CALIFORNIA ATTORNEY'S FEES

Costs, Deadlines, Probate, Reasonableness Of Fees, Special Fee Shifting Statutes: $175,252.50 Fee Award Under Financial Elder Abuse Statute Affirmed On Appeal

Fee Request Reduced Down From $203,865; Two Awarded Routine Costs Components Remanded For A Further Hearing.

               In Thompson v. Ito, Case No. G061437 (4^th Dist., Div. 3 June 12, 2024) (unpublished), a defendant losing a trust undue influence case and determined to have committed financial elder abuse was hit with an adverse attorney’s fees award of $175,252.50 out of a requested $203,865 (reductions made based on excessive hourly rates, clerical work, and some discovery work not allowed by the lower court).  The award was made under Welfare & Institutions Code section 15657.5, providing that a fee award is mandatory where financial elder abuse is found.  The lower court also awarded the full costs request of $27,961.07 to the winning plaintiff. 

               Defendant’s appeal was mainly unsuccessful except for a remand to have a further hearing on two components of the costs award.

The argument that no attorney’s fees could be awarded while a merits appeal was pending (with the financial elder abuse findings affirmed earlier) lacked merit because the issue was a collateral matter not embraced within the merits judgment.  (Bankes v. Lucas, 9 Cal.App.4^th 365, 369 (1992), superseded by statute on other grounds; Korchemny v. Piterman, 68 Cal.App.5^th 1032, 1052 (2021).)

               Fees were mandatory against a party found to have committed financial elder abuse, so no “prevailing party” analysis was necessary.

               The fee award was no abuse of discretion, given that the lower court did reduce the request, that appellant raised new arguments on appeal (with those challenges forfeited), and that appellant failed to specify which block-billed entries should be disallowed.

               With respect to the costs award, appellant did not file a motion to tax costs, but the lower court did not err in allowing entertainment of his fee opposition challenges to costs.  Two components, the award of lodging and parking costs (which are discretionary items to be allowed or disallowed) for one person—totaling $2,468.67—was reversed and remanded because it was unclear the role of the claiming person in the case.  However, because the costs claimant would be given the opportunity to meet this objection, the matter was remanded to have a hearing on these two costs components only.

               Justice Motoike authored the 3-0 unpublished opinion.

Probate, Section 998: No Matter Whether Probate Code Provisions Or CCP § 998 Applied. Lower Court Properly Granted Expert Witness Fees To Attorney Who Winded Down Deceased Attorney Friend’s Practice In Fee Division Battle With Friend’s Administrator

In Dicta, Appellate Court Suggested 998 Offers May Not Be Barred In Probate Litigation.

               Estate of Howell, Case No. D081920 (4^th Dist., Div. 1 May 23, 2024) (unpublished) is interesting reading for probate practitioners.

               This case involved a battle over attorney fee compensation to be divided between the administrator wife of a deceased attorney and another attorney (who was a friend of the deceased attorney and appointed to wind down the law practice).  That latter attorney brought significant fees into the practice being wound down.  The attorney sent a CCP § 998 offer to administrator wife to the tune of $300,000, which was not accepted.  The matter proceeded to trial, with the attorney getting $872,914 and with wife obtaining $237,428.  Attorney used a forensic accountant expert who the lower court found very helpful in establishing the court’s division of fee compensation, later awarding $53,240.80 in expert witness fees to the attorney.  Wife appealed the postjudgment expert witness fee order.

               The 4/1 DCA affirmed.  It found the lower court had discretion to award the expert fees under Probate Code sections 1000 and 1002.  However, the panel then stated that it did not believe that CCP § 998 offers were barred in probate litigation, so that was another ground on which to affirm—even though it did not have to determine if section 1002 superseded “the constellation” of CCP §§ 1032, 1033.5, and 998 or whether the CCP governs in the absence of more Probate Code specificity.  The expert fee award was no abuse of discretion no matter which analytical path was chosen.

               BLOG UNDERVIEW—For those interested in this area, see our December 4, 2023 post on Peccia v. Guerrero, an unpublished opinion suggesting that section 1002 does supersede CCP §§ 1032, 1033.5 (although section 998 was not at issue).

