports, and farm leases.
Laing and Railsback reported in their
attachment to the twelfth report that completion of the eleventh annual report
took ten hours. The hours to complete the report remained between ten and
fifteen hours until the twentieth report, where it was reported the prior annual
report took thirty-seven hours to complete. That number rose substantially over
the years, reaching a reported seventy-six hours in their attachment to the
twenty-sixth annual report. The number dropped to forty-eight hours in the next
report, and it stayed somewhere between thirty to forty-eight hours thereafter.
Additionally, the time reported to complete the conservatorship‟s tax returns rose
steadily over the years. The attachment to the twelfth report reported four hours
for preparation and completion of the tax returns; by the twenty-sixth report, the
hours had risen to twelve and have generally remained at about twelve hours per
year.
In billing for their time, Laing and Railsback included their time spent on
the telephone. For the twelfth through the twenty-sixth reports, each call listed
on their compensation affidavit was billed at a minimum time of a quarter of an
hour. The minimum billed call time rose to a half an hour for each call listed in
the attachments to the twenty-seventh through thirty-third reports.5
The
attachments generally did not contain any description of the call or indicate
whether the call required legal or conservator services.6
5
There appears to be one exception to Laing and Railsback‟s billing: in the
attachment to the twenty-eighth report, Laing and Railsback charged one hour total for
four calls from Klein.
6
Calls were clearly included in the totals of the legal and conservator hours
reported to the court.
8
Over the years, Laing and Railsback also requested additional
compensation for their out-of-pocket expenses advanced in administering the
conservatorship, which often included copying, postage, phone service, and
mileage costs.
The attachments to reports twelve through sixteen did not
expressly set forth any mileage charges. Thereafter, every report included a
mileage fee. The mileage fees included, among other things, 7 Laing‟s driving the
ward
to
appointments,
taking
the
ward
shopping,
and
dropping
off
conservatorship deposits at the firm‟s bank in a neighboring city.
The twelfth report reported that the total value of Klein‟s assets, including
240 acres of farmland valued at $1500 per acre, was $371,607.30. The total
value of Klein‟s assets, including 240 acres of farmland valued at $4000 per acre,
had increased to $1,133,434.42 in the thirty-fourth report. Although the value of
the estate rose throughout the years, the court approved the annual reports
noting the original surety bond was still in place and did not require the bond
amount to be increased.
Klein visited at least two different attorneys over the years, seeking to
have Laing removed as conservator. Laing refused to resign. In approximately
2007, Klein visited attorney Garold F. Heslinga, again seeking to have Laing
removed as conservator. Although Klein did not have any objections to Laing
and Railsback‟s overall services, Klein wanted more money dispensed to him
7
For example, in the seventeenth and twenty-sixth reports, defendants charged
2.5 and 3.5 hours, respectively, plus mileage to visit Klein for Christmas. On the
seventeenth report, they also charged 2.5 hours plus mileage to take Klein a birthday
cake on his birthday.
9
from the conservatorship. Klein also told Heslinga he had heard he was being
overcharged. Klein requested that a bank serve as his conservator.
On July 26, 2007, Klein filed his petition in equity, seeking removal of the
conservator pursuant to Iowa Code section 633.65 and reimbursement of losses
he allegedly suffered as a result of the actions of Laing and Railsback for,
essentially, overbilling and charging unreasonable rates over the years.
The
petition, as later amended, requested removal and reimbursement on the
grounds of fraud, theft, and malpractice, among other things. Klein requested
damages to compensate him for his losses, punitive damages, and attorney fees.
On May 8, 2008, Laing and Railsback filed their motion for summary
judgment, seeking dismissal of Klein‟s older claims under the five-year statute of
limitations for fraud. See Iowa Code § 614.1(4). However, the district court
denied Laing and Railsback‟s motion, finding because Klein had not been
provided notice for orders entered in the conservatorship after May 20, 1985, all
actions of the conservator and the attorney for the conservator after that date
were reviewable by the court as provided for in Iowa Code section 633.37.
