Court Opinion

ID: 883861
Source: CourtListenerOpinion
Date Created: 2013-06-05 02:42:37.628148+00
Date Added: 2024-06-11T15:12:25.761172
License: Public Domain

NO.       96-074
                IN THE SUPREME COURT OF THE STATE OF MONTANA

IN RE THE ESTATE OF MARY K. DAMM,
                                                                          h/Q!! ,:?i Vj!Q!j
Deceased.

APPEAL      FROM:     District  Court of the Seventy      Judicial    District,
                      In and for the County of Richland,
                      The Honorable  Richard G. Phillips,        Judge presiding.

COUNSEL OF RECORD:
               For   Appellant:
                      George      T.   Radovich,       Radovich        Law Firm,
                      Billings,        Montana      (for Edwin         K. Damm)
                      Fred E. Whisenand,  McIntee     & Whisenand,
                      Williston,  North Dakota    (for Leona Howard)
               For   Respondent:
                      Mike Weber, Cresap,   Weber               & Irigoin,
                      Sidney, Montana  (for Alice                Synek)

                                        Submitted      on Briefs:            September        5,    1996
                                                            Decided:         November         21,   1996
Filed:
Justice             Charles            E.        Erdmann               delivered                the        opinion         of     the         Court.
          Pursuant                to      Section                I,      Paragraph                3(c),          Montana          Supreme              Court

1995 Internal                  Operating                    Rules,             the        following               decision             shall          not         be

cited      as precedent                          and shall                  be published                   by its      filing           as a public

document             with      the          Clerk           of        the     Supreme            Court           and by a report                      of     its

result          to        State           Reporter                    Publishing                Company             and      West            Publishing

Company.

          Edwin            Damm and Leona                        Howard             appeal         from          an order         issued              by the

Seventh             Judicial                District                   Court,             Richland               County,         approving                   the

final      accounting                     of      the       estate             of Mary            K. Damm with                   respect              to     its

award          of      personal                   representative                           fees            and      attorney             fees.                    We
affirm.

          The issues                   on appeal                      are     as follows:

          1.          Did           the          District                   Court         err         in     setting             the         amount               of

compensation                 to        the        personal                   representative?

          2.          Did      the          District                  Court         err     in approving                   the    fee         agreement

between              the       personal                 representative                            and         the      attorney                 for          the

estate?

                                                                              FACTS

          Mary        K.     Damm died                  testate                on April               7,     1993.          Mary's            last         will

and testament                  provided                 that           the      residue            of       her estate            be divided                      in

equal      shares              to      her         three              children,              Alice           Synek,          Edwin            Damm,          and

Leona          Howard.                 The         assets               of     the         residuary                estate         consisted                      of

Mary's          residence                   in     Sidney,                  mineral          property                located            in     Richland

County,             one     bond,              and      numerous                bank            accounts             and     certificates                         of

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deposit.                  Mary      also        held       bank           accounts            and certificates                                   of    deposit
in      joint             ownership            with        Alice,             Edwin,          and         Leona.                 Mary             nominated
Alice           to        be     the       personal             representative                           of         the         estate                 and        the

District              Court          appointed             Alice            to     act       in       that          capacity.

           In November                    1993,        Alice          filed         her       final           account,                  petition                  for

determination                        of         testacy,                  determination                        of          heirs,                     and         for

settlement                  and distribution                         of     the      estate.                  On December                         14,        1993,

the       District               Court           conducted                a hearing                 on        the         matter.                      At        that

hearing,                  Edwin's            attorney               stated           that           he        had         filed              a        separate

complaint                  against           Alice         regarding                the       treatment                    of      certain                   joint

tenancy              acc0unts.l                  Edwin's             attorney               also          objected                 to        the            amount

of      personal               representative                   fees          and attorney                     fees             included                    in    the

final           accounting                and argued                 that         closing             the       estate                 at         that           time

would           be premature.                        The     court            agreed          to         continue                the         hearing                 so

that       Alice            and the          attorney           for         the      estate           could           file          affidavits                       in

support              of     their         time        spent          working              on the          affairs                 of        the        estate.

