Case Title: Ruttenberg v. Friedman

Citation: 

Docket Number: 1090600

State: alabama

Court: Alabama Supreme Court

Date: 2012-05-11T00:00:00Z

Document:
Rel: 05/11/2012
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334)
229-0649), of any typographical or other errors, in order that corrections may be made
before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
 OCTOBER TERM, 2011-2012
_________________________
1090600
_________________________
Pamela Ruttenberg, Warren Ruttenberg, and Jodi Ruttenberg
Benck
v.
Karl B. Friedman and Daniel H. Markstein III, as executors
of the estate of Harold Ruttenberg, deceased
Appeal from Jefferson Probate Court
(No. 191362)
MAIN, Justice.1
This case was originally assigned to another Justice on
1
this Court. It was reassigned to Justice Main on January 26,
2011.
1090600
Pamela Ruttenberg, Harold Ruttenberg's widow ("Pamela"),
and two of the Ruttenberg's three children, Warren Ruttenberg
and Jodi Ruttenberg Benck (hereinafter sometimes collectively
referred to as "the objectors"), appeal from a final judgment
of the Jefferson Probate Court, granting the petition of Karl
B. Friedman and Daniel H. Markstein III (hereinafter  referred
to individually as "Friedman" and "Markstein" and sometimes
collectively as "the coexecutors"), the coexecutors of the
estate of Harold Ruttenberg, for final settlement of the
estate.  Ruttenberg's third child, Don-Allen Ruttenberg("Don-
Allen"), who had worked with his father in the family
business, Just For Feet, Inc. ("Just For Feet"), and who was
involved in civil litigation and criminal prosecution
surrounding Just For Feet, did not object to the coexecutors'
administration and settlement of his father's estate.  This
Court has jurisdiction.  See § 12-22-20, Ala. Code 1975.
I.  Facts and Procedural History
Ruttenberg moved his family to Birmingham from South
Africa in 1977 and opened an athletic-shoe store known as Just
For Feet.  Ruttenberg met and retained Friedman to provide him
with legal representation.  Over the years, Friedman, and
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other members of the law firm of Sirote & Permutt, P.C. ("the
Sirote firm"), represented Ruttenberg and members of his
family in connection with both business and personal matters.
In November 1999, Just For Feet filed a petition in
bankruptcy. 
 
Just For 
Feet's 
collapse 
resulted 
from accounting
and securities fraud and spawned several criminal and civil
lawsuits.  Following the bankruptcy filing, Ruttenberg formed
Amalgamated Concepts, LLC ("Amalgamated"), and Southbay
Properties, LLC ("Southbay"), to engage in the restaurant
business.  Amalgamated owned and operated Cooper Grill
restaurants in Birmingham, Richmond, Virginia, and Destin,
Florida, and breakfast restaurants in Birmingham, Montgomery,
and Destin.  Southbay owned the property on which the Destin,
Florida, restaurants and were located.
By May 2000, Friedman, who remained Ruttenberg's close
friend, had grown weary of the myriad legal issues and billing
conflicts.  He referred Ruttenberg to Markstein, a lawyer with
the law firm of Maynard, Cooper & Gale, P.C. ("the Maynard
firm").  Friedman recommended Markstein because Markstein 
focused his law practice on taxation and estate planning and
advising family businesses and because Markstein holds an
3
1090600
LL.M. in taxation and estate planning from Harvard Law School. 
Luther H. "Rusty" Dorr, Jr., also of the Maynard firm, was
retained to provide legal representation to Ruttenberg and
Don-Allen in the several legal actions that arose following
the demise of Just For Feet.
In January 2004, Ruttenberg was diagnosed with terminal
brain cancer.  Ruttenberg asked Markstein to assist him with
his estate planning and requested that his good friend,
Friedman, be involved.  Markstein recommended that Ruttenberg
create a trust for his children and grandchildren, and he
advised Ruttenberg to consider appointing a corporate
executor, but, according to Markstein, Ruttenberg insisted
that he serve.  Initially, Markstein declined because he
believed 
that 
Ruttenberg's 
estate 
would 
involve 
a 
particularly
high degree of risk for the executor, but he agreed to serve
on the condition that he and Friedman be named coexecutors. 
Markstein drafted a will and a revocable trust for
Ruttenberg.  Friedman and Markstein were named coexecutors of
the estate and members of the advisory committee of the trust. 
The revocable trust was created to manage Ruttenberg's
businesses in the event he became disabled.  Ruttenberg's
4
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estate plan provided that, upon final settlement of the
estate, the remainder of the probate estate was to be
transferred 
into 
the 
revocable 
trust 
and 
thereafter
distributed together with the assets of the revocable trust
into one trust for the benefit of Ruttenberg's children and
grandchildren and two marital trusts for the benefit of his
wife, Pamela.
Ruttenberg died on December 23, 2005.  His will was
admitted to probate, with Friedman and Markstein serving as
coexecutors.  Ruttenberg's will expressly authorized the
coexecutors to act as attorneys and to perform legal services
for the estate and provided that the coexecutors could hire
additional attorneys to assist in the administration of the
estate. 
 
Because 
the 
will expressly authorized 
the 
coexecutors
to hire law firms to assist in the administration and because
Ruttenberg had previously engaged the legal services of the
Sirote firm and the Maynard firm, the coexecutors hired those
firms to perform legal work for the estate, assigning to the
Maynard firm the issues relating to Amalgamated and Southbay
and the Just For Feet litigation and to the Sirote firm the
preparation of the federal tax returns.  The Sirote firm and
5
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the Maynard firm continued to bill the estate for legal
services rendered as they had billed Ruttenberg before his
death.  Friedman and Markstein billed the estate separately
for work performed in their capacities as coexecutors and in
their capacities as his attorneys.  Friedman maintained sole
responsibility for communicating with Ruttenberg's family,
keeping them informed through numerous detailed letters,
telephone conversations, and meetings.
Charles R. Goldstein, the Chapter 7 bankruptcy trustee
for Just For Feet, filed a claim against Ruttenberg's estate
in the amount of $400,000,000 ("the Goldstein claim"). 
Knesseth Israel Temple filed a claim for $246,000 ("the 
Temple
claim").  Bayer Properties, Inc., agent for Bayer Retail
Company, LLC, filed a claim for $232,695.12, plus interest and
attorney fees ("the Bayer claim").  Other claims were filed
and paid.
On January 25, 2008, after more than two years of
administering the estate and managing the numerous legal
issues, the coexecutors petitioned the probate court for a
final settlement of the estate.  The coexecutors also filed
three 
supplemental 
accountings. 
 
