Estate of Stull, In re

• Decision Date: 20 April 1999
• Docket Number: No. A-98-129,A-98-129
• Parties: In re ESTATE OF Buddie STULL, also known as Buddie William Stull, Deceased. Robert Anderson et al., Appellants, v. E. Michael Slattery et al., Appellees.
• Court: Nebraska Court of Appeals

Page 18

593 N.W.2d 18

8 Neb.App. 301

In re ESTATE OF Buddie STULL, also known as Buddie William Stull, Deceased.

Robert Anderson et al., Appellants, v. E. Michael Slattery et al., Appellees.

No. A-98-129.

Court of Appeals of Nebraska.

April 20, 1999.

Syllabus by the Court

1. Attorney Fees: Equity: Contracts. The right of an attorney to compensation for his or her services depends upon a contract of employment, express or implied. The common fund doctrine is a well-recognized exception to this general rule. Under the "common fund" or "equitable fund" doctrine, the fee of an attorney whose services on behalf of a litigant operate to create, discover, increase, preserve, or protect a fund or property to which others also may have a claim may be ordered paid therefrom by a court of equity, or one exercising equitable jurisdiction.

2. Attorney Fees. The common fund doctrine is not applicable where the party sought to be charged has employed his or her own attorney, such attorney has actively participated in litigation, and such counsel has not terminated, abandoned, or acquiesced in the representation of his or her client by other counsel.

3. Attorney Fees: Contracts. In awarding attorney fees out of a common fund, a trial court is not bound by the contract between the attorney and the client.

4. Attorney Fees. In determining a reasonable amount of attorney fees in a common fund context, a court should consider the services actually performed, the amount in controversy, the nature of the case, the results obtained, the extent of preparation of the case, the difficulty of the questions involved, the skill required, the customary charges of the bar for similar work, and the character and standing of the attorney.

Thomas B. Thomsen, of Sidner, Svoboda, Schilke, Thomsen, Holtorf, Boggy & Nick, Fremont, for appellants.

William R. Reinsch, of Reinsch & Slattery, P.C., Plattsmouth, for appellee Slattery.

MUES, INBODY, and CARLSON, Judges.

MUES, Judge.

I. INTRODUCTION

Attorney E. Michael Slattery filed a will contest challenging two charitable bequests on behalf of a residuary beneficiary, Rosie Wolski. Slattery reached settlement agreements with the two charities which resulted in a substantial increase in the residuary estate. Slattery then sought attorney fees from the settlement funds based on the common fund doctrine. The trial court awarded Slattery one-third of the estimated settlements. Several members of the residuary appeal from that decision. For the reasons set forth below, we affirm in part, and in part reverse and remand with directions.

II. BACKGROUND

On November 13, 1997, Slattery filed a petition for distribution of funds and an application for the payment of attorney fees from the estate of Buddie Stull, also known as Buddie William Stull. Slattery alleged that his services had been retained by Wolski to challenge certain charitable bequests of real property to Midlands Community Foundation (Midlands) and Nebraska Methodist Hospital Foundation (Methodist). Slattery further alleged that on behalf of the entire residuary of heirs, he had entered into settlement agreements with both Midlands and Methodist and that said agreements had been approved by the court. Slattery claimed that his efforts resulted in a benefit to the residuary beneficiaries of $98,500.96. Slattery further claimed that under the common fund doctrine, he was entitled to recover attorney fees from the settlement proceeds. Slattery prayed that the court enter an order providing for payment of attorney fees of $32,890.65, or one-third of the amount recovered, plus costs of $57.

Several members of the residuary, Harriett Holman, Valeria Safarik, and the copersonal representatives of the estate of Harriett Anderson (hereinafter these three residuary members will collectively be referred to as the "objectors"), objected to the application for attorney fees. The objectors alleged that the common fund doctrine was inapplicable to the facts at hand and that the attorney fees requested by Slattery were not fair and reasonable.

Trial on the matter was held December 3, 1997, and the following facts were adduced:

Stull died on July 24, 1995. Stull devised a parcel of land to Midlands and another parcel of land to Methodist. The will has not been made a part of our record. However, the testimony indicated that there were some valuable assets beneath the soil of the land and that the will provided that the land could not be "dredged or sold in any way." The will set forth other specific devises and further provided that the remainder would go to the residuary of which Wolski was a one-third beneficiary. The record is unclear as to how many other residuary beneficiaries there were.

