Hi Baris - this is because, in your particular example, there is a seam in the hammer head surface that happens to be closer to the edge being filleted than the radius:
Rhino’s great weakness in filleting edges is that it cannot find faces that are not on the edge being filleted - it cannot ‘jump’ over to an unconnected face.
In this case, use FilletSrf , twice, with Extend = No.
You’ll then need to trim and re-assemble the part.
A sort of geeky way out, if you want to re-make that part is to set UseExtrusions to make polysurfaces rather than extrusion objects, and when you extrude using ExtrudeCrv, set SplitAtTangents=No - then the only seam will be from the curve seam, which is not at that awkward location.
I’d just use FilletSrf on what you have, good to get that process worked out, you’ll need it again.
-Pascal