October 15, 2013
In the Matter of SCPA 2110 Proceeding, Estate of Albert Nathan Eisenberg, Deceased.
Law Offices of Seema Verma PLLC, New York City (Seema Verma of counsel), for petitioner.
SNR Denton U.S. LLP, New York City (Ralph M. Engel and Martin R. Gold of counsel), for respondent Citibank, N.A.
Eric T. Schneiderman, Attorney General, New York City (Deborah Yurchuk McCarthy of counsel), for respondent Ultimate Charitable Beneficiaries.
Theodore A. Goldbergh, P.C., New York City (Theodore A. Goldbergh, of counsel) and Seth Rubenstein, P.C., Brooklyn (Leo Beitner of counsel), for respondent Etsuko Hamada.
Rita M. Mella, J.
Seema Verma, Esq., on behalf of the Law Offices of Seema Verma PLLC ("Verma") which represented Etsuko Hamada as: (1) nominated executor of the will of Albert Nathan Eisenberg; (2) as successor co-trustee of a revocable trust created under an agreement between decedent, as settlor, and Citibank, N.A. ("Citibank"), as co-trustees, dated May 3, 1991, as amended and restated on June 11, 2004; and (3) as co-trustee of a charitable trust created under an agreement between decedent, as settlor, and Ms. Hamada, as co-trustees, dated June 11, 2004, seeks an order fixing its fees, to be paid from the revocable trust, in the amount of $250, 802 (see SCPA 2110). Verma further seeks "costs and pre/post judgment interests [sic] and attorney's fees." Ms. Hamada, individually, already has paid $82, 000 to Verma. Verma has allocated $64, 436 of the $82, 000 to services allegedly benefitingdecedent's estate and the balance to services rendered to Ms. Hamada, individually. 
The trustees of the revocable trust are the sole beneficiaries under decedent's will, and the trustees of the charitable trust are the remainder beneficiaries of the revocable trust.Objections to the requested relief have been filed by the Attorney General of the State of New York, on behalf of the ultimate charitable beneficiaries; by Citibank, currently sole trustee of both the revocable and charitable trusts; and by Ms. Hamada.
In addition, there are two motions before the court. Citibank, as sole trustee of the revocable and charitable trusts, has moved for an order imposing sanctions and costs against Verma (see 22 NYCRR 130-1.1). Ms. Hamada, a beneficiary under the revocable trust of $ 2 million, reduced by its share of taxes, has moved for a determination of Verma's attorney's lien.
Decedent died on June 1, 2010, at age 93, leaving a probate estate (according to the application for preliminary letters) of $106, 970, subject to liabilities of $60, 000 to $120, 000. At the time of decedent's death, the revocable trust (according to Citibank, in its accounting proceeding which has since been withdrawn) had a value of $6.5 million.
On June 12, 2010, Ms. Hamada retained Verma to represent her, initially only as nominated executor. By November 22, 2010, Verma had ceased to represent Ms. Hamada.  Thus, Verma seeks compensation for representing Ms. Hamada for a period of less than six months.
The procedural posture of the instant application is somewhat anomalous.
I. Procedural History:
On November 26, 2010, Verma submitted a claim for legal fees to Citibank, as co-trustee of the revocable trust. On March 22, 2011, Citibank petitioned for settlement of its account as co-trustee of the revocable trust, for the period from July 16, 2004, to June 1, 2010, decedent's date of death. Both Ms. Hamada, individually, and Verma filed objections to the account.
On May 11, 2011, Verma filed the instant SCPA 2110 petition. Citibank moved to dismiss Verma's SCPA 2110 proceeding or, alternatively, to consolidate it with the accounting proceeding.
In a July 18, 2011 decision, the court determined to hold Verma's petition in abeyance pending resolution of the accounting proceeding or until further order of the court. The court explained that Ms. Hamada had "hired two additional attorneys whose fees must also be taken into consideration in fixing fees compensable from the trust. The corporate co-trustee has filed an accounting proceeding where the fees of those attorneys can be considered along with those of petitioner." The court noted that Verma had been asked to supplement the information submitted with the petition so as to clarify, and to provide additional detail, as to the time attributable to the representation of Ms. Hamada, as a co-trustee, rather than individually. The July 18, 2011 decision was affirmed unanimously, with costs, by the Appellate Division (93 A.D.3d 413 [1st Dept 2012], lv dismissed 19 N.Y.3d 1011 ). In a May 15, 2012 order, the Appellate Division denied Verma's motion for reargument of that court's decision, and her alternative motion for leave to appeal.
