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Posted by: Chandra Williams on Jul 29, 2015

Court: TN Court of Appeals

Attorneys 1:

James G. Stranch, III, and Michael J. Wall, Nashville, Tennessee, for the appellant, David G. Rogers, Trustee for the Bankruptcy Estate of Paul T. Sorace.

Attorneys 2:

Eugene N. Bulso, Jr., and Paul J. Krog, Nashville, Tennessee, for the appellees, Estate of Jane Kathryn Ross and Joan Wildasin. John D. Kitch, Nashville Tennessee, for the appellee, Peggy D. Mathes.

Judge(s): CLEMENT

The dispositive issue in this appeal is whether the terms of an attorney-client retainer agreement preclude the attorneys from recovering any fees for representation of the decedent’s estate in an action to recover assets from the decedent’s son. Prior to her death, the decedent commenced an action against her son to recover the value of a new home she constructed on her son’s property, which was prior to the engagement of the attorneys whose fees are at issue. After the decedent’s death, the administrator continued to pursue the action, but subsequently concluded that the estate did not have sufficient assets to continue prosecuting the claim; thus, the administrator agreed to a settlement with the decedent’s son. When the motion seeking court approval of the settlement was filed, the decedent’s daughter opposed the settlement. Following discussions, the administrator, the decedent’s daughter, and her attorneys entered into an agreement stating, in pertinent part, that the daughter’s attorneys would “at no cost to the estate, prosecute this matter to trial” and that “all [of the attorneys’] fees and expenses shall be the responsibility of [the daughter].” The attorneys prosecuted the matter to trial, and the estate prevailed; however, the son appealed the judgment, and we reversed and remanded for a new trial. The estate prevailed on remand, and the son appealed again. While the second appeal was pending, the son filed a petition for bankruptcy, a bankruptcy trustee was appointed, and the probate court allowed the trustee to be substituted for the son. Thereafter, the attorneys who represented the estate in the trial of the underlying action and both appeals filed a motion for fees and expenses. The administrator for the estate did not file an objection to the fees based on the retainer agreement or inform the probate court or the trustee of the existence of the retainer agreement. Following a hearing, the trial court awarded $178,598 in attorneys’ fees and expenses and assessed all of the fees against the estate. Soon thereafter, the bankruptcy trustee learned of the retainer agreement. Based on this new information, the trustee filed a Tenn. R. Civ. P. 59.04 motion to set aside the order assessing the attorneys’ fees against the estate. The administrator supported the trustee’s motion, taking the position for the first time that the parties to the retainer agreement intended for the daughter to be responsible for all of the attorneys’ fees. Conversely, the attorneys seeking the fees insisted that the retainer ?? agreement only relieved the estate of liability for the fees incurred through the trial, which concluded on August 15, 2012. The attorneys’ position was supported by the administrator’s prior counsel who negotiated the terms of the retainer agreement on behalf of the estate. She stated that it was not the intent of the parties to preclude the new attorneys from recovering fees for services rendered on behalf of the estate after trial. She also stated that it would be “highly inequitable” for the estate to not be responsible for the fees incurred after the trial because the resulting judgment benefited the estate. Following a hearing on the trustee’s motion, the trial court ruled that it was the intent of the parties for the daughter to be solely responsible for attorneys’ fees and expenses “up to trial,” but all reasonable and necessary fees and expenses incurred after that trial were the responsibility of the estate. Thus, the court assessed the attorneys’ fees incurred through August 15, 2012 to the daughter and all fees incurred thereafter to the estate. This appeal followed. We affirm.