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In re Estate of Wilson

June 21, 2007

IN RE ESTATE OF LIZZIE WILSON; PAUL D. PEARLSTEIN, APPELLANT.


Appeal from the Superior Court of the District of Columbia (ADM 414-00) (Hon. José M. López, Trial Judge..

The opinion of the court was delivered by: Washington, Chief Judge

Argued June 7, 2006

Before WASHINGTON, Chief Judge, REID, Associate Judge, and WAGNER, Senior Judge.

Appellant Paul D. Pearlstein, appeals the trial court's order requiring him to pay to decedent's estate a portion of the attorney's fees paid to him by the estate's personal representative from her personal funds for services that he rendered in connection with the administration of the estate. We affirm.

I.

Lizzie Wilson died intestate on May 5, 1990. The primary asset of value in her estate was her home located at 30 New York Avenue, N.W., in the District of Columbia. The personal representative of decedent's estate ("the estate") sought to liquidate the residence, but due to a recalcitrant relative of the decedent who was residing in the home, had difficulty obtaining possession. The personal representative retained appellant, Paul D. Pearlstein ("appellant"), to assist her in acquiring possession of the property. The personal representative signed an agreement to pay the legal fees and personally guaranteed payment of the fees. Appellant, through the normal course of business, provided monthly billing statements to the personal representative. These billing statements were not requests for compensation, but were merely statements of the work performed and the value for those services. As explained in the retainer agreement, appellant would wait until completion of probate to collect his fee directly from the estate funds.

After successfully completing the assigned task, the personal representative discharged appellant as counsel. The personal representative sent appellant a check in the amount of $6,937.15 and stated in her letter of transmittal that it was payment in full for appellant's legal services and that "this completes and terminates the need for your legal services." The personal representative paid appellant from her personal funds and not from estate funds.*fn1 Appellant informed the personal representative that he was willing to collect his fee from the estate upon completion of probate. Demurring to appellant's suggestion, the personal representative insisted that appellant take the compensation immediately. Appellant then accepted. On March 16, 2001, appellant filed a praecipe signed by himself and the personal representative noting his withdrawal as counsel and that the personal representative would proceed pro se.*fn2

On July 31, 2001, the personal representative filed her final account with the trial court. Included in that final account was the personal representative's request for reimbursement of the attorney fees she had paid to appellant. On February 16, 2005, the trial court entered an order stating that it would approve the final accounting, but it took exception to appellant's failure to seek approval from the trial court before accepting compensation for the legal work he performed in the case. The trial court found such actions to run afoul of the 1981 version of D.C. Code § 20-751,*fn3 even though the trial court also found that the legal services rendered were necessary and that the requested hourly rate was reasonable. Nevertheless, the court ordered appellant to return 25% of the fee ($1,734.28) to the estate as a sanction for accepting the fee without prior court approval.

It is the trial court's position that § 20-751 requires all compensation sought for work done on an estate to be first approved by the trial court, regardless of the actual source of payment.*fn4

Although aware of a debate in the legal community as to the requirements of the statute when funds are not withdrawn directly from the estate, the trial court noted that appellant was aware that the trial court's position was that payment for services in connection with the administration of an estate was subject to prior court approval regardless of whether the funds come from the estate.*fn5 Relying on this court's decision in Travers, supra note 4, the trial court rejected appellant's argument that prior court approval was not required because the payment came from the client's personal funds at the client's insistence and not from estate assets. Appellant filed a timely notice of appeal.

II.

The issue before this court is whether the trial court erred in interpreting D.C. Code § 20-751 (1981) as requiring prior court approval of all legal fees incurred while working on estate matters, even when those fees are not being paid directly from the estate's funds. This court reviews the trial court's interpretation of a statute de novo. See Cass v. District of Columbia, 829 A.2d 480, 482 (D.C. 2003).

The 1981 version of D.C. Code § 20-751 states in relevant part that: "Reasonable compensation for work performed by a[n] . . . attorney with respect to administration of the estate pursuant to this title may be paid upon approval by the Court of a request filed as provided by subsections (c) through (g)." As a result, we have recognized that the probate court has "complete discretion as to whether or not to approve requests for compensation payments." Delaney, supra note 3, 819 A.2d at 993 (citing Johnson v. United States, 398 A.2d 354 (D.C. 1979)). Thus, our review is for abuse of discretion.

This court addressed a contention similar to the one raised here in Travers, supra note 4 (appending Travers v. Strupp, No. 91-PR-1427 (D.C. April 16, 1993), an unpublished Memorandum Opinion and Judgment ("MOJ")). Both Travers cases*fn6 dealt with a dispute over the appellant's entitlement to legal fees for services rendered in connection with the sale of a home that constituted the decedent's sole asset. The appellant in Travers was retained by the decedent's family members -- none of whom at the time were the personal representatives of the estate -- to help prevent the foreclosure of the property. After forestalling the foreclosure on the property, obtaining financing for its renovation, and then facilitating a subsequent sale, appellant sought compensation from the family members who retained him. One of the decedent's daughters -- who by this time had been appointed personal representative -- paid the appellant with estate funds. No request was made to the trial court seeking this compensation. A court appointed auditor-master was ordered to perform an accounting on the estate and discovered the unapproved payment of legal fees. After unsuccessfully attempting to have appellant formally make a request for the fees, the auditor-master recommended judgment in the amount of the fee against appellant. Appellant argued that he was not retained to perform services for the estate, but was retained by family members to stave off the impending foreclosure. Finding this argument unpersuasive, the trial court entered judgment against appellant ...


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