CALIFORNIA ATTORNEY'S FEES

Probate/Special Fee Shifting Statute: Elder Abuse Fee Entitlement Unclear Based On Murky Statement Of Decision Denying Fee Award

 

Independent Tort versus Statutory Violation Didn’t Need to be Addressed Here.

     Estate of Hazewinkel, Case No. D058282 (4th Dist., Div. 1 Dec. 9, 2011) (unpublished) is interesting in its discussion of potential fee entitlement under California’s Elder Abuse Act statute, Welfare and Institutions Code section 15657.5(a).

     Although it reversed the denial of a fee award for an inadequate statement of decision in essence, it contains an interesting discussion of whether you need an independent tort or just a statutory elder abuse violation for fee entitlement purposes. Looks like there is a split, so look as these decisions when you grapple with this issue.

Probate: Contentious Trust Administration Litigation Results In Removed Trustee Father Having To Pay Winning Beneficiary Son Fees Incurred In Removal Petition Litigation/Related Jewelry, Joint Tenancy Litigation And Results In Father Having To Reimburse E

 

No Abuse of Discretion in Acrimonious Probate Proceedings.

     Probate proceedings are another area where emotions run high as well as attorney’s fees for the combatants. Losing combatants can be hit with fees/costs for the winner’s efforts, and trustees may have to restore fees/costs paid from a trust where the court determines that these expenditures only personally benefited the trustee.

     Cardelucci v. Cardelucci, Case No. E049975 (4th Dist., Div. 2 Dec. 8, 2011) (unpublished) illustrates these results, involving a son beneficiary who successfully had father removed as a trustee over deceased mother’s inter vivos trust and prevailed in litigation over jewelry (“a woman’s best friend,” diamonds and all)/joint tenancy issues.

     Father’s appeal was not successful, with the abuse of discretion review standard not being surmounted--similar to the other December 8 unpublished decision we have reviewed.

     The lower court ordered father to reimburse the trust for litigation expenses and other inappropriate trust fund distributions to himself. This was correct because a trustee cannot use trust funds to defend his personal interests. (Prob. Code, § 15684; Whittlesey v. Aiello, 104 Cal.App.4th 1221, 1226-1227, 1230 (2002).)

     Son’s efforts in compelling trust accountings and obtaining trustee removal were reimbursable by father to the tune of $220,000 in attorney’s fees. (Prob. Code, § 17211(b).) Also, the lower court did not err in ordering that father reimburse the trust $100,000 he charged the trust for his own litigation expenses incurred in unsuccessfully opposing his removal as trustee. (See Conservatorship of Lefkowitz, 50 Cal.App.4th 1310, 1314-1315 (1996) [no fees allowable to trustee lacking objective reasonableness and subjective good faith in resisting a trustee removal petition].)

     BLOG UNDERVIEW--The appellate court in this one sustained the decisions of Retired Associate Justice Kenneth Andreen. Retired Justice Andreen used to serve on the Fifth District Court of Appeal when co-contributor Mike was an appellate clerk. Justice Andreen subsequently married Patricia Noyes, who was a clerk colleague of Mike’s. Mike wishes them holiday cheer.

Probate: Temporary Conservator’s Attorney Entitled To Fees Even If No Permanent Conservator Ever Appointed

 

Crucial Inquiry Is Whether Temporary Conserator Acted In Good Faith and in Best Interest of Conservatee.

     Strange procedural cases actually produce new law, which is what happened in Conservatorship of Cornelius, Case No. A131495 (1st Dist., Div. 4 Nov. 15, 2011) (certified for publication).

     In this one, a 73-year old widower, who apparently associated with people who lived in his house rent-free, obtained money/credit cards from him, and operated a marijuana farm, was placed into temporary conservatorship even though due to some strange twists no permanent conservatorship ever matured. The trial court did award attorney’s fees and costs to the temporary conservator (a daughter) and her attorneys along the way--all totaling about $34,000, some of which were other conservatorship expenses by others. Conservatee appealed, principally arguing that the failure to obtain a permanent conservatorship precluded fees/costs resulting from the temporary conservatorship.

     Not so, said the appellate court. Probate Code sections 2641(a) and 2642(a) make no distinction between temporary and permanent conservators--”and we perceive no reason to draw one,” finding solace in the reasoning from Estate of Moore, 258 Cal.App.2d 458, 459-464 (1968). The relevant question was whether the temporary conservator acted in good faith, based on the best interest of her father, something that the Court of Appeal found because there was overwhelming support for this conclusion in the record below. Fee awards affirmed.

Probate: $38,000 Fee Award Against Holographic Will Executor Reversed Based On Lack Of Statutory Basis

 

Gotta Have a Basis, Or Else Fee Recovery is Toast.

[Above:  April 1942.  Ann Rosener, photographer.  Library of Congress.]

     In Estate of Brown, Case No. G043780 (4th Dist., Div. 3 Oct. 4, 2011) (unpublished), a lower court awarded $38,000 in attorney’s fees to respondents in a bitter probate petition battle in which appellant was apparently deemed to be the executor under a holographic will pursuant to resulting or constructive trust theories. Appellant appealed from the adverse award, claiming there was no entitlement basis for the award.

Probate: Executor Could Not Obtain Estate Distribution Without Honoring Estate Attorney’s Lien

 

Distribution Allowed, But Subject to Attorney’s Lien.

     Just to show you that trial and appellate courts do seriously consider attorney’s interests, here is one in the probate context that highlights this in spades.

     In Middleton v. Roos, Case No. A130329 (1st Dist., Div. 5 Sept. 26, 2011) (unpublished), among other issues, executor attempted to obtain certain distributions of his mother’s estate assets without any exposure for his counsel’s work on behalf of the estate.

     Not gonna happen, ruled the trial court, in a determination affirmed on appeal.

     Pursuant to Probate Code section 11640(a), the payment of estate debts takes priority over the distribution of the estate to the estate’s beneficiaries (such as executor). The expenses of administration, including an attorney’s allowed compensation, are given the highest priority. (Prob. Code, § 11420(a)(1).) Simply because the probate court would not allow a distribution of estate proceeds, without an express waiver of compensation from attorney providing valuable services, was no abuse of discretion but properly within the ambit of the law. The distribution could be made, but subject to the attorney’s lien. Viva la estate attorneys in this one!

Probate: Trustee Causing Trust To Expend Money In Bad Faith Can Be Assessed With Attorney’s Fees

 

Equitable Powers Are Broad in Probate Court.

     Watson v. Watson, Case No. B214891 (2d Dist., Div. 6 July 19, 2011) (unpublished) confirms the broad powers granted to probate courts to award attorney’s fees against trustees that take bad faith actions against a trust. Here, trustee conveyed property to himself out of the trust without the knowledge of the trust grantor/beneficiary--the latter requesting attorney’s fees for this breach of fiduciary duty, a request granted by the lower court.

     On appeal, fee award affirmed. The superior court, sitting as a probate court, has broad equitable discretion to award attorney’s fees. (Rudnick v. Rudnick, 179 Cal.App.4th 1328, 1333 (2009).) Trustee certainly breached his fiduciary duties to grantor/beneficiary of the trust, which equitably required him to pay the full cost of litigation caused by his misconduct. Soria v. Soria, 185 Cal.App.4th 780 (2010) did not compel a contrary result; a reversal there was required because the fees were awarded in a civil court action, unlike the fee award in this probate court action based on the probate court’s equitable powers.

