Limitations Defined to Exception to “American Rule”: Fee Shifting in Guardianship Actions
In the Matter of A.D., 477 N.J. Super. 288 (App. Div. 2023)
This published opinion defines limitations to the exception to the American Rule against fee shifting in guardianship actions. The case was initiated by the Sussex County Office of Adult Protective Services (“APS”). The court appointed Stephen Kossup as counsel and Brian Lundquist as temporary guardian for A.D. (“Hank,” a fictitious name created by the Appellate Division).
Hank had no significant assets. Income was limited to $835 per month, the sum of Social Security Disability and Supplementary Security Income benefits. In its complaint, APS included a request that APS bear no responsibility for the costs and fees associated with the appointment of an attorney or temporary guardian.
The Appellate Division noted that R. 4:86-4 (e) provides, “The compensation of the attorney for the party seeking guardianship, appointed counsel and of the guardian ad litem, if any, may be fixed by the court to be paid out of the estate of the alleged incapacitated person or in such other manner as the court shall direct.”
The Appellate Division also noted that N.J.S.A. § 3B:12-24.1(c) authorizes the court to appoint a temporary guardian and to award the temporary guardian “reasonable fees for his services, as well as reimbursement of his reasonable expenses, which shall be payable by the estate of the alleged incapacitated person or minor.”
The opinion continues: “The Sussex County Surrogate executed an ‘order’ dated June 11, 2020, scheduling a hearing to take place on July 14, 2020, before a Superior Court Judge.” In the Matter of A.D. 477 N.J. Super 288, 292 (App. Div. 2023). In a footnote, the court observed:
Why the Surrogate and not the Superior Court judge executed the order is not clear to us. Rule 4:86-3A(a) requires “the [s]urrogate” prior to docketing a complaint seeking a guardianship for an alleged incapacitated person to “review the complaint to ensure the proper venue is laid and that it contains all information required by R. 4:86-2.” However, Rule 4:86-4(a) requires “the court” to “enter an order fixing a date for hearing” provided “the court is satisfied with the sufficiency of the complaint and supporting affidavits and that further proceedings should be taken thereon.”
Id., at n.2.
The opinion continued to note that the following language appeared beneath the appointing paragraph:
SELECT ONE:
______ The attorney appointed to represent the alleged incapacitated person is appointed pro bono (without cost);
OR
_______ The attorney appointed to represent the alleged incapacitated person is to be paid. Pursuant to R. 4:86-4(d) the court may direct that counsel be paid from the assets of the alleged incapacitated person or in such manner as the court shall direct.
A.D., 477 N.J. Super. at 292.
A check mark appeared next to the second paragraph. The order did not mention compensation for the guardian ad litem.
A filed copy of the order and verified complaint were sent to APS, Kossup, Lundquist and the Surrogate. Although no motion had been filed, the language providing that APS bore no responsibility for the costs and fees associated with the appointment of an attorney or temporary guardian was crossed out. A handwritten note appeared next to the crossed-out portion stating “per” and the initials of the Superior Court judge assigned to the case.
APS sent a three-page letter to the court “objecting to the unilateral amendment of the complaint without providing APS an opportunity to be heard on the issue.” Id. at 293. There was no response.
In July 2021, the court entered a judgment of legal incapacity and appointed a limited guardian. The judge praised all involved, including Lundquist, Kossup, and the APS social worker. After placing her decision on the record, the judge raised the issue of the fee applications submitted by appointed counsel and the temporary guardian. APS did not object to the amount of the fees but opposed the request that APS pay the fees. Kossup submitted a certification to support a request for $3,767 in fees. Lundquist requested payment of $12,980 in fees and $2,032 in expenses, including $1,500 for a medical report.
APS submitted a certification from Joan Bruseo, the Director of the Sussex County Division of Social Services. Bruseo testified about the services provided by her organization and detailed the impact the decision to award fees to court-appointed attorneys and temporary guardians would have on the ability of the Division of Social Services to serve its clients.
Bruseo certified that her organization uses APS funding for, among other things, “[e]mergency [s]helter for individuals in need of immediate safe housing, home health aides, and [p]hysician [a]ssessments.” Id. at 296. Bruseo certified that in 2021, the New Jersey Department of Human Services had allocated $85,800 from federal grants to Sussex County for APS services and that “[t]he balance of the costs of salaries and benefits was absorbed directly by Sussex County.” Id. Bruseo certified that “[t]here is not enough money in [the] APS budget to pay for court-appointed attorneys or temporary guardians” and “[i]f we were forced to allocate funding to pay attorneys the simple bottom line is that the clients’ care, health, and wellbeing will suffer.” Id. at 296-97.
In March 2022, the court denied the fee applications. While praising the appellants for their “herculean” efforts and “remarkable results,” the judge found that APS had “acted in accordance with its mandate” and that “nothing in this matter provides the misfeasance by a state agency or otherwise extraordinary circumstances necessary to warrant fee-shifting of the court-appointed attorneys’ counsel fees to a state agency.” Id. at 297.