Specifically, 
in 
the 
petition
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for final settlement, the coexecutors requested: (1) approval
of their actions in administering the estate; (2) an award of
compensation for ordinary services in the amount of
$1,200,000, including approval of a prior payment to the
coexecutors of $800,000;  (3) an award of compensation for
2
extraordinary services in an amount to be determined within
the court's discretion; (4) approval and an award of fees and
expenses to the Sirote firm and the Maynard firm for legal
services rendered by them through final settlement; and (5)
the 
release 
from 
all 
further 
liability 
relating 
to
administration of the estate. 
On September 22, 2008, the objectors filed an objection
to the petition for final settlement.  The objectors excepted
to: (1) approval for previously paid ordinary compensation to
the coexecutors and an award of additional compensation for
ordinary and extraordinary services to the coexecutors; (2)
approval of previously paid fees, expenses, and bonuses  to
3
During the administration of Ruttenberg's estate, the
2
coexecutors paid themselves 
$400,000 
each in fees for ordinary
services without prior court approval.  A portion of this
amount was paid after the coexecutors achieved the settlement
of the Goldstein claim.
As discussed later in this opinion, two bonuses were paid
3
to the Sirote firm in the total amount of $50,000, and a bonus
7
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the Sirote firm and the Maynard firm and an award of
additional fees and expenses for legal services rendered by
those law firms through final settlement;  (3) payment made
in settlement of the Goldstein claim; (4) payment of the
Temple claim; and (5) payment of the Bayer claim.  The
objectors contended that the coexecutors had breached their
fiduciary duties to the estate and its beneficiaries by
failing 
to 
keep the 
objectors properly 
informed 
concerning 
all
matters, and they sought compensatory and punitive damages.
During the bench trial, which lasted nine days, the
probate court heard testimony from numerous witnesses and
reviewed hundreds of exhibits.  After the trial, both the
coexecutors and the objectors submitted briefs.  On December
29, 2009, the probate court entered an opinion and order,
granting the petition for final settlement, approving the
accountings, and discharging the coexecutors from liability
for all actions in administering the estate.  The probate
court found that the coexecutors had "fully administered the
decedent's Estate in accordance with the decedent's Will and
of $25,000 was paid to the Maynard firm from the estate
account.  See Part VI.B. of this opinion.
8
1090600
in the best interest of the Estate" and that the objectors'
claims were without merit.  
The probate court determined that the coexecutors were
entitled to be fully compensated for the risks and
responsibilities they assumed in administering the estate
pursuant to §§ 43-2-682 and -848, Ala. Code 1975, and awarded
fees for ordinary services in the amount of $1,165,937.  The
court found that the coexecutors had accepted extraordinary
risks and responsibilities and had achieved extraordinary
results 
for 
the 
estate, 
warranting 
additional 
compensation 
for
extraordinary services in the amount of $700,000.  See § 43-2-
848(b), Ala. Code 1975.  The court also found the legal fees
and expenses were reasonable and were properly payable from
the estate pursuant to §§ 43-2-682 and -849, Ala. Code 1975. 
On January 29, 2010, the objectors filed a timely notice of
appeal with this Court.
II.  Standard of Review
The applicable standard of review in an appeal from a
probate proceeding, conducted in Jefferson and Mobile
counties, where the probate court has concurrent statutory
equitable jurisdiction with the circuit court to hear actions
9
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concerning the administration of an estate, is well settled. 
See Regions Bank v. Reed, 60 So. 3d 868, 878-79 (Ala. 2010);
Jett v. Carter, 758 So. 2d 526 (Ala. 1999).  See also Shewmake
v. Estate of Shewmake, 940 So. 2d 260, 264 (Ala. 2006).4
"The evidence in this case was presented to the
trial judge in a bench trial.  '"When a judge in a
nonjury case hears oral testimony, a judgment based
on findings of fact based on that testimony will be
presumed correct and will not be disturbed on appeal
except for a plain and palpable error."'  Smith v.
Muchia, 854 So. 2d 85, 92 (Ala. 2003) (quoting
Allstate Ins. Co. v. Skelton, 675 So. 2d 377, 379
(Ala. 1996)); see also First Nat'l Bank of Mobile v.
Duckworth, 502 So. 2d 709 (Ala. 1987).  As this
Court has stated,
"'"The ore tenus rule is grounded upon the
principle that when the trial court hears
oral testimony it has an opportunity to
evaluate the demeanor and credibility of
witnesses."  Hall v. Mazzone, 486 So. 2d
408, 410 (Ala. 1986).  The rule applies to
"disputed issues of fact," whether the
dispute 
is 
based 
entirely 
upon 
oral
testimony or upon a combination of oral
See Act No. 974, Ala. Acts 1961 (regarding concurrent
4
jurisdiction of the circuit court and probate court of Mobile
County), and Act No. 1144, Ala. Acts 1971 (regarding general
jurisdiction of the Jefferson Probate Court concurrent with
that of the Jefferson Circuit Court, in equity, in the
administration of the 
estate 
of deceased persons); the probate
courts of Shelby and Pickens counties also have concurrent
equitable jurisdiction where the probate judge is licensed to
practice law in Alabama.  See Amend. No. 758, Ala. Const. 1901
(Official Recomp., Local Amendments, Shelby County, § 4), and
Amend. No. 836, Ala. Const. 1901 (Official Recomp., Local
Amendments, Pickens County, § 6.10).
10
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testimony and documentary evidence.  Born
v. Clark, 662 So. 2d 669, 672 (Ala. 1995).
The 
ore 
tenus 
standard 
of 
review,
succinctly stated, is as follows:
"'"[W]here the evidence has been
[presented] 
ore 
tenus, 
a
presumption 
of 
correctness
attends 
the 
trial 
court's
conclusion on issues of fact, and
this Court will not disturb the
trial court's conclusion unless
it 
is 
clearly 
erroneous 
and
against the great weight of the
evidence, but will affirm the
judgment if, under any reasonable
aspect, 
it 
is 
supported 
by
credible evidence."'
"Reed v. Board of Trs. for Alabama State Univ., 778
So. 2d 791, 795 (Ala. 2000) (quoting Raidt v. Crane,
342 So. 2d 358, 360 (Ala. 1977)).  However, 'that
presumption [of correctness] has no application when
the trial court is shown to have improperly applied
the law to the facts.'  Ex parte Board of Zoning
Adjustment of Mobile, 636 So. 2d 415, 417 (Ala.
1994)."
Robinson v. Evans, 959 So. 2d 634, 637 (Ala. 2006).
Questions relating to the good faith and prudence of an
executor in carrying out his or her duties in administering 
an estate are questions of fact clothed with a presumption of
correctness when the ore tenus rule is applied, and a probate
court's judgment based on such findings will not be disturbed
on appeal unless that judgment is clearly erroneous. 
11
1090600
"[T]he trial judge is in the better position to
judge the credibility of the witnesses and the
sufficiency of the evidence. This Court will not
disturb the decision of the trial court, sitting
without a jury, on conflicting evidence that is
partly ore tenus, unless it is contrary to the great
weight of the evidence.  United States Fidelity &
Guar. Co. v. Armstrong, 479 So. 2d 1164 (Ala. 1985);
Owen v. Rutledge, 475 So. 2d 826 (Ala. 1985);
Burroughs v. Great Atlantic & Pacific Tea Co., 462
So. 2d 353 (Ala. 1984); First Alabama Bank of
Montgomery, N.A. v. Martin, 425 So. 2d 415 (Ala.
1982), cert. denied, 461 U.S. 938, 103 S.Ct. 2109,
77 L.Ed. 2d 313 (1983); Sams v. Byars, 207 Ala. 504,
93 So. 415 (1922). It is not our province to attempt
to 
ascertain 
with 
mathematical 
certainty 
the
specific items calculated by the trial court to
reach the total assets received into the estate or
the total credit due the administratrix. Cf. G.M.
Mosley Contractors, Inc. v. Phillips, 487 So. 2d
876, 879 (Ala. 1986). We cannot say that the probate
court's finding that the estate consisted of assets
totalling $322,777.77, is contrary to the great
weight of the evidence."
American States Ins. Co. v. Copeland, 534 So. 2d 275, 278
(Ala. 1988). The extent to which an executor should be
compensated rests in the sound discretion of the court and is
to be determined in view of all the circumstances of the case. 
§ 43-2-848, Ala. Code 1975; Noble v. Jackson, 132 Ala. 230,
31 So. 450 (1902).  See Armstrong v. Alabama Nat'l Bank, 404
So. 2d 675, 676 (Ala. 1981) (compensation for ordinary
services); McCollum v. Towns, 456 So. 2d 48, 50 (Ala. 1984)
(compensation for extraordinary services).  The determination
12
1090600
whether an attorney-fee award is reasonable is within the
sound discretion of the trial court, and its determination on
that issue will not be disturbed on appeal unless in awarding
the fee the trial court exceeded its discretion.  § 43-2-682
and -849, Ala. Code 1975; Van Schaack v. AmSouth Bank, N.A.,
530 So. 2d 740, 749 (Ala. 1988) (providing nonexhaustive list
of criteria for evaluating whether an attorney-fee award is
reasonable); and Dent v. Foy, 214 Ala. 243, 107 So. 210
(1925). 
III.  Fiduciary Duty of Coexecutors
and Alleged Conflicts of Interest
The personal representative of the estate is either the
administrator, in the case of an intestate estate, or the
executor, in the case of a testate estate.  § 43-8-1(24), Ala.
Code 1975.  A personal representative is a fiduciary charged
with settling and distributing the estate of the decedent
expeditiously, efficiently, and economically in accordance
with the terms of the decedent's will and in a manner
consistent with the best interests of the beneficiaries of the
estate.  See § 43-2-833(a), Ala. Code 1975.  Essentially, the
personal 
representative 
marshals 
assets, 
identifies 
and 
honors
valid claims against the estate, and distributes the balance. 
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Consistent with his or her duty, the personal representative
is required to use good faith and prudence and to preserve
from depletion the total fund in which all the beneficiaries
of the estate will share.  Section 43-2-833(a), Ala. Code
1975, which was adopted from § 3-703(a) of the Uniform Probate
Code, imposes a prudent-man standard on the personal
representative in dealing with estate assets.  Specifically,
§ 
43-2-833(a) 
provides 
that 
the 
personal 
representative 
"shall
observe the standards in dealing with the estate that would
be observed by a prudent person dealing with the property of
another ...."  In addition, "[i]f the personal representative
has special skills or is named personal representative on the
basis of representations of special skills or expertise, the
personal representative is under a duty to use those skills." 
§ 43-2-833(a), Ala. Code 1975.
Attorneys engaged in probate work undertake to represent
the 
personal 
representative of 
the 
estate; 
sometimes, 
they 
act
in a dual capacity of personal representative and attorney. 
The attorney who is a beneficiary or creditor of the estate
risks a conflict of interest in representing the personal
representative and can be held to a more demanding standard
14
1090600
of care than an attorney who is not a beneficiary or creditor. 
See, e.g., § 43-2-833(a), Ala. Code 1975.  Especially in large
estates, attorneys may also be engaged to assist and represent
the personal representative on issues that arise in probate
and in the administration of the estate.  In Maryland Casualty
Co. v. Owens, 261 Ala. 446, 451, 74 So. 2d 608, 612 (1954),
this Court recognized that "[a]n executor occupies a position
of trust with respect to those interested in the estate and
is the representative of the decedent, of creditors and of the
legatees and distributees."  (Citing Durden v. Neighbors, 232
Ala. 496, 168 So. 887  (1936); and Amos v. Toolen, 232 Ala.
587, 168 So. 687 (1936).)
Section 43-2-839, Ala. Code 1975, grants the personal
representative 
broad 
power 
over all 
property 
in 
the 
decedent's
estate.  Moreover, an extensive listing of transactions in
which the personal representative can engage, without court
approval, is set forth in § 43-2-843, Ala. Code 1975.  The
personal representative must get court approval of a limited
number of actions if not otherwise expressly authorized in the
decedent's will.  See § 43-2-844, Ala. Code 1975.  Under
Alabama law, "[i]f the exercise of power concerning the estate
15
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is improper, the personal representative is liable to
interested persons for damage or loss resulting from breach
of the personal representative's fiduciary duty to the same
extent as a trustee of an express trust."  § 43-2-840, Ala.
Code 1975.  Further, except for certain exceptions not
applicable here, "any transaction which is affected by a
substantial conflict of interest on the part of the personal
representative, is voidable by any person interested in the
estate except one who has consented after fair disclosure
...."  § 43-2-841, Ala. Code 1975.  Rule 1.7(a), Ala. R. Prof.
Cond., concerning conflicts of interest, provides: 
"A lawyer shall not represent a client if the
representation of that client will be directly
adverse to another client, unless:
"(1) 
The 
lawyer 
reasonably 
believes 
the
representation 
will 
not 
adversely 
affect 
the
relationship with the other client; and
"(2) Each client consents after consultation."
The objectors allege that the coexecutors breached their
fiduciary duties in several respects.  The elements of such
a claim are as follows: (1) the existence of a fiduciary duty
between the parties; (2) the breach of that duty; and (3)
damage suffered as a result of the breach.  See Hensley v.
Poole, 910 So. 2d 96, 106 (Ala. 2005). 
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IV.  Objectors' Claims
A.  The Goldstein Claim
The objectors contend that the coexecutors breached their
fiduciary duties to the estate in their handling of the
Goldstein litigation and settlement, claiming that the
coexecutors should pay the estate $7,500,000 and forfeit
compensation for their services because they did not pursue
a claim for contribution against Don-Allen for half of the
Goldstein 
settlement 
amount. 
 
