Willows v. Estate of Bockwoldt (In re Estate of Bockwoldt)

• Decision Date: 13 April 2012
• Docket Number: No. 09–1914.,09–1914.
• Parties: In The Matter of The ESTATE OF Loren S. BOCKWOLDT, Deceased. Dale Richard Willows, Conservator for Brandie Renee Bockwoldt, Minor Child of the Decedent, Appellant, v. The Estate of Loren S. Bockwoldt, Appellee.
• Court: Iowa Supreme Court

814 N.W.2d 215

In The Matter of The ESTATE OF Loren S. BOCKWOLDT, Deceased.Dale Richard Willows, Conservator for Brandie Renee Bockwoldt, Minor Child of the Decedent, Appellant,

v.The Estate of Loren S. Bockwoldt, Appellee.

No. 09–1914.

Supreme Court of Iowa.

April 13, 2012.

Timothy L. Baumann, William B. Norton, and Christopher L. Surls of Norton, Baumann & Surls, PLLC, Lowden, for appellant.

Daniel P. Kresowik of Stanley, Lande & Hunter, P.C., Davenport, for appellee.

ZAGER, Justice.

This case comes before us on further review from the court of appeals. As part of an order approving the final report of the executor of the estate of Loren S. Bockwoldt, the district court approved extraordinary attorney fees of $15,845.50 for Pete Wessels and $17,957.91 in attorney fees for the law firm of Stanley, Lande and Hunter (SLH), attorneys for the estate. The district court also approved expenses of $631.79. The district court found that these attorney fees and expenses were for necessary and extraordinary services to the estate pursuant to Iowa Code section 633.199 (2005). Dale Richard Willows, the conservator for the beneficiary of Loren's estate, objected to the application. After a hearing and ruling by the district court, Willows appealed. The court of appeals reversed the district court's ruling, holding “attorney fees may not be awarded for litigating an application for attorney fees under chapter 633.” We granted further review. Upon our further review, we now vacate the decision of the court of appeals and affirm the order of the district court in part and reverse in part. We hold extraordinary attorney fees may be awarded for defending a fee application in district court and on appeal. However, the case must be remanded for a hearing to determine the amount of fees to be awarded to SLH.

I. Factual Background and Prior Proceedings.

The present case requires us to resolve a dispute over a request for fees for extraordinary services in connection with the estate of Loren S. Bockwoldt. The extraordinary services at issue in this appeal were provided to the estate by Wessels and SLH between February 1, 2007, and June 8, 2009. This application was filed along with the final report and will be referred to as the 2009 application. The extraordinary services contained in the 2009 application were primarily for the defense of an application for fees for extraordinary services that Wessels provided to the estate between March 23, 2005, and January 31, 2007. This first application will be referred to as the 2007 application. Wessels and Eric Knoernschild of SLH defended the 2007 application before the district court, which granted the 2007 application. After Willows appealed, Wessels and SLH then defended the 2007 application on appeal. After remand by the court of appeals, Wessels filed a modified version of the 2007 application. After the district court's decision on remand from the court of appeals, Willows again appealed the award of extraordinary attorney fees. Wessels and SLH again defended the modified 2007 application before the court of appeals. These are the extraordinary services for which Wessels and SLH now seek compensation in the 2009 application.

A. The Background of the 2007 Application. Loren and Tammy Bockwoldt, husband and wife, died in an automobile accident in Arizona on March 12, 2005. Loren had two children: an adult son, Brock, and a minor child, Brandie. Brandie was Tammy's only child. Brandie was a beneficiary of Loren and Tammy's estates, while Brock was only a beneficiary of Loren's estate. Tammy's brother, Willows, was appointed Brandie's conservator. Neal Bockwoldt, Loren's brother, was appointed as coexecutor of both Loren and Tammy's estates, along with Willows and Brock. Wessels was designated as the attorney for both estates, but later withdrew from representation of Tammy's estate due to a conflict of interest.

