may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Estate of Titus Bellville,
Filed August 25, 1998
Hennepin County District Court
File No. P095804
Mary R. Vasaly, Maslon Edelman Borman & Brand, LLP, 3300 Norwest Center, 90 South Seventh Street, Minneapolis, MN 55402 (for respondents John W. Provo & Mark W. Gullickson)
D.J. Nielsen, Gray Plant & Mooty Mooty & Bennett, P.A., 33 South Sixth Street, Suite 3400, Minneapolis, MN 55402-3796 (respondent pro se)
Considered and decided by Amundson, Presiding Judge, Peterson, Judge, and Shumaker, Judge.
This appeal is from a district court order determining attorney fees in a probate proceeding. We affirm.
Titus Bellville died testate in February 1995. His estate consisted of his homestead, a one-half interest in a tree farm, and personal property. His will beneficiaries were his five children, Rodney, Bonny, Sarah, John, and appellant Tara Bellville. Titus Bellville's will named appellant as his personal representative.
Appellant retained respondent D.J. Nielsen of Gray Plant & Mooty Mooty & Bennett, P.A., to assist in probate proceedings. Nielsen prepared an application for informal probate of will and appointment of personal representative.
About one month later, upon learning the amount of the estate's bill with Gray Plant, appellant discharged Nielsen. After a complaint by appellant, Nielsen reduced the bill to $650 for attorney fees, which represented 3.25 hours of his time billed at $200 per hour, plus 17.90 in expenses. The district court found those charges were fair and reasonable.
Appellant next retained respondent Mark W. Gullickson. Gullickson filed in the district court the probate application that Nielsen had prepared, and appellant was appointed personal representative. Appellant met with Gullickson in May 1995 and informed him that four of the beneficiaries wanted to maintain the estate's real property, but Bonny Bellville wanted to be paid cash for her interest. Because the estate had insufficient money to pay for Bonny Bellville's interest without selling the real property, appellant and Gullickson discussed the best way to structure the property transfer to enable the other beneficiaries to buy out Bonny Bellville's interest. Appellant and Gullickson also discussed tax issues.
Gullickson testified that following the May meeting, he understood that appellant would provide him with the information he needed to prepare closing documents. He testified that he followed up on his request for information in June and in July. In October 1995, Gullickson sent appellant a letter stating that they needed to get moving on the probate proceeding and requesting that appellant make any necessary changes to an enclosed inventory draft.
By February 1996, Gullickson had completed drafts of an inventory and final account. The drafts contained several errors that inflated the value of the estate's real property. Gullickson provided copies of the incorrect drafts to Bonny Bellville at her request but without obtaining appellant's consent. Gullickson testified that, at the time, he was unaware that a dispute existed between Bonny Bellville and the other beneficiaries. After learning that Gullickson had provided the incorrect drafts to Bonny Bellville, appellant discharged Gullickson.
Gullickson billed appellant $2,200 for 20 hours of his time, plus $254 in expenses for services provided through December 1995. The district court found that the amount of time billed by Gullickson was appropriate.
In late February 1996, appellant met with and retained respondent Jack W. Provo. During the February meeting, appellant and Provo discussed the problems with the real estate valuations and the need to negotiate with Bonny Bellville's attorney, John M. Giblin. Provo testified that after receiving the file in March 1996, he recommended that appellant obtain formal appraisals of the estate's real property. Appellant did not do so, and Giblin refused to accept a realtor's estimate of value. A formal appraisal eventually was obtained, and Provo provided a copy of it to Giblin in June 1996.
Provo testified that initially, Bonny Bellville seemed satisfied with the appraisal but continued to object to appellant's requests for reimbursement of estate administration expenses. Provo requested that appellant obtain a house inspection and repair estimates to document some of the expenses to which Bonny Bellville objected. Provo testified that appellant provided the requested documents to him on about July 22, 1996, and that he then drafted a new inventory and a new final account and sent copies of them to appellant for approval on August 2.
Appellant did not approve the final account. On September 25, 1996, she gave Provo information about revisions that she wanted Provo to make. In early November 1996, appellant provided Provo with updated information for the final account, and Provo completed an inventory and appraisement, final account, and proposal for distribution. Appellant approved the documents, and Provo circulated them to the other beneficiaries.
Bonny Bellville filed numerous objections. In late December 1996, Provo prepared and circulated to all of the beneficiaries a response to Bonny Bellville's objections. Provo also prepared a draft of a court petition, which appellant approved in late January 1997.