More 
particularly, 
the 
objectors
contend that, had the coexecutors not allowed Don-Allen to be
represented by Friedman and the Maynard firm as a codefendant
with the estate, the estate somehow would have been able to
settle with Goldstein for less than $15,000,000.
After Just For Feet filed for bankruptcy, several
criminal and civil lawsuits were filed against various
parties, including Ruttenberg and his son, Don-Allen.  One of
those civil cases was a lawsuit filed in 2001 by Goldstein,
the Just For Feet bankruptcy trustee, on behalf of the
company, against its former directors and officers and
Deloitte & Touche, LLP, its accounting firm, and several
partners and/or employees of the accounting firm.  Ruttenberg
and Don-Allen were jointly named as defendants in several
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1090600
counts 
alleging 
breach 
of 
fiduciary duty, 
corporate waste, 
and
fraud.   All the joint counts were based on the allegation
5
that Ruttenberg, Don-Allen, and others had participated in
misrepresentations and omissions that resulted in a false and
misleading portrayal of Just For Feet's financial condition,
concealment of the company's insolvency, the incurring of
additional debt, the failure to restructure the company's
finances or to seek the protection of the bankruptcy laws in
a timely fashion, and other damage.   By the time of
6
Ruttenberg's death, all the other civil lawsuits, except the
Goldstein litigation, had been settled using insurance
proceeds.
Dorr of the Maynard firm represented both Ruttenberg and
Don-Allen in the Goldstein litigation before Ruttenberg's
death.  Ruttenberg had paid all his own as well as Don-Allen's
The other counts named Ruttenberg individually and
5
Deloitte & Touche, LLP, and/or its partners and employees.
Criminal investigations were pursued against both
6
Ruttenberg and Don-Allen.  Ruttenberg avoided prosecution
because of his health.  Don-Allen pleaded guilty to conspiracy
to commit securities fraud and wire fraud, conspiracy to
submit false statements to auditors, and conspiracy to make
false entries and to aiding and abetting submitting false
statements to auditors, in violation of various provisions of
federal law, and he was sentenced to a prison term of 20
months and was ordered to pay a $50,000 fine.
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legal fees before his death.  Before he passed away, he also
directed the Maynard firm to pay  on Don-Allen's behalf a fine
imposed by the Securities and Exchange Commission.  The
Goldstein claim represented damages being sought in the
Goldstein civil litigation.  After the Ruttenberg estate was
substituted for Ruttenberg as a party defendant in the
Goldstein litigation, Dorr continued to represent the estate
and Don-Allen. 
Dorr 
advised 
the 
coexecutors 
that 
the 
Goldstein
litigation was a serious matter and that the estate had no
favorable testimony or evidence and no viable defense to the
allegations by Goldstein.  Instead, Ruttenberg's deposition
testimony was unfavorable, and the evidence indicated that
Ruttenberg had orchestrated and directed almost every aspect
of the Just For Feet accounting fraud.  Dorr monitored
depositions 
by 
transcript 
rather 
than by 
traveling the 
country
to attend in person because the coexecutors had concluded that
the additional expense would not improve the estate's
prospects in the litigation and could waste estate assets.
A mediation was conducted in the Goldstein litigation in
New York on June 15, 2006, in an effort to reach a settlement
with the remaining defendants, including Ruttenberg's estate
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and Don-Allen.  Several of the defendants had already reached
settlements with the bankruptcy trustee, including the
accounting firm, which had agreed to pay $24 million.  The
coexecutors had proposed that the defendants try to settle as
a group, but outside directors had rejected that approach,
given that Ruttenberg appeared to have been ultimately
responsible for the accounting fraud and collapse of Just For
Feet.  
Friedman, Markstein, Dorr, and Shaun Ramey, an attorney
with the Sirote firm, who monitored the case and who kept
Friedman abreast of the ongoing litigation, attended the
mediation.  Friedman and Markstein attended the mediation as
coexecutors of the estate.  Dorr attended as an attorney
representing the estate and Don-Allen.  At mediation,
Goldstein first offered to settle with the estate for
$50,000,000, then for the value of the combined estate and
revocable trust, or approximately $30,000,000.  During
discovery, Goldstein had obtained information regarding the
value of the estate, Pamela's assets, and the revocable trust. 
The coexecutors rejected those demands and ultimately made a
final settlement offer of $15,000,000, which was accepted. 
Shortly after mediation, Friedman wrote a detailed, lengthy
20
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letter to Pamela and the Ruttenberg children explaining the
negotiations and the settlement.  In his letter, Friedman
invited Pamela and the children to contact him if they had any
questions.  According to Friedman, he was never contacted by
the heirs with questions about the Goldstein settlement.  
As a condition of the settlement, Goldstein released the
estate, Don-Allen, the objectors, Ruttenberg's and the
estate's 
financial 
advisors, and 
the 
coexecutors 
and 
their 
law
firms.  In addition, the agreement required that the estate
provide verification of the assets of the estate and the
revocable trust.  The coexecutors directed the trustee of the
revocable trust to provide approximately $12,000,000 from the
trust to help fund the settlement.  The coexecutors then made
a wire transfer of the $15,000,000 settlement amount from the
estate's bank account to Goldstein's bank account.  The
settlement was paid in this manner in order to have proof of
payment to show satisfaction of the Goldstein claim.
Several witnesses testified regarding the Goldstein
litigation, settlement, and claim.  C. Fred Daniels testified
as an expert for the coexecutors and opined that had the
coexecutors not settled the Goldstein claim for substantially
less than the claimed amount, the estate would have been
21
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insolvent and the trust assets would have been depleted as
well.   Douglas Bell also testified as an expert for the
7
coexecutors  and stated that the Goldstein litigation made the
8
Ruttenberg estate a very risky and difficult estate to
administer.  Edward Croft, an outside director of Just For
Feet, who was also a defendant in the Goldstein litigation,
testified that the outside directors settled with Goldstein
for $40,000,000, and paid more attorney fees and costs than
did the Ruttenberg estate.  
Friedman, 
Markstein, 
and 
Dorr, 
who 
attended 
the
mediation, 
all 
testified that the 
coexecutors 
committed 
to 
pay
the entire $15,000,000 on behalf of the estate in settlement
Daniels testified that he holds a law degree and an LL.M. 
7
in taxation and that he is currently a partner at the law firm
of Cabaniss, Johnston, Gardner, Dumas & O'Neal, LLP.  He
stated that he has 35 years' experience in the area of estates
and trusts, starting as a trust officer for a bank, where his
duties included setting and defending personal-representative
fees to be charged by the bank and negotiating attorney fees
with attorneys who represented estates for which the bank
served as personal representative.  Daniels testified that,
during his years practicing law, he has focused on estates,
trusts, and taxation and has been involved in setting,
supporting, and contesting personal-representative  fees and
attorney fees for estates.
Bell testified that he holds an MBA and a banking
8
certificate and has worked in banking for approximately 40
years.  He also served on the committee that drafted Alabama's
version of the Uniform Probate Code.
22
1090600
of the Goldstein claim.  They testified that no reference was
ever made to Don-Allen's paying any portion of the settlement
because the payment was conditioned on everyone being
released, including the coexecutors, Ruttenberg's financial
advisors, and the objectors.  Additionally, the evidence
indicated that Don-Allen was incarcerated during the time of
the Goldstein mediation and that he had a net worth of only 
approximately $1.3 million.9
As to the alleged conflict of interest, the evidence
indicated that Friedman and Markstein attended the mediation
as coexecutors of the estate and that they did not represent
or speak on behalf of Don-Allen.  The evidence showed that the
only one attending the mediation on behalf of Don-Allen was
Dorr.  Markstein testified that he attended the mediation
solely in his capacity as an executor representing the estate
and that he did not represent or speak on behalf of Don-Allen. 
Likewise, 
Friedman 
clearly 
testified that he 
did 
not 
represent
We note that the probate court found that if Don-Allen
9
had actually borrowed $7,500,000 from his mother, Pamela, in
order to pay half of the $15,000,000 Goldstein settlement, it
would not have increased the money in the estate available to
the other children and would only have served to recycle funds
from Pamela to the marital trusts created for her benefit. 
Furthermore, 
this 
maneuver 
could 
have 
decreased 
the 
children's
ultimate inheritance by the potential gift tax Pamela might be
required to pay on the "loan" and/or gift to Don-Allen.
23
1090600
Don-Allen at the mediation.  In addition, the evidence
presented to the  probate court demonstrated that the estate's
assets–-not 
Don-Allen's--were 
primarily 
sought 
in 
the
Goldstein mediation.  The bankruptcy trustee, through
discovery, was aware that the estate and Ruttenberg revocable 
trust had substantially more assets than Don-Allen had
individually.
With regard to the Goldstein claim, after hearing
testimony and admitting documentary evidence, the probate
court found that, because the Goldstein litigation threatened
the solvency of the entire estate, the settlement of the
action for a lesser amount while incurring minimal attorney
fees resulted in significant benefit to the estate.  The court
concluded that the reason there were any assets at all
remaining in the estate and the revocable trust was because
of the extraordinary result the coexecutors had achieved in
settling the Goldstein matter.  The probate court determined
that the objectors' contention that the coexecutors should
forgo compensation and pay the estate because they were acting
under impermissible conflicts of interest while they were
representing the estate was without merit.  The court found
24
1090600
that there was no conflict of interest in the  representation
of the estate and Don-Allen.
Upon review of the record of the trial and of the
documentary evidence, we conclude that there was substantial
credible evidence to support the probate court's decision as
to the Goldstein claim.  The probate court heard a great deal
of 
conflicting 
evidence 
from several 
witnesses about 
the 
facts
surrounding the Goldstein litigation and how the Goldstein
claim should have been handled.  Ultimately, the court
determined that the coexecutors handling of the Goldstein
matter resulted in great benefit to the estate and, most
importantly, 
ensured 
the 
"continuing 
viability 
of 
the 
estate." 
In addition, there was ample evidence before the probate court
to support its factual finding that the coexecutors did not
suffer from any impermissible conflict of interest by the
joint representation of the estate and Don-Allen by the
Maynard firm.  There was also substantial evidence to support
the probate court's rejection of the objectors' theory that
the coexecutors should have sued Don-Allen and forced him to
borrow $7,500,000 from his mother in order to contribute it
to the payment of the settlement of the Goldstein claim.
Consequently, we conclude that the probate court did not
25
1090600
exceed its discretion, and its judgment as to the Goldstein
claim is due to be affirmed.
B.  The Temple Claim
The objectors also contend that the coexecutors should
have to forgo any compensation and should be required to pay
the estate because (1) the Temple claim was not enforceable,
or, (2) even if the pledge allegedly made by Ruttenberg during
his life was a lawful debt of the estate, the coexecutors
should have required Pamela to pay the pledge, or (3)
Friedman, who was a member of and who served on a committee
of the Temple, had a conflict of interest in approving the
estate's payment of the Temple claim.
On June 27, 2006, the Temple filed a claim against the
estate for $246,000, the remaining balance of a pledge it
alleged 
Ruttenberg 
made 
to 
its 
capital 
and 
endowment campaign. 
In the summer of 2003, the Temple had established a capital
and endowment campaign to raise funds to build a new synagogue 
as well as to expand its endowment program.  The campaign
committee began to solicit pledges.  In September 2003, the
committee approached Ruttenberg and he stated that he would
make a pledge of $250,000.  Ruttenberg, however, did not
complete a pledge card and return it to the Temple. 
26
1090600
Ruttenberg paid $4,000 of his pledge on December 29, 2003. 
Thereafter, the committee had continued to seek pledges and
had announced the pledges it had already received, including
Ruttenberg's $250,000 pledge.  After the committee had
solicited pledges totaling a sizable amount, it found and
purchased a suitable piece of property and employed an
architectural firm to design plans for the construction of the
new building.  The committee also paid a site-evaluation firm
to conduct soil and drainage testing.  Additionally, the
committee incurred numerous other expenses, including storage
fees, legal fees, and consulting fees, as well as additional
architectural and development fees.
The probate court expressly rejected the objectors'
contentions and found that the "pledge was a valid debt of the
[e]state that [the coexecutors] were obligated to pay."   The
court found that the coexecutors "should not have to forfeit
any compensation or be required to pay the [e]state because
Friedman allegedly had a conflict of interest in approving the
payment by the [e]state of the claim filed by" the Temple
because "Markstein independently approved of the [e]state's
payment of the Temple claim."  In essence, the probate court
concluded that, even if Friedman had a conflict of interest
27
1090600
as to the Temple claim, Markstein did not and that the claim
was a valid debt of the estate correctly approved and paid by
Markstein.
The objectors essentially first aver that the pledge was
unenforceable because Ruttenberg never signed a pledge card. 
Alabama law is clear that an unsigned pledge, when met with
detrimental reliance, rises to the level of an enforceable
pledge.  See Pass v. First Nat'l Bank, 25 Ala. App. 519, 149
So. 718 (1933) (providing that upon receipt of consideration
or detrimental reliance, a charitable pledge rises to the
level of an enforceable contract); South v. First Nat'l Bank,
17 Ala. App. 569, 88 So. 219 (1920).  The evidence in this
case showed that the Temple detrimentally relied on
Ruttenberg's pledge.  The Temple had used Ruttenberg's pledge
to encourage others to donate to the campaign.  The Temple
even publicized Ruttenberg's pledge in its newsletters and
other advertisements.  Moreover, the evidence indicated that,
before his death, Ruttenberg had even made appearances at
various meetings and fund-raising activities to show his
support for the campaign.
Turning to the question whether Pamela should have been
required to pay the Temple claim individually, there was
28
1090600
substantial evidence before the probate court, albeit
conflicting, that, although it may have provided a tax benefit
to her to pay the pledge, Pamela expressly and repeatedly
asked Friedman to have the Temple claim paid by the estate. 
Once the coexecutors determined that the Temple claim was a
lawful debt of the estate, they--not Pamela--were obligated
to pay it.  The evidence even showed that Pamela personally
delivered the estate check to the Temple in payment of the
remaining pledge amount.  The evidence also showed that the
decision was made to wait and pay the Temple claim after the
estate-tax return had cleared because the Internal Revenue
Service ("IRS") might disallow the claim as a valid charitable
contribution.  It was decided that only if the IRS disallowed
the claim would Pamela personally pay the claim.
As to the alleged conflict of interest in regard to the
Temple claim, "[t]he general rule is that the allowance or
rejection of a claim against the estate by one of two or more
personal representatives is binding upon the estate." 
Davenport v. Witt, 212 Ala. 114, 115, 101 So. 887, 888 (1924). 
Davenport suggests that when one of two executors is unable
to 
carry 
out 
a 
particular 
function 
because 
of 
disqualification, whether valid or not, or for other reasons,
29
1090600
the other executor may allow or reject the claim.  In
addition, § 43-2-846, Ala. Code 1975, provides that one co-
representative may act on behalf of the estate where there is
delegation by one representative to another.  In this case,
where there is an alleged conflict regarding the Temple claim
because Friedman served on a committee at the Temple,
Markstein would be able to act on behalf of the estate in
regard to the Temple claim.
Accordingly, after concluding that the Temple claim was
enforceable, the coexecutors had a fiduciary duty to pay it. 
Thus, the record and Alabama law amply support the probate
court's 
finding 
that any 
hypothetical 
conflict 
of 
interest 
did
not affect payment of the Temple claim.  In addition,
Markstein's independence in passing on the validity of the
Temple claim buttressed the propriety of the decision to pay
the claim.  Thus, we conclude that the probate court's
judgment regarding the payment of the Temple claim is due to
be affirmed.
C.  The Bayer Claim
The objectors also contend that the coexecutors should be
required to pay money to the estate and to give up all
compensation because the Sirote firm allegedly suffered from
30
1090600
a conflict of interest by representing Bayer Retail Company,
LLC ("Bayer"), in an unrelated matter while Friedman was
acting as an executor for the estate.
Amalgamated operated a breakfast restaurant at the Summit
shopping center in Birmingham.  Bayer was the landlord.  In
2001, 
Ruttenberg 
had 
personally 
guaranteed 
the 
payment 
of 
rent
and performance of all provisions of the restaurant lease
agreement.  The lease agreement provided that, in the event
of default, interest, late fees, and attorney fees were
chargeable.  During 2005, Amalgamated sold the business and
assigned the lease to a third party.  In connection with the
transaction, Ruttenberg agreed to guarantee one year's rent
to induce Bayer to accept the assignment of the lease.  In
early December 2005, before Ruttenberg's death, the third
party breached the lease, and Bayer demanded full payment of
one year's rent in the amount of $232,695.12, not including
interest, late fees, or attorney fees as provided in the
lease.  Ruttenberg died shortly after Bayer demanded payment
of rent pursuant to the guarantee.  Bayer filed a claim
against the estate, seeking $232,695.12, plus interest and
attorney fees.  Bayer filed an amended claim, seeking 
31
1090600
$232,695.12, plus interest and attorney fees, less a credit
of $55,745 from the sale of the restaurant equipment. 
The evidence revealed that Ruttenberg had acknowledged
and confirmed the debt to Bayer before his death.  Thus, the
objectors do not dispute that the Bayer claim was a valid debt
of the estate.  Rather, the objectors dispute the coexecutors'
payments of approximately $12,000 in interest and $15,000 in
attorney fees sought by Bayer and allege that the overpayment
was the result of a conflict of interest.  The objectors argue
that Bayer's claim amount should have been limited to
$232,695.12, the principal amount of the lease.
Here, the evidence showed that the Sirote firm had
represented Bayer for years and that the Sirote firm was
representing Bayer in connection with unrelated matters while
the Bayer claim was pending against the estate.  The evidence,
however, also showed that Friedman was not involved in any way
with the Bayer matters that were not related to the Bayer
claim.  The record shows that an attorney with the Maynard
firm 
negotiated 
the 
Bayer 
obligation 
before 
Ruttenberg's 
death
and that Markstein relied on that attorney's assessment of the
Bayer claim in deciding to pay the claim instead of pursuing
litigation over $15,000 in attorney fees and $12,000 in
32
1090600
interest. 
 
