COURT OF APPEALS DECISION DATED AND RELEASED November 15, 1995 |
NOTICE |
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with the Supreme Court a petition to review an adverse decision by the Court
of Appeals. See § 808.10
and Rule 809.62, Stats. |
This opinion is
subject to further editing. If
published, the official version will appear in the bound volume of the
Official Reports. |
No.
94-3304
STATE OF WISCONSIN IN
COURT OF APPEALS
DISTRICT II
In the Matter of the Estate
of Elsie P. Showalter, Deceased:
RUDY KOPECKY,
Personal Representative,
Appellant,
v.
NANCY LAMAR,
MICHAEL VERMEY and
JOHN VERMEY,
Respondents.
APPEAL
from a judgment of the circuit court for Racine County: DENNIS J. FLYNN, Judge.
Reversed and cause remanded with
directions.
Before
Anderson, P.J., Nettesheim and Snyder, JJ.
ANDERSON,
P.J. Rudy Kopecky, the personal representative of
Elsie P. Showalter's estate, appeals from a judgment of the trial court
reducing the amount of attorney's fees by thirty-five percent. We conclude that the trial court arbitrarily
reduced the attorney's fees in this case and that Attorney Daniel P. Fay was
denied a fair hearing as to the reasonable value of his fees. Accordingly, we reverse the judgment of the
trial court and remand for a new hearing.
Kopecky
signed a retainer agreement with the Law Firm of Daniel P. Fay, S.C., as the
attorney in the matter of the estate of Showalter. The hourly rate was to be $140 per hour for Fay's services, $100
per hour for his associates, and $70 per hour for paralegal time. The agreement also provided:
It is also understood and agreed that the final bill
rendered by the Firm shall, in addition to reflecting the time expended, take
into account any of the factors prescribed by the State Bar of the State of
Wisconsin and be considered as guides when determining the reasonable fees for
legal services ¼.
Kopecky
requested $49,136.83 on behalf of Fay for fees. At the final account hearing, Nancy Lamar, Michael Vermey and
John Vermey, beneficiaries of the estate and the respondents on appeal, were
present. There were no objections to
Fay's fees for legal services. However,
the court sua sponte determined that it would not approve the request because
there was no documentation. At the
hearing, Fay stated:
[M]y computer produces an itemization of what was done
and what the amount charged is for.
It's in the computer and it internally computes the amount of time then
puts the final figure, so to some extent you have to back figure it. I should—I will try and produce the
hours. The problem I have, your Honor,
is on May 1st of '93 the old computer system went to bed, so I will do the best
that can I [sic], but be aware.
The court stated:
So counsel is clear, if there's a sum per hour times
some hours I would want to be able to know both of the factors within the
formula, how many hours, how much per hour and then the other is simply the
multiplication, and the same with the expenses, because again, I want everybody
to have a clear understanding of what the charges are.
The court set the matter for hearing in September 1993 so that Fay
could provide documentation of his fees.
Fay subsequently submitted copies of his monthly billing
statements. The statements, however,
did not reflect the hourly rate or the time spent.
At the
September 1993 hearing, the court described the purpose as follows: “to allow the parties, any of the parties if
they wished to either agree or disagree or challenge or not challenge any of
the charges in that area.” The
beneficiaries voiced criticism they had concerning Fay's billing. The court held:
[T]he personal representative and his attorney, while
establishing the necessity of the general legal work that was done, have not
proven that the final charge for Attorney Fay's legal services is
reasonable. The Court finds that
billing as submitted, based on the record that has been presented is imprecise
and is inadequate in terms of reasonableness.
The court approved sixty-five per cent of the fees
submitted. Kopecky appeals.
The
beneficiaries raise the issue that the personal representative does not have
standing to appeal because he cannot demonstrate that the probate court's final
judgment bears directly and injuriously upon the interests of the estate. We disagree. Kopecky's obligation to Fay is governed by their fee
agreement. Kopecky paid Fay's fees from
the estate. Because Kopecky will be
required to reimburse the estate for the reduced attorney's fee amount, he is
an appropriate appellant. See Laus
v. Braasch, 274 Wis. 569, 572-73, 80 N.W.2d 759, 761 (1957) (“An
attorney's claim for services is normally against the executor or
administrator, and the court allows some or all of a fee paid or incurred only
as a credit on the account.”).