In a December 28, 2012 decision, the court granted a motion by Citibank — made in both the accounting proceeding and Verma's SCPA 2110 proceeding — to the extent of permitting Citibank to discontinue its accounting proceeding. In addition, the court lifted the July 18, 2011 stay on the SCPA 2110 proceeding. The court observed that all parties to the accounting proceeding, with the exception of Verma, had consented to the discontinuance, and that the issues raised by Verma in its objections were the subject of its proceeding for determination of legal fees and would be adjudicated therein. The court noted that the papers filed by Citibank and Ms. Hamada in the accounting proceeding, opposing Verma's fee request, would be considered in the SCPA 2110 proceeding, and the court permitted Verma to file responsive papers by February 4, 2013.
On January 22, 2013, Verma filed a notice of appeal of the December 28, 2012 decision.
On January 18, 2013, Verma filed in this court a compact disc which, she stated, contained ".pdf and audio files, in support of my pending petition for a judicial determination of my outstanding legal fees." She added: "As the document evidence is quite voluminous, bated 1-3377, I cannot reasonably submit a hardcopy [sic] filing and serve it to all parties of record." 
The two instant motions were returnable on February 22, 2013. As indicated in this court's May 3, 2013 decision, the court conducted several conferences and, on April 11, 2013, the parties agreed to waive a hearing, and that both motions would be marked submitted as of May 10, 2013.
On May 6, 2013, Verma filed a second memorandum of law, ostensibly in response to Citibank's motion for the imposition of sanctions. (The first memorandum of law was filed on February 11, 2013.) On May 9, 2013, the Attorney General of the State of New York filed a responsive affidavit.
II. Verma's Representation of Ms. Hamada:
Ms. Hamada signed three letters of engagement with Verma, dated June 12, 2010, July 29, 2010 and August 2, 2010, respectively.  The letters are signed by Ms. Hamada and by Seema Verma, Esq., of the Law Offices of Seema Verma PLLC. The relationship of the three letters is not entirely clear. 
The first letter reads: "Client, Etsuko Hamada, hires Attorney to provide legal representation in handling of initial matters concerning client's estate administration and executorship." It indicates that Ms. Hamada will provide a retainer of $4, 000, against which Verma would bill at an hourly rate of $400. The letter further reads: "Should matters go to litigation and client agrees to continue with my representation under a new retainer agreement, client understands that my hourly rate will be at $500 per hour with a minimum retainer of $50, 000."
The second letter purports to "redefine" the "full scope of representation and its challenges." Verma agreed to represent Ms. Hamada, as co-trustee of each of the two trusts and as nominated executor, and individually, in a host of capacities.  The letter provides for Verma's fees of $400/hour, for services, generally, but $500/hour for litigation, and a contingency fee of 40% of Ms. Hamada's recovery with respect to her individual claims and any "award" to decedent's estate.  Apparently, however, Verma agreed that the 40% contingency fee would be reduced by payments made pursuant to time charges. 
The second letter of engagement reads:
"Further, I am not an experienced attorney relating to trust and estate matters given its challenges, whereby I am gaining competency as we go because I am required to do so on my own. [Emphasis added.]"
"With my full disclosure however, I do want to assure you that I can manage all such issues and its [sic] complexity as that is my specialty overall in practicing law where my skills are unique as a lawyer."
The third letter agreement speaks about the need to pursue litigation. 
Essentially, Verma represented Ms. Hamada, as fiduciary, in only two matters: as petitioner in an uncontested probate proceeding, and as respondent in proceedings commenced by Citibank, as co-trustee, for the removal of Ms. Hamada, as successor co-trustee of the revocable trust and as co-trustee of the charitable trust.
