Probate: Denial Of Attorneys’ Fees To Temporary De Facto Trustee Who Successfully Defeated Breach Of Fiduciary Claims Affirmed On Appeal

No Authority Entitling De Facto Trustees To Same Reimbursement Remedies As Designated Trustees.   

            In Sonntag v. Franz, Case No. A161466 (1^st Dist., Div. 1 December 16, 2021) (unpublished), defendant who temporarily acted as a de facto trustee sought attorneys’ fees and costs after successfully defeating breach of fiduciary duty claims brought by two of her siblings/trust beneficiaries.  Defendant claimed entitlement based on the trial court’s finding that she was the de facto trustee for six months. Although the trial court awarded defendant costs as the prevailing party, it denied her motion for fees.  The 1/1 DCA affirmed.

            Defendant argued on appeal that public policy supports the mutuality of remedies as it pertains to a de facto trustee – thereby entitling her to reimbursement for successful defense costs just as an appointed trustee would be – but provided no authority to support her contention.  In fact, the appellate panel was able to find only one case awarding fees against a trust to the de facto trustees – an Indiana case where the de facto trustees had been appointed by the U.S. District Court and had acted and been recognized as such for seven years before the 7^th Circuit Court of Appeals concluded the District Court had no jurisdiction to appoint trustees or administer the trust. (Gray v. Union Trust Co. (1938) 213 Ind. 675, 678; 14 N.E.2d 532.) However, that was a very different situation.  Here, as the panel observed, defendant was under no obligation to incur expenses on behalf of the trust. Rather, she should have looked to the designated trustee, who had requested she temporarily perform trustee duties on his behalf, to defend the trust against the siblings’ claims.