Louis Bernstein, the father, was in his late eighties and he obviously had a personal interest in obtaining funds before his death. He and the other brothers had consented to the initial report of the administratrix, withholding the paintings from the estate in favor of her individual claim, although they all knew that the paintings existed. It also appeared that Louis Bernstein had assigned his claim to others in order to defeat a possible claim by his wife, and that this assignment had not been filed in the probate proceedings. The brothers were, moreover, not acting in harmony, one brother accusing the others of fraud and threatening to initiate separate criminal and civil proceedings. Earnest also was concerned with the uncertainties inherent in the litigation, particularly if the issue ultimately came before a jury, in view of the many strong human factors which would operate in favor of the widow who had supported her impecunious husband, buying his paints and feeding him through her labors as a school teacher over a long period of time.
The Court has analyzed the authorities cited and is unable to find any decision or any canon of ethics which placed upon the administratrix or Weissbrodt an obligation to advise the plaintiff prior to settlement of amounts obtained from sales of individual paintings or any authoritative valuation of the paintings, even if there was one, which could have been passed on. The question of value was always speculative and remains speculative today. All of the parties were aware of this and there is no rule of law which necessitated any disclosure beyond that which was made. Plaintiff's best case is Estate of Albright, 309 N.Y. 126, 127 N.E. 2d 910 (1955), but that case does not stand for the proposition for which it is advanced. There the party seeking rescission of the settlement was entitled to share in what was acknowledged to be the property of the estate, if she could establish that she was the bona fide widow; the New York Court of Appeals decided only that the claim of rescission could be heard and determined prior to trial on the merits of her claim against the estate.
The settlement in this instance was made by experienced attorneys and the courts have long recognized that arm's length disposition of litigation, particularly settlements made through counsel by sophisticated litigants, cannot lightly be set aside merely because subsequent developments may indicate that the bargain made proved more beneficial to one party than the other. It is not unusual in a rescission action for those seeking reopening of a settlement to rationalize objections and even to distort facts. This is such a case. Many of the positions now taken by the plaintiff's son Aaron cannot be said to be credible in the light of the documentary evidence and what the Court finds to be the wholly credible testimony of Weissbrodt. The two key individuals involved on plaintiff's side in the settlement, Louis Bernstein and his lawyer Earnest, are dead, thus illustrating the particular difficulties presented in an attempt to reopen a negotiated arm's length settlement under the impetus of hindsight and post-settlement rationalizations. The Court has entered judgment on behalf of the defendant and wholly exonerates Weissbrodt from the various shifting attacks on his integrity.
The Court considers this a completely unfounded suit and has concluded in its discretion that this is an appropriate case in which to award defendant attorneys' fees as well as certain out-of-pocket costs. The Court is well aware of the general rule that attorneys' fees will not be awarded as costs except in extraordinary cases. The reasons for this rule are fully discussed by the Supreme Court in Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 717-718, 87 S. Ct. 1404, 18 L. Ed. 2d 475 (1967). This, however, is an extraordinary case.
From the beginning of this lawsuit, the allegations of fraud were unsupported by any evidence except a conviction on the part of the Bernstein brothers that they had made a bad bargain in 1964. They nevertheless pressed the action over its long and tedious course. Utilizing lawyers retained on a contingent basis, they had little at hazard, and could afford to keep hoping against hope that something would turn up to support the serious charges of fraud and misrepresentation against attorney Weissbrodt. The complaint was amended three times to reflect altered theories of the action or other developments. In the end, the case rested on a novel legal theory that could readily have been presented at the outset without the wearing, time-consuming, expensive pretrial activity which is so graphically shown by the jacket of this case. Defendant had 20 court appearances prior to trial; there were 15 depositions taken outside of Washington generating, with one deposition in Washington, 2,183 pages. Defendant's counsel logged 3,388 hours and their work included 709 pages of correspondence and 1,122 pages of legal and factual memoranda. By unsuccessfully resisting discovery, the brothers made it necessary to take their depositions twice. These and related facts are fully developed in an extensive affidavit of attorney William D. Rogers and need not be further elaborated.
There are other factors to be considered. The defendant was not deposed, called as a witness nor shown to have given Weissbrodt any directions or instructions. Rather, she is depicted on this record as one who, confronted with lawsuits by her husband's relatives, placed her confidence in a recognized member of the bar and proceeded thereafter as he in his professional judgment suggested. In short, she did nothing but seek and follow legal advice. For having done this and defended an unfounded suit she faces substantial legal fees well above the amount she paid to settle the original litigation. On the other hand, the plaintiff has only some out-of-pocket expenses. This shocks the conscience, given the nature of the suit.
