Santa Clara judge reconsiders his early ruling on a trustee excessive fee case

Santa Clara judge reconsiders his early ruling on a trustee excessive fee case


By Karen de Sá





kdesa@mercurynews.commercurynews.com



Posted: 07/27/2012 06:57:48 PM PDT

July 28, 2012 4:12 AM GMTUpdated: 07/27/2012 09:12:08 PM PDT







1 of 8Danny Reed hearingAttorney Matt Crosby returns to his seat after approaching the bench as attorney Mike Desmarais waits to speak during a hearing before Judge Franklin Bondonno at Santa Clara County Superior Court in San Jose, Calif. Friday, July 27, 2012 in which attorneys for Danny Reed challenged the $150,000 awarded to Reed's former conservator, attorney Thomas Thorpe. (Patrick Tehan/Staff)


Click photo to enlarge

Danny Reed, right, talks with his attorney, Mark Dames, outside Santa Clara... ( Patrick Tehan )«123»SAN JOSE -- In a case that has already spawned reforms in Santa Clara County's probate court, the battle over a six-figure bill that a trustee charged a brain-damaged San Jose man landed back before a judge Friday.



Judge Franklin Bondonno agreed to re-evaluate the $146,500 he awarded just two months ago to a Los Gatos attorney for defending the trustee's high fees.



Danny Reed, 37, took a bold stand in 2010 and opposed his court-appointed trustee's $108,000 bill for just 4 ½ months' work. When Reed and his public defender challenged those fees, trustee Thomas Thorpe and his attorneys charged more than twice that amount in legal costs to defend their original bills.



Friday's showdown in court was the latest twist in a lengthy battle that has taken on far broader meaning than the average estate dispute. Reed's case was at the heart of "Loss of Trust,'' an investigation published this month by this newspaper that revealed how some Santa Clara County estate and care managers are charging excessive fees and how the court was doing little to stop it.



Reversing his own decision would be extremely rare, but there were signs the judge understood the objections.



In a nod to Reed's pro-bono defense team, Bondonno said Friday the lawyers had "done a terrific job in saying: 'Judge, there's something that just isn't right in how this whole thing played out.' "



Still, he left no doubt of the uphill battle for Reed. Bondonno said while





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he understood the argument that Reed is now "stuck" with those attorney's fees, he added that he was bound by legal precedent: "I think the Supreme Court is telling me what I have to do."



Indeed, Reed's two-year battle has now reached a rare climax. Bondonno is set to release his decision early next week on the latest go-round in the case.



Reed's story and others like it have already prompted the court's leading probate judge to tighten scrutiny on fee requests and has led court officials to convene a task force to craft new systemwide rules.



In his May decision, Bondonno denied Thorpe every cent of the $67,312 he charged Reed to defend his original fees for service as temporary trustee. But he awarded Thorpe's attorney Michael Desmarais most of the $165,202 in legal fees he sought from Reed's estate, save for $18,646 Bondonno found to be inappropriate and double-billed.



Reed's legal team wants that ruling scrapped, and noted that high fees are symptomatic of outlandish compensation demands by court-appointed estate managers and their attorneys that have been allowed to flourish for too long under a permissive court in Santa Clara County.



"This apple cart needs to be upset," deputy public defender Mark Dames told the judge Friday. "They would only have the brashness to do this if there were a culture of indifference."



Attorney Desmarais lashed back that Reed's own attorneys are running up the bill to his estate, by continually challenging his and Thorpe's fees "apparently for some higher principle." Every time they object, he argued, his side has more legal defense work they must bill for.



"This is going to cause more and more and more fees, and I don't think if Danny Reed is in the condition he says he is that he is aware of what his attorneys are doing," Desmarais said, referring to the lingering effects of Reed's traumatic brain injury from two car accidents. "There is no one left to protect Danny Reed from his lawyers."



Reed cannot work because he is partially paralyzed, and suffers from chronic nerve pain and memory loss. He receives $850 a month in disability benefits but has money he won from personal injury settlements that his mother set aside for his lifelong care.



Desmarais, who charges $475 an hour, and Thorpe, at rates up to $250 an hour, argue they are the real victims because they are not being paid for their work. Desmarais also argued Friday that it is not Reed per se paying the bill, but rather a third-party: Reed's special-needs trust.



Desmarais went on to say he is defending Thorpe not only from claims that he overcharged Reed for his financial management services, but also that the trustee violated his professional duties -- a claim that was removed from the early court proceedings by Judge Bondonno. And Desmarais noted how vicious his opponents have been, rehashing the statements of public defender Dames, who once wrote that the trustee bills sucking up a young, disabled man's life savings were so egregious that for Thorpe, "banishment to the Fourth Circle would seem entirely proper."



Contact Karen de Sá at 408-920-5781.



http://www.mercurynews.com/trust/ci_21177392/santa-clara-judge-reconsiders-his-early-ruling-trustee