Deadlines, Probate: Trustee Obtaining $285,363.10 Fee Award Against Beneficiary Who Brought Objections In Bad Faith Affirmed On Appeal

Probate Code Sections, Contractual Fee Provisions, And Equitable Powers Provided Fee Entitlement, With CRC 3.1702 Fee Motion Filing Deadlines Not Applicable To Probate Proceedings.

            In Rudnick v. Rudnick, Case No. F079105 (5^th Dist. Sept. 23, 2020) (unpublished), a beneficiary in a long-standing trust dispute withdrew objections to a final distribution/termination of the trust on the eve of a hearing.  The lower court determined the objections were in bad faith and, while an appeal was pending on that determination (ultimately affirmed), trustee brought a fee motion to recover $314,000 in fees under Probate Code section 17211(a) [a fee-shifting provision involving challenges to a trustee’s account activities which were made without reasonable cause and in bad faith], a contractual fees clause in a settlement agreement between the parties, and Probate Code section 1310(b) [equitable powers of the probate court to take actions to prevent loss or injury to property].  The probate court awarded $285,363.10 in fees and $5,167.52 in costs to trustee.  Aggrieved beneficiary appealed.

            The Fifth District, in a 3-0 opinion authored by Acting Justice Levy, affirmed.  All of the issues raised were legal in nature, and none of them bore fruit from beneficiary’s viewpoint.

            Appellant first argued that the lower court lacked jurisdiction to pass on fees because the prior appeal stayed any such determination, but caselaw was to the contrary.  (Bankes v. Lucas, 9 Cal.App.4^th 365, 368 (1992); Silver v. Gold, 211 Cal.App.3d 17, 26 (1989).)  There were three independent bases for fee entitlement:  section 17211(a), the settlement agreement fees clause, and the general equitable powers of the probate court.  Even though reasonable cause to object to a trustee’s account is a legal issue (Uzyel v. Kadisha, 188 Cal.App.4^th 866, 927 (2010)), the timing of the beneficiary’s withdrawal of objections in tandem with the meritless nature of them easily supported the lower court’s conclusion.  Appellant also contended that the fee motion was untimely based on failure to follow the CRC 3.1702 deadlines, but the problem there was that those deadlines do not apply to probate proceedings.  (Hollaway v. Edwards, 68 Cal.App.4^th 94, 97-99 (1998) [construing predecessor to rule 3.1702].)