in Re Guardianship of Keith A. Hanker, an Incapacitated Person ( 2013 )

Opinion issued June 25, 2013
In The
Court of Appeals
For The
First District of Texas
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NO. 01-12-00507-CV
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IN RE GUARDIANSHIP OF KEITH A. HANKER, AN INCAPACITATED
PERSON
On Appeal from the Probate Court
Galveston County, Texas
Trial Court Case No. PR0067842
MEMORANDUM OPINION
Tracey Hanker, guardian of the person of Keith A. Hanker, appeals from a
probate court order for payment of attorney’s fees and expenses from Keith’s
estate. In two issues, she contends that the probate court abused its discretion in
awarding an hourly rate of (1) $300 for the attorney and (2) $85 for the paralegal
when the only evidence of appropriate hourly rates was her attorney’s
“unchallenged testimony” of higher rates. We affirm.
Background
In June 2005, the probate court appointed Tracey as guardian of the person
of her brother Keith and Moody National Bank as guardian of Keith’s estate. In
April 2010, the court authorized Tracey to employ the Law Offices of Kenneth C.
Kaye to represent her in carrying out her duties as Keith’s guardian, and ordered
that the fees and expenses be paid from Keith’s estate “once approved by the
Court.” At that time, the court had a published and signed fee schedule entitled
“Standards for Court Approval of Attorney Fee Petitions.” 1
In December 2011, Tracey filed her Application for Payment of Attorney’s
Fees, supported by the affidavit of her attorney, Kenneth C. Kaye. Kaye’s affidavit
stated that the amount of reasonable and necessary fees and expenses for almost
eleven months 2 was $52,576.22 based on “reasonable” hourly rates of $350 to
$400 for him and $125 to $150 for his paralegal. The application stated that
1
The fee schedule, effective September 1, 2007, is not in the appellate record but
was discussed at the hearing on attorney’s fees and is available at
http://www.co.galveston.tx.us/probate_court/documents/Stand-Court-Approv-Att-
fees.pdf. We take judicial notice of the schedule. See TEX. R. EVID. 201 (providing
for judicial notice of “adjudicative facts”); Office of Pub. Util. Counsel v. Pub.
Util. Comm’n, 878 S.W.2d 598, 600 (Tex. 1994) (recognizing that court of appeals
may take judicial notice for first time on appeal).
2
The requested fees and expenses covered the time period from December 21,
2009, through November 6, 2011, and therefore included work performed by Kaye
before and after the April 2010 court order authorizing his retention.
2
Keith’s estate had become indebted to Kaye for this amount and that the court had
“impliedly authorized” this payment in its April 2010 order. Attached to Kaye’s
affidavit was a statement itemizing the date and a general description of the
services provided and expenses.
The bank objected to Tracey’s application, specifically objecting that the
requested hourly rate exceeded the standard rate set by the Galveston County
probate court. Margaret T. Hindman, Keith’s guardian ad litem, also objected to
Tracey’s application, objecting to approximately ninety hours of work performed
by Kaye and his paralegal and approximately $8000 in expenses as unreasonable
and unnecessary.
The probate court held a hearing on Tracey’s application at which Kaye
testified. He testified that his usual fee was between $350 and $400 an hour and
that a reasonable fee for a paralegal with his paralegal’s skills and qualifications
was $125 an hour. Kaye testified about some of his firm’s specific work and
expenses. Neither the bank nor the guardian ad litem cross-examined Kaye or
offered evidence. The guardian ad litem argued that a fee of $125 per hour for a
paralegal was unreasonable and that certain fees and expenses were unreasonable
and unnecessary. The bank “echo[ed] the guardian ad litem’s concerns” about
some of Kaye’s work. The probate court took judicial notice of Tracey’s
application.
