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14-P-1641                                              Appeals Court

   W. NANCY BRADY, executrix,1 & another2 vs.        CITIZENS UNION
                    SAVINGS BANK3 & another.4


                             No. 14-P-1641.

          Bristol.       June 1, 2015. - September 30, 2015.

            Present:    Sullivan, Maldonado, & Massing, JJ.


Probate Court, Attorney's fees, Trust.        Trust, Attorney's fees.
     Practice, Civil, Attorney's fees.        Executor and
     Administrator, Attorney's fees.



     Complaint in equity filed in the Bristol Division of the
Probate and Family Court Department on July 13, 2011.

     The case was heard by Virginia M. Ward, J.


     Philip J. Laffey for Dale Eggers.
     Edwin F. Landers, Jr., for W. Nancy Brady.
     Ben Nathan Dunlap for Edwin J. Haznar, Jr.


     1
         Of the estate of Thomas T. Brady.
     2
       Edwin J. Haznar, Jr., executor of the estate of Edwin J.
Haznar.
     3
       The complaint names the bank in its capacity as bailee of
the assets of the Wilson O. Smith Trust.
     4
         Dale Eggers.
                                                                     2



    MASSING, J.      Defendant Dale Eggers, a beneficiary of the

William O. Smith Trust (the trust), appeals from a decree issued

by a judge of the Probate and Family Court awarding attorney's

fees, costs, and compensation for professional services to be

paid to the plaintiffs from trust funds.     The plaintiffs'

petition to the court claimed that their decedents (the

trustees) had rendered legal and accounting services to the

trust and had incurred expenses in their defense of a lawsuit

that Eggers initiated against them in connection with their

duties as trustees.    The amount of the award was nearly sixty

percent of the value of the trust at the time of the petition.

While we do not reach the question of the reasonableness of the

award, we remand the case for the judge to "undertake a more

specific and searching analysis of the actual requests for fees

and costs submitted than the record suggests took place."

Matter of the Estate of King, 455 Mass. 796, 809 (2010) (King).

    Background.      Eggers's father, Wilson O. Smith, established

the trust in 1987.    Among the beneficiaries were Smith's wife,

Betty Georgas (who was not Eggers's mother), Eggers, and

Eggers's children.    In December, 2006, Eggers and one of her

daughters initiated a lawsuit in the Probate and Family Court

against the trustees, Thomas T. Brady and Edwin J. Haznar,

alleging breach of fiduciary duty in their 1994 conveyance of a
                                                                     3


Florida property out of the trust to Georgas (the prior action).

     After nearly four years of litigation, on November 8, 2010,

summary judgment entered in favor of the trustees.    Among the

grounds for judgment was that the prior action was barred by the

statute of limitations because Eggers had actual notice of the

alleged breaches of fiduciary duty more than three years before

she filed the complaint.   Eggers filed a notice of appeal from

that judgment, but withdrew her appeal in 2011.

     On July 13, 2011, the plaintiffs in the present matter

filed a petition to recover for professional services rendered

to the trust and for attorney's fees, costs, and professional

services incurred by the trustees in connection with their

successful defense of the prior action.    See note 8, infra.     The

plaintiffs relied on the provisions of G. L. c. 206, § 16,5 and




     5
       At the time the fee petition was submitted, G. L. c. 206,
§ 16, as appearing in St. 1949, c. 140, provided, in relevant
part:

     "An executor, administrator,   guardian, conservator or
     trustee shall be allowed his   reasonable expenses, costs and
     counsel fees incurred in the   execution of his trust, and
     shall have such compensation   for services as the court may
     allow."

This statute was since repealed as of March 31, 2012. St. 2008,
c. 521, §§ 38, 44, as amended by St. 2010, c. 409, § 23, and
St. 2011, c. 224. See now §§ 708, 709, 805, 811, and 816(15),
(24) of the Massachusetts Uniform Trust Code, G. L. c. 203E,
inserted by St. 2012, c. 140, § 56.
                                                                    4


G. L. c. 215, § 39B,6 and on the terms of the trust.7    Attached

to the petition were invoices totaling $457,902.09 and

affidavits describing the services rendered and the fees and

costs incurred.8   On October 20, 2012, the same judge who had


     6
       General Laws c. 215, § 39B, as appearing in St. 1975,
c. 400, § 70, provides in pertinent part:

     "When a judgment or decree is entered in a contested
     proceeding seeking equitable relief or on an account or to
     determine the construction of a will or of any trust
     instrument . . . the probate court may, in its discretion
     as justice and equity may require, provide that such sums
     as said court may deem reasonable be paid out of the estate
     in the hands of such fiduciary to any party to the
     proceeding on account of counsel fees and other expenses
     incurred by him in connection therewith" (emphasis
     supplied).

