NO. 96-074 IN THE SUPREME COURT OF THE STATE OF MONTANA
IN RE THE ESTATE OF MARY K. DAMM, h/Q!! ,:?i Vj!Q!j Deceased.
APPEAL FROM: District Court of the Seventy Judicial District, In and for the County of Richland, The Honorable Richard G. Phillips, Judge presiding.
COUNSEL OF RECORD: For Appellant: George T. Radovich, Radovich Law Firm, Billings, Montana (for Edwin K. Damm) Fred E. Whisenand, McIntee & Whisenand, Williston, North Dakota (for Leona Howard) For Respondent: Mike Weber, Cresap, Weber & Irigoin, Sidney, Montana (for Alice Synek)
Submitted on Briefs: September 5, 1996 Decided: November 21, 1996 Filed: Justice Charles E. Erdmann delivered the opinion of the Court. Pursuant to Section I, Paragraph 3(c), Montana Supreme Court
1995 Internal Operating Rules, the following decision shall not be
cited as precedent and shall be published by its filing as a public
document with the Clerk of the Supreme Court and by a report of its
result to State Reporter Publishing Company and West Publishing
Company.
Edwin Damm and Leona Howard appeal from an order issued by the
Seventh Judicial District Court, Richland County, approving the
final accounting of the estate of Mary K. Damm with respect to its
award of personal representative fees and attorney fees. We affirm.
The issues on appeal are as follows:
1. Did the District Court err in setting the amount of
compensation to the personal representative?
2. Did the District Court err in approving the fee agreement
between the personal representative and the attorney for the
estate?
FACTS
Mary K. Damm died testate on April 7, 1993. Mary's last will
and testament provided that the residue of her estate be divided in
equal shares to her three children, Alice Synek, Edwin Damm, and
Leona Howard. The assets of the residuary estate consisted of
Mary's residence in Sidney, mineral property located in Richland
County, one bond, and numerous bank accounts and certificates of
2 deposit. Mary also held bank accounts and certificates of deposit in joint ownership with Alice, Edwin, and Leona. Mary nominated Alice to be the personal representative of the estate and the
District Court appointed Alice to act in that capacity.
In November 1993, Alice filed her final account, petition for
determination of testacy, determination of heirs, and for
settlement and distribution of the estate. On December 14, 1993,
the District Court conducted a hearing on the matter. At that
hearing, Edwin's attorney stated that he had filed a separate
complaint against Alice regarding the treatment of certain joint
tenancy acc0unts.l Edwin's attorney also objected to the amount
of personal representative fees and attorney fees included in the
final accounting and argued that closing the estate at that time
would be premature. The court agreed to continue the hearing so
that Alice and the attorney for the estate could file affidavits in
support of their time spent working on the affairs of the estate.
On December 18, 1995, Alice filed her second final account,
petition for determination of testacy, determination of heirs, and
for settlement and distribution of the estate. Alice sought
$14,283 in personal representative fees, and $21,394 in attorney
fees. Edwin and Leona both filed objections to the final
accounting and on January 9, 1996, the District Court conducted a
1 The companion suit against Alice involved whether or not some of the jointly held bank accounts and certificates of deposit should be included in the estate. The litigation was eventually settled in 1995 and resulted in a significant delay in the final accounting of the estate.
3 hearing on the matter. On February 7, 1996, the court issued its order approving the final account as adjusted. In that order, the court awarded Alice $5,280 in personal representative fees and
approved the fee agreement between Alice and the attorneys for the
estate. This appeal followed.
ISSUE 1
Did the District Court err in setting the amount of
compensation to the personal representative? In her affidavit filed with the court, Alice indicated she had
spent 314.25 hours performing her duties as personal representative. The $14,283 total fee award she sought in the
final accounting of the estate resulted in a compensation rate of
over $45 per hour. The District Court reduced the number of hours
to 264 and the hourly rate to $20, resulting in a total fee award
in the amount of $5,280.
Edwin and Leona argue on appeal that Alice inflated her fee in
order to "have her vengeance on the other heirs for the poor or
unequal treatment she feels she received at the hands of her mother
during her lifetime." They contend that Alice was motivated by her
own self-interest and submitted false time records and a false
affidavit to the court. Edwin and Leona argue that Alice should
not be compensated for her time in resisting the separate civil
lawsuit and they claim that the maximum number of hours Alice could have expended on the affairs of the estate was 221.75. They claim
that $8 per hour is a reasonable rate of compensation since that
4 was the highest hourly rate Alice ever received during the course
of her regular employment. Thus, Edwin and Leona maintain that, at
best, a fair and equitable fee should be $1,774.
Section 72-3-634(Z), MCA, provides that in any dispute
concerning fees, the court shall set the fee. We have previously held that the review of fees paid or taken by a personal
representative is left to the sound discretion of the district
court. Flikkema v. Kimm (1992), 255 Mont. 34, 42, 839 P.2d 1293,
1298. The court's determination will not be overturned absent a
showing of an abuse of discretion. Flikkema, 839 P.2d at 1298-99
(citing Estate of Stone (1989), 236 Mont. 1, 768 P.2d 334). The
test for abuse of discretion is whether the trial court acted
arbitrarily without employment of conscientious judgment or
exceeded the bounds of reason resulting in substantial injustice.