Probate/Conservatorship: Dueling Conservatorship Candidates Got Much Reduced Attorney’s Fees For Battling, But Winning Conservatorship Candidate Only Gets 25% Of Requested Fees

 

Having 70% of Settlement Funds Go to Attorney’s Fees Not Digestible.

     Okay, for all of you probate and conservatorship practitioners, here is an interesting one involving dueling attorney’s fees requests by conservatorship candidates.

     The winning conservator got his requested fees whacked down by 75%, while the losing conservatorship--who also got a big whack--did not appeal. Here are the numbers: Winner sought over $83,000 in fees/costs, but was only awarded $20,753--25% of the request; loser sought over $43,000 in fees/costs, but was only awarded $8,037 based on two categories of expenses that were of benefit to the conservatee, a 47-year-old gentleman who was cared for by his grandmother until the dueling conservator candidates vied for control once grandmother could no longer assist conservatee.

     The winning conservatorship, astonished we might say about the 25% fee award, appealed in Conservatorship of Alcaraz, Case No. D057542 (4th Dist., Div. 1 July 18, 2011) (unpublished).

     To get to the bottom line, the appellate court was shocked that the conservator candidates would be seeking fees that totaled 70% of the settlement fund for conservatee (with the fund being about $180,000).

     However, we do not like to skirt the law on this blog, so here we go.

     Only reasonable fees to a conservator’s attorney are allowed. (Prob. Code, § 2640(c)(2).) Only just and reasonable fees are allowed to an unsuccessful conservatorship petitioner. (Prob. Code, § 2640.1.)

     Appellant (winner conservator getting greatly reduced fees) argued that an agreement by some of the parties to not object to a fee request bound the trial court in determining the reasonableness of a fee award. Get outta here, said the appeal court. Reasonableness of fees is always an issue vested with the lower court in this area.

     The special needs trustee appointed in the case had a fiduciary duty to manage the trust and make objections (including to fee requests), so she had no conflict of interest in doing so.

     Bottom line, the probate court found that a lot of the fees incurred by winner related to an intra-family “squabble” (great word, isn’t it?) rather than something really benefitting conservatee. In the end, fee award, 75% reduction, affirmed.

Surgery scalpels.  1878.  Japanese drawing.  Library of Congress.

Probate: Lower Court Decision To Charge Beneficiary’s Trust Account For Attorney’s Fees Was No Abuse Of Discretion

 

Ranting and Raving Does Not Help on Appeal.

     Although we cannot say that it was definitive, appellant’s ranting and raving below and on appeal certainly did not help him overturn a probate court’s award of fees against his trust account. It didn’t come close.

     In McBride v. Hall, Case No. H035399 (6th Dist. July 12, 2011) (unpublished), trust beneficiary represented himself in protracted litigation over the appointment of a trustee to succeed respondent trustee, with beneficiary being unsuccessful in getting himself appointed. The probate court basically directed payment of certain costs and fees from beneficiary’s trust account for lower court proceedings and defense of certain orders on appeal by the appointed trustee. Respondent won the fee battles, and appellant beneficiary appealed.

     The problem here was that the lower court record was riddled with “rants and raves” by appellant. On appeal, using words like “mauled” and “ensnared”--although maybe good verbiage to use on a Safari or a truly brutal law-and-motion proceeding--did not resonate well with the appellate court.

     The probate court has discretion to charge a trust with legal expenses incurred in defense of trust administration tasks, with the attorneys aiding a trustee in this arena being entitled to fees in the court’s discretion. (Uzyel v. Kadisha, 188 Cal.App.4th 866, 911 (2010); Kasperbauer v. Fairfield, 171 Cal.App.4th 229, 235 (2009); Donahue v. Donahue, 182 Cal.App.4th 259, 268 (2010).) No abuse of discretion here with respect to charging fees against appellant’s account.

Ethics/Probate: Attorney’s Fees Awards To Conservatee”s And Conservator’s Lawyers Affirmed On Appeal

 

Conservatee’s Daughter’s Appeals Sadly End Contentious Conservatorship Fee Proceedings.

     In a bitterly contested conservatorship proceeding, Conservatorship of Gdowski, Case Nos. G043583 & G044070 (4th Dist., Div. 3 July 7, 2011) (both unpublished), two appeals resolved awards of attorney’s fees to the lawyers for both conservatee and conservator resulting from conservatee’s daughter’s objections to the way the conservatorship was being handled with respect to her mother.

     Daughter’s principal contention was both attorneys had conflicts of interest of a nature requiring a forfeiture of fees. Although a serious violation of an attorney’s responsibilities can give rise to a forfeiture of fees, Pringle v. La Chapelle, 73 Cal.App.4th 1000, 1006 (1999), the appellate court found no such egregious conflict of interest for the involved lawyers.

     Orders awarding fees to attorneys for either conservatee or conservator are expressly appealable. (Prob. Code, § 1300(e).) Also, daughter was found to have standing so the appeal could be considered on the merits, although the awards were found to be proper.

     Justice O’Leary wrote both opinions, poignantly summarizing the appeals this way: “ . . . both appeals are utterly without merit [and] they appear to be misguided and bitterly motivated attempts to have the last say in the case by punishing those who dared to disagree with [daughter appellant].”

Probate: Extraordinary Fees For Services Rendered To Trustee Not Justified

 

They Only Benefitted the Trustee, Not the Trust, Justifying Fee Request Denial.

     The Second District, Division 6, in Waters v. Conkle, Case No. B225166 (2d Dist., Div. 6 June 23, 2011) (unpublished), reminds all of you probate practitioners that extraordinary fees will only be awarded where the attorney’s actions had some benefit for the trust, rather than just benefitting the trustee. In this one, trustee’s attorney lost his fee reimbursement request of $28,431.50, with the lower court determining he had already been paid over $66,000, had not completed activities in line with the trust intent, and had only taken actions to make up for the trustee’s failure to account properly to beneficiaries. Probate courts have special responsibilities to insure that extraordinary fees are reasonable (Donahue v. Donahue, 182 Cal.App.4th 259, 269 (2010)), and no fees are justified when the benefits are only to the trustee rather than to the trust (Estate of Gump, 1 Cal.App.4th 582, 605 (1991)). The appellate court found the fee denial was no abuse of discretion.

Probate: $8,500 Fee Award Reversed Because Probate Code Section 17211(b) Requisites Not Met

Neither the Conditions of the Trust Nor Fee-Shifting Statute Were Met Here.

     In our March 24, 2010 post, we discussed the fee-shifting parameters of Probate Code section 17211(b) in the context of Leader v. Cords, 182 Cal.App.4th 1588 (2010). Leader has been discussed in other posts, namely, our March 24, 2010 post on Leach (unpublished) and June 15, 2010 post on Soria (published). It has surfaced, yet again, in the next unpublished decision we examine.

     Scichilone v. Duguay, Case No. D057435 (4th Dist., Div. 1 May 23, 2011) (unpublished) involved stepdaughters challenging the accounting from stepfather under a trust after his wife died. The trial court awarded stepdaughters attorney’s fees of $8,500 under Probate Code section 17211(b) because of its perception that stepfather had been dilatory in a trust accounting, although they did get the information.  Stepfather appealed.

Probate: $70,000 Fee Award In $241,000 Elder Abuse/Negligence Case Settlement Sustained On Appeal

 

Retainer Agreement, Even If Void, Could Be Considered in Deciding upon Fee Award.

