Opinion ID: 1376005
Heading Depth: 2
Heading Rank: 1

Heading: Foley's Appeal

Text: Foley argues that he was denied the right to a fair trial. He claims that the judge abused his discretion, made errors of law, and made disparaging remarks to Foley and his attorney that showed judicial bias against him. In Nevada State Bank v. Snowden, 85 Nev. 19, 449 P.2d 254 (1969), this court stated that unless specifically objected to at trial, objections to a substantive error in the absence of constitutional considerations are waived. Id. at 21, 449 P.2d at 255. A party who claims judicial misconduct on appeal should make a specific objection at trial, and Foley made no such objection. Because Foley failed to preserve the objection of judicial misconduct, we conclude that his claim on that issue is meritless. Foley argues that the February 23, 1984, agreement was meant to encompass interim awards of Hughes fees made and funded after his withdrawal from the firm, and that the court should interpret the agreement to include an essential omitted term that would provide for the ninth and tenth interim awards. Under the trial court's ruling, Foley received twenty-three percent of the ninth interim award and nothing under the tenth interim award, which was wholly earned after he separated from the firm. Under the March 23, 1987, agreement, which was a settlement between Foley and Morse & Mowbray with respect to the Hughes estate fees, Foley received a Hughes fee award of $1,323,873.32. We have reviewed the agreement and conclude that the trial court's interpretation of it was fair and reasonable. Foley also argues that the court erred when it allowed Morse & Mowbray an offset of $22,627.46 against Foley on two accounts, the Shaw estate and the Shaw custody matters, that were originally with Morse-Foley. When Foley left Morse-Foley, the firm allowed him to take the Shaw files, and it assigned him the duty to collect on the accounts on behalf of the firm. Foley instructed his client not to pay the firm on the Shaw estate matter, and he failed to collect on both cases. The court found that the offset was proper and that Foley breached his fiduciary duty, not only by failing to collect the fees due, but by advising the client not to pay the agreed amount. After review of these facts, we conclude that Foley's claim with respect to the Shaw matters is meritless.
Foley claims that the court erred when it awarded Morse & Mowbray an interest in three contingency fee cases identified as Father Kenny, Lawyer Johnson, and Cynthia Gifford. In a similar case concerning a law firm dissolution, the California Court of Appeals ruled that every partner must account to the partnership for any benefit and hold as trustee for it any profits derived without the consent of the other partners from any transaction of the partnership or from any use of its property. Rosenfeld, Meyer & Susman v. Cohen, 191 Cal.App.3d 1035, 237 Cal.Rptr. 14, 22-23 (1987). The court stated that failure to account properly was a burden of proof that rested with the fiduciary who had contravened duties enabling allocation and accounting. Id. 237 Cal.Rptr. at 23, 237 Cal.Rptr. 14. Foley, who was in a position to make the allocation, failed to do so. The most elementary conceptions of justice and public policy require that the wrongdoer shall bear the risk of the uncertainty which his own wrong has created. Bigelow v. RKO Radio Pictures, 327 U.S. 251, 265, 66 S.Ct. 574, 580, 90 L.Ed. 652 (1946). Since Foley failed to bear his burden to account, we conclude that the trial court's rulings in favor of Morse & Mowbray with respect to the three contingency fee cases were not erroneous.
Foley also appeals the trial court's finding that there was no justification for collateral attack on the final fee award to Morse & Mowbray in the estate of Candace Daly Rice. Candace Daly Rice died in a car accident in Oregon in June, 1981. The firm was hired to handle the administration of the estate, which had assets of approximately $8.7 million, and William R. Morse was named in the will as a co-executor of the estate. In addition, during the administration of the estate, Morse was appointed as the guardian for Rice's orphaned son, the sole heir of the estate, Marcus Daly Lamb, who was adopted by Morse's son. Also, Morse was a trustee of the testamentary trust together with Valley Bank and another party. In sum, Morse served in four different capacities with respect to his work for the Rice estate: as co-executor, trustee, guardian, and attorney for the estate. Foley claims that the final fee the firm requested ($325,000.00) for work done on the estate was far below the 5% rule, [2] and that the district court, using the grounds of res judicata and collateral estoppel, improperly excluded evidence that Morse & Mowbray breached its fiduciary duty to Foley when it requested only one-third of the fees to which it was entitled. In an order dated February 28, 1986, Judge Leavitt settled the fifth and final accounting and awarded $325,000.00 in fees from the $8,743,163.59 Rice estate to Morse & Mowbray. Foley was entitled to approximately $54,000.00 in fees under the separation agreement of June 14, 1984. Seeking to collaterally attack the judge's award in the total amount of $325,000.00, Foley claims that a reasonable fee should have been between $900,000.00 and $1,100,000.00. Foley cites no statute or case to support the 5% rule and concedes it is a rule of thumb. Even if it were mandatory that it apply, taking into account all of the fees paid to other attorneys involved in the administration of the estate, the total fees paid to Morse & Mowbray ($325,000.00) and other attorneys ($462,613.45) were more than five percent of the value of the estate's assets. We conclude that Foley's claim that he is due a percentage of a higher fee on the Rice estate because of the 5% rule is meritless. The district court found that Foley should have intervened and appealed the award in February, 1986, when the Rice estate closed. However, because the district court refused to admit any evidence or testimony on the Rice estate claim, the finding that Foley had the opportunity to intervene and appeal is not supported by any evidence in the record. Whether Foley could have intervened and appealed is a question of fact and law. Since the Rice estate is closed, Foley may not assert a claim against it. See NRS 147.040(2) (even if a claimant did not have statutory notice, the claim against an estate must be filed before the filing of the final account). However, Foley may have a claim against Morse or against Morse & Mowbray for his share of the fees that Foley claims were waived, on the basis that Morse or the firm breached a fiduciary duty or exceeded actual authority. Therefore, we reverse and remand this matter to the district court for an evidentiary hearing and findings as to whether Foley could have intervened and appealed as an interested party in the Rice probate proceedings and whether he is thereby precluded from now collaterally attacking the claimed waiver of the administration fees.
