Summary
taking excessive attorney fees from guardianship and estate; taking improper guardianship fees and fiduciary fees
Summary of this case from In re Application of CorriganOpinion
No. D.D. 87-28
Submitted March 15, 1988 —
Decided October 12, 1988.
Attorneys at law — Misconduct — Indefinite suspension — Taking excessive attorney fees from guardianship and estate — Taking improper guardianship fees and fiduciary fees.
ON CERTIFIED REPORT by the Board of Commissioners on Grievances and Discipline of the Bar, No. 52-86-B.
Relator, Disciplinary Counsel, filed a complaint alleging seven counts of misconduct against respondent, Conrad A. Curren, on November 17, 1986. Respondent answered the complaint on April 1, 1987. The matter was heard by a panel of the Board of Commissioners on Grievances and Discipline of the Bar on October 8 and 9, 1987.
All the allegations of misconduct involved respondent's representation in connection with the guardianship of Ethel T. Wildman and her decedent estate. Count I of the complaint alleged, inter alia, that respondent had violated DR 1-102(A)(5) (engaging in conduct prejudicial to the administration of justice) and 7-102(A)(3) (failing to disclose that which an attorney is required by law to reveal). Counts II, III, and IV charged respondent with a variety of disciplinary violations, but the gravamen of these allegations was that respondent had violated DR 2-106(A) (charging or collecting an illegal or clearly excessive fee). Counts V, VI and VII were dismissed by the board after its consideration of the evidence presented at the hearing.
The events from which the instant complaint arose are, for the most part, not in dispute. Respondent had represented Wildman, a former school teacher who was not married and who had no close relatives for a number of years prior to her death in December 1980. For the period March 1, 1971 through February 28, 1975, respondent prepared two successive leases that provided for Edsel Davis to rent four hundred four acres of farmland belonging to Wildman. Davis, a former student of Wildman's, paid an annual rent of $12,120 under the first two-year lease and $11,000 per year under the second two-year lease. This property would later be valued at $593,400 in an inventory that respondent filed in the administration of Wildman's estate.
In 1974, respondent prepared Wildman's last will and testament which she executed. The will made several specific bequests and provided that any property remaining in Wildman's estate be given to Berea College of Kentucky for a scholarship fund. The will also directed that respondent and Davis serve as co-executors of what would become Wildman's considerable estate. According to the will, however, respondent was to receive no compensation for his services as executor. Instead, fiduciary fees were to be paid only to Davis.
On March 31, 1975, Wildman, at her doctor's suggestion, was placed under guardianship by the Clinton County Probate Court. Davis was appointed Wildman's guardian pursuant to an application that respondent prepared. Respondent was engaged to represent Davis in this capacity.
On October 6, 1977, respondent filed the first accounting of the guardianship's assets. The accounting was based on records that Davis had given respondent, and it reflected payments of $1,166 to respondent. Although Davis had continued to lease the farmland from Wildman under the conditions of the lease that had expired in February 1975, the accounting did not disclose this arrangement to the probate court.
No further accountings were filed in the guardianship until after Wildman's death on December 28, 1980. On April 24, 1981, respondent filed the final guardianship accounting with the probate court. It reflected payments of $16,267.74 to respondent.
Fees to be charged in matters before the Clinton County Probate Court are set by the court's Local Rule 19. As of April 1978, that rule allowed a guardian's attorney to be paid fees only on written application to the court justifying the hourly or quantum meruit charge. No evidence was presented with respect to how a guardian's attorney fees were to be determined prior to 1978, although respondent did submit a 1967 copy of the Clinton County Bar Association's Attorney's Fee Guide. The record does not substantiate, however, that this guide had been approved by the probate court. Indeed, the guide's formula for calculating fees is inconsistent with the method expressed by the court's 1978 rule.
Local Rule 19 was changed in August 1979 to allow for a fee for opening a guardianship, i.e., preparing and filing the application, bond, inventory, and other supporting papers, in the amount of one-half of one percent of the gross estate as determined from the inventory. The rule also provided for a continuing fee to be charged thereafter in the amount of three percent of either the income or the disbursements, whichever was larger, during the accounting period.
Although Local Rule 19 was in effect during the years of Wildman's guardianship, respondent did not apply either the 1978 or the 1979 version of this rule in computing the attorney fees he charged for his services. Instead, respondent relied on the 1967 fee guide in order to calculate the cost of his representation. The fee guide differed from the probate court's rule in that the guide allowed an attorney to base his charge on three percent of all amounts received and three percent of all amounts paid out during the accounting period.