A bench trial was held on July 29, 30, and 31, 2008, on the previously
approved twelfth through thirty-third annual reports, along with the pending thirtyfourth and final reports of Laing and Railsback.8 Klein testified that he did not
have a problem with the services provided to him by Laing and Railsback, he just
8
The parties stipulated that the trial would constitute final hearing for the
purposes of Iowa Code section 633.37 on all reports of the conservatorship filed after
May 20, 1985, including the pending annual reports for the thirty-fourth reporting period
of May 21, 2007, to May 20, 2008, and Laing and Railsback‟s final report period for the
period of May 21, 2008, to October 17, 2008.
10
wanted more money provided to him.9 He further testified that he wanted a bank
to serve as his conservator. Attorney Hugh Faulkner, who practiced in the area
of probate and tax law, testified as an expert witness for Klein. Faulkner opined
that tax returns, using the tax software he and Laing and Railsback used, should
take no more than an hour to two hours to complete, at most. He further testified
that in his opinion, the amount of time spent completing an annual report should
take no more than a half day to a day, at most. He testified that the hourly rate
for legal fees charged by Laing and Railsback was consistent with the area, but
he questioned the hours charged by them for completing the annual report. He
testified that he found it improper to charge a half an hour for every call, and
testified that he had not seen an individual charge $100 an hour to do
guardianship-type work.
Faulkner acknowledged that Klein‟s conservatorship
was unusual given Klein‟s condition and other aspects. Additionally, Faulkner
testified that certified public accountants charged two to three times as much as
he would for a comparable return, and that he had trained his clients to bring
their tax information to him in a format that helps him keeps his cost of preparing
tax returns low.
Laing testified that he tried to find a guardian for Klein over the years, but
he could not find anyone to serve. Laing testified Klein also refused to have a
guardian appointed. Laing testified he did not resign as conservator because he
9
At the time of trial, Klein was living in a residential treatment facility, but he was
generally free to go out during the day. Klein testified that he was given a spending
allowance of $350 a month from the conservatorship. The administrator of the facility
handled the spending allowance for Klein and dispensed five dollars a day to him. Klein
testified that he liked to buy energy drinks and cigarettes, but did not have enough
money to make the purchases he wanted. The record gives no indication as to how the
balance of the spending allowance was utilized.
11
was not asked, he did not think Klein wanted him to resign, and he thought Klein
would change his mind. Laing testified he personally managed the investments,
and when asked why he did not simply attach the investment company‟s report of
the investment activities to the annual report, Laing explained that there were
often errors in the reports that needed to be corrected. Laing testified that he
and Railsback did not keep an hour-by-hour record of their time, but testified that
they kept track of the total hours worked. Laing testified that the phone calls
were listed in blocks; essentially one call listed on the attachment to the annual
report represented several calls received.
Laing testified he drove the
conservator‟s deposits to the bank, located in the neighboring city, instead of
mailing them because he was a fiduciary and wanted the receipts.
Railsback testified that although he and Laing billed for a quarter- or halfhour per call, it did not mean that the phone call lasted that exact amount of time.
Railsback testified that they determined whether the work performed was legal or
conservator service using office records, notes, files, and work product.
Railsback testified the going rate for good support staff was ten dollars an hour.
Admitted into evidence was the deposition of Laing and Railsback‟s expert
witness, attorney Philip Leff. Leff opined that Laing and Railsback‟s billing was
typical except their billing practice of charging a half-hour for each telephone call.
He testified his office charged a minimum of a tenth of an hour. He also opined
that because of the ward‟s mental health issues, more time was likely necessary
to be expended for his care. Leff testified that his office‟s typical fee for preparing
tax returns involving farms was $800-900 per return and that some certified
public accountants charged up to $1500-$1600 for the same kind of returns.
12
On December 22, 2008, the district court entered its statement of issues,
findings of fact, conclusions of law, judgment and decree. The court found that
because Klein had not been provided notice for orders entered in the
conservatorship after May 20, 1985, the court should make an independent
determination of whether the attorney fees and conservatorship fees previously
ordered were reasonable and necessary. The court found the vast majority of
the work claimed by the conservator was for guardianship-type duties, and those
types of tasks could have and should have been performed for a fee far less than
the amount charged by the attorney conservator.
