Court Opinion

ID: 4372269
Source: CourtListenerOpinion
Date Created: 2019-02-28 17:02:51.400405+00
Date Added: 2024-06-11T14:22:26.189408
License: Public Domain

NOTICE: NOT FOR OFFICIAL PUBLICATION.
 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
                 AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

                                    IN THE
             ARIZONA COURT OF APPEALS
                                DIVISION ONE

                        In the Matter of the Estate of:

  DAVID GEORGE GREGAN and KATHLYN MAUREEN GREGAN,
                        Deceased.
            _________________________________

               MAUREEN E. GREGAN, Petitioner/Appellant,

                                        v.

      EAST VALLEY FIDUCIARY SERVICES, Respondent/Appellee.

                             No. 1 CA-CV 18-0189
                               FILED 2-28-2019

           Appeal from the Superior Court in Maricopa County
                          No. PB2002-090036
            The Honorable Terri L. Clarke, Judge Pro Tempore

   AFFIRMED IN PART; VACATED AND REMANDED IN PART

                                   COUNSEL

Gregan Law Office PC, Apache Junction
By Maureen E. Gregan
Counsel for Petitioner/Appellant

Hunter, Humphrey & Yavitz, PLC, Phoenix
By Candess J. Hunter, Isabel M. Humphrey
Counsel for Respondent/Appellee
                       GREGAN v. EAST VALLEY
                         Decision of the Court

                      MEMORANDUM DECISION

Judge Jon W. Thompson delivered the decision of the Court, in which
Presiding Judge James B. Morse Jr. and Vice Chief Judge Peter B. Swann
joined.

T H O M P S O N, Judge:

¶1           Maureen E. Gregan appeals from the probate court’s order
approving the third account of East Valley Fiduciary Services (“EVFS”), the
successor personal representative of her parents’ estate. For the following
reasons, we affirm in part and vacate and remand in part.

                FACTS AND PROCEDURAL HISTORY

¶2             David George Gregan and Kathlyn Maureen Gregan died
intestate in 2001. They left three adult children, David W. Gregan (David),
Maureen E. Gregan (Maureen), and Kelly M. Shaffer (Kelly). In 2002,
Maureen and David jointly applied for informal probate of the estate,
asking to serve as co-personal representatives. See Ariz. Rev. Stat. (A.R.S.)
§ 14-3301(2019).1 The probate court granted their application.

¶3           Twelve years later, the estate was still open. David and
Maureen cross-petitioned to remove one another as co-personal
representative, each accusing the other of failing to cooperate and
improperly managing estate assets. Upon stipulation by the heirs, the
probate court appointed EVFS as the successor personal representative.
Rex Decker (Decker) appeared as counsel for EVFS.

¶4            The bulk of the estate’s value was comprised of real property,
including a residential home, two pieces of vacant land, and a commercial
car lot. From the outset, the parties gave EVFS mixed messages regarding
their decision to sell the properties or distribute them in-kind.

1 We cite to the current version of any statute unless the statute was
amended after the pertinent events and such amendment would affect the
result of this appeal.

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                        GREGAN v. EAST VALLEY
                          Decision of the Court

¶5           One year after its appointment, EVFS filed a petition for
approval of a proposed distribution and its first annual report. EVFS
explained that fees were higher than expected for many reasons, including

       incomplete records, the absence of an Inventory and
       Appraisement, missing records that had been purged from
       the bank archives, a lack of date of death appraisals,
       unaccounted for rents and potential rents, disagreements as
       to what accounts should be included in the Estate,
       disagreements as to what should be done with the real
       property, appraisal discrepancies relative to the real property,
       sale proposals on a car lot involving [] past and present lease
       conditions and EPA concerns, disagreements as to what
       should be done with the personal property, and unpaid taxes,
       interest and penalties.

¶6           Maureen objected to EVFS’s petition and asked the probate
court to deny the annual account. In a separate pleading, she objected to
Decker’s fees as “excessive and unreasonable” and asked the court to
disallow $13,445.00 of billed fees. Kelly joined in Maureen’s objection. The
probate court disallowed $4,730.00 in fees.

¶7            Thereafter, the case continued as the remaining assets were
distributed and the estate was settled. Maureen again objected to the
attorneys’ fees. Over her objection, the probate court entered an order
approving the amended third account, including approval of $42,311.17 in
attorneys’ fees and $7,354.04 in fiduciary fees.

¶8            Maureen timely appealed from the order, and we have
jurisdiction pursuant to A.R.S. § 12-2101(A)(9) (2019).

                               DISCUSSION

¶9             We review the probate court’s approval of a personal
representative’s attorneys’ fees for an abuse of discretion. See In re Estate of
Wright, 132 Ariz. 555, 560 (App. 1982) disapproved of on other grounds by
Marvin Johnson, P.C. v. Myers, 184 Ariz. 98, 101 (1995). We view the record
in the light most favorable to upholding the court’s decision and will affirm
if it is supported by any reasonable basis. See Weinstein v. Weinstein, 235
Ariz. 40, 51, ¶ 41 (App. 2014).

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                         GREGAN v. EAST VALLEY
                           Decision of the Court

I.     Attorneys’ Fees

¶10           On appeal, Maureen challenges the attorneys’ fees awarded
to EVFS. First, she argues that EVFS should not be permitted to recover
fees incurred in defending or justifying Decker’s disputed fees. Next, she
argues that the total amount of fees billed ($91,409.30) is unreasonable.

