2nd DCA Upholds West Coast Factors for Calculation of Trustee’s Fees, as Contrasted with the Lodestar Method Set Forth in Rowe

In Robert Rauschenberg Foundation v. Grutman, 2016 Fla. App. LEXIS 181 (Fla. 2d DCA 2016), the Second DCA found that the trial court properly used the West Coast factors rather than the lodestar method to calculate the trustees’ fees because the legislative history of Section 736.0708(1), Fla. Stat. indicated an intent to apply the West Coast factors, and there was no indication of legislative intent to apply the lodestar method.  In the subject case, the administration of the considerable estate of famous artist and philanthropist, Robert Rauschenberg (“Decedent”). Decedent devised his residuary estate to the Robert Rauschenberg Revocable Trust (“Trust”), and the Trust’s sole remainder beneficiary was the Foundation. The Trustees managed the Trust assets after Decedent’s death while its assets were being transferred to the Foundation. In this time, the value of the Trust assets increased from $605,645,595 to $2,179,000,000. The Trust did not contain a provision addressing trustee’s fees and the parties disagreed regarding the methodology to be used to calculate the fees. The Trustees requested between $51,000,000 and $55,000,000 in fees based on the factors set forth in West Coast Hospital Ass’n v. Florida National Bank of Jacksonville, 100 So. 2d 807 (Fla. 1958).

The West Coast factors include: the amount of capital and income received and disbursed by the trustee; the wages or salary customarily granted to agents or servants for performing like work in the community; the success or failure of the administration of the trustee; any unusual skill or experience which the trustee in question may have brought to his work; the fidelity or disloyalty displayed by the trustee; the amount of risk and responsibility assumed; the time consumed in carrying out the trust; the custom in the community as to allowances to trustees by settlors or courts and as to charges exacted by trust companies and banks; the character of the work done in the course of administration, whether routine or involving skill and judgment; any estimate which the trustee has given of the value of his own services; payments made by the cestuis to the trustees and intended to be applied toward compensation.

The Foundation asserted that the Trustees were only entitled to $375,000 in fees based on the lodestar method set forth in Florida Patient’s Compensation Fund v. Rowe, 472 So. 2d 1145 (Fla. 1985), modified, Standard Guaranty Insurance Co. v. Quanstrom, 555 So. 2d 828 (Fla. 1990). Almost thirty years after the West Coast case, the Rowe case adopted the lodestar method for determining reasonable attorney fees which entails multiplying the number of hours reasonably expended by a reasonable hourly rate. To determine the reasonable number of hours and the reasonable hourly rate, the court considers factors similar to the West Coast factors. Subsequent to Rowe, the Court held that the application of “reasonable” in the fee statute was consistent with the lodestar method for attorneys and personal representatives in In re Estate of Platt, 586 So.2d 328 (Fla. 1991).  After many more years, in 2007, the Florida legislature enacted Section 736.0708(1), Fla. Stat. which notes that trustee’s fees be “reasonable under the circumstances.”

The trial court applied the West Coast factors and awarded $24,600,000 to the Trustees for their services. The Robert Rauschenberg Foundation, as sole remainder beneficiary of the Robert Rauschenberg Revocable Trust, (“Appellant”) appealed to the Second DCA. The Second DCA analyzed the legislative history of the statute and found that the legislative history showed an intent to apply the West Coast factors and no intent to apply the lodestar method.  Therefore, the Court affirmed the trial court’s calculation of fees using the West Coast factors. It also found that the court’s findings regarding those factors and the reasonable fee amount were supported by the evidence presented at trial.

If you or anyone you know is in need of representation in actions involving Guardianship, Probate and/or Trust Disputes, or questions pertaining to such proceedings, please contact The Law Offices of Glenn M. Mednick, P.L., at (954) 315-1154 or gmednick@mednicklawgroup.com.