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At the conclusion of the hearing, the probate court stated that “the auditor
has gone through this accounting and I’m going to get with her for the final dollar
amount.” As to the attorney’s fees, the court stated that “the maximum amount an
attorney’s going to be allowed is 300 an hour” and “the maximum amount for a
legal assistant is 85 an hour” based on the court’s published fee schedule
applicable to the fees at issue. The court’s fee schedule advised lawyers that the
court owed a duty to the estates of wards to ensure that lawyers were paid only
“reasonable and necessary” attorney’s fees and expenses, and that those would be
determined based on the factors set forth in rule 1.04 of the Rules of Professional
Conduct. The fee schedule included a table “setting forth what the court believes is
appropriate rates for court-appointed fiduciaries’ attorney’s fees” based on an
attorney’s years of experience. The schedule provided that while there were
circumstances in which the trial court could deviate from these ranges, in the
typical case an attorney with eleven or more years of experience—like Kaye—had
a “court-approved rate” of “$200-300/ hour” and a paralegal’s rate was $45 to $85
per hour unless the paralegal had certification in estate planning and probate law.
The probate court also concluded that some of the work for which Tracey
sought reimbursement was “guardianship work” rather than “attorney’s work” and
required prior court approval. The court signed an order for payment of fees and
expenses in the amount of $24,449.96, finding that attorney’s fees and expenses in
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that amount were “reasonable, necessary, and required for the protection and
welfare of Keith A. Hanker and should be paid . . . .” 3 This appeal followed.
Payment of Attorney’s and Paralegal’s Fees
In her first issue, Tracey contends that the probate court abused its discretion
as a matter of law in awarding attorney’s fees at $300 per hour because the only
evidence of an appropriate rate was Kaye’s unchallenged testimony that $350 to
$400 per hour was reasonable and necessary. In her second issue, Tracey similarly
contends that the probate court abused its discretion as a matter of law in awarding
paralegal fees at $85 per hour because the only evidence of an appropriate rate was
Kaye’s unchallenged testimony that $125 per hour was reasonable and necessary.
Tracey does not challenge any reduction by the probate court in the number of
Kaye’s and his paralegal’s hours for which she sought payment. 4
3
The clerk’s record includes Kaye’s statement with handwritten calculations made
by the probate court judge or auditor. These notes indicate that the court reduced
both the fees and expenses. The $24,449.96 for fees was calculated based on (1)
sixty-eight and one-half hours of Kaye’s time at $300 per hour, (2) thirty-five
hours of paralegal time at $85 per hour, and (3) expenses of $924.96. The probate
court order, however, does not state a specific hourly rate for attorney’s fees or
paralegal fees.
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Tracey requests that we reverse the probate court order and remand the case to the
probate court to determine an hourly rate within the range to which Kaye testified
and multiply that rate by the number of hours that the court found appropriate. She
also requests that we render judgment as a matter of law for paralegal fees based
on a rate of $125 per hour multiplied by the number of hours the court found
appropriate.
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A. Standard of review
We review the trial court’s approval of attorney’s fees incurred by a
guardian for an abuse of discretion. Epstein v. Hutchison, 175 S.W.3d 805, 807
(Tex. App.—Houston [1st Dist.] 2004, pet. denied) (citing State ex rel. Tex. Dep’t
of Mental Health & Mental Retardation v. Ellison, 914 S.W.2d 679, 682–683 (Tex.
App.—Austin 1996, no writ)); see Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex.
1998) (“We review a trial court’s granting of attorney’s fees for an abuse of
discretion.”). A trial court abuses its discretion only if it reaches a decision so
arbitrary and unreasonable that it amounts to a clear and prejudicial error of law or
clearly fails to correctly analyze or apply the law. Intercont’l Terminals Co., LLC
v. Vopak N. Am., Inc., 354 S.W.3d 887, 892 (Tex. App.—Houston [1st Dist.] 2011,
no pet.) (citing In re Olshan Found. Repair Co., LLC, 328 S.W.3d 883, 888
(Tex.2010)). We may not substitute our judgment for the trial judge’s. Id. (citing
New Process Steel Corp. v. Steel Corp. of Tex., 638 S.W.2d 522, 524 (Tex. App.—
Houston [1st Dist.] 1982, no writ)).
B. Recovery of attorney’s and paralegal fees under the Probate Code
Section 666 of the Probate Code provides for reimbursement of a guardian’s
expenses, including attorney’s fees:
A guardian is entitled to be reimbursed from the guardianship estate
for all necessary and reasonable expenses incurred in performing any
duty as a guardian, including reimbursement for the payment of
reasonable attorney’s fees necessarily incurred by the guardian in
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connection with the management of the estate or any other matter in
the guardianship.
