Matter of Maryott
Annotate this CaseDecided on July 31, 2018
Surrogate's Court, Rockland County
Matter of Proceeding by Kalman D. Rothman, Esq., as attorney to the Estate of Donald K. Maryott, Deceased, To fix and determine compensation for legal services pursuant to SCPA § 2110.
2015-584/C
Kalman D. Rothman, Esq.
Law Offices of K.D. Rothman, P.C.
Attorney for Petitioner
55 Old Turnpike Road, Suite 202
Nanuet, NY 10954
Barbara Underwood, Acting Attorney General
Office of the Attorney General of the State of New York
By Deborah Yurchuk McCarthy, A.A.G.
Attorney for Charitable Beneficiary
Charites Bureau
28 Liberty Street
New York, NY 10005
Keith J. Cornell, J.
Before the Court is a petition per SCPA § 2110 by Kalman D. Rothman, Esq. ("Petitioner") as attorney to the Estate of Donald K. Maryott (the "Decedent") to fix the amount of legal fees incurred by the Estate from August 17, 2015 to December 22, 2016. An objection was filed by the New York State Attorney's General Office ("OAG") on behalf of the beneficiary of a charitable bequest.
The following papers were considered in deciding this motion:
1. Verified Petition to Fix and Determine Fees, dated March 17, 2017 with Exhibits A-D/ Affidavit of Charles J. Hayes, Executor, sworn to March 13, 2017;
2. Objection of the OAG, dated May 3, 2018, with Exhibits 1-3;
3. Reply Affidavit of Executor, sworn to May 19, 2018, with Exhibits D-H.
Background
Donald K. Maryott was born in 1931. On October 1, 2013, at the age of 82, he was admitted into Northern Riverview Health Care Center for long term care after discharge from Nyack Hospital, where he was treated for injuries sustained in a fall. On December 3, 2013, the administrator of Northern Riverview filed an Article 81 petition requesting appointment of a guardian. The administrator alleged that Mr. Maryott suffered from dementia and claimed that Mr. Maryott might be open to exploitation by non-family members. In the psychiatric [*2]evaluation dated November 6, 2013, Mr. Maryott is described as having "severe recall deficits."
Mr. Maryott retained Lawrence Weissmann, Esq. to oppose the guardianship petition. Mr. Weissmann was assisted by paralegal Charles J. Hayes. Alden Wolff, Esq. was appointed by the court as a Court Evaluator. A hearing was held before the Honorable Thomas E. Walsh, II, and Mr. Weissmann was allowed to handle Mr. Maryott's finances per interim order dated January 14, 2014. The petition for the guardianship was eventually withdrawn and it appears that Mr. Maryott was later discharged from the nursing home. Mr. Hayes, under the supervision of Mr. Weissmann, handled Mr. Maryott's finances from January 2014 through his death.
In June 2015, Mr. Weissmann drafted a Last Will and Testament (the "Will") for Mr. Maryott. Decedent executed the Will on June 6, 2015. The Will appointed Charles J. Hayes as Executor. Although Decedent had two brothers, two sisters, two daughters and a son, the Will left bequests to only three of his relatives and a share to his church: $1000 to one sister, Janice Mitchell, with the residuary split equally among Decedent's brother Robert, Decedent's daughter, Terri Lynn Hanson, and the Christian Church of Rockland.
Decedent passed away on August 12, 2015. Petitioner was retained on August 17, 2015 by the Executor. Petitioner promptly petitioned for letters testamentary, which were granted to the Executor on November 24, 2015. The Executor attempted to sell Decedent's home in March 2016, but the sale fell through due to an outstanding mortgage. Soon after, in April 2016, the Executor was served with a foreclosure complaint based on a note that Decedent allegedly signed in 2011, secured by a "reverse mortgage." The Executor and the Petitioner have pursued an active defense against the foreclosure, which is still unresolved.[FN1]
In March 2017, Petitioner filed the instant request to fix his fees per SCPA § 2110. A supplemental citation to the OAG Charities Bureau was issued on February 15, 2018. The OAG appeared in the action and filed objections on May 4, 2018, arguing that the $22,000 requested by Petitioner should not be granted in whole. The OAG argued that approximately half of the fee request was related to the defense of the foreclosure, which may or may not be a benefit to the Estate. The OAG also argued that approximately $6500 of the fee request was for activities properly performed by the Executor, rather than by an attorney. In response, Petitioner and the Executor defended the value of the services performed. In particular, the Executor argued that the work he did in his capacity as a paralegal to Petitioner was properly billed to the Estate pursuant to SCPA § 2110(4).
Discussion
The determination of the reasonableness of fees is within the sound discretion of the Surrogate. See Matter of Stortecky v. Mazzone, 85 NY2d 518 (1995). The factors to be taken into account in the fixing of fees, known as the "Potts/Freeman" requirements, include the time expended by the attorney, the size of the estate, the billing practices in the community, the difficulties involved in the matter, the skill required, the attorney's experience, ability and reputation, the responsibilities involved, and the benefit resulting to the estate from the services rendered. See Matter of Freeman, 34 NY2d 1 (1974); Matter of Potts, 213 A.D. 59 (4th Dept. [*3]1925), aff'd 241 NY 593 (1925).