The court found the
conservator did not show the reasonableness of the amount charged for the
duties performed. The court then reduced the conservator‟s rate to fifteen dollars
per hour, explaining:
It is very difficult for the court to evaluate the individual events and
transactions that have taken place over the past twenty-three years
in this case. The remoteness in time reduces the court‟s ability to
precisely determine whether the duties performed by the
conservator should have been done. If the court allows all of the
conservator‟s hours in the past but at a reasonable rate, the court is
recognizing the unique nature of this conservatorship and the
ward‟s needs for assistance on multiple levels. The undisputed
record is that most of the duties, if not all, of those performed by the
conservator could have been performed by a competent legal
secretary or paralegal. The defendants testified that the starting
rate for such employees in their office is $10 per hour at this time.
Given the fact that we are going back twenty-three years, the
regular or anticipated rate of pay at that time might have been less.
In an effort to try to recognize that the conservator may not have
been able to retain someone at a starting rate of pay to do some of
these duties, the court will calculate all of the conservator‟s hours at
$15 per hour.
The court also found the time charged for preparing the tax returns for the
conservatorship should not be adjusted.
However, the court found the time
13
reported for preparing the annual report beyond fifteen hours was excessive,
reasoning that the early annual reports took between ten and fifteen hours and
there was nothing about the conservatorship that would require that much more
time for preparation of the annual report than was necessary in the early years.
The court applied its conclusions to the thirty-fourth and final reports, finding the
reports should be approved, but adjusting the rate of the conservator to fifteen
dollars per hour and allowing only fifteen hours for the completion of annual
reports. Additionally, the court found Laing breached his fiduciary duty to do
what was in the best interests of the conservatorship when he refused to step
down when Klein‟s action was filed. Citing Iowa Code section 633.160, the court
found Laing should be responsible personally for a portion of the attorney fees
charged by Klein‟s attorney.
Defendants appeal. Klein cross-appeals.
II. Scope and Standards of Review.
A hearing on allowance of attorney fees stands in equity and thus is
reviewable de novo. In re Estate of Simon, 288 N.W.2d 549, 551 (Iowa 1980); In
re Estate of Bass v. Bass, 196 N.W.2d 433, 435 (Iowa 1972); In re Estate of
Bolton, 403 N.W.2d 40, 42 (Iowa Ct. App. 1987). In equity cases, especially
when considering the credibility of witnesses, we give weight to the fact findings
of the district court, but we are not bound by them. Iowa R. App. 6.904(3)(g).
“The burden of showing the services rendered and value thereof rests
upon the claimant.” In re Estate of Myers, 238 Iowa 1103, 1107, 29 N.W.2d 426,
428 (1947). In endeavoring to ascertain a reasonable legal fee, relevant factors
include the time necessarily spent by the attorney, the nature and extent of the
14
service, the amount involved, the difficulty of handling and the importance of the
issues, the responsibility assumed, the results obtained, and the experience of
the attorney.
Simon, 288 N.W.2d at 552.
“To a considerable extent the
compensation of an attorney rests in the discretion of the court. Yet, as stated,
this must be a reasonable degree of discretion.” Glynn v. Cascade St. Bank, 227
Iowa 932, 939, 289 N.W. 722, 725 (1940).
III. Discussion.
On appeal, defendants assert the district court erred in several respects:
(1) reducing the payment of the conservator at a rate of fifteen dollars per hour;
(2) reducing the amount of time allowed in preparing the annual reports;
(3) punishing Laing for remaining as the conservator after the lawsuit was filed;
and (4) calculating damages. Klein cross-appeals, asserting the district court
erred in failing to (1) award Klein for all of his attorney fees; (2) reduce the fees
awarded concerning telephone calls, mileage, and tax returns; and (3) sanction
or admonish defendants for failing to provide an adequate bond. Klein requests
appellate attorney fees. We address their arguments in turn.