A. Probate Proceeding:
Verma commenced the probate proceeding on July 30, 2010, seven weeks after Ms. Hamada had retained Verma to represent her as nominated executor. The execution of the will had been supervised by an attorney (Gary S. Moriwaki, Esq.); the attesting witnesses had executed a contemporaneous affidavit. Citibank renounced its nomination as co-executor and, on July 21, 2010, executed a waiver of process and consent to probate. The affidavit of a genealogist, retained by counsel for Citibank, was sworn to on July 19, 2010 (see 22 NYCRR 207.16[c]). On August 4, 2010, Ms. Hamada executed an affidavit in which she affirmed that she is a permanent resident of the United States, having held a "green card" since 1996, and intends to reside in New York City indefinitely. On August 5, 2010, Ms. Hamada's standard application for preliminary letters was granted. On August 19, 2010, Gary S. Moriwaki, the attorney who had drafted the 2004 amendment to the revocable trust, signed an affirmation concerning beneficiaries who had been in a confidential relationship with decedent (see Matter of Satterlee, 281
App.Div. 251 [1st Dept 1953]). On September 8, 2010, Seema Verma, Esq., filed a less-than-two-page affidavit regarding the same beneficiaries. The sole distributee of decedent's estate, Robert Levy, a first cousin once removed, executed a waiver of process and consent to probate on August 31, 2010. The probate decree was not signed, and letters testamentary did not issue, until November 29, 2010, after Verma had been substituted as counsel.
Nevertheless, the total number of hours reflected on Verma's time sheets, under the heading, "Estate Administration, " are 161.09, of which Verma reports spending no fewer than 126.29 on the uncontested probate proceeding, including many hours at the Surrogate's Court.  The fee claimed is $64, 436. 
B. Proceedings for Removal of Ms. Hamada, as Co-Trustee:
On August 17, 2010, Citibank, as co-trustee of each of the two trusts, filed petitions for the removal of Ms. Hamada as successor co-trustee of the revocable trust and as co-trustee of the charitable trust. On the October 12, 2010 return day of the petitions, the court suspended Ms. Hamada's powers. A transcript of the court's ruling reads: 
"In terms of the grounds for the suspension of Hamada, I would cite two separate, although there are many, incidents. One is the numerous emails from Ms. Hamada's lawyer, Seema Verma, to Ralph Engel, the attorney for Citibank, stating categorically that she will not permit any distributions to be made from the Eisenberg revocable trust to the charitable trust, of which she is also a co-trustee, until all of Hamada's claims are resolved.
"This demonstrates a want of understanding of her fiduciary duties, self-dealing, and a breach of duty of loyalty to the charitable trust and its ultimate charitable beneficiaries.
"In addition, and I find this particularly troubling, Ms. Hamada's lawyer submits a co-trustees management agreement' that has been executed by Ms. Hamada and by Wells Fargo — I am quite stunned that Wells Fargo would do this — in connection with her August 2010 purported appointment of Wells Fargo to substitute for Citibank in both trusts.
"That agreement provides the following provision: Where trustees cannot come to a unanimous or majority decision, the individual trustee's decision and judgment shall control.
"In addition, it provides that the individual trustee's power includes the power to seek reformation of the trust agreements as necessary, without challenges from corporate trustee of its validity or dispute.
"These provisions are contrary to New York law — the charitable trust is expressly governed by New York law — and in violation of the express terms of the charitable trust agreement, which provide that the trustees shall act by unanimous decision, except for ministerial functions.
"The management agreement, as I said, also purports to empower the individual trustee to seek reformation without challenges from the corporate trustees. This executed management agreement is further evidence of Ms. Hamada's want of understanding, and I suspect would also disqualify Wells Fargo, although that is not before me.
"Consequently, the powers of Etsuko Hamada as co-trustee of the Albert Nathan Eisenberg Trust dated May 3, 1991, as amended and restated, and as co-trustee of the Albert Nathan charitable foundation trust dated June 11, 2004 are suspended until further order of this Court."
In a colloquy with one of Ms. Hamada's new lawyers, the court stated, "your client and particularly her attorney, Ms. Verma, have demonstrated a lack of understanding, a lack of loyalty to the trust, a conflict of interest, self-dealing, et cetera, et cetera, et cetera." In response to Ms. Verma's remark: "The whole agreement can be changed at any point. That is not even the issue before the Court, " the court stated: "it is an issue and it shows not only your client's want of understanding but your want of understanding of the Laws of Trusts and Estates."
