Opinion
File Nos. 2016-508/C, H; 2016-508/F, K; 2016-508/I, K
11-18-2021
In the Matter of the Application of Stephen VAN WIE, AS TRUSTEE OF the HELEN S. VAN WIE IRREVOCABLE TRUST, Petitioner, v. Barbara VAN WIE and Frank Perricone, Respondents, for an Order enforcing the Stipulation of Settlement dated November 3, 2016 and Decree of this Court dated December 8, 2016. Proceeding for the Judicial Settlement of the Interim Account of Barbara Van Wie, Beneficiary of the Estate of Helen Van Wie, Deceased. In the Matter of the Accounting by Stephen Van Wie, As the Trustee of the Estate of Helen S. Van Wie, Deceased.
Brian M. Newman, Esq. and Raymond P. Raiche, Esq. for Respondents/Petitioner Barbara Van Wie Stephen Van Wie, Petitioner/Respondent Pro Se
Brian M. Newman, Esq. and Raymond P. Raiche, Esq. for Respondents/Petitioner Barbara Van Wie
Stephen Van Wie, Petitioner/Respondent Pro Se
Timothy P. McElduff Jr., S.
The Court received and considered the following submissions in connection with Barbara Van Wie's application by Order to Show Cause, returnable on October 1, 2021, seeking modification of this Court's Decision and Order dated December 1, 2020, which had decided the fee application of prior counsel for Stephen Van Wie, Keane & Beane, P.C.:
1. Affirmation of Brian Newman, Esq., together with Exhibits A through D, filed on August 5, 2021; and
2. Affirmation of Legal Services, together with Exhibit A, filed on August 5, 2021.
Additionally, the Court received and considered the following submissions in connection with Barbara Van Wie's application by Order to Show Cause, returnable on October 1, 2021, to fix the compensation of her attorney in these proceedings:
1. Verified Petition to Determine Legal Fees filed on August 6, 2021; and
2. Affirmation of Legal Services, together with Exhibit A filed on August 6, 2021.
Background
Barbara Van Wie (hereinafter "Barbara") and Stephen Van Wie (hereinafter "Stephen") are the beneficiaries of the Helen Van Wie Irrevocable Trust and the Estate of Helen Van Wie, their deceased mother. The main asset of Trust was the Decedent's home. The parties’ dispute began with the terms of the Trust, specifically, whether or not a Fourth Amendment to the Trust (which effectively disinherited Stephen) was valid. The Fourth Amendment was ultimately invalidated. The dispute then became selling the Decedent's home, which was occupied by Barbara and her boyfriend. The dispute over the home has spawned twelve, separate proceedings/subfiles in this Court since 2016.
By Decision and Order dated April 9, 2020, this Court decided a motion for summary judgment, finding issues of fact in File No. 2016-508/C, which set that subfile, as well as subfiles A, B, F and I, on a course for trial.
By Decision and Order dated May 8, 2020, this Court granted Keane & Beane, P.C.’s motion to withdraw as counsel for Stephen. Thereafter, Keane & Beane, P.C. submitted its application for approval of its attorney's fees and costs, which was contested by Barbara. In a detailed Decision and Order dated December 1, 2020, this Court approved the vast majority of Keane & Beane, P.C.’s fees and costs and, further, allocated responsibility for payment of the same between Stephen, Barbara and the Trust under applicable law.
By Scheduling Order dated July 21, 2020, this Court joined the remaining pending proceedings for trial and directed Stephen and Barbara to file long-outstanding items by August 12, 2020. Stephen failed to comply.
By Conditional Order dated September 23, 2020, this Court set a new, extended schedule of filing deadlines and ordered that Stephen's right to amend his accounting and his right to object to Barbara's accounting would be deemed waived if said amendment and objection were not filed by September 30, 2020.
On September 29, 2020, Stephen retained new counsel, Corbally, Gartland and Rappleyea, LLP ("CGR"), who requested an extension of time to comply with the Court's Conditional Order. The Court granted CGR an additional two weeks of time to comply. Ultimately, CGR complied with the extended filing deadline.
Not long thereafter, however, CGR filed an application to be relieved as counsel due to Stephen's alleged failure to cooperate and irretrievable breakdown in the attorney-client relationship. Stephen failed to submit any opposition to CGR's application and failed to appear on the return date. By Decision and Order dated April 8, 2021, this Court granted CGR's application to be relieved as counsel and, therein, provided Stephen time to retain new counsel, scheduled a pre-trial conference date, a trial submission calendar and a virtual bench trial date. Additionally, the Decision and Order warned the parties that failure to appear at the pre-trial conference could result in an order of default, dismissal or other such order pursuant to 22 NYCRR 207.27.
