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Estate of Sweetland
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MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2001 ME 21
Docket: Cum-00-451
Submitted
on Briefs: January 18, 2001
Decided: January 30, 2001
Panel:WATHEN, C.J., and CLIFFORD, RUDMAN, DANA, SAUFLEY, ALEXANDER, and
CALKINS.
ESTATE OF ROBERT E. SWEETLAND
RUDMAN, J.
[¶1] Irene Mailhiot, personal representative of the Estate of Robert E.
Sweetland, appeals from the judgment entered in the Cumberland County
Probate Court (Childs, J.) ordering that she reimburse the Estate of
Sweetland in the amount of $40,613.26. She contends that she should be
compelled to reimburse the estate only for 10% of the court's surcharge.
We disagree and, therefore, affirm the judgment of the Cumberland County
Probate Court.
I. BACKGROUND
[¶2] Robert E. Sweetland of Windham, Maine, died testate on
January 24, 1997. Pursuant to his Last Will and Testament, Irene Mailhiot of
Hull, Massachusetts, was appointed to serve as the Personal Representative
of Sweetland's Estate.
[¶3] Sweetland's will directed that his residuary estate be divided in
the following manner: 40% to the Massachusetts Shriners Hospital Burn
Institute; 20% to a Massachusetts Masonic Home; 5% to the American
Cancer Society in Brunswick, Maine; 15% to the Salvation Army in Portland,
Maine; 10% to the Maine State Society for the Protection of Animals
(MSSPA), the Appellee herein; and 10% to the Animal Refuge League, in
Westbrook, Maine.
[¶4] Sweetland's Estate was valued at $227,085.98 and consisted
primarily of a home in Windham, Maine, a car, and numerous bank accounts.
In July 1999, Mailhiot contacted all six beneficiaries and provided each with
a First and Final Accounting, which included Schedule A (Assets and Income
Earned) and Schedule B (Liabilities and Expenses Incurred for the period
January 24, 1997, up through and including June 30, 1999). Mailhiot also
provided each beneficiary with a "Receipt and Release" accompanied by a
note stating that, "[u]pon my receipt, of all six (6) Receipt and Release
agreements properly executed and notarized, I will forward you a check,
payable to your organization, in the amount of your entitlement, . . . ."{1}
[¶5] MSSPA offered to execute a receipt but refused to sign a release.
The Accounting and Inventory provided to MSSPA showed that Mailhiot had
charged $94,889.85 in administration fees and expenses to the Estate,
leaving $132,196.14 to be distributed to the beneficiaries. Of this
$94,889.85, Mailhiot billed the Estate for $36,000 in administrative fees,{2}
and $14,113.26 for travel related fees.
[¶6] Pursuant to 18-A M.R.S.A. § 3-1003, Mailhiot filed a Sworn
Statement of Personal Representative Closing Estate. MSSPA, pursuant to
18-A M.R.S.A. §§ 3-719 and 3-721, objected to Mailhiot's closing statement
and petitioned for a judicial review of the reasonableness of Mailhiot's
administration fees and expenses. MSSPA alleged that Mailhiot's expenses
were excessive pursuant to the standards set forth in 18-A M.R.S.A.
§§ 3-719{3} and 3-721.{4}
[¶7] A testimonial hearing was held on March 24, 2000.{5} The
Probate Court found:
[T]he administrative fees charged by Ms. Mailhiot were excessive
under the standards of compensation set forth in 18-A M.R.S.A.
§§ 3-719 and 3-721. The Court will allow the amount of
$10,000.00 for the Personal Representative's administrative
fees. Ms. Mailhiot will reimburse the Estate in the amount of
$26,000.00 for administrative fee overcharges. In addition, she
will reimburse the Estate in the amount of $3,500.00 for the
cost of the legal settlement caused by her misfeasance.
In addition to the administrative fees, Ms. Mailhiot
charged the Estate $14,113.26 for food, travel, auto, parking,
[and] tolls, including two to three lunches per week at a lavish
local restaurant. These charges are unreasonable and
unsupported by the evidence. The Court will allow the amount
of $3,000.00 for these expenses. Ms. Mailhiot will reimburse
the Estate in the amount of $11,113.26 for Personal
Representative expense overcharges.
