Castruccio v. Castruccio

• Decision Date: 29 July 2020
• Docket Number: No. 1023, Sept. Term, 2018,1023, Sept. Term, 2018
• Citation: 233 A.3d 175,247 Md.App. 1
• Parties: ESTATE OF Peter CASTRUCCIO, et al. v. Sadie M. CASTRUCCIO
• Court: Court of Special Appeals of Maryland

247 Md.App. 1

233 A.3d 175

ESTATE OF Peter CASTRUCCIO, et al.

v.Sadie M. CASTRUCCIO

No. 1023, Sept. Term, 2018

Court of Special Appeals of Maryland.

July 29, 2020

Argued by Shale D. Stiller (Brett Ingerman, DLA Piper, LLP (US) of Baltimore, MD) Frederick R. Franke, Jr. (David E. Sessions, Jack K. Beckett, Deborah F. Howe, Franke, Sessions & Beckett, LLC of Annapolis, MD), all on the briefs, for Appellant.

Argued by Kenneth B. Frank (Kenneth B. Frank, PA of Baltimore, MD and Cynthia E. Young of Annapolis, MD), all on the brief, for Appellee.

Panel: Graeff, Nazarian, Arthur, JJ.^*

Arthur, J.

This case marks yet another appeal to this Court concerning the administration of the estate of Dr. Peter Adalbert Castruccio.¹

While defending against a series of lawsuits initiated by Dr. Castruccio's widow, the fiduciary of the estate submitted an interim petition for attorneys’ fees and expenses to the Orphans’ Court for Anne Arundel County. He requested that the fees be paid out of the estate's assets.

Mrs. Castruccio objected to the petition, principally on the ground that the fiduciary had not obtained the orphans’ court's approval to retain one of the firms that represented him. Darlene Barclay, the principal beneficiary of the estate, objected on the ground that the fees should be charged against Mrs. Castruccio's share of the estate because she had allegedly acted in bad faith during the litigation. The orphans’ court denied the exceptions, and Ms. Barclay and Mrs. Castruccio filed de novo appeals to the Circuit Court for Anne Arundel County.

After a six-day trial, the circuit court permitted the attorneys’ fees and expenses to be paid out of the estate's assets. The court took issue, however, with the lawyers’ hourly rates and with the number of hours billed by counsel for the estate. The court significantly reduced the hourly rates of most of the estate's attorneys and cut nearly a third of the billed hours. The court also denied Ms. Barclay's request to apportion the fees to Mrs. Castruccio's share of the estate.

All three parties appealed the circuit court's ruling. Mrs. Castruccio challenges the court's decision to permit the attorneys’ fees to be paid from the estate. The fiduciary of the estate and his attorneys contest the court's reduction of the proposed attorneys’ fees. Ms. Barclay contends that the court should have found that Mrs. Castruccio acted in bad faith and, therefore, shifted the attorneys’ fees to Mrs. Castruccio's share of the estate.

We affirm the circuit court's denial of Ms. Barclay's and Mrs. Castruccio's exceptions to the fee petition. We vacate the award of attorneys’ fees, however, and remand the case for the court to determine an award that is consistent with this opinion.²

FACTUAL AND PROCEDURAL BACKGROUND

Dr. Peter Castruccio died on February 19, 2013, and was survived by his wife of 62 years, Sadie Castruccio. The Register of Wills of Anne Arundel County admitted Dr. Castruccio's will and codicil to administrative probate on February 26, 2013, and appointed his long-time personal lawyer, John Greiber Jr., as the personal representative of the estate under the terms of the will. The inventory value of Dr. Castruccio's estate was $6,628,972.95.

After making a few cash gifts, Dr. Castruccio's will stated that Mrs. Castruccio would receive the entire residuary estate if she survived him and had made and executed a will before his death. In a separate section, however, the will stated that if Mrs. Castruccio did "not have a valid Will filed with the Register of Wills in Anne Arundel County dated prior thereto these [sic]," the residuary estate would go to Darlene Barclay, Dr. Castruccio's longtime assistant.

On March 4, 2013, Mr. Greiber, the personal representative, hired Robert H.B. Cawood of the Annapolis firm of Cawood and Cawood LLC to serve as counsel to the estate. Within days thereafter, Mrs. Castruccio would initiate the first of several legal proceedings concerning Dr. Castruccio's will and the administration of estate: a petition to caveat the will.

In response to that proceeding and the likelihood of additional proceedings, Mr. Greiber promptly engaged Shale D. Stiller, Brett Ingerman, and Melissa L. Mackiewicz, attorneys at the Baltimore office of the international law firm DLA Piper LLP (US) ("DLA"), to serve as lead litigation counsel. As part of the engagement, DLA agreed to discount its standard hourly rates by 18.55 percent and not to increase the rates during the pendency of the engagement.