Verma appealed from the October 18, 2010 decision which embodied the court's ruling at the October 12, 2010 calendar. The Appellate Division determined:
"Verma lacks standing to appeal from an October 18, 2010 order of the Surrogate's Court, which granted Citigroup's motion to remove Hamada as a co-trustee of Eisenberg's Revocable Trust to the extent it suspended Hamada's appointment as trustee [citations omitted]. Even assuming arguendo that Verma had standing to appeal from the order, it failed to timely appeal within 30 days of service of a copy of the order with notice of entry (see CPLR 5513 [a]). In any event, the court properly exercised its discretion to suspend Hamada as a co-trustee with Citibank where the record shows that Hamada aggressively pursued her own interests in the proceeds of the trusts and estate, to the apparent neglect of other designated beneficiaries, thus evincing a clear conflict of interest." (Citations omitted; emphasis added.)
Matter of Eisenberg, 93 A.D.3d 413, 413-414 (1st Dept 2012), lv dismissed 19 N.Y.3d 1011 (2012), supra.
On December 10, 2012, Ms. Hamada filed resignations as successor co-trustee of the revocable trust and as co-trustee of the charitable trust, respectively. On January 29, 2013, the parties to each of the two removal proceedings filed a stipulation of discontinuance. 
Verma's time sheets reflect a division of the work on this matter into three categories: "Trusts Administration, " 190.38 hours, $76, 152; "Order to Show Cause, " 340.65 hours, $170, 325; and "Appeal, " 8.65 hours, $4, 325. The totals are: 539.68 hours, $250, 802.
Verma's time records are replete with charges for non-legal work, at hourly rates that range from $400 to $500, such as file management  and even shopping (August 1, 2010): "Shop with client to buy Ipad for trustee admin and email connection, " 2 hours, $800. In addition, there are time charges for legal work unrelated to the administration of either decedent's estate or decedent's two trusts, such as legal work apparently on behalf of Ms. Hamada, individually (e.g. June 28, 2010: "With Client all day at her home to gather documents and records for Letter of Demand and reimbursement from 1 to 1 pm, " 12 hours, "$4, 800; June 30, 2010: "Worked with Client to finish up the mailing packet for Demand Letter to Engel from 10:30 pm to 2:30 am, " 4 hours, $1, 600; and July 1, 2010: "Gather document and send supplemental package of records to Engel, " 4 hours, $1, 600).
III. Present Petition:
A fiduciary is entitled to pay from the estate any reasonable counsel fees she may necessarily incur (EPTL 11-1.1[b]). The Appellate Division has explained:
"It is the ability of the attorney and his capacity and success in handling large and important matters and in commanding large fees therefor, the amount involved and the result obtained, which are of prime importance in determining what constitutes a just and reasonable charge."
Matter of Potts, 213 App.Div. 59, 62 (4th Dept 1925), affd 241 NY 593 (1925).
The Court of Appeals has enunciated the specific factors to be considered in evaluating the reasonableness of an attorney's fees:
"Long tradition and just about a universal one in American practice is for the fixation of lawyers' fees to be determined on the following factors: time and labor required, the difficulty of the questions involved, and the skill required to handle the problems presented; the lawyer's experience, ability and reputation; the amount involved and benefit resulting to the client from the services; the customary fee charged by the Bar for similar services; the contingency or certainty of compensation; the results obtained; and the responsibility involved [citations omitted]."
Matter of Freeman, 34 N.Y.2d 1, 9 (1974).
The Surrogate's Court has the "ultimate responsibility of deciding what constitutes reasonable legal compensation, regardless of the existence of a retainer agreement" (Matter of Sucheron, 95 A.D.3d 892, 894 [2d Dept 2012], quoting Matter of Nicastro, 186 A.D.2d 805, 805 [2d Dept 1992]).
Here, the first two factors enunciated by the Court of Appeals, "time and labor required" and "difficulty of the questions involved, " are related. Nothing in the uncontested probate proceeding would suggest that anything more than the standard "time and labor" would have been required. The proceedings to which Verma devoted the most time — 340.65 hours, for a fee of $170, 325 — in which Verma unsuccessfully defended against Ms. Hamada's removal as co-trustee, were prompted by the indefensible conduct of Ms. Hamada, under Verma's guidance.
