SAN JOSE -- Accusing a local trustee of engaging in a "feeding frenzy," an appeals court justice Thursday expressed outrage over a case that has brought widespread attention to excessive fees plundering the estates of elderly and disabled adults.
Private estate manager Thomas Thorpe of Los Gatos charged a brain-injured San Jose man $108,771 after just 4½ months' work -- and then billed him more than twice that much in a legal battle to defend his fees.
"What did he contribute to the whole process? For the $100,000, could you give me one example?" Justice Franklin Elia demanded of Thorpe's attorney, Ellyn Nesbit. "Give me a $20,000 example!"
At the rate Thorpe and his lawyers were running up bills in 2010, Elia said, there would soon be nothing left of 37-year-old Danny Reed's $653,000 in life savings.
"Ultimately, it became a feeding frenzy," the justice said.
In their first appearance before the 6th District Court of Appeal, lawyers on both sides of Reed's case made oral arguments Thursday, but a decision is not expected for weeks.
Reed's plight was first publicized in this newspaper in July to illustrate how some Silicon Valley estate managers and their attorneys have charged extraordinary rates as trustees and conservators appointed by Santa Clara County Superior Court judges.
After Thorpe submitted his $108,771 bill for a judge's approval, Reed challenged the fees in court. That led to $261,878 in additional charges for Thorpe and his attorneys to defend the original bill.
Exposure of Reed's case prompted a swift response by Superior Court judges, spawning new court rules reining in fees, as well as the prospect of statewide legislation.
Reed's lawyers, the San Jose father-son team of Matt and Mike Crosby, and Santa Clara County Public Defender Mark Dames, are arguing in the first of two appellate cases that Thorpe deserves no compensation at all. They question what -- if any -- benefit Thorpe brought to Reed's estate. They also claim Reed was not properly informed that a judge was replacing his mother, the former trustee, with a private professional and that his subsequent protests in court went unheeded.
Nesbit, Thorpe's attorney, argues that her client was acting on court authority and deserves the fees that were ultimately awarded by the lower court, albeit a reduced amount of $27,006. Although she was repeatedly interrupted by Justice Elia's impassioned outbursts Thursday, Nesbit said her client was appointed in "an emergency," when court investigators believed Reed's mother had mismanaged his funds. Thorpe was on "an urgent mission" to find the missing money, she said.
Reed, who was partially paralyzed after two cars struck him in separate accidents, placed his $1.7 million in awards from the resulting lawsuits in a court-overseen special-needs trust. His mother managed the funds and served as his trustee, until a routine review by a probate court investigator raised concerns about accounts she opened with the money.
Nesbit said Thursday that after the court appointed Thorpe to take over, he subsequently found Reed's townhome -- a key asset in the trust -- was "uninhabitable" because of hoarding, threatening its value. That resulted in more fees for service, as Thorpe arranged for a cleanup, she said.
But Elia, the only justice who spoke at Thursday's hearing, scoffed at the notion that Thorpe did much at all. Although the trustee charged $9,764 just to research Reed's bank accounts, according to a forensic analysis of his bills, the information about where Reed's mother had placed the money had been provided to Thorpe even before his appointment by a county employee. It took that employee several hours on a single day to locate all the funds and determine that none were missing.
"What did they even appoint this man to do? The mother had done a very good job taking care of her son," Elia said. There was "nothing improper," nor any "malfeasance" proven on her part, and "the son himself said, 'I can handle this myself; why are they appointing people for me?' "
As Nesbit argued that Thorpe played a critical role tracking down the previously missing money and getting the house cleaned up, the justice cut her off: Why should such fees be awarded "for somebody who does who knows what -- for some cleaning?" As for the money thought to be missing, Elia pointed out: "They'd already found it!"
Reed has two cases now before the Court of Appeal. The second appeal challenges $145,000 in Thorpe's attorney fees that Reed was ultimately ordered to pay by a Superior Court judge in late July. In that ruling, Judge Franklin Bondonno said he was bound by state law to award Thorpe's attorney his "fees on fees," but implored the appeals court to overrule him.
Contact Karen de Sá at 408-920-5781.