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IN THE COURT OF APPEALS OF IOWA No. 9-757 / 09-0124 Filed December 30, 2009

IN THE MATTER OF THE CONSERVATORSHIP OF JOHN THOMAS KLEIN, Plaintiff-Appellee/Cross-Appellant, vs. DONALD N. LAING, as Conservator and Individually, D. SCOTT RAILSBACK, As Attorney for Conservatorship and Individually, and LAING & RAILSBACK LAW FIRM, Defendants-Appellants/Cross-Appellees. ________________________________________________________________ Appeal from the Iowa District Court for Keokuk County, Mary Ann Brown, Judge.

Donald N. Laing, D. Scott Railsback, and the Laing & Railsback Law Firm appeal, and John Thomas Klein cross-appeals, from the district court order setting attorney and conservator fees. AFFIRMED AS MODIFIED.

Stephen N. Greenleaf of Lynch, Greenleaf & Michael, L.L.P., Iowa City, for appellant. Garold F. Heslinga of Heslinga, Heslinga, Dixon & Moore, Oskaloosa, for appellees.

Considered by Vogel, P.J., and Doyle and Mansfield, JJ.

2 DOYLE, J. This appeal and cross-appeal concern over twenty years of fees and expenses awarded to Donald N. Laing and the Laing & Railsback Law Firm for reported services performed and monies expended in the administration of the John Thomas Klein conservatorship. Defendants Laing, D. Scott Railsback, and the Laing & Railsback Law Firm appeal, and John Thomas Klein cross-appeals, from the district court order that reduced certain amounts of fees previously awarded to Laing and the law firm. Upon our de novo review, we affirm as modified. I. Background Facts and Proceedings. John Thomas Klein was born in 1950. He served in the armed forces and was honorably discharged in April 1973. Kleins mother died a few months later, and he received an inheritance including money and numerous acres of farmland. In approximately 1974, Klein was diagnosed with paranoid

schizophrenia. Klein also has a history of substance abuse. At the time of trial, Klein had no close living relatives or any individuals for whom he was concerned about preserving his estate upon his death. In 1974 Klein sought to establish a voluntary conservatorship for himself because he believed he could not manage his financial affairs due to his mental condition.1 Klein asked attorney Donald Laing, who had handled some legal affairs for Kleins family, to serve as his conservator. On May 21, 1974, the

Klein also is the beneficiary of a trust. The trust is managed separately by a bank and is not at issue here.

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3 district court appointed Laing conservator of Kleins property and required a $50,000 surety bond, which Laing obtained. Laing filed annual reports for the conservatorship, and he annually sought compensation for his services as conservator, and as attorney for the conservatorship, as well as for out-of-pocket expenses spent administering the conservatorship. In the beginning years of the conservatorship, the annual

reports did not report specific hours worked or the amount of expenses claimed by Laing. Rather, the reports requested that the court "fix and allow the

reasonable compensation" for his services. The district court in the early years approved the annual reports and awarded fees in a lump sum with no delineation of conservator or attorney fees. In approximately 1979, Laings law partner, D. Scott Railsback, began performing services for the conservatorship. Although Railsback was generally identified as the attorney for the conservator, both Laing and Railsback performed both conservator and legal services for the conservatorship. In the fifth annual report, filed in 1979, Laing sought and received compensation for both himself and Railsback.2 In May 1983, Laing filed the ninth annual report for the conservatorship. Attached to the report were affidavits of compensation for Laing and Railsback, reporting that together they had spent in excess of 300 hours with respect to Klein. The reported 300 hours included 120 hours spent traveling to Connecticut to visit Klein, who was at that time residing in a treatment facility there. The court

Laing reported an approximate combined number of hours he and Railsback spent providing services to the conservatorship.