In 
addition, 
after 
several 
discussions 
with Bayer's
general counsel and Bayer's attorney, the coexecutors were
able to reduce the attorney fees claimed from to $77,565.04
to $15,000.  Ultimately, the estate paid $232,695.12, plus
interest of approximately $12,000 and a $15,000 attorney fee.
The probate court found that "[t]he Bayer Properties
claim was a just and valid debt of the Estate."  The court
stated that the lease included interest and attorney fees in
the definition of rent.  The probate court found no evidence
of a conflict of interest and stated that, even if Friedman
had a conflict of interest because of the Sirote firm's prior
representation of Bayer, Markstein did not have such a
conflict.  The probate court determined that the coexecutors
"made a prudent decision to compromise and pay the claim
rather than expend Estate resources on paying attorneys to
litigate the issue with Bayer." 
Upon our review of the evidence, including the testimony
and the documentary evidence adduced at trial, we conclude
that the evidence does not indicate that the probate court's
findings are erroneous.  
Here, the coexecutors had a
fiduciary duty to pay the claim and had to determine the
feasibility of litigating the attorney fee and interest
33
1090600
portion of the claim.  Given the other matters before the
coexecutors in administering the estate and considering that
the attorney-fee and interest provisions of the lease would
likely be enforceable, we cannot say that the coexecutors'
payment of the claim, including attorney fees and interest,
was not warranted.  Moreover, much like the Temple claim, the
involvement of the Maynard firm before Ruttenberg's death and
Markstein's independence in passing on the validity of the
claim prevented a conflict of interest.  Consequently, we
conclude that the probate court's judgment regarding the
payment of the Bayer claim is due to be affirmed. 
V.  Coexecutors Fees for
Ordinary and Extraordinary Services
The objectors assert that, under the facts of this case,
the fees awarded the coexecutors for ordinary services were
unreasonable.  The objectors likewise contend that the fees
awarded the coexecutors for extraordinary services were not
warranted.  "The award of executor fees is largely within the
discretion of the trial judge."  Armstrong v. Alabama Nat'l
Bank, 404 So. 2d 675, 676 (Ala. 1981).  Furthermore, "[t]he
determination of the amount of fees to be awarded for
extraordinary 
services 
rendered 
in 
administering 
estates 
rests
34
1090600
with the trial court."  McCollum v. Towns, 456 So. 2d 48, 50
(Ala. 1984).  
10
Section 43-2-848 provides that executors are entitled to
"reasonable compensation for services as may appear to the
court to be fair ...."  § 43-2-848(a), Ala. Code 1975.  In
assessing the reasonableness of an executor's compensation,
Alabama courts consider the following factors:
"[T]he novelty and difficulty of the administrative
process, the skill requisite to perform the service,
the likelihood that the acceptance of the particular
employment will preclude other employment, the fee
customarily charged in the locality for similar
services, the amount involved and the results
obtained, 
the 
requirements 
imposed 
by 
the
circumstances and condition of the estate, the
nature and length of the professional relationship
with the decedent, the experience, reputation,
diligence, and ability of the person performing the
services, the liability, financial or otherwise, of
the personal representative, or the risk and
responsibility involved ...."
§ 43-2-848(a).  In addition, § 43-2-848(a) provides that a fee
for ordinary services should not exceed "two and one-half
percent of the value of all property received and under the
possession and control of the personal representative and two
and one-half percent of all disbursements."  § 43-2-848(a),
We note that § 43-2-680, Ala. Code 1975, applicable in
10
Armstrong and McCollum was repealed by Act No. 93-722, Ala.
Acts 1993, and has been replaced by § 43-2-848, Ala. Code
1975, which was in effect in this case.
35
1090600
Ala. Code 1975.  Regarding compensation for extraordinary
services, § 43-2-848(b), Ala. Code 1975, provides that over
and above fees for ordinary services, "the court may allow a
reasonable compensation for extraordinary services performed
for the estate." 
The probate court determined that the coexecutors were
entitled to receive $1,165,937 for their ordinary services in
administering Ruttenberg's estate.  The court found that the
coexecutors were both "eminently qualified attorneys who
brought significant expertise and effort to bear on an estate
that was extremely complicated" and that the coexecutors
successfully 
resolved 
a 
number 
of 
"very 
significant 
challenges
to the viability of the Estate," including: 
"–the 
management 
and 
sale 
of 
various
Ruttenberg-related businesses and other assets; 
"–the settlement of a major lawsuit that threatened
the solvency of the entire Estate; 
"–sensitive and complicated personnel and staffing
issues;
"–oversight of investment assets; 
"–the successful preparation of a complex and risky
estate tax return; 
"–the successful resolution of other creditors'
claims against the Estate; and
36
1090600
"–the retention and management of counsel to perform
various legal services necessary to administer the
estate." 
The probate court also found that the coexecutors performed
each of those services competently and diligently and that
their services resulted in significant benefits for the
estate.  The court further found that the objectors'
contentions were not supported by the evidence and that the
factual and expert testimony presented on behalf of the
coexecutors was more credible.  
As 
to 
extraordinary 
services, 
the 
probate 
court
determined that the coexecutors should each receive $350,000. 
The court recognized that the Ruttenberg estate was the type
of estate for which additional compensation for extraordinary
services was contemplated and stated:
"First, in gathering Mr. Ruttenberg's assets,
the Personal Representatives were required to deal
with 
Amalgamated 
Concepts, 
LLC 
and 
SouthBay
Properties, 
LLC 
as 
going 
concerns 
operating
restaurants, a car wash and several collateral
businesses 
in 
three 
states. 
 