Due to the changes made in Local Rule 19 and respondent's failure to keep detailed accounts of the sources from which the guardianship received income, the board could only estimate the fees to which respondent was rightfully entitled. Nevertheless, after applying the 1979 version of Local Rule 19 (the version that was in effect when respondent filed the final guardianship accounting) to the figures respondent supplied to explain his charges, the board found that respondent should have charged the guardianship only $13,673. In contrast, respondent received $17,433.74 from the guardianship before closing it. The board noted that $13,317.74 of respondent's fee was withdrawn after Wildman's death.
After Wildman's death in December 1980, respondent and Davis applied to the probate court for authority to administer her estate as co-executors. According to a subsequently filed inventory, Wildman's estate contained property valued at $825,634.24. The co-executors' application, dated February 9, 1981, indicated that the estate owed them nothing and that they owed nothing to the estate. Respondent, however, later withdrew an additional $9,622.63 from the estate for his services in connection with the guardianship, bringing his total fee in that matter to $27,056.37. While this additional amount was disclosed to the probate court in a fiduciary accounting filed on October 1, 1981, respondent did not secure prior court approval for this charge.
Respondent attempted to justify this action at the disciplinary hearing. He claimed that after consulting the 1967 fee guide and filing the final accounting in the guardianship, he received a form from the probate court that he believed was to be used in calculating his fees in the guardianship. Using the formula depicted on this form, respondent came to the conclusion that he had charged too little for his services. As a result, he submitted his new fee assessment to the probate court and withdrew the balance of his charges, $9,622.63, from the estate account. Against this backdrop, respondent testified that he did not realize that Wildman's estate owed him a debt when he filed the February 1981 application to administer it.
According to the testimony of the probate judge sitting at the time these events took place, however, the form on which respondent relied in reassessing his fee for the guardianship was not one used by the Clinton County Probate Court. Even if it were, the form pertained to fees to be charged in a decedent's estate, not a guardianship. (The form's heading read "ESTATE OF _____, DECEASED." Respondent crossed out "DECEASED" and inserted the word "Incompetent" in its place.) Furthermore, even if the form were applicable, the monetary values he used in calculating his fees were not substantiated by the accounts he filed.
In addition to the extra guardianship fees, the Wildman estate accounting of October 1, 1981, also reflected that respondent received $18,500 in attorney fees for the estate and, contrary to the express terms of Wildman's will, $2,000 in fiduciary fees. The accounting also showed that respondent was paid $9,500 for which no purpose was designated. Moreover, like the guardianship accountings, the October 1 fiduciary accounting did not indicate that Davis was still leasing property from the estate and, although Davis was the co-executor, it did not bear his signature.
In both the guardianship and decedent's estate, Davis generally did the bookkeeping and wrote most of the checks. Respondent also had authority to sign estate vouchers and he kept a number of blank checks on the estate account. In the spring of 1982, however, Davis became concerned because respondent was writing so many checks. The probate court had been approving the account filings in the estate and guardianship strictly as a matter of routine. When Davis complained about the transactions that were occurring in the course of administering the Wildman estate, however, the court realized that respondent had improperly charged the estate for fiduciary fees and for the guardianship attorney fees.
After the probate court cited Davis and respondent for not having timely filed an account, respondent filed a second fiduciary accounting on December 27, 1982. Davis did not sign this accounting either. Respondent subsequently withdrew the December accounting after Davis filed exceptions thereto. Davis then filed his own fiduciary accounting in June 1983, which, insofar as it concerned the payments made to respondent, was the same as respondent's December 27 filing. Respondent responded to Davis' accounting with another of his own on July 1, 1983. The amounts listed as having been paid respondent in the July 1 accounting were also identical to the amounts in the December 27 accounting, although the reasons for several of the payments were described in somewhat greater detail.
A review of respondent's December 27, 1982 accounting, Davis' June 28, 1983 accounting, and respondent's July 1, 1983 accounting reflects that respondent was paid an additional $7,500 to $9,500 in fiduciary fees and $9,500 to $11,000 in attorney fees. (The ranges in the figures result from different designations for the same vouchers.) While some of the attorney fees were described as extraordinary in the July 1, 1983 accounting only, at no time did respondent seek prior court approval for his fees. Respondent was also paid another $8,000 from the estate for which no purpose was designated. In addition, respondent's July 1 filing indicated for the first time a claim against Davis for $297,250. Respondent asserted that this amount was the difference between the fair rental for the four hundred four acres of farmland and what Davis had been paying in rent during the guardianship and thereafter.