Foley claims that Morse & Mowbray spent more than 1150.1 hours of work on the guardianship which were never billed or collected, and that he is entitled to a share of the fees that were waived without his consent. The district court ruled that the guardianship fees were properly waived by Morse, who served as the guardian of the sole minor beneficiary. NRS 159.183 provides that [a] guardian shall be allowed reasonable compensation for his services as guardian and ... reasonable expenses incurred in retaining ... attorneys. Because a client should not have to pay for duplicative services, Morse could not charge full compensation for the same service in his different capacities as guardian, attorney, trustee, and co-executor. Matter of Estate of Larson, 103 Wash.2d 517, 694 P.2d 1051 (1985). However, Morse could have received fees in his capacity as a guardian for performing services different than those as an attorney. See Gaines v. Johnson, 216 Ga. 668, 119 S.E.2d 28 (1961) (one acting as both a guardian and an executor can collect both guardianship fees and executor's fees); see also Prostack v. Songailo, 97 Nev. 38, 623 P.2d 978 (1981) (guidelines necessary to determine the reasonableness of attorney's fees include the quality of the advocacy, the character of the work to be done, the work actually performed by the attorney, and the result). Morse could have received fees in his capacity as a guardian for performing services different than those in his other capacities. Generally, guardianship fees are considered personal compensation. See Farish v. Jewett, 120 So.2d 642 (Fla.Ct.App.1960) (a guardian, although a member of a law firm, was entitled to be paid in person for his services as the guardian of an estate); In re Krecl's Guardianship, 85 So.2d 727 (Fla.1956) (personal compensation is allowed so long as guardian does not breach a fiduciary duty). On the other hand, under an employment agreement that Morse seemed to ratify at trial, guardianship fees earned by the partners were to be the property of the firm. Thus, whether Morse was entitled to the fees as a guardian personally or a member of the firm is a question of fact. If Morse were entitled to the fees personally, he had the right to waive them; however, if he were entitled to the fees as a firm member for work he performed as the guardian and there was no legal justification for waiving those fees, then Foley had an interest in a share of those fees that were earned prior to Foley's departure. For these reasons, we conclude that the district court erred in ruling, without taking evidence, that the guardianship fees were appropriately waived.
Foley claims that the district court adopted Morse & Mowbray's proposed findings of fact and conclusions of law without any changes and without any reference to the record, and that this was error. See Flowers v. Crouch-Walker Corp., 552 F.2d 1277, 1284 (7th Cir.1977) (a critical view of a finding is appropriate where the findings of fact and conclusions of law were not the original product of a disinterested mind); FRCP 52(a). In Foster v. Bank of America, 77 Nev. 365, 365 P.2d 313 (1961), this court observed that NRCP 52(b) now contemplates ex parte findings subject to the right of the other party to move to amend the same. Id. at 373, 365 P.2d at 318. Foley moved to amend the findings of fact and conclusions of law under NRCP 52(b) and submitted his own proposed findings of fact and conclusions of law. As discussed above, the district court's findings of fact and conclusions of law concerning the Rice estate are questionable because the court did not admit evidence pertaining to the issue. We have reviewed Foley's claims as to other findings of fact and conclusions of law, and because the record supports them, we conclude there was no error. Therefore, we reverse and remand as to the Rice probate proceedings so that Foley will have an opportunity to present evidence on that issue, and we find meritless the remaining claims of error that Foley raises in regard to the findings of fact and conclusions of law.
Foley next argues that the district court erred in sanctioning him for bringing suit in bad faith when it awarded attorney's fees to Morse & Mowbray. An award of attorney's fees under NRS 18.010(2)(b) is within the discretion of the district court. Marine Midland Bank v. Monroe, 104 Nev. 307, 308, 756 P.2d 1193, 1195 (1988). The district court imposed sanctions because it believed that Foley had shown bad faith throughout this dispute and had abused the discovery process. For example, while Morse & Mowbray made six separate detailed accountings to Foley over a five-year period, Foley's only accounting from the approximately fifty cases that he had taken with him was a one-page letter regarding a single file. Although the district court had reason to impose sanctions, we conclude that, in light of the complexity of the issues involved, the sanctions were severe. Moreover, since we have come to a different conclusion than the district court as to the issue of the guardianship fees for the sole minor beneficiary of the Rice estate, we question whether the district court would nevertheless have imposed such harsh sanctions had it come to the same conclusion as we have on that issue. For these reasons, we reverse and remand the order imposing sanctions on Foley. Once the district court has taken evidence on the Rice probate proceedings and the guardianship fees, it shall reconsider the amount of sanctions to be imposed in light of its estimation of the good faith and validity of Foley's claims.