     Here is an interesting one from our local Santa Ana court in the “Probate” category.

     Lanzone v. Santilli, Case No. G043586 (4th Dist., Div. 3 Apr. 14, 2011) (unpublished) involved a situation where an attorney helped garner an elderly plaintiff a $241,000 settlement in an apparently tricky elder abuse/negligence case, with attorney entitled to a $96,400 fee recovery under a contingency agreement. Plaintiff balked at the settlement unless attorney reduced fees to $8,168, a proposal rejected by attorney. The settlement was eventually enforced and attorney was awarded fees of $70,000 under Probate Code section 3601 and Cal. Rules of Court, rule 7.955(a)(2). Elderly person’s guardian ad litem challenged the fee award on appeal.

Probate: Probate Volunteer Panel Counsel Entitled To Fee Award From Conservatee’s Estate Under Probate Code Section 1470(c)

 

Second District, Division 3 Upholds Fee Award In Second Appeal.

     In our January 8, 2010 post, we explored the appeal in Conservatorship of Davis, where the Second District, Division 3 held that Probate Code section 1470(c) did authorize the probate court to order that attorney’s fees for work by an appointed Probate Volunteer Panel (PVP) counsel for a proposed conservatee (even though no formal conservatorship estate was ever created) could be paid from the conservatee’s estate. However, it reversed because the proposed conservator had no notice of the hearing and never stipulated to having a commissioner hear the matter.

     Later, however, PVP counsel renewed a fee petition and was granted fees of $18,497.50, to be paid from conservatee’s trust. This prompted a second appeal by the proposed conservator.

     This time the fee award was affirmed in Conservatorship of Davis (Davis v. Pitzer), Case No. B225190 (2d Dist., Div. 3 Apr. 7, 2011) (unpublished).

Probate: Second District, Division Three Concludes That Res Judicata Prevented Respondents from Relitigating Probate Dispute, and Also Deprived Trial Court of Grounds to Determine that Appellant Had to Pay Fees and Costs

Probate Case Has Nice Summary of Principles of Res Judicata/Collateral Estoppel

     The Court of Appeals early on telegraphed the train wreck that is this case with the understated observation, “The relationship between the siblings was not optimal.” Estate of Redfield, Case No. B216190 (2nd Dist. Div. 3 4/5/11) (certified for publication).

Probate: Litigant Winning Creditor’s Claim Against Unreasonable Advances Of Opponent Entitled To Fee Award

$9,000 Attorney’s Fees Award Charged Against Probate Distribution to Losing Party.

     Probate is certainly an equitably driven area, as the next case shows in how one losing party was denied a fee award and another party was awarded fees to be charged against losing party’s next probate estate distribution.

     In Estate of Jagar, Case No. A126750 (1st Dist., Div. 3 Mar. 28, 2011) (unpublished), young wife in an Hindu marriage got involved in probate estate battles with ex-wives and children of her deceased husband. Ex-wife obtained summary judgment based on a creditor’s claim in the estate which was contested by younger wife even though ex-wife claimed entitlement under a marital settlement agreement. Younger wife was denied her fees in the battle, while ex-wife received an award of $9,000, to be paid from younger wife’s subsequent probate distributions.

     Younger v. ex in this one, with ex prevailing on appeal.

     Younger’s fee request was properly denied under Probate Code section 1002, which authorizes the court to award discretionary fees to any party to probate proceedings or award fees out of the assets of the estate “as justice may require.” In this one, the trial court had no mandatory duty to award fees and nothing indicated that the opponents unreasonably contested younger wife’s marriage to the deceased.

            However, ex did sustain her fee award at the appellate level. Probate Code section 9354(b) provides that the prevailing party in an action shall be awarded reasonable litigation expenses, including attorney’s fees, if the prosecution or defense of the action against the prevailing party was unreasonable. The record showed that younger wife was unreasonable in defending against ex’s creditor claim; after all, there was a marital settlement agreement and younger wife never presented any proof in opposition to ex’s summary judgment motion in her creditor claim action.

Probate Two-Fer: Fees Allowable To Executor/Heir As A Party Assisting Court And Beneficiary Properly Awarded Fees As A Surcharge Against Trust For Trustee‘s Breach of Fiduciary Duties

 

     Wow, March 22 was a busy, busy day for attorney’s fees topics in both state and federal courts. Here come a lot of posts, starting with our category “Probate.”

Probate Code section 11704(b) at Issue in Estate of Bartsch, Case No. A126925 (1st Dist., Div. 1 Mar. 22, 2011) (certified for publication).

     Here, the appellate court confronted whether an executor/heir (with 14% in a probate estate) was disqualified from receiving an award of attorney’s fees for ordinary/extraordinary services because he was not impartial and hence not “a party to assist the court” under Probate Code section 11704(b). After examining both the statute itself and legislative history, the Court of Appeal concluded that the designation of a representative as a “party” in the statute necessarily implied the right to advocate either for or against an heirship petition by another. The $19,774.96 fee award to executor’s attorney was proper.

Probate Code section 17211(b) Involved in Guest v. Frazier, Case No. B225938 (2d Dist., Div. 6 Mar. 22, 2011) (unpublished).

     Probate Code section 17211(b) authorizes an award of attorney’s fees and litigation expenses in favor of a beneficiary who contests the trustee’s account if the trustee’s opposition to the contest was “without reasonable cause and in bad faith,” using malicious prosecution standards when determining these elements. (See Uzyel v. Kadisha, 188 Cal.App.4th 866, 926 (2010) [reviewed in our September 23, 2010 post].) In this instance, the trial court properly awarded successful beneficiary challenging a trustee’s actions $80,000 in attorney’s fees and $1,741 in costs, which was imposed as a surcharge on the family trust. The record showed that trustee acted in bad faith in refusing to distribute beneficiary’s share of the trust assets (with beneficiary being mentally/physically disabled), because the refusal was in retaliation for beneficiary’s exercise of his right to obtain relief from the courts, or in imprudently investing into junk bonds. Although section 17211(b) was silent on whether appellate fees were awardable to beneficiary, the Court of Appeal determined it was implied to be so in line with similar entitlements under other statutes.

Probate/Substantiation Of Fees: Fee Denial Based On Failure To Allow Further Submissions Of Detailed Fee Substantiation Deemed An Abuse of Discretion

$101,178.62 in Attorney Work Must Be Reconsidered For Beneficial Result.

     In the past, we have discussed many cases which hold that billing records must be presented to the court (as well as the trustee) when an attorney is seeking reimbursement for probate court litigation work. This stems from the trial court’s “special responsibility” to ensure that fee awards are reasonable and the trustee’s administration is prudent (because it is often times the trustee who hires attorneys to carry out routine or extraordinary work on behalf of the trust). (See Donahue v. Donahue, 182 Cal.App.4th 259, 269 (2010); Schwartz v. Labow, 164 Cal.App.4th 417, 427 (2008); Hollaway v. Edwards, 68 Cal.App.4th 94, 98 (1998).) Here is an interesting one where a lower court’s failure to award fees by failing to allow further submissions of detailed fee substantiation was deemed an abuse of discretion--a result which was dependent upon an unusual set of facts.

