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In re Estate of Bruess

Court of Appeal of Iowa

August 7, 2013

IN THE MATTER OF THE ESTATE OF DONALD J. BRUESS, Deceased, Estate-Appellee,
v.
THE LAW FIRM OF JOHN GEHLHAUSEN, P.C., Intervenor-Appellant.

Appeal from the Iowa District Court for Winneshiek County, John J. Bauercamper, Judge.

A law firm appeals the district court's order approving its fees and expenses incurred in representing the estate in a wrongful death action.

James H. Cook and Erin Patrick Lyons of Dutton, Braun, Staack & Hellman, P.L.C., Waterloo, for appellant.

Daniel L. Fretheim of Anderson, Wilmarth, Van Der Maaten, Belay & Fretheim, Decorah, for appellee Estate.

Kevin E. Schoeberl of Story & Schoeberl Law Firm, Cresco, for appellees Bruess, Bruess, Rothman, and Bruess.

Timothy Lynch of Lynch Law Office, for Dennis Bruess.

Darrell Bruess, League City, Texas, pro se.

Considered by Doyle, P.J., and Danilson and Mullins, JJ.

MULLINS, J.

John Gehlhausen appeals the district court's order awarding him a forty percent attorney fee and court costs taxed by the federal court out of the settlement reached in a wrongful death action. Gehlhausen claims the district court should have enforced the attorney fee contract executed by the estate and approved by the probate court. He asserts the district court's order inadequately compensates him for a vast majority of the substantial expenses advanced in the litigation. He asks the district court order be reversed and the case remanded to the district court with instructions to enforce the fee agreement. We affirm as modified.

I. BACKGROUND FACTS AND PROCEEDINGS.

Donald J. Bruess (the decedent) was killed after his riding lawnmower rolled over, trapping him under water. He was survived by his eight adult children. An estate was opened, and Donald E. Bruess Jr. (Donald) was appointed administrator of the estate. Gehlhausen, a Colorado attorney specializing in lawnmower rollover cases, contacted the attorney for the estate after reading information about the death online. By the time Gehlhausen contacted the estate the two-year statute of limitation for the wrongful death claim was nearly expired.

A contingency contract was presented by Gehlhausen to Donald as administrator that provided Gehlhausen would receive a forty-percent contingency fee for sums recovered prior to or through trial, [1] and would advance the cost of the expenses up to $250, 000. Both the attorney fee and the expenses would be recoverable by Gehlhausen only if there was a recovery by settlement or trial. The contract also listed the expenses in detail that would be advanced and specified a nine-percent finance charge would be assessed on all costs advanced by Gehlhausen from the date of advancement. Each of the eight beneficiaries of the estate consented to entering into the contingency fee agreement and asked the court to approve the same. The court authorized Donald, as the administrator, to execute the contingency fee agreement to prosecute the wrongful death action on behalf of the estate.

The wrongful death lawsuit was filed in federal court in Iowa with the assistance of James Cook as local counsel. The case proceeded to mediation where the parties eventually agreed to a confidential settlement. Donald then sought court approval of the settlement and asked the court to "review the payment of the attorney fees and costs" from the settlement. Three of the beneficiaries objected to the settlement and asked the court to set a hearing to review the settlement and the payment of attorney fees and costs.

The court held that hearing on June 29 and July 5, 2012. At the hearing another of the beneficiaries objected to the settlement, and Donald joined with the four beneficiaries in questioning some of the litigation expenses claimed by Gehlhausen. Donald testified at the hearing he was never advised of the ongoing expenses Gehlhausen was incurring in the litigation until the mediation when he asked for an estimate of the expenses. He was shocked to find out that Gehlhausen had advanced expenses which exceeded the amount of his contingent fee.

The court found the total amount of the settlement reasonable and in the best interests of the estate so long as it ignored the attorney fees and expenses Gehlhausen was requesting. It found that if the attorney fees and all the claimed expenses were paid, the eight beneficiaries would recover only a nominal amount.[2] After considering the six factors found in Iowa Code section 633.199 (2011) for determining the value of extraordinary attorney services, the court determined that reasonable compensation for Gehlhausen under the facts of the wrongful death case would be the payment of fees and expenses in the amount of forty percent of the recovery together with reimbursement for all court costs taxed by the federal court and actually paid by counsel. The court ordered all other expenses to be paid by trial counsel. Gehlhausen filed a motion to reconsider, which was denied by the district court. He now appeals.

II. SCOPE AND STANDARD OF REVIEW.

This action was tried in probate court as a proceeding in equity and our review is thys de novo. See Iowa Code § 633.33; In re Estate of Thomann, 649 N.W.2d 1, 3 (Iowa 2002). We give weight to the trial court's findings of fact, especially its determinations of credibility, but we are not bound by them. Iowa R. App. P. 6.904(3)(g). While our review of the amount awarded for attorney fees is de novo, "we review a district court's decision that services were extraordinary under section 633.199 for abuse of discretion." In re Estate of Bockwoldt, 814 N.W.2d 215, 222 (Iowa 2012). We will reverse if the district court "exercises its discretion on grounds or for reasons that are clearly untenable, or to an extent clearly unreasonable." Id.

III. LITIGATION EXPENSES.

No party has appealed the court's approval of the settlement amount, so the only issue before us on appeal is the portion of the court's order pertaining to the allocation of attorney fees and expenses to Gehlhausen. The attorney fee contract between Gehlhausen and the estate called for a forty percent attorney fee plus the costs advanced by Gehlhausen in the prosecution of the wrongful death lawsuit. Gehlhausen claims the ...


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