State must pay legal fees in unclaimed property appeal

July 24, 2015

A woman who previously won a federal lawsuit arguing she was entitled to interest on unclaimed property held by the Indiana attorney general’s office also won her claim that the state should pay her legal fees for her initial appeal.

Acting as a guardian for a relative, Katherine Cerajeski successfully argued in 2013 the state had no right to keep property her relative held in a small, interest-bearing bank account. The judgment led to a change in Indiana law, stating that claimants to Indiana unclaimed property administered by the AG’s office are entitled to interest as well as principal on money in those accounts.

“Even if our holding in the previous round that the plaintiff was entitled to just compensation … was incorrect … the plaintiff nevertheless had obtained a judgment which compelled a change in state law that gave her compensation equal to the damages she was seeking, and it was a result brought about by the efforts of her lawyers,” Judge Richard Posner wrote in Katherine Cerajeski, Guardian for Walter Cerajeski v. Greg Zoeller, Attorney General of the State of Indiana, et al.,  15-1313.  

The court reversed the District Court ruling that the case was moot because of the change in statute, and it ruled Cerajeski could pursue an award of attorney fees. Posner, though, wrote for the panel that the fees Cerajeski’s lawyers are seeking raise an eyebrow.

“We offer the tentative view that the amount sought – $258,462.50 for 375.75 hours – is excessive, both in the amount of time for which fees are sought and in the average hourly billing rate ($687.86). Remember that this was just time spent on the appeal (the first, not the present, appeal), and the high average billing rate implies that few junior members of the two law firms who handled the appeal for the plaintiff could have been assigned to work on the appeal. In fact it appears that law-firm partners billed more than 93 percent of the total hours billed,” Posner observed.

The case was remanded with instructions for Judge Jane Magnus-Stinson of the U.S. District Court for the Southern District of Indiana to determine reasonable attorney fees.

Cerajeski was represented by Saunders Law Firm and Donaldson & Guin, both of Chicago.



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