See G. L. c. 215, § 45 (authorizing discretionary awards of
costs and expenses in contested Probate and Family Court cases
"as justice and equity may require").
     7
       The trust instrument authorizes the trustees to use the
assets of the trust "[t]o employ and pay reasonable compensation
and expenses of investment counsel, legal counsel, accountants,
agents or others for any of the purposes hereto."
     8
       W. Nancy Brady, as executrix, claimed attorney's fees and
costs under G. L. c. 206, § 16, and G. L. c. 215, § 39B, for her
decedent's defense against Eggers's suit in the amount of
$186,971.88. In addition, she claimed $35,475.77 under G. L.
c. 206, § 16, and the terms of the trust, "in connection with
execution of the Trust and making a successful defense against
[Eggers's suit]," including a $5,000 insurance deductible paid
to the law firm retained to defend the trustee against Eggers's
suit.

     Edwin J. Haznar, Jr., as executor, claimed attorney's fees
and costs under G. L. c. 206, § 16, and G. L. c. 215, § 39B, for
his decedent's defense against Eggers's suit in the amount of
$171,854.44. In addition, he claimed $63,600 under G. L.
c. 206, § 16, and the terms of the trust, for his decedent's
                                                                      5


decided the prior action held a nonevidentiary hearing on the

petition, and on April 11, 2013, she issued a single-page decree

ordering payment from the trust in the full amount requested in

the petition, giving no explanation for the award.

    Discussion.     1.   Timeliness.   Eggers contends initially

that the plaintiffs are not entitled to reimbursement for

expenses associated with the defense of the prior action because

they did not file their petition until after judgment in the

prior action had entered.    This contention is without merit.

See Paone v. Gerrig, 362 Mass. 757, 762 (1973), citing G. L.

c. 206, § 16; G. L. c. 215, § 39A; and Condon v. Haitsma, 325

Mass. 371 (1950).

    2.   Reasonableness of the award.      Eggers argued below that

the expenses requested in the petition, $457,902.09, accounted

for nearly sixty percent of the trust assets of $778,645.84 as

of February 28, 2011.    She also argued that the fees were

excessive given the nature of the litigation, and that the

services rendered were duplicative or insufficiently documented.

Although the judge presided over the prior action and was

capable of determining, based on first hand observation, many

factors bearing on the reasonableness of the fees sought, see

King, 455 Mass. at 805-806, and cases cited, on the record


"accounting services . . . in connection with the administration
of the Trust and making a successful defense against [Eggers's
suit]."
                                                                      6


before us, we are unable to determine the reasonableness of the

award.     See T. Butera Auburn, LLC v. Williams, 83 Mass. App. Ct.

496, 504 (2013).

    "An important factor in assessing the reasonableness of

fees awarded in probate cases is the size of the estate."

Clymer v. Mayo, 393 Mass. 754, 772 (1985).    To ensure that the

judge takes this "long-standing principle," ibid., into account,

and to "prevent the fund from being either entirely or in great

part absorbed by counsel fees," ibid., quoting from Frost v.

Belmont, 6 Allen 152, 165 (1863), where, as here, fees are to be

paid for the services of those "'who may not have been employed

by those whose estates are thus diminished,' they are to be

awarded on 'strictly conservative principles,'" Clymer v. Mayo,

supra at 773, quoting from Holyoke Natl. Bank v. Wilson, 350

Mass. 223, 230 (1966).

    Additional factors for the judge to consider are well

settled.    See Cummings v. National Shawmut Bank, 284 Mass. 563,

569 (1933); Linthicum v. Archambault, 379 Mass. 381, 388-389

(1979); Clymer v. Mayo, 393 Mass. at 773; King, 455 Mass. at

807-808.    These include factors bearing on the reasonableness of

the hourly rate, such as "the ability and reputation of the

attorney," the demand for the attorney's services, and the rate

charged for similar services by other attorneys in the same

community.    King, supra at 807, quoting from Cummings v.
                                                                      7


National Shawmut Bank, supra.     Other factors to be considered

are "the time spent, . . . the amount of money or the value of

the property affected by controversy, and the results secured."