¶11            A personal representative who defends or prosecutes a
proceeding “in good faith” is entitled to receive from the estate “necessary
expenses and disbursements including reasonable attorneys’ fees
incurred.” A.R.S. § 14-3720 (2019). In determining reasonable compensation
for a personal representative, the probate court must adhere to the fee
guidelines for professional services set forth in the Arizona Code of Judicial
Administration (A.C.J.A.). See Ariz. R. Prob. P. 33(F); A.C.J.A. § 3-303(C).
Section 3-303 instructs the court to “[w]eigh the totality of the circumstances
in each case” and to determine reasonable compensation on a “case-by-case
basis.” A.C.J.A. § 3-303(D)(1)(b). Section 3-303 also sets forth multiple
factors for the court to consider in determining reasonable compensation,
including, as relevant here, (1) the usual market rates; (2) the total amount
of all annual expenditures relative to the amount of the estate; (3) the
expertise, training, education, experience and skill of the professional; (4)
the conditions or circumstances of the work; (5) the work actually
performed; and (6) the result. See A.C.J.A. § 3-303(D)(3).

¶12            Maureen relies on § 3-303 to argue that EVFS should not be
compensated for time Decker spent defending his fees. Specifically, she
argues that, under § 3-303(D)(2)(f)(1), billable time does not include “[t]ime
spent on billing or accounts receivable activities, including time spent
preparing itemized statements of work performed, copying, or distributing
statements.” A.C.J.A. § 3-303(D)(2)(f)(1). Decker, however, did not bill the
estate for “billing or accounts receivable activities.” Rather, he billed the
estate for time spent researching and responding to Maureen and Kelly’s
objections to his fees. Section 3-303 does not exclude this type of work from
“billable time.” Moreover, § 3-303 provides that when “contested litigation”
arises over fees, the probate court may determine reasonable compensation
“in its sole discretion.” A.C.J.A. § 3-303(D)(2)(f)(1).

¶13            This court has previously addressed the question of whether
a personal representative is prohibited from recovering fees incurred in
defending its fees. See Pierce v. Molet, 207 Ariz. 401, 402, ¶ 10 (App. 2004).
In Pierce, the plaintiffs argued that such fees cannot be recovered because
the act of defending the personal representative’s compensation or her
attorney’s fees does not benefit the estate. See id. This court declined to

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                        GREGAN v. EAST VALLEY
                          Decision of the Court

prohibit the recovery of such fees. See id. at 408, ¶ 31. Instead, we explained
that A.R.S. § 14-3720 requires the reviewing court to determine whether the
personal representative acted in “good faith” by considering “all relevant
surrounding circumstances.” See id. at 406, ¶ 25. While the question
whether the estate derived a benefit from the fees is a “relevant subject for
inquiry,” it is not a dispositive statutory requirement. See id. at 402, ¶ 1.

¶14           We have reviewed Decker’s billing statements to determine if
he acted in good faith and to determine if the probate court had a reasonable
basis for approving his fees. Decker charged a reasonable hourly rate and
possessed the expertise necessary to advise the personal representative.
Although the total dollar amount of attorneys’ fees incurred is high,
Decker’s billing records reflect that the contentious nature of this case
required him to spend significant time juggling the competing interests of
three heirs, who regularly disagreed, and responding to their objections.

¶15           Moreover, Maureen and Kelly, both lawyers themselves,
openly criticized EVFS’s administration of the estate. Ten months after
EVFS’s appointment, Kelly alleged that “[t]he estate has received little to no
benefit from the fiduciary services in this matter and in fact the estate has
been detrimentally impacted by the complete failure by the appointed
fiduciaries to finalize and close this estate.” Maureen filed lengthy and
detailed objections to Decker’s fees, which Kelly joined. They filed a
separate objection to EVFS’ fiduciary fees, which they later withdrew. On
David’s part, he filed an objection to the proposed distribution, which
Maureen later characterized as a “meritless pleading which clearly serves
no purpose other than to force the estate to incur more fees/costs.”

¶16           The same commissioner presided over this matter from the
time EVFS was appointed to the final settlement. She observed that
although this case “could have been a routine probate matter,” it had
become complicated “due to difficulties between the co-personal
representatives, the many years of delays, and the on-going inability of all
three heirs to ‘get along’.” The probate court was in the best position to
determine the reasonableness of Decker’s fees. See In re Estate of Wright, 132
Ariz. at 560 (“The reasonableness of compensation for the attorneys
representing the personal representative is peculiarly within the
knowledge of the probate court and will not be disturbed absent a showing
of abuse of discretion.”).

¶17           It is unfortunate that Decker was required to spend so much
time defending his fees, but his actions are reasonable given the contentious
nature of this litigation. Viewing the facts in the light most favorable to

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                       GREGAN v. EAST VALLEY
                         Decision of the Court

upholding the probate court’s decision, we find no abuse of discretion and
affirm the order approving Decker’s fees.

II.   Fiduciary Fees

¶18           Maureen also argues that the probate court erred in directing
payment of $7,354.05 in fiduciary fees. She explains that EVFS had already
been paid for those fees. EVFS agrees.

¶19           Because the probate court’s order directed the heirs to return
$24,908.90 to the Estate and this amount mistakenly included $7,354.05 in
fiduciary fees, we remand this matter with instructions for the court to
amend its order to reflect that EVFS’s fiduciary fees were paid in full.

                             CONCLUSION

¶20          For the foregoing reasons, we affirm the probate court’s
ruling approving the estate’s attorneys’ fees. We vacate the court’s ruling
approving fiduciary fees in the amount of $7,354.04 and remand for
amendment of the order to reflect payment of those fees.

¶21           EVFS requests an award of attorneys’ fees on appeal from the
estate, pursuant to A.R.S. § 14-3720. We grant its request upon compliance
with Arizona Rule of Civil Appellate Procedure 21.

                          AMY M. WOOD • Clerk of the Court
                          FILED: AA

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