Gaustad v. City of Columbus (1995), 272 Mont. 486, 901 P.2d 565.
In the present case, the District Court determined that even
though Alice's accounting for her hours varied from the original
time sheets to the affidavits supplied to the court, it would give
her the benefit of the doubt. The court determined that the hours
spent in preparation of the separate civil litigation should not be
paid from the estate funds and that 'I [alfter reviewing the other
hours contained in the time sheets," Alice should be compensated
for 264 hours of work. In addition, the District Court held that
the filing, deposition, and jury costs associated with the separate stated that the personal representative is free to contract with employees of the estate as long as the fees for such services are
not excessive. The court stated that an excessive fee is one that
goes beyond the ceiling established by § 72-3-633, MCA, and held
that the "statutory language puts an outside limit on what can be
contracted for."
Free access — add to your briefcase to read the full text and ask questions with AI
NO. 96-074 IN THE SUPREME COURT OF THE STATE OF MONTANA
IN RE THE ESTATE OF MARY K. DAMM, h/Q!! ,:?i Vj!Q!j Deceased.
APPEAL FROM: District Court of the Seventy Judicial District, In and for the County of Richland, The Honorable Richard G. Phillips, Judge presiding.
COUNSEL OF RECORD: For Appellant: George T. Radovich, Radovich Law Firm, Billings, Montana (for Edwin K. Damm) Fred E. Whisenand, McIntee & Whisenand, Williston, North Dakota (for Leona Howard) For Respondent: Mike Weber, Cresap, Weber & Irigoin, Sidney, Montana (for Alice Synek)
Submitted on Briefs: September 5, 1996 Decided: November 21, 1996 Filed: Justice Charles E. Erdmann delivered the opinion of the Court. Pursuant to Section I, Paragraph 3(c), Montana Supreme Court
1995 Internal Operating Rules, the following decision shall not be
cited as precedent and shall be published by its filing as a public
document with the Clerk of the Supreme Court and by a report of its
result to State Reporter Publishing Company and West Publishing
Company.
Edwin Damm and Leona Howard appeal from an order issued by the
Seventh Judicial District Court, Richland County, approving the
final accounting of the estate of Mary K. Damm with respect to its
award of personal representative fees and attorney fees. We affirm.
The issues on appeal are as follows:
1. Did the District Court err in setting the amount of
compensation to the personal representative?
2. Did the District Court err in approving the fee agreement
between the personal representative and the attorney for the
estate?
FACTS
Mary K. Damm died testate on April 7, 1993. Mary's last will
and testament provided that the residue of her estate be divided in
equal shares to her three children, Alice Synek, Edwin Damm, and
Leona Howard. The assets of the residuary estate consisted of
Mary's residence in Sidney, mineral property located in Richland
County, one bond, and numerous bank accounts and certificates of
2 deposit. Mary also held bank accounts and certificates of deposit in joint ownership with Alice, Edwin, and Leona. Mary nominated Alice to be the personal representative of the estate and the
District Court appointed Alice to act in that capacity.
In November 1993, Alice filed her final account, petition for
determination of testacy, determination of heirs, and for
settlement and distribution of the estate. On December 14, 1993,
the District Court conducted a hearing on the matter. At that
hearing, Edwin's attorney stated that he had filed a separate
complaint against Alice regarding the treatment of certain joint
tenancy acc0unts.l Edwin's attorney also objected to the amount
of personal representative fees and attorney fees included in the
final accounting and argued that closing the estate at that time
would be premature. The court agreed to continue the hearing so
that Alice and the attorney for the estate could file affidavits in
support of their time spent working on the affairs of the estate.
On December 18, 1995, Alice filed her second final account,
petition for determination of testacy, determination of heirs, and
for settlement and distribution of the estate. Alice sought
$14,283 in personal representative fees, and $21,394 in attorney
fees. Edwin and Leona both filed objections to the final
accounting and on January 9, 1996, the District Court conducted a
1 The companion suit against Alice involved whether or not some of the jointly held bank accounts and certificates of deposit should be included in the estate. The litigation was eventually settled in 1995 and resulted in a significant delay in the final accounting of the estate.
3 hearing on the matter. On February 7, 1996, the court issued its order approving the final account as adjusted. In that order, the court awarded Alice $5,280 in personal representative fees and
approved the fee agreement between Alice and the attorneys for the
estate. This appeal followed.
ISSUE 1
Did the District Court err in setting the amount of
compensation to the personal representative? In her affidavit filed with the court, Alice indicated she had
spent 314.25 hours performing her duties as personal representative. The $14,283 total fee award she sought in the
final accounting of the estate resulted in a compensation rate of
over $45 per hour. The District Court reduced the number of hours
to 264 and the hourly rate to $20, resulting in a total fee award
in the amount of $5,280.