I. The Many Actions in the Administration of the Estate of Peter Castruccio

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.

A. The Caveat Action

On March 12, 2013, Mr. Cawood informed Mrs. Castruccio that, under the terms of the will, she would receive the residuum of her late husband's estate only if she had had a "valid Will filed with the Register of Wills in Anne Arundel County dated prior thereto these," as the will stipulated. Mrs. Castruccio had not filed (or deposited) a will with the register of wills.³

On March 27, 2013, Mrs. Castruccio filed a petition to caveat in the Orphans’ Court for Anne Arundel County, in which she sought to invalidate the will and obtain a declaration that Dr. Castruccio had died intestate. Mrs. Castruccio would receive the entire net estate if her late husband had died intestate. See Md. Code (1974, 2017 Repl. Vol., 2020 Supp.), § 3-102(f) of the Estates and Trusts Article ("ET").⁴

During the litigation of the caveat action, the orphans’ court transmitted a number of factual issues to the Circuit Court for Anne Arundel County for determination. See ET § 2-105(b). After extensive discovery, the circuit court granted the estate's motion for summary judgment on October 7, 2014, and rejected Mrs. Castruccio's challenge to the validity of her late husband's will. This Court affirmed the grant of summary judgment in a reported decision. Castruccio v. Estate of Castruccio , 230 Md. App. 118, 146 A.3d 1132 (2016). The Court of Appeals granted Mrs. Castruccio's petition for a writ for certiorari and affirmed this Court's decision. Castruccio v. Estate of Castruccio , 456 Md. 1, 169 A.3d 431 (2017).

B. The Deed Action

On April 13, 2013, less than three weeks after she filed the petition to caveat, Mrs. Castruccio filed an action in the Circuit Court for Anne Arundel County to quiet title to seven pieces of commercial real estate, valued at $3.6 million, that were held in the name of her late husband. Mrs. Castruccio alleged that Dr. Castruccio had forged her signature on the deeds that conveyed those properties from the Castruccios as tenants by the entireties to Dr. Castruccio alone. In effect, Mrs. Castruccio sought to extract those properties from her late husband's estate so that they would pass to her as the surviving tenant. If she were to succeed, the estate would lose more than half of its value.

After fourteen months of contentious discovery and four days of trial, the circuit court entered judgment in favor of the estate on all counts. In reaching its decision, the court stated that Mrs. Castruccio was "a particularly poor litigant to pursue this claim since she participated in the transaction by giving her assent and approval to it." Indeed, the court observed that, at about the same time that Dr. Castruccio signed his wife's name to the deeds that conveyed seven jointly-held properties to himself, he also signed her name to deeds that conveyed four jointly-held properties, of roughly equal value, to her alone. The court surmised that the conveyances were part of a plan to divide the couple's assets for tax and estate-planning purposes.

This Court affirmed the circuit court's judgment, and the Court of Appeals denied Mrs. Castruccio's petition for a writ of certiorari. See Castruccio v. Estate of Castruccio , No. 2622, Sept. Term 2014, 2015 WL 9306895 (Md. Ct. Spec. App. Dec. 22, 2015), cert. denied , 447 Md. 298, 135 A.3d 416 (2016).

C. The First Removal Action

On May 14, 2013, about seven weeks after she filed the petition to caveat and a month after she filed the deed action, Mrs. Castruccio filed a petition in the orphans’ court to remove Mr. Greiber as special administrator of the estate.⁵ In response to the estate's efforts to obtain discovery, Mrs. Castruccio denied access to Dr. Castruccio's records and objected to every third-party subpoena that the estate served.

At a hearing on July 11, 2013, Mrs. Castruccio voluntarily withdrew the petition after the orphans’ court excluded her expert witness as a discovery sanction. The orphans’ court denied the petition for removal on July 16, 2013.

D. The Will Construction Action

Although Mrs. Castruccio contended that her husband's will was invalid, she filed another circuit court action on January 16, 2014, in which she sought a declaration that she (rather than Ms. Barclay) was the residuary beneficiary under the will. The circuit court stayed the action on May 8, 2014, pending the outcome of the caveat action, because it made little sense to interpret the will while its validity was being challenged.

The court lifted the stay in June 2015, after its ruling in the caveat action, and the parties proceeded to conduct discovery and to file cross-motions for summary judgment. On January 6, 2017, the court granted the estate's motion for summary judgment, denied Mrs. Castruccio's cross-motion for summary judgment, and...