Estate of Platt, In re

• Decision Date: 03 October 1991
• Docket Number: No. 74793,74793
• Citation: 586 So.2d 328
• Parties: In re ESTATE OF Lester PLATT, Deceased. 586 So.2d 328, 16 Fla. L. Week. S640
• Court: Florida Supreme Court

Page 328

586 So.2d 328

In re ESTATE OF Lester PLATT, Deceased.

No. 74793.

586 So.2d 328, 16 Fla. L. Week. S640

Supreme Court of Florida.

Oct. 3, 1991.

Samuel S. Smith and James R. George of Ruden, Barnett, McClosky, Smith, Schuster & Russell, P.A., Miami, for petitioners.

Harry G. Carratt of Morgan, Carratt and O'Connor, P.A., Ft. Lauderdale, for respondents.

Rohan Kelley of Rohan Kelley, P.A., Ft. Lauderdale, Florida; and William S. Belcher of Belcher & Fleece, P.A., St. Petersburg, amicus curiae for The Real Property, Probate and Trust Law Section of The Florida Bar.

J. Thomas Cardwell of Akerman, Senterfitt & Eidson, Orlando, amicus curiae for Florida Bankers Ass'n.

OVERTON, Justice.

Petitioners, Patricia Platt Faulkner and Barbara Platt Swanson, children and residuary beneficiaries of the estate of Lester Platt, deceased, seek review of the Fourth District Court of Appeal's decision in In re Estate of Platt, 546 So.2d 1114 (Fla. 4th DCA 1989), in which the district court approved attorney's and administrator's fees computed solely on a percentage of the amount of Platt's $7,000,000 estate. The district court expressly found that the lodestar method ¹ to compute attorney's fees "is not applicable to the determination of attorney's fees and personal representative fees under section 733.617, Florida Statutes (1987)." Id. at 1114.

We find conflict with Standard Guaranty Insurance Co. v. Quanstrom, 555 So.2d 828 (Fla.1990), De Loach v. Westman, 506 So.2d 1142 (Fla. 2d DCA 1987), and Brady v. Williams, 491 So.2d 1160 (Fla. 2d DCA 1986). ² For the reasons expressed, we quash the decision of the district court of appeal in the instant case.

The following are the pertinent facts. George A. Patterson, the attorney for the estate, and NCNB National Bank of Florida (NCNB) were appointed co-personal representatives on March 15, 1985, of the estate of Lester Platt, deceased. Platt was incompetent during the last two years of his life, and Patterson and NCNB managed his assets under a guardianship agreement, for which they were fully compensated. At the time of Platt's death, they were in control of his assets, and no marshaling of assets was necessary to administer his estate. Petitioners, as residuary beneficiaries of the estate, share the impact of any fees awarded.

At the commencement of the probate of the estate, Patterson and NCNB advised the beneficiaries that the personal representative fees and attorney fees charged would equal 4.5% of the value of the estate. Since the approximate value of the estate was $7,000,000, the proposed fees totaled $315,000. Petitioner Faulkner objected to the payment of a fee based on a percentage of the estate and requested that Patterson and NCNB maintain accurate time records for their services. Two years later, in closing the estate, Patterson and NCNB petitioned for attorney's and personal representative's fees totaling $489,877, or 6% of the estate.

Patterson petitioned for attorney's fees in the amount of $144,300 and sought $92,500 as his share of the personal representative fees. At the hearing on fees, Patterson testified that he had expended 274 total hours as attorney for the estate. This computes to an hourly rate of $526.64. Patterson also testified that his office staff had spent 155 hours on estate matters but that his fee of $144,300 was calculated on the basis of 2% of the estate rather than upon the time and labor expended.

Patterson testified that his usual hourly rate was $350, and his experts testified that $200 to $300 per hour was a reasonable fee for this type of service. At $350 an hour, the fee would have been $95,900. Further, the record reflects that typing and proofreading services made up the bulk of the 155 hours spent by Patterson's staff on the estate. Petitioners challenge the amount of compensable time Patterson spent on the estate and assert that only approximately 220 of the 274 hours were properly compensable because the remaining hours were expended in pursuit of Patterson's fee.

Patterson's first expert witness testified that he believed a fee of $140,000, approximately 2% of the value of the estate, would be a reasonable fee. The expert testified that the estate was valued at $7,000,000 and that Patterson had expended 274 hours on the estate. He explained that he did not believe that the lodestar method applied but that, if he computed a fee under the lodestar method, Patterson would be entitled to $200 an hour, multiplied by a factor of 3, or a fee of $164,000. On cross-examination, he testified that $200 an hour would be a reasonable rate for a probate lawyer who is a member of the American College of Probate Counsel.