TEX. PROB. CODE ANN. § 666 (West Supp. 2012); see Epstein, 175 S.W.3d at 808
(stating that section 666 provides for reimbursement of guardian’s expenses and
considers attorney’s fees to be expense); see also Woollett v. Matyastik, 23 S.W.3d
48, 52 (Tex. App.—Austin 2000, pet. denied) (“Attorney’s fees incurred by a
guardian may be a necessary and reasonable expense incurred by the guardian in
executing his duties as a guardian.”). The Probate Code further provides that all
expenses charged be “(1) in writing, showing specifically each item of expense and
the date of the expense; (2) verified by affidavit of the guardian; (3) filed with the
clerk; and (4) paid only if the payment is authorized by court order.” TEX. PROB.
CODE ANN. § 667 (West 2003).
In addition to the Probate Code requirements for payment of expenses,
requests for attorney’s fees in general must meet certain requirements. Woollett, 23
S.W.3d at 52. First, even when the trial court is the factfinder, expert testimony is
required to support an attorney’s fees award; a court does not have authority to
adjudicate the reasonableness of attorney’s fees on judicial knowledge without the
benefit of evidence. Id. at 53.5 Second, the expert testimony should address both
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Section 38.004 of the Civil Practice and Remedies Code, which authorizes a trial
court to take judicial notice of the usual and customary attorney’s fees and of the
contents of the case file in certain circumstances, does not apply to this case. See
TEX. CIV. PRAC. & REM. CODE ANN. § 38.004 (West 2008).
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the hourly rate and the hours expended. Id. Third, the parties do not dispute—–and
we agree—–that the trial court should consider the factors set forth in rule 1.04 of
the Rules of Professional Conduct: (1) the time and labor involved, the novelty and
difficulty of the questions involved, and the skill required to perform the legal
services properly; (2) the likelihood that the acceptance of the particular
employment will preclude other employment by the lawyer; (3) the fee customarily
charged in the locality for similar legal services; (4) the amount involved and the
results obtained; (5) time limitations imposed by the client or the circumstances;
(6) the nature and length of the professional responsibility with the client; (7) the
experience, reputation and ability of lawyer or lawyers performing the services;
and (8) whether the fee is fixed or contingent on results obtained or uncertainty of
collection before the legal services have been rendered. TEX. DISCIPLINARY RULES
PROF’L CONDUCT R. 1.04, reprinted in TEX. GOV’T CODE ANN., tit. 2, subtit. G,
app. A (West 2013) (Tex. State Bar R. art. 10, § 9); see also Arthur Andersen &
Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997) (applying rule 1.04
factors in breach of contract claim); Alford v. Whaley, 794 S.W.2d 920, 925 (Tex.
App.—Houston [1st Dist.] 1990, no writ) (applying similar factors in determining
reasonableness of ad litem fees). The trier of fact can consider these factors—often
called the Arthur Andersen factors—as well as counsel’s expertise in arriving at a
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reasonable amount of attorney’s fees. Powell Elec. Sys., Inc. v. Hewlett Packard
Co., 356 S.W.3d 113, 128 (Tex. App.—Houston [1st Dist.] 2011, no pet.).
An attorney’s fee award may include compensation for work performed by
paralegals. See El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 763 (Tex. 2012) (setting
out requirements for proof of work done by paralegals). In order to recover
paralegal fees, the evidence should show: (1) the paralegal’s qualifications to
perform substantive legal work, (2) that the paralegal performed substantive legal
work under an attorney’s direction and supervision, (3) the nature of the legal work
performed, (4) the paralegal’s hourly rate, and (5) the number of hours the
paralegal expended. All Seasons Window & Door Mfg., Inc. v. Red Dot Corp., 181
S.W.3d 490, 504 (Tex. App.—Texarkana 2005, no pet.) (citing Multi-Moto Corp.
v. ITT Commercial Fin. Corp., 806 S.W.2d 560, 570 (Tex. App.—Dallas 1990,
writ denied)); see Gill Sav. Ass’n v. Int’l Supply Co., 759 S.W.2d 697, 703 (Tex.
