In the Matter of Lucille Bunin Askin, deceased. Glenn Askin, etc., petitioner-respondent; Parker A. Schweich, et al., respondents-respondents; Neil Zachary, objectant-respondent; Choate Hall & Stewart, LLP, nonparty-appellant; Schnader, Harrison, Segal & Lewis, et al., nonparty-respondents. (File No. 1883/97)
APPEAL by nonparty Choate Hall & Stewart, LLP, one of the executor's former attorneys, in a probate proceeding in which Glenn Askin, formerly known as Glenn Askin Schweich, the executor of the estate of Lucille Bunin Askin, petitioned for the judicial settlement of a final account of the estate, from so much of a decree of the Surrogate's Court (Anthony A. Scarpino, Jr., S.), dated June 14, 2011, and entered in Westchester County, as, upon a decision of the same court dated April 19, 2011, and upon dismissing its application for legal fees in the sum of $161, 557.02, directed it to refund legal fees in the sum of $133, 079.54, which had already been paid to it by the estate.
Gallet Dreyer & Berkey, LLP, New York, N.Y. (David S. Douglas and Pamela Gallagher of counsel), for nonparty- appellant.
MARK C. DILLON, J.P., RUTH C. BALKIN, LEONARD B. AUSTIN, JEFFREY A. COHEN, JJ.
OPINION & ORDER
On this appeal, we are asked to determine whether the Surrogate's Court has subject matter jurisdiction to determine what, if any, legal fees are due to an out-of-state law firm representing an executor in matters relating to the estate. For the reasons set forth herein, we answer in the affirmative and remit the matter to the Surrogate's Court, Westchester County, for a determination of the reasonable and appropriate fees earned by nonparty Choate Hall & Stewart, LLP (hereinafter Choate Hall), in this matter.
The decedent, Lucille Bunin Askin, died on May 10, 1997, survived by her daughter Glenn Askin, formerly known as Glenn Askin Schweich, her son Neil Zachary, and three grandchildren. The decedent's will was admitted to probate in the Westchester County Surrogate's Court on November 18, 1997, and letters testamentary were issued to Glenn Askin, the nominated executor under the will. Glenn Askin, who was a Massachusetts resident at the time of her mother's death and subsequent issuance of letters testamentary, retained Choate Hall, a Massachusetts-based law firm, to render legal services to her in her representative capacity as the executor of the estate. Choate Hall performed extensive legal services on behalf of the estate from May 10, 1997, to May 31, 2003. When the executor moved to New York in 2003, she retained successor counsel. During the time that it represented the estate, Choate Hall, which did not maintain an office in New York, retained New York law firms to appear as counsel on the executor's behalf in the Surrogate's Court.
In March 2004, the executor's successor counsel filed a petition for the judicial settlement of a final account of the estate, which covered the period from May 10, 1997, to May 31, 2003, and included a request that the Surrogate's Court allow and fix the amount of legal fees and disbursements owed to Choate Hall for the legal services provided by it during that period. The executor averred in her petition that Choate Hall had been paid the sum of $131, 260.70. She further averred that legal fees for "ancillary services" billed by Choate Hall in the sum of $2, 743.13 remained outstanding.
Zachary filed objections to the executor's account in February 2005, and the decedent's grandchildren filed objections in April 2005. The objections filed by both Zachary and the grandchildren included a challenge to the counsel fees that had already been paid by the estate to Choate Hall. While the objections were pending, the executor filed an amended and supplemental petition for the judicial settlement of the final account, in which she requested that the Surrogate's Court fix the fees and disbursements owed Choate Hall. By that point, fees in the sum of $131, 312.83, and disbursements in the sum of $1, 766.71, had already been paid to Choate Hall, and additional invoices in the amount of $12, 549.33 remained unpaid.