Patterson's second expert testified that a 3% attorney's fee would be reasonable for representing an estate where there is a corporate fiduciary and that he would seek to increase the percentage to 4% if other factors were present, such as a noncorporate fiduciary. The expert stated that, since this was a $7,000,000 estate, a reasonable attorney's fee for Patterson would be $210,000. He testified that his usual hourly fee was $150 to $200, but he believed that that amount was inadequate to handle estate matters. He further explained that, if he were employed strictly on an hourly basis, he would contemplate charging $300 per hour.

In response, petitioners' expert testified that, upon examining the file and time records, his range of a reasonable fee was between $58,000 and $70,000. The prime factor in his calculation of the attorney's fee was the number of hours expended. He testified that he used rates of $200 an hour and $250 an hour to arrive at his two alternative fees; that he multiplied the 235.8 hours of attorney time by $200 an hour, which computed to a figure of $47,160; that he multiplied the 149.5 hours spent by paralegals by $75 an hour, which he felt was a very reasonable fee for paralegals, to arrive at the figure of $11,212.50; and that he added these products together, resulting in his low fee of $58,372.50. He arrived at the high fee of $70,162.50 by using an hourly rate of $250 instead of $200.

Regarding the personal representative's fee, NCNB sought its fee solely upon its scheduled percentage rates. ³ NCNB did not present any evidence of hours expended or of what a reasonable hourly rate would be for such a corporate fiduciary. NCNB stated that, although it was requested to keep time records, it chose not to do so because of the administrative cost of keeping such records. NCNB sought a personal representative's fee of $203,077, plus $50,000 for unusual and extraordinary services. Experts from Sun Bank and Florida National Bank testified that it was customary practice for corporate fiduciaries to charge a personal representative's fee based on a sliding-fee rate schedule prepared by the bank. They stated that their personal representative fees in a comparable estate would have been greater than the fee sought by NCNB.

Patterson sought, in addition to his attorney's fee, a co-personal representative's fee of $92,500. Patterson's first expert testified that Patterson was entitled to a co-personal representative's fee equal to one-third to one-half of what the corporate fiduciary received as personal representative. Patterson's second expert testified that a reasonable co-personal representative's fee in this instance would be 1% of the probate estate. In response, petitioners' expert testified that a reasonable co-personal representative's fee for Patterson, based upon the work performed, would be $32,000.

The trial court entered an order expressly refusing to apply the principles set forth in Florida Patient's Compensation Fund v. Rowe, 472 So.2d 1145 (Fla.1985). In its order, the court noted that, in awarding compensation to the attorney and personal representative, it could utilize one or more of the criteria in section 733.617, Florida Statutes (1985). Regarding attorney's fees, the trial court determined that the fee of $144,300, based solely on a percentage of the estate, was reasonable. It further found that NCNB should receive a personal representative's fee of $203,077, calculated in accordance with the corporate fiduciary's rate card. The court denied the corporate fiduciary's request for an extra $50,000, finding insufficient evidence for this claim of extraordinary services. The court granted Patterson a co-personal representative's fee of $67,692, an amount equal to one-third of NCNB's fee. On appeal, the Fourth District Court of Appeal affirmed the setting of fees based on a percentage of the estate, relying on its decision in In re Estate of Warwick, 543 So.2d 449 (Fla. 4th DCA 1989), quashed, 586 So.2d 327 (Fla.1991).

The issue in this cause is whether section 733.617 allows "reasonable compensation" for attorneys and personal representatives to be computed solely on the basis of a fixed percentage of the amount of the probate estate.

To understand the legislative intent of section 733.617, it is important to review its legislative history. Prior to 1974, fees for personal representatives were established as a percentage of the amount of the estate, in accordance with section 734.01, Florida Statutes (1973). ⁴ That statute was repealed in 1974, and the authority for attorney's and personal representative's fees was placed in section 733.617, Florida Statutes (Supp.1974). This statute read as follows:

733.617 Compensation of personal representatives and professionals providing services.--

(1) Personal representatives, attorneys, accountants, and appraisers are entitled to reasonable compensation.

(2) If a will provides for compensation of the personal representative and there is no contract with the decedent regarding compensation, the personal representative may renounce the provisions before qualifying and be entitled to reasonable compensation. A personal representative also may renounce his right to all or any part of the compensation. A renunciation of the...