Subsequently, Stephen failed to appear at the May 14, 2021 pre-trial conference without excuse. As a result, Barbara moved to hold Stephen in default. The Court granted Barbara's motion, declared Stephen in default, dismissed certain proceedings and objections and ordered Barbara to proceed to inquest on the remaining proceedings on scheduled trial date of May 21, 2021. Specifically, Barbara's burden at trial was to establish her Petition to account as trustee for the period of March 30, 2016 through September 30, 2019 [File No. 2016-508/F] and to establish her Objections to the final accounting of Petitioner Stephen Van Wie as trustee for the period of May 12, 2017 through October 14, 2020 [File No. 2016-508/I].
Stephen failed to appear at the inquest on May 21, 2021. Barbara appeared and submitted her proof. At the close of the inquest, the Court directed counsel for Barbara to submit a proposed, final Decree to close File Nos. 2016-508 F and I.
Stephen has never sought to vacate his default(s).
Barbara has not yet submitted a proposed Decree.
Instead, Barbara now moves, by Order to Show Cause, to modify the Court's prior Decision and Order dated December 1, 2020 [entered in File Nos. 2016-508/C, H] for the purposes of (1) changing the allocation of responsibility for payment of Keane & Beane, P.C.’s attorney's fees as between Barbara, Stephen and the Trust and (2) imposing sanctions upon Stephen for frivolous conduct. Barbara's application is unopposed.
Additionally, Barbara now moves, by Order to Show Cause, to fix the compensation of her attorney for services rendered in the accounting proceedings [File Nos. 2016-508/F, I] under File No. 2016/K. This application is also unopposed.
On September 22, 2021, the deadline for Stephen's responsive papers pursuant to Barbara's pending Orders to Show Cause, the Court received a letter from Stephen requesting a 60-day extension of time to respond due to a health issue and "the sudden need to locate/retain/familiarize a new attorney." Stephen's letter, however, contained no effort to cure his prior default in these proceedings. Further, his health issue was not substantiated by proof, nor did it prevent him from writing a lengthy, well-written letter that could have taken the form of an application to vacate his default and oppose the Orders to Show Cause. Finally, Stephen's characterization of his need to locate/retain/familiarize a new attorney with his case(s) as a "sudden need" was not only inaccurate, but disingenuous. Stephen, himself, alienated and ceased working with his own counsel on two, separate occasions during these proceedings. Stephen has known that he needed to locate, retain and familiarize a new attorney with his cases since December 2020. As a result of Stephen's failure to cure his default and his failure to request an extension of time for good cause shown, the Court did not grant Stephen an extension of time to respond to the pending Orders to Show Cause.
Analysis
A. Modification of the Court's prior Decision and Order dated December 1, 2020.
The Court's prior Decision and Order dated December 1, 2020 directed that, of the $59,756.91 in fees/costs awarded to Keane & Beane, P.C., (1) responsibility for payment of the amount of $17,611.70 shall be allocated to and paid from Stephen Van Wie personally, (2) responsibility for payment of the amount of $25,043.03 is be allocated to and paid from Barbara Van Wie's beneficial share of the trust and (3) payment of the amount of $17,102.18 shall be payable from the trust corpus generally.
Barbara now seeks to re-allocate the responsibility for payment of attorney's fees due to the fact that Stephen's claims were ultimately dismissed upon his default. Specifically, Barbara seeks to re-allocate the responsibility for paying these fees by (1) making Stephen personally responsible to pay $19,440.15 of the previous $25,043.03 assessed against Barbara's beneficial share of the Trust and (2) making Stephan responsible to pay $8,451.30 of the previous $17,102.18 assessed against the Trust corpus.
Presumably, Barbara's application is made pursuant to CPLR § 2221 ("Motion affecting prior order"), particularly, CPLR § 2221(e), a motion for leave to renew. However, Barbara's application fails to comply with the procedural requirements of CPLR §§ 2221(e)(1), in that it is not specifically identified as a motion to renew. More importantly, however, Barbara's motion fails to offer new facts that would change the prior determination, as explained below. See CPLR § 2221(e)(2).