     Kennedy v. Lowthorp Richards McMillan Miller & Templeman, Case No. B220613 (2d Dist., Div. 6 Mar. 8, 2011) (unpublished) was a situation where a law firm supplied $101,178.62 in professional services enabling its elderly client to recover title to her home from her daughter and to place it in a trust to provide for her health, maintenance, and support through probate court litigation. The firm submitted its bills for fees and costs to the trustee for payment with the trustee who, in turn, petitioned the court for approval through a declaration that did not include the detailed billings.

Probate: Attorney’s Fee Reduction In Accounting Reversed Because Fees Did Have To Be Spent And Not Out Of Proportion to Trust Assets

Fourth District, Division 2 Saw No Basis For Fee Reduction.

     Although abuse of discretion is the guiding standard for fee amount reductions, it will not prevail where the record showed there was a lot of work, the fees were not out of proportion to trust assets, and no reason for the reduction was set forth.

     Scott v. Key, Case No. E049906 (4th Dist., Div. 2 Jan. 20, 2011) (unpublished) is a situation where a lower court slashed

an attorney’s fee request by a trustee in an eighth accounting. However, it did so after observing that numerous court hearings were required and not indicating why fees should be cut. Aside from that, the trust assets were not insignificant.

     Result on appeal? Reversed. The requested fees were not out of proportion to the size of the trust and the reduction was counterintuitive to the trial court’s own comments on the attorney needing to attend numerous hearings.

Probate/Substantiation of Fees: $693,876.02 Extraordinary Fee Award To Estate Administrator’s Attorney Affirmed On Appeal

No Res Judicata Impact From Prior Fee Denial; Daily Substantiation Requirements Do Not Govern Probate Fee Awards.

     This post will definitely interest probate practitioners. Aside from the fact that it involves a fairly substantial “extraordinary fee” award, it also demonstrates that the appellate courts will be demanding on application of res judicata principles and will not require overly stringent substantiation requirements for extraordinary fee requests (at least as compared to other areas, such as lodestar oriented requests).

     Estate of Goldstein, Case No. A126507 (1st Dist., Div. 2 Jan. 12, 2011) (unpublished) is the case, where a lower court awarded Downey Brand an award of $693,876.02 for “extraordinary fees” in representing an attorney’s estate in litigation against former firm members for fee entitlement in several settled flood cases and in a separate interpleader--all involving about 3 years of work.

Probate: Trustee’s Attorney Not Entitled To Full Fees Where Record Showed Attorney Did Not Protect Remainder Beneficiary Interests

$7,500 Fee Award Out of Requested $36,000 In Fees Sustained On Appeal.

     Here is one showing how lower courts will balance the interests of trustees and trust remainder beneficiaries when crafting fee awards. (Boy, these terms take us back to law school probate classes, don’t they?)

     In Clare v. MacCarley, Case No. B223107 (2d Dist., Div. 5 Jan. 10, 2011) (unpublished), attorney representing a former trustee appealed a $7,500 fee award because she only gained this amount of a requested $36,000 fee request following objections by two trust remainder beneficiaries. She appealed, but lost.

     The problem here was that trustee and his wife conveyed trust property to themselves and took actions that made clear wife was trying to manipulate trust assets to her benefit, all in derogation of the interests of the two remainder beneficiaries. The key concern here was to determine whether there was an abuse of discretion in only awarding less than one-fourth of requested fees to trustee’s attorney, which required balancing what fees were spent to benefit the trust versus fees spent to benefit the trustee.

     No abuse of discretion in this instance because a lot of the efforts went to benefitting the trustee (and wife), rather than the trust. (Donahue v. Donahue, 182 Cal.App.4th 259, 269-270 (2010) [one of our Top 20 Cases for 2010].) The lower court has authority to protect the interests of remainder beneficiaries (Salter v. Lerner, 176 Cal.App.4th 1184, 1189 (2009)), something which was apparently done in the fashioning of the fee award reducing the fee request to former trustee’s attorney in this particular case.

Probate: Trustee Breaching Fiduciary Duties Still Allowed To Recoup 60% Of Counsel Fees

Fiduciary Duty Breaches Do Not Necessarily Preclude Fee Recovery Altogether.

     The Fourth District, Division 1 reinforces that attorney’s fees awards in probate matters are governed by statute but guided by equitable considerations.

     In Kunit v. Kingston, Case No. D056103 (4th Dist., Div. 1 Dec. 23, 2010) (unpublished), trustee was removed after having been found to have breached certain fiduciary duties in administering a trust. He then moved to recover attorney’s fees spent on trust administration work as well as the proceedings that gave rise to the fiduciary duty breach findings. The lower court awarded him 60% of requested fees ($80,095.20), disallowing the other 40% totaling $53,396.80.

     Both sides appealed, with one beneficiary arguing no fees should have been awarded and trustee arguing that 60% was too low an awarded percentage.

Year End Wrap-Up: Mike & Marc’s Top 20 Attorney’s Fees Decisions In 2010--Part 1 of 2.

     Above:  Wrapping It Up.

      As we wish all readers the happiest of Holidays, we now present our top 20 published decisions from California appellate courts or the Ninth Circuit. This list is not meant to slight other important decisions in certain areas, but these are the ones that “rose to the top” from our perspective. We will post 10 today and 10 in an ensuing post. The number of ranking is not geared at all to the decision’s relative importance.

     20. Quan v. Computer Sciences Corp., 623 F.3d 870 (9th Cir. 2010) -- authored by N.D. Iowa District Judge Bennett, siting by designation; discussed in our Oct. 21, 2010 post.

     District courts retain discretion to award or deny routine costs to a prevailing party in an ERISA case as long as a proper record of the decision making process is made.

     19. California Correctional Peace Officers Assn. v. Virga, 181 Cal.App.4th 30 (1st Dist., Div. 4 2010) -- authored by Justice Sepulveda; discussed in our Jan. 16, 2010 post.

     A civil rights case arising under 42 U.S.C. § 1983 is not a “civil proceeding under the California Torts Claim Act” for purposes of Code of Civil Procedure § 1038 fee awards to state entities.

     18. Pipefitters Local No. 636 Defined Benefit Plan v. Oakley, Inc., 180 Cal.App.4th 1542 (4th Dist., Div. 3 2010) -- authored by Justice Aronson; discussed in our Jan. 14, 2010 post.

     Shareholder in publicly-traded company properly denied fee recovery under “substantial benefit” equitable rule where shareholder provided no pre-suit notification to the company and achieved fairly immaterial changes in a challenged proxy statement.

     17. Mundy v. Neal, 186 Cal.App.4th 256 (2d Dist., Div. 2 2010) -- authored by Justice Ashmann-Gerst; discussed in our July 1, 2010 post.

Disabled plaintiff’s failure to make a prelitigation demand for corrective action barred fees requested under California’s “catalyst theory.”

     16. Uzyel v. Kadisha, 188 Cal.App.4th 866 (2d Dist., Div. 3 2010) -- authored by Justice Croskey; discussed in our Sept. 23, 2010 post.

Probate Code § 17211(b) fee recovery to beneficiaries, as against trustees, has a “reasonable cause” element akin to the same element in a malicious prosecution action.

     15. Kirby v. Immoos Fire Protection, Inc., 186 Cal.App.4th 1361 (3d Dist. 2010), review granted, No. S185827 (Nov. 17, 2010) -- authored by Justice Sims; discussed in our July 27, 2010 post.

