L.A. Times / Don Bartletti ~ Reading Cinemas Movie Theatre

The Los Angeles Times is reporting on a family estate dispute and court drama thatis affecting the Los Angeles-based movie theater chain Reading InternationalInc. which has dozens of cinemas around the world, major real estate holdings, and a nearly 200-year history with roots in the railroad and coal business. The adult three children of Reading’s late chief executive, James J. Cotter Sr., are waging a battle for control of the company.

This case is more complicated than the typical estate dispute in that it involves a public company but it has some allegations that are common to many of them such as whether the father had capacity to amend the trust, breach of fiduciary duty and undue influence.

The Los Angeles Times reported that the issues began after James J. Cotter Sr., a Los Angeles businessman, resigned as CEO and chairman in August 2014 because of declining health, leaving son James Cotter Jr. in charge. Cotter Sr. died in September 2014 at age 76. Shortly thereafter, his two daughters went to court, alleging their brother improperly convinced their father to add him to a trust that would control the voting shares of the company.

The article notes that Ellen and Margaret Cotter’s court papers claimed that James Cotter Jr. unduly influenced their father while he was in the hospital after suffering a fall in his home. The daughters said their father lacked “the knowledge and understanding necessary” to make such financial decisions. The daughters contend that after their dad was admitted to the hospital, their brother convinced an estate attorney to draft an amendment to the trust that made him a co-trustee. They allege he lied to Margaret by saying the changes were made based on videos he took of their father expressing his wishes. 

Do I Need to Hire a Lawyer in Probate Court?

One common question that we often hear is the following:

"Do I have to hire a lawyer in Probate Court?"

or its close relative:

"Can I represent myself in Probate Court?"

I would note that this question also comes up during Probate Court hearings on a regular basis, because on a typical day, out of about 50 or so matters on the calendar there are bound to be 2 or 3 people representing themselves without lawyers.  Invariably, of the two or three, one or two of them is told by the judge to "seek legal advice."

You would expect a lawyer to say "of course you need to hire a lawyer" but the most accurate answer is that the need depends upon the facts:

1. If you have plenty of time on your hands, and no time pressure with respect to the estate, and no pressure from creditors or heirs, you might be able to represent yourself and have no downside.   Most people consider "wasting time" a downside, hence the first qualification.  A continuance, which is what the Court calls the situation where a matter scheduled for January 31 has to to be rescheduled for March 5 because a document is not properly prepared, causes a delay of the time of the continuance, in this example over 30 days.  So, if it does not matter how long it takes to, for example, take title to property, then the client would not be upset with the delay.  However, if a creditor or another heir wants things concluded, the delay is problematic.

2  So, that leads us to the next generalization:  if time is in any sense of the essence, only by using an experienced probate lawyer can you be confident to minimize delays.   This also applies if the client simply wants to not worry about the matter, because regardless of how long the process takes, the stress factor drops if a lawyer helps with the case.

3. Then, there are the situations in which you absolutely need a lawyer, and as soon as possible: (a) any time there is a party against you.  This is because a mistake you make may result in liability to the other party, be they creditor or heir.  (b) Any time there is a potential tax problem of the decedent.  (c) any time there is a creditor of the decedent which has a claim which may be disputed.

4. Finally, if you do not want the burden of responsibility, you should always hire a lawyer.   If, for example one sibling is nominated to be the administrator, and part of the job is reporting on the administration to the other siblings, use of an experienced probate lawyer greatly increases the odds that the administration will be stress free, since an expert will be available to answer questions.  This factor alone seems like a matter of common sense but is in fact important.  Many "probate disputes" start when the administrator is un-represented and an avoidable mistake is made.

 The Cost May Be Less Than You Think

 Probate fees are significantly less than fees charged by realtors to market and sell property.  Although there are some discount real estate (market your property yourself) brokerages, in the main no one considers the standard 5% commission on a real estate transaction to be out of line, and as a matter of fact considering the amount of people who voluntarily pay it, it is considered very much "in line."  To sell a $1,000,000 house, in a transaction which might take 60 to 90 days, costs $50,000.   To probate a $1,000,000 estate, which might take more than a year, and collect various assets and deal with multiple beneficiaries, and protect yourself as a fiduciary from liability costs a $23,000 statutory fee in Probate Court.   Although there are sometimes other fees and costs for additional work, at a fundamental level in this area legal representation is less expensive that selling a house.

So, it turns out that advice is actually simple.  Save money if you can, but don't be "penny wise and pound foolish."

