400 P.3d 605
Haw. Ct. App.2017Background
- Decedent Ethel Camacho executed wills in 1998 (gave estate to grandsons Nephi and Moses), 2000 (gave estate to daughter Beverly), and 2004 (also to Beverly); she transferred real property into a trust in 2008 and died March 13, 2008.
- Nephi filed to probate the 1998 will and was informally appointed personal representative; Beverly challenged and moved to formal probate, alleging later wills and a trust superseded the 1998 will.
- At jury trial, the 2004 will was invalidated for lack of capacity, but the jury found the 2000 will valid (so the 1998 will was not the last valid will). Beverly was appointed personal representative and the 2000 will probated.
- Nephi moved under HRS § 560:3-720 for reimbursement from the estate of "necessary expenses and disbursements including reasonable attorneys’ fees incurred," requesting $345,736.78 in attorneys’ fees and $42,754.09 in costs. The trial court awarded the full amount and entered judgment for $388,490.87.
- Beverly appealed, principally arguing that Nephi could not recover attorneys’ fees from the estate because his counsel had been retained on a contingency-fee basis and he owed them nothing after losing.
- The Hawai‘i Supreme Court held HRS § 560:3-720 requires estate payment only for fees/costs the personal representative is legally obligated to pay; vacated the attorneys’ fee portion of the judgment and remanded for further proceedings on costs (record insufficient to determine necessity of all costs).
Issues
| Issue | Nephi's Argument (Plaintiff) | Beverly's Argument (Defendant) | Held |
|---|---|---|---|
| Whether HRS § 560:3-720 authorizes estate payment of attorneys’ fees when claimant retained counsel on contingency and thus owes no fees after losing | Statute awards "reasonable attorneys’ fees incurred" whether successful or not; entitlement to fees is statutory and not defeated by private contingency agreements | Contingency fee meant Nephi owed nothing; statute only covers fees the representative is legally obligated to pay; awarding fees would create a windfall to claimant or claimant's counsel | Court: statute covers only fees/costs the representative has actually incurred or is legally obligated to pay; no award of attorneys’ fees where contingency agreement left Nephi with no obligation to pay; attorneys’ fee award vacated |
| Whether Nephi may recover costs under HRS § 560:3-720 despite not prevailing | Costs are recoverable under the statute "whether successful or not"; Nephi borrowed funds and was obligated to pay costs | Beverly objected to many specific cost items as unnecessary or undocumented but did not argue Nephi lacked obligation to pay costs | Court: costs can be awarded if the claimant was obligated to pay them; remanded to determine which cost items were "necessary" and properly documented |
| Whether Nephi acted in good faith (statutory precondition) | Litigation was pursued in good faith based on medical records and capacity concerns; he sought to protect estate interests named in earlier will | Beverly argued lack of good faith and that Nephi acted for personal gain as a beneficiary of the 1998 will | Court: good faith is a factual determination; trial court found good faith and this record does not rebut that finding |
| Whether beneficiary status (Nephi was a devisee under the 1998 will) bars recovery | Being a beneficiary does not preclude recovery if actions were in good faith | Beverly argued a primary-beneficiary pursuing the will for personal benefit cannot recover | Court: beneficiary status alone does not disqualify a nominated personal representative from recovery under § 560:3-720 if actions were in good faith |
Key Cases Cited
- Vinson v. Ass’n of Apartment Owners of Sands of Kahana, [citation="130 Hawai'i 540, 312 P.3d 1247"] (Haw. App. 2013) (interpreting “incurred” to require payment or legal obligation to pay before fees/costs are recoverable)
- Russell v. Moeling, 526 S.W.2d 533 (Tex. 1975) (statute allowing executor reimbursement did not authorize estate payment of attorneys’ fees where contingency agreement left unsuccessful executor owing no fees)
- In re Estate of Robinson, 236 Kan. 431, 690 P.2d 1383 (Kan. 1984) (contrasting view: contingency agreement does not control statutory award of attorney fees)