We
independently review attorney's fees when challenged on appeal. Herro, McAndrews & Porter, S.C. v.
Gerhardt, 62 Wis.2d 179, 184, 214 N.W.2d 401, 404 (1974). The proper factors to consider when
determining the reasonable value of attorney's fees for services rendered are:
[T]he amount and character of the services rendered, the
labor, the time, and trouble involved, the character and importance of the
litigation, the amount of money or value of the property affected, the
professional skill and experience called for, and the standing of the attorney
in his profession; to which may be added the general ability of the client to
pay and the pecuniary benefit derived from the services.
Id.[1]
At the
August hearing, the trial court stated:
I could not find it, to see the bill by particularly
Attorney Fay, the $49,000 bill, and I find it not to be in the file. Therefore, I do not approve even one penny
of the expenses incurred relative to the attorney. At this point I can't approve something that I don't know. In fact, to approve something in that manner
would be clearly reversible. I can
indicate the very few times I've had to deal with particularly attorney fee
issues, also most -- I can't remember one where I have approved simply the
bill. There's always been a reduction
based on my own evaluation of the law and the facts of the particular case. It may be that this $49,000 fee is totally
appropriate. Certainly the heirs aren't
objecting to it, but I'm not going to approve it until I see it. [Emphasis added.]
The trial court's statement gives us pause because it
suggests that the court approached the issue of reasonable attorney's fees with
a made-up mind. This is improper and
serves as one of the bases for our reversal.
Compare State v. J.E.B., 161 Wis.2d 655, 674, 469 N.W.2d
192, 200 (Ct. App. 1991) (“[I]t is improper for a court to approach sentencing
decisions with an inflexibility that bespeaks a made-up mind.”), cert.
denied, 503 U.S. 940 (1992).
Fay
argues that “no objections were filed, and while the court may have
appropriately allowed oral objections to be made at the hearing, the stating of
those objections gave rise to the necessity of an adversary hearing.” We agree with Fay and conclude that he was
not aware that the September hearing would be an evidentiary hearing on the
reasonable value of his legal services.
Therefore, he was not prepared to present evidence or witnesses to support
his bill. See Wengerd v. Rinehart,
114 Wis.2d 575, 582, 338 N.W.2d 861, 866 (Ct. App. 1983) (denial of a hearing
would raise a serious due process question).
We agree with Fay that if he was required to prove the reasonableness of
every aspect and entry of his billing, he would have needed his entire file to
show the work done and perhaps the testimony of his office staff as to the work
completed. Therefore, we conclude that
the court was arbitrary in setting fees at sixty-five per cent of those which
were paid.
It is
impossible from the record before us to conduct an independent review to
determine the reasonableness of attorney's fees. We remand this case to the trial court for further proceedings, see
generally Cuccio v. Rusilowski, 171 Wis.2d 648, 492 N.W.2d 345 (Ct.
App. 1992), in order to provide Fay with the opportunity to present evidence to
support his fees. Furthermore, we
conclude that on remand, the appellant has the right to substitution of judge
pursuant to § 801.58(7), Stats.,
to insure a completely unbiased hearing.
By
the Court.—Judgement reversed
and cause remanded with directions.
Not
recommended for publication in the official reports.
[1] Section 851.40, Stats., provides:
Basis for
attorney fees. (1) Any attorney
performing services for the estate of a deceased person in any proceeding under
chs. 851 to 879, including a proceeding for informal administration under ch.
865, shall be entitled to just and reasonable compensation for such services.
(2) Any personal representative, heir,
beneficiary under a will or other interested party may petition the court to
review any attorney's fee which is subject to sub. (1). If the decedent died intestate or the
testator's will contains no provision concerning attorney fees, the court shall
consider the following factors in determining what is a just and reasonable
attorney's fee:
(a) The time and labor required.
(b) The experience and knowledge of the
attorney.
(c) The complexity and novelty of the problems
involved.
(d) The extent of the responsibilities assumed
and the results obtained.
(e) The sufficiency of assets properly available to pay for the
services, except that the value of the estate may not be the controlling
factor.