Each W.Va. justice off case involving colleague

Steve Korris Apr. 26, 2011, 10:26am


CHARLESTON, W.Va. (Legal Newsline) - All five Justices of the West Virginia Supreme Court of Appeals have disqualified themselves from hearing a claim that a judge awarded an excessive fee to Justice Margaret Workman prior to her election.

The entire Court will excuse itself from oral argument on Wednesday, April 27, so that five substitutes can review Kanawha Circuit Judge Paul Zakaib's action in a drowning case.

He divided an $80,000 fee by awarding $76,500 to Workman and $3,500 to Cynthia Ranson and Michael Ranson of Charleston.

Former Justice Arthur Recht will hear the case, along with circuit judges Gary Johnson, Robert Stone, Jack Alsop, and Thomas Evans.

The parties disagree vehemently, even about who wins if Workman loses.

Her lawyer, Edward ReBrook of Charleston, calls it a dispute over fees.

The Ransons answer that their client, Eugenia Schmalhorst (formerly Moschgat) of Missouri, will get every penny they recover.

They claim Zakaib failed to follow a previous Supreme Court order requiring him to divide fees without creating unfairness to Schmalhorst.

They wrote that there was no hearing and no judicial inquiry into the reasonableness of the fees or the costs.

"Clearly, Eugenia Moschgat has been denied the most basic of all protections inherent tour judicial system," they wrote, using a former name that persists on the record.

ReBrook replied that they filled their petition with mischaracterizations and lies.

"If the Ranson Firm has not given Ms. Moschgat her proceeds from the settlement, it is in violation of the lower court's order," he wrote.

He wrote that Schmalhorst would have received a more favorable settlement if the Ransons had stayed out of it.

Schmalhorst's mother, Linda Kannaird, worked at Speedway Super America in Sissonville.

In 2000, with flood water rising toward the store, she and other workers tried to haul merchandise away.

Water surrounded the store, and Charleston fire department sent a rescue team. The workers climbed into the boat, but it capsized and Kannaird drowned.

Schmalhorst, her only child, was appointed administrator of the estate. She retained the Ransons, who sued Speedway Super America under state workers compensation law.

The suit included wrongful death claims against Charleston and rescue team members.

Kannaird's 10 brothers and sisters retained Workman and petitioned to replace their niece as representative of the estate, claiming she was estranged from her mother.

Zakaib removed Schmalhorst and appointed an aunt, Dianna Savilla, in her place. Zakaib removed the Ranson firm as counsel for the estate, and he substituted Workman.

She settled wrongful death claims against the city and the rescuers, and Schmalhorst divided the proceeds with her aunts and uncles.

In 2003, the Ransons settled Schmalhorst's claim against Speedway Super America.

Speedway moved to dismiss the claims of Kannaird's brothers and sisters, arguing they weren't in the class of persons who could recover under workers compensation law.

Zakaib agreed, and he dismissed the claims.

On appeal, the Supreme Court ruled that only Schmalhorst could recover but that Savilla should represent the estate.

They ordered Zakaib to compensate Savilla for her expenses including attorney fees, without creating unfairness to Schmalhorst.

Savilla sought attorney fees from Speedway, and Zakaib found no basis for that.

Zakaib set a hearing on whether Savilla should recover fees and expenses from the settlement between Schmalhorst and Speedway.

At the hearing, in 2007, he directed the Ranson firm to hold in escrow $75,000 in fees and $18,192.69 in expenses.

Zakaib reached no decision in a year and a half, and Schmalhorst moved to release the funds in escrow.

Six days after she filed the motion, the Ransons received a copy of an order from Zakaib awarding them $3,500 for filing the original complaint. The order provided $76,500 for Workman, plus all the expenses she claimed.

Zakaib revised the order in 2009, with the same result, and Schmalhorst appealed.

"Savilla and her legal counsel consistently acted adverse to Eugenia Moschgat's interest and potential recovery and in fact diminished the value of her claim," the Ransons wrote.

"The personal representative of an estate acting in a fiduciary capacity has a duty to manage the estate under his control to the advantage of those interested in it and to act on their behalf," they wrote.

"Instead, Ms. Moschgat received just the opposite," they wrote.

They wrote that Workman recovered fees of $63,333 and expenses of $10,529.64 from a settlement with the city. They wrote that Zakaib ordered duplicate payment of expenses Workman recovered from the settlement with the city.

"Full information was consistently provided by the Workman firm to Ms. Moschgat, and her interests were vigorously protected," ReBrook replied.

He wrote that she received a fair share of the proceeds of the settlement with the city. He wrote that the Ransons did an end run around Savilla by entering into a secret settlement with Speedway, in an amount far less than the value of the case.

He claimed the settlement constituted legal malpractice.

He wrote that the Workman firm "spent an enormous amount of time and money representing the interests of all of the potential beneficiaries."

He wrote that any allegation that Workman harmed Schmalhorst's claim was absurd.

"It is not this Court's job to determine the appropriate division of attorney's fees," he wrote. "Had the Ranson Firm just stayed out of this litigation and let the administratix and counsel for the estate do their job, Ms. Moschgat would have received a significantly more favorable settlement.

"The circuit court provided adequate compensation to the Ranson Firm for the extremely brief and limited time it represented the estate."

Workman won a 12-year term on the Supreme Court of Appeals in 2008.

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