     Employer can recover fees in action containing Labor Code § 218 claims other than minimum wage/overtime compensation claims. In granting review, the California Supreme Court framed the issues to be considered as being these: (1) Does Labor Code § 1940 apply to a cause of action alleging meal and rest period violations or may attorney’s fees be awarded under Labor Code § 218.5?, and (2) Is our analysis affected by whether meal and rest period claims are brought alone or accompanied by wage/overtime claims?

     14. Leader v. Cords, 182 Cal.App.4th 1588 (4th Dist., Div. 1 2010) -- authored by Presiding Justice McConnell; discussed in our Mar. 24, 2010 post.

     Probate Code § 17211(b) is to be liberally construed in favor of trust beneficiaries successfully challenging a trustee’s failure to make trust distributions (construing “contests the trustee’s account” language in the fee-entitling statute).

     13. Barnett v. First National Ins. Co. of America, 184 Cal.App.4th 1454 (2d Dist., Div. 7 2010) -- authored by Justice Jackson; discussed in our May 28, 2010 post.

     Joint offers under Code of Civil Procedure § 998 to husband and wife are valid without need for apportionment on a going-forward basis, disagreeing with its prior Weinberg decision.

     12. County of Santa Clara v. Superior Court, 50 Cal.4th 35 (Cal. Sup. Ct. 2010) -- authored by Chief Justice George; discussed in our July 27, 2010 post.

     Public entities may compensate private counsel through contingency fee agreements if governmental entities retain control and provide proper supervision over private counsel.

     11. Moore v. Kaufman, 189 Cal.App.4th 604 (2d Dist., Div. 1 2010) -- authored by Justice Rothschild; discussed in our Oct. 24, 2010 post.

     SLAPP attorney’s fees award to successful defendant cannot be imposed against losing plaintiff’s attorney.

     The next 10 decisions are coming soon, so stay tuned--storm watch notwithstanding.

 

Stay tuned for more . . .

Probate: Difference Between “Ordinary” And “Extraordinary” Compensation Highlighted In Recent Unpublished Decision

Fourth District, Division 3 Affirms Sizable Extraordinary Fee Award Under Abuse of Discretion Standard.

     Acting Presiding Justice O’Leary, in the 3-0 unpublished decision in Estate of Fernandez, Case No. G041272 (4th Dist., Div. 3 Dec. 7, 2010) (unpublished), has a nice discussion of the difference between “ordinary” and “extraordinary” compensation in the probate area as well as a good discussion of the abuse of discretion review standard generally applicable to review of the amount of fees awarded.

     Extraordinary fees of $101,000 were awarded to special estate administrator, along with $312,666.75 and $257,945 to his two attorneys. The fees were challenged on appeal, but were not overturned.

     Justice O’Leary noted the probate arena differences between “ordinary” compensation, based on a sliding scale of the value percentages of the estate accounted for, versus “extraordinary” compensation for which there are no set rates except for the lower court’s gauge of reasonableness. In determining extraordinary compensation, the lower court takes into account the value of the estate, the nature/difficulty of the tasks performed and time spent, the results achieved, whether those results benefited the estate as a whole, and whether the amount of ordinary compensation payable would be reasonable alone. (Ross, Cal. Practice Guide: Probate (The Rutter Group 2009) ¶ 16:327.4 at p. 16-99, ¶ 16:330 at pp. 100-101.)

     The problem here was that the litigation was abundant (the trial court’s register of action was 146 pages long) and the fee battle was extensively litigated to boot. Appellants could not surmount the abuse of discretion standard accorded to the lower court fee determinations, with Justice O’Leary colorfully borrowing from the “uphill battle” language in Estate of Gilkison, 65 Cal.App.4th 1443, 1448 [“This is an uphill battle which, absent unusual circumstances, may be equated with confederate General John Bell Hood’s attempt to capture ‘Little Round Top’ at the battle of Gettysburg in the Civil War. General Hood did not succeed.”].

             Dead at Little Round Top – position of Berdan’s Sharpshooters – Gettysburg.  Stereograph.  July 1863.

Probate: Court Order Requiring Payment Of County Counsel and Public Defender’s Fees Out Of Conservatee’s Trust Reversed On Appeal

Second District, Division 2 Determines Trust Beneficial Interest Is Not Part of Conservatee’s Estate.

     In Conservatorship of the Person and Estate of George, Case No. B221327 (2d Dist., Div. 2 Oct. 27, 2010) (unpublished), the trial court ordered fees for a conservator, County Counsel (counsel for guardian), and Public Defender (counsel for conservatee) paid from the conservatee’s trust in connection with underlying conservatorship proceedings.

     That order was reversed by the appellate court upon appeal by the trustee ordered to pay.

     Reason? Compensation could only be paid from conservatee’s “estate,” which did not include conservatee’s beneficiary interest in the trust. That beneficial interest was not “personal property” because conservatee only possessed an inchoate right to enforce performance of the trust for purposes of compelling trustee to make support payments from trust property on his behalf.

Probate And Family Law Doubleheader: Substantial Attorney's Fee Awards In Favor Of Beneficiaries and Ex-Wife Affirmed On Appeal

     As we read more and more cases on fee awards, we are struck about how both trial and appellate courts really like litigants to be reasonable and do not condone litigation that goes on and on in a fashion derided by Charles Dickens some time ago. These next two cases illustrate how the protracted nature of litigation, especially if chargeable to the non-prevailing or wealthier side in a dispute, may well play a part in a decision to affirm substantial fee awards.

Estate of Gridley, Case Nos. A123463/A124908 (1^st Dist., Div. 2 Oct. 19, 2010) (Unpublished).

     This one involved a contest between a daughter and two sons about how 40% of father's estate residue would be divided up, despite the fact they had all entered into a written beneficiary equalization agreement with a fees clause. Eventually, daughter lost, pretty much across the board, her challenges to the equalization agreement. Sons, as prevailing parties under the contractual fees clause, filed to recoup $655,336.75 in fees, with the lower court granting the request but awarding slightly less, but substantial nonetheless--$626,159.75. In doing so, the lower court noted that daughter's "unfocused, acrasial [intemperate; excessive] presentation of ever-expanding, cobbled-together theories" made the case more expensive and complex than it needed to be. The appellate court found no abuse of discretion, given that daughter drove up the acrimony and required sons to devote more resources than were likely necessary.

Marriage of Bohbot, Case No. B214035 (2d Dist., Div. 3 Oct. 20, 2010) (Unpublished).

     Here, you knew this one was not going to end up good for the loser when the appellate court early on observed: "This is our fourth and hopefully last opinion in this seemingly endless litigation."

     Wife was awarded $200,000 in attorney's fees and $150,000 for litigation costs advanced by another firm (not to mention $50,000 awarded to her experts). The bases were Family Code sections 2030-2032, the playing field leveler, and section 271, the sanctions provision against uncooperative/cantankerous litigants. Although finding some shared fault on both sides, the family court ultimately found that husband spent two and a half times more and that his income/expense declarations did not inspire as much confidence as ex-wife's. The lower court also found wife should be responsible for one-third of her claimed fees. Again, no abuse of discretion, especially since husband did not point out what work was being challenged—a classic situation to find a waiver or forfeiture, as the appellate court did. Fee award affirmed.

BLAWG BONUS:  Acrasia was the name of the racehorse that won the 1904 Melbourne Cup.

