In re Estate of Johnson
| Decision Date | 31 August 2005 |
| Docket Number | No. S-11084.,S-11084. |
| Citation | 119 P.3d 425 |
| Parties | In the Matter of the ESTATE OF Clifford JOHNSON, Maynard Johnson, Appellant, v. Hughes Thorsness Powell Huddleston & Bauman LLC, Appellee. |
| Court | Alaska Supreme Court |
Hugh G. Wade and Marion C. Kelly, Wade Kelly & Sullivan, Anchorage, for Appellant.
James M. Gorski and Robert L. Manley, Hughes Thorsness Powell Huddleston & Bauman LLC, Anchorage, and Susan C. Orlansky, Feldman & Orlansky, Anchorage, for Appellee.
Before: BRYNER, Chief Justice, EASTAUGH, FABE, and CARPENETI, Justices.
Maynard Johnson moved to reopen probate proceedings for his father's estate because he believed the legal fees incurred during the closing of the estate were excessive. The superior court denied his motion and Maynard Johnson appealed. We remanded the case to the superior court to determine the reasonableness of professional fees charged to the estate. The probate master held an evidentiary hearing and concluded that the legal fees were reasonable, and the superior court approved the findings. Maynard Johnson appeals that determination and several related matters. Because we conclude that the appellee did not meet its burden of proving the reasonableness of all of the legal fees charged to the estate, we reverse in part the superior court's order.
Clifford M. Johnson died in 1983. His sister, Evva Betts, was appointed as the personal representative for his estate under his will. The will bequeathed $5,000 to Nancy Wharton and the residue of the estate to Clifford Johnson's son, Maynard Johnson. Maynard Johnson is the appellant in this case.
In 1984 attorneys for the personal representative submitted an inventory of the estate assets. The total assets were valued at $682,798. The principal assets in the estate were a partnership in a drilling company, a bar and store in South Naknek, several parcels of land, and $70,000 in accounts receivable from the store.1
The estate debts totaled $185,746.2 The debts consisted of a $100,321.95 obligation to Humana Hospital for expenses associated with Clifford Johnson's illness, a bank note in the amount of $17,961.82, federal taxes in the amount of $41,695, promissory notes to private parties, trade accounts relating to the bar and store, and additional medical bills.
Following his father's death, Johnson continued to operate the bar and store. He sold his father's interest in the drilling business for $50,000, as well as some fuel tanks and other estate property. He used the proceeds from these sales to pay some of the estate debts. In an earlier proceeding relating to the estate, the probate master found that Johnson illegally retained between $1,000 and $4,000 in proceeds from this sale without depositing them into an estate account.
In 1984 Humana Hospital applied for creditor's protection. The probate master held a hearing and ordered the personal representative to post a bond in the amount of $200,000. The probate master found that Johnson had been acting as an agent for the estate and ordered him appointed co-personal representative. Acting as co-personal representatives, Evva Betts and Johnson posted a $200,000 bond issued by Safeco in June 1984.
In April 1986 Johnson entered into an earnest money contract to sell the bar and store. The transaction was scheduled to close in June 1986, but the sale did not close during Johnson's tenure as co-personal representative. Johnson also entered into a verbal contract to sell two parcels of land owned by the estate. In an earlier proceeding relating to this case, the probate master found that Johnson personally retained the proceeds from the land sales.
In May 1986 Humana Hospital filed a motion to remove Evva Betts and Johnson as personal representatives for the Clifford Johnson estate. Humana was represented by the law firm of Hughes, Thorsness, Gantz, Powell & Brundin (Hughes, Thorsness). Humana argued that for almost two years the estate had not made payments on the balance owed to Humana. Humana also pointed out that the estate had yet to pay other debts, including the federal estate tax owed on the estate. Humana charged that the co-personal representatives had exhibited "nonfeasance" in their management of the estate. Although Betts and Johnson disagreed with Humana's characterization of their estate management, they agreed to resign as personal representatives. On May 30, 1986, the superior court issued an order appointing the public administrator as successor personal representative for the estate. The order specifically authorized the public administrator to employ Hughes, Thorsness to perform legal services to assist with the administration of the estate.3
The public administrator employed Hughes, Thorsness to perform legal services relating to the estate from May 1986 through the closing of the estate. Legal services provided for the estate by Hughes, Thorsness included the sale of the bar and store in South Naknek; resolution of a claim against the estate by the Naknek Electric Company resolution of a claim against the estate by Peter Pan Seafoods; negotiation of an agreement tolling the statute of limitations for potential claims that the estate had against Betts and Johnson regarding their mismanagement of the estate; transactions involving a motion to forfeit the $200,000 Safeco surety bond that Betts and Johnson posted in response to the probate court's 1984 order; resolution of a claim filed against the estate by the Odom Company; collection of small claims owed to the estate; and efforts to establish clear legal title to the estate's various real estate holdings. The fees and expenses charged by Hughes, Thorsness for these and other legal tasks are the subject of this appeal.