The Court finds that during the period of her
administration, Irene Mailhiot systematically and intentionally
abused her authority by grossly overcharging the Estate for
personal gain wherever and whenever she could, and her
conduct was a breach of her fiduciary responsibilities as Personal
Representative. MSSPA has spent $4,700.00 in attorney's fees
in its challenge to Irene Mailhiot's proposed closing of the
Estate. The Court finds these fees reasonable and orders that
Irene Mailhiot be surcharged the amount of $4,700.00 so that
the Estate may reimburse MSSPA for their attorney fees.{6}
The sum which Irene Mailhiot has been ordered to pay to
the Estate in reimbursement will be divided amongst the
Devisees according to the percentages of the residuary to which
they are entitled by the Last Will and Testament of Robert E.
Sweetland.
II. DISCUSSION
[¶8] Mailhiot contends that the Probate Court exceeded its authority
when it ordered her to reimburse the full $40,613.26 to the Estate.
Mailhiot does not dispute the court's finding with respect to the excessive
administration fees and expenses. Rather, Mailhiot argues that, because
each of the other five beneficiaries signed the "Receipt and Release,"{7} they
have released her from liability for her actions as personal representative,
including her liability for the full $40,613.26. Accordingly, Mailhiot argues
she only has to reimburse the Estate $4,061.33, an amount equal to 10% of
$40,613.26, MSSPA's share in the residuary.
[¶9] The Probate Code provides, in pertinent part, that "the
reasonableness of the compensation determined by the personal
representative for his own services, may be reviewed by the court. Any
person who has received excessive compensation from an estate for services
rendered may be ordered to make appropriate refunds." 18-A M.R.S.A.
§ 3-721(a) (1998).{8} The plain language of the statute vests the Probate
Court with the authority to order "appropriate refunds" from any person
who has received excessive compensation.
[¶10] The reimbursement of overcharged personal representative
fees is analogous to a case of improperly charged attorney fees. If attorney
fees are improperly charged to the estate, they are returned to the estate
because the improper fees constitute a damage or loss to the estate. See
Estate of Stowell, 595 A.2d 1022, 1026 (Me. 1991). Similarly, Mailhiot's
overcharge resulted in a damage or loss to the Estate, entitling the Estate to
a reimbursement.
[¶11] In addition, a personal representative is liable to the
beneficiaries of an estate for damage or loss to the estate resulting from a
breach of their fiduciary duty. Harrington v. Lord, 1997 ME 201, ¶ 12, 704
A.2d 1211, 1215 (citing 18-A M.R.S.A. § 3-712 (1981)); see also Estate of
Stowell, 595 A.2d 1022, 1026 (Me. 1991). A personal representative is a
fiduciary subject to the same duty of loyalty and liability for breach as the
trustee of an express trust. See 18-A M.R.S.A. § 3-712 (1998). The Probate
Court found that Mailhiot "systematically and intentionally abused her
authority by grossly overcharging the Estate for personal gain wherever and
whenever she could," and that, consequently, she had breached her
fiduciary duty. Just because Mailhiot "was open and forthcoming" about the
excessive fees she charged does not change the fact that she breached her
fiduciary duty when she overcharged the Estate. Accordingly, because
Mailhiot intentionally breached her fiduciary duty, she must reimburse the
Estate in the amount of $40,613.26.
The entry is:
Judgment affirmed. Remand to the
Cumberland County Probate Court for the
assessment of attorney fees on this
appeal.
Attorney for appellant:
James B. Smith, Esq.
Woodman Edmands Danylik & Austin, P.A.
P O Box 468
Biddeford, ME 04005-0468
Attorneys for appellee:
Harold C. Pachios, Esq.
Sigmund D. Schutz, Esq.