           On December                    18,        1995,          Alice          filed           her        second              final               account,

petition              for       determination                   of        testacy,            determination                            of        heirs,           and

for        settlement                  and        distribution                      of       the         estate.                       Alice                sought

$14,283              in     personal             representative                           fees,        and          $21,394                 in        attorney

fees.                 Edwin            and       Leona          both              filed            objections                     to             the         final

accounting                  and on January                     9,     1996,          the          District                Court             conducted                   a

        1 The companion     suit against  Alice       involved       whether   or not
some    of the jointly   held bank accounts      and certificates          of deposit
should     be included  in the estate.      The litigation           was eventually
settled     in 1995 and resulted     in a significant          delay    in the final
accounting     of the estate.

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hearing             on the           matter.              On February                        7,     1996,          the         court         issued              its
order          approving              the       final          account             as adjusted.                          In     that         order,              the
court          awarded              Alice            $5,280           in     personal                         representative                      fees           and

approved             the       fee       agreement              between                 Alice            and the              attorneys                for       the

estate.               This       appeal           followed.

                                                                       ISSUE             1

          Did          the           District                 Court           err             in          setting               the         amount                   of

compensation                   to     the       personal              representative?
              In her         affidavit                filed      with         the         court,               Alice          indicated                she had

spent               314.25               hours                performing                          her           duties                as          personal
representative.                           The         $14,283              total              fee         award          she         sought             in       the

final          accounting                of     the       estate            resulted                     in     a compensation                     rate              of

over      $45 per              hour.            The District                  Court                reduced              the     number            of         hours

to      264 and the                  hourly            rate      to        $20,         resulting                  in     a total                fee         award

in      the     amount           of      $5,280.

          Edwin          and Leona               argue          on appeal                    that        Alice          inflated             her        fee          in

order          to     "have           her       vengeance                  on the             other             heirs          for         the     poor              or

unequal             treatment               she feels            she received                           at the          hands          of her           mother

during          her     lifetime."                     They contend                     that            Alice       was motivated                       by her

own      self-interest                         and       submitted                 false                time       records              and        a false

affidavit              to      the       court.                Edwin         and Leona                        argue       that         Alice            should

not      be         compensated                 for       her     time             in        resisting                  the      separate                    civil

lawsuit             and they           claim           that      the        maximum                 number             of hours            Alice             could
have      expended               on the          affairs              of     the         estate                was 221.75.                   They            claim

that          $8 per          hour        is     a reasonable                      rate             of        compensation                  since              that

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was the             highest             hourly             rate         Alice          ever          received                 during                 the      course

of her          regular             employment.                    Thus,            Edwin           and Leona                  maintain                    that,      at

best,          a fair          and equitable                       fee         should           be $1,774.

           Section                72-3-634(Z),                      MCA,             provides                       that          in           any          dispute

concerning                  fees,            the        court      shall            set       the             fee.          We have                  previously
held           that         the             review           of         fees         paid                or          taken           by         a         personal

representative                         is        left       to      the         sound           discretion                        of       the            district

court.              Flikkema                v.      Kimm         (1992),            255 Mont. 34,        42,        839 P.2d 1293,

1298.              The      court's                determination                     will           not         be overturned                             absent          a

showing             of      an abuse               of      discretion.                      Flikkema, 839 P.2d                  at     1298-99

(citing             Estate             of        Stone          (1989),             236 Mont. 1,      768 P.2d 334).               The

test        for          abuse          of         discretion                  is      whether                  the          trial              court          acted

arbitrarily                    without                   employment                  of         conscientious                                  judgment               or

exceeded              the      bounds              of      reason          resulting                     in      substantial                         injustice.

Gaustad            v.     City          of       Columbus               (1995),             272 Mont. 486,        901 P.2d 565.

           In      the       present               case,          the      District                  Court            determined                      that         even

though          Alice's                accounting                 for      her         hours              varied              from             the        original

time       sheets            to the              affidavits               supplied                  to        the      court,             it         would         give

her      the       benefit             of        the      doubt.           The court                     determined                    that           the      hours

spent        in preparation                         of the         separate                 civil             litigation                  should              not     be

paid       from          the      estate                 funds      and         that          'I [alfter                reviewing                     the      other

hours          contained                in         the     time         sheets,"               Alice                 should            be compensated

for      264 hours                of        work.           In     addition,                  the         District                   Court            held         that

the      filing,            deposition,                    and jury             costs          associated                      with            the        separate
stated          that          the      personal              representative                           is     free         to         contract            with
employees              of      the      estate            as long              as the            fees         for        such           services           are

not      excessive.                   The court              stated            that         an excessive                        fee       is     one that

goes      beyond              the      ceiling             established                     by        § 72-3-633,                     MCA,        and     held

that      the         "statutory               language              puts           an outside                  limit            on what            can         be

contracted                  for."