App.—Dallas 1988, writ denied). “Paralegal fees have been denied absent such
proof.” El Apple I, 370 S.W.3d at 763 (citing Moody v. EMC Servs., Inc., 828
S.W.2d 237, 248 (Tex. App.—Houston [14th Dist.] 1992, writ denied)).
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C. Kaye’s testimony was not conclusive on the appropriate hourly rates
Tracey contends that the probate court was required to accept the hourly
rates to which Kaye testified because his testimony was unchallenged and, thus,
conclusive.
Generally, the determination of reasonable attorney’s fees is a fact question
and the testimony of an interested witness, though not contradicted, does no more
than raise a fact issue for the factfinder to determine. Ragsdale v. Progressive
Voters League, 801 S.W.2d 880, 882 (Tex. 1990) (concluding that award of $150
in attorney’s fees was abuse of discretion when uncontroverted testimony was that
reasonable fee was $22,500); see also Smith v. Patrick W.Y. Tam Trust, 296
S.W.3d 545, 547 (Tex. 2009) (“The reasonableness of attorney’s fees is ordinarily
left to the factfinder, and a reviewing court may not substitute its judgment for the
[factfinder’s].”); Powell Elec. Sys., Inc., 356 S.W.3d at 128 (stating that expert
testimony regarding attorney’s fees is not conclusive and trier of fact is not bound
by such testimony). Attorney’s fees, however, may be proven as a matter of law in
some cases by uncontroverted expert testimony. Ragsdale, 801 S.W.3d at 882. To
fit within this exception to the general rule, the uncontroverted expert testimony
must be (1) readily controvertible if untrue; (2) clear, direct, and positive; and (3)
uncontradicted by the “attendant circumstances.” Id.; see also Rosenblatt v.
Freedom Life Ins. Co. of Am., 240 S.W.3d 315, 321 (Tex. App.—Houston [1st
10
Dist.] 2007, no pet.) (“[T]he uncontroverted testimony of an interested witness will
establish that attorneys’ fees sought are reasonable and necessary as a matter of
law . . . but only if the following conditions exist: (1) the testimony could readily
be controverted if untrue; (2) the testimony is clear, direct, and positive; and (3)
there are no circumstances that tend to discredit or impeach the testimony.”);
Brown v. Bank of Galveston Nat’l Ass’n, 930 S.W.2d 140, 145 (Tex. App.—
Houston [14th Dist.] 1996), aff’d, 963 S.W.2d 511 (Tex. 1998) (citing Ragsdale,
801 S.W.2d at 882) (“[I]f the evidence is not contradicted by any other witness, or
attendant circumstances, and the same is clear, direct and positive, and free from
contradiction, inaccuracies, and circumstances tending to cast suspicion thereon, it
is taken as true, as a matter of law.”). These attendant circumstances may indicate
that the claimed attorney’s fees are unreasonable or incredible. Ragsdale, 801
S.W.2d at 882. The Texas Supreme Court has since noted that even if the
testimony is uncontroverted, a fact issue might be presented based on the Arthur
Andersen factors. Patrick W.Y. Tam Trust, 296 S.W.3d at 548.
Relying on Brown v. Bank of Galveston, Tracey contends that the guardian
ad litem’s and Moody Bank’s failure to challenge Kaye’s testimony established the
hourly rates as a matter of law. See Brown, 930 S.W.2d at 145. In Brown, the court
of appeals concluded that the bank established its reasonable attorney’s fees as a
matter of law when its lawyer’s testimony was “uncontradicted and unimpeached”
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and the plaintiff did not discredit or disprove the testimony although he had the
opportunity. Id.; see Brown v. Bank of Galveston Nat’l Ass’n, 963 S.W.2d 511, 515
(Tex. 1998), abrogated on other grounds by Ford Motor Co. v. Ledesma, 242
S.W.2d 32 (Tex. 2007) (holding that court of appeals properly awarded attorney’s
fees because bank established amount). A failure to discredit or disprove
testimony, however, is only one circumstance a court may consider in deciding
whether testimony raises a fact issue or is accepted as true as a matter of law.