Barbara argues that the dismissal of Stephen's proceeding to enforce the terms of the parties’ Stipulation of Settlement [File No. 2016-508/C] has resulted in no gain or benefit to the Trust/Estate, and thus, Stephen should now be responsible to pay $19,440.15 of the previous $25,043.03 assessed against Barbara's beneficial share of the Trust. Barbara is mistaken, however, in that the $25,043.03 in fees previously assessed against her pertained to the cost of ejecting her from the Trust asset (i.e., the house) in the first instance , not the cost of enforcing the subsequently drawn Stipulation of Settlement , as was discussed in the prior Decision and Order dated December 1, 2020, as follows:
Here, the Court finds that a $25,043.03 portion of the legal fees detailed in Keane & Beane's submissions were incurred due to the conduct of Barbara Van Wie in requiring Stephen Van Wie, as trustee, to litigate matters relating to Barbara Van Wie's ejection from the trust's sole asset, the subject home. These legal fees are described in Invoice Nos. 25579, 26587, 27397, 28299, 28817 and 29693. Barbara Van Wie's failure to purchase the home (as per a stipulation) or otherwise cooperate in vacating the home to expedite its sale or otherwise paying or procuring market rental for the home caused litigation expense for the trust in the form of ejection proceedings over the course of several months. This litigation expense was avoidable, unnecessarily incurred and/or a result of bad faith conduct, which renders such expense chargeable to Barbara Van Wie's beneficial share of the trust. See, e.g., In re Estate of Benware, 86 AD3d 687, 688 (3d Dept. 2011) (in accounting proceedings, a beneficiary's actions causing the estate to incur unnecessary legal expenses made legal fees or a portion thereof properly chargeable to her share of the estate); In re Estate of Poletto , 31 Misc 3d 1206(A) (Sur. Ct., Monroe Co., 2011) (objectant's delay in producing the will and his opposition to that will which reduced his share of the estate resulted in objectant's liability for 50% of the legal fees incurred by the estate); see also , In re Hyde, 15 NY3d 179 (2010) (bad faith conduct may permit discretionary allocation of responsibility for attorney's fees to a beneficiary). Consequently, the Court holds that legal fees in the amount of $25,043.02 shall be allocated to and paid from Barbara Van Wie's beneficial share of the trust.
(See Exhibit A, pp. 4-5).
Barbara additionally requests that $8,451.30 of the $17,434.30 in fees/costs previously assessed against the corpus of the Trust be reallocated to Stephen, personally, due to the dismissal of his proceeding to enforce the Stipulation of Settlement and his accounting proceeding. As to these fees/costs, the Court previously held as follows:
Recovery of the remaining portion of Keane & Beane's fees in the amount of $17,434.30 from Invoices Nos. 30789, 35568, 35647, 49801, 53091 and 53669, which refer or relate to the enforcement of stipulations of settlement and contested accountings, among other things, is permitted to be paid from the trust corpus generally. In the event that the trust corpus is not sufficient for the recovery of such funds, then Keane & Beane may look to its retainer agreement with Stephen Van Wie.
(See Exhibit A, p. 5).
The payment of litigation expenses by a trust or estate, however, does not depend on the success or failure of the fiduciary in a legal proceeding; instead, it depends on whether the litigation was brought or defended in good faith for the preservation of the trust or estate. See In re Bittson's Trust, 41 Misc 2d 5, 9-12 (Sup. Ct. 1963) ; see also In re Williams’ Estate , 143 Misc. 527 (Sur. Ct. 1932) (holding that costs from an unsuccessful litigation to increase estate's assets could be allowed as an expense of the estate); In re Coventry's Est., 178 Misc. 620 (Sur. Ct. 1941) (holding that the expense incurred by an executrix for legal service in the discharge of her duty as such is an expense of administration, even if her efforts were unsuccessful and not beneficial to the estate), aff'd sub nom. In the Matter of Coventry, 263 AD 1064 (4d Dept. 1942).
Here, there is no indication that Stephen's proceedings to enforce the Stipulation of Settlement and to account were brought in bad faith. In fact, the Court already determined that the cascade of proceedings here were launched following Barbara's failure to purchase the home or otherwise cooperate in vacating the home to expedite its sale or otherwise paying or procuring market rental for the home. (See Exhibit A, pp. 4-5). Furthermore, Barbara challenged the enforceability and construction/interpretation of the Stipulation of Settlement litigated in File No. 2016-508/C and was found to be incorrect on both issues. Stephen's proceeding to enforce the Stipulation of Settlement and his accounting proceeding were initially filed in accordance with his fiduciary duties and out of good faith and/or necessity. As a result, it is within the discretion of this Court to find these fees/costs incurred by Stephen to be an expense of the Trust/Estate. The Court finds no reason to change its prior decision on this issue. Accordingly, Barbara's application to modify the Court's prior Decision and Order dated December 1, 2020 is denied.
See this Court's Decision and Order dated April 9, 2020, File No. 2016-508/C.