The "skill required to handle the problems presented" are those of an experienced practitioner in the field of trusts and estates. Ms. Verma, by her own admission ("I am not an experienced attorney relating to trust and estate matters"),  lacked such experience at the outset. Despite her assertion that she would be "gaining competency as we go, " Ms. Verma does not appear to have acquired appropriate "experience, ability, " and knowledge during the less than six months that her firm represented Ms. Hamada.
The "benefit resulting to the client" and "results obtained, " with respect to the probate estate, consisted of obtaining preliminary letters and the filing of papers to obtain a probate decree under circumstances that were far from complicated.
The "amount involved, " with respect to the administration of the trusts (according to Citibank) was $6.5 million, but the "benefit resulting to the client" and "results obtained" were virtually non-existent.
The petition for an order fixing Verma's fees "in the amount of $250, 802 plus costs and pre/post judgment interests [sic] and attorney's fees in recovery against the decedent's trust estate" is denied. The court determines that the $82, 000 which Verma already has received covered more than reasonable compensation and, accordingly, fixes Verma's fees, payable from the revocable trust, at zero.
IV. Motion of Citibank For Imposition of Sanctions and Costs (22 NYCRR 130-1.1):
Citibank, as trustee of the revocable trust, seeks an order imposing sanctions upon Seema Verma, Esq., and Seema Verma PLLC of not less than $448, 705, that is, the legal fees it incurred to defend against Verma's allegedly frivolous conduct.  Citibank, as trustee of the revocable trust, identifies five matters on account of which it seeks the imposition of sanctions.
First, Verma interfered with the administration of the revocable and charitable trusts. Verma demanded that Citibank, as co-trustee of the revocable trust, distribute to Ms. Hamada the sum distributable to her pursuant to the trust agreement — plus $3 million, which Verma claimed, represented the sum of two lifetime gifts that decedent had made to Ms. Hamada from the revocable trust, even though there had been no delivery.  Verma also demanded an additional distribution of some $179, 000 to reimburse Ms. Hamada for funds allegedly expended on behalf of decedent during his lifetime. Verma insisted that Citibank make such distributions to Ms. Hamada, individually, before Ms. Hamada, as co-trustee of the revocable trust, would agree to fund any portion of the charitable trust. When counsel for Citibank informed Verma that a delay in the partial funding of the charitable trust would trigger an otherwise avoidable capital gains tax, Ms. Verma responded, in a July 20, 2010 e-mail: "I am not intimidated by your BS and this matter needs to be resolved prior to funding it appropriately. This trust can wait until matter [sic] are cleared before proceeding." Ms. Verma described the charitable trust agreement, to which her client had been a signatory, as "fraudulent."  According to Citibank, as a result of Verma's intereference, on August 17, 2010, Citibank was obliged to file petitions for the removal of Ms. Hamada, as successor co-trustee of the revocable trust and as co-trustee of the charitable trust. On August 25, 2010, Ms. Hamada purported to substitute Wells Fargo Bank, N.A, for Citibank, as co-trustee of both the revocable and charitable trusts. The cost of responding to Verma's demands and then prosecuting the removal proceedings was $263, 525.
Second, Verma appealed the suspension of her former client's authority to act as co-trustee of each of the two trusts. Citibank seeks $74, 179, as the cost of the appeal, on which it prevailed and for which the Appellate Division assessed costs against Verma.
Third, according to Citibank, "Verma asked the Appellate Division for re-argument or, alternatively, for permission to appeal to the Court of Appeals. After losing that application, Verma made the same request directly to the Court of Appeals, which request was also denied." The legal fees for defending against those applications were $35, 570.
Fourth, all parties — except for Verma — agreed to discontinue the accounting proceeding commenced by Citibank, as co-trustee of the revocable trust, and to resolve Verma's fee claim within the context of the SCPA 2110 proceeding. Verma refused to consent to the resolution of the fee claim within the context of the SCPA 2110 proceeding, obliging Citibank to file a CPLR 3217(b) motion. Verma opposed the motion. Referring to "Law Offices of Seema Verma PLLC" in the plural, as "Petitioners, " Verma affirmed, at ¶17 of an affirmation filed on December 7, 2012:
"the record speaks to [sic] itself as to how much Petitioners have worked to make all parties on the record and this Court to understand the law and its duties for proper trust administration. In fact, it ought to be clear to this Court that it is Petitioners who have the greatest understanding of the laws of Trusts and Estates over all other attorneys assigned to these matters. The record speaks for itself that it is this Court who has no understanding of the record and the law over the course these [sic] entire matters... If this Court is not prepared to understand each and every legal detail and its implications being said and executed [sic], then this Court should not have ruled upon it to cause more harm... No staff has been assigned to understand the record and legal documents that are being ruled on, except for a single court attorney who does not possess enough knowledge to help resolve these matters effectively... Yet, Judge Glen ruled in her limited understanding..."