On February 16, 2007, the district court issued a ruling on several motions relating to Loren and Tammy's estates, including the 2007 application. The court awarded Wessels $67,045 in attorney fees from Loren's estate and $5888.50 in attorney fees from Tammy's estate. On Wessels' motion, the court also removed Brock and Willows as coexecutors of both estates, citing conflicts of interest.¹ The court appointed Central State Bank as the executor of Loren's estate and First National Bank of Muscatine as the executor of Tammy's estate. There were significant assets in Brandie's conservatorship, so the court required Willows to post a bond prior to removing any money from the conservatorship. A wrongful death action was pending in Arizona at the time, so the district court refused to close the estates. However, since the ultimate outcome of the litigation was unclear, the district court ordered that “for the time being” half of the recovery should be placed in Tammy's estate and half should be placed in Loren's estate, noting that the order might be amended in the future. Willows appealed each of these rulings, including the award of fees requested in the 2007 application. The estates responded to the appeals.

On appeal, the court of appeals affirmed the district court's holding on all issues except the fee award. The court of appeals determined that the district court awarded fees without properly following code sections 633.197–.199. The court of appeals noted that as part of the 2007 application, Wessels had supplied a detailed, fifty-page statement itemizing exactly what services he had provided for the estate, as well as identifying seven “extraordinary issues” that had arisen during the management of the estate. These extraordinary issues included litigation as to Brandie's guardianship, ownership of farmland interests and farm-related business interests, income tax issues, obtaining information on fifteen different insurance policies between the two estates, and the division of assets between the two estates.² However, at the hearing, the district court did not require Wessels to go forward to prove his fees, nor did the district court make specific findings as to which of these services were ordinary and which were extraordinary. As a result, the court of appeals remanded the 2007 application to the “district court for a hearing requiring the applicant to meet his burden and for specific findings regarding the reasonableness of ordinary fees and extraordinary fees granted.”

On January 30, 2008, in response to the court of appeals ruling, Wessels filed another application for ordinary and extraordinary fees (the modified 2007 application). Like the initial 2007 application, the modified 2007 application sought fees for services provided from March 23, 2005, to February 1, 2007. It included the list of seven matters that were extraordinary and an itemized list of services provided.³ Willows again objected. A hearing on the modified 2007 application commenced on February 25, 2008. Counsel for Wessels argued it would be “very difficult” to break out the “real estate, litigation, and taxation issues” involved in Loren's estate. The district court agreed and refused to require Wessels to break out or itemize his bill. However, the hearing was continued to allow Wessels “an opportunity to amend his proofs”.

According to the itemized billing statement Wessels offered in support of the modified 2007 application, he had performed services for Loren's estate which totaled $76,375.50 in fees. This number was based on the number of hours Wessels worked on the estate multiplied by his hourly rate and included the hourly rate of Wessels' legal assistant. The modified 2007 application noted that, under section 633.197, the statutory cap on ordinary fees for Loren's estate was $20,432.89. The modified 2007 application requested the court award extraordinary fees of $55,942.61, the difference between the amount Wessels billed to the estate and the maximum amount allowed as ordinary fees under section 633.197.

At the resumed hearing on April 24, 2008, Willows admitted Wessels actually performed all the services listed in the itemized bill. Willows conceded Wessels was entitled to $20,432.89 in ordinary fees, $640.50 in necessary and extraordinary expenses, and $18,413 in fees for necessary and extraordinary services. Willows, however, disagreed that the remaining $37,529.61 in fees were for actual, necessary, and extraordinary services to Loren's estate. The district court disagreed with Willows, stating,

It seems to this Court Willows has a larger obligation after Wessels specifically and extensively explained the unusual issues with which he had to come to grips ... than to allege only in general terms without reference to specific services, some of the services Wessels provided were only “ordinary.” He did not do so.

The district court then awarded Wessels all $76,375.50 in fees for ordinary and extraordinary services, and Willows appealed.

In its April 8, 2009 ruling, the court of appeals modified the district court's award. The court of appeals found the district court had once again improperly shifted the burden of proof under section 633.199 to Willows instead of placing it on the party requesting the fees. The court of appeals “disagree [d] with the district court that Wessels ‘specifically and extensively explained the unusual issues with which he had to come to grips.’ ” The court also took issue with how the amount of extraordinary fees was calculated, stating,

Wessels's interpretation of the relevant code sections was that so long as he provided some extraordinary services, all his fees above the section 633.197 cap became presumptively compensable under section 633.199. This is not how the code sections operate.

Section 633.198 authorizes payment of reasonable attorney fees “as full compensation for all ordinary services.” The fee schedule provided in section 633.197 provides the maximum any attorney can collect on fees for ordinary services, regardless of...