Edwin and Leona argue on appeal that Alice inflated her fee in
order to "have her vengeance on the other heirs for the poor or
unequal treatment she feels she received at the hands of her mother
during her lifetime." They contend that Alice was motivated by her
own self-interest and submitted false time records and a false
affidavit to the court. Edwin and Leona argue that Alice should
not be compensated for her time in resisting the separate civil
lawsuit and they claim that the maximum number of hours Alice could have expended on the affairs of the estate was 221.75. They claim
that $8 per hour is a reasonable rate of compensation since that
4 was the highest hourly rate Alice ever received during the course
of her regular employment. Thus, Edwin and Leona maintain that, at
best, a fair and equitable fee should be $1,774.
Section 72-3-634(Z), MCA, provides that in any dispute
concerning fees, the court shall set the fee. We have previously held that the review of fees paid or taken by a personal
representative is left to the sound discretion of the district
court. Flikkema v. Kimm (1992), 255 Mont. 34, 42, 839 P.2d 1293,
1298. The court's determination will not be overturned absent a
showing of an abuse of discretion. Flikkema, 839 P.2d at 1298-99
(citing Estate of Stone (1989), 236 Mont. 1, 768 P.2d 334). The
test for abuse of discretion is whether the trial court acted
arbitrarily without employment of conscientious judgment or
exceeded the bounds of reason resulting in substantial injustice.
Gaustad v. City of Columbus (1995), 272 Mont. 486, 901 P.2d 565.
In the present case, the District Court determined that even
though Alice's accounting for her hours varied from the original
time sheets to the affidavits supplied to the court, it would give
her the benefit of the doubt. The court determined that the hours
spent in preparation of the separate civil litigation should not be
paid from the estate funds and that 'I [alfter reviewing the other
hours contained in the time sheets," Alice should be compensated
for 264 hours of work. In addition, the District Court held that
the filing, deposition, and jury costs associated with the separate stated that the personal representative is free to contract with employees of the estate as long as the fees for such services are
not excessive. The court stated that an excessive fee is one that
goes beyond the ceiling established by § 72-3-633, MCA, and held
that the "statutory language puts an outside limit on what can be
contracted for."
Edwin and Leona argue that an attorney should be compensated
only for those services which were beneficial to the estate. They
claim that Alice and her attorney attempted to keep certain joint
accounts out of the estate and that the separate litigation which
resulted was not beneficial to the estate. Edwin and Leona argue that the attorney fees should be limited to the attorney's hourly
rate multiplied by the amount of time actually spent on handling
estate matters. Here, they claim that, at most, the attorney fees
should be $3,468, based on 40.8 hours of work at $85 per hour.
Alice argues that when the fee for an attorney is questioned,
the court does not set the fee, but rather, reviews the fee
arrangement. She claims that the personal representative, not the
court, sets the attorney fees in the first instance and that the
estate is bound by that agreement. Alice argues that even though
the fee contract is open for review, the amount of the fee is not
automatically converted into a quantummeruit measure of compensation
whereby recovery is limited exclusively to the reasonable value of
services rendered on an hourly basis. She cites to In re Estate of
Magelssen (1979), 182 Mont. 372, 380, 597 P.2d 90, 95, where this Court stated that quantummevuit compensation is normally appropriate
only where a valid contract does not exist.
Section 72-3-633, MCA, provides that if the services of an attorney are engaged by the personal representative, the compensation of the attorney shall not exceed one and one-half
times the compensation allowable to the personal representative.
Juxtaposed against that statutory requirement, however, is the situation where the terms of the attorney fee agreement exceed the
statutory ceiling. In that regard, the District Court cited to
Maselssen, 597 P.2d at 95, where we stated:
It is clear that a court, when reviewing a fee agreement under a substantially performed contract, cannot blind itself to the terms of the contract and make its own determination of what is reasonable.
In Maselssen, we also stated that:
We do not believe that section 91A-3-722 [the predecessor to § 72-3-634, MCA, which allows the court to review the employment of attorneys and their fees1 was intended to permit competent, fullyinformedpersonalrepresentatives to disavow their otherwise enforceable contracts for an attorney's services.
Maselssen, 597 P.2d at 95. Thus, the statutory maximum should not
necessarily prevent an award of attorney fees which exceed the
ceiling in a situation where the personal representative and
attorney have contracted for a higher fee and the contract has been
substantially performed. We therefore conclude that in this case
the District Court did not abuse its discretion when it determined
that the fee agreement between Alice and the attorney must be
approved.
8 Nevertheless, the court did not award a specific amount of
attorney fees. We must therefore turn to the attorney/client fee
agreement in order to determine the amount of attorney fees which
should be paid by the estate in this case. According to the
attorney's affidavit filed with the court, he and Alice "entered
into an oral agreement wherein Alice Synek agreed to pay [the
attorney] the maximum fee allowed by Section 72-3-663, MCA [sic]."
It is clear that the fee agreement set the attorney fees at the
statutory maximum.
In Issue 1 we held that the District Court did not abuse its
discretion when it awarded Alice $5,280 in personal representative
fees. Thus, the statutory maximum for attorney fees is $7,920 and
the final accounting of the estate should reflect that amount.
Affirmed.
Justice