Matter of Bender
Annotate this CaseDecided on December 17, 2015
Surrogate's Court, Broome County
Matter of Douglas A. Bender, Deceased.
2012-364
For Petitioner (Bonnie Bender):
Rachel A. Abbott, Esq. of Coughlin & Gerhart, LLP
Trial counsel, Robin B. Blumenrkranz, Esq. of Levy Konigsberg, LLP
Referring counsel, Melissa Smith, Esq.
David H. Guy, J.
Douglas A. Bender died intestate on September 24, 2011. Decedent was survived by his spouse, Bonnie Bender, and four children, two of whom were minors when their father died.
Limited Letters of Administration were issued to Bonnie Bender on June 25, 2012. The only asset of this estate is a cause of action for pain and suffering, related to decedent's asbestos exposure, commenced by decedent and his spouse before he died, and continuing thereafter with an additional wrongful death claim.
By Order dated April 11, 2014 (the 2014 Order), this Court approved a partial settlement of the pending lawsuit, to facilitate the payoff of a loan taken by decedent before his death. The 2014 Order also authorized the discontinuance of that portion of the action relating to decedent's conscious pain and suffering. All of the net proceeds of the settlement authorized by the 2014 Order, as well as all subsequent settlement proceeds, are allocated solely to the cause of action for decedent's wrongful death.[FN1]
The underlying case was commenced in Broome County Supreme Court. That Court (Hon. Richard T. Aulisi) entered Orders of Adequacy on September 29, 2014 and March 2, 2015, approving settlements with multiple defendants. Those Orders of Adequacy also approved attorneys' fees of 1/3 of the net recovery, in accordance with the retainer agreement filed in connection with the action.
By petition filed May 26, 2015, the administrator petitioned for allocation and disbursement of all net settlement proceeds, as well as approval of legal fees and disbursements relating to the administration of the estate, separate and apart from the legal fee associated with the underlying claim which is the sole asset of the estate. Petitioner filed an amended account of proceedings on July 23, 2015, updating the calculation of the allocation of the wrongful death proceeds pursuant to Matter of Kaiser, 198 Misc. 582 (Surrogate's Court, Kings County, 1950). Decedent's minor children, now of age, consented to the distribution to the net wrongful death proceeds pursuant to Kaiser.
This Court issued an Order on August 6, 2015, approving the allocation and distribution of the net settlement proceeds, with an escrow of $12,000 for administration fees and expenses. The Court reserved on the amount and allocation of those fees and expenses until additional supporting documentation was submitted by petitioner and counsel.
On September 24, 2015, petitioner filed supplemental affirmations from counsel as well as her own affidavit. In addition to providing the affirmation of services as requested by the Court in the August 6, 2015 Order, petitioner also disclosed that a small portion of funds thought to be held in escrow by trial counsel, Levy Konigsberg, LLP (LK), had in fact not been received by LK. Approximately $7,000 of the gross settlement funds has not yet been received from two defendants. Petitioner requests an Order authorizing the distribution of the funds that are held for distribution, with provision for the distribution of the balance of the settlement funds, when received. This is a de minimis change from the original petition and does not impact that ultimate distribution to the decedent's distributees. The request for an amended Order is granted.
The Court now considers petitioner's request for approval of separate fees for estate administration, reserved by the Court in the August 6, 2015 Order. Petitioner originally requested the sum of $12,000 be held in escrow to cover these fees. The attorney affirmation submitted by local/administrative counsel, Coughlin & Gerhart, LLP (C & G), discloses that in preparing the original petition, counsel overlooked a prior estate billing in the amount of $8,956.71 already paid by LK from funds held in escrow, bringing the total requested for legal fees of administrative counsel to $18,931, plus disbursements in the amount of $1,339.04. Petitioner requests that these fees and disbursements be paid from the net proceeds of the settlement, before distribution of the balance to the distributees.
The issues for determination by the Court are the appropriate amount of fees to be allowed to C & G, and the appropriate source of payment of those fees. The determination of attorneys' fees allowed in the underlying action was made by the Supreme Court and set forth in the Orders of Adequacy. The Orders of Adequacy do not comport with this, and most Surrogate's, Courts' longstanding practice of limiting contingency fees in matters involving infants to 25%, absent a showing of special circumstances. New York Estate Administration, Turano & Radigan, 2015 Edition, §20.08; Matter of Layden, 92 Misc 2d 353 (Surrogate's Court, Queens County, 1977); Matter of Harrison, NYLJ, April 11, 1985, p. 13 col. 1 (Surrogate's Court, Bronx County).