Rosenblatt, 240 S.W.3d at 321. Other “attendant circumstances” may raise a fact
issue. For example, our sister court found that the “attendant circumstances” in a
case created a fact issue despite uncontroverted testimony in light of two Arthur
Andersen factors: “the simplicity of the issues involved and the results obtained.”
Garza v. Slaughter, 331 S.W.3d 43, 46 (Tex. App.—Houston [14th Dist.] 2010, no
pet.).
Tracey presented the only evidence on attorney’s fees through her attorney.
In his affidavit, Kaye stated that a reasonable hourly rate for him in this case was
between $350 to $400 per hour “taking into account each and every one of the
factors mandated to be considered by attorneys in Texas” and that a reasonable
hourly rate for his paralegal was between $125 and $150 per hour. The total
amount of fees and expenses would be $52,567.22 if the lower hourly rates were
used and $59,163.72 if the higher hourly rates were used. At the hearing, Kaye
12
testified that the reasonable hourly rate for his paralegal was $125 per hour, for a
total amount of fees and expenses of $57,413.72 if his higher hourly rate was used.
We conclude that Kaye’s testimony only raised a fact issue for the probate
court given the “attendant circumstances” surrounding his work. The customary
fee for representing a ward in a guardianship proceeding in Galveston County was
set forth in the probate court’s fee schedule, a schedule that was in effect when the
court authorized Tracey to employ Kaye to represent her in carrying out her duties
as guardian. The court’s fee schedule highlights the importance of the lawyer’s
experience and expertise, and offers higher rates for lawyers with probate law
certification or particular expertise in probate matters. Kaye made no showing of
either and did not provide any testimony about his paralegal’s skills and
qualifications. He also did not provide clear and unequivocal testimony about the
results he obtained for much of his work. The determination of the fee in a
guardianship proceeding presents a unique attorney’s fee inquiry: the probate
judge’s responsibilities include protection of the ward. See In re Guardianship of
Glasser, 297 S.W.3d 369, 376 (Tex. App.—San Antonio 2009, no pet.) (“The
probate court has the ultimate responsibility for protection of an incapacitated
person’s best interest.”); see also Epstein, 175 S.W.3d at 809 (describing probate
court’s approval of only reasonable and necessary attorney’s fees that guardian
incurred as “ultimate safeguard”). And, the fees to be paid to the guardian’s lawyer
13
reduce the guardianship estate. See TEX. PROB. CODE ANN. § 666 (West 2003)
(authorizing reimbursement for payment of “reasonable attorney’s fees necessarily
incurred” from guardianship estate). We cannot conclude that a probate judge in a
guardianship proceeding who hears a guardian ad litem’s objection to an attorney’s
fee to be paid from the estate abuses its discretion by drawing on her knowledge of
the case, review of the court file, and her experience in other guardianship
proceedings in determining whether a requested fee is reasonable. See generally
Alford, 794 S.W.2d at 925 (“[A]n appellate court has the authority in looking at the
entire record to draw on the common knowledge of the justices of the court and
their experience as lawyers and judges to view the matter in light of the testimony,
the record, and the amount in controversy.”).
Finally, Kaye’s testimony about his agreement with Tracey was not clear
and unequivocal. Kaye testified that he was hired on an hourly fee basis, but did
not testify that Tracey agreed to his requested hourly rates. His fee statement
attached to his affidavit does not show any hourly rates or show a total amount due
for fees and expenses. We conclude that Kaye’s testimony was not conclusive
testimony that established his and his paralegal’s hourly rates as a matter of law.
We conclude that Tracey did not conclusively prove hourly rates for
attorney’s fees as a matter of law and, thus, has not demonstrated that the probate
court abused its discretion. Other than her challenge based on hourly rates, Tracey
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does not challenge the order for payment of $24,449.96 as fees and expenses
“reasonable, necessary and required” for Keith’s protection and welfare and does
not complain of the probate court’s failure to order payment for all services and
expenses submitted.
We overrule Tracey’s two issues on appeal.
Conclusion
Having overruled both of Tracey’s issues, we affirm the probate court’s
order.
Harvey Brown
Justice
Panel consists of Justices Jennings, Brown, and Huddle.
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