Court News Ohio
Court News Ohio
Court News Ohio

Attorney Suspended for Attempting to Deplete Estate

The Supreme Court of Ohio today suspended a Belmont County attorney for six months for attempting to use all the unclaimed assets of an estate to pay to him and his law firm.

In a per curiam opinion, the Supreme Court unanimously found John Estadt of St. Clairsville misled the Belmont County Probate Court and committed several ethics violations when he attempted to drain the remaining assets of the estate of man who appeared to have no next of kin by increasing the fees paid to his law firm.

While agreeing that Estadt violated the rules, Justices Patrick F. Fischer and Jennifer Brunner disagreed with the sanction. The two justices indicated that Estadt should have been suspended for one year, with six months stayed.

The opinion noted that at the conclusion of the matter, Estadt located a cousin of the deceased man, and the cousin received about $21,000 from the estate. Estadt was fired by his law firm, and the probate court authorized $10,268 in attorney fees for work performed by others in the firm. Estadt received no payment for his legal work.

Unclaimed Funds Finder Seeks Lawyer’s Help
In 2019, a “finder” located unclaimed funds listed by the Ohio Department of Commerce that belonged to Morris W. Rees of Martins Ferry. Rees died without a will in 2010, and his unclaimed funds consisted of stocks, dividends, bank accounts, and life insurance proceeds. The assets were valued at $42,834.

The finder asked Estadt to assist him with probating the Rees estate and sought to collect a 10% finder fee. Estadt agreed and immediately began billing for the matter through his firm, Hanlon, Estadt, McCormick & Schramm.

Estadt wrote a law firm engagement letter outlining the necessary steps for handling the estate. He noted that Rees had no known next of kin, and he stated that hourly rates for the firm’s work would be $300 for his work, $200 for associate attorneys, and $100 for paralegals. He signed the letter twice, once as a law firm representative and again as the client and estate administrator.

Estadt applied to the probate court to be appointed as the estate administrator. He signed the name of Erik Schramm Jr., a firm attorney and son of a named firm partner, as the attorney for the estate.

Bills Increased to Drain Account
Estadt asked Schramm to determine whether Rees had any next of kin. Schramm asked a paralegal to generate a report on Rees using a legal research service. The report did not identify a next of kin. At that time, neither Estadt nor Schramm took any other action to identify a next of kin other than having the probate court publish a notice of a hearing regarding the estate.

Two years later, the firm generated bills indicating it performed $20,000 of work for the estate, with Estadt reportedly doing about 60% of the work. Estadt then made handwritten adjustments to the rates, increasing the payment for the associate attorneys and the paralegals by $100 an hour. He also revised the number of hours worked, increasing the bill to $34,050.

After Estadt paid the finder his fee and paid a few other expenses, the remainder of the Rees estate was valued at $31,444. Estadt sought probate court approval of the attorney fees and told the court that the firm would “write-off” about $2,600 as a courtesy so that the amount billed for attorney fees would match the $31,444 left in the Rees estate.

Estadt signed the fee application with the probate court without disclosing how many hours he billed for his work, and signed it as the administrator. He signed Schramm’s name as the attorney for the estate. That document stated that Schramm found all the statements in the application to be true.

Firm Raises Concerns About Increased Bills
A month after the application was filed, Schramm and the firm’s leadership, which included Schramm’s father, confronted Estadt about the decision to increase the billing rates for the other employees and his unauthorized signing of the younger Schramm’s name to the probate court filings.

The firm fired Estadt, and the probate court was alerted to questions about the fees sought by Estadt. The probate judge scheduled a hearing on the matter. Before the hearing, Estadt conducted additional research and found a cousin of Rees, Patricia Suriano. He determined that she was entitled under state law to inherit the proceeds of Rees’ estate.

At the hearing, Schramm testified that he did not authorize Estadt to sign his name to the Rees estate documents and that he told Estadt he did not agree with increasing the hourly rates. Estadt testified that he increased the rates so that the remaining money in the estate would not go back to the state’s unclaimed funds division.

The Court noted that Estadt was not aware that under R.C. 2105.07, any unclaimed property of an administrated estate is transferred to the county treasurer to support local public schools. The probate court also determined the fees Estadt was proposing were not reasonable and “grossly” exceeded the amount permitted by local rules. The probate court authorized the standard fee under local rules, which was $1,768, along with another $8,500 in fees it determined were justified.

Disciplinary Counsel Charges Lawyer With Rule Violations
The Office of Disciplinary Counsel filed a complaint in 2022 with the Board of Professional Conduct, alleging that Estadt violated five ethics rules. At a board hearing, the probate judge testified that the original hourly rates that Estadt proposed were on the high end for Belmont County but could have been considered a customary fee.

The board concluded that Estadt’s increasing of the rates constituted charging a clearly excessive fee. The board also found Estadt committed other professional conduct rule violations, including making a false statement to a court and engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation.

Estadt did not object to the board’s findings but argued that his misconduct warranted a fully stayed one-year suspension. The disciplinary counsel suggested Estadt be suspended for one year, with six months stayed. The board stated it reviewed nine prior Supreme Court decisions regarding similar acts of attorney misconduct and suggested a six-month suspension.

The Court noted that Estadt had no prior discipline during his 39-year legal career and lost his employment at the firm. It concluded the six-month suspension was the appropriate sanction.

2023-0177. Disciplinary Counsel v. Estadt, Slip Opinion No. 2023-Ohio-2347.

Please note: Opinion summaries are prepared by the Office of Public Information for the general public and news media. Opinion summaries are not prepared for every opinion, but only for noteworthy cases. Opinion summaries are not to be considered as official headnotes or syllabi of court opinions. The full text of this and other court opinions are available online.

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