The Surrogate has jurisdiction and responsibility to review attorneys' fees, even [*2]though no party objects to them. Stortecky v. Mazzone, 85 NY2d 518 (1995). Petitioner's retainer agreement with counsel is not binding on this Court, nor on the minor distributees. Matter of Lanyi, 147 AD2d 644 (2nd Dept., 1989); Matter of Warhol, 165 Misc 2d 726 (Surrogate's Court, New York County 1995); Matter of Duke, N.Y.L.J.,
May 3, 2000, page 28 column 6 (Surrogate's Court, New York County); Roberts v. Moore, 74 Misc 2d 709 (App. Term 1973).
A wrongful death recovery is not part of the decedent's estate and is not subject to the payment of decedent's debts or the administration expenses of the estate, except for, inter alia, "the reasonable expenses of the action or settlement". EPTL §5-4.4(b). To the extent fees are sought for C & G which are not related to the wrongful death action, those are administration expenses not payable from these proceeds. To the extent that fees are sought for services rendered by C & G which relate to the wrongful death proceeding, there is no evidence presented that the contingent fee already allowed by the Supreme Court in that action is insufficient to cover them. The only asset of this estate is the wrongful death proceeding. That is the only reason for a Surrogate Court proceeding.
In each Department, the amount of legal fees under a contingency fee arrangement in a wrongful death proceeding is limited by Court Rule. In the Third Department, that Rule is 22NYCRR §806.13. While not provided to the Court, the retainer agreement between LK and petitioner, referenced in the Orders of Adequacy, provided for a payment of 1/3 of the sum recovered, after disbursements. This case falls within Schedule B of Rule 806.13. The Rule specifically provides that where a contingency arrangement calls for a 1/3 fee, counsel cannot be paid more than that amount, even under what might be deemed extraordinary circumstances. [FN2] Matter of Falu, NYLJ, January 22, 2015, page 24, column 5 (Surrogate's Court, Kings County); Matter of Kulaya, NULJ, 1/18/13 P. 22 column 4 (Surrogate's Court, New York County).
Some case law supports a "reasonable charge" for the administrative work associated with settling a wrongful death proceeding. The precedent is distant and the awards are truly modest. In re Feifer, 151 Misc. 54 (Surrogate's Court, New York County, 1934) ($100 allowed); In re Weinstein, 153 Misc. 279 (Surrogate's Court, Bronx County, 1934) ($150 allowed); In re Longo, 106 NYS 2d 801 (Surrogate's Court, Kings County, 1951) (disbursements only of $82.10 allowed). Current precedent is consistent with Rule 806.13. Matter of Falu, supra; Matter of Kulaya, supra; Estate of Singh, NYLJ, November 23, 2009, page 21, column 1 (Surrogate's Court, Kings County) (total counsel fees limited to contingent fee, with 90% awarded to trial counsel and 10% to administrative counsel); Matter of Hai, 25 Misc 3d 236 (Surrogate's Court, Kings County) (total counsel fee limited to 1/3, with 85% allowed to trial counsel and 15% to administrative counsel).
A careful review of the fee affirmation submitted by C & G shows that local counsel's efforts were completely related to the underlying cause of action, which again is the only asset of this estate. The initial petition for partial settlement is somewhat atypical in that it involves repayment of a pre-settlement of loan obtained by decedent. [*3]At the same time, asbestos litigation cases are almost without exception settled in waves, involving multiple petitions to the Court for allowance of fees and distribution. Nothing is presented to this Court to indicate that exceptional work, or work not anticipated in the original retainer agreement, was involved in handling this action and the related estate.
Upon review of the records presented, the Court determines that the sum of $18,000 is a reasonable and appropriate fee for C & G as local/administrative counsel in this proceeding. The Court sees no basis to vary from the limitation of Rule 806.13 that total fees should not exceed the 1/3 contingency arrangement. The retainer agreement between C & G and the petitioner cannot be used to circumvent this rule. Falu, supra; Matter of Kulaya, supra. The disbursements submitted by C & G in the amount of $1,339.04 are allowed from the net settlement proceeds. The legal fees allowed to C & G are to be paid proportionately by Levy Konigsberg, LLP and referring counsel, Melissa Smith, Esq., from the fees awarded in the Orders of Adequacy.
This Decision constitutes the Order of the Court. The Court will enter an Amended Order consistent with this Decision, supplanting the August 6, 2015 Order.
ENTER:
Dated:December 17, 2015
Binghamton, New York
______________________________
Hon. David H. Guy
Surrogate Judge Footnotes
Footnote 1: Proceeds of a wrongful death action are not subject to claims of decedent's creditors. However, the lender in this case had received a security interest in the litigation proceeds.
Footnote 2: Note, the Rule in the First Dept. where LK is based, is identical. 22 NYCRR §603.7
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