In February 1997, notwithstanding Bonny Bellville's objections, Provo filed in the district court the inventory, final account, proposal for distribution, beneficiaries' consents, and various other petitions. A hearing was scheduled for March 20, 1997. Contrary to appellant's claim that the hearing was continued because Provo scheduled insufficient time for it, Provo testified that the continuance resulted because several other matters the court heard earlier in the day ran beyond the time expected.
Appellant instructed Provo to consider reasonable settlement proposals from Bonny Bellville pending the continued April 8, 1997, hearing. On April 7, 1997, Bonny Bellville offered to settle her objections for $58,300. During the morning of April 8, Provo and Giblin conducted settlement negotiations but did not reach agreement.
In the afternoon, appellant agreed to a $35,000 or $35,300 settlement proposal and authorized Provo to submit it to Giblin. Upon reconsideration, appellant became dissatisfied with the way the settlement proposal distributed administration expenses, so she called Provo to withdraw her consent to the settlement. Provo urged appellant to reconsider withdrawing her consent. Appellant refused to consent to the settlement proposal, and Provo withdrew as counsel.
Provo charged appellant a total of $22,768.50. While representing appellant, Provo transferred from the Popham Haik law firm to Maslon Edelman Borman & Brand, LLP. The record did not contain direct evidence of billings for services provided while Provo was with Popham Haik. By applying the ratio of attorney time to legal assistant time and expenses shown by the Maslon Edelman statements to the total charges by appellant while at Popham Haik, the district court determined that Provo spent 15 hours on this case while at Popham Haik. Provo spent an additional 62 hours on this case while at Maslon Edelman. The district court found:
The total of 77 hours is excessive, given what was achieved, even assuming that [appellant's] actions did add to Provo's time. A similar conclusion follows for the legal assistant time. A reasonable time for Provo and his legal assistants to have spent would seem to be about 65% of what they did expend.
The district court awarded Provo $14,400, for attorney fees and expenses.
Appellant next retained attorney Paul Nesvig. The parties settled Bonny Bellville's objections for $30,000 in July 1997, and a formal probate order was filed in November 1997.
On appeal, appellant challenges the awards of attorney fees to Nielsen, Gullickson, and Provo. Provo seeks review of the district court's reduction of his fees.
1. Appellant challenges several of the district court's findings of fact. The district court's findings of fact will not be reversed unless clearly erroneous. Minn. R. Civ. P. 52.01. "Clearly erroneous means `manifestly contrary to the weight of the evidence or not reasonably supported by the evidence as a whole.'" Novack v. Northwest Airlines, Inc., 525 N.W.2d 592, 597 (Minn. App. 1995) (quoting Northern States Power Co. v. Lyon Food Prods., Inc., 304 Minn. 196, 201, 229 N.W.2d 521, 524 (1975)). This court must view the evidence in the light most favorable to the prevailing party. Delinquent Taxes of Carney v. Marray County Bd. of Comm'rs, 384 N.W.2d 920, 923 (Minn. App. 1986).
Appellant challenges the district court's finding on the complexity of the probate proceeding. The district court found:
On the surface, this estate would have appeared to be fairly easy to administer and quick to conclude, but it was complicated by the facts of: (a) one devisee's desire to be "cashed" out, (b) the apparent unwillingness to recognize the need for formal appraisals if a desirable tax basis was to be established and one devisee was to receive cash, (c) one or two of the devisees ([appellant] for certain) living in the estate property without a formal agreement among all devisees, (d) the estate's cash shortage and [appellant's] significant advances, without discussions with the devisees of the cash needs or how to repay the advances, (e) [appellant's] apparent change of mind on issues during the administration, such as the termination of Nielsen within a month of his retention, the termination of Gullickson for what appears, at most, to be a misunderstanding about what should be communicated to the devisees, and her disavowment of the settlement after agreeing to it. [Appellant] claimed to have been most concerned about the costs of administration (mostly attorney fees), but partially caused additional expense by her actions.
Appellant argues that the evidence shows that she discharged Nielsen for delay, errors and overbilling and Gullickson for delay, giving erroneous legal advice, and improperly transmitting erroneous property valuations to Bonny Bellville. Although that was appellant's testimony, the district court's findings indicate that it found that appellant's testimony on the issue was not credible. We must give due regard to the district court's ascertainment of witness credibility. Minn. R. Civ. P. 52.01. Evidence other than appellant's testimony supports the district court's findings regarding the terminations of Nielsen and Gullickson. Those findings are not clearly erroneous.
