Hill v. Kruse

225 So. 3d 56, 2016 WL 7176584
CourtSupreme Court of Alabama
DecidedDecember 9, 2016
Docket1150162 and 1150148
StatusPublished
Cited by3 cases

This text of 225 So. 3d 56 (Hill v. Kruse) is published on Counsel Stack Legal Research, covering Supreme Court of Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hill v. Kruse, 225 So. 3d 56, 2016 WL 7176584 (Ala. 2016).

Opinion

STUART, Justice.

Todd E. Hill, Roy Wayne Hill, Brian A. Hill, and D.ebra Hill Stewart (hereinafter referred to collectively as “the Hills”) filed both a petition for á writ of mandamus and an appeal challenging orders entered by the Mobile Circuit Court on October 7 and October 23, 2015. We deny the petition in case no.. 1150162 and reverse and remand in case no. 1150148.

Facts and Procedural History

The Hills are the children of Leroy Hill, who died testate in 2009. Deborah D. Hill, Leroy’s second wife, offered Leroy’s will for probate. The Hills hired Vincent F. Kilborn III and David A. McDonald (hereinafter referred to as “the attorneys”) to bring a breach-of-contract action against Leroy Hill’s estate and Deborah, alleging breach of an agreement between Leroy and the Hills’ mother at the time Leroy divorced the Hills’ mother in 1984 to make a will leaving the Hills a coffee company and a family ranch. The Hills and the [58]*58attorneys entered into a retainer agreement, which required the Hills to pay the attorneys “40% of any recovery, in the event there is a recovery, with or without suit.” According to the agreement, “recovery” included cash, real or personal property, stock in the Leroy Hill Coffee Company, and all or part ownership in the family ranch. After a trial, a judgment was entered for the Hills ordering specific performance of the contract, which required the conveyance of the coffee company and the ranch to the Hills. This Court affirmed the trial court’s judgment, without an opinion. See Estate of Hill v. Hill 205 So. 3d 706 (Ala. 2014)(table). The issue now before this Court involves the attorney fee.

A few months before this Court released its October 2014 decision, the administration of the estate was removed from the probate court to the circuit court.1 In January 2015, the circuit court entered an order stating that neither the coffee company nor the ranch would be conveyed to the Hills until resolution of Deborah’s election for a widow’s share. The court issued an additional order, requiring that evidence be submitted as to the potential taxes and administrative costs to be paid by the estate. The Hills negotiated a settlement of their claims against Deborah, her insurer, and her bank. The circuit court approved the settlement.

On March 31, 2015, the Hills, represented by the attorneys, moved the circuit court to approve the attorney fee authorized in the retainer agreement between the Hills and the attorneys “as a reasonable and necessary estate expense[ ].” As grounds for the motion, the Hills stated:

“1. The parties have reached a global settlement which includes an agreement by the estate to pay [Deborah] a $1.5 million marital bequest (in the form of cash and gold) in exchange for [Deborah’s] dismissal of all her claims against the [estate], including her claim for a one-third statutory share of the estate.
“2. [The Hills] request that this court examine the July 16, 2009, fee agreement between [the Hills and the attorneys,] which establishes a fee of 40% of all ‘cash, real or personal property, including, but not limited to, stock in [the coffee company] or any related company and all or a part ownership in the approximately 4,000 acres [ranch].
“3. [The Hills] further request that the court review the supplemental affidavit of Vincent F. Kilborn regarding expenses, as well as the previously filed affidavits of David A. McDonald, Vincent F. Kilborn, Frank Taylor, Clay Rankin, and Xavier Hartmann,[2] and, thereafter, issue an order that the 40% fee and the $485,929.53 incurred as litigation expenses by [the Hills] in reaching a resolution with [Deborah and her insurer] are reasonable, necessary, and essential expenses of the [Leroy Hill] estate, taking into account the size and character of the estate and the local law and practice.
“4. Such a finding by the court will assist [the Hills] in subsequent discussion with the IRS regarding the tax deductibility of the fees and expenses incurred in ensuring that the estate of Leroy Hill be distributed to the ‘persons entitled to it.’
“5. The potential tax deductibility of the fees and expenses incurred by [the Hills] in the litigation with [Deborah] was a factor in [the Hills’] decision to [59]*59enter into a global settlement with [Deborah and her insurance company].
“WHEREFORE, the premises considered, [the Hills] request this Court to examine the evidence before it and issue an order approving the July 16, 2009, 40% contingency fee agreement and the related litigation expenses as reasonable, necessary and essential fees and expenses of the Leroy Hill estate to ensure that the Leroy Hill estate be distributed to the persons entitled to it.”

Hills’ petition, at Exhibit G (emphasis added).

On March 31, 2015, the circuit court entered an order granting the Hills’ motion, stating:

“This matter is now before the court on [the Hills’] February 27, 2015, submission and [their] March 25, 2015, supplement in response to this court’s January 26, 2015, order that evidence be submitted as to the potential estate tax owed and the administrative costs to be paid from the estate. After carefully considering all relevant evidence, including the July 16, 2009, contingency fee agreement and the affidavits of David A. McDonald, Vincent F. Kilborn, Frank Taylor, Clay Rankin, and Xavier Hartmann, this court rules as follows:
“1. The contingency fee agreement between the [Hills] and [the attorneys] provides as an attorney fee 40% of all ‘cash, real or personal property, including, but not limited to, stock in [the coffee company] or any related company and all or a part ownership in the approximately 4,000 acres [ranch].’
“2. The contingency fee agreement further provides that the [Hills] shall be responsible for all litigation expenses incurred by the attorneys.
“3. The Court finds that the 40% attorney’s fee of all cash and real or personal property of the [estate] and litigation expenses in the amount of $485,929.53 are necessary, reasonable and essential expenses incurred for the proper resolution of the [estate], taking into account the size and character of the estate and the local law and practice.
“4. Without the fees and expenses incurred above, the Court finds the estate would not have been distributed to the persons entitled to it.”

Hills’ petition, at Exhibit H.

After Deborah was removed as administrator, the circuit court appointed Frank H. Kruse to administer the estate. The circuit court ordered Kruse to obtain professional appraisals of the assets of the estate and to complete the administration of the estate. Kruse determined there was no estate-tax liability resulting from either the will contest or the settlement and reported that conclusion to the circuit court. He also sought appraisals of the coffee company and the ranch.

In early April 2015, the Hills paid the attorneys approximately $1,835,000 in attorney fees and $485,929 in litigation expenses from funds transferred to the attorneys’ trust account under the Hills’ settlement with Deborah and her insurer.

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225 So. 3d 56, 2016 WL 7176584, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hill-v-kruse-ala-2016.