The Surrogate is obligated to limit attorney's fees to reasonable amounts regardless of any agreement made by the fiduciary. See In re Cook, 41 AD2d (1st Dept. 1973), aff'd, 33 NY2d 919 (1973). In addition to being reasonable, the legal services must be necessary. An attorney cannot be compensated from an estate for performance of executorial services that should have been tasks for the fiduciary. See In re Jones, 168 AD2d 448 (2d Dept. 1990). Finally, while an attorney may bill for paralegal services performed under the supervision of the attorney, the paralegal's time can only be billed for legal services for which the attorney could have been compensated. See In re Iacono, 2014 NY Slip Op 30240(U) at *9 (Surr. Ct. Nassau Co. 2014) (disallowing fees for paralegal services that were "secretarial in nature" and considered part of office overhead).
Here the matter is complicated by the dual role of Charles Hayes, who is both the Executor of the Estate and a paralegal in the employ of the attorney who is petitioning for fees. In his affidavit, Petitioner says that Mr. Hayes performed 98% of the legal work, which was billed at a rate of $125/hour. The invoices support that claim, with only 14.6 hours of the total 157.5 hours billed at Petitioner's customary rate of $300/hour. It is clear that some of the work billed by Petitioner was work that should have been performed by the Executor without cost to the Estate. The Court is left to analyze which activities were legitimate and necessary legal work performed by the paralegal Charles Hayes in place of Petitioner, which work is properly billed by Petitioner to the Estate, versus work properly performed by Executor Charles Hayes, which is not billable to the Estate. In addition, the Court must determine if the approximately 80 hours spent during the period on foreclosure defense are properly charged to the Estate.
Applying the factors
The invoices and statements submitted by Petitioner reflect over 155 hours of time billed through the end of 2016, for a total cost of $22,000. Petitioner expects the total value of his services to exceed $30,000. See Pet'n ¶ 14. The Petition values estate assets at approximately $63,000, not including the home in foreclosure. See id. In the reply to the OAG's objections, the Executor states that the Estate has $106,000 in assets per the check register, not including the home in foreclosure. Unless the foreclosure defense eventually fully succeeds in discharging the debt, the fees may exceed 50% of the value of the Estate.
Mr. Rothman is a respected member of the local bar with significant experience in probate and his billing rates are in line with the standard for the community. It appears that the work in marshalling assets was carried out by Petitioner and the Executor in timely fashion. The condo in Wisconsin was sold, the junk cars were disposed of, and the CD held by First Niagara was successfully redeemed. However, much of the work identified was properly done by the Executor and should not be billed as attorney or paralegal time. Further, it is not obvious if all of the litigation was necessary, especially the action against Meredith Peterson and Eric Daubitz for removal of what proved to be their car from Decedent's property.
In assessing the relative difficulties involved, Petitioner claims that this Estate is "extremely complex." Reply Affirmation of Kalman Rothman ¶ 10. However, most of the complexity identified relates to the foreclosure, not the probate. Unfortunately, it is not at all clear that the Estate will benefit from the services rendered on this issue. On the chance that the Estate eventually prevails and has the mortgage and note discharged, the Estate will recover significant value, depending on the amount the property is then worth. But in the event that the mortgagee eventually prevails, the Estate will have spent tens of thousands of dollars defending [*4]a foreclosure on a property that is empty and does not generate any income, at no benefit to the Estate at all.
Conclusion
After closely examining Petitioner's affirmation of legal services, the invoices, and the objection, and after considering the Potts/Freeman requirements, this Court determines that Petitioner's attorney's fees for the period of August 17, 2015 to December 22, 2016 for the probate are properly fixed at $4,202.50 and shall be a charge against the Estate. The fees for services that are properly performed by the Executor, which fees total $6,338.50, are disallowed. The disbursements for postage are disallowed. Finally, the application for $11,515.00 in fees related to the foreclosure defense are disallowed without prejudice to Petitioner renewing his application after conclusion of the foreclosure action. It is therefore
ORDERED that the Estate's attorneys' fees for the period of August 17, 2015 to December 22, 2016 are fixed at $4202.50, which shall be a charge against the Estate; and it is further
ORDERED that the fees for the foreclosure defense are fixed at $11,515.00 and disallowed without prejudice to renew the application upon completion of the foreclosure action.
This constitutes the Decision and Order of the Court.
Dated: July 31, 2018
New City, New York
HON. KEITH J. CORNELL
Rockland County Surrogate Footnotes
Footnote 1:The Executor questions the validity of the debt, alleging that funds were never received by Decedent. In December 2017, the court denied plaintiff's motion for summary judgment based on the failure of plaintiff to provide non-hearsay evidence of the disbursement of funds (plaintiff provided business records that failed to satisfy the requirements of CPLR § 4518).
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