Arizona Court of Appeals Division One Holds That a Trial Court Must Consider a Number of Factors when Determining Whether to Award Attorneys’ Fees Incurred by a Guardian, Conservator, or Trustee.

In 2004, Marge Marjorie Sleeth (“Marge”) moved in with Rhule B. Sleeth (“R.B.).  In December 2007, R.B.’s son Mark Sleeth (“Mark”) sought an appointment as temporary and permanent guardian and conservator for R.B. and temporary successor trustee of R.B.’s living trust.  Mark hired Scott Ferris of Dyer & Ferris as his counsel.  Thomas Asimou represented R.B.  In January 2008, the court-appointed Mark as temporary guardian, conservator, and successor trustee, and in April 2008, the court-appointed him permanent guardian, conservator, and successor trustee.  In June 2008, Mark attempted to evict Marge from R.B.’s home, and Marge, in turn, petitioned to remove Mark as R.B.’s guardian.  In November 2008, Mark filed a “Guardian’s Care Plan and Conditional Resignation.”  In December 2008, the court found that Mark had violated court orders and statutory requirements, and replaced him with an independent private fiduciary.  In June 2009, the court-appointed Managed Protective Services, Inc. as R.B.’s conservator and successor trustee.  In October 2009, the court terminated the guardianship as no longer necessary.  In July 2009, however, Mark submitted a petition seeking an award of attorneys’ fees incurred between December 2007 and May 31, 2009, in the amount of $260,080, and costs in the amount of $10,133.36.  The request included fees incurred even after Mark was removed as R.B.’s guardian, conservator, or trustee.  Marge and R.B. objected.  The Court awarded all fees and costs, less a small discount of $5,515.  Marge and R.B. appealed.

The ArizonaAppeals Court vacated and remanded the award.  The Court explained that the statutes providing for attorneys’ fees for guardians and conservators require that such fees be “reasonable.”  Furthermore, under Arizona Rule of Probate Procedure 33, requests for payments of fees must be accompanied by a “a detailed statement of the services . . . [and] tasks performed, the dates [of] such services . . ., the time expended . . ., the name and position of the person who performed the services, and the hourly rate charged.”  Costs must be similarly identified and explained.  Additionally, the comment to Rule 33, as well as the National Probate Court Standard 3.1.5 (Attorneys’ and Fiduciaries’ Compensation), explain that courts should consider multiple factors when reviewing requests for compensation.  Accordingly, the Court held that trial courts must closely examine requests for fees and costs that ultimately may be borne by a protected person, and must consider, among other things, whether counsel filed unnecessary motions or engaged in unproductive litigation, and whether counsel was successful.  Additionally, an accounting is necessary for the trial court to evaluate the reasonableness of the requested fees. 

With respect to fees and costs incurred by trustees, the Court explained that the statutes also require that the fees be reasonable and incurred in good faith.  In this case, the trial court did not evaluate the fees requested, leading the Court to vacate the award of costs and fees and remand.

The Court also disapproved of Ferris’s practice of recording only half-hour or one-hour increments and use “block billing,” and required that the trial court evaluate each entry of block-billing for reasonableness on remand.  It also required the trial court to review the reasonableness of clerical work performed by Ferris’s paralegal.   

The Court rejected Mark’s argument that the statutes governing guardian and conservators do not require that the protected person or his estate derive any benefit from the legal fees incurred, explaining that the legislature did not intend that courts overlook whether an attorneys’ or a fiduciary’s services produced any value or benefit to the protected person and were thus reasonable.  Likewise, the Court rejected Mark’s argument that the statutes governing trustees do not require courts to critically evaluate fee requests, explaining that the “good faith” requirement requires courts to look at all of the circumstances, including the benefit to the estate.

Judge Weisberg authored the opinion; Presiding Judge Hall and Judge Kessler concurred.