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TRANSAMERICA INS. CO. v. KEOWN

May 8, 1979

TRANSAMERICA INSURANCE COMPANY, Plaintiff,
v.
William S. KEOWN, Defendant, and Marguerite Bossle, Executrix of Estate of W. Louis Bossle, Intervening Defendant, and C. Edwin Munger, F. Morse Archer, Jr., Guardian ad litem, George Munger and Carol L. Ober, Intervening Defendants



The opinion of the court was delivered by: BROTMAN

In this declaratory judgment action pursuant to 28 U.S.C. § 2201, plaintiff Transamerica Insurance Company seeks a determination of the rights and liabilities of the parties under the terms of an attorney's malpractice insurance policy issued to defendant William S. Keown, Esquire. Jurisdiction is conferred upon this court by diversity of citizenship, 28 U.S.C. § 1332.

The majority of the issues raised in this case were decided upon the summary judgment motion of defendant and intervenors, and reported at 451 F. Supp. 397 (1978). Trial by the court was had on the remaining issues on June 27-30 and July 5, 1978, and the parties have submitted post-trial briefs. This opinion will constitute the court's findings of fact and conclusions of law. Fed.R.Civ.P. 52(a).

 Introduction

 The court refers to its opinions of March 27, 1978, and June 16, 1978, for the full factual background and history of the case.

 Defendant Keown is the Succeeding Trustee of a trust created by the will of Clarence A. Munger. The intervenors are beneficiaries of that will and trust. Keown, as Trustee, was surcharged for the following items in a Judgment Order entered July 30, 1974, by the Camden County Court:

 TABLE

 In the court's prior opinions, the respective rights of the parties concerning the first three items, relating to the real estate, were defined. Furthermore, Mr. Keown's insurance company does not have to "reimburse" him for amounts he overpaid himself. Accordingly, only responsibility for the latter four items is at issue. Additionally, the defendant and intervenors seek attorney fees incurred by them in this action and in the state court action.

 This court's opinion on the summary judgment motion creates the legal framework for the decision concerning the remaining surcharges. In interpreting the Fiduciary Coverage Clause in the Transamerica insurance policy, it was stated that

 
(T)he inquiry must proceed along two lines. First, were the acts for which Mr. Keown was surcharged acts for which he was responsible in his role as an attorney. Second, were the acts such that an attorney would be legally liable for their commission. 451 F. Supp. at 401.

 The same two questions will form the basis for this opinion. As to each surcharge, it must be determined whether the function was one an attorney might perform, and whether an attorney performing the function as Keown did would be liable.

 Findings of Fact

 Mr. Keown testified that he was admitted to the New Jersey Bar in 1950. His only education in accounting came from one basic accounting course in undergraduate school. Transcript (Tr.) I, 60-61. Before undertaking to work on the Munger estate, he had never handled a Federal estate matter. He had also never prepared a Federal income tax return or a State inheritance tax return for an estate as large as the Munger estate. Finally, he had never handled a tax appeal of the magnitude involved in the tax appeal related to the Munger estate. Tr. I, 93.

 Morris Liebman testified that he was hired to prepare the final income tax return, the Federal estate tax returns and the State inheritance tax return. Tr. I, 6. Additionally, of his total bill to the estate, about $ 500 to $ 750 was attributable to work connected with the Egg Harbor property, and $ 400 was attributable to the preparation of tax returns for Edwin Munger, one of the beneficiaries. Liebman also established a bookkeeping system for the estate, for which he did not bill separately.

 The Probate court judgment surcharged Keown $ 17,281.01, plus 5% Uncompounded interest, for all but $ 2000 of the fees paid to Emmanuel Liebman. The court found his fees excessive and ...


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