Citing the fact that Nesvig completed the probate proceeding in less than two months, appellant argues that the estate was easy to administer, so probate should have been accomplished quickly. We disagree. The record shows the existence of the problems listed by the district court and supports the finding that those problems complicated administration. The record does not indicate that Nesvig would have been able to complete the estate administration so easily and quickly if he had not had the benefit of the work done by the three previous attorneys.
Appellant challenges the finding that Nielsen produced the documents necessary to secure appellant's appointment as personal representative. Appellant argues that the evidence showed that Nielsen only partially completed the documents and appellant had to complete them herself. But appellant only had to fill in some missing information, such as two beneficiaries' addresses, appellant's current residence, and a list of estate assets and their approximate value. Such information typically is provided to an attorney by a client. The only change Gullickson made to the application before filing it was the substitution of his name as the attorney. The district court's finding that Nielsen produced the documents necessary to secure appellant's appointment as personal representative is not clearly erroneous.
Appellant argues that the evidence does not support the district court's finding that Provo recommended that appellant obtain formal real estate appraisals and that appraisals were later obtained with the assistance of Provo's office. Provo testified that he recommended formal real estate appraisals. The record shows that a formal appraisal of the homestead was obtained, and Provo's testimony indicates that the appraisal was obtained with the assistance of his office. The district court apparently erred in finding that multiple appraisals were obtained, but the record does not indicate that the error affected the district court's decision. In addition to showing error, an appellant must demonstrate that the error was prejudicial. Bloom v. Hydrotherm, Inc., 499 N.W.2d 842, 845 (Minn. App. 1993), review denied (Minn. Jun. 28, 1993). Absent such a showing here, reversal is not appropriate. See Minn. R. Civ. P. 61 (harmless error to be ignored).
In finding 10, the district court found that several documents were filed on February 10 and March 20, 1996, but the filing actually occurred in 1997. In finding 11, the court found that a hearing was continued from March 20 until April 8, 1996. Again, the correct year was 1997. The errors appear to be only typographical errors, and the record does not suggest that the district court misunderstood the sequence of events in the probate proceeding. Nothing in the record indicates that the errors caused appellant prejudice.
Appellant argues that the evidence does not support the finding that the terms of the settlement achieved by Nesvig were "close to, if not the same as, the settlement Provo believed appellant had approved." Appellant argues that the actual settlement was significantly better than the proposed settlement because the actual settlement provided that Nielsen's, Gullickson's, and Provo's attorney fees would be contested, thereby potentially saving the estate over $28,000. But awarding no fees to Nielsen, Gullickson, and Provo would have been reversible error. See Minn. Stat. § 525.515 (1996) (setting forth criteria for determining attorney fees in probate proceedings). The district court did disallow $8,368.50 of the fees claimed by Provo. The benefit to the estate, however, is offset by the additional expenses incurred in litigating and appealing the attorney fee issue.
Appellant also asserts that the actual settlement was better because, under the proposed settlement, Bonny Bellville would have paid no estate attorney fees. Appellant, however, did not testify that under the proposed settlement, no attorney fees would have been charged to Bonny Bellville or her share of the estate. Rather, appellant testified that the proposed settlement did not include any attorney fees incurred after the date of the settlement conference. The record does not indicate that if the proposed settlement had been accepted, significant attorney fees would have been incurred after the date of the settlement conference.
Finally, appellant contends that the actual settlement was better than the proposed settlement because the actual settlement precluded Bonny Bellville from contesting any property transfers that occurred before Titus Bellville's death. But appellant testified that Provo agreed to include such a provision in the proposed settlement, although he thought Bonny Bellville might not accept it. The district court's finding that the terms of the proposed settlement were close to the terms of the actual settlement is not clearly erroneous.
2. The district court has discretion to award attorney fees in a probate proceeding, and its decision will not be reversed absent an abuse of discretion. In re Estate of Balafas, 302 Minn. 512, 516, 225 N.W.2d 539, 541-42 (1975).
[A]n attorney performing services for the estate at the instance of the personal representative * * * shall have such compensation therefor out of the estate as shall be just and reasonable.
Minn. Stat. § 525.515(a); see Minn. Stat. § 525.515(b) (factors district court shall consider in determining attorney fee award).
Minn. Stat. § 525.515 requires proof of a benefit to an estate before an attorney may be paid for providing "services" for the estate at the request of a personal representative * * *.
In re Estate of Evenson, 505 N.W.2d 90, 92 (Minn. App. 1993).
