In re Brashich

250 A.D.2d 71, 680 N.Y.S.2d 214, 1998 N.Y. App. Div. LEXIS 11647

This text of 250 A.D.2d 71 (In re Brashich) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Brashich, 250 A.D.2d 71, 680 N.Y.S.2d 214, 1998 N.Y. App. Div. LEXIS 11647 (N.Y. Ct. App. 1998).

Opinion

OPINION OF THE COURT

Per Curiam.

Respondent Deyan R. Brashich was admitted to the practice of law in the State of New York by the First Judicial Department on March 28, 1966, as Deyan Ranko Brashich. Respondent Benjamin M. Cardozo was admitted to the practice of law in the State of New York by the First Judicial Department on June 29, 1942. At all times relevant to this proceeding, respondents maintained offices for the practice of law within the First Judicial Department.

By petition dated April 7, 1997, the Departmental Disciplinary Committee (the DDC) sought an order pursuant to 22 NYCRR 603.4 (d), Judiciary Law § 90 (2), and the doctrine of collateral estoppel, finding respondents guilty of professional misconduct in violation of Code of Professional Responsibility DR 1-102 (A) (4) (22 NYCRR 1200.3) (conduct involving dishonesty, fraud, deceit or misrepresentation), (5) (conduct prejudicial to the administration of justice) and (8) (conduct that adversely reflects on fitness to practice), DR 2-106 (A) (22 NYCRR 1200.11) (charging an illegal or excessive fee), DR 5-101 (A) (22 NYCRR 1200.20) (conflicting representation of a client due to financial or personal interests) and DR 7-102 (A) (3). (22 NYCRR 1200.33) (concealing or failing to disclose that which the lawyer is required by law to reveal) and referring this matter back to the DDC solely to consider evidence in mitigation or aggravation, if any, and to recommend the appropriate sanction.

The DDC sought to base the application of collateral estoppel on the record of the proceedings in Matter of Lucille M. Stern (file No. 1976/2260, Sur Ct, Westchester County), the memorandum decision dated December 15, 1994, the decree dated February 23, 1995 of the Honorable Albert J. Emanuelli, Surrogate, Westchester County, and the decision and order of the Appellate Division, Second Department, affirming the Surrogate’s order (227 AD2d 636).

The underlying facts are as follows. This matter arose from a proceeding in Surrogate’s Court to set legal fees and approve [73]*73an accounting of a trust. The trust was established by Lucille M. Stern’s will. The will provided that Ms. Stern’s two children, Babette and Edward, should have a life income interest in the corpus of the trust, which consisted entirely of stock in Kreisler Manufacturing Corporation. Edward was the President, Chief Executive Officer, Chairman of the Board and majority stockholder of Kreisler at all relevant times.

By operation of the will, Edward was the sole trustee of the trust. Upon the death of both Edward and Babette, their children were to inherit the trust per stirpes.

In or about August 1987, Babette retained respondent Cardozo of Cardozo & Cardozo, P. C. to represent her in an action to remove Edward as trustee and to obtain an intermediate accounting. Edward had refused to distribute any funds from the trust to Babette, who had no income and was destitute.

On November 12, 1987, Babette signed a letter agreement with respondent Cardozo that provided that she pay him $7,500 as a minimum fee and agree to a one-third contingency fee in the event she received money by settlement or court order. In or about August 1988, Cardozo engaged respondent Brashich as trial counsel for Babette.

Respondents proceeded in Surrogate’s Court to seek removal of Edward as the trustee due to his failure to make a distribution to Babette despite the appreciation of Kreisler stock. The application was successful and, on September 28, 1989, Surrogate Brewster removed Edward as trustee. Edward immediately sought review by the Appellate Division, Second Department, and obtained a stay of the Surrogate’s removal ruling. In the meantime, respondents submitted a fee request to Surrogate Brewster for $162,000 based on quantum meruit. The request omitted any reference to the contingency fee agreement. No hearing was held and no fee was awarded.

During the pendency of the appeal, the parties tried to settle the matter so that Edward would remain the trustee but would make a distribution to Babette. A major concern on Edward’s part was to maintain control of the Kreisler stock.

In or about February 1991, the parties agreed to a settlement withdrawing the appeal. Edward, Babette and Babette’s four children signed discharge agreements and releases terminating the Lucille M. Stern trust and discharging and indemnifying Edward as trustee. According to the discharge agreements, the Kreisler stock was to be divided in half and distributed as income, one half of the stock to Edward and one [74]*74half to Babette after which Kreisler would immediately buy Babette’s stock at $10 per share: $1,750,064. A separate agreement provided that Babette would establish a trust for herself with her son Frederick as trustee, and trusts for the benefit of her four children with a life interest for her, funded by approximately half of the monies she received for the stock ($881,730).

At this time, respondents demanded their fee and agreed to accept a “reduced” amount of $500,000. Three of Babette’s children agreed to contribute in equal parts ($125,000 each) toward their mother’s total fee of $500,000. Respondents received a total of $375,000 from the three consenting children, but Babette’s fourth child, Deborah, objected to respondents’ fee demand. Respondents agreed to apply to the Surrogate’s Court for an award of counsel fees due them from Deborah.

On February 6, 1991, respondents filed a petition in Surrogate’s Court pursuant to SCPA 2110. The request was based upon one third of Deborah’s one-quarter share of the distribution from her mother (i.e., one third of $437,660), plus additional fees and costs of the appeal and the then-pending application, for a total of $176,367.76.

. On September 26, 1991, Surrogate Emanuelli denied respondents’ motion for summary judgment on their fee petition and ordered Edward to file an intermediate accounting. The Surrogate appointed a guardian ad litem to represent the interests of the living and yet unborn grandchildren of Edward and Babette.

Both Deborah and the guardian ad litem answered respondents’ petition, objecting to the fee, among other things. The answers objected, inter alia, to the designation of Babette’s distribution as “income”, to the destruction of Lucille M. Stern’s trust as set forth in her will, and to respondents’ fees, noting that the court had not approved the settlement or the fee. The guardian ad litem also objected to the potential tax consequences of the settlement and to the negative impact on the grandchildren by the change in the measuring lives of the new trusts. Both answers alleged that respondents had deceived Babette and her children in a manner calculated to maximize their fee, by denominating the funds paid to Babette as “income” so as to justify taking one third of her “income” pursuant to their continency fee agreement. The answers further alleged that respondents acted illegally by destroying the trust without court approval and by recommending that Babette indemnify Edward for any losses resulting from the destruc[75]*75tion of the trust, in violation of EPTL 11-1.7. Finally, the answers alleged that respondents improperly failed to disclose to the court that they had already received $375,000 in fees and failed to properly advise Babette that they had made a prior application to Surrogate Brewster for legal fees based upon the value of their services.

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Related

In re Phelan
173 A.D.2d 621 (Appellate Division of the Supreme Court of New York, 1991)
In re the Estate of Stern
227 A.D.2d 636 (Appellate Division of the Supreme Court of New York, 1996)

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250 A.D.2d 71, 680 N.Y.S.2d 214, 1998 N.Y. App. Div. LEXIS 11647, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-brashich-nyappdiv-1998.