A. Defendants’ Appeal.
1. Rate of the Conservator.
Defendants argue that the district court erred in reducing the conservator‟s
hourly rate to fifteen dollars an hour and that amount is unreasonable, arbitrary,
and punitive.
They cite to the district court‟s 1984 order that reduced the
conservator‟s hourly fee from sixty to thirty dollars as evidence that the reduction
to fifteen dollars an hour was unreasonable.
Additionally, the defendants
15
seemingly argue that the conservator‟s hourly rate as charged was reasonable
because Klein admitted the conservator reviewed the annual reports with him.
Conservators have a duty to protect and preserve the estate, invest it
prudently, provide an accounting, perform all other duties required by law, and
deliver the assets to the ward upon termination of the conservatorship. Iowa
Code § 633.641. They must give “personal care” in managing the estate. In re
Moore’s Guardianship, 227 Iowa 735, 737, 288 N.W. 880, 881 (1939); In re
Brubaker’s Guardianship, 214 Iowa 413, 416, 239 N.W. 536, 537-38 (1931). As
stated above, the burden to establish the reasonableness of the rate fell upon the
conservator. See Myers, 238 Iowa at 1107, 29 N.W.2d at 428.
Here, no evidence was presented, other than Laing‟s self-serving
testimony, to establish the conservator and guardian services performed could
not be performed at a lower cost or that the higher amount charged by Laing and
Railsback was reasonable. Many of the hours billed by Laing and Railsback
were for services that required no face-to-face contact with Klein and could have
been performed by competent office staff, such as depositing funds at the bank,
paying real estate taxes, calling automotive repair shops about Klein‟s vehicle,
picking up Klein‟s car, buying gifts or gift cards for Klein, and mailing gifts and
letters. Clearly many of these tasks, billed at a rate as high as $125 an hour,
could have been billed at a much lower rate, evidenced by Railsback‟s testimony
that the going rate for good support staff was ten dollars an hour. Additionally,
the undisputed evidence was that Klein was unable to manage his financial
affairs due to his mental condition, and he entered into a voluntary
conservatorship to protect his assets.
Upon our de novo review, we find
16
defendants failed to establish the reasonableness of their billed hourly rate or the
thirty dollar hourly rate for their conservator services. We find the district court‟s
determination that the hourly rate should be set at fifteen dollars an hour to be
reasonable under the circumstances, and therefore affirm on this issue.
2. Managing Klein’s Investments and the Annual Report Hours.
Defendants next argue that the district court erred in holding the
conservator did not perform any useful function in managing the ward‟s non-real
estate assets. Defendants also argue the district court erred in reducing the
hours allowed for preparation and completion of the annual reports. Because the
two issues are related, we address them together.
For reports one through eighteen, the average number of hours reported
to complete the annual report was 12.3 hours. During those reporting periods,
no separate time was billed for managing the investments. In the nineteenth
annual report, fifteen hours were reported for completing the annual report and
an additional twenty-five hours were reported for managing Klein‟s investments.
The next year, the hours billed for completing the annual report rose to thirtyseven hours, and the hours for managing Klein‟s investments rose to thirty-two
hours. For the nineteenth through the thirtieth reporting periods, Defendants
billed and were paid for time managing Klein‟s investments in addition to the
hours reported to prepare and complete the annual reports. The district court did
not reduce any time billed for managing the investments, only the time it found
defendants overbilled for preparing the annual reports. In reducing the allowable
hours for preparation and completion of the annual reports, the district court
stated: “It appears that the attorney made „busy work‟ in completing the type of
17
annual report that was prepared in this case. The detail contained in the annual
report about investments was not necessary.” We agree.
Defendants‟ argument that substantial time was required to compile
investment information for the annual reports simply does not hold water given
the amount of time they billed separately for managing the investments.
