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Court Addresses Executor Fee Dispute

A man from New York City executed a Will and its appendices and named a German Catholic Church his principal beneficiary in his last will and testament. The Will was challenged by the executors of a prior will executed in 1972. The appellant firm that represented the deceased man appealed an order from the Court that denied the appellant firm’s motion to dismiss the answer of the executor respondents of a prior Will. The executors of the prior Will were a bank and its legal firm. After an extensive litigation, the parties entered into a broad settlement agreement, pursuant to which the church received $3,000,000 together with a half-interest in a trust comprising the residuary property. The terms were incorporated into a decree.

The dispute arises out of the appellant firm’s application to fix its fee for legal services rendered to the preliminary executors of the Will. The executors of the prior will opposed the award of any fees on the grounds that the appellant firm knowingly presented an invalid Will and consequently committed other alleged wrongdoing. The appellant firm sought to dismiss the answer, asserting theories of inconsistency, bringing out matters already resolved and affirmative defense. The appellant firm further relied on the pronouncement in the court’s decree, to the effect that it appeared to the court that legitimate issues have been raised as to which of the Wills should be admitted for probate and that the compromise is made in good faith in the context of a legitimate will contest. The pronouncement is fair to the deceased in light of the circumstances and avoids any further litigation and unnecessary expense.

The court rejected the appellant firm’s arguments, reasoning that the question of bad faith on the part of the counsel, asserted in the answer, had not been litigated in the course of the proceedings and the quoted preamble did not constitute a finding of fact and that issues bearing on the award of fees were expressly reserved in both the settlement agreement and the decree until the instant application.

The reversal of the order is imperative. The respondents who executed a prior Will assumed the flawed position that a Will possessing sufficient validity for the purpose of distributing millions of dollars to its principal beneficiary is nevertheless completely lacking in validity for the purpose of fixing the compensation of the attorneys for the executors under that Will.

New York Probate Lawyers said that the respondents’ wide-ranging discourse on theories of raising matters already settled and why they might not be implicated by the settlement, does not improve the inconsistency inherent in their argument. Significantly, the respondents who executed the prior Will does not suggest that they were unaware of any material fact bearing on the invalidity of the 1988 Will at the time they entered into the stipulated settlement. Thus, they are unable to pursue the customary course of moving to vacate the stipulation on equitable grounds.

The reversal of the order is predicated less upon the operation of the various issues previously settled and more upon substantial public policy considerations favoring the enforcement of settlement agreements as a matter of contract. Long Island Probate Lawyers said at issue in the proceeding was the validity of the 1988 Will, to which the fixing of fees is a mere incident. By stipulating to disbursements from the estate to the Will’s beneficiaries, the respondents have necessarily removed the issue of the Will’s validity from the controversy. Moreover, to settle an issue resolved by stipulation, merely for the sake of deciding a collateral matter, would hinder any benefit obtained as a result of the expeditious resolution of the dispute by settlement.

The stipulations of settlement are favored by the courts and not lightly cast aside. Only where there is cause sufficient to invalidate a contract, such as fraud, collusion, mistake or accident, will a party be relieved from the consequences of a stipulation made during litigation.
It is irrelevant that the appellant firm and was then counsel to the executors, was not a signatory to the settlement agreement. It is material, however, that it was signed by the executor, more so that it was reduced to an order and entered where strict enforcement not only serves the interest of efficient dispute resolution but also is essential to the management of court calendars and integrity of the litigation process. Having agreed to resolve the dispute as to the validity of the 1988 instrument in order to avoid the expense, delay and hazard attendant on continued litigation, the respondents may not now raise the same issue, thereby introducing expense, delay and hazard into the incidental matter of fixing counsel’s fees.

The appellant firm should bear in mind that a stipulation of settlement limiting the issues, discontinuing a cause of action or withdrawing a claim is an agreement to which the courts are party and in the enforcement of which the courts have a particular interest. Whether or not counsel should be regarded as benefitted by a settlement agreement entered into by a client, as the parties contest, is not the issue; the essential consideration is the interest of the courts in enforcing agreements that facilitate the determination of a controversy. As the Court of Appeals observed, courts have long favored and encouraged the fashioning of stipulations as a means of expediting and simplifying the resolution of disputes.

