Probate, Section 1717: Prevailing Trustee Lost Bid Against Sister Beneficiary Because Sister’s Trustee Removal Petition Was Not Brought In Bad Faith And No Contract Provided Fee Entitlement Basis Against Sister Under Civil Code Section 1717

Probate Code Section 15642(d) Was Other Fee Entitlement Basis, But Rejected Below.

            In Meyers v. Meyers, Case No. A154912 (1^st Dist., Div. 5 May 23, 2019) (unpublished), two sisters—one of which was trustee and other of which a beneficiary along with the trustee sister—got entangled in a battle when trustee sold a property to a third party in order to pay for trustor mother’s care.  Beneficiary lost her bid to remove trustee sister and the quiet title action as to the property sale was resolved against trustee sister and the property’s current owner.  Trustee moved to recover attorney’s fees against losing sister on two bases:  (1) Probate Code section 15642(d), authorizing entitlement to fees where a petition for removal of a trustee is filed in bad faith; and (2) Civil Code section 1717, based on fees clauses in the real estate contracts between trustee-prior buyer and then prior buyer-current property owner.

            The trial court denied trustee’s request for fees under either basis.

            The 1/5 DCA affirmed.  The problem with the trustee removal fee entitlement provision was that the lower court found the removal petition was not filed in bad faith, which was a factual conclusion reviewed under an abuse of discretion (and there was no such abuse based on the record).  The flaw in the section 1717 request was that beneficiary was not a party to either real estate sales agreement because she was not trustee, and the quiet title action was not “on the contract” as it had to be.  The quiet title also was based on trust documents, not the contracts transferring the property.