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Appeal of Estate of Jakobiec

Supreme Court of New Hampshire

November 30, 2017

APPEAL OF ESTATE OF BEATRICE JAKOBIEC (New Hampshire Bar Association Public Protection Fund Committee)

          Argued: April 19, 2017

         Public Protection Fund Committee

          Law Office of Steven M. Latici, P.A., of Gilmanton (Steven M. Latici on the brief and orally), for the claimant.

          Bussiere & Bussiere, P.A., of Manchester (Keith F. Diaz on the brief and orally), for the respondent.

          HICKS, J.

         The claimant, Edmund Hibbard, Esq., Administrator of the Estate of Beatrice Jakobiec (Estate), appeals a decision of the respondent, New Hampshire Bar Association Public Protection Fund Committee (PPFC), finding that the Estate is entitled to reimbursement from the Public Protection Fund (PPF) in an amount significantly less than that which the Estate claims was stolen by former attorney Thomas Tessier. We reverse in part, vacate, and remand.

         The following facts are taken from the Auditor's Report in Tessier's disciplinary proceeding in the Attorney Discipline Office (ADO), which was appended to the Estate's statement of claim to the PPFC and appears in the record. These facts do not appear to be disputed and, in any event, are recited for background only.

         Beatrice Jakobiec passed away on May 11, 2001, leaving two sons, Frederick A. Jakobiec, M.D. and Thaddeus Jakobiec, Jr., as heirs. On June 26, 2002, Tessier was appointed to administer the Estate. He filed a first and final account for the Estate with the probate court on April 10, 2003, valuing the Estate at $280, 124.00. The actual value of the Estate for probate purposes, as determined by the auditor for the ADO, was $576, 074.03. The auditor concluded that "[t]he assets included in the Estate by Attorney Tessier were valid and belonged in the Estate valuation, " but that Tessier failed to include additional assets owned by Beatrice at the time of her death. In particular, certain bank certificates of deposit owned by Beatrice were canceled by Tessier, with the proceeds issued by check payable to the Estate or to Tessier as administrator of the Estate. The auditor for the ADO concluded that it appeared Tessier took the proceeds "for his own purposes." The auditor further noted that Tessier received and presumably "utilized . . . for his own purposes" a refund on insurance premiums that was due the Estate. In addition, the auditor detailed Tessier's misappropriation, using fraudulent powers of attorney, of funds belonging to Frederick individually or held in trust for Thaddeus, who has been blind since birth.

         On April 2, 2009, the Estate filed its claim in the instant matter, alleging a loss, as restated in its memorandum and at the hearing at the PPFC, in the gross amount of $404, 830.76. The Estate's total loss consisted of $208, 798.95 in stolen assets (the Stolen Assets), $96, 500.00 in stolen legal fees, and $99, 531.81 in lost income. In support of its claim for stolen legal fees, the Estate alleged that "assets of the estate were deposited to the . . . client trust account" of Tessier's law firm and that "Tessier directed the unlawful periodic payment of legal fees to his law firm and himself." With respect to the Estate's lost income claim, the PPFC noted that, according to the Estate's offer of proof, that claim sought "to recover the opportunity cost arising from the alleged theft of the CDs, legal fees, and insurance premium, " and was supported by the Estate's attorney's "simple interest calculations applying Moody's average AAA Corporate Bond Rate of 5.68% for 2002-2008."

         Against the gross amount of its loss, the Estate credited the net recoveries it obtained from third parties: specifically, $180, 896.00 from the probate bond and $14, 211.18 from the certified public accountant (CPA) who had prepared the Estate's federal tax return. The gross amounts of those recoveries were $250, 000.00 and $20, 000.00, respectively. The PPFC noted that "[a]ccording to the [Estate's] offer of proof at the hearing, the difference between the gross and the net recoveries represented attorney's fees incurred in collecting the recoveries. After applying these net recovery credits, the Estate submitted a claim of $209, 723.76."[1]

         The PPFC found "that the Estate has established by a preponderance of the evidence that it suffered a loss in assets of $208, 798.95 for the five [certificates of deposit omitted from the probate accounting] and insurance premium, and that these amounts were stolen." It also found that $89, 686.07 (the Stolen Legal Fees) of the $96, 500.00 in legal fees claimed to have been misappropriated by Tessier "were stolen and are reimbursable." The discrepancy in those amounts is due to the PPFC's finding that two checks (the Excluded Checks) claimed to represent stolen legal fees "appear to have been for the benefit of Thaddeus Jakobiec and are not properly reimbursed here." The PPFC also found that "the Estate's claim for lost income is not eligible for recovery" under New Hampshire Supreme Court Rule 55(4). Totaling the Stolen Assets and Stolen Legal fees, the PPFC found the gross amount of $298, 485.02 to be eligible for reimbursement. From that amount, the PPFC deducted the gross amounts the Estate recovered from the probate bond and the CPA ($250, 000.00 and $20, 000.00 respectively), to arrive at a net eligible recovery of $28, 485.02. The PPFC then concluded:

The [PPFC] further finds that there are only two beneficiaries of the Estate, Frederick and Thaddeus Jakobiec. The [PPFC] previously has found [in a proceeding on a separate claim on the PPF made by Thaddeus] that Thaddeus Jakobiec has been fully compensated for losses suffered by Mr. Tessier's defalcations, and accordingly reduces the Net Eligible Recovery by half to $14, 242.51.

         In the PPFC proceeding regarding Thaddeus (the Thaddeus Jakobiec Proceeding), the PPFC relied upon a probate court decision involving a trust established for Thaddeus's benefit (the Smillie Trust). See In re Trust of Lillian M. Smillie, Case No. 2010-0675, 2011 WL 13092686 (N.H. Dec. 8, 2011) (unpublished decision affirming probate court order). In that proceeding, the PPFC quoted a portion of the probate court's order explaining arrangements made to reimburse Thaddeus and Frederick for funds taken by Tessier:

Thomas Tessier hired Attorney William Boesch to represent him in this process, and Attorney [Regina] Rockefeller [hired by the Claimant's brother, Frederick Jakobiec, to investigate Tessier's actions] and Boesch worked together extensively for many months. Together, the attorneys agreed that making Thaddeus whole was their first priority. The attorneys reviewed documents from the Smillie Trust, Beatrice Jakobiec Estate, Thaddeus Jakobiec Irrevocable Trust, receipts, valid expenditures for his care, and calculated his share of his mother's estate expenses and taxes. It was agreed that, as of December 18, 2006, the full amount due Thaddeus Jakobiec under the Smillie Trust, $110, 162.53, was in the Smillie Trust accounts when Rockefeller and James Goves, MD, the present petitioners, became the successor trustees of the Smillie Trust in 2006. As it turns out, although not at issue in these proceedings, the full amount due Thaddeus Jakobiec under his Irrevocable Trust ($199, 963.12) was also then in the trust account, plus a whole lot ...

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