Kossup and Lundquist appealed, arguing that the trial court misinterpreted In re Guardianship of DiNoia, 464 N.J. Super. 562 (App. Div. 2019), and In re Farnkopf, 363 N.J. Super. 382 (App. Div. 2003), and by requiring a finding of extraordinary circumstances or “state agency malfeasance” for an award of fees under R. 4:86-4(e).
Kossup also argued the trial court was required to award him fees pursuant to the June 11, 2020 order and the strike marks on the return copy of the verified complaint.
The Appellate Division first reviewed appellants’ reliance on R. 4:42-9(a)(3):
In Farnkopf, we reversed an order requiring the Office on Aging to pay the fees of the court-appointed “interim conservative/ guardian” in part because we found Rule 4:42-9(a)(3) did not support that fee award. (citation omitted). After we decided Farnkopf, Rule 4:42-9(a)(3) was amended in 2006 to include the following sentence: “In a guardianship action, the court may allow a fee in accordance with R. 4:86-4(e) to the attorney for the party seeking guardianship, counsel appointed to represent the alleged incapacitated person, and the guardian ad litem.”
A.D., 477 N.J. Super. at 298.
The opinion noted that R. 4:86-4(e) provides: “The compensation of the attorney for the party seeking guardianship, appointed counsel, and of the guardian ad litem, if any, may be fixed by the court to be paid out of the estate of the alleged incapacitated person or in such other manner as the court shall direct.”
Appellants focused on “in such other manner as the court shall direct” to support their request for an order directing APS to pay their fees. The court rejected that argument, concluding “[t]he problem with that contention is that in APS’s enabling statute, the Adult Protective Services Act, N.J.S.A. § 52:27D-406 to-425, the Legislature did not give courts the authority to order APS to pay fees under these circumstances.” A.D., 477 N.J. Super. at 299.
The Appellate Division found that the judge correctly recognized that APS was created by statute. In analyzing the enabling act, the Farnkopf court held that the enabling statute does not extend to compelling any litigant or any other person or party to bear counsel fees, just the estate itself. The Appellate Division then noted that although R. 4:42-9(a)(3) was amended in 2006 to give the court discretion to order fee awards in any manner as the court shall direct, “[t]he language of N.J.S.A. § 52:27D-418 remains the same and provides for payment only from the vulnerable person’s ‘own estate.’ Similarly, N.J.S.A. § 3B:12-24.1(c)(9) provides for payment of a temporary guardian’s fees and costs only from “the estate of the alleged incapacitated person.” A.D., 477 N.J. Super. at 300.
Next, the Appellate Division noted that the Farnkopf court also considered the immunity provisions of the statute, N.J.S.A. § 52:27D-409(e):
In addition, the Act renders protective service providers and their employees “immune from criminal and civil liability when acting in the performance of their official duties.” The only exceptions to immunity, which have no basis in this record, are when providers or their employees engage in “conduct … outside the scope of their employment, or [which] constitutes a crime, actual fraud, actual malice, or willful misconduct.” Ibid. This grant of immunity demonstrates the Legislature’s obvious desire to render those who pursue the laudatory goals of the Act free from liability for the costs or fees incurred by other persons or parties.
A.D., 477 N.J. Super. at 299 (quoting Farnkopf, at 403).
The Appellate Division then went on to distinguish DiNoia. “In DiNoia, we affirmed an order requiring APS to pay the fees of the court-appointed counsel for the alleged incapacitated person” because the trial judge found that APS had failed to carry out its statutory duties, specifically that APS had failed to conduct the financial investigation and analysis it was required to perform under Rule 4:86-2(b), had thereby protracted the litigation, and had ignored requests to produce records. The Appellate Division noted that “given that misconduct,” there was no abuse of discretion in the trial court’s decision to require APS to pay the attorney fees in DiNoia. A.D., 477 N.J. Super. at 300.
The Appellate Division turned to Kossup’s argument that the judge was required to award him fees based on the June 11, 2020 order. “Kossup contends he relied on the sentence stating, “[t]he attorney appointed to represent the alleged incapacitated person is to be paid.” Id. The Appellate Division rejected this argument, noting that Kossup had viewed this language as a promise of payment and disregarded the next sentence of the order: “the court may direct that counsel be paid from the assets of the alleged incapacitated person or in such manner as the court shall direct.” Id. (emphasis added).
The Appellate Division observed that “Kossup also mischaracterizes the order as ‘the Court’s own order.’ In fact, the order was issued by the surrogate, not the Superior Court judge who ultimately decided the case. The judge was not bound by the surrogate’s order and was free to use her discretion in deciding the fee applications.” Id. at 301 (citation omitted).
The Appellate Division also rejected Kossup’s last argument regarding the strike-outs on the verified complaint. “Neither the court nor the surrogate had authority to sua sponte strike language from the complaint with no pending motion, no notice to the parties, and no opportunity for APS to hear and respond to the concerns that led the court or surrogate to strike the language.” Id.
Accordingly, the Appellate Division affirmed.