Similarly, defendants‟ argument that additional time was required to compile the
reports because there were often errors in the investment documents makes little
sense, given that Laing, as conservator, hired the investment firm and stayed
with the firm through the years despite the claimed errors. An expert testified
that the annual reports should take no more than a half day to a day at most to
complete, and the defendants failed to establish that the hours billed by them in
excess of a day was reasonable. We find the district court‟s determination that
the amount of time billed for the annual reports should not have exceeded fifteen
hours to be generous but reasonable, and therefore affirm on this issue.
3. Attorney Fees.
Defendants next argue that the district court erred in requiring Laing to pay
a portion of Klein‟s attorney fees. The district court found that by refusing to step
down when this action was filed, Laing breached his fiduciary duty to do what
was in the best interests of this conservatorship. We agree.
Laing argues that Klein‟s only complaint was that he needed more
spending money, so Laing stepping down was not necessary or justified.
However, the argument ignores that the petition, filed on July 26, 2007, sought to
remove defendants because of alleged violations of fiduciary duties. Moreover,
we find Laing‟s argument that the fact Klein had tried twice before to have Laing
18
removed but ultimately dismissed those actions to be unpersuasive.
We
conclude the district court‟s determination that Laing should be responsible
personally for a portion of the attorney fees charged by Klein‟s attorney to be
reasonable and therefore affirm on this issue.
4. Calculating Damages.
Finally, defendants contend the district court erred in its damages
calculation. Defendants argue the court confused hours charged for payment of
bills with hours charged for preparation of final reports.
Defendants‟ annual
reports are not models of clarity and undoubtedly contributed to any confusion.
Additionally, defendants argue that the court incorrectly listed the fees set by
previous orders.
Upon our de novo review, we note there were a few minor errors in the
figures listed in the district court‟s exhibit A, which set forth previously approved
fees and rates for the twelfth through the final annual reports. This resulted in
the district court incorrectly reducing the conservator‟s hours by .08 for the thirtyfirst report and the attorneys‟ hours by two hours for the final report, and we
adjust the court‟s damages calculation accordingly (see attachment 1).
Additionally, we find the district court incorrectly determined defendants‟
legal hours for the twenty-sixth report.
That year, defendants‟ attachment
reported a combined seventy-six hours for completing the annual report, a
service defendants ordinarily billed at the attorney fee rate, and for paying bills
and doing accounting work for the conservatorship, a service they ordinarily
billed at the conservator‟s rate. Defendants billed seventy-four of the seventy-six
hours at the attorney fee rate and two hours at the conservator‟s rate. However,
19
the district court determined that of the lump sum of seventy-six hours, forty-eight
hours was defendants‟ reported time for completing the annual report.
The
district court then reduced the forty-eight hours to fifteen hours, thus allowing a
total of sixty-two legal hours. Upon our de novo review, we find the district court
erred in determining forty-eight hours was the defendants‟ reported time for
completing the annual report that year. It was the defendants‟ burden to show
the services rendered and the value thereof. We find nothing in the record to
evidence that of defendants‟ seventy-four hours billed at the attorney fee rate,
forty-eight hours were for the annual report and the remaining twenty-six hours
were for other legal services. We therefore find that seventy-four hours was
defendants‟ reported time to complete the annual report. We modify the district
court‟s allowance of sixty-two legal hours that year to thirty-six hours, and we
adjust the court‟s damages calculation accordingly (see attachment 2). We find
no other errors in the district court‟s figures and calculations, and we therefore
affirm in all other respects concerning the district court‟s figures and calculations.
B. Klein’s Cross-Appeal.
1. Trial Attorney Fees.
Klein argues that the district court erred in not awarding him the entirety of
his trial attorney fees. As stated above, we agree with the district court that by
refusing to step down when this action was filed, Laing breached his fiduciary
duty to do what was in the best interests of this conservatorship. We conclude
the district court‟s determination that Laing should be responsible personally for a
portion of the attorney fees charged by Klein‟s attorney to be reasonable and
therefore affirm on this issue.