Preti Flaherty Beliveau Pachios & Haley, LLC
P O Box 9546
Portland, ME 04112-9546
FOOTNOTES******************************** {1} . The "Receipt and Release"
stated, in relevant part that, WHEREAS, in order to avoid the additional
expense and delay of a judicial settlement of the account, the Personal
Representative has agreed to the settlement of the estate by receipt and
release; NOW THEREFORE, the undersigned, having examined all statements
and accounts hereinbefore referred to of the Personal Representative, does
hereby APPROVE, RATIFY AND CONFIRM the same in all respects. The undersigned
further agrees that the said Personal Representative has settled its accounts,
has paid all of the creditors and claimants of the estate, has made distribution
of the estate, and has closed the administration of said estate upon receipt
and release. The undersigned further acknowledges that the aforesaid payments
and distributions have been properly made and does for itself and its successors
and assigns hereby release, remise and forever discharge Irene D. Mailhiot,
as Personal Representative and in her individual capacity as well, of and
from all liability, responsibility and accountability by reason of any and
all of her acts, doings and omissions to act in connection with the administration
of said estate and in making the payments as stated herein. {2} . The Probate
Court found that Ms. Mailhiot charged the Estate at a rate of $35.00 per
hour. According to Ms. Mailhiot's post-hearing brief, she charged the Estate
for 56 trips to Maine. For each trip, Ms. Mailhiot charged seven (7) hours
in alleged travel time. The court, however, found "convincing evidence
that Ms. Mailhiot was living in the home she was trying to sell." {3}
. § 3-719. Compensation of personal representative A personal representative
is entitled to reasonable compensation for his services. If a will provides
for compensation of the personal representative and there is no contract
with the decedent regarding compensation, he may renounce the provision
before qualifying and be entitled to reasonable compensation. A personal
representative also may renounce his right to all or any part of the compensation.
A written renunciation of fee may be filed with the court. 18-A M.R.S.A.
§ 3-719 (1998). {4} . § 3-721. Proceedings for review of employment
of agents and compensation of personal representatives and employees of
estate (a) After notice to all interested person, on petition of an interested
person or on appropriate motion if administration is supervised, the propriety
of employment of any person by a personal representative, including the
employment of any attorney, auditor, investment advisor or other specialized
agent or assistant, the reasonableness of the compensation of any person
so employed, or the reasonableness of the compensation determined by the
personal representative for his own services, may be reviewed by the court.
Any person who has received excessive compensation from an estate for services
rendered may be ordered to make appropriate refunds. (b) Factors to be considered
as guides in determining the reasonableness of a fee include the following:
(1) The time and labor required, the novelty and difficulty of the questions
involved, and the skill requisite to perform the service properly; (2) The
likelihood, if apparent to the personal representative, that the acceptance
of the particular employment will preclude the person employed from other
employment; (3) The fee customarily charged in the locality for similar
services; (4) The amount involved and the results obtained; (5) The time
limitations imposed by the personal representative or by the circumstances;
(6) The experience, reputation and ability of the person performing the
services. 18-A M.R.S.A. § 3-721 (1998). {5} . Mailhiot has not presented
us with a transcript of the Probate Court hearing. Nor does she challenge
the findings of the court. Because Mailhiot does not challenge any factual
finding of the trial court, but merely challenges the court's legal conclusion
that Mailhiot must reimburse the estate for the entire overcharge not just
MSSPA's proportionate share, and because that determination did not require
the exercise of the court's discretion, we undertake a review without the
necessity of a factual record. {6} . Ms. Mailhiot does not appeal the Probate
Court's Order surcharging her in the amount of $4,700 for the attorney fees
incurred by MSSPA in challenging her fees. {7} . The "Receipt and Release"
stated, in relevant part that, [t]he undersigned further acknowledges that
the aforesaid payments and distribution have been properly made and does
for itself and its successors and assigns hereby release, remise and forever
discharge Irene D. Mailhiot, as Personal Representative and in her individual
capacity as well, of and from all liability, responsibility and accountability
by reason of any and all of her acts, doings and omissions to act in connection
with the administration of said estate and in making the payments as stated
herein. {8} . Comments to the Uniform Probate Code, reprinted in the Maine
Probate Code state that "it seem[s] wise to emphasize that any interested
person can get judicial review of fees if he desires it. Also, if excessive
fees have been paid, this section [3-721] provides a quick and efficient
remedy." 18-A M.R.S.A. § 3-721 (1998).
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