If a petition to appoint a guardian is dismissed in a Mental Hygiene Law (MHL) Article 81 proceeding, the statute on its face permits the court to direct the petitioner to pay the fees of the Court Evaluator and Court-Appointed Counsel to the Alleged Incapacitated Person (AIP). The statute says nothing about the petitioner’s motives. It sets forth no requirement that there be an absence of bad faith before authorizing the court to require petitioner to pay.

However, case law carves out a safe harbor for petitioners. Where a petition is dismissed or withdrawn, a finding of bad faith is required before the court  is authorized to direct the petitioner to pay compensation to the Court Evaluator or Court-Appointed Counsel for the AIP.

Pursuant to MHL 81.10(f), which governs the award of compensation to Court-Appointed Counsel to the AIP, the court “shall” determine the reasonable compensation of Court-Appointed Counsel for the AIP (the statute does not apply to the award of compensation for attorneys privately retained by the AIP). The AIP “shall be liable” for Court-Appointed Counsel’s compensation “unless the court is satisfied that the person is indigent.” In other words, Court-Appointed Counsel is compensated by the AIP, unless the AIP can’t pay. “Compensation” includes fees and disbursements.

If the petition is dismissed, MHL 81.10(f) gives the court discretion to direct that petitioner pay the AIP’s Court-Appointed Counsel’s fees, but, pursuant to case law, this only applies to circumstances where the petition was brought in bad faith by the petitioner.

The rules for the source of compensation are similar for Court Evaluators. Pursuant to MHL 81.09(f), which governs the compensation of Court Evaluators, when the court renders a judgment granting the petition, the court may award a reasonable amount of compensation to the Court Evaluator payable by the estate of the AIP. Unlike MHL 81.10(f), however, which governs Court-Appointed Counsel to the AIP, the statute says nothing about the source of compensation where the AIP is indigent and cannot afford to pay.

When a judgment denies or dismisses a petition, MHL 81.09(f) authorizes the court to award “a reasonable allowance to a court evaluator… payable by the petitioner or by the person alleged to be incapacitated, or both in such proportions as the court may deem just.”

However, as with fees for the Court-Appointed Counsel to the AIP, in cases where the petition is dismissed, case law holds that a trial court in an MHL Article 81 guardianship proceeding is only permitted to direct a petitioner to pay the fees of the Court Evaluator where there is a showing of bad faith by the petitioner.

In Matter of Loftman (Mae R.), the Appellate Division, Second Department held that in the absence of evidence that the petitioner commenced the proceeding in bad faith, courts do not have authority to require petitioners to pay the Court Evaluator and Court-Appointed Counsel’s fees.

In that case, the Queens County Supreme Court dismissed the petition following a hearing on capacity. Thereafter, without a hearing on compensation, the court fixed the fees to be paid to the Court Evaluator and the Court-Appointed Attorney to the AIP, and directed the petitioner to personally pay those fees.

The Appellate Division, Second Department  reversed the decision both on the issue of capacity and fee shifting, holding that the AIP was, in fact, an Incapacitated Person (IP), and that the court improvidently exercised its discretion in directing that petitioner bear the burden of compensation to Court-Appointed Counsel for the AIP and the Court Evaluator.

The Appellate Division, Second Department held:

Finally, in light of our determination that Mae R. is incapacitated within the meaning of Mental Hygiene Law article 81, and the absence of evidence that the petitioner commenced this proceeding in bad faith, it was an improvident exercise of discretion for the Supreme Court to direct the petitioner to pay the fees of the court-appointed evaluator and the attorney it appointed to represent Mae R. in the proceeding (see Mental Hygiene Law § 81.09[f]; Matter of Samuel S. [Helene S.], 96 AD3d at 958; Matter of Marjorie T. [Sherwood], 84 AD3d 1255, 1255).

A counterargument to my interpretation of the holding in Matter of Loftman (Mae R.) could be that the Appellate Division also reversed the decision on the issue of capacity, and ultimately, the petition was never dismissed. However, the court parses its language carefully to hold that its determination is based on  both the determination that that AIP was incapacitated  “, and” the absence of evidence of bad faith by the petitioner.

For example, the Dutchess County Supreme Court described the fee shifting statutes eloquently in Matter of Bonnie H. (Bonnie O.), buttressing the  holding in Matter of Loftman (Mae R.) . “The purpose of the statute permitting shifting of fees to the petitioner is to caution those who would bring a frivolous petition, or one motivated by avarice, that they might very well have to bear the financial burden of the proceeding,” wrote the court in Matter of Bonnie H. (Bonnie O.). “Hence, the relevant factors in determining the proper apportionment of fees when a petition is dismissed include whether there is evidence that the petitioner was motivated by avarice or possible financial gain, whether the petitioner has acted in good faith in commencing the petition, the sufficiency of the petition on its face, the relative assets or indigence of the petitioner and the AIP, and any special circumstances that may exist, such as benefits to the AIP that may have resulted from the filing of the petition”.

Moreover, this standard also applies to cases where the petitioner seeks to withdraw its application. In Matter of Marjorie T. v Sherwood, the Appellate Division, Second Department held that “the Supreme Court improvidently exercised its discretion in directing the petitioner to pay the AIP’s counsel fees, given the lack of evidence that the proceeding was brought in bad faith, notwithstanding its withdrawal”.

Despite the absence of an express provision in the statute, case law carves out a safe harbor for petitioners whose petition is dismissed or withdrawn. Absent a finding of bad faith, the court is generally not authorized to direct the petitioner to pay compensation to the Court Evaluator or Court-Appointed Counsel for the AIP.