In re Estate of Tkachuk, A-3578-19, 2021 WL 2711116 (N.J. Super. App. Div. June 30, 2021).
Karen Lesso Conover (“Conover”) was the executor and primary beneficiary of the estate of Margaret C. Tkachuk (“Estate”). The law firm she retained to assist her with the administration of the Estate made a tax allocation error that benefited her.
Mark Lesso (“Lesso”), a residual beneficiary of the Estate, filed a complaint that sought an accounting and alleged that the $61,878 tax payment made from the residuary estate was in error. Conover hired a second law firm to represent her in the litigation, and she eventually reimbursed the tax payment to the Estate. Conover later retained a third firm to represent her with respect to both the administration of the Estate and the litigation.
The parties entered into a settlement agreement and submitted a consent order (“Order”) to the court which required Conover to put the first law firm on notice of a potential malpractice claim related to the tax error. Conover never fulfilled this obligation. The Order further required all attorneys seeking fees and costs in connection with the litigation to file their fee applications with the court. Any party whose attorneys who were already paid by the Estate and whose fee application was not approved by the court would be required to return such fees to the Estate.
After reviewing the fee applications, the court rendered a decision that required Conover to reimburse $33,129 to the Estate for counsel fees charged by attorneys who represented her in the litigation and whom she paid from Estate funds – thus creating a fund in court. Any unpaid fees would become Conover’s personal responsibility. The court awarded Lesso’s attorneys $25,986.85 in fees and costs which were to be paid from the fund in court.
Conover filed a motion for reconsideration, which was denied and increased the amount she owed the Estate to about $39,000. She appealed the trial court order and the reconsideration denial.
On appeal, Conover asserted that the trial court: (1) erred to the extent it awarded Lesso’s legal fees to be paid from the Estate under Rule 4:42-9(a)(3) and under In re Estate of Vayda, 184 N.J. 115 (2005); (2) abused its discretion when it ordered Lesso’s feeds be paid from the fund in court, when the court’s decision was motivated by equitable considerations; and (3) erred by making determinations as to disputed facts on an incomplete record.
The appellate court affirmed the trial court order and denial of the motion for reconsideration. Specifically, the panel found that the trial judge had noted during the reconsideration motion hearing that the reference to Rule 4:42-9(a)(3) was a typographical error, and instead intended to award plaintiff’s legal fees under Rule 4:42-9(a)(2) which governed the payment of counsel fees from a fund in court. Further Conover’s reliance on Vayda was misplaced. The appellate panel agreed that in this matter, the successful litigant’s – i.e. Lesso’s – counsel fees should be paid out of the Estate.
Additionally, the trial court’s decision that Conover should be responsible for her own fees and reimburse said fees to the Estate, creating the fund in court, was not an abuse of discretion, nor a misinterpretation of the law. The appellate court confirmed that the trial court correctly followed the two-step process evaluating when legal fees should be paid from a fund in court, as illustrated in Porreca v. City of Millville, 419 N.J. Super. 212, 225 (App. Div. 2011). Specifically, the court considered (1) whether Lesso was entitled as a matter of law to an attorney fee award under the fund in court exception, and (2) whether the fee amount, which was within the discretion of the court, was reasonable under the facts of the case.
As to Conover’s third argument, the court determined that while the underlying record in this case may have been incomplete, it was harmless error because the basis for determining the allocation of fees was not based on Conover’s actions as executor of the Estate, but rather on the creation of a fund in court.
Lastly, Conover argued that she should not be responsible for the first law firm’s fees because they were retained to assist with the administration of the Estate. The appellate panel affirmed the lower court’s decision since the first firm did not represent the Estate, but rather Conover in her capacity as the executor of the Estate. Furthermore, Conover had agreed and subsequently failed to notice the first law firm of a potential malpractice claim. Had she done so, and prevailed, those fees would have been returned to the Estate.
The post Court Orders Executor Responsible for Own Legal Fees in Estate Litigation appeared first on Archer & Greiner.