Costs, Probate: Probate Code Section 1002 Takes Precedence Over General CCP § 1032(b) Prevailing Party Provisions

Probate Court Has Discretion To Determine Whether Costs Should Be Awarded, Who Should Pay Them, And Who Should Recover Them.

            Peccia v. Guerrero, Case No. B316614 (2d Dist., Div. 3 Dec. 4, 2023) (unpublished) is an opinion reminding practitioners that specific Probate Code provisions may take precedence over more general CCP prevailing party statutory provisions.

            In this case, petitioners and respondents got involved in probate disputes involving two different subtrusts, with each side partially prevailing on certain claims relating to the different subtrusts.  The lower court determined that no attorney’s fees or costs should be awarded to either side.  One of the petitioners appealed, but he did not obtain a change in result.

Under Probate Code section 1000(a), the “rules of practice applicable to civil actions” apply to proceedings under the Probate Code, “[e]xcept to the extent that this code provides applicable rules.” Section 1002 provides: “Unless it is otherwise provided by this code or by rules adopted by the Judicial Council, either the superior court or the court on appeal may, in its discretion, order costs to be paid by any party to the proceedings, or out of the assets of the estate, as justice may require.”  Case law holds that, notwithstanding CCP § 1032(b) mandatory prevailing party costs provisions generally applicable, the probate court has specialized discretion to determine whether costs should be awarded, who pays them, and who recovers them.  (Hollaway v. Edwards, 68 Cal.App.4^th 94, 99 (1998).)  In this instance, given partially prevailing parties on both sides of the “litigation coin,” the probate court did not abuse its discretion in not awarding CCP prevailing party costs to appellant.

Prevailing Party, Probate: $61,557 Fee Award To Removed Trustee For His Attorney’s Work On Trust Petition Affirmed On Appeal

Trustee and Challenging Beneficiaries Got Mixed Results, So Trustee Entitled To Fees, Inclusive Of “Fees On Fees.”

            In Farnocchia v. Harms, Case No. A164639 (1^st Dist., Div. 1 Nov. 29, 2023) (unpublished), two beneficiaries of a trust filed a petition to remove Harms as trustee, for an accounting, and for breach of fiduciary duty.  Although trustee was removed and provided asset documentation acceptable to the beneficiaries, the petition was resolved by a stipulation through which the asset information was deemed adequate, and no finding of fiduciary duty breach was made.  The lower court then granted trustee’s attorney’s fees in the amount of $61,557 for the work of the attorney helping trustee reach the stipulation resolving the petition, including “fees on fees” on the fee entitlement issue.  Beneficiaries appealed the order, but it was affirmed on appeal.

            Initially, the Court of Appeal provided a nice review of the situations giving rise to fee entitlement under these circumstances.  “In People ex rel. Harris v. Shine (2017) 16 Cal.App.5th 524, our colleagues in Division Five summarized when such fees are appropriate:

“ ‘ “The underlying principle which guides the court in allowing costs and attorneys’ fees incidental to litigation out of a trust estate is that such litigation is a benefit and a service to the trust,” ’ and not for the personal benefit of the trustee. [Citation.] Courts have found a trustee’s legal services were for the benefit of the trust, and thus payable from trust funds, where the attorneys helped prepare an accounting [citation]; successfully defended an accounting [citation]; litigated to preserve trust assets [citation]; successfully defended against a petition to invalidate the trust [citation]; or successfully defended against a petition to remove or surcharge the trustee [citation].

“Fee awards have been denied or reduced where the attorneys helped prepare an inaccurate accounting [citation]; unsuccessfully defended an accounting [citation]; or unsuccessfully defended a petition to remove or surcharge the trustee [citation]. Where the results of such proceedings were mixed, courts have either awarded fees based on the trustee’s overall success in the proceeding [citation] or apportioned fees according to the trustee’s success [citation]. [¶] Fee awards have also been found inappropriate where the trustee acts from personal interest or motive. [Citations.]

“In short, the costs of a successful defense to a removal or surcharge petition are generally chargeable against the trust even though the trustee personally benefits as a result. [Citation.] However, a trustee is not entitled to indemnity for fees incurred in an unsuccessful defense of such a petition absent an additional showing that ‘the trustee subjectively believed that the expense was necessary or appropriate to carry out the purpose of the trust and that belief was objectively reasonable.’ ” (Id. at pp. 534–535.)