The parties settled the objections to the account by an order and stipulation of settlement dated September 29, 2010, and so-ordered on November 10, 2010 (hereinafter the order and stipulation). As relevant to this appeal, the order and stipulation required the executor to file a second amended and supplemental petition for the judicial settlement of her final account, and directed that Choate Hall contemporaneously file a "Supplemental Affidavit of Legal Services which encompasses all of [its] legal fees and disbursements incurred through and including the date hereof for Court review, determination and award." The order and stipulation further provided that in the event that the Surrogate's Court directed that legal fees be refunded to the estate, 60% of the fees refunded would be paid to Zachary, and 40% of the fees refunded would be paid to the grandchildren.
In accordance with the order and stipulation, in October 2010, the executor, through her successor counsel, filed a second amended petition for judicial settlement of the final account, extended through September 30, 2010. The second amended petition included a request for the Surrogate's Court to fix and determine the legal fees and disbursements to be paid to Choate Hall. As required by the order and stipulation, Choate Hall filed an affidavit of services and a supplemental affidavit of services, detailing the services it provided to the executor, and requested, in the event the court fixed its legal fees, the sum of $161, 557.02, of which $133, 079.54 represented fees, expenses, and ancillary services through May 31, 2003, that already had been paid. Such services included the defense and settlement of an audit and inquiries by the Internal Revenue Service; preparation of the petition for probate; preparation of the court inventory for filing with the Surrogate's Court; extensive correspondence and advice in connection with Zachary's refusal to cooperate with aspects of the administration of the estate or abide by the will; and other legal services which the executor paid absent any protest.
The Surrogate's Court subsequently directed Choate Hall to submit a memorandum of law concerning the court's jurisdiction to fix the fees of an out-of-state law firm. In its memorandum of law, Choate Hall emphasized that it was a Massachusetts law firm that had performed legal services solely in Massachusetts based on a Massachusetts retainer agreement. Choate Hall submitted that under these circumstances, the court did not have jurisdiction to review the reasonableness of the fees it had charged pursuant to its retainer agreement with the executor, and fix a reasonable fee. Choate Hall additionally asserted that the executor had never objected to any aspect of the legal fees it had charged, and that neither Zachary nor the grandchildren had identified any specific legal service they found objectionable.
In a decision dated April 19, 2011, the Surrogate's Court determined that it did not have authority pursuant to SCPA 2110 to fix and determine Choate Hall's fee. Relying on Judiciary Law § 470, the court reasoned that it could "only fix the fee of an attorney for the fiduciary and order the fee to be paid out of the estate if that attorney has an office for the maintenance of business in New York " (emphasis added). However, the court also determined that it had the authority to direct the return to the estate of counsel fees which had been paid to an out-of-state attorney. Accordingly, it concluded that Choate Hall's application for legal fees was subject to dismissal and that Choate Hall was required to refund to the estate all fees it had been paid, which totaled $133, 079.54. The Surrogate's Court then issued a decree of judicial settlement dated June 14, 2011, in which it, inter alia, dismissed Choate Hall's application for legal fees and directed Choate Hall to refund to the estate the sum of $133, 079.54. Choate Hall now appeals from so much of the decree as directed it to refund the legal fees it had been previously paid.
For the reasons that follow, we find that the Surrogate's Court erred in concluding that it lacked subject matter jurisdiction to fix and determine the compensation owed to Choate Hall for services rendered to the estate. Further, the court should have made a determination as to the fair value of Choate Hall's services, rather than direct that the entire fee be returned. Thereafter, the court should have directed only a refund of such fees paid to Choate Hall that it considered to have been paid in excess of what it determined to be the fair value of Choate Hall's services to the estate pursuant to SCPA 2110.
We begin our analysis by examining the constitutional and statutory scope of the jurisdiction granted to the Surrogate's Court. The New York State Constitution grants Surrogates jurisdiction over "all actions and proceedings relating to the affairs of decedents, probate of wills, administration of estates and actions and proceedings arising thereunder or pertaining thereto" (NY Const, Art VI, § 12[d]). In addition to the constitutional mandate, the Surrogate's Court is required to exercise "full and complete general jurisdiction in law and in equity to administer justice in all matters relating to estates and the affairs of decedents" by determining questions that arise between any parties ...