It should also be noted that, in the Court's Decision and Order dated December 1, 2020, the Court had previously assessed Stephen Van Wie, personally, for the responsibility to pay $17,611.70 in legal fees/costs for his successful efforts to void the Fourth Amendment to the Trust and restore or uphold his personal rights/beneficiary interest under the Trust. (See Exhibit A, pp. 3-4).
B. Imposition of sanctions .
Conduct is frivolous if, among other things, it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another. 22 NYCRR 130-1.1(c)(2). The goals of imposing sanctions include preventing the waste of judicial resources. Levy v. Carol Mgmt. Corp., 260 AD2d 27, 34 (1st Dept. 1999) ; see, e.g., Wasson v. Mendik, 253 AD2d 711 (1st Dept. 1998) (finding that sanctions were properly imposed upon plaintiff's attorneys for frivolously proceeding to jury selection while intending not to proceed to trial, causing the unnecessary expense to be incurred by defense counsel and the waste of valuable court time and resources).
Here, Stephen engaged in a pattern of delay, non-compliance and, ultimately, non-appearance that began in the summer of 2020. He terminated his attorney-client relationship with Keane & Beane, P.C. as a result of his own conduct. Thereafter, he failed to diligently prosecute his proceedings on his own and failed to comply with court-ordered deadlines. He retained new counsel, CGR, only at the last second, after undue delay and on the eve of an extended deadline. He then destroyed his relationship with CGR within the course of two months, which caused CGR to move to withdraw as counsel. By Decision and Order dated April 8, 2021, the Court granted CGR's motion and gave Stephen a third opportunity to retain new counsel. Therein, the Court also set a pre-trial conference date, a pre-trial submission schedule and a trial date. Further, the Court warned Stephen that a default could occur in the event of his failure to appear. Without excuse or any prior notice, Stephen failed to appear at the pre-trial conference on May 14, 2021 and was consequently defaulted for his non-appearance. Stephen was afforded notice and opportunity to contest the amount of any claims or figures at the inquest scheduled for May 21, 2021. Regardless, Stephen failed to appear at the inquest, without excuse or prior notice.
It is apparent from the record that, as of December 2020, Stephen did not intend to prosecute his claims any longer. Nevertheless, he allowed his claims to be scheduled for pre-trial conference, pre-trial submissions and a trial in May 2021 without ever contacting opposing counsel or the Court to advise of his intended non-appearance or abandonment of his claims. This conduct warrants the imposition of sanctions under 22 NYCRR 130-1.1(c)(2) because it unnecessarily prolonged litigation and wasted judicial resources.
The proper amount of the sanction is the next issue. The amount of the sanctions imposed by the Court cannot exceed $10,000.00 for any single occurrence of frivolous conduct. See 22 NYCRR 130-1.2.
Barbara's counsel requests sanctions in the amount of $4,398.84, which represents her legal costs to defend against Stephen's enforcement of the Stipulation of Settlement in File No. 2016-508/C. The purpose of sanctions, however, is not to reimburse a litigant for defending against what was (up until its abandonment at the pre-trial conference) a meritorious claim to enforce a Stipulation of Settlement. Instead, the purpose of sanctions is to compensate a party for unnecessary expense and to deter the waste of valuable court time and resources that occurs due to frivolous conduct. See Wasson, supra.
Here, Stephen caused unnecessary expense to Barbara and wasted valuable court time and resources by maintaining the pending proceedings, yet failing to appear at the court-ordered pre-trial conference date and at the inquest. If Stephen had no intention of prosecuting his claims or defending against Barbara's, he could have and should have stipulated to discontinue the various proceedings, with prejudice, sometime between December 2020 and May 2021. In Wasson , which was decided in 1998, the appropriate sanction fixed by the First Department was $2,000.00 per defense attorney. Wasson v. Mendik, 253 AD2d 711 (1st Dept. 1998). This Court finds the appropriate sanction for Stephen's similar frivolous conduct of forcing his adversary to appear for pre-trial and trial activities without intending to appear himself, in 2021, is $3,000.00. This $3,000.00 sanction may be applied against or recovered from Stephen's beneficial interest in the Trust/Estate.