There is ample authority for the award of counsel fees in equity cases such as this. In Sprague v. Ticonic National Bank, 307 U.S. 161, 164, 59 S. Ct. 777, 779, 83 L. Ed. 1184 (1939), the Supreme Court stated: "Allowance of [counsel fees and other expenses not included in ordinary taxable costs] in appropriate situations is part of the historic equity jurisdiction of the federal courts." See also Gazan v. Vadsco Sales Corp., 6 F. Supp. 568 (E.D.N.Y. 1934):
This court in an equity action has inherent power to grant an additional allowance of costs as between client and solicitor. Such costs may be awarded where fraud and misconduct have been charged, and not sustained when the suit was brought without any basis and was vexatious and oppressive.
In Cleveland v. Second National Bank & Trust Co., 149 F.2d 466 (6th Cir. 1945), cert. denied, 326 U.S. 775, 66 S. Ct. 231, 90 L. Ed. 468 (1945), appellant had charged the trustee of an estate with fraud, a charge which the court had determined to be "utterly unfounded." Substantial counsel fees were allowed the trustee as costs. In affirming this award, the Sixth Circuit noted: "It is common experience that charges of mismanagement and fraud against fiduciaries will speedily blast the best reputations, and it is also common experience that once destroyed they may not easily be restored." 149 F.2d 466, 470. The same might be said for charges of fraud and breach of fiduciary obligation against an attorney.
Defendant was ably and conscientiously represented by highly competent counsel. Their normal time charges for some 3,388 hours logged total $154,006, but they acknowledge that they will be forced to reduce this amount in any actual billing. It is difficult to set an hourly rate for attorneys who handled different phases of the case. A bare minimum charge for this time in the aggregate is $30 per hour, a figure well below the firm's normal time charges and one which experience suggests involves no element of profit. Congress recently recognized this hourly rate as appropriate for appointed counsel in criminal cases. Public Law 91-447, October 14, 1970, amending 18 U.S.C. § 3006A. It represents the barest of minimums in today's economy. By adopting it as the standard in this case the Court will more than adequately adjust for any activities of defendant's counsel which involved duplication of lawyer's time or non-productive work, factors that may sometimes be present in a situation such as this although there is no indication of this in the proof. Approximately one-fifth of the time was logged prior to the time that a summary judgment motion of defendant was heard and denied by Judge Holtzoff. On this occasion plaintiff had full information on the true merits of the case and his representations to Judge Holtzoff which defeated the motion proved to be wholly without substance. Giving plaintiff the benefit of the doubt on the frivolity of his claim up to that time, the Court awards defendant four-fifths of the time logged for attorneys' fees at $30 per hour, or the sum of $81,310.
A final question is whether attorneys' fees should be assessed against the estate, against Aaron Bernstein individually and as executor of the estate, or against all three Bernstein brothers. The estate has no assets, and can meet only $5,000 covered by the cost bond. The money received in the 1964 settlement was transferred by Louis Bernstein to his sons by gift prior to his death well before this case came to trial. Aaron Bernstein, as executor of his father's estate, was thereafter substituted as plaintiff, and he with support from his brothers kept the suit alive solely for their own benefit. In this effort Aaron Bernstein took the prime responsibility. Without his acquiescence the suit could not have gone forward. Nathan Bernstein was somewhat active and testified at trial, while Joseph apparently took only a limited role. Nathan and Joseph are not parties to the suit, are not before the Court, and costs will not be assessed against them.
An executor of an estate may in certain circumstances be held personally liable for the costs of a lawsuit prosecuted by him in his representative capacity. In re Butler, 20 F. Supp. 995 (W.D. Va. 1934), states the general rule to be that
executors and administrators are not personally liable for costs of litigation conducted by them in good faith, as to transactions arising during the lifetime of their decedent, but may be so held liable where they act in an imprudent or ill-advised manner in conducting such litigation; * * *
20 F. Supp. at 999. In accord with this decision are Singer v. Singer, 196 S.W. 2d 938 (Tex. Civ. App. 1946); Page v. Cave, 94 Vt. 306, 111 A. 398 (1920); and Lynch v. Webster, 17 R.I. 513, 23 A. 27 (1891). It is thus both just and proper that the major burden of this lawsuit should fall upon Aaron Bernstein. The full amount of costs will be assessed against him both individually and as executor.
Only the following out-of-pocket costs will be allowed defendant, i.e., all amounts paid for one copy of any deposition or trial transcript; filing fees; witness fees; $800 for Florida counsel; and any transportation expenses incurred in attending out-of-town depositions noticed by plaintiff. Out-of-pocket costs totaling $12,477.12 are claimed. These are not itemized in sufficient detail but counsel can promptly determine the amount to be awarded in the light of the foregoing. Only costs of the type indicated above up to the face amount of the bond will be allowed for out-of-pocket costs. This amount should be promptly negotiated between counsel and incorporated in an order granting judgment for defendant on the merits, for attorneys' fees in the amount of $81,310, and for out-of-pocket costs computed as herein set forth. The $50,000 rescission bond shall stand and not be released until final order in this case following whatever appeal, if any, is taken.
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