The respondents place considerable reliance on language contained in the settlement agreement that nothing therein shall be construed to prevent them from objecting to payment of fees to the appellant firm, or seeking reimbursement of such fees, in connection with the firm’s representation of the preliminary executors. However, the setting of legal fees always requires that counsel justify the sums charged, and the right of an interested party to contest whether the amount billed was reasonable does not entail the right to assert an issue that party has agreed to settle.

Thus, the decree provides for the setting of fees after the firm has filed its affidavit of services rendered. This provision preserves no more than the right of the executors to contest the reasonableness of the amount charged for representation; it does not operate to preserve their right to contest the very legitimacy of the representation provided by counsel.

A proceeding to set attorneys’ fees is deemed to be a separate and distinct action, thereby implicating the doctrine of matters settled conclusively. An order of discontinuance effecting settlement on the merits is accorded the same effect as the entry of judgment on the merits.
The concept of adjudication embraces not only those matters which are actually litigated before a court but also those relevant issues which could have been litigated. The concept of affirmative defense is somewhat narrower, requiring two distinct elements: that an issue in the present proceeding must be identical to that necessarily decided in the prior proceedings and that in the prior proceeding, the party against whom anticipation is sought was accorded a full and fair opportunity to contest the issue.

Being properly utilized also serves to conserve the resources of courts and appellants. Suffolk County Probate Lawyers said that because the doctrine is based on general notions of fairness, there are few indisputable rules. As stated, the fundamental inquiry is whether re-litigation should be permitted in a particular case in light of what are often competing policy considerations, including fairness to the parties, conservation of resources of the court and the complainants, and the societal interests in consistent and accurate results. No rigid rules are possible, because even these factors may vary in relative importance depending on the nature of the proceedings.

Even entertaining the respondents’ argument on the narrower basis of affirmative defense, the interest in upholding the integrity of the stipulated settlement and, thus, conserving the resources of the court and the complainants, and the societal interests in consistent and accurate results, militate against respondents’ attempt to revisit the question of the validity of the 1988 Will. Claim preclusion operates to bar any claim arising out of the same transaction or series of transactions even if based upon different theories. The offering of the 1988 Will for validation and the services rendered by the appellant firm to the proponents in that proceedings are inseparable. Likewise, the validity of the Will is a question that could have been raised–and was actually raised–in the course of the proceeding. Thus, the respondents cannot implicitly concede the validity of the 1988 Will for the purpose of discontinuance and revive the issue for the purpose of challenging the counsel’s fees.

Logically, either there is an arguable validity to the 1988 Will so as to warrant the payment to its beneficiaries and, collaterally, to warrant payment to the counsel for services rendered to its executors, or the instrument is so tainted by fraud that neither settlement nor payment of the counsel fees is warranted. If the stipulation was entered into as the result of fraud, collusion or mistake, the respondents’ obvious remedy would be to seek cancellation. However, it appears that the respondents and Will executors were aware of the material facts surrounding the offering of the Will for validation, and any misgivings they may have entertained as the result of the knowledge were not sufficient to deter them from stipulating to the settlement. Therefore, the option of moving to vacate the stipulation is unavailable to them.

While there is no serious disagreement that the position taken by the appellant firm in favor of the admission of the 1988 Will to validate was filled with difficulty, it remains that the respondents consented to the distribution of a substantial portion of the property to the primary beneficiary under that instrument. It would be anomalous to punish the counsel for its success in exacting such concession by permitting a conceding party to revive the conceded issue to attack the counsel’s right to collect its fee. The interpretation urged by the respondents would open the floodgates to collateral attack upon the counsel for any party who was successful in negotiating a favorable settlement.

To permit such litigation would have a chilling effect on the settlement of marginal cases, in contravention of the well-established policy of encouraging the settlement of disputes, and would embroil the courts in unnecessary litigation of ancillary issues. The Court declines to establish a doubtful precedent whereby a disaffected litigant is permitted to contest the propriety of maintaining the very action necessarily resolved against it by stipulation as a means of denying fees to the attorney for a successful party.

Accordingly, the order of the Surrogate’s Court, entered February 2, 2001, which, to the extent appealed from as limited by the statement of the issues presented, denied the motion by petitioner- appellant to dismiss the answer of the respondents, should be reversed, on the law, without costs, the answer stricken, and the matter remanded to Surrogate’s Court for further proceedings.

Everybody determined to safeguard what we worked hard for so whoever we intend to leave it with can benefit from them. Legal disputes can be inevitable if we are not around to anymore to implement our Will. If you find yourselves in this situation, make sure to consult with Stephen Bilkis and Associates.

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