The 
Personal
Representatives negotiated and secured retention
agreements with key employees, such as a Chief
Operating 
Officer, 
chief 
and 
several 
office
personnel, which agreements provided sufficient
incentive arrangements to keep a competent staff in
place.  The Personal Representatives also directed
cost-cutting 
measures, 
such 
as 
discontinuing
expensive advertising campaigns and moving the
offices to a smaller space, that helped to stem
37
1090600
multi-million dollar losses that Amalgamated had
experienced 
for 
several 
years 
before 
Mr.
Ruttenberg's death and that returned the business to
a break-even status.
"Second, the Personal Representatives faced an
extraordinary and difficult claim for $400,000,000
in a lawsuit filed by Charles Goldstein (the
'Goldstein claim' arising out of the 'Goldstein
litigation'), the trustee in bankruptcy of Just for
Feet, on behalf of the company's creditors.  The
Personal Representatives settled this claim against
the Estate for $15,000,000, while incurring minimal
legal 
fees. 
 
In 
doing 
so, 
the 
Personal
Representatives 
effectively 
and 
economically 
removed
a contingent liability and ensured the continuing
viability of the Estate.  The reason that there are
any assets at all remaining in the probate estate
and the Revocable Management Trust is because of the
extraordinary 
result 
that 
the 
Personal
Representatives achieved in quickly settling this
$400,000,000 lawsuit, which alleged that as founder,
chief executive officer, and chairman of the board
of directors of Just for Feet, Mr. Ruttenberg
orchestrated and oversaw a massive accounting fraud
at the company and refused to permit the company to
file for bankruptcy.  The Court is convinced that
the Goldstein lawsuit was extremely serious: all of
the witnesses and co-defendants identified Mr.
Ruttenberg as the ultimate tortfeasor, and the
Estate had no viable defense.  The Goldstein claim
easily could have exhausted all of the assets in the
Estate and Revocable Management Trust, and the
Personal 
Representatives' 
decision 
to 
settle
preserved approximately half of the Estate assets.
The wisdom of the Personal Representatives' decision
to settle for $15,000,000 is underscored by the
settlement amounts paid by the other Goldstein
defendants: Deloitte & Touche and the outside
directors, who were alleged to have played less
central roles in the fraud and failure to file
timely for bankruptcy, settled for $24,000,000 and
$40,000,000, respectively.
38
1090600
"Another remarkable result in the Goldstein
litigation was the extremely low attorneys' fees
incurred.  The Personal Representatives approved
cost-saving defense strategies that could have
subjected the Personal Representatives to criticism
for not taking every possible measure to defend the
Estate.  However, they were trying to preserve
Estate assets and did not believe that taking a more
active role would improve the Estate's prospects in
the 
litigation. 
 