Probate: Order Requiring Repayment Of Fees By Attorney To Trust Reversed On Appeal

Third District Finds Advance Payment of Fee by Trustee for Trust Administration Work Was Proper.

     Some judges, like the lower court, in the next case we discuss are under a misapprehension that trust administration attorney’s fees have to always be approved by the court and cannot be advanced by the trustee. That is simply not the law, according to the reversal of a lower court taking that very position in Bristol v. Clark, Case No. C062705 (3d Dist. Oct. 14, 2010) (unpublished).

     There, trustee had advanced payment of some attorney’s fees for trust administration work performed by an attorney. The lower court did not like that because the advanced fees exceeded the amount of fees awarded in a prior probate proceeding producing a court-approved order for fee payment. The trial judge ordered the attorney to return the advanced legal fees. Attorney appealed, obtaining a reversal of the disgorgement order.

     First, attorney did have standing because she would suffer a financial hit of an immediate, pecuniary, and substantial nature. (Marsh v. Mountain Zephyr, Inc., 43 Cal.App.4th 289, 293, 295 (1996).)

     On the merits, the appellate panel concluded that the trustee did have authority to pay trust administration-related fees to attorney without prior court approval. Probate Code sections 16243 and 16249 authorize just that. Although other rules require prior court approval for payment of services rendered to the trustee in a personal capacity, the fees in this case related to trust administration work.

Probate: Attorney’s And Accountant Fees Properly Payable By Trust

Probate Code Section 16247 So Authorizes.

     Although published on other issues, Manson v. Shepherd, Case No. H034019 (6^th Dist. filed Sept. 3, 2010, ordered partially published Sept. 30, 2010, fee award discussion unpublished), reminds probate practitioners representing trustees to invoke Probate Code section 16247 for obtaining reimbursement of attorney’s fees for trust administration work. Those fees will be paid from the trust if so ordered by the probate court. (Kasperbauer v. Fairfield, 171 Cal.App.4^th 229, 235 (2009).) Also, lower court decisions approving such payments are generally reviewed under the abuse of discretion standard of review. (Donahue v. Donahue, 182 Cal.App.4^th 259, 268 (2010).)

 Probate Court Room, Wayne County Building, Detroit.  c1902.  Library of Congress.

Probate and POOF!: $13.364 Million Fee Award Against Trustee Under Probate Code Section 17211(b) Evaporates

 

Second District, Division 3 Finds Trustee Had Reasonable Cause to Contest Beneficiary Claims.

     In our category “Probate,” we previously have examined Probate Code section 17211(b), which allows attorney’s fees to be awarded to a beneficiary contesting a trustee’s account if the lower court determines that the trustee’s opposition was made without “reasonable cause” and in bad faith. Here is a dozzy of a POOF! under this section.

     Uzyel v. Kadisha, Case No. B196045 et al. (2d Dist., Div. 3 Sept. 22, 2010) (certified for publication) involved a $13,364,530 attorney’s fees award against trustee that was granted under section 17211(b). The Second District, Division 3, in a detailed analysis of the Probate Code provision, reversed the fee award.

     It found that “reasonable cause” under section 17211(b) was synonymous with the “probable cause” element of malicious prosecution claims—meaning an objective standard is used to determine if the actions were legally tenable. The appellate panel rejected the trial court’s test that “reasonable cause” required an objectively reasonable belief that the trustee would be completely exonerated by taking opposing actions. The correct test was expressed this way by the Court of Appeal: “We believe that reasonable cause to oppose a contest of an account requires an objectively reasonable belief, based on the facts then known to the trustee, either that the [adverse] claims are legally or factually unfounded or that petitioner is not entitled to the requested remedies.” (Slip Op., pp. 81-82.)

     Because trustee did successfully challenge several claims and the appellate court found other findings were suspect, absence of reasonable cause was not shown, resulting in (you guessed it) a POOF!—a reversal of the $13.364 million fee award.

Probate: Common Fund Recovery Comes To The Rescue!

 

Adversarial Beneficiary Losing the Fight May Be Held Responsible for Winner’s Attorney’s Fees.

     Family feuds can be bitter, as the next case demonstrates. They also can result in being saddled with attorney’s fees depending how the trial court rules, given that some equitable doctrines like the common fund doctrine are very broad and pliable in nature.

     Gay v. Dunbar, Case No. A125421 (1^st Dist., Div. 1 June 29, 2010) (unpublished) involved a bitter struggle with sharply conflicting trial testimony over what a mother intended when she transferred the bulk of her assets into joint ownership with one child shortly before she died, but had a will and had seemed to indicate to others that she wanted assets divided between all three children.

Probate: Surcharging Fees of Beneficiary Against Trustee Affirmed On Appeal

Fourth District, Division 2 Found Trustee Brought it on Himself.

     In DeRosa v. Masi, Case No. E045145 (4^th Dist., Div. 2 June 25, 2010) (unpublished), trustee was ordered to personally reimburse part of a loan used for attorney’s fees in probate litigation battles with a beneficiary substantially prevailing on several key issues. Trustee’s main appellate challenge was that the fees had to be surcharged in proportion to the time spent in trial on issues won by the opponent. Not so, said the appellate court. Besides the lack of legal authority to support such a position, trustees have been surcharged in entirety where the litigation resulted from the fault of the trustee, which was the situation presenting itself in De Rosa. (Estate of Miller, 259 Cal.App.2d 536, 547-548.) Estate of Cassity, 106 Cal.App.3d 569, 572-574 (1980)—trustee’s primary authority—did not dictate a contrary result because the trustee there acted in good faith and the surcharged amounts were a small percentage of those sought by beneficiary, much different from the trustee-laiden fault and beneficiary’s win on the key issues in the overall probate litigation in DeRosa.

Probate: $263,025 Fee Award Under Probate Code Section 17211(b) Is Reversed On Appeal

 

Fourth District, Division 3 Finds Grandchildren’s Action Did Not Contest a Trustee’s Account, So That There Was No Fee Entitlement under Section 17211(b) –Soria Tale.

     An award of attorney’s fees under California law always depends on answering a crucial preliminary question—is there a fee entitlement basis based on contract or statute. The answer to this question, either way, is pivotal. Respondents who did win fees below were unable to sustain the fee entitlement basis on appeal so that—much like a reversal of a judgment with fees—their fee award went POOF!

     The case we are reviewing comes from our own local Fourth District, Division 3, in a 3-0 opinion authored by Justice Fybel. The decision came down in Soria v. Soria, Case No. G041661 (4^th Dist., Div. 3 June 14, 2010) (certified for publication).

Probate: Reversal On Major Issues Means That Intervening Fee Award Must Be Vacated

 

Fourth District, Division 1 Also Provides Guidance on Fee Recovery For Family Code Section 1102 Violations.

     Well, for all of you probate practitioners out there, the Fourth District, Division 1 has issued an interesting unpublished decision on a fee award that fell based on a subsequent reversal on major issues in the case.

     In Estate of Hazewinkel, Case No. D054657 (4^th Dist., Div. 1 June 4, 2010) (unpublished), successor trustee (son) for late father was embroiled in trust litigation against father’s second wife Wanda. The appellate court, in an earlier unpublished decision in May 2009, had upheld a determination by the probate court that a certain trust transfer deed was ineffective for lack of Wanda’s consent, but reversed for retrial of discrete issues on Wanda’s trust beneficiary status. Before issuance of the earlier appellate opinion, the probate court awarded Wanda attorney’s fees of $153,591 and costs of $15,347.65, with the fee recovery premised on Family Code section 1101(g) [providing for fee and costs recovery in a situation where one spouse transfers a community asset in breach of certain fiduciary duties]. Son appealed the postjudgment award of fees and costs.

