San Jose: Judge rejects nearly $30,000 attorney fee to disabled man's trust

San Jose: Judge rejects nearly $30,000 attorney fee to disabled man's trust


By Karen de Sá





kdesa@mercurynews.commercurynews.com



Posted: 07/31/2012 06:14:29 AM PDT

July 31, 2012 1:14 PM GMTUpdated: 07/31/2012 06:14:36 AM PDT





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Danny Reed, right, talks with his attorney, Mark Dames, outside Santa Clara... ( Patrick Tehan )«1»Related Stories

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Santa Clara County's court-appointed personal and estate managers are handing out costly and questionable billsTranscript: Online discussion of how to avoid conservatorshipsSanta Clara County court-appointed estate manager quits case after questions about fees, judgmentMercury News editorial: County judges must impose tighter rules for managing vulnerable residents' estatesSAN JOSE -- In his strongest language yet, a Santa Clara County judge threw out almost $30,000 in attorney's fees charged to the trust of a disabled San Jose man whose fight against excessive charges in the local probate court is spawning sweeping reforms.



While Judge Franklin Bondonno said he lacks the power to strike down another $145,000 in attorney's fees billed to the trust of Danny Reed, the judge -- in a highly unusual gesture -- implored a higher court to overturn his decision.



The ruling comes in the aftermath of this newspaper's investigation, "Loss of Trust," which highlighted Reed's costly fight to beat back high trustee and attorney's fees billed to the 37-year-old brain-damaged man's special needs trust. When Reed objected, his trustee's attorney charged even more to defend the original bills.



"At some point, this endless wasting of Danny Reed's trust assets must stop," Judge Franklin Bondonno stated in a ruling released Monday. "As far as this Court is concerned, that moment is long past."



Bondonno's latest action strikes down a third set of fees requested by attorney Michael Desmarais, who is representing prominent Silicon Valley trustee Thomas Thorpe in this closely watched case illustrating the high cost of estate managers who serve elderly and disabled adults -- and how the court did little for years to stop it. In less than a month, the newspaper's series has prompted more scrutiny in Santa Clara County's lead





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probate judge's courtroom and a 25-member task force to study more far-reaching changes.



Original charges



In 2010, Thorpe hired Desmarais to defend a six-figure bill for just 41/2 months' work as a court-appointed trustee to manage Reed's estate, which -- under state law -- is on the hook for "reasonable" legal bills racked up on all sides of the case. When Reed objected to Thorpe's and his attorneys' original $108,000 bill, the costs soared.



The bills submitted by Thorpe's team so far amount to more than half of the money Reed has left in his trust. Reed's legal team includes a public defender and two private attorneys working free of charge.



In previous rulings, Bondonno struck down 80 percent of fees Thorpe charged Reed's estate, and has said he lamented awarding Thorpe's attorney more than $145,000. But he said he was hamstrung by a 1989 California Supreme Court ruling in the Estate of Trynin, which allows for so-called "fees-on-fees" in disputes such as these. When Reed's side claimed Thorpe had breached his professional duty, the judge ruled Thorpe had a right to defend himself.



Nonetheless, the judge has still nipped at costs. Bondonno denied 60 percent of Desmarais' first fee request for $11,000. In the second round of fees, he found $18,646 to be inappropriate and double-billed. And the judge rejected all of Desmarais' third set of fees: "The Court is not satisfied that the claimed sum of $29,364.77 is reasonable," Bondonno wrote. "More to the point, this Court refuses to make another fee award to be paid from Danny Reed's diminishing trust assets."



When reached by phone, Desmarais declined to comment on the decision, telling a reporter "you should be ashamed of yourself."



Bondonno's rulings awarding Desmarais six-figures in the Reed case are questioned by some legal scholars.



"It seems crazy on the face of it," said UC Berkeley law professor Eric Rakowski, who specializes in trusts and estates, and called the award "absurd."



"It's completely unreasonable for a (trustee) to spend more money defending a fee request than the amount of the fee itself," Rakowski said.



'Kafkaesque' case



In Trynin, the justices ruled that a "Kafkaesque judicial nightmare" could result from a request of fees for fees that devolved into "an infinite regression" of legal wrangling. But they added that the problem "is largely theoretical and seldom arises in practice." If it were to occur, the ruling stated, trial courts have broad discretion to deny fees.



Rakowski said Bondonno failed to use his discretion in the Reed case. "They said it's not going to happen," he noted of the justices' "nightmare" warning. "Well, this is a case where it did."



Yet Bondonno has now made clear he wished there were an alternative. In his ruling released Monday he wrote for a second time that he awarded Desmarais fees from Reed's estate "with great reluctance." And he noted his satisfaction that his earlier awards are now before the Sixth District Court of Appeal. In a rare request by a trial court judge to potentially be overturned, Bondonno stated: "This Court hopes that its present decision will be appealed. This Court also hopes that the appellate courts and/or the legislature can do what it is not permitted to do -- and develop a new and more workable rule for fees-on-fees cases."



That challenge is now being taken up by two state lawmakers -- Assembly members Jim Beall, D-San Jose, and Jerry Hill, D-San Mateo -- who are hoping to introduce new legislation in the coming session to fix the "fee-on-fee" predicament for the elderly and disabled.



Hill said after reading the Mercury News series that "the arrogance, the unfairness and the injustice" of high fees charged by some Santa Clara County private estate managers and their attorneys has his office seeking new laws. "I was shocked and offended by what I read, and if this occurs elsewhere then we have a major problem and many more victims," Hill said.



He added that piling legal bills on top of fees that are already "inappropriate, high and excessive," is wrong. "To me, it's criminal."



Contact Karen

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