This 
strategy 
resulted 
in
tremendous savings to the Estate, as the total legal
fees for the Goldstein lawsuit, both before and
after Mr. Ruttenberg's death, were approximately
$350,000.  In contrast, the outside directors paid
legal fees in excess of $3,700,000 and expenses in
excess of $1,300,000.
"Third, the Personal Representatives presided
over the preparation of an extremely complicated
estate tax return. There was a substantial risk that
Mr. Ruttenberg's advancements of approximately
$20,000,000 
to 
Amalgamated 
could 
have 
been
recharacterized by the Internal Revenue Service as
gifts, [and] the Personal Representatives were
acutely aware that the Estate was at risk of being
assessed gift and generation skipping taxes of more
than $14,400,000. The Personal Representatives could
be held personally liable for these taxes if they
applied Estate assets to other debts, such as the
Goldstein settlement, before satisfying the tax
obligation.  The Personal Representatives and their
legal counsel considered whether they should convert
the debt to equity, and ultimately decided against
this course. They directed the preparation of a
return that was 'complete in the extreme' in hopes
of avoiding an audit. Until the IRS issued a closing
letter for the Estate tax return, the undocumented
advances presented a huge risk to the Estate and to
the Personal Representatives, personally."
However, in order to properly determine whether the fees
for ordinary services and extraordinary services were
39
1090600
reasonable, this Court must consider other issues presented
on appeal by the objectors that are encompassed in the
assessment of the reasonableness of the coexecutors' fees.
The objectors contend that the coexecutors improperly
inflated 
their 
requested fee 
for 
ordinary 
services 
by 
applying
the statutory percentage to assets that either should not have
been included in the estate or that should have been included
at a lower dollar value.  In particular, the objectors
challenge the coexecutors' valuation of the receivable from
Amalgamated for Ruttenberg's unsecured loans to the company. 
The objectors also contend that the funds transferred from the
revocable trust to the estate that were used to pay a portion
of the settlement of the Goldstein litigation should not have
been included in the value of the estate for purposes of
calculating the coexecutors' fees.  They also claim error
because, they say, a portion of the coexecutors' fees was paid
in advance without court approval, in violation of the
statutory directive.  We consider these in turn.
A.  Amalgamated Receivable
First, the objectors claim error in the court's valuation
of the Amalgamated receivable at $2,189,400 for purposes of
calculating 
the 
fees of 
the 
personal 
representatives 
 
because,
they say, the valuation improperly increased the coexecutors'
40
1090600
fees.  The estate included a receivable from Amalgamated for
the amount of Ruttenberg's unsecured loans to that company. 
The coexecutors used a valuation from Kassouf & Company, an
accounting firm.  The Kassouf firm determined that if all the
assets of Amalgamated had been liquidated on the date of
Ruttenberg's death, they would have generated approximately
$2,100,000. 
The probate court considered evidence that supported the
accuracy of the Kassouf firm's valuation of the Amalgamated
receivable.  Daniels, one of the coexecutors' expert
witnesses, who reviewed the valuation and found it to be
reliable,  testified that it was reasonable and prudent for
11
the coexecutors to rely upon the Kassouf valuation of the
Amalgamated receivable.  Daniels explained that based on his
many experiences working with the Kassouf firm, he believed
that the firm makes independent judgments as to value in its
assessments.  He stated that he had relied upon its valuations
in many matters and had advised his clients to rely on Kassouf
valuations.  He testified that he believed the estate was
See supra note 7.
11
41
1090600
released from $2.1 million of liability with respect to a
Birmingham restaurant lease.  He also opined that the estate
received $151,500 for the sale of the Destin restaurant and
the Destin car wash.
Wray Pearce and Lowell Womack, who testified as experts
for the objectors and stated that they had not reviewed the
Kassouf valuation, testified that the Amalgamated receivable
was worth zero at the time of Ruttenberg's death.  The record
indicates that they based this valuation on the coexecutors'
previously valuing this receivable at zero before the Kassouf
firm had thoroughly conducted its valuation.  The record,
however, 
shows 
that the 
coexecutors 
ultimately 
sold the 
assets
of Amalgamated in exchange for $150,000 and the release of
lease obligations of more than $2,000,000. 
The probate court observed the credibility and demeanor
of the witnesses and considered the documentary evidence,
including the estate-tax-return valuation of Amalgamated at
$2,100,000, and determined that Amalgamated should be valued
at $2,100,000 for purposes of calculating the coexecutors'
fee.  It heard ample evidence to support its finding, and we
see no reason to disturb that finding.
42
1090600
B. Transfer of Funds in Revocable Trust to Pay Goldstein
Claim
 Because the estate did not have adequate funds to pay
the $15,000,000 to settle the Goldstein claim, pursuant to the
terms of Ruttenberg's revocable trust funds were transferred
to the estate account from the trust.  The coexecutors
transferred $12,709,426.75 from the revocable trust to the
estate's bank account to fund the $15,000,000 settlement from
the 
estate 
account. 
 
The 
objectors 
except 
to 
the
characterization of those funds as a receipt and disbursement
of the estate for purposes of calculating the coexecutors'
fees.
As we previously concluded, the Goldstein settlement was
a valid debt of the estate.  In addition, several witnesses,
including witnesses for the objectors, testified that all the
assets of the revocable trust were at risk in the Goldstein
litigation 
and 
that 
the 
coexecutors 
bore 
the 
full
responsibility for paying the debt at issue in the Goldstein
litigation and the full risk if the debt was not satisfied. 
Likewise, testimony indicated that it is important for
executors to be able to establish proof of payment in the
event they should have difficulty obtaining a satisfaction of
43
1090600
claim and that this was more readily accomplished in this case
by transferring the funds from the revocable trust to the
estate account.
Bell, one of the coexecutors' expert witnesses,12
testified that it would have been appropriate for the
coexecutors to calculate their fee based upon the entire value
of the revocable trust, not just the trust funds transferred
to the estate account to pay the Goldstein settlement.  He
stated that if a bank had served as executor of an estate
similar to the Ruttenberg estate, it would have taken a fee
based on the entire value of the revocable trust.  He
explained that as a  member of the committee that had drafted
Alabama's version of the Uniform Probate Code, the intent of
the committee in drafting Ala. Code 1975, § 43-2-848(a), was
that compensation for executors should be based not just on
the probate estate, but on every asset over which the
executors have authority and liability.  In addition, the
objectors' 
assertion 
that 
the 
coexecutors 
should 
have 
directed
the trustee of the revocable trust to pay the money directly
to the plaintiff in the Goldstein litigation is without merit
See supra note 8.
12
44
1090600
because that procedure, which was urged by the objectors'
expert, Pearce, would not have changed the characterization
of the revocable-trust funds for fee purposes but quite
possibly would have caused an issue with proof of satisfaction
of the claim for both the estate and the coexecutors.
In this case, it was within the coexecutors' discretion
to determine how to pay the Goldstein claim, a valid claim
against the estate, and the characterization of those funds
as a receipt and disbursement of the estate for purposes of
calculating the coexecutors' fees was proper.  The facts
considered by the probate court establish that the receipts
and disbursements taken into consideration in determining the
coexecutors' fees should include the portion of the revocable
trust that was transferred into the estate account to pay a
portion of the Goldstein settlement.  Thus, the probate court
did not exceed its discretion in this regard.
C.  Prior Court Approval Before Payment
   of Compensation for Ordinary Services
The objectors assert that § 43-2-844(7), Ala. Code 1975,
requires prior court approval before payment to a personal
representative of compensation for ordinary services and that
the probate court erred in ruling that the coexecutors did not
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breach their fiduciary duty in paying themselves compensation
for ordinary services in the amount of $800,000 without prior
approval of the probate court.
The probate court ruled that the coexecutors did not
breach their fiduciary duty to the estate by paying themselves
$800,000 
in 
compensation 
without 
obtaining 
the 
probate 
court's
prior approval.  The probate court determined that payment of
a personal representative without prior court approval is
allowed under § 43-2-844(7), if such payment is "expressly
authorized by the will," and it further concluded that
Ruttenberg's will "provide[d] a sufficient basis for interim
payments of Personal Representative fees"; therefore the
payments fell within the exemption.
During October 2006, each coexecutor was paid $200,000,
representing partial payment of personal-representative fees
for ordinary services.  An additional $200,000 in fees was
paid to each of them in March 2007.  Thus the coexecutors
received fees totaling $800,000 without first obtaining the
approval of the probate court.
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Although the ore tenus standard of review is applicable
here, because this issue presents a question of law and does
not concern a disputed issue of fact, our review is de novo.
"[T]his Court reviews issues of law de novo.
"'[W]here the facts before the trial court
are 
essentially 
undisputed 
and 
the
controversy involves questions of law for
the court to consider, the court's judgment
carries no presumption of correctness.' 
Allstate Ins. Co. v. Skelton, 675 So. 2d
377, 379 (Ala. 1996).  Questions of law are
reviewed de novo.  BT Sec. Corp. v. W.R.
Huff Asset Mgmt. Co., 891 So. 2d 310 (Ala.
2004).'
"Alabama Republican Party v. McGinley, 893 So. 2d
337, 342 (Ala. 2004)."
Ex parte Terry, 957 So. 2d 455, 457 (Ala. 2006)
 Section 43-2-844(7), Ala. Code 1975, states, in part:
"Unless expressly authorized by the will, a personal
representative, only after prior approval of court, may ...
[p]ay compensation to the personal representative."  However,
in this case, any error in the prior payment of coexecutors'
fees for ordinary services without prior court approval is
moot.  Here, the probate court took evidence and heard
argument about the reasonableness of the requested fees,
considered the statutory factors applicable to determining a
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reasonable fee, and credited the total fee awarded by the
amount the coexecutors had previously paid themselves. 
Specifically, the probate court awarded the coexecutors
$1,165,937 in fees for ordinary services and said:  "$800,000
has been properly paid ....  The remaining $365,937 is due to
be paid in equal shares of $182,968.50."  Therefore, any error
was remedied when the probate court issued its final award,
after taking into consideration the statutory factors set out
in §§ 43-2-848 and -682, Ala. Code 1975, and then crediting
the amount the coexecutors had paid themselves against the
total fee awarded to the coexecutors for ordinary services.13
The ultimate fee approved by the probate court reflected
the court's weighing of evidence of the factors contained in 
§ 43-2-848, including the complexity 
of the estate, the length
The objectors cite Wehle v. Bradley, 49 So. 3d 1203
13
(Ala. 2010), as dispositive.  In Wehle, the appellants argued 
that "the personal representatives were required to obtain
prior 
court approval before compensating themselves out of 
the
assets of the estate."  49 So. 3d at 1206.  This Court agreed.
Wehle, however, is distinguishable from this case.  In Wehle,
the circuit court had entered a partial summary judgment in
favor of the personal representatives with regard to all
compensation.  The Wehle case, which was at the summary-
judgment stage, was in a different posture than this case, 
and the circuit court in Wehle did not consider the statutory
factors in determining the personal-representative fees. 
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of the relationship between the Ruttenberg family and the
coexecutors, and the favorable results obtained by the
coexecutors in maintaining the solvency of the estate.  The
coexecutors submitted substantial credible evidence of the
activities they undertook on behalf of the Ruttenberg estate,
as well as expert-opinion testimony of what would be
reasonable 
fees for those services.  Thus, the probate court's
judgment on the coexecutors' fees for ordinary services is
supported by substantial credible evidence and is affirmed.
D.  Compensation for Extraordinary Services
The objectors claim that the probate court erred in
awarding the coexecutors fees for extraordinary services in
the amount of $700,000.  In rendering the award, the probate
court relied upon § 43-2-848(b), Ala. Code 1975, which
provides that over and above the fees awarded for ordinary
services, "the court may allow a reasonable compensation for
extraordinary services performed for the estate."  
The evidence in this case supports the probate court's
determination that the risks and responsibilities assumed by
the coexecutors far exceeded those in an ordinary estate
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administration.  The coexecutors were charged with, among
other things, settling the $400,000,000 Goldstein claim while
keeping the estate solvent, managing and selling Ruttenberg's
restaurant 
businesses, 
obtaining a 
closing 
letter 
from the 
IRS
on the estate-tax return as filed, which was complex, and
paying the Goldstein settlement before securing a closing
letter from the IRS, and avoiding potential gift taxes,
interest, and penalties in excess of $15,000,000 as a result
of the personal loans Ruttenberg had made to Amalgamated.  
In reaching its conclusion, the probate court considered
the ore tenus evidence presented by the coexecutors' expert
witnesses Daniels and Bell.  Daniels testified that the
coexecutors 
should 
be 
awarded 
a 
fee 
for 
extraordinary 
services
in the range of $600,000 to $800,000.  He opined that any
executor faced with such massive liability far exceeding the
value of the estate, as was the case here, would have
petitioned the court to declare the estate insolvent to free
the executor from the role and to allow the creditors to elect
an 
administrator 
to 
complete 
the 
administration. 
 