Ibid., quoting from Cummings v. National Shawmut Bank, supra.

"Particular attention should be given to the necessity for the

services and to the extent of duplication of effort involved."9

Chase v. Pevear, 383 Mass. 350, 374 (1981).     As noted supra, the

judge in this case must also consider the amount of the award in

proportion to the size of the estate, although no single factor

is decisive of what is to be considered fair and reasonable

compensation.   King, supra.

     We recognize that the judge has wide discretion in

determining an appropriate fee award.     See Chase v. Pevear, 383

Mass. at 371; King, 455 Mass. at 809.     See also WHTR Real Estate

Ltd. Partnership v. Venture Distrib., Inc., 63 Mass. App. Ct.

229, 235 (2005).     Here, however, the judge made no findings that

would allow us to determine whether she properly exercised that

discretion by evaluating the relevant factors through a

conservative lens.


     9
       In this regard, we note that the plaintiffs requested
payment for services that each trustee (one an attorney, the
other an accountant) personally provided in defense of the prior
action, as well as attorney's fees and costs that each trustee
incurred in that defense. See note 8, supra. The judge's
review for necessity and duplication of services should include,
but not be limited to, any overlap of these claimed expenses.
                                                                      8


    3.     Collateral sources.   Eggers further argues that because

the trustees' insurers apparently paid most of the attorney's

fees associated with their defense of the prior action, the

plaintiffs should not be allowed to recover defense costs

exceeding the trustees' personal out-of-pocket expenses.      We do

not agree that the trustees' insurance coverage bars the

plaintiffs from recovering for the expenses incurred in the

trustees' defense of the prior action.    However, the insurance

coverage is yet another factor the judge should consider on

remand in awarding fees and costs "in [her] discretion as

justice and equity may require."    G. L. c. 215, § 39B, as

appearing in St. 1975, c. 400, § 70.

    In many contexts in which fee awards are authorized, the

party entitled to fees is permitted to recover notwithstanding

the fact that the party is not personally responsible for

payment of those fees.   See, e.g., Northern Assocs. v. Kiley, 57

Mass. App. Ct. 874, 877-878 (2003) (where commercial lease

provided for payment of "attorney[']s fees incurred," fees

awarded even though attorney had not yet billed or received

payment.    "Incurring a fee is to be distinguished from paying a

fee[, . . . and w]hether a party ultimately pays the fees for

which he has obligated himself . . . is not determinative").

Cf. Darmetko v. Boston Hous. Authy., 378 Mass. 758, 763-764

(1979) (mandatory fees under G. L. c. 186, § 14, payable to
                                                                   9


publicly funded legal services organization representing

prevailing tenant at no cost); Torres v. Attorney Gen., 391

Mass. 1, 14 (1984) (same, with respect to suit under Fair

Information Practices Act, G. L. c. 214, § 3B).

    Recently in Polay v. McMahon, 468 Mass. 379, 389 (2014),

the Supreme Judicial Court rejected the contention that the fee-

shifting provision of the anti-SLAPP statute, G. L. c. 231,

§ 59H, did not apply where the prevailing party's liability

insurer paid for its defense.   The court reasoned that applying

the fee-shifting provision in these circumstances advanced the

statutory goals of protecting petitioning activity and promoting

prompt resolution of "SLAPP" litigation.   Ibid.   The court

further observed, "Nothing about the statutory term 'incurred'

precludes application of the fee-shifting provision where the

fees were 'incurred' by a third party acting on a defendant's

behalf."   Ibid.

    Other jurisdictions also hold that when a party entitled to

recover attorney's fees has insurance coverage for those fees,

this fact does not bar recovery.   These decisions rely on two

alternative rationales for the proposition that "an award of

attorney fees is not necessarily contingent upon an obligation

to pay counsel."   Ed A. Wilson, Inc. v. General Servs. Admn.,

126 F.3d 1406, 1409 (Fed. Cir. 1997).

    One line of cases applies the "benefit of the bargain"
                                                                    10


rationale of the collateral source rule;10 that is, "the

plaintiff who contracts for insurance with his or her own funds

should receive that benefit" without the other party using it to

offset a claim for expenses.   Fust v. Francois, 913 S.W.2d 38,

47 (Mo. Ct. App. 1995), citing Washington v. Barnes Hosp., 897

S.W.2d 611, 619 (Mo. 1995).    "The policy underlying [this] rule

focuses on the inherent unfairness of improving the defendant's

position through consideration of payments made independently to

the plaintiff."   State ex rel. Owners Ins. Co. v. McGraw, 233 W.