The legal fees incurred by Citibank, as trustee of the revocable trust, to obtain a discontinuance of its accounting proceeding were $21, 674.
Finally, in January 2011, Law Offices of Seema Verma PLLC filed a complaint in the United States District Court for the Southern District of New York, alleging eleven claims against defendants Citigroup, Inc., et al. The March 23, 2011 order of Judge Paul A. Crotty, dismissing the complaint, provides:
"The allegations... suggest that Citigroup and related entities have billions of dollars of clients' assets and they exercise control over law firms, which are only too anxious to cooperate with the bank. The Complaint suggests that the bank controls and directs the New York Attorney General's office; [sic] and improperly influences the New York County Surrogate's Court. Finally, the Complaint alleges that as a result of Citigroup's unlawful practices and conflict of interest relationships, Plaintiff lost her client and has suffered substantial financial losses and hardships (i.e., lost legal fees).
"The gravamen of the Complaint deals with certain actions involving a trust in a litigated Surrogate's Court proceeding. Plaintiff believes that a large trust affects interstate commerce all by itself. This is quite wrong. While it is not clear how any facet of a proceeding pending before the Surrogate's Court can be the subject of a monopoly claim under Sherman Act §2, the Complaint is barren of any allegation of a monopoly or any attempt to monopolize any part of the trade or commerce among the several states...
"Whatever else may be said concerning Plaintiff's claim that she is entitled to her legal fees for representing a party in a contested Surrogate's Court proceeding, it does not amount to a plausible anti-trust claim, Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007).
"When the Court advised Plaintiff that she had failed to state a claim under the Sherman Act or the Clayton Act, and that if Defendants were forced to make a motion to dismiss for failure to state a claim, the Court would permit a motion for sanctions, the Plaintiff decided to withdraw her Complaint.
"Pursuant to Rule 41(a)(2), the Complaint is dismissed and the Clerk is directed to close this matter."
The legal fees incurred by Citibank in defending against the Federal Court action were $53, 757.
Throughout these proceedings, Seema Verma, Esq., has demonstrated a clear want of understanding. The imposition of sanctions, in the instant case, would advance neither the punitive nor prophylactic purpose of sanctions.  Therefore, the court declines to impose costs and sanctions and so denies the motion of Citibank.
V. Ms. Hamada's Motion for a Determination of the Attorney's Lien of the Law Officesof Seema Verma PLLC:
Ms. Hamada has moved for a determination of the value of Verma's attorney's lien, so that Citibank, as trustee of the revocable trust, may make distributions. 
Even if the court were to assume, arguendo, that Verma had a right to a charging lien pursuant to Judiciary Law § 475, upon her discharge by Ms. Hamada, Verma was limited, at most, to a fee based on quantum meruit for the reasonable value of its services (see Campagnola v Mulholland, 76 N.Y.2d 38, 43-44 ). The court having determined Verma's SCPA 2110 petition, Ms. Hamada's motion is moot, and, accordingly, it is dismissed.
Verma's SCPA 2110 petition is denied, to the extent that Verma seeks an order fixing its fee in the amount of $250, 802, plus "costs and pre/post judgment interests [sic] and attorney's fees." The court determines that the $82, 000 which Ms. Hamada, individually, paid to Verma more than reasonably compensated Verma for services rendered to Ms. Hamada, as fiduciary, and, accordingly, the court fixes Verma's fee, payable from the revocable trust, at zero. The motion of Citibank, as trustee of the revocable trust, for the imposition of sanctions is denied. The motion of Ms. Hamada, individually, for a determination of Verma's attorney's lien, is dismissed as moot.
This decision constitutes the order of the court.