Court Opinion

ID: 5110915
Source: CourtListenerOpinion
Date Created: 2021-10-02 14:57:07.71933+00
Date Added: 2024-06-11T08:21:33.451658
License: Public Domain

COURTNEY HUDSON HENRY, Judge, concurring in part and dissenting in part. Today, a majority of this court has upheld the circuit court’s decision to award a personal administrator attorney’s fees for the preparation and defense of his account-ings, as well as the circuit court’s ruling that the estate was also liable to the personal administrator for attorney’s fees he incurred in opposition to litigation brought by the estate to recoup funds allegedly misappropriated from the estate. I am in complete agreement -with the majority’s opinion affirming that portion of the fee award attributable to the accountings. However, Arkansas law does not permit the award of fees for legal services rendered in connection with the separate lawsuit. Therefore, I must dissent. In Arkansas, a circuit court may not award attorney’s fees unless the fees are authorized by statute. In re Estate of Reimer, 2010 Ark. App. 41, 2010 WL 132348. As applicable here, Arkansas Code Annotated section 28-^18 — 108 (Supp. 2009) provides: (d)(1) The personal representative may employ legal counsel in connection with the probate of a will or the administration of the estate, and the attorney so employed shall prepare and present to the circuit court all necessary notices, petitions, orders, appraisals, bills of sale, deeds, leases, contracts, agreements, inventories, financial accounts, reports, and all other proper and necessary legal instruments during the entire six (6) months, or longer when necessary, while the estate is required by law to remain open. Pursuant to this statute, the supreme court has long recognized that courts may authorize an administrator to employ counsel in the necessary protection of the estate in his or her hands l^and may allow fees for such services rendered by the administrator to protect and preserve the estate. Paget v. Brogan, 67 Ark. 522, 55 S.W. 938 (1900). So, too, attorneys may be retained and paid reasonable sums for advising the administrator in the affairs relating to his office and for giving proper legal assistance in the conduct of the administration. Miller v. Oil City Iron Works, 184 Ark. 900, 45 S.W.2d 36 (1931). Here, however, the question is whether an award of fees to a co-administrator is authorized where the services are not associated with the administration or the protection of the estate. Carmody and Savers place much reliance on the supreme court’s decision in Dunklin v. Ramsay, 328 Ark. 263, 944 S.W.2d 76 (1997). In that case, the question before the court was whether a minority co-executor had the right to oppose the actions of the majority of executors in construing the decedent’s will. The supreme court held that the minority coexec-utor lacked standing to do so, holding that the provisions of Arkansas Code Annotated section 28^18-104 (1987) clearly mandated that, in situations where there are more than two executors of an estate, the powers given to them may only be exercised by the joint action of the majority, unless otherwise provided in the will. Dunklin did not involve the issue of attorney’s fees, but the supreme court cited with approval the decision of In re Greenberg’s Estate, 15 Ill.App.2d 414, 146 N.E.2d 404 (1957), where the Illinois Appellate Court held that a minority co-executor was free to seek independent legal counsel at his own expense in administering the affairs of the estate but not at the expense of the estate. While Dunklin supports Carmody and Savers’ actions in prosecuting the global lawsuit in the manner they | Tasee fit and over the objection of appellee, it does not directly touch upon the attorney’s fee issue in question here. More to the point is the decision of In re Torian v. Smith, 263 Ark. 304, 564 S.W.2d 521, cert. denied, 439 U.S. 883, 99 S.Ct. 223, 58 L.Ed.2d 195 (1978), where the supreme court approved the disallowance of fees for services that were performed on behalf of the executor in his individual capacity and whose actions were in derogation of the interests of the estate and its beneficiaries. Building upon this holding, in Croft v. Clark, 24 Ark.App. 16, 748 S.W.2d 149 (1988), we reversed an award of attorney’s fees to an administrator who was sued both in his administrative and personal capacities. There, certain heirs of the decedent sued the administrator, who was also an heir, to set aside transfers made by the decedent to the administrator and other members of the administrator’s family, claiming that the decedent was incompetent at the time the transactions were consummated. The heirs’ lawsuit was successful. Afterwards, the administrator petitioned the probate court for the attorney’s fees that he incurred in defending the suit. The trial court allowed the fees, but we disagreed, reasoning that the administrator could not recover his attorney’s fees from the estate because the estate stood to gain nothing, even if the administrator had prevailed in the