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga and Mooney, A Partnership.
For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210. The firm website is www.moravecslaw.com

Litigation in the Probate Courts Part II, How Long Does it Take?

In the first installment of this series of posts, we talked about the general aspects of probate litigation, and what to expect if you find yourself involved in a case.  In this post I will talk about how long each phase of a case may take, and what a litigant can expect along the way.  Often, the timing of a case is as important as the substance of the claims.

A case breaks down into the following segments:

A. Pleading, or the making of allegations by one side and the corresponding denial of allegations by the other side.  Pleading alone can take several months.  In a Probate case, it is rare for one party to file any sort of motion, the other party to receive it and object, and for the parties to both agree with the Court to move to the next stage in anything less than about four months, sometimes much longer.  The other factor is that in a Probate case there are often more than two sides.  Each beneficiary of an estate could have a different view of a matter.

B. Discovery, or additional fact finding.   Additional fact finding always takes time.  For example, let say that the matter at issue is a beneficiary demanding an accounting.  Well, the court may say "when can you have that accounting done?"  The party may respond "in three months."  Then the court orders it filed, and of course the other side gets time to examine it and have specific objections, which might take a couple of more months.  So now you could easily have taken a year.

C. Preliminary Orders, which are Orders from the Court to keep the case moving along.  There may be some preliminary orders along the way, but those could be expensive to get and are always time consuming.  To continue with the example above, a typical case may start with a beneficiary accusing the trustee of some act and asking that the trustee be removed.  However, if there has not been an accounting filed the court will want to see that first, and that may take a few months.

D.  A formal mediation. At this point a year or so may have gone by, and the parties are already growing tired.  At this point the Court will offer the parties a chance to mediate the matter before a private mediator.  Often, this is the point at which the case settles.  Mediation can be very helpful, since it is often in mediation that, for the first time, one side hears how the other side's arguments and their arguments are viewed by an unbiased third party.

E.  An Evidentiary Hearing.  Thiis is what most people consider "a trial" to be, or what they think of by "going to court."  Not only do the first four steps often take more than a year to complete, it now may take a year to get a hearing date on a matter that will take more than a couple of hours of evidence.  Two years with no resolution feels like a long time, and it is.

F.  Appeals, if any.  An actual appeal, with briefing schedule to the appellate court, could be another year.  Often, appeals are filed simply to create the possibility of additional settlement discussions.

As you can see, the rather extreme length of time it can take to obtain a court order is a factor in the dispute,  independent of the actual merits of the claim.  Time is a factor which simply must be discussed with the client, because not only is "time" an issue, but costs rise along with time.  There is no positive way to really spin this, but this is why most cases settle -- it would simply take too long and cost too much to achieve complete victory.

At Moravec, Varga & Mooney we have extensive experience with disputed matters and the various phases of a case.  We have found that it is a great help to a client to give them an honest appraisal of how long a case can actually take.  It can be an extremely bad thing if a lawyer is "too optimistic" about how quickly a client can get a case to a judge.  If the client does not understand the time and costs involved, the time and cost can simply overwhelm the merits of the case, which can be a disaster if the case is actually a good one.


Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga and Mooney, A Partnership.
For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210. The firm website is www.moravecslaw.com

The Los Angeles area office is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108.

Estate Litigation: Martin Luther King Jr.'s Children Wrangle In Court Over Estate

Once estate or probate litigation happens, there are probably many silent prayers that there be a peaceful resolution. Litigation among family members is often very stressful, disruptive and sometimes emotionally painful.

It's not often, however, that such prayers become public. On September 29, 2009, the Rev. Joseph Lowery, a follower of the Rev. Martin Luther King Jr. invoked the spirit of the civil rights icon and his wife, Coretta, in praying for a peaceful resolution to the legal battle among the King children. He led dozens of clergy, civil rights veterans and others in prayer at the Kings’ crypt in Atlanta.

If the King family can have a family and legal dispute over the valuable estates of Martin Luther King Jr. and Coretta Scott King -- it shows that anyone can. It is apparent that the lawsuit is embarrassing to those who are intent on preserving Kings' legacy.

In July 2008, the lawsuit was filed in Fulton County, Georgia with two of the siblings claiming that a third has misappropriated money from their parents' estates. Bernice King and Martin Luther King III charge that in late June 2008, their brother Dexter improperly transferred "substantial funds" from Bank of America to accounts he controls. The Bank of America account contains funds from the estate of Coretta Scott King, who died in 2006 at age 78.

