Wednesday, July 29, 2020

Maryland: Estate May Retain and Pay Counsel

In highly contentious estate litigation between the widow in a 62-year marriage and the decedent's longtime assistant, the Maryland Court of Special Appeals held that an estate's special administrator has authority to retain counsel and that fee reductions made by the trial court required a remand.

A special administrator of an estate may engage counsel to prosecute and defend litigation on behalf of the estate without court approval under the power to “collect, manage and preserve property” granted by section 6-403 of the Estates and Trusts Article.

Further

Fiduciaries of an estate who defend against challenges to their reasonable, good faith construction of the will are acting to benefit the estate by effectuating the testator’s intent and are entitled to attorneys’ fees for their participation in the action.

After the decedent passed

During the years immediately following Dr. Castruccio’s death, Mrs. Castruccio initiated lawsuits to contest the validity of the will, Mr. Greiber’s interpretation of the will, and the administration of the estate. She also initiated another lawsuit that was designed to extract millions of dollars in assets from the estate, so that they would pass to her outside of probate. In addition, she refused to comply with a court order, which prompted the estate to initiate contempt proceedings against her. These various legal proceedings led to a multitude of hearings, appeals, motions for summary judgment, a four-day trial, and extensive discovery.

The estate had retained DLA Piper

Although we disagree with many of the arguments that the estate has brought to bear, we agree that, on the record in this case, there was no basis to conclude that Mr. Greiber could have readily found an Anne Arundel County law firm with the resources and specialized experience to defend the estate against the sophisticated, multi-front legal offensive that Mrs. Castruccio was about to launch. For that reason, we conclude that the court abused its discretion in reducing DLA’s already-discounted fees. Accordingly, we shall vacate the attorneys’ fee award and remand the case to the circuit court for a determination of the fair and reasonable hourly rates in accordance with this opinion.

The trial judge's decision

In the written opinion, the trial judge cited his “familiar[ity] with litigation practices, including reasonable hourly rates in Anne Arundel County, having practiced there for twenty (20) years before joining the Circuit Court,” in finding that DLA’s proposed rates were inconsistent with fees customarily charged in the area. The estate contends that the judge impermissibly relied on his own personal knowledge to calculate reasonable hourly rates for each attorney. The estate is incorrect.

Under Maryland law, a judge may “rely upon his [or her] own knowledge and experience in appraising the value of an attorney’s services.”

But

we conclude that the circuit court abused its discretion in relying on the “locality” factor to further reduce DLA’s already-discounted hourly rates for the fee award. We shall remand the case to the circuit court to reevaluate the fee petition, using the discounted fees that Mr. Greiber agreed to pay. The court is not required to conclude that the discounted hourly rates are reasonable, but it may not confine the rates to its conception of a reasonable rate in ordinary, conventional litigation in Anne Arundel County.

The trial court found 40% of the work done was unnecessary

The estate contends that the circuit court impermissibly cut large portions of billed hours from the proposed fee without giving the estate an opportunity to address the court’s concerns. We agree.

At the trial on the fee petition in this case, the estate introduced several days’ worth of unrebutted testimony, including Mr. Rosenberg’s unrebutted expert testimony, generally concerning the reasonableness of the fees and the necessity for the approximately 4000 hours of work that the lawyers had performed. The court, however, discouraged the parties from discussing specific time entries on the 100 or so pages of bills, correctly saying that “it would take weeks” to analyze each.

Yet in its opinion, issued 18 months after the trial, the court scoured the bills, complained that specific billing entries did not provide a sufficiently detailed explanation of the time spent on individual matters and said that it was therefore unpersuaded of the necessity of some of the work. It was an abuse of discretion for the court to base its decision on the putative inadequacy of the billing records, without first giving the estate the opportunity to address the court’s concerns.

(Mike Frisch)

https://lawprofessors.typepad.com/legal_profession/2020/07/although-we-disagree-with-many-of-the-arguments-that-the-estate-has-brought-tobear-we-agree-that-on-the-record-in-this-case.html

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