Va. 776, 784 (2014) (Davis, C.J., concurring) (citation

omitted).

     The second line of cases rests on a broad interpretation of

what it means to "incur" expenses.    "[A]ttorney fees are

incurred by a litigant 'if they are incurred in his behalf, even

though he does not pay them.' . . .    [T]he insured can be viewed

as having incurred legal fees insofar as [it has] paid for legal

services in advance as a component of [its] . . . insurance


     10
       In tort cases, the common-law collateral source rule
provides that "the value of reasonable medical expenses that an
injured plaintiff would be entitled to recover from the
tortfeasor as a component of her compensatory damages is not to
be reduced by any insurance payments or other compensation
received from third parties by or on behalf of the injured
person." Law v. Griffith, 457 Mass. 349, 355 (2010) (citation
omitted). The collateral source rule promotes deterrence by not
allowing the tortfeasor "to benefit from either contractual
arrangements of the injured party with insurers or from any
gifts from others intended for the injured party." Ibid.
                                                                    11


premiums."    Ed A. Wilson, Inc. v. General Servs. Admn., 126 F.3d

at 1409-1410, quoting from Goodrich v. Department of the Navy,

733 F.2d 1578, 1579 (Fed. Cir. 1984).    See State ex rel. Owners

Ins. Co. v. McGraw, 233 W. Va. at 785 (Davis, C.J., concurring)

(majority rule is that "in a tort action arising from an

underlying action, a plaintiff may recover attorney's fees paid

. . . by an insurance company in the underlying action").

    Under this rationale, a party incurs "the costs of

litigation, including reasonable attorney's fees, when that

party acts in response to a claim brought against him or her by

marshaling financial and human resources. . . .    Having

insurance to pay those expenses is merely one way of discharging

the litigant's obligation or liability; it is a way of financing

the costs."   Worsham v. Greenfield, 435 Md. 349, 357-358 (2013).

See Graco, Inc. v. CRC, Inc. of Tex., 47 S.W.3d 742, 744-746

(Tex. Ct. App. 2001) (under statute providing for manufacturers'

indemnification of sellers, seller incurred compensable loss

when insurer retained legal counsel to defend products liability

action on seller's behalf).    See also Torres v. Attorney Gen.,

391 Mass. at 14-15 (plaintiff represented by legal services

organization "incurred" attorney's fees even though he had no

obligation to pay for services).    Compare Northern Assocs. v.

Kiley, 57 Mass. App. Ct. at 878.

    Accordingly, the trustees' insurance coverage does not
                                                                   12


preclude recovery of their reasonable fees and expenses in the

defense of the prior action.   We note, however, that an award of

fees under G. L. c. 215, § 39B, should not be viewed as

automatic.11   Rather, in matters relating to wills, estates, and

trusts, the discretion vested in the trial judge to depart from

the usual "American rule" that the parties are responsible for

their own fees "require[s] a reason, grounded in equity, why an

award shifting fees should be made."   King, 455 Mass. at 805.

On remand, in addition to the factors enumerated in part 2

supra, the judge should take the trustees' insurance coverage

into account, giving it as much or as little weight as the judge

deems appropriate, in arriving at a just and equitable award.

     Conclusion.   We vacate the decree allowing the plaintiffs'

petition and remand the matter to the Probate and Family Court

for further proceedings in accordance with this opinion.

                                    So ordered.




     11
       The relevant considerations are the same whether the
award is made under the judge's statutory authority or under the
trust instrument. See notes 5 through 7, supra. Awards of
counsel fees and expenses to trustees and others rendering
services to the trust "generally lie in the discretion of the
Probate Court." Chase v. Pevear, 383 Mass. at 371. The
language of the trust instrument, permitting "reasonable
compensation" for expenses incurred "for any of the purposes
hereto" echoes the relevant statutory provisions, and the
plaintiffs make no argument that the trust instrument provides a
broader entitlement.