Probate: Elder Financial Abuse Fees Affirmed Where Impacted Party Never Challenged Basis For Award In Probate Proceedings Below

 

Second District, Division 6 Upholds Fee Award Exceeding $49,000.

     In order to avoid a waiver, a litigant needs to challenge fee entitlement in proceedings below.

     Porco v. Helm, Case No. B211138 (2d Dist., Div. 6 May 17, 2010) (unpublished) involved a trustee who was removed via a petition which requested “such attorney’s fees as may be allowable by law.” A fee request under the elder financial abuse statutes (Welfare and Institutions Code sections 15610.30(a) and 15657.5(a)) was made in an unopposed motion for judgment on the pleadings. Trustee never contested the fee entitlement in the proposed statement of decision or in the motion where fees were fixed by the lower court.

Probate: Fee Award Against Beneficiary Affirmed On Appeal

 

Trustee Awarded Fee and Costs Based on Trial Court’s Determination that Beneficiary Presented Petition for Breach of Trust and Removal in Bad Faith.

     “No good deed goes unpunished.” Although this saying frequently captures the moment, the next case actually demonstrates the opposite—a trustee’s kindness to his sister in a probate estate situation was actually awarded by a recovery of fees and costs as against a beneficiary (deceased sister’s son) who attempted to punish his prior kindness.

     Leach v. Kleveland, Case No. D054532 (4^th Dist., Div. 1 Mar. 24, 2010) (unpublished) involved a probate dispute over the division of trust assets between a brother (the trustee) and his sister (who subsequently died and had her beneficiary interest pass to her son, or the beneficiary). Brother and sister reached a tentative deal on dividing up the estate, with a residence going to her, some liquid trust assets to brother, and an equalization payment from sister to brother. Although sister later reneged on the deal, brother did let her move into the house, and brother assumed control over the liquid assets in the trust and used them for his own personal use. After sister died, her son (the beneficiary) took the position that the house had to be conveyed to him without any equalization payment. Trustee filed a petition for instructions to compel the sale of the house so trust assets could be divided evenly, and beneficiary filed a petition for breach of trust and removal of brother as trustee.

     Trustee eventually prevailed on all petitions and was awarded his attorney’s fees and costs from beneficiary’s share of the estate based on a determination beneficiary had filed and prosecuted his petition in bad faith. Among other things, the lower court determined that trustee had been very kind to sister in letting her move in the house (even though she reneged on the tentative division) and that trustee, as a layman, had inadvertently taken the liquid assets but cooperated in any accountings for purposes of dividing the estate. Beneficiary appealed both the merits and fee determinations, losing across the board on appeal.

     Because substantial evidence supported the lower court’s determination that trustee acted reasonably and in good faith in trust administration activities, no award of attorney’s fees were allowable to beneficiary under Probate Code section 17211(b), which provides that fees can be awarded where the court determines that a trustee’s opposition to a contest was unreasonable and in bad faith. (BLOG OBSERVATION—This same appellate court examined this probate code section in Leader v. Cords, a recent published decision reviewed in our March 24, 2010 post.)

     Beneficiary then challenged the award of fees to trustee. His due process challenge was rejected, because beneficiary’s own removal petition was brought under Probate Code section 15642 (which allows for fee recovery where a removal petition is filed in bad faith and removal would be contrary to the settlor’s intent) such that this gave beneficiary adequate notice that he could be subjected to fees as a losing party. Fees did not have to be demanded in a complaint or a petition outside of a default setting, with the noticed fee motion satisfying due process requirements. (Chinn v. KMR Property Mgt., 166 Cal.App.4^th 175, 194 (2008).)

     The lower court did not err in relying on some of beneficiary’s settlement correspondence as proof of bad faith, because settlement negotiations are admissible to show that a case was litigated for an improper purpose. (HMS Capital, Inc. v. Lawyers Title Co., 118 Cal.App.4^th 204, 219 (2004).)

     Beneficiary’s challenge to the amount of the fee award (which is not mentioned in the decision) did not go very far because (1) fees were unapportionable given the intertwinment of issues in both petitions, and (2) he forfeited the argument by only incorporating by reference arguments made in papers below rather than tender the arguments in his appellate briefs. (Paterno v. State of California, 74 Cal.App.4^th 68, 109 (1999).)

     BLOG UNDERVIEW—So, in this case, a good deed did not get punished. However, who originated the saying “No good deed goes unpunished”? Looks like the origin is unclear, with some saying it should be attributed to American financier John P. Grier, banker Andrew W. Mellon, director Billy Wilder, writer Oscar Wilde, writer Dorothy Parker, or the widely-quoted gossip columnist Walter Winchell. If there is a majority view of attribution for this saying, writer Clare Boothe Luce appears to be the winner. There you go!

Probate: Court Of Appeal Interprets Fee-Shifting Provision As Remedial, Reversing Denial Of Fees To Beneficiaries Under Probate Code Section 17211(b)

 

Appellate Court Faces First Impression Issue of Construing “Contests the Trustee’s Account” Language in Statute.

     Probate Code section 17211(b) gives discretion to award attorney’s fees to a trust beneficiary who “contests the trustee’s account,” if the court determines the trustee’s opposition to the contest was “without reasonable cause and in bad faith.” The Probate Court does not define “contests the trustee’s account,” and no prior published decision interpreted the phrase. That is, until the Fourth District, Division 1 yesterday issued Leader v. Cords, Case No. D055202 (4^th Dist., Div. 1 Mar. 23, 2010) (certified for publication).

Probate: Beneficiaries Were Not Awarded Attorney’s Fees Under Probate Code Section 17211(b)

Beneficiaries Did Get Fees From Trust “Common Fund” Doctrine, But Did Not Hit Trustee For Fee Recovery.

     Let us tell you, probate cases are tough and pit familial members at each other in bitter disputes. The next case is no different and shows how both lower/appellate courts labor with these difficult controversies.

     Two sisters, trust beneficiaries, did recoup their attorney’s fees under a “common fund” doctrine theory against the trust—a somewhat self-defeating exercise. Instead, they wanted to recover fees from ex-trustee brother personally, who was found to have conflicts of interest and to have breached his fiduciary duties as trustee. The trial court refused to assess fees against trustee personally, even though he was only allowed limited payment for his own attorneys’ work (with the rest charged against trustee’s beneficial interest in the trust). Sisters appealed the denial of their fees against brother in Cirillo v. Crooks, Case No. D054247 (4^th Dist., Div. 1 Mar. 2, 2010) (unpublished).

Probate: Court Of Appeal Reverses $5.2 Million Fee Awards To Former Trustee And His Attorneys in Beneficiary Self-Dealing/Conflict Litigation

Fourth District, Division 3 Finds That Fee Recordkeeping and Trust Litigation Expenses Must Be Scrutinzed Closely to Determine if Fees Were Reasonable and Appropriate From a Trust Benefitting Perspective.

     Donahue v. Donahue, Case Nos. G040628/G041503 (4^th Dist., Div. 3 Feb. 24, 2010) (certified for publication), is sure to be a widely cited opinion when it comes to adjudging the reasonableness of attorney’s fees requested by a trustee in trust litigation. It is a recent 3-0 decision authored by Justice Aronson of our local Court of Appeal.

