Probate: Attorney Fees And Costs Awarded Under § 17211(b) Against Trustee, Who Opposed Petition For An Accounting, Affirmed On Appeal – Along With Denial Of Trustee’s Request For Fees Under § 15684

Trustee’s Opposition To Remainder Beneficiaries’ Petition For An Accounting Was Without Reasonable Cause And Was In Bad Faith.

            Trust beneficiaries normally – even if they prevail – pay their own attorney fees when challenging a trustee’s conduct.  However, as the saying goes, there is an exception to every rule. Pursuant to Prob. Code § 17211(b), “If a beneficiary contests the trustee’s account and the court determines that the trustee’s opposition to the contest was without reasonable cause and in bad faith, the court may award the contestant the costs of the contestant and other expenses and costs of litigation, including attorney’s fees, incurred to contest the account. The amount awarded shall be a charge against the compensation or other interest of the trustee in the trust. The trustee shall be personally liable and on the bond, if any, for any amount that remains unsatisfied.”

            In Enderle v. Enderle, Case No. G058326 (4^th Dist., Div. 3 June 29, 2021) (unpublished), a remainder beneficiary of a multigenerational irrevocable trust petitioned to compel his trustee uncle to provide an accounting, and the uncle opposed – arguing nephew, as a remainder beneficiary, was not entitled to an accounting because Prob. Code § 16061 references only beneficiaries. The trial court disagreed – citing Esslinger v. Cummins, 144 Cal.App.4^th 517, 525 (2006), which holds that a remainder beneficiary may request an accounting under § 16061 and then petition the trial court for an accounting if the trustee does not comply within 60 days. Additionally, the trial court granted nephew’s request for fees and costs under § 17211(b) – finding trustee uncle had acted without reasonable cause and in bad faith in refusing to provide nephew with an accounting. This result was affirmed on appeal. Section 17211 is not a prevailing party statute, and the determining factor for awarding fees/costs for uncle’s refusal to provide an accounting was whether that refusal was made in bad faith.

            Additionally, the 4/3 DCA, in a 3-0 opinion authored by Justice Goethals, affirmed the trial court’s denial of trustee uncle’s request for fees under § 15684. Because uncle’s refusal to provide an accounting was without reasonable cause, the attorney fees uncle incurred in defending that refusal were not “incurred in the administration of the trust,” nor as a benefit to the trust, under § 15684.