Wolski subsequently retained Slattery to challenge the will and paid him a $1,500 retainer. Slattery initially challenged the will on the theory that Stull was not competent at the time he executed the will. Several months later, "it became obvious that [they] weren't going to prevail" under this theory. After conducting some "discovery type process," Slattery obtained a copy of the will and decided to pursue a different approach. Slattery filed a second action challenging the charitable bequests on the ground that the bequests violated the rule against perpetuities. Our record does not contain either of these pleadings. When Slattery was preparing the second petition, there was concern that Wolski was without sufficient funds to proceed further in the matter. Accordingly, Slattery and Wolski "elected to enter into [a] contingency arrangement" in which Wolski agreed to pay Slattery one-third of any amounts recovered.

Eventually, Slattery began settlement negotiations with Midlands and Methodist. During this time, Wolski would occasionally come to Slattery's office. Because Wolski could not drive, she was frequently accompanied by Holman. According to Slattery, Holman would frequently ask questions while she was at his office and would occasionally telephone with questions regarding the estate. Slattery testified that Holman also came in on her own or with other family members.

Slattery eventually was able to reach settlement agreements with both Midlands and Methodist. The agreements essentially provided that the land would be sold and that the charitable beneficiaries would receive 60 percent of the sale proceeds and the remaining 40 percent was to go to the residuary estate. An evidentiary hearing was then scheduled to obtain court approval of the agreements.

Slattery attempted to notify "everyone" that there would be an evidentiary hearing on the proposed settlement agreements. The trial court initially refused to approve the agreements because not all of the residuary members had signed them. The trial court determined that before it would approve the agreements, all of the residuary members would have to agree to the terms of the agreements. After Slattery obtained all of the necessary signatures, the trial court approved the two agreements. Slattery testified that the time expended in obtaining all the necessary signatures "probably exceeded the case preparation." In all, Slattery estimated that he spent approximately 104.8 hours on this case.

Lynn McHugh, copersonal representative of the Stull estate, was called to testify. According to McHugh, the Methodist property was sold for $98,432. Forty percent of that, or $38,827.23, was being held by the estate. The Midlands property was expected to sell for $150,656. According to McHugh, he had a purchaser for the property but there were some problems with the title, and he would not accept an offer until the title was clear. McHugh estimated that after both sales were complete, the estate would receive $98,274.99 pursuant to the settlement agreements. McHugh testified that there were approximately $7,000 in cash devises that had not been paid for lack of funds and stated that some of this money would be used to pay those off. The remaining funds were to be distributed to the residuary.

Other evidence was offered at the hearing which will be discussed later as necessary to our opinion. After hearing the evidence, the trial court determined that the common fund doctrine applied to this case and that the funds from the proceeds of the sales of the real estate was a common fund. The court found that the contingency fee agreement with Wolski was fair and reasonable. The court further found that the evidence supported Slattery's contention that he was entitled to "one-third of the amounts recovered for the residual class of devisees from the proceeds of the sell [sic] of the real estate." The objectors now appeal that decision.

III. ASSIGNMENTS OF ERROR

Restated, the objectors allege that the trial court erred in determining that the common fund doctrine applies to this case and in awarding an excessive amount of attorney fees.

IV. STANDARD OF REVIEW

In the absence of an equity question, an appellate court, reviewing probate matters, examines for error appearing on the record made in the county court. In re Estate of Stephenson, 243 Neb. 890, 503 N.W.2d 540 (1993).

In reviewing a question of law, an appellate court reaches a conclusion independent of the lower court's ruling. Goff-Hamel v. Obstetricians & Gyns., P.C., 256 Neb. 19, 588 N.W.2d 798 (1999).

V. DISCUSSION

1. IS COMMON FUND DOCTRINE APPLICABLE?

Resolution of this case necessarily involves a determination of whether the common fund doctrine applies to the facts of this case. The determination of whether the common fund doctrine applies is a question of law, with respect to which this court must reach a conclusion independent of the trial court's ruling. See In re Guardianship & Conservatorship of Bloomquist, 246 Neb. 711, 523 N.W.2d 352 (1994); Hauptman, O'Brien v. Milwaukee Guardian, 7 Neb.App. 60, 578 N.W.2d 83 (1998).

Ordinarily, the right of an attorney to compensation for his or her services depends upon a contract of...