No Res Judicata Impact From Prior Fee Denial; Daily Substantiation Requirements Do Not Govern Probate Fee Awards.
This post will definitely interest probate practitioners. Aside from the fact that it involves a fairly substantial “extraordinary fee” award, it also demonstrates that the appellate courts will be demanding on application of res judicata principles and will not require overly stringent substantiation requirements for extraordinary fee requests (at least as compared to other areas, such as lodestar oriented requests).
Estate of Goldstein, Case No. A126507 (1st Dist., Div. 2 Jan. 12, 2011) (unpublished) is the case, where a lower court awarded Downey Brand an award of $693,876.02 for “extraordinary fees” in representing an attorney’s estate in litigation against former firm members for fee entitlement in several settled flood cases and in a separate interpleader–all involving about 3 years of work.
The Court of Appeal affirmed.
One of the primary challenges was that the lower court’s prior denial of an extraordinary fee request (albeit before any final distribution had been ordered) had preclusive res judicata impact. The appellate court disagreed, finding that appellant had failed to show that the exact same issue had been determined. Finding a lack of good cause for denying extraordinary fees at one point in time does not necessarily mean that good cause may not occur at a later point in time.
That brought the court to consideration of appellant’s challenges to the substantiation submitted in support of the fee request, consisting mainly of monthly summaries of services and work. Appellant argued that, under California Rules of Court, rule 7.702, much more detail needed to be provided, somewhere close to daily substantiation that would be used tosupport fee awards in lodestar cases. Not so, said the appellate court.
In contrast to lodestar cases, the fee award under the Probate Code is not a fee-shifting mechanism but a lower court’s discretionary call of what is “just and reasonable” under the circumstances. Cases in this area do not require daily substantiation in order to pass muster. (See, e.g., Estate of Fulcher, 234 Cal.App.2d 710, 717-718 (1965).)
Furthermore, “ there is no probate case that holds that the estate must provide detailed background information for each Downey Brand attorney who worked on the litigation involving the estate.” The First District, Division 2 panel primarily distinguished the reversal of a multi-firm fee request in Donahue v. Donahue, 182 Cal.App.4th 259 (2010) [one of our Top 20 Cases for 2010] because only one law firm was involved rather than multiple attorneys from different law firms. Beyond that, the monthly summaries by Downey Brand, unlike the time substantiation in Donahue, were adequate in nature.
BLOG OBSERVATION–Even in our initial post on Donahue, we predicted it would be cited and discussed quite a bit. Fortune tellers we are not, but this decision is must reading for anyone needing to see the “road map” that needs to be provided to appellate courts when attempting to justify a substantial fee ruling. (See our February 27, 2010 initial post discussion on Donahue; see our December 24, 2010 post in which it is listed among our top 20 California fee decisions for 2010.)
[Real] Fortune Teller. Nov. 1938. Lee Russell, photographer.