Harrill & Sutter, PLLC v. Kosin

2011 Ark. 51, 378 S.W.3d 135, 2011 Ark. LEXIS 41
CourtSupreme Court of Arkansas
DecidedFebruary 9, 2011
DocketNo. 10-518
StatusPublished
Cited by20 cases

This text of 2011 Ark. 51 (Harrill & Sutter, PLLC v. Kosin) is published on Counsel Stack Legal Research, covering Supreme Court of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Harrill & Sutter, PLLC v. Kosin, 2011 Ark. 51, 378 S.W.3d 135, 2011 Ark. LEXIS 41 (Ark. 2011).

Opinions

COURTNEY HUDSON HENRY, Justice.

| Appellant Harrill & Sutter, PLLC (“Harrill”) appeals a Garland County Circuit Court order ruling that appellee Cynthia Kosin discharged Harrill for cause, thereby determining the attorney’s fee, pursuant to Arkansas’s attorney-lien statute, Arkansas Code Annotated section 16-22-304 (Supp.2009), based upon quantum-meruit recovery rather than the parties’ fee agreement. For reversal, Harrill argues that the circuit court erroneously applied the attorney-lien statute. Kosin brings a cross-appeal seeking attorney’s fees pursuant to Arkansas Code Annotated section 16-22-308 (Repl.1999). Our jurisdiction is proper pursuant to Arkansas Supreme Court Rule l-2(a)(5) (2010). We affirm the direct appeal and reverse and remand on Kosin’s cross-appeal.

I. Facts

Kosin’s husband, John Robert Kosin, died on March 3, 2003. At the time of his death, Kosin resided in Arkansas but held business headquarters in Virginia, engaged in businesses |⅞⅛ several states, made payments to a previous wife on her divorce settlement, and had numerous tax difficulties. The record reveals that his businesses did not pay employee-withholding (“941”) taxes.

Stephen Butler of Winchester, Virginia, prepared the decedent’s will, dated September 20, 2002. The will nominated Butler as executor and trustee and directed Butler to pay a consulting fee to W.R. Reynolds and Rick Lynch, who operated Kosin’s companies. The decedent’s will left all of his household property and personal effects to Kosin, bequeathed annual payments of $525,000 to his wife for life, and gave her the right for the duration of her life to reside in his Hot Springs residence known as Greystone Estate. Additionally, the will bequeathed lavish gifts to friends and relatives, leaving the remainder of the estate to St. Luke’s Episcopal Church. Butler administered the bulk of the estate assets in Virginia, and the court later appointed Melanie Grayson as admin-istratrix of the Arkansas estate, which included the home and personal property. Butler voluntarily paid Kosin a -widow’s allowance of $3,000 per month and paid expenses of the home.

On May 23, 2003, Kosin consulted with Raymond Harrill and engaged the Harrill law firm to represent her in all matters pertaining to her rights to inherit from her husband’s estate. Kosin expressed her concerns about Butler, certain executives in her husband’s companies, and their potential conflicts of interest. Raymond Harrill requested the assistance of his partner, Luther Sutter, because of the complexity of the case. On June 18, 2003, Harrill and Kosin entered into a contingency-fee agreement whereby the law firm was to receive “twenty |spercent (20%) of the gross amount received from John Ko-sin’s estate presently or in the future, or if the matter is settled, or thirty percent (30%) of the gross amount received from John Kosin’s estate presently or in the future, with a lawsuit seeking to set aside the pre-nuptial agreement as filed, or an election to take against the will as filed.”

In order to determine Kosin’s rights to elect against the will, Harrill needed to obtain a complete financial picture of the decedent’s companies. From June 10, 2003, through July 30, 2004, Sutter requested information from Butler in twenty-two letters. As a part of his administrative duties, Butler supplied Sutter with an accounting of the ongoing expenses of the estate, a copy of a premarital agreement between Kosin and the decedent, a copy of a divorce and separation agreement between the decedent and his previous wife, and 2002 tax returns for various corporations in which the decedent had an interest. Butler advised Sutter that Butler’s course of action was to sell the decedent’s principal business assets and to close those that were not profitable. Butler further notified Sutter that the president of the corporation offered to purchase the profitable assets of the decedent’s estate. On July 21, 2003, Butler provided Sutter with a copy of the inventory of the Virginia assets, and in August 2003, Sutter opened an ancillary estate in Garland County Circuit Court to administer the Arkansas property.

On November 11, 2003, Butler notified Sutter by letter that Butler had entered into a contract to sell the decedent’s businesses for $39.4 million with a contingency clause that allowed Butler to be released from the contract if he deemed the sale inadequate. The letter Unformed Sutter that he engaged Management Planning, Inc., to appraise the restaurants in order to determine the validity of the purchase price, but he would rely in part upon an evaluation performed by the pending lender of the estate. More significantly, Butler enclosed a copy of the appraisal of Greystone, which indicated a value of $2.9 million. Butler noted that he would favor a settlement of the real estate whereby Kosin would be entitled to the sale proceeds free of trust less the expenses of the sale, settlement with the church, and payoff of the existing deed-of-trust indebtedness, taxes, and expenses of the Arkansas administration. Butler later testified that he offered Kosin the net value of the home, which he estimated to be in excess of $1 million. Sutter forwarded a copy of the letter to Kosin, but according to Kosin, Sutter did not explain the terms of the offer. Further, nothing in the record reveals that Sutter attempted to explain to Kosin that this offer exceeded her dower- and-homestead interest and, if settled upon this basis, would have resulted in a settlement amount greater than that which Kosin would have ultimately received. Sutter did not discuss the offer with Kosin until September 1, 2004, after learning that Kosin had retained Friday, Eldredge & Clark (“the Friday firm”). At that time, Sutter advised Kosin of the $1 million settlement offer and advised that he acquired this information, not from Butler, but from Melanie Grayson, the administratrix of the ancillary estate.

Additionally, on September 1, 2004, Sut-ter wrote Butler a letter stating that Kosin was concerned about the 941 tax issue and continued to grow impatient about its resolution. Sutter reminded Butler that he had requested ninety days to prepare a plan concerning the 15issue and added:

If there is no timetable forthcoming in the near future, my client may very well be forced to advise the IRS of these 941 tax issues in order to bring this matter to a conclusion.... [I]n my view of the pending litigation concerning the premarital agreement and will, my client is hesitant to elect against the will until the IRS tax liability is liquidated. Accordingly, I must insist that the IRS be notified of this 941 tax issue on or before December 1, 2004, by letter, copied to me.

On January 16, 2004, Butler informed Sutter that the decedent’s profitable businesses had been sold on December 31, 2003, for the total purchase price of $44,650,000. Although Sutter had two notices of the pendency of the sale, neither Sutter nor any other member of the Har-rill firm took any action to avoid the sale, nor did they retain counsel in Virginia to assist in the Virginia proceeding until February 2004 after the sale occurred. Further, Sutter later told Butler that he intended to notify the Internal Revenue Service regarding unpaid 941 taxes.

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Bluebook (online)
2011 Ark. 51, 378 S.W.3d 135, 2011 Ark. LEXIS 41, Counsel Stack Legal Research, https://law.counselstack.com/opinion/harrill-sutter-pllc-v-kosin-ark-2011.