November 2012 Vol. 9, No. 3

9.3.4

Fee Recovery

Case:

In re Estate of Wong  (2012) 207 Cal.App.4th 366

Issue:

Is a probate attorney entitled to statutory compensation for work on behalf of the executor of an estate following his discharge and replacement by other counsel even though:  (1) the parties did not execute a written fee agreement; and (2) the executor rescinded her attorney services agreement with the attorney seeking fees because the attorney allegedly committed constructive fraud by misleading the executor about the attorney’s intention to seek statutory fees from the probate court?

Holding:

Yes.  Compensation for “ordinary services” rendered to the executor of an estate is governed by Probate Code section 10810 et seq.  Under that statute, payment for the attorney’s ordinary services is “based on the value of the estate accounted for by the personal representative” and is calculated pursuant to a statutory formula.  (207 Cal.App.4th at 376.)

The Court of Appeal noted that the executor-appellant implicitly conceded that “the statutory scheme governing attorney compensation for ordinary probate work does not require a written fee agreement between the executor and her attorney.”  (Ibid.)   The Court rejected the executor’s contention that Business and Professions Code section 6148(a), which requires a written fee agreement where it is reasonably foreseeable that the total expense to the client will exceed $1000, nonetheless required a written fee agreement.  “[A]ttorney compensation for services rendered to the personal representative of a probate estate is not paid by the client, but out of the estate.  Therefore, it is not simply unlikely but actually impossible that the ‘total expense’ to the client of an attorney rendering ordinary probate services will exceed $1,000.”  (Id. at 377, citation omitted, emphasis in the original.)  The Court rejected as “not supported by any reasoning or case authority” contrary guidance given in the CEB guide California Decedent Estate Practice.  (Id. at 378.)

The Court rejected executor’s claim of rescission based on constructive fraud for three reasons.  First, the executor failed properly to raise the issue of constructive fraud in the trial court.  (Id. at 353-354.)  Second, the executor failed to take the steps necessary to effect a unilateral rescission:  (1) giving notice of rescission to the other party upon discovering the facts giving him the right to rescind; and (2) restoring to the other party everything the rescinding party has received from the other party under the contract or offering to do so on the condition that the other party do likewise unless unable or unwilling to do so.  (Id. at 382-383.)  In making this point, the Court was “extremely concerned” that the executor and her counsel appeared unfamiliar with the law of rescission.  (Id. at 382.)  Third, there was substantial evidence in the trial court that the executor was not in fact deceived by about her attorney’s intention to seek a statutory fee for the ordinary probate work.  (Id. at 384.)

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