This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2002).
IN COURT OF APPEALS
Estate of Emil A. Schmidtke,
Rice County District Court
File No. P3-00-1792
Valerie Downing Arnold, Thomas Tuft Law Offices, 1590 White Bear Avenue, St. Paul, MN 55106; and
James R. Korman, Korman & Korman Ltd., 504 Central Avenue, P.O. Box 716, Faribault, MN 55021 (for appellant James R. Korman)
James R. Keating, 221 Northeast 11th Avenue, Faribault, MN 55021 (personal representative for respondent Estate of Emil Schmidtke)
Considered and decided by Randall, Presiding Judge, Shumaker, Judge, and Wright, Judge.
Emil A. Schmidtke died intestate. David Halverson and Sue Melchert were appointed as co-personal representatives. Schmidtke's estate was neither large nor complex, consisting of $6,631.67 in cash, limited personal property, and his home, which included approximately 80 acres of real estate. Melchert was a friend of Alma L. Schmidtke, the decedent's sister. Halvorson is a first cousin of the decedent. Halverson and Melchert hired Keith Nelson, an attorney, to represent them in their duties as co-personal representatives. Because the personal property was insufficient to pay expenses, the court found that it was necessary to sell the real estate. The home required cleaning to make it ready for sale and Melchert hired various family members and heirs of the estate to perform this work. Melchert sought compensation from the estate of $25 per hour for their labor. The court found this wage unreasonable, instead setting their wage at $10 per hour.
Melchert indicated that she was interested in buying the property. Nelson, the personal representatives' attorney, told her that she would have a conflict of interest as both a personal representative of the estate and also a prospective purchaser of an estate asset. Melchert and Halvorson agreed on an appraiser, but then Melchert and her husband met privately with the appraiser and told him to appraise the real estate only for agricultural purposes and ignore any other possible use. Stan Burmeister, the appraiser, testified that the land was worth $130,000 for agricultural purposes only, but that the fair market value would be approximately $190,000 if residential use were considered. Melchert and her husband repeatedly expressed interest in buying the property, submitting one written and multiple oral offers at various prices. Instead of selling to the Melcherts, Halvorson insisted that the land be listed with a local realtor. The estate received an offer to purchase the land for $175,900 but then Melchert refused to agree to the sale as a co-personal representative. Nelson concluded that he had a conflict of interest since his two co-personal representative clients had a conflict of interest and withdrew. Melchert and Halvorson each retained separate counsel, James Korman and Greg Carlson respectively, and each made a motion to remove the other as personal representative. Melchert and Halvorson eventually entered into an agreement that both would resign; the district court accepted their resignations and then appointed James Keating as representative. The district court also scheduled an accounting covering the period of time that Melchert and Halvorson were co-personal representatives.
Korman, on behalf of Melchert, completed an interim accounting, but Keating objected. He objected both to the lack of compensation for Nelson, the original attorney, and to payments to Melchert and Korman because Melchert's conflict of interest and failure to resign significantly increased costs to the estate. The court held hearings on these issues, finally concluding that some of Korman's services benefited Melchert personally and not in her capacity as a personal representative. The court also found some of Korman's requested fees inappropriate because they were estimates of work to be done, rather than work already completed. The court found Korman's reasonable attorney fees on behalf of Melchert as personal representative were $8,966.93. Two days before Keating filed a Petition for Approval of Final Account, Korman submitted an additional bill to the estate for $3,957. At the final account hearing, Korman objected because the account did not include his desired payment of $3,957 in additional fees. The district court denied Korman's request for additional fees and approved the final account, ordering the assets of the estate be distributed to the heirs. Korman scheduled a hearing for August 5, 2002, on a motion to review the district court's order, but later informed Keating that this hearing was cancelled. After confirming this cancellation with the court, and believing this meant the issue would not be appealed, Keating distributed the estate property to the heirs in accordance with the district court's order.
This court will not reverse the district court’s award or denial of attorney fees unless the district court abused its discretion. Becker v. Alloy Hardfacing & Eng’g Co., 401 N.W.2d 655, 661 (Minn. 1987). Under Minnesota law, there are two ways to obtain attorney fees in probate cases. The first provides attorney fees when an attorney's actions benefit the estate.
[W]hen, and to the extent that, the services of an attorney for an interested person contribute to the benefit of the estate, as such, as distinguished from the personal benefit of such person, such attorney shall be paid such compensation from the estate as the court shall deem just and reasonable and commensurate with the benefit to the estate from the recovery so made or from such services.
Minn. Stat. § 524.3-720 (2002) (emphasis added). The second provides for compensation for services performed at the instance of the personal representative:
Notwithstanding any law to the contrary, an attorney performing services for the estate at the instance of the personal representative, guardian or conservator shall have suchcompensation therefor out of the estate as shall be just and reasonable. This section shall apply to all probate proceedings.
Minn. Stat. § 525.515(a) (2002) (emphasis added). Thus, both statutes require the court to consider whether the compensation sought is just and reasonable. In fixing the value of services rendered, Minn. Stat. § 525.515(b) states:
In determining what is a fair and reasonable attorney's fee effect shall be given to a prior agreement in writing by a testator concerning attorney fees. Where there is no prior agreement in writing with the testator consideration shall be given to the following factors in determining what is a fair and reasonable attorney's fee:
(1) The time and labor required;
(2) The experience and knowledge of the attorney;
(3) The complexity and novelty of problems involved;
(4) The extent of the responsibilities assumed and the results obtained; and
(5) The sufficiency of assets properly available to pay for the services
Minn. Stat. § 525.515(b) (2002) (emphasis added). Our task is to determine whether the district court abused its discretion when it determined that the additional attorney fees sought by Korman were not reasonable. We conclude the district court was well within its discretion when it denied Korman additional attorney fees.
The district court heard expert testimony regarding the nature of the estate. Keith Nelson, an attorney who practices in the area and has handled a number of estates in his 20-year practice, testified that this was a "garden variety estate" and that it is common for attorney fees in such an estate to range from $2,500 to $5,000. In this case, more than $27,000 has been paid in fees, with $8,967 paid to Korman. When asked if the total fees in this case were reasonable, Nelson testified, "obviously it's an excessive amount for what it probably should have been." He acknowledged that the reason the estate became complicated was because of the dispute between the personal representatives.
This estate was neither complex nor novel. It consisted of a small amount of the decedent's personal effects, around $6,000 in cash, and some real property. Melchert's antics made settling this estate significantly more complex than it should have been. Melchert's most significant questionable move was her plan to undervalue the land and then purchase it at the lower price. In addition to this dispute, other actions by Melchert increased the costs to the estate. As personal representative, she approved the distribution of $300 to her husband to pay a debt supposedly owed on an automobile she and her husband claim they sold to the decedent years ago. There was no documentary evidence of this transaction. Melchert also had the estate pay her husband $119 to show this same vehicle to a potential buyer. The automobile was sold for $150. Finally, Melchert hired her friends and neighbors to sort through the property and prepare it for sale. She sought $25 per hour in compensation for cleaning and sorting work. This is in spite of the fact that she regularly cleans houses for $10 per hour. She testified that Korman's office told her to charge between $25 and $40 per hour for her, and her friend's, labor.
Another consideration is that the money in this case has already been distributed. Keating distributed the estate to the heirs in accordance with the district court's order approving the final account. Keating only distributed the assets after confirming that Korman had cancelled the hearing on his motion for review.
In conclusion, combining all relevant circumstances surrounding this estate and in light of the statutory factors, we cannot say that the district court abused its discretion by failing to award additional attorney fees.