Brooklyn Court's Routines Play Role in Feinberg Case
New York Law Journal May 26-2005
ALBANY — The battle over Michael H. Feinberg's judicial career hinges on whether the Brooklyn surrogate did anything wrong in awarding millions of dollars in fees to a close friend and, if so, the magnitude of the alleged offense.
Briefs filed at the Court of Appeals reveal significant factual discrepancies over what Surrogate Feinberg did and to what extent, if any, he overpaid Louis R. Rosenthal, the former counsel to the public administrator. They also reveal a bird's-eye view of questionable Surrogate's Court practices in Brooklyn that have apparently gone on for decades.
To a large extent, the briefs deal with a fundamental issue of judicial discretion, and whether the Commission on Judicial Conduct should be second-guessing a judge's discretionary actions. But they also delve into simple arithmetic, and whether Surrogate Feinberg awarded anywhere near the "millions" in excess fees alleged by the commission.
The commission claims Surrogate Feinberg ignored both the law and the bounds of propriety in enriching Mr. Rosenthal, and that the surrogate's behavior was so egregious that no discipline short of removal would send the right message to the judiciary and the public.
But Surrogate Feinberg insists he did nothing other than follow longstanding Brooklyn practice in awarding the fees. And while he admits overlooking a "ministerial" chore in granting fee requests without mandatory affidavits, he claims the payments to Mr. Rosenthal were justifiable and only a fraction of the amount alleged by the commission.
On June 9, the Court of Appeals will attempt to sort it all out when it hears Surrogate Feinberg's appeal of a commission determination that he should be ousted from the judiciary. The matter promises to be hotly contested on both a legal and factual basis, as the Court is called upon for a relatively rare exercise of its fact-finding power in a judicial misconduct case.
The case centers largely on how lawyers who administer the estates of those who die without valid wills are paid in Brooklyn.
Records show that in the borough, the counsel to the public administrator — the office charged with managing intestate affairs — has historically received as compensation a share of the estate.
In the early 1970s, Surrogate Nathan Sobel began awarding then-counsel Hesterberg & Keller of Brooklyn a 7 percent share of the smaller estates and an 8 percent cut of those over $60,000. Surrogate Sobel's successor, Bernard M. Bloom, continued that practice, as did Surrogate Feinberg.
Traditionally, attorneys were allowed to draw off the larger estates to make up for their meager earnings on the smaller estates — a practice Surrogate Feinberg justified in his brief as the "Robin Hood effect."
Hesterberg & Keller, which held the counsel position for about 40 years, was twice asked by the attorney general to reduce its fees to 6 percent. Under compromise agreements in 1988 and 1994, the firm agreed to restructure its fee requests. Typically, the firm would initially request 6 percent of the gross estate up to the time of the accounting, and then ask for another 2 percent through a Post-It note for work done between the accounting and the final decree. It routinely — but not always — got 8 percent, according to court records.
When Surrogate Feinberg was elected in 1996, Hesterberg & Keller's procedures had been harshly criticized in a report by the New York City comptroller, according to court records. Surrogate Feinberg dismissed Hesterberg & Keller and gave the business to Mr. Rosenthal, a longtime friend from Brooklyn Law School.
Surrogate Feinberg and Mr. Rosenthal celebrated holidays and family milestones together, served together on the bench when both were Civil Court judges and were political allies, records show.
Between 1997 and 2002, Mr. Rosenthal handled hundreds of estates for Surrogate Feinberg. Like Hesterberg & Keller, Mr. Rosenthal normally requested 6 percent at the outset and then put in for the additional 2 percent on a Post-It note on the final decree. And, like Hesterberg & Keller, Mr. Rosenthal's requests were routinely approved.
A potentially critical difference, however, is that Hesterberg & Keller was required by the court to submit the mandatory affidavits. Mr. Rosenthal, who collected roughly $8.6 million in fees, was not.
List of Allegations
The case against Surrogate Feinberg rests on several allegations. The commission contends that he:
• Fired the well-qualified firm of Hesterberg & Keller in order to give the work to Mr. Rosenthal, who, according to the commission, got a position for which he was unqualified because he and Surrogate Feinberg had been friends since the early 1960s. That, according to the commission, conveyed the impression that the surrogate was favoring a friend.
• Persistently violated the Surrogate's Court Procedure Act, which requires filing an affidavit of legal services justifying the appointment of counsel and fees to be paid. Mr. Rosenthal was never required to filed such an affidavit in the 5-1/2 years at issue and Surrogate Feinberg made no effort to determine if the work and billings were justified, according to the commission.
• Ignored the 6 percent cap negotiated by the attorney general and Surrogate Bloom as well as a 5 percent cap on estates over $300,000.
• Ultimately permitted Mr. Rosenthal to divert more than $2 million in excessive fees — funds the court should have protected for the heirs or, where there were no heirs, the state.
Distilled to their essence, there are basically two broad questions before the Court of Appeals. One deals with Surrogate Feinberg's practice in awarding fees; the other deals with the strongly disputed computation of the alleged overpayments to Mr. Rosenthal.
On the first issue, the commission portrays Surrogate Feinberg as a judge who "unceremoniously and summarily" dropped Hesterberg & Keller to give a "plum appointment" to a friend and political ally, "with no search, no interview and no semblance of merit selection."
Commission Administrator and Counsel Robert H. Tembeckjian, in a brief filed last week, dismisses as "preposterous" Surrogate Feinberg's argument that his award of an 8 percent flat fee was a legitimate exercise of judicial discretion. He suggests there was no exercise of discretion, just a rubber-stamp approval of whatever Mr. Rosenthal requested.
