Court Permits Law Firm To Enforce Refunding Bonds To Satisfy Its Legal Fee Award

The defendant, William Lewis, was the administrator of his deceased mother’s estate. In connection with the administration of the estate, and related litigation with his brother regarding the estate, the defendant was represented by Eileen Siegeltuch, an attorney at Cureton Clark, P.C. The Cureton firm sent him an invoice for over $68,000 in legal fees in connection with its representation, which the defendant only partially paid. Thereafter, Ms. Siegeltuch left the Cureton firm and took the estate file with her; the firm then ceased doing business.

Ms. Siegeltuch concluded the administration of the estate on the defendant’s behalf, with the exception of the outstanding legal fees to the Cureton firm. She completed an accounting that listed a “reserve” of $60,000 for “Cureton Clark Legal Fees.” Both brothers signed an Approval of Accounting and Refunding Bond and Release.

Thereafter, the Cureton firm filed an action against the defendant for the unpaid legal fees. After a trial, the court issued a decision in favor of the law firm, and ordered the “defendant, Administrator of the Estate,” to pay $47,000 to the firm. When the defendant failed to do so, the law firm levied on a personal account belonging to the defendant, and moved for an order directing that the account be turned over to the firm. The defendant opposed the application, arguing that the court order was not against him individually. The court ultimately agreed with the defendant: the judgment for legal fees was against the estate, not against the defendant personally.

However, because both brothers had signed refunding bonds, the inquiry turned to those bonds, and the court ordered that the refunding bonds would be enforced in favor of the law firm.

On appeal, the issue was whether the estate refunding bond could be triggered for a debt incurred by the administrator (as opposed to a debt incurred by the decedent). The defendant argued that the refunding bond should not be enforced in favor of the law firm, because the debt was not incurred by the decedent. In addressing the issue, the appellate court began by reviewing the purpose and effect of refunding bonds, citing a 1936 case:

[O]n closing an estate, each distributee is required by law to give a refunding bond, conditioned for a return of the share so distributed or a proportionate part thereof, to discharge any debt … which the said executor or administrator may not have other assets to pay. The bond, nominally to the executor, is for the benefit of the creditor, and suable by him in the name of the executor….

The court went on to examine the New Jersey statutes regarding refunding bonds, which have separate provisions depending on whether or not the decedent had a will: where there is a will, the refunding bond is conditioned to not just the decedent’s debts, but extends the bond to “any debt or debts.” In contrast, in the case of an intestate estate, the statute limits the condition of the refunding bond to debts of the decedent.

Ultimately, the court found that this distinction did not insulate the defendant, even though the estate was an intestate estate. The refunding bond executed by the brothers did not track the language of the statute addressing intestate estates; instead, it obligated the brothers to satisfy “any debt or debts,” not limited to those of the decedent. Moreover, the court opined that, even if the refunding bond had not included this more expansive language, the defendant’s argument was meritless, because it would allow him to incur substantial administration expenses, distribute the estate, and be free and clear from unsatisfied judgments incurred in connection with the administration.

The law firm was therefore permitted to enforce the refunding bonds to satisfy its unpaid award of legal fees.

The defendant’s subsequent petition for certification to the Supreme Court was denied.

A copy of Cureton Clark v. Lewis can be found here – Cureton Clark PC v Lewis