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The Sun Valley Group, Inc. v. Mallet - 8/22/2013

Arizona Court of Appeals Division One Holds Fiduciary Fees and Costs May Not Be Reduced Solely Because Protected Person Cannot Afford To Pay.


Sun Valley served as conservator and guardian for Helga Mallet, and after the appointment of a successor fiduciary, Sun Valley and its attorneys filed a petition to approve fees and costs.  The probate court found that the fees and costs were “reasonable, necessary, and in the best interests of Mallet.”  However, because the bulk of Mallet’s net worth was in illiquid real estate, the probate court determined that Mallet could not afford to pay the fees and costs, and therefore the request was not in Mallet’s best interest.  The probate court approved half of the requested amount.  Sun Valley and its attorneys timely appealed.

In a unanimous decision, the court reversed the decision and remanded to the probate court for a re-determination of the reasonableness of the fees and costs charged.  The court noted that probate courts must consider the list of factors in the Arizona Code of Judicial Administration to determine the reasonableness of fees.  These factors include the fiduciary’s obligation to conduct a cost-benefit analysis before providing services to ensure that the services are not excessive or unproductive.  The liquidity of the protected person’s net worth can be a factor in the cost-benefit analysis, because the costs of liquidating illiquid assets may tip the balance against otherwise reasonable actions.  Lack of affordability alone, however, is an insufficient reason to deny a request for fees and costs.

Judge Cattani authored the opinion; Judges Thompson and Hall concurred.

Posted by: Shane Ham

Posted On: 9/4/2013