20
2. Fees for Calls, Mileage, and Tax Returns.
Klein next argues that the charges for calls, mileage, and the hours
completing tax returns were excessive and the district court erred in not reducing
these charges. Although the later reports indicate each call was billed at a half
an hour per call, defendants at trial produced evidence that the one call recorded
on the attachment to the annual report was in fact blocks of calls representing
that amount of time. Although we highly disagree with this reporting method, we
find Klein did not rebut defendants‟ evidence of the calls. Additionally, although
the amount charged as mileage was indeed a large amount, defendants‟ reports
evidence numerous services were provided to Klein that required driving, and
thus a mileage charge was reasonable. Finally, we agree with the district court‟s
conclusion that the hours billed and the amount charged for completion of the tax
returns was reasonable under the facts of this case. Defendants‟ expert testified
certified public accountants may charge an amount similar to defendants for like
tax returns, supporting their charges. We therefore affirm on this issue.
3. Sanction and Bond.
Klein
argues
that
defendants
were
required
to
increase
the
conservatorship bond after the value of the conservatorship‟s assets rose.
Although it would have been prudent to have increased the bond amount, we
disagree that the defendants were required to do so.
Iowa Code section 633.633 states that its provisions as to bonds apply to
all fiduciaries. Section 633.170(1) states:
Except as herein otherwise provided, the court or the clerk shall fix
the penalty of the bond in an amount equal to the value of the
21
personal property of the estate, plus the estimated gross annual
income of the estate during the period of administration.
At the time the conservatorship was opened, the bond was adequate.
The
district court did not require that it be increased. We therefore find no error and
affirm on this issue.
4. Appellate Attorney Fees.
Finally, Klein requests appellate attorney fees.
We decline to award
attorney fees in this case. Costs on appeal are taxed to defendants.
IV. Conclusion.
Upon our de novo review, we modify the district court‟s $175,511.60
judgment against Defendants to $178,497.91 (see attachments). We affirm in all
other respects.
AFFIRMED AS MODIFIED.
22
ATTACHMENT 1
Previously Approved Reports - Conservator Fees for Reports 12-33
Report
#
Total
conservator
hours
reported
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
Totals
35.40
42.85
41.30
36.10
31.75
52.66
98.25
72.25
79.00
59.00
88.75
72.25
64.50
60.00
69.25
47.00
58.50
63.50
111.50
215.0810
158.00
236.00
1792.89
Hourly
rate
charged/
requested
Conservator
fee paid/
requested
Total
conservator
hours allowed
$61.57
$57.46
$60.00
$57.57
$55.00
$42.00
$55.00
$50.00
$60.00
$75.00
$75.00
$80.00
$80.00
$80.00
$85.00
$100.00
$125.00
$125.00
$125.00
$100.00
$100.00
$100.00
$5,172.00
$3,927.50
$5,155.50
$3,345.00
$1,746.25
$2,896.30
$5,403.75
$3,612.50
$4,740.00
$4,425.00
$6,656.25
$5,780.00
$5,160.00
$4,800.00
$5,886.25
$4,700.00
$7,312.50
$7,937.50
$13,937.50
$21,508.00
$15,800.00
$23,600.00
$163,501.80
35.40
42.85
41.30
36.10
31.75
52.66
98.25
72.25
79.00
59.00
88.75
72.25
64.50
60.00
69.25
47.00
58.50
63.50
111.50
215.08
158.00
236.00
1792.89
Total requested (12-33) :
Total allowed:
Amount owed back (12-33):
Hourly
rate
adjusted
Adjusted
conservator
fee award
$15.00
$15.00
$15.00
$15.00
$15.00
$15.00
$15.00
$15.00
$15.00
$15.00
$15.00
$15.00
$15.00
$15.00
$15.00
$15.00
$15.00
$15.00
$15.00
$15.00
$15.00
$15.00
$531.00
$642.75
$619.50
$541.50
$476.25
$789.90
$1,473.75
$1,083.75
$1,185.00
$885.00
$1,331.25
$1,083.75
$967.50
$900.00
$1,038.75
$705.00
$877.50
$952.50
$1,672.50
$3,226.20
$2,370.00
$3,540.00
$26,893.35
$163,501.80
$26,893.35
$136,608.45
Pending Conservator Fees - 34 & Final Reports
Report
#
34
Final
Total
conservator
hours reported
Hourly rate
adjusted
63.41
$15.00
39.66
$15.00
Total adjusted award:
Adjusted
conservator fee
award
$951.15
$594.90
$1,546.05
Conservator Fees Owed to Ward for Reports 12-33:
Conservator Fees Owed to Defendants for 34 & Final Reports:
Amount Owed to Ward for Conservator Fees:
10
$136,608.45
$1,546.05
$135,062.40
Numbers in bold in the table are numbers corrected from the district court‟s exhibit A
or calculations.