C. Blustein, Shapiro, Frank & Barone, LLP's application to fix compensation.
It is well settled that the decision to award attorney's fees, and the determination as to their reasonableness, lies within the sound discretion of the Surrogate. Matter of Freeman, 34 NY2d 1, 10 (1974) ; Matter of Potts, 123 Misc. 346 (Sur. Ct. 1924)affd. 213 AD 59, 62 (4d Dept.)affd. 241 NY 593 (1925). In exercising that discretion, the Court is required to consider, among other things, the following factors: (1) the time and labor expended by counsel; (2) the parties’ retainer agreement; (3) the complexity of the issues; (4) the lawyers’ experience; (5) the fees customarily charged; (6) the size of the estate/amounts involved; and (7) the results obtained. See, e.g., Matter of Freeman, 34 NY2d at 10 ; Matter of Potts, 123 Misc. at 346 ; In re Talbot , 84 AD3d 967 (2d Dept. 2011) ; In re Barich , 91 AD3d 769 (2d Dept. 2012).
Ultimately, however, the Surrogate bears the responsibility of deciding what constitutes reasonable legal compensation and the allocation thereof, regardless of the existence of a retainer agreement or whether all interested parties have consented to the amount of fees requested. See In re Hyde, 15 NY3d 179 (2010) ; In re Beneware, 86 AD3d 687 (3d Dept. 2011) ; Matter of Verplanck , 151 AD2d 767 (2d Dept. 1988) ; Matter of Kelly, 187 AD2d 718 (2d Dept. 1992) ; Matter of McCann, 236 AD2d 405 (2d Dept. 1997).
Reimbursement for expenses is similarly within the discretion of the Surrogate. Matter of Estate of Graham , 238 AD2d 682, 687 (3d Dept. 1997).
While attorneys may recover, for example, the time and value of a paralegal's services [see SCPA § 2110(4) ], attorneys may not recover fees for executorial tasks (i.e., those tasks capable of being performed by a layperson) when they are included as part of the attorney's fee request. Matter of Phelan , 173 AD2d 621, 622 (2d Dept. 1991). Classifying a particular service as being legal in nature does not necessarily mean that it is compensable as an attorney's fee. Matter of Estate of Passuello , 184 AD2d 108, 111 (3d Dept. 1992).
Expenses or services for which the attorney expects reimbursement should be listed by a retainer agreement; however, the court is not bound by such terms. Matter of Rosa-Myers , 63 Misc 3d 251, 255 (Sur. Ct. 2019) ; Stortecky v. Mazzone , 85 NY2d 518 (1995).
Furthermore, the Surrogate is not obligated to accept the face value of the attorney's summary of the hours expended or the materials submitted in support, regardless of their volume. Matter of Bobeck , 196 AD2d 496, 497 (2d Dept. 1993) ; Matter of Kelly , 187 AD2d 718, 719 (2d Dept. 1992). Courts have repeatedly emphasized the significance of contemporaneously maintained time records as a component of an attorney's affirmation of legal services and have given little weight to "after the fact" estimations of time expended. Matter of Phelan , 173 AD2d 621, 622 (2d Dept. 1991).
Last, but not least, the petitioning attorney has the burden of establishing that the requested attorney's fees were necessary, fair and reasonable. Matter of Estate of Passuello , 184 AD2d 108, 111 (3d Dept. 1992) ; Matter of Estate of Quade , 121 AD2d 780, 782 (3d Dept. 1986).
Here, Barbara's counsel, Blustein, Shapiro, Frank & Barone, LLP ("BSFB") seeks the approval of attorney's fees and costs in the aggregate amount of $15,606.87. In connection with their application, BSFB has submitted detailed time records and explanations of their work. BSFB has also explained how their work has benefitted the Trust/Estate at issue and, as a result, should be paid by the Trust/Estate. BSFB has not sought approval for $18,736.54 in additionally incurred fees because they are unrelated to the benefit of the Trust/Estate and are, instead, related to Barbara's personal benefit. Upon review of the above BSFB's submissions, the Court finds that the total amount of the reasonable fees and disbursements due BSFB for its services, and payable by/recoverable from the Trust/Estate, is $15,606.87.
Conclusion
For the reasons discussed above, it is hereby
ORDERED that Barbara Van Wie's application to modify the Court's Decision and Order dated December 1, 2020 is denied; and it is further
ORDERED that Barbara Van Wie's application for sanctions as against Stephen Van Wie is granted in the amount of $3,000.00, which may be applied against/recovered from Stephen Van Wie's beneficial interest in the Trust/Estate herein; and it is further
ORDERED that the attorney's fees, costs and disbursements due Petitioner Blustein, Shapiro, Frank & Barone, P.C. are hereby fixed in the amount of $15,606.87 and shall constitute a lien against the assets of the Trust/Estate; and it is further
ORDERED that counsel for Barbara Van Wie shall, within 30 days of the date of this Decision and Order, submit a proposed final Decree, consistent with this Decision and Order, to be entered in File Nos. 2016-508/F and I.
This constitutes the Decision and Order of the Court.