On October 29, 1992, Hughes, Thorsness submitted a petition to the probate court for settlement, distribution, and approval of the final accounting on the estate. The petition included an accounting covering the period from May 30, 1986 (the date the public administrator was appointed successor personal representative) through July 31, 1992. The accounting reported professional fees charged by Hughes, Thorsness in the amount of $155,560 for legal fees and $11,791.43 for expenses during that period, totaling $167,351.43. A subsequent accounting for the period from August 1, 1992 through February 28, 1993 reflected that payments in the amount of $30,409.87 were made to Hughes, Thorsness for the closing fees and expenses. In total, Johnson claims that Hughes, Thorsness received legal fees in the amount of $197,761.30 during this period.
The superior court judge entered an order approving the final accounting and decree of distribution on December 31, 1992. Johnson claims that the total payments he received from the estate were only $2,411.65. Hughes, Thorsness maintains that Johnson also received an additional $18,722.80 and parcels of real estate valued at $29,700.
Before closing the estate, Hughes, Thorsness established a trust for liquidation of assets to "satisfy any outstanding potential claims that may be asserted against the Estate or the successor Personal Representative by unsatisfied creditors...." The superior court approved the transfer of $25,000 from the estate to the liquidation trust. Christy Morse, a former Hughes, Thorsness paralegal, was designated as trustee. Between June 11, 1993 and April 18, 1996, payments were made to Hughes, Thorsness from the trust to cover the firm's expenses in litigation regarding legal fees charged to the estate.
On November 3, 1993, Johnson filed a motion under Alaska Civil Rule 60(b) to reopen the probate proceedings to review the legal and accounting fees. The probate master recommended that Johnson's motion be denied, and Superior Court Judge Larry D. Card issued an order denying the motion. Johnson appealed to this court. We reversed the superior court's denial of Johnson's motion to set aside the final probate judgment and remanded for review of the fees under AS 13.16.440,4 but we did not decide whether the fees and costs were excessive.
On remand, Johnson submitted interrogatories to the public administrator requesting a breakdown of professional fees. Hughes, Thorsness responded by letter, stating that the public administrator was no longer a party. Hughes, Thorsness also submitted an itemized computer printout of its billing activity relating to the estate. Johnson then filed a motion to compel discovery, arguing that the billing records provided by Hughes, Thorsness did not provide a breakdown of the time billed for work on various legal projects.
The probate master recommended that the public administrator appoint a successor personal representative to execute responses to Johnson's discovery requests.5 The probate master also recommended that the superior court deny Johnson's motion to compel production because the billing records provided by Hughes, Thorsness were the only billing records available. On April 7, 1998, Superior Court Judge Larry D. Card issued an order adopting all of the probate master's recommendations.
While in the process of conducting discovery on remand, Johnson learned that the trustee for the liquidation trust had withdrawn funds from the trust to compensate Hughes, Thorsness for legal fees incurred while defending Johnson's motion to reopen the estate and Johnson's first appeal to this court. On April 30, 1998, Johnson filed a motion for order to show cause requesting sanctions against Hughes, Thorsness for withdrawing funds from the trust for this purpose. Hughes, Thorsness opposed the motion. The superior court did not take action on the motion.
The probate master held a four-day evidentiary hearing on the reasonableness of the professional fees from June...
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...estates, courts widely consider the size of the estate in relation to the fees when awarding attorneys’ fees. See In re Estate of Johnson , 119 P.3d 425, 433 (Alaska 2005) (stating that "[c]ourts in a number of jurisdictions have found that attorney's fees in probate matters were excessive ......
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In re Crandall
...have determined the amount of the fee compared to the size of the estate is an appropriate consideration, citing In re Estate of Johnson , 119 P.3d 425, 433-34 (Alaska 2005).The Estate of Johnson court pointed to Annot., 58 A.L.R.3d 317, § 2. See 119 P.3d at 433 n.27. That annotation commen......
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Estate of Castruccio v. Castruccio
...estates, courts widely consider the size of the estate in relation to the fees when awarding attorneys' fees. See In re Estate of Johnson, 119 P.3d 425, 433 (Alaska 2005) (stating that "[c]ourts in a number of jurisdictions have found that attorney's fees in probate matters were excessive b......