            The appellate court found that beneficiaries were not necessarily the prevailing party because although they got Harms removed as trustee and obtained asset information, the trustee did successfully defend against the accounting challenges, and no breach of fiduciary findings were made.  This mixed result allowed recoverable compensation for the work of trustee’s attorneys in reaching a stipulation with respect to beneficiaries’ petition.  Furthermore, trustee was entitled to “fees on fees” in demonstrating fee entitlement before the lower court.  (Estate of Griffith, 97 Cal.App.2d 651, 656 (1950).)

Laffey Matrix, Probate, Reasonableness Of Fees: Probate Court Properly Lowered Requested Attorney’s Fees For Trust Work Based On Its Knowledge And Experience

Lower Court Did Not Have to Credit The Laffey Matrix.

            Melbostad v. Kasales, Case No. A165361 (1^st Dist., Div. 3 June 16, 2023) (unpublished) demonstrates how, in California state court cases, a trial court is able to draw upon its own knowledge and experience in determining a reasonable lodestar hourly rate and in determining the reasonableness of overall fees to be awarded.

            What happened in this matter was that an attorney providing both trustee and attorney fee work waived any compensation for trustee work under Probate Code section 15687(b), claiming entitlement for $163,061.82 in attorney’s fees work for a trust.  The lower court, based on its knowledge and experience in the area, reduced the claimed $525 hourly rate to $465 and found a substantial portion of the requested hours related to waived trustee compensation, such that $48,681 should be the fee award. 

            The appellate court affirmed.  Appellant’s argument that trustee’s compensation factors should be applied to a trust attorney’s fee compensation determination was unsupported by authority.  With respect to the hourly rate, the lower court did not have to follow the Laffey Matrix rates but, instead, could rely on its knowledge and experience of what a reasonable hourly rate should be in the probate area.

Allocation, Probate: $441,295.63 Fee Award Under Probate Code Section 859, Which Incorporates Mandatory Elder Abuse Fee Shifting, Affirmed Against Removed Trustee On Appeal

No Apportionment Required Because Elder Abuse and Fiduciary Duty Breach Claims Were Intertwined.

            In Keading v. Keading, Case No. A153628 (1^st Dist., Div. 3 Apr. 28, 2023) (unpublished), a beneficiary successfully obtained an elder abuse finding and successfully removed a trustee under Probate Code section 850, which allows a probate judge under related Probate Code section 859 to award reasonable attorney’s fees to the prevailing party (mandatory under the elder abuse fee shifting statute but discretionary on other claims).  The prevailing beneficiary moved for $598,158.93 in fees under the elder abuse statute, arguing no apportionment was necessary because elder abuse and fiduciary breach claims were intertwined, and asking for a 1.75 multiplier.  The lower court, after making downward adjustments for duplication (two attorneys at trial) and excessive hourly rates, awarded $441,295.63 in fees under the elder abuse fee shifting statute, inclusive of a 1.25 multiplier.

            Removed trustee was miffed, appealing the fee order.  The order was affirmed on appeal.

            No apportionment was necessary because there was a common nucleus of facts between the elder abuse and fiduciary breach claims.  Appellant argued that an evidentiary hearing on the fee request should have been held, but the appellate court agreed that the facial request was reasonable, everyone got to support their respective positions on the fee request, and the probate judge did reduce the fee request.  Fee award affirmed.

Probate: Trustee Defending Against Invalidity and Undue Influence Claims By A Beneficiary Was Not Entitled To Attorney’s Fees Reimbursement

Trustee Had To Stay Neutral, Not Taking the Position Of One Beneficiary Or The Other In Non-Neutral Fashion.

            In Zahnleuter v. Mueller, Case No. C093909 (3d Dist. Mar. 7, 2023 published, originally issued as an unpublished opinion on Feb. 9, 2023), a trustee sought reimbursement for attorney’s fees in defending the validity of a third amendment to a trust and undue influence claims by certain beneficiaries from the trust (trustee had to bear the entire $201,164.15 in fees, surcharged against his interest in trust assets).  The lower court denied the fees, deciding that the dispute relating to the third amendment was not allowed as reimbursable under the trust documents and was not allowable because trustee was taking a non-neutral position by representing one beneficiary’s position in relation to the third amendment over the position vis-à-vis other beneficiaries.

