Opinion ID: 526983
Heading Depth: 2
Heading Rank: 1

Heading: The Karr-Pikna Fee Proceeding

Text: 3 In 1981, Pikna was retained by Evia Freiberg Karr (Karr), widow of David Karr, to represent her in connection with claims she wished to assert against David Karr's estate. If successful, Pikna was to receive 23 percent of Karr's recovery. This representation resulted in a settlement in 1982, awarding Karr one-sixth of the residue of David Karr's estate. Karr subsequently learned that Pikna was not in fact duly licensed to practice law, and she retained LeBoeuf Lamb, who in July 1985 commenced a proceeding in surrogate's court seeking to rescind the retainer agreement. By this time, Pikna was in prison. 4 In the meantime, Beers and Ahrensfeldt, two of Pikna's former clients, had sued Pikna for embezzlement of funds entrusted to him in connection with a real estate transaction. In August 1985, they obtained a judgment against Pikna for $304,800 plus interest. When they discovered that Pikna's only asset was his claim to his fee from Karr, they moved to intervene in the surrogate's court proceeding brought by Karr for rescission of her fee agreement with Pikna. Beers and Ahrensfeldt stated that they did not seek to have the surrogate's court order payment of Pikna's fee to them but sought only to preserve Pikna's Interest by opposing [Karr's] Petition. The court instead appointed a guardian ad litem to represent Pikna's interests. 5 The dispute between Karr and Pikna was settled at a pretrial conference in December 1987. The United States, though it had been informed of the proceeding and attended this conference, was not a party to either the proceeding or the settlement agreement. The settlement required Karr, out of her recovery from the estate, to pay Pikna $77,500 and to pay his guardian ad litem a fee of $7,500. In addition, the court stated: 6 It is further stipulated and agreed that the moneys, with the exception of the guardian ad litem's fee, will be held either in a separate estate account that will draw interest or in an attorney's escrow account that will draw interest, until the Court resolves the issue of who is entitled to this money. 7 That issue can be resolved in this court if all of the parties agree. If not, it can be decided in any other forum. 8 Pikna's fee has been held in escrow by LeBoeuf Lamb. 9 In January 1988, the Surrogate held a conference, attended by representatives of Beers/Ahrensfeldt and the United States, and proposed that they settle their competing claims to Pikna's fee by splitting Pikna's fee equally. Some weeks thereafter, the government rejected the proposed compromise. Its letter to the Surrogate pointed out, inter alia, that Pikna's federal tax liability exceeded the total amount of the fee and that all of the government's liens on Pikna's assets had been filed months before Beers and Ahrensfeldt obtained their judgment against Pikna. The government stated that it planned to commence an action to foreclose on its liens.