DEBT-SLASHER GETS FEE CHOPPED
If you want $1.25 million in attorney’s fees, make sure you don’t create an estate that’s only big enough to cover your bill.
That’s what the Second District Court of Appeal said last week in affirming a lower court that had slashed one firm’s expected take from $1.25 million to just $200,000.
By all accounts, attorney Kenneth Petrulis did a fantastic job administering the estate of Dan Stevenson, who left debts totaling $12.2 million when he died in 2001.
Petrulis and his firm, Goodson Wachtel and Petrulis of Los Angeles, enticed three dozen creditors to slash their combined demands to $1.7 million; some lenders even decided they owed about $700,000 to Stevenson’s estate.
Then in August 2003, Petrulis submitted a $1.25 million bill on behalf of the Goodson firm for 2,127 hours of work.
Creditor William Wilks, shocked by the amount, challenged the payment.
Wilks said he didn’t know about Goodson’s fee arrangement, allowing the firm twice its normal hourly rates. Commissioner H. Ronald Hauptman had sealed the fee deal after Petrulis argued its revelation would hurt the estate’s litigation against some creditors.
In February 2005, retired Los Angeles County Superior Court Judge Warren Ettinger cut Goodson’s payment to $200,000 in fees plus $73,144 in costs, saying “the estate cannot be considered to have received a benefit if only attorney’s fees and administrative costs are generated.”
The appellate panel agreed, finding that the trial court should not have sealed the payment arrangement and that the deal did not constitute a contingency fee agreement, at least not by the definition in a state law that allows “extraordinary” compensation in some cases.
The panel also called Petrulis’ $1.25 million billing “incredible on its face” in Estate of Stevenson, 06 C.D.O.S. 6925.
“Given that the assets in the estate did not exceed $700,000, we cannot say that a fee award of $200,000 was an abuse of discretion. That left $427,000 in assets (after the award of costs) and $1.7 million still due the lenders,” Second District Justice Robert Mallano wrote, with Justice Vaino Spencer agreeing. Justice Miriam Vogel concurred in the judgment only.
Both courts noted the firm’s billing can be reconsidered when the estate files a final accounting.
� Cheryl Miller
JUDGE DROPS RACE FOR FULL TERM
Shawna Schwarz, the judicial candidate who became a judge even before voters could decide her fate, has decided to leave the campaign trail.
Schwarz was appointed to finish a two-year term on the Santa Clara County Superior Court bench in April, just one month after she had filed papers to run for a full six-year ride for a different open seat. She announced Wednesday that she is dropping out of the November election.
“Though there are no legal or ethical barriers to my remaining on the ballot for Superior Court Office No. 13, the time and effort I would expend running a campaign would be better spent preparing for my change in assignment from dependency court to criminal court, beginning Sept. 1,” Schwarz said in a statement.
Schwarz came in first in the June primary by a 1,213-vote margin. She would have faced Michele McKay McCoy, a retired Santa Clara prosecutor, in a November runoff.
However, since Schwarz dropped out, McCoy will now face Santa Clara prosecutor Timothy Pitsker on Nov. 7. Pitsker, who came in third in the June 6 primary, was out of town last week and could not be reached for comment.
� Julie O’Shea