Probate: Court-Appointed Attorney For Conservatee Can Be Paid Out Of Conservatorship Estate, But Fee Payment Order Reversed On Due Process Grounds

 

Second District, Division 3 Finds Lack of Hearing Notice and Failure to Stipulate to a Temporary Judge Required As Bases For Overturning Order.

     A commissioner awarded a court-appointed conservatee’s attorney fees of $9,170 payable out of the estate. Conservatee’s husband appealed the fee order, obtaining a reversal in Conservatorship of Davis, Case No. B214680 (2d Dist., Div. 3 Jan. 6, 2010) (unpublished).

     The Court of Appeal initially found that the probate court was empowered to appoint the conservatee’s attorney, whose fees could be ordered paid from the conservatorship estate unless the estate cannot bear the costs. (Prob. Code, § 1470(a)-(c).)

     However, a lack of due process drove the reversal in this case. Based on a local Los Angeles County rule, husband should have been given notice of the hearing, which was not done. Also, the temporary judge—a commissioner—is only authorized to act upon stipulation of the parties, meaning the commissioner could not make the order when husband was absent from the proceedings.

Probate: Spendthrift Trust Clause And Interlocutory Fee Challenge Did Not Dictate Reversal Of Fee Award

Fourth District, Division 1 Finds Appeal Premature in Lots of Respects.

     In Reedy v. Bussell, Case No. D054569 (4^th Dist., Div. 1 Jan. 6, 2010) (unpublished), trustee won an interlocutory judgment quieting title and ordering a partition by sale of a 131-acre ranch as against a trust beneficiary. The lower court awarded attorney’s fees in the partition action on an interim basis, but after a final judgment was entered as allowable by law. Beneficiary, feeling aggrieved, appealed.

     Judgment was affirmed, but on fairly technical bases.

First, beneficiary argued that a spendthrift provision in the trust prohibited creditors from enforcing any judgment against his interest in the trust. In a nice discussion of spendthrift trust provisions, the Court of Appeal found that it did not apply because this provision terminated so that this restriction was not in force—after all, the pertinent trust did terminate by its terms. Once a trust is terminated and trust corpus is distributed, a spendthrift provision has no application. Here, the trust terminated, so that the spendthrift provision terminated as well. (While a trust is in existence, a spendthrift provision only allows enforcement of certain creditor claims—child support and in other cases only 25% of the amount payable to the beneficiary after deducting support amounts. See Prob. Code, §§ 15305, 15306, 15306.5(b)-(c).)

     Second, beneficiary argued that the court erred in awarding fees in the interlocutory judgment. The problem here was that the challenge was premature, because the order only indicated fees were warranted as “allowed by law,” which meant the contention could be raised later following entry of a final judgment in the matter.

Marc And Mike’s Top Twenty Decisions For 2009

Part 1 of 2: First Ten Grouping—Nos. 11-20.

     As noted in an earlier post, we have accumulated our “top 20” attorney’s fees decisions, recognizing that we limit the list to published decisions and that the order reflects nothing about the importance of the decision. Rather, we try to survey decisions of interest in different areas of the substantive law based on all the decisions we have examined during 2009. Without further ado, here we go.

     YEARLY ROUNDUP

20. Crawford v. Astrue, 2009 WL 3617989 (9^th Cir. Nov. 4, 2009) (en banc)

Majority Author: Circuit Judge Fletcher; Concurring/Dissenting Author:

Circuit Judge Clifton; Dissenting Author: Circuit Judge Ben

     Attorneys representing Social Security disability insurance claimants are presumptively entitled to fee awards under their contingency arrangements; majority reversed magistrate reductions of awards to only 6.68-11.61% of past-due benefits award.

(See our November 5, 2009 post on this decision.)

19. Krug v. Maschmeier, 172 Cal.App.4^th 796 (lst Dist., Div. 4 Mar. 25, 2009)

Author: Presiding Justice Ruvolo

     Prevailing defendants in civil harassment actions can recover discretionary attorney’s fees even if the underlying action was not frivolous or was not brought in bad faith.

(See our March 25, 2009 post on this decision.)

18. Garcia v. Santana, 174 Cal.App.4^th 464 (2d Dist., Div. 7 May 28, 2009)

Majority Author: Justice Zelon; Concurring Author: Justice Woods;

Dissenting Author: Justice Jackson

     Financial condition of indigent litigant is a factor to consider in assessing fees to a prevailing party in a Davis-Stirling Act action.

(See our May 28, 2009 post on this decision.)

17. In re SNTL Corp., 571 F.3d 826 (9^th Cir. June 23, 2009)

Per Curiam Opinion

     Unsecured creditor’s request for postpetition-incurred contractual/statutory fees, arising from prepetition claim, is allowable.

(See our June 23, 2009 post on this decision.)

16. Biltmore Associates, LLC v. Twin City Fire Ins. Co., 572 F.3d 663 (9^th Cir.

July 10, 2009)

Author: Justice Kleinfield

     Attorney’s fees, if other than sanctions or if not awarded for trustee wrongdoing, can only be awarded against trustee in a representative capacity.

(See our July 10, 2009 post on this decision.)

15. Center For Biological Diversity v. Marina Point Development Co., 566 F.3d

794 (9^th Cir. May 14, 2009) (second amendment)

Majority Author: Circuit Judge Fernandez; Concurring Author: Circuit

Judge Rymer; Dissenting Author: Justice Kleinfield

     Attorney’s fees were properly awarded under the Endangered Species Act even though underlying controversy was moot; court will not review the merits determination, if moot, for purposes of testing the fees award; concurring opinion suggests that the U.S. Supreme Court may want to review the issue.

(See our March 28, 2009 post on this decision.)

14. Alan T.S., Jr. v. Superior Court, 172 Cal.App.4^th 238 (4^th Dist., Div. 3 Mar.

18, 2009)

Author: Presiding Justice Sills

     Interesting discussion of problems that plague the family law court system, made in the course of reversing awards for failure to consider the relevant “need” factors under Family Code sections 2030 and 2032.

(See our March 21, 2009 post on this decision.)

13. Ramon v. County of Santa Clara, 173 Cal.App.4^th 915 (6^th Dist. May 4, 2009)

Author: Acting Presiding Justice Mihara

     Plaintiff’s amicus curiae work in related action was proper basis for additional fee award under California Code of Civil Procedure section 1021.5 (the private attorney general statute).

(See our May 4, 2009 post on this decision.)

12. Law Offices of Andrew L. Ellis v. Yang, 178 Cal.App.4^th 869 (2d Dist., Div. 3

Oct. 27, 2009)

Author: Justice Aldrich

     Trial courts have discretion to award or deny anti-SLAPP attorney’s fees to defendants in cases where plaintiffs dismiss their actions without prejudice.

(See our October 28, 2009 post on this decision.)

11. Galleria Plus, Inc. v. Hanmi Bank, 2009 WL 3859491 (2d Dist., Div. 4

Nov. 19, 2009)

Author: Presiding Justice Epstein

     Code of Civil Procedure section 128.7 sanctions cannot be granted unless a prior, unfiled “safe harbor” motion has set a definitive hearing date in the motion sent to the opponent.

(See our November 20, 2009 post on this decision.)

Our next top 10 will follow shortly before the New Year. Happy Holidays to everyone.