          Edwin          and Leona                  argue         that         an attorney                    should             be compensated

only      for         those          services             which          were        beneficial                    to     the          estate.           They

claim       that         Alice          and her             attorney                attempted                 to        keep         certain            joint

accounts              out      of      the     estate             and that             the           separate                 litigation                which

resulted              was not           beneficial                 to     the         estate.                Edwin             and Leona                argue
that      the         attorney               fees     should             be limited                    to     the        attorney's                 hourly

rate      multiplied                   by     the         amount          of        time         actually                spent           on handling

estate          matters.               Here,          they        claim         that,                at most,            the         attorney            fees

should          be $3,468,                   based        on 40.8              hours            of     work         at        $85 per            hour.

          Alice          argues             that      when the                fee     for            an attorney                  is     questioned,

the      court              does       not          set      the         fee,          but            rather,                 reviews            the       fee

arrangement.                        She claims             that         the     personal                   representative,                        not      the

court,          sets          the      attorney              fees         in     the        first            instance                  and       that      the

estate          is     bound          by that             agreement.                   Alice               argues             that       even       though

the      fee         contract           is     open         for      review,               the         amount            of      the       fee      is     not

automatically                       converted             into       a quantummeruit                       measure             of       compensation

whereby           recovery              is     limited            exclusively                        to the         reasonable                   value          of

services              rendered              on an hourly                 basis.                 She cites                to      In re Estate                   of

Magelssen               (1979),              182 Mont. 372,         380,            597 P.2d 90,      95,       where         this
Court       stated                that         quantummevuit              compensation                     is        normally         appropriate

only      where          a valid                contract                 does         not      exist.

          Section                 72-3-633,                  MCA,        provides               that            if     the       services               of     an
attorney                are              engaged                  by      the           personal                     representative,                          the
compensation                      of      the         attorney              shall             not       exceed            one       and      one-half

times        the        compensation                         allowable                 to     the       personal              representative.

Juxtaposed                against                 that            statutory                 requirement,                     however,              is         the
situation               where            the     terms            of     the      attorney              fee          agreement            exceed              the

statutory               ceiling.                      In     that         regard,              the      District                 Court       cited             to

Maselssen, 597 P.2d                 at        95,        where          we stated:

          It is clear     that a court,     when reviewing      a fee agreement
          under a substantially         performed    contract,     cannot  blind
          itself     to the terms     of the contract        and make its      own
          determination       of what is reasonable.

In Maselssen,                      we also                 stated         that:

          We do not believe         that section       91A-3-722      [the predecessor
          to § 72-3-634,        MCA, which allows          the court      to review    the
          employment      of attorneys         and their      fees1 was intended         to
          permit     competent,     fullyinformedpersonalrepresentatives
          to disavow      their     otherwise      enforceable      contracts      for an
          attorney's      services.

Maselssen, 597 P.2d                at         95.         Thus,         the      statutory                maximum          should               not

necessarily                   prevent                 an     award          of         attorney             fees          which          exceed               the

ceiling            in         a        situation                  where           the         personal                 representative                         and

attorney           have            contracted                 for        a higher             fee       and the           contract            has been

substantially                      performed.                      We therefore                     conclude              that      in      this             case

the     District              Court             did        not         abuse      its         discretion                when it          determined

that        the         fee         agreement                 between                 Alice          and         the      attorney            must             be

approved.

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             Nevertheless,                      the       court             did        not          award            a specific               amount         of

attorney                fees.           We must               therefore                turn          to     the        attorney/client                     fee

agreement                 in      order         to     determine                  the         amount            of     attorney              fees        which

should             be      paid            by    the          estate          in         this             case.           According                 to     the

attorney's                     affidavit              filed          with         the         court,             he and Alice                  "entered

into         an      oral           agreement                 wherein                 Alice          Synek             agreed           to     pay        [the

attorney]                 the      maximum             fee      allowed               by Section                     72-3-663,           MCA [sic]."

It      is        clear          that       the        fee       agreement                    set         the        attorney           fees        at     the

statutory                 maximum.

             In     Issue           1 we held                 that      the           District              Court         did      not        abuse        its

discretion                 when it              awarded             Alice         $5,280             in     personal             representative

fees.             Thus,          the       statutory                maximum             for         attorney             fees      is        $7,920        and

the      final            accounting                 of       the     estate             should             reflect             that         amount.

             Affirmed.

                                                                                                      Justice

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