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4 initially approved the report and awarded Laing and the law firm $12,000 for services rendered. However, on August 11, 1983, the court set the matter for hearing for reconsideration. Further, the court appointed another attorney to act as interim conservator for the purpose of the hearing. The court ordered the conservator and attorney for the conservatorship to have present at the hearing "all receipts, vouchers and other proofs of payment of expenditures as well as all evidence of income received by the Conservator during the period of the Report." In a letter to Laing and Railsback, the judge indicated that since Laings firm was also the attorney for the conservatorship, "it is a much better practice where the fees are substantial that the matter be set for hearing and notice prescribed." The judge suggested that the attorneys provide an itemization of all fees paid to the firm as well as an itemization of funds spent on the trips to visit Klein. Notice was sent to the conservator, the interim conservator, and to the wards aunt, all of whom appeared at the hearing. Following a hearing on the matter, the court approved the ninth report except for the matter of fees, in which the allowance of $12,000 was rescinded. The court found the evidence submitted failed to show the trip to Connecticut was necessary and reduced the fees allowed to $8500. In July 1984, Laing filed the tenth annual report for the conservatorship. Attached to the report were affidavits of compensation for Laing and Railsback, along with an itemized statement of the hours worked by the attorneys. However, the statement was not separated out by the attorney performing the service or type of service performed, i.e. legal versus conservator services. The attorneys requested compensation at the rate of sixty dollars per hour for all services.

5 The court set the tenth report for hearing, provided notice to Klein, and appointed an attorney to represent Klein pursuant to Iowa Code section 633.118 (1984). Following a hearing, the court entered an order reducing Laing and Railsbacks fees. The court stated: It is obvious from the outset that the conservator in this case is acting in a dual capacity [as both guardian and conservator], and this has caused some of the misunderstandings and problems which have arisen in regard to the allowance of fees. . . . .... . . . As part of the tenth report, the conservator states that he believes the court should appoint a guardian for the ward and that the conservator would decline to further serve in that capacity. . . . A petition should be presented to the court pursuant to sections 633.552 of the Iowa Probate Code so a guardian may be properly appointed. The conservator testifies that there is no one else present and able to undertake these duties. He also indicates a promise made to the wards mother to continue to look after the property. If the conservator declines to serve, he should make it known so that future misunderstandings as to the allowance of fees will not arise. If the conservator determines that no one else is available and continues to serve in that capacity, he should at least segregate his accounts and time records so that separate applications could be presented to the court. This court still believes that the latter method is the less acceptable method and that it would be preferable to have a separate guardian and conservator. The court, after reviewing the attorneys statement of services, reduced both the time charged and the fees for the conservator services from sixty dollars an hour to thirty dollars an hour. Despite the courts suggestion that a guardian be appointed, Laing continued to perform both guardian- and conservator-type duties for Klein. On February 10, 1986, Laing filed the conservatorships eleventh annual report. Notice was given to Klein, and an attorney was appointed to represent him. It appears the court awarded Laing and Railsbacks requested hours for both

6 conservator and legal fees at the rate of sixty dollars an hour; however, notice was given to Klein, and it does not appear that Kleins attorney objected to the hourly fees. The eleventh report was the last report of which Klein received notice. Annual reports twelve through thirty-three (June 1986 through June 2007) were approved by the district court, including the exact fees and expenses requested by Laing and Railsback in their affidavits attached to the reports, without notice to Klein or the appointment of an attorney for Klein. Although their compensation attachments gave a total of hours to be billed as conservator fees and legal fees, the individual charges were not separated by the attorney performing the service or by the type of service until the thirty-fourth report. For reporting periods twelve through thirty-three, the conservator charged between $42 per hour and $125 per hour for fulfilling the general conservatorship and guardianship duties.3 The conservators reported time for reports nineteen through thirty included numerous hours managing the wards investments, among other things. For reporting periods twelve through thirty-three, the average hourly legal fee for legal services provided to the conservatorship by Laing and Railsback was $108.59 per hour.4 The reported legal services performed by Laing and Railsback included preparation of the annual reports, tax returns, social security

The conservators hourly fee started at $61.57 per hour for the twelfth reporting period. The fee dropped as low as $42 per hour during the seventeenth report period, and rose as high as $125 per hour for the thirtieth reporting period 4 The hourly legal fee in the twelfth report was $61.57 per hour. The hourly fee steadily increased over the years, reaching $150 per hour for the twenty-seventh reporting period. The fee fell to $135 per hour during the thirty-first reporting period.

