Estate of Jones, Matter of, No. 24748

CourtUnited States State Supreme Court of South Carolina
Writing for the CourtTOAL; WALLER and BURNETT, JJ., and GEORGE T. GREGORY Jr., and L. CASEY MANNING
Citation495 S.E.2d 450,329 S.C. 97
PartiesIn the Matter of the ESTATE OF Frank Preston JONES, Jr., Deceased. In Re Claim of LEATHERWOOD, WALKER, TODD & MANN, P.C., Attorneys, Estate File 56, Drawer 548, Respondent, v. The ESTATE OF Frank Preston JONES, Jr., Petitioner. . Heard
Docket NumberNo. 24748
Decision Date16 December 1997

Page 450

495 S.E.2d 450
329 S.C. 97
In the Matter of the ESTATE OF Frank Preston JONES, Jr., Deceased.
In Re Claim of LEATHERWOOD, WALKER, TODD & MANN, P.C.,
Attorneys, Estate File 56, Drawer 548, Respondent,
v.
The ESTATE OF Frank Preston JONES, Jr., Petitioner.
No. 24748.
Supreme Court of South Carolina.
Heard Dec. 16, 1997.
Decided Jan. 19, 1998.
Rehearing Denied Feb. 4, 1998.

Page 451

[329 S.C. 98] C. Rauch Wise, Greenwood, and Ken Suggs, of Suggs & Kelly, Columbia, both for petitioner.

J.D. Todd, Jr., of Leatherwood, Walker, Todd & Mann, P.C., Greenville, for respondent.

TOAL, Acting Chief Justice:

The Court of Appeals affirmed in result the award of attorneys' fees to Leatherwood, Walker, Todd & Mann, P.C. ("Law Firm"). We granted a writ of certiorari to review the question of whether the express fee contract was contingent on the successful recovery of a tax refund in federal court. We now reverse.

FACTUAL/PROCEDURAL BACKGROUND

Frank P. Jones, Jr. died in 1979. Elliott, Davis & Company ("Accounting Firm") represented the Jones estate in filing estate tax returns with federal and state authorities. Accounting Firm claimed a marital deduction for the estate because a woman named Eleanor Stickles lived with Jones. This deduction was disallowed by the Internal Revenue Service ("IRS") and the S.C. State Tax Commission. The estate paid the taxes due.

[329 S.C. 99] The estate then petitioned a probate court to determine the marital status of Stickles. The court found a valid common law marriage between Jones and Stickles. After this determination, Accounting Firm prepared, on the basis of a marital deduction, a claim for a refund from both the IRS and the S.C. Tax Commission. The claims were denied. The state refund was denied because it was not filed within three years of the due date of the return.

Accounting Firm then contacted Law Firm with which it had a longstanding professional relationship. Correspondence between the two firms indicates that Law Firm was handling two different matters for Accounting Firm: (1) initially representing Accounting Firm against a potential professional liability suit in relation to the Jones estate; and (2) seeking a refund for the estate. Law Firm did pursue these matters, by writing letters to Accounting Firm's carrier reporting the potential professional liability claim, and seeking a refund from the S.C. Tax Commission and the IRS. On October 20, 1987, Law Firm argued the refund matter before the S.C. Tax Commission. On December 22, 1987, the Commission ordered a $30,695 refund.

The record contains copies of bills sent by Law Firm to Accounting Firm detailing fees owed. The final bill is dated August 9, 1988 and reflects over $14,500 in fees. As of August, no part of Law Firm's bill for services regarding the processing of the refund had been paid. On August 23, 1988, Law Firm wrote to the administrator of the estate, proposing a contract to proceed with litigation in federal court. The letter provides, in part:

We are willing to go forward with preparing the case and handling it in United States District Court on a contingent fee basis. We think that a contingent fee of one-third of the total amount recovered (including both principal and interest) would be reasonable. In setting this contingent fee, we will agree for it to include the total amount of our charges for all legal services rendered to this date. We will file the suit and pursue it through the Fourth Circuit (if the District Court opinion is appealed) for one-third of the total amount recovered (taxes plus interest) from the IRS and SCTC. Of course, the Estate would reimburse us for all costs and [329 S.C. 100] expenses incurred in the representation (including those already paid or incurred, i.e. $310.38).

The administrator did not respond, so on September 27, 1988, Law Firm again wrote

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him: "After having done considerable work in behalf of your brother's estate (the Estate) with no compensation, we cannot and will not do any further work without a contract for specific compensation signed by you as Administrator of the Estate." An attorney for the estate contacted Law Firm a few days later to discuss the federal action. Law Firm wrote a letter to the administrator on October 11, 1988, confirming the initiation of an action in federal court: "As you are well aware and in accord with your direction, [attorney for the estate] telephoned me on yesterday ... and advised your request that we proceed with filing suit in United States District Court for the District of South Carolina by you as Administrator of the Estate of Frank P. Jones, Jr. against the United States of America."

Law Firm initiated the action in federal court against the IRS. The action was not successful. In communicating with the administrator about the adverse results, Law Firm stated the chances of success on appeal would be "nil." It further advised the administrator of the time for appeal. The administrator did not respond, and there was no appeal of the matter to the Fourth Circuit Court of Appeals.

Eventually, Law Firm elected to file a claim against the estate for attorneys' fees in connection with the procurement of the state tax refund. It sought one-third of the $30,650 state tax refund. The estate denied it was liable for any attorneys' fees. Law Firm presented four alternate theories to the probate court to justify its claim to attorneys' fees: (1) an express contract was created through the correspondence to the administrator (August 23, 1988; September 27, 1988) and the call of the...

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2 practice notes
  • Weatherford v. Price, No. 3180.
    • United States
    • Court of Appeals of South Carolina
    • June 5, 2000
    ...wording of Rule 1.5, which precludes a fee contingent upon amount or outcome in a domestic case. See also Matter of Estate of Jones, 329 S.C. 97, 103, 495 S.E.2d 450, 453 (1998) ("A contingent fee is one which is made to depend upon the success or failure in the effort to enforce a supposed......
  • In re Ducane Gas Grills, Inc., C/A No. 04-15219-W.
    • United States
    • United States Bankruptcy Courts. Fourth Circuit. U.S. Bankruptcy Court — District of South Carolina
    • October 7, 2004
    ...would-be client's unilateral belief cannot create an attorney-client relationship.") (emphasis added); In re Estate of Jones, 329 S.C. 97, 104, 495 S.E.2d 450, 454 n. 1 (1998)("The fact that an attorney's services have inured to the benefit of others does not necessarily give rise to a cont......
2 cases
  • Weatherford v. Price, No. 3180.
    • United States
    • Court of Appeals of South Carolina
    • June 5, 2000
    ...wording of Rule 1.5, which precludes a fee contingent upon amount or outcome in a domestic case. See also Matter of Estate of Jones, 329 S.C. 97, 103, 495 S.E.2d 450, 453 (1998) ("A contingent fee is one which is made to depend upon the success or failure in the effort to enforce a supposed......
  • In re Ducane Gas Grills, Inc., C/A No. 04-15219-W.
    • United States
    • United States Bankruptcy Courts. Fourth Circuit. U.S. Bankruptcy Court — District of South Carolina
    • October 7, 2004
    ...would-be client's unilateral belief cannot create an attorney-client relationship.") (emphasis added); In re Estate of Jones, 329 S.C. 97, 104, 495 S.E.2d 450, 454 n. 1 (1998)("The fact that an attorney's services have inured to the benefit of others does not necessarily give rise to a cont......

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