Instead, 
the
coexecutors of the Ruttenberg estate managed to keep the
estate solvent, which Daniels testified he considered to be
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an extraordinary result, in and of itself warranting
additional compensation.
According to Daniels, several other factors were
exceptional and warranted extraordinary compensation.  First,
he 
testified 
that, 
the 
Goldstein 
settlement 
was 
an
extraordinary result because the $400,000,000 Goldstein claim
could easily have exhausted all the assets of both the estate
and the revocable trust.  Second, Daniels testified that the
coexecutors obtained extraordinary results with regard to
Amalgamated because Ruttenberg had loaned Amalgamated about
$11,000,000 before 2004 and had made additional cash loans of
$4,500,000 per year to Amalgamated in 2004 and 2005, while the
coexecutors were able to stabilize the company so that in 2006
no cash loans were made and a profit, although very small, was
realized.  Lastly, Daniels stated that the coexecutors should
receive fees for extraordinary services where there are, as
in this case, significant risks and responsibilities relating
to taxes and the estate-tax return filed with the IRS. 
Daniels testified that the loans  Ruttenberg made to
Amalgamated put the coexecutors, as well as other attorneys
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involved in the tax preparation at risk for the imposition of
potential gift and generation-skipping taxes because the IRS
could 
easily 
have 
determined 
that 
Ruttenberg's 
cash
contributions to Amalgamated were not loans, but were gifts,
leaving the coexecutors and attorneys exposed and the estate
insolvent.  He also stated there were other also tax risks
associated with Ruttenberg's estate, such as payment of the
Goldstein settlement.
Similarly, Bell, one of the expert witnesses for the
coexecutors, testified that the coexecutors were due
extraordinary compensation.  Bell stated that the coexecutors
achieved 
an 
excellent 
result 
in 
a 
high-risk 
estate
administration. 
 
Bell testified that most executors would 
have
sought extraordinary compensation under these circumstances,
and, in his opinion, the coexecutors were entitled to
compensation for their extraordinary services in the amount
of $600,000.
Generally, 
whether 
extra 
compensation 
beyond 
the
statutory amount should be allowed and, if so, in what amount
is to be decided by the probate court, and an appellate court
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will not disturb an executor's award for extraordinary
services unless the court exceeded its discretion in allowing
the award.  In this case, we cannot say that, given the
evidence before us and the proportion of services performed
by the coexecutors, the probate court exceeded its discretion
in awarding fees for extraordinary services.  Accordingly, we
hold that the award of fees for extraordinary services by the
probate court was proper.
VI.  Legal Fees, Bonuses, and Expenses
The objectors argue that the probate court exceeded its
discretion in approving and awarding payment for legal
services and expenses incurred in connection with the
settlement of the estate.  The objectors claim error because,
they say, the probate court's ruling that the coexecutors
properly billed Amalgamated for legal services performed in
their capacities as attorneys for the estate was improper. 
The objectors also contend that the probate court erred in
finding that the coexecutors did not breach their fiduciary
duties in connection with the payment of bonuses to the
Maynard firm and the Sirote firm in the total amount of
$75,000 and in finding that those bonuses were reasonable.  
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In evaluating the reasonableness of an attorney fee
generally, this Court has stated:
"'The determination of whether an
attorney fee is reasonable is within the
sound discretion of the trial court and its
determination on such an issue will not be
disturbed on appeal unless in awarding the
fee 
the 
trial 
court 
exceeded 
that
discretion.  State Bd. of Educ. v. Waldrop,
840 So. 2d 893, 896 (Ala. 2002); City of
Birmingham v. Horn, 810 So. 2d 667, 681–82
(Ala. 2001); Ex parte Edwards, 601 So. 2d
82, 85 (Ala. 1992), citing Varner v.
Century Fin. Co., 738 F.2d 1143 (11th Cir.
1984).
"'This Court has set forth 12 criteria
a court might consider when determining the
reasonableness of an attorney fee:
"'"[T]he nature and value of the
subject matter of the employment;
(2) the learning, skill, and
labor requisite to its proper
discharge; (3) the time consumed;
(4) the professional experience
and reputation of the attorney;
(5) 
the 
weight 
of 
his
responsibilities; (6) the measure
of success achieved; (7) the
reasonable expenses incurred; (8)
whether 
a 
fee 
is 
fixed 
or
contingent; (9) the nature and
length 
of 
a 
professional
relationship; 
(10) 
the 
fee
customarily 
charged 
in 
the
locality 
for 
similar 
legal
services; (11) the likelihood
that a particular employment may
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preclude other employment; and
(12) the time limitations imposed
by 
the 
client 
or 
by 
the
circumstances."
"'Van Schaack v. AmSouth Bank, N.A., 530
So. 2d 740, 749 (Ala. 1988). These criteria
are for purposes of evaluating whether an
attorney fee is reasonable; they are not an
exhaustive list of specific criteria that
must all be met.  Beal Bank v. Schilleci,
896 So. 2d 395, 403 (Ala. 2004), citing
Graddick v. First Farmers & Merchants Nat'l
Bank of Troy, 453 So. 2d 1305, 1311 (Ala.
1984).
"'We defer to the trial court in an
attorney-fee 
case 
because 
we 
recognize 
that
the trial court, which has presided over
the entire litigation, has a superior
understanding 
of 
the 
factual 
questions that
must 
be 
resolved 
in an 
attorney-fee
determination.  Horn, 810 So. 2d at 681–82,
citing Hensley v. Eckerhart, 461 U.S. 424,
437, 103 S. Ct. 1933, 76 L.Ed.2d 40 (1983). 
Nevertheless, 
a 
trial 
court's 
order
regarding an attorney fee must allow for
meaningful 
appellate 
review 
by 
articulating
the decisions made, the reasons supporting
those decisions, and how it calculated the
attorney fee.  Horn, 810 So. 2d at 682,
citing American Civil Liberties Union of
Georgia v. Barnes, 168 F.3d 423, 427 (11th
Cir.1999); see also Hensley, 461 U.S. at
437, 103 S. Ct. 1933.'"
Kiker v. Probate Court of Mobile Cnty., 67 So. 3d 865, 867–68
(Ala. 2010) (quoting Pharmacia Corp. v. McGowan, 915 So. 2d
549, 552–53 (Ala. 2004) (emphasis added in Kiker)). 
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A.  Amalgamated Attorney Fees
The objectors claim error in the probate court's ruling
that the coexecutors properly billed Amalgamated separately
for services performed by each of them in their capacities as
attorneys for the estate.  The objectors also assert that the
estate–-not Amalgamated directly--should have been billed for
legal services related to Amalgamated.
The coexecutors' law firms were paid $86,565 by
Amalgamated for services rendered in connection with the
management and sale of that company.  The evidence showed that
approximately $525,000 was transferred from the estate to
Amalgamated during the administration of the estate so that
Amalgamated could pay its obligations, including attorney
fees.  The probate court found that the coexecutors, "as
attorneys, properly billed Amalgamated ... for legal services
that they performed in their role as attorneys for the
Estate." 
The probate court heard testimony and considered
documentary evidence on this issue and found no wrongdoing. 
The evidence showed that when Friedman and Markstein
negotiated 
contracts 
on 
behalf 
of 
Amalgamated 
they were acting
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in their capacities as attorneys, not as coexecutors.  Most
of the work performed by Friedman and Markstein as to
Amalgamated was legal in nature and, had they not been
attorneys, they would have been required to retain attorneys
to negotiate the terms and draft the contracts related to the
sale of Amalgamated.  In addition, the record also amply
supports a basis for billing Amalgamated for attorney fees
separately from the estate.  The probate court heard testimony
regarding 
why 
the 
coexecutors 
sought 
to 
separately 
account 
for
time expended on Amalgamated.  We see no reason to go behind
the probate court's finding that the coexecutors' services
with regard to Amalgamated were properly characterized and
billed as legal work.  To do so would require this Court to
reweigh the testimony and other evidence and to sit in
judgment of the credibility of the witnesses.
B.  Bonuses
The coexecutors paid the Sirote firm two bonuses totaling
$50,000 and the Maynard firm one bonus in the amount of
$25,000.  The first bonus of $25,000 was paid to both firms
after the Goldstein claim was settled.  The coexecutors paid
a second bonus to the Sirote firm of $25,000 after the estate-
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tax return was approved by the IRS.  The probate court
determined that the bonuses paid were reasonable "in light of
the skill required, exceptional services rendered and results
obtained."  
As an initial matter, the objectors contend that it was
a conflict of interest for the coexecutors to pay bonuses to
their respective law firms.  This Court, in Cashion v.
Torbert, 885 So. 2d 745, 753 (Ala. 2003), addressed an
executor-attorney conflict-of-interest situation and stated:
"[T]he fact that an executor-attorney 'employs
himself' does not raise a conflict of interest and
... where an executor appointed by a will is also an
attorney, there is no reason why that individual
'shall not be allowed a reasonable compensation for
his services' rendered the estate in his capacity as
attorney, so long as the services had been
necessarily and bona fide rendered for the benefit
of the estate." 
 