Berea College, the residuary beneficiary in Wildman's will, eventually requested that both respondent and Davis be removed from their fiduciary capacities. In an entry dated March 27, 1984, the probate court granted the college's request and appointed another attorney to be administrator with will annexed. In the same entry, after reviewing the guardianship and the estate transactions, the court found that Davis had rented Wildman's farmland without authority from the court and at a price considerably less than that which he should have paid. Finding both fiduciary accountings before it to be unacceptable, the court further determined that:
"* * * Conrad A. Curren has overpaid himself as an attorney; improperly paid himself as a co-executor and has in addition paid himself out of said estate for no apparent reason at all: that his payment to himself out of the estate assets as guardian is improper."
The court's decision was affirmed on appeal.
Respondent's failure to compile complete and accurate records in Wildman's estate again made it difficult for the board to determine the fees to which he should have been entitled. However, applying Local Rule 19, the board estimated that respondent could only have properly charged attorney fees in the amount of $29,867.74. In contrast, respondent was paid at least $28,000 in attorney fees, approximately $11,500 in improper fiduciary fees, and $17,500 without explanation, for a total of $57,000. Adding this to the guardianship fees of $9,622.63, which were also improperly charged against the estate, reveals that respondent received approximately $66,622.63 from the Wildman estate.
The newly appointed administrator thereafter sued respondent in the Clinton County Court of Common Pleas to recover these improper fees. He also sued Davis, contending that Davis' interests as tenant, guardian, and co-executor were in conflict with the interest of his ward and the decedent's estate. The administrator claimed that Davis had failed to lease the farmland from Wildman and her estate at its fair market value as well. Respondent's insurer settled the claim against respondent for $59,000. The claim against Davis, which was complicated by his bankruptcy, was settled for $11,000.
In light of the foregoing, the board determined with respect to Count I that respondent had created a "technical" conflict of interest by serving as co-executor and attorney for Wildman's estate, as well as serving as attorney for Wildman's guardian. It also found that respondent should have disclosed to the probate court Davis' leasing of Wildman's farmland, giving as a reason that R.C. 2109.44 prohibits a fiduciary from dealing with his ward's estate without court approval. The board rejected respondent's argument that, since the guardianship and estate forms did not specifically require disclosure, he was not required to do so. Thus, the board concluded that respondent had violated DR 1-102(A) (A) and 7-102(A)(3).
The board considered Counts II, III and IV of the complaint together because they charged, in various ways, that respondent took excessive attorney fees from the guardianship, excessive attorney fees from the decedent's estate, improper guardianship fees from the estate, and improper fiduciary fees from the decedent's estate. It found evidence in the record to support each of these claims. In response to respondent's argument that he was open in reporting the fees taken in the guardianship and estate accountings to the probate court, the board found that respondent's disclosure did not justify taking the improper fees. Indeed, the board concluded that respondent expected the probate court's routine approval of the accounts, and relied upon these approvals, up to the time that Berea College applied to remove respondent and Davis as the co-executors. Moreover, although respondent argued that Wildman knew he was going to take fiduciary fees, the board observed that the provision in Wildman's will was binding absent a probate court order to the contrary. As a result of these findings, the board determined that respondent had violated DR 2-106(A).
Before making its recommendation, the board noted that perpetrators of misconduct similar to respondent's have generally been given at least an indefinite suspension. It cited several decisions of this court, including Bar Assn. of Greater Cleveland v. Bostnar (1985), 18 Ohio St.3d 343, 18 OBR 384, 481 N.E.2d 599 (permanent disbarment); Columbus Bar Assn. v. Bryant (1984), 15 Ohio St.3d 25, 15 OBR 21, 471 N.E.2d 1386 (permanent disbarment); and Butler Cty. Bar Assn. v. Green (1982), 1 Ohio St.3d 48, 1 OBR 92, 438 N.E.2d 406 (indefinite suspension), as authority for this observation. Nevertheless, the board recommended that respondent be suspended for only one year.
J. Warren Bettis, disciplinary counsel, and Mark H. Aultman, for relator.
Charles W. Kettlewell, for respondent.
This court finds that respondent violated the Disciplinary Rules indicated by the board. Our review of the record, however, requires us to order a more severe sanction than that recommended by the board. Accordingly, respondent is hereby ordered indefinitely suspended from the practice of law in Ohio. Costs taxed to respondent.
Judgment accordingly.
MOYER, C.J., SWEENEY, LOCHER, HOLMES, DOUGLAS, WRIGHT and H. BROWN, JJ., concur.