Bernice is administrator of her late mother's estate, while Dexter is president of the Estate of Martin Luther King Jr. corporation -- of which the siblings are all shareholders. The operation of that business is in disarray, with the siblings "deadlocked" in its management, according to the complaint, which charges that the company's assets are "being misapplied or wasted."

Lawsuits often result in cross-complaints and this was no exception. Dexter countersued, claiming that his siblings had improperly borrowed office space and company cars from the King Center, an Atlanta civil rights museum. He also accused Bernice of corrupting their father’s legacy by acting as host of an anti-gay-marriage rally at the center.

Recently, on September 14, 2009, Judge Ural Glanville ordered the children of the Rev. Martin Luther King Jr. to meet in their capacity as the sole shareholders of the corporation that manages their iconic father's estate. The three siblings have not held such a meeting since 2004. The removal of Dexter King as the estate's administrator was unlikely because that would require a meeting of the board of directors.

Judge Glanville also ruled in favor of dismissing some of the allegations against Dexter King, but left the question of whether he failed to act in the best interest of his father's incorporated estate to a jury. A trial on the allegation of breach of fiduciary duty could happen as early as next month.

Attorney Comments: First, like many estate lawsuits, this occurred after the death of the children's mother, Coretta Scott King, in 2006 and another sister Yolanda in 2007. The parent or older sibling is often the glue that is holding the family together and informally resolving disputes.

Second, the "breach of fiduciary duty" cause of action alleged against the brother Dexter King is a reminder to all estate trustees that they should appreciate the fiduciary nature of his or her position. The trustee may understand his or her concrete duties and responsibilities -- but when emotions are involved and family or beneficiary disputes arise, he or she may lose sight of their "fiduciary duty."

What is fiduciary duty? A fiduciary's duty requires honesty of course. In addition, it requires the trustee to have undivided and undiluted loyalty to those whose interests the fiduciary is to protect. Thus, the trustee must treat each beneficiary with loyalty and protect their interests. This becomes more complicated when the trustee is also a beneficiary. A trustee cannot favor his or her own interest over another beneficiary's interest. The trustee is not entitled to treat the property of the trust as if it were his or her own. The trustee is wearing two hats (trustee and beneficiary) and the trustee hat imposes fiduciary duties of loyalty to the other beneficiaries. The greatest exposure to litigation for a trustee arises from his or her fiduciary duties.

Not even the slightest hint of self-dealing or unfairness is acceptable in the relationship between a fiduciary and those whose interests he or she is to protect. It is sometimes difficult for a fiduciary to recognize a problem when it occurs and it can be more difficult to be truly objective. It is therefore important for trustees to carefully review their financial decisions with experienced counsel in order to insure that they are acting appropriately.

One advantage in using an attorney as counsel rather than an accountant or another professional is the protection provided by the attorney-client privilege. All communications between the trustee and his or her attorney will be privileged and not discoverable in the event of litigation. A communication with the CPA, however, where the trustee/beneficiary writes emails that he will never turn over the family house to another beneficiary without a fight could be discovered in future litigation.

In certain cases, for example, trustee's legal counsel may advise the trustee to obtain a release from the beneficiary or seek a court order before taking certain action. In other cases, the attorney may advise the trustee to immediately dispose of certain real property to a beneficiary so that the estate is no longer liable for that property (taxes, insurance, liability, etc.) and to minimize the risk that the beneficiary will have any future claim against the estate or the trustee.

Posted by Henry (Hank) J. Moravec, III, a partner at Moravecs, A Professional Law Corporation. For a free 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210.

He focuses his practice on Estate Planning, Trust and Probate Administration, Beneficiary and Trustee Representation, Tax Law, and Nonprofit Law. He represents clients throughout Southern California and his office is conveniently located for clients in the Los Angeles, Orange and San Bernardino Counties.

With respect to probate, Hank Moravec has over 20 years' experience as one of the best Los Angeles probate attorneys and Los Angeles probate litigation attorneys and is available should you need legal advice regarding your own or a family member's situation. For a consultation, You can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 to request a consultation.

The firm website is http://www.moravecslaw.com/. The firm is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108. There is ample free parking adjacent to the firm's office.

The office is located in San Marino, California, a suburb of Los Angeles in the San Gabriel area located 20 minutes from downtown Los Angeles. The firm represents clients throughout California and its attorneys appears in probate court throughout Southern California (Pasadena probate attorney, Los Angeles probate attorney, Santa Monica probate attorney, Pomona probate attorney, Torrance probate attorney, Long Beach probate attorney, Van Nuys probate attorney, Santa Barbara probate attorney, Orange County probate attorney, Riverside probate attorney, San Bernardino probate attorney)