In Mills v. Neville, 443 So. 2d 935 (Ala. 1983), the Court
noted that "'[w]hen the executor ... is an attorney or
solicitor, and in either capacity renders professional
services, 
necessary 
in 
litigation 
for 
the 
benefit, 
or 
demanded
by the necessities of the estate, he is entitled to
compensation for such services ....'" 443 So. 2d at 937-38
(quoting Clark v. Knox, 70 Ala. 607, 617 (1881)). Further, the
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Court provided that "[e]ven where legatees have themselves
been represented by counsel, an executor also acting as
attorney for the estate, and thus incidentally acting for the
beneficiaries, nevertheless has been allowed to recover for
his own services as an attorney." 443 So. 2d at 938 (citing
Alexander v. Bates, 127 Ala. 328, 28 So. 415 (1900)).
In addition, this Court has held that a contingency fee
to be awarded on the basis that the personal representative
obtained a beneficial result did not present a conflict of
interest.  See, e.g., Mills, 443 So. 2d at 937-38.  In this
case, there was no conflict of interest, especially
considering 
that 
Ruttenberg's 
will 
expressly 
provided 
that 
the
coexecutors were authorized to retain their law firms to
assist them in matters related to the administration of the
estate.  Moreover, the Sirote firm and the Maynard firm
achieved a favorable result by settling the Goldstein claim
for much less than $400,000,000 and for less than the amounts
paid by other defendants in that action.  The evidence also
showed that the estate paid less in legal fees with regard to
the Goldstein litigation than did the other defendants in that
litigation. 
 
Likewise, the 
Sirote 
firm prepared 
the 
estate-tax
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return, which was extremely complicated and unique but which
was accepted by the IRS without audit.  In this case, the
Sirote firm and the Maynard firm rendered services to the
estate that benefited the estate.  Furthermore, the probate
court was aware of and approved the bonuses to the attorneys
for the estate.
Additionally, 
the 
amounts 
paid 
in 
bonuses 
were
reasonable.  Daniels, one of the coexecutors' expert
witnesses, testified that the bonuses were modest under the
circumstances of this case.  Further, the fees paid by other
litigants in the Goldstein matter far exceeded the amounts 
paid to the attorneys representing the estate, even if $50,000
is included in the calculation of total fees paid in defending
the Goldstein matter.  Similarly, the evidence demonstrated
that the estate-tax return was risky for the coexecutors and
the attorneys who prepared the return and was quite complex.
The objectors also argue that the explanation provided by
the coexecutors for payment of the bonuses was inconsistent. 
According to the objectors, the initial explanation was that 
it was simply too difficult to account for all the time spent
by various members of the Sirote firm and the Maynard firm on
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various matters and that the bonuses were paid to capture
unrecorded time expended by those firms on various estate
matters.  The objectors claimed that it was not until the end
of the administration of the estate that they were informed
that the bonuses were paid for extraordinary services
performed by the Sirote firm and the Maynard firm in
connection with the Goldstein claim and by the Sirote firm in
connection with preparation of the estate-tax return.  The
probate court considered all the evidence and concluded that
the bonuses were appropriate and reasonable.  We cannot say
that in doing so the probate court exceeded its discretion. 
C.  Legal Fees and Expenses Paid to the Sirote Firm and the
Maynard Firm
The objectors claim that the probate court exceeded its
discretion in awarding attorney fees and expenses to the
coexecutors' respective law firms.  In its judgment, the
probate court awarded attorneys fees and expenses as follows:
"A.  With respect to Maynard, Cooper & Gale, P.C.:
"1)
The Court approves fees paid by the
Personal Representatives through September
30, 2006 in the amount of $126,971.50
(including a bonus of $25,000.00) and
expenses 
reimbursed 
by 
the 
Personal
Representatives through September 30, 2006
in the amount of $449.03;
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"2)
The Court approves payment of additional,
primarily pre-dispute fees ($9,380.00)
through January of 2008 that were billed in
February of 2008 but that remain unpaid;
"3)
The Court awards payment of fees for
services 
rendered 
from 
February 
2008
through October 15, 2009 in the amount of
$621,014;
"4)
The Court directs reimbursement in the
amount of $62,210.02 ($223.23 through
January 
of 2008 
and 
$61,986.79 from
February 2008 through September 30, 2009)
for its out-of-pocket expenses incurred
through September 30, 2009; and
"B. With respect to Sirote & Permutt, P.C.:
"1)
The Court approves fees paid by the
Personal 
Representative 
through 
December 
7,
2007 
in 
the 
amount 
of 
$429,865.60
(including 
bonuses 
totaling 
$50,000.00) 
and
expenses 
reimbursed 
by 
the 
Personal
Representatives 
through 
December 
7, 
2007 in
the amount of $12,470.46;
"2)
The Court awards payment of fees of
$415,954.00 for services rendered from
December 3, 2007 through October 2, 2009;
and
"3)
The Court directs reimbursement in the
amount of $50,519.97 for its out-of-pocket
expenses 
incurred 
through 
October 
2, 
2009."
Under our well established standard for reviewing a trial
court's findings of fact based on ore tenus evidence, we
assume that the trial court's findings are correct, and we
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will not disturb a judgment based on those findings unless it
is clearly erroneous.  Downs v. Newman, 500 So. 2d 1062 (Ala.
1986).  The probate court heard extensive testimony and also
considered documentary evidence regarding the billings of the
Sirote firm and the Maynard firm.  It also heard testimony
from attorneys experienced in the area of wills and estate
administration 
regarding 
attorney 
fees 
customarily 
charged 
for
similar services to the effect that the legal fees and
expenses were reasonable in this case.  Accordingly, because
the evidence supports the probate court's finding regarding
attorney fees and expenses, we cannot hold that the probate
court exceeded its discretion in its award of legal fees and
expenses to the Sirote firm and the Maynard firm.
VII.  Conclusion
Upon review of the record of the nine-day trial and the
considerable documentary evidence, we hold that there was
substantial evidence to support the probate court's decision. 
We conclude that the probate court did not exceed its
discretion.  Based on the foregoing, the judgment of the
probate court is affirmed.
AFFIRMED.
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Malone, C.J., and Stuart, Parker, and Wise, JJ., concur. 
Bolin and Shaw, JJ., concur in part and concur in the
result in part.
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BOLIN, Justice (concurs in part and concurs in the result in
part).
I concur in all respects with the main opinion, with the
exception of Part V.C., pertaining to the issue of the
necessity of 
obtaining prior 
court 
approval 
before 
the 
payment
of compensation to the co-personal representatives for
ordinary services; as to that issue, I concur in the result
only.
Shaw, J., concurs.
65