"In petitioner's court, a simple calculator, not an independent judge, was all that was necessary to dispense millions of dollars," Mr. Tembeckjian argues.
Mr. Tembeckjian also suggests that Surrogate Feinberg's awarding of those fees without the required affidavit effectively concealed his generosity and made it difficult for the attorney general, which is served with all estate fee requests, to fulfill its watchdog role.
"Petitioner's argument that the affidavit requirement is 'ministerial' completely misses the point," Mr. Tembeckjian said. "Without affidavits, there would be no reliable way to determine what legal work Counsel had done and whether a fee was earned or deserved. . . . That the Attorney General did not put a stop to it may be explained by the limited nature of the Attorney General's role in these estates, and the manner in which the records were sent to the Attorney General by Rosenthal."
Amount of Fees
The commission's allegation that Mr. Rosenthal collected about $2 million more than he was due is based on the charge that Mr. Rosenthal received an 8 percent commission on all 475 cases at issue. Repeatedly, the commission — which split 6-3 in deciding Surrogate Feinberg should be removed rather than censured — referred to the "millions" it contends were wrongly paid to Mr. Rosenthal as justification for the surrogate's removal.
Since then, however, the attorney general has sent a letter to Mr. Rosenthal stating that "we are not adopting the $2 million figure that appeared in the [Commission on Judicial Conduct] Opinion" and instead are willing to settle for restitution of $729,800.
After the Law Journal reported on that letter (NYLJ, May 18), the attorney general's press aide wrote a letter to the newspaper (NYLJ, May 20) explaining that the figure cited in the letter was based on some "subset" and was not necessarily reflective of the entire alleged overpayment.
Mr. Tembeckjian stands by his calculation, but says in his brief that the exact amount of the alleged overpayment is not the heart of the issue — despite the commission's emphasis on the $2 million figure in its call for removal.
"Any judge who would dispense millions of dollars in funds entrusted to the court, without regard to explicit statutory criteria and on the basis of Post-It notes in lieu of affidavits, is guilty of egregious misconduct and should be removed from office, without regard to whether the total overpayment to a particular person was $2 million or $1 million or half a million," Mr. Tembeckjian wrote.
Surrogate Feinberg's attorney, Henry M. Greenberg of Greenberg Traurig, counters that the amount is vitally important, especially since the commission seemingly relied on what he contends is a wildly inflated number in calling for the judge's removal.
Mr. Greenberg suggests that Mr. Tembeckjian is guilty of the same offense he accuses Surrogate Feinberg of: making a judgment on the propriety of fees without any determination of whether they were justified in any particular case.
"Not once was a question raised about the Counsel's fees by the New York State Attorney General, whose office knew precisely how much Surrogate Feinberg awarded in every case," Mr. Greenberg wrote in his brief. "Not once was a complaint uttered by the New York City comptroller, whose office twice issued audit reports on the operations of the Kings County [public administrator]."
According to Mr. Greenberg, the commission's assumption that Mr. Rosenthal collected an 8 percent commission in all 475 cases is factually and demonstrably wrong.
Mr. Greenberg notes that during the early years, Mr. Rosenthal split his fee with Hesterberg & Keller. Also, Mr. Greenberg contends, an 8 percent commission was not awarded in all cases. And, the attorney claims, after the Administrative Board of the Courts in October 2002 adopted a sliding fee scale for Surrogate's Court matters — before Surrogate Feinberg was targeted by the commission — Surrogate Feinberg applied that new scale not only prospectively, but retroactively. The attorney said Surrogate Feinberg recognizes he erred in failing to demand affidavits of legal service and regrets what amounts to oversight but not misconduct.
Additionally, Mr. Greenberg accused the commission of attempting to "destroy" the "distinguished career" of a judge because it thinks 8 percent is excessive, notwithstanding the fact that "no statute, court rule, regulation or appellate decision precluded an 8 percent fee." He added that since Surrogate Feinberg indisputably had the discretion to award higher fees in appropriate cases, it is not up to the commission to decide if those fees were appropriate.
Claims of Overreach
Surrogate Feinberg's case has attracted the attention of judges who complain that the commission has strayed too far into the realm of judicial discretion.
In recent years, some members of the commission, several judges and even some Court of Appeals judges have expressed concern over the panel's reach. Last year, for instance, when a 4-3 Court removed Troy City Judge Henry Bauer for setting excessive bails, a dissenter said a review of a judge's bail decisions was well "outside the commission's scope of authority."
A surrogates' group makes a similar argument with regard to the awarding of counsel fees in estate matters.
"The implications of the Commission sanctioning a judge on errors allegedly committed solely in discharging the responsibilities of his judicial office are . . . both far reaching and ominous," wrote retired Court of Appeals Judge Howard A. Levine, now of Whiteman Osterman & Hanna in Albany and counsel to the Surrogate's Association, which is supporting Surrogate Feinberg in an amicus brief.
"Calling a judge to answer for purely legal error to a non-judicial commission having the power to prosecute, determine and enforce even the ultimate sanction of removal inevitably will have a chilling effect on the independence of the entire judiciary as they make rulings in the cases before them," argued Mr. Levine and James B. Ayers, also of the Whiteman firm.
Feinberg v. State Commission on Judicial Conduct is first on the June 9 calendar, slated for argument at 2 p.m. in Albany. The Court of Appeals is likely to decide the case by early July.