23
ATTACHMENT 2
Previously Approved Reports – Legal Fees for Reports 20-33*
A. Total
Legal
Hours
Reported
B.
Annual
Report
(AR)
Hours
Reported
C. Total
Hours
Less
reported
AR
Hours
=(A - B)
D.
Allowed/
Adjusted
AR
hours
103.75
98.00
76.25
69.75
58.00
70.75
95.00
109.00
104.00
101.00
56.00
75.00
93.00
75.00
37.0
42.0
45.0
48.0
48.0
54.0
74.0
48.0
48.0
45.0
30.0
45.5
44.0
38.0
66.75
56.00
31.25
21.75
10.00
16.75
21.00
61.00
56.00
56.00
26.00
29.50
49.00
37.00
15.0
15.0
15.0
15.0
15.0
15.0
15.0
15.0
15.0
15.0
15.0
15.0
15.0
15.0
E.
Adjusted
G. Adjusted
Legal Fee
=(E x F)
H. Amount
Previously Paid
to Defendants
$8,175.00
$7,100.00
$4,625.00
$4,593.75
$3,125.00
$3,870.96
$4,500.00
$11,400.00
$10,650.00
$10,650.00
$6,150.00
$6,007.50
$8,670.08
$7,020.00
$96,537.29
$10,375.00
$9,800.00
$7,625.00
$8,718.75
$7,250.00
$8,625.50
$11,875.00
$16,350.00
$15,600.00
$15,150.00
$8,400.00
$10,125.00
$12,599.00
$10,125.00
$152,618.25
Total previously paid to Defendants (20-33) :
Total adjusted
Amount owed back to Ward (20-33):
Report
#
20
21
22
23
24
25
26
27
28
29
30
31
32
33
Total
$152,618.25
$96,537.29
$56,080.96
Legal
Hours
=(C +D)
F. Rate
81.75
71.00
46.25
36.75
25.00
31.75
36.00
76.00
71.00
71.00
41.00
44.50
64.00
52.00
$100.00
$100.00
$100.00
$125.00
$125.00
$121.92
$125.00
$150.00
$150.00
$150.00
$150.00
$135.00
$135.47
$135.00
*Reports 12-19 did not require any adjustment of legal fees because the annual report and
tax returns were less than the allowed amounts.
Legal Fees
Report
#
Total
Legal
Hours
Reported
Annual
Report
(AR)
Hours
Reported
34
71.84
Final
67.33
Total Hours
Less AR
Hours
Adjusted
AR
hours
Total
Rate
42.00
29.84
15.00
44.84
$135.00
$6,053.40
33.50
33.83
15.00
48.83
$135.00
$6,592.05
Total Legal Fees Due to Defendants for Pending Reports:
$12,645.45
Adjusted Legal
Fee
Legal Fees Owed to Ward for Reports 20-33:
Legal Fees Owed to Defendants for 34 & Final Reports:
Amount Owed to Ward for Legal Fees:
$56,080.96
$12,645.45
$43,435.51
24
ATTACHMENT 3
Amount Owed to Ward for Conservator Fees:
Amount Owed to Ward for Legal Fees:
Total Amount Owed Back to Ward
$135,062.40
$43,435.51
$178,497.91
Division of Amount Owed Back to Ward
Amount of Judgment Against Laing Personally:
$4,508.25
Amount of Judgment Against Defendants (Total Amount
Owed Back to Ward less Laing's personal judgment): $173,989.66
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