Metropolitan News-Enterprise


Thursday, May 2, 2019


Page 1


Court of Appeal:

Attorney Must Be Paid by Estate Before Distributing to Heirs

Panel Says Judge Does Not Have Equitable Power to Deviate From Rule


By a MetNews Staff Writer


A trial court may not, on equitable grounds, deviate from the rule that attorney fees and costs must be paid by an estate before distribution to heirs, the First District Court of Appeal has held.

While agreeing with Concord attorney Robert J. Hooy of Hooy & Hooy that it was an error to distribute sums to the decedent’s adult biological son, Stephen Nefas, in preference to his firm, Div. Two, in Tuesday’s unpublished opinion by Justice Therese M. Stewart, remanded the case for further consideration of the amount of the award.

The estate had $184,191.26 in cash; the Hooy firm had received $57,160 of the $106,477.02 that was awarded for costs and statutory and extraordinary fees.

Ethical Violations

Stewart recited instances of conflicts of interest and apparent incompetence and perfidy on the part of Hooy in handling the case, remarking: “[W]e are troubled by the appearance of so many potential ethical violations by the Hooy firm.” His efforts after substituting out included actions aimed at thwarting the interests of his former client—the decedent’s widow, Cornelia Steinberg.

 “Simply put, this probate matter is an issue-spotting exercise in professional ethics that could rival a law school exam,” Stewart said. “Nobody has argued that the Hooy firm’s fees should have been denied outright, or now should be disgorged, due to conflicts of interests…, and we will not decide that question.

“Having said that, we agree with the Hooy firm that the probate court’s order of distribution was erroneous.”

Payment From Estate

Citing provisions of the Probate Code, she said:

“The estate’s personal representative is allowed ‘all necessary expenses in the administration of the estate’…, including compensation for the services of its attorney which must be “charge[d] against the estate in the amount allowed” by the court….Although the statutory probate scheme has undergone many revisions over the years, the rule that attorney’s fees are chargeable to the estate as an expense of administration is one of longstanding.”

Stewart rejected the contention that Contra Costa Superior Court Judge John H. Sugiyama had equitable powers to provide that one beneficiary—the widow, Cornelia Steinberg—would be liable for any shortfall, declaring that “the statutes do not confer discretion to depart from the statutory order of priority governing the payment of extraordinary attorney fees.”

Judge’s Misconceptions

The jurist declared:

“Since the court clearly did not intend for these fees to be paid out of the estate, we cannot determine what amount of extraordinary fees and costs it would have found ‘just and reasonable’…if it had understood the fees would be paid from the only source legally permissible, i.e., the estate assets, and that their payment of the fees would be given statutory priority ahead of other debts and claims.  Particularly in light of the fact that the Hooy firm’s efforts after it substituted out of the case appear to have done ‘virtually nothing to benefit the estate’…it is appropriate in these circumstances for us to remand the Hooy firm’s request for extraordinary attorney fees and costs for further proceedings.”

The case is Estate of Steinberg, A150046.


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