lawsuit, and because the position taken by the administrator was in derogation of the interests of the estate as a whole. The view our courts have taken in such matters is shared by those in other jurisdictions. In the case of In re Estate of Maxcy, 240 So.2d 93 (Dist.Ct.App.Fla.1970), the court stated the general rule: 114It is a clearly recognized principle in the administration of estates that counsel may be reimbursed from the estate only for the reasonable value of the necessary legal services he renders which benefits the estate, not the executor personally. And this principle is equally as applicable in the case of co-executors, assuming arguendo that separate counsel could represent each co-executor. Such separate counsel should not expect, and should not receive, fees for services that do not represent a distinct benefit to the estate. Such services, or a portion thereof, as inure to the benefit of the executor or co-executors primarily should not be compensable out of the estate funds. Id. at 96. See also In re Estate of Amator, 117 Ariz. 579, 574 P.2d 67 (Ariz.Ct.App. 1978) (holding that attorney’s fees are not allowed if incurred to protect the administrator’s personal interests); In re Oliver v. City of Larimore, 540 N.W.2d 630 (N.D.1995) (holding that attorney’s fees are authorized only when counsel is retained for the benefit of the estate and are disallowed if the legal services are performed primarily for the personal interest of the administrator). The common themes emanating from this body of law are that an administrator may not recover attorney’s fees from the estate where the legal services rendered advance the personal interests of the administrator, where the estate derives no benefit from the services, or where the position asserted by the administrator is contrary to the interests of the estate. When these principles are applied to the instant case, I am persuaded that the trial court erred as a matter of law in awarding fees related to the global lawsuit. The third-party complaint asserted a claim against Gaughan in his individual capacity, based on his own contractual obligation. Thus, Gaughan’s personal interest is at stake, not that of the estate. Gaughan’s potential liability is to the surety; therefore, there will be no resulting benefit to the estate. Moreover, Gaughan is aligned in opposition to the estate, and he has specifically taken Impositions contrary to those asserted by the estate. For these reasons, I must conclude that the estate is not obliged to reimburse Gaughan for his attorney’s fees. Rather than apply the law, the majority is consumed by the notion that Gaughan should not have to pay his own attorney’s fees because he was wrongfully haled into court when Carmody and Savers “prematurely” brought Western Surety into the global lawsuit. This “but for” logic runs counter to the settled law that an estate is not responsible for paying the fees of a personal administrator who is protecting his own interests, not the estate’s, and who aims to defeat the lawsuit rightfully brought by a majority of the administrators of the estate. Quite simply, the law does not allow attorney’s fees under these circumstances. In addition, I am not convinced that joining Western Surety in the global lawsuit was necessarily improper. Arkansas Code Annotated section 28-48-208 (Repl. 2004), which governs the enforcement of obligations on a bond, authorizes the filing of a separate lawsuit, apart from the administration of an estate, to recover damages sustained by reason of the default of a personal administrator, and the statute further provides that a surety is entitled to notice of actions affecting its liability on the bond. Carmody and Savers filed an independent action as permitted by the statute, and they have maintained that they named Western Surety in the global lawsuit in order to comply with the notice provision of the statute. In Continental Ins. Cos. v. Estate of Rowan, 252 Ark. 980, 482 S.W.2d 102 (1972), the surety received notice of the lawsuit brought against the former guardian for whom it had issued a bond, and the surety elected to participate in the litigation. In fact, the surety took the lead 11firole in defending the actions of the former guardian in order to avoid its own liability on the bond. In the same way, the liability of Western Surety, and in turn Gaughan, depends on whether Betts misallocated funds. If either Western Surety or Gaughan believed that joining Western Surety in the litigation was premature, they could have pursued the simple measure of moving to dismiss Western Surety from the lawsuit. Instead, like the surety in Continental Ins. Cos., id., they have chosen to remain in the lawsuit as a means of protecting their own interests. As stated before, the law does not require the estate to pay the attorney’s fees of Gaughan for advancing his own personal interests that are antithetical to the interests of the estate. I cannot fault Gaughan for protecting his interests, but he cannot do so at the expense of the estate. BROWN, J., joins.