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7 payee reports, and farm leases. Laing and Railsback reported in their

attachment to the twelfth report that completion of the eleventh annual report took ten hours. The hours to complete the report remained between ten and fifteen hours until the twentieth report, where it was reported the prior annual report took thirty-seven hours to complete. That number rose substantially over the years, reaching a reported seventy-six hours in their attachment to the twenty-sixth annual report. The number dropped to forty-eight hours in the next report, and it stayed somewhere between thirty to forty-eight hours thereafter. Additionally, the time reported to complete the conservatorships tax returns rose steadily over the years. The attachment to the twelfth report reported four hours for preparation and completion of the tax returns; by the twenty-sixth report, the hours had risen to twelve and have generally remained at about twelve hours per year. In billing for their time, Laing and Railsback included their time spent on the telephone. For the twelfth through the twenty-sixth reports, each call listed on their compensation affidavit was billed at a minimum time of a quarter of an hour. The minimum billed call time rose to a half an hour for each call listed in the attachments to the twenty-seventh through thirty-third reports.5 The

attachments generally did not contain any description of the call or indicate whether the call required legal or conservator services.6

There appears to be one exception to Laing and Railsbacks billing: in the attachment to the twenty-eighth report, Laing and Railsback charged one hour total for four calls from Klein. 6 Calls were clearly included in the totals of the legal and conservator hours reported to the court.

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8 Over the years, Laing and Railsback also requested additional compensation for their out-of-pocket expenses advanced in administering the conservatorship, which often included copying, postage, phone service, and mileage costs. The attachments to reports twelve through sixteen did not

expressly set forth any mileage charges. Thereafter, every report included a mileage fee. The mileage fees included, among other things, 7 Laings driving the ward to appointments, taking the ward shopping, and dropping off

conservatorship deposits at the firms bank in a neighboring city. The twelfth report reported that the total value of Kleins assets, including 240 acres of farmland valued at $1500 per acre, was $371,607.30. The total value of Kleins assets, including 240 acres of farmland valued at $4000 per acre, had increased to $1,133,434.42 in the thirty-fourth report. Although the value of the estate rose throughout the years, the court approved the annual reports noting the original surety bond was still in place and did not require the bond amount to be increased. Klein visited at least two different attorneys over the years, seeking to have Laing removed as conservator. Laing refused to resign. In approximately 2007, Klein visited attorney Garold F. Heslinga, again seeking to have Laing removed as conservator. Although Klein did not have any objections to Laing and Railsbacks overall services, Klein wanted more money dispensed to him

For example, in the seventeenth and twenty-sixth reports, defendants charged 2.5 and 3.5 hours, respectively, plus mileage to visit Klein for Christmas. On the seventeenth report, they also charged 2.5 hours plus mileage to take Klein a birthday cake on his birthday.

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9 from the conservatorship. Klein also told Heslinga he had heard he was being overcharged. Klein requested that a bank serve as his conservator. On July 26, 2007, Klein filed his petition in equity, seeking removal of the conservator pursuant to Iowa Code section 633.65 and reimbursement of losses he allegedly suffered as a result of the actions of Laing and Railsback for, essentially, overbilling and charging unreasonable rates over the years. The

petition, as later amended, requested removal and reimbursement on the grounds of fraud, theft, and malpractice, among other things. Klein requested damages to compensate him for his losses, punitive damages, and attorney fees. On May 8, 2008, Laing and Railsback filed their motion for summary judgment, seeking dismissal of Kleins older claims under the five -year statute of limitations for fraud. See Iowa Code

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