Appellant argues that Nielsen, Gullickson, and Provo provided no benefit to the estate and, therefore, should not have been awarded any attorney fees. A personal representative has a fiduciary duty to act in the estate's best interests and
a duty to settle and distribute the estate of the decedent in accordance with the terms of any probated and effective will and applicable law, and as expeditiously and efficiently as is consistent with the best interests of the estate.
Minn. Stat. § 524.3-703(a) (1996). Services rendered in accordance with a personal representative's duty are services that benefit the estate.
Nielsen met with appellant for two hours and discussed probating Titus Bellville's estate. He prepared the documents necessary to have appellant appointed personal representative. Those services were in accordance with appellant's duty to settle and distribute the estate. Appellant does not contend that Nielsen's billing rate, $200 per hour, was unreasonable. The district court's award to Nielsen of $650 for attorney fees plus $17.90 for expenses was not an abuse of discretion.
Appellant argues that Gullickson improperly advised her that high real estate values should be used for tax purposes. Gullickson testified that he explained the tax advantages of using high real property valuations to obtain a stepped-up basis, advice he routinely gives estate clients. Appellant did not present evidence showing that Gullickson's explanation of tax consequences was incorrect.
Appellant also argues that Gullickson improperly told her that realtor evaluations would be sufficient and improperly communicated incorrect information to Bonny Bellville. The record indicates that a formal real estate appraisal was necessary because Bonny Bellville demanded it, and Gullickson testified that the information he communicated to Bonny Bellville was the type of information that he routinely provides to beneficiaries when requested. Gullickson testified that he was unaware that a dispute existed between Bonny Bellville and the other beneficiaries. We cannot conclude that Gullickson's advice was improper or that he acted improperly in communicating information to Bonny Bellville.
Gullickson filed the documents necessary for appellant to be appointed personal representative. He advised appellant on tax consequences and how to proceed with probating the estate. He prepared an inventory of estate assets. Although the inventory contained errors in property valuations, the district court did not find that the errors were significant. Gullickson's services were in accordance with appellant's duty to settle and distribute the estate. Appellant contends that Gullickson delayed in probating the estate, but there was evidence that any delay was caused at least in part by appellant's failure to provide information requested by Gullickson. Appellant does not argue that Gullickson's hourly billing rate was unreasonable. The district court did not abuse its discretion in finding that 20 hours was an appropriate amount of time for the services provided by Gullickson and awarding him $2,454 for attorney fees and expenses.
Finally, appellant challenges the award of attorney fees to Provo. Appellant argues that Provo performed a disservice to the estate by pursuing a settlement with Bonny Bellville instead of proceeding promptly to a contested hearing. But appellant did not present evidence by anyone with legal experience or training regarding whether proceeding to a contested hearing instead of attempting settlement would have been in the estate's best interests. Opinion testimony must be supported by an adequate foundation. See Minn. R. Evid. 701 (opinion testimony by lay witness); Minn. R. Evid. 702-703 (expert opinion testimony).
Provo prepared inventory and final account drafts. He conducted settlement negotiations with Giblin. During those negotiations, Bonny Bellville reduced her settlement demand from $73,600 to $35,300 or $35,000. Appellant argues that Provo delayed in probating the estate. But there was evidence that any delay resulted at least in part from appellant's failure to promptly provide information requested by Provo, appellant changing her mind about the distribution terms, and Bonny Bellville's objections. Provo's services were in accordance with appellant's duty to settle and distribute the estate.
Appellant does not argue that Provo's billing rate of $200 per hour was unreasonable. She does not dispute that he actually spent 77 hours working on the administration of the estate. Appellant's complaint concerns the results that Provo achieved given the amount of time he spent on the case. The district court specifically addressed that concern in allowing Provo fees for only 65% of the time that he and his legal assistants spent on the case. The district court's award to Provo of $14,400 for attorney fees, including expenses, was not excessive.
Provo argues that the evidence does not support the district court's reduction of his fees. "A determination of the reasonable value of attorneys' fees may be based on proof of the value or the court's observation of the services performed." Franklin v. Western Nat'l Mut. Ins. Co., 558 N.W.2d 277, 281 (Minn. App. 1997). The district court conducted a two-day hearing on the issue of attorney fees and had before it considerable testimony and documentary evidence regarding the services provided. The court's findings indicate that it was apprised of the services provided. The district court's reduction of Provo's fees was not an abuse of discretion. See Hanson v. Hanson, 378 N.W.2d 28, 31 (Minn. App. 1985) (upholding award of attorney fees based on district court's finding that showed an awareness of the amount and value of the services provided).