            The Third District affirmed.  The trustee’s fee expenditures did not benefit the trust, rather than the trustee as far as taking sides with a beneficiary as far as the third amendment was concerned.  In that regard, the trustee must look to the beneficiary whose interest the trustee is vetting to recover fees.  (Whittlesey v. Atello, 104 Cal.App.th 1221, 1227-1231 (2002); Terry v. Conlan. 131 Cal.App.4^th 1445, 1462-1464 (2005).)  The main controversy was not a challenge to the existence of the trust, but who would control and benefit from it.  Trustee was not being neutral in the dispute, bolstered by the fact the third amendment itself indicated that the trustee was not authorized to defend the third amendment at the expense of the trust estate. 

Probate: Feuding Co-Trustees Properly Awarded Fees Based On Not Providing Complete Accounting Disclosures

Awards Of Probate Fees And Costs, Which Are Equitable In Nature, Are Hard To Overturn.

             In Healy v. Donnelly, Case Nos. G060968 et al. (4^th Dist., Div. 3 Jan. 17, 2023) (unpublished), co-trustees got into various trust accounting disputes, eventually settling on the eve of trial and agreeing that the probate judge could entertain motions for attorney’s fees and costs.  Co-trustee Healy sought $116,097.90 in fees and $6,697.89 in costs, but the probate court only awarded $49,492.50 in fees.  Co-trustee Donnelly sought $211,471.25 in fees and $9,256.90 in costs, all of which were awarded.  Both sides appealed, claiming they did not get enough in fees or fees should not have been awarded at all.

            The 4/3 DCA, in an opinion authored by Acting Presiding Justice Moore, affirmed all the orders.  Both co-trustees had accounting disclosure issues, although co-trustee Healy had more given how he exacerbated the litigation and was even more at blame for not providing a complete accounting as to Trust B.  The lesson here is that probate fee/costs awards are equitable in nature, with it being hard to overturn how a probate judge viewed things as far as ultimately awarding fees and costs when acrimonious proceedings are involved.

Probate: $170,095 Attorney’s Fees Award Against Decedent’s Son Under Probate Code Section 859 And Attorney’s Fees Surcharged Against The Trust Under Section 15684 Affirmed On Appeal

Son Wrongfully Obtained Decedent’s Personal Property And Sought A Greek House Which Was Found To Belong To The Overall Estate.

            The Probate Code has many fee-shifting provisions, most of which are discretionary.  They provide great leeway to the probate court in fashioning an award, given that the probate court is one of equity to safeguard estates and trusts.

            Appellant in Sehremelis v. Sehremelis, Case Nos. G059941 et al. (4^th Dist., Div. 3 Dec. 2, 2022) (unpublished) learned the sting of one of the fee-shifting provisions.  He was found to have in bad faith wrongfully taken some personal property of his deceased father under the Probate Code section 859 when the co-executors/successor co-trustee’s of father’s will/trust petitioned to get damages for these actions, with section 859 having a discretionary fee-shifting provision for the benefit of the prevailing party.  The probate court awarded $170,095 in section 859 fees to co-executors and against decedent’s son.  Also, they petitioned to offset son’s inheritance share for his interest in a Greek house, a petition which was denied but with the fees incurred to bring it surcharged against the trust. 

            Son appealed both fee rulings, but they were affirmed by the 4/3 DCA.  Section 859 certainly allowed for imposition of fees, and Greek litigation resulting in a judicial escrow for the personal property did not alter the result.  With respect to the Greek house petition, trustees were attempting to offset son’s interest in the house against his inheritance, which would have benefitted the trust.   Although unsuccessful, those fees can be charged against the trust in the lower court’s discretion under Probate Code section 15684, subdivision (b).

Deadlines, Probate: $212,089.25 In Fees To Sole Trust Beneficiary Under Probate Code Section 8804(c) Was Sustained Under Law Of The Case Doctrine

Also, Fee Motion Was Timely Filed Based On Notice of Entry of Judgment Containing Two Documents Comprising The Judgment.

            In Karamooz v. Karamooz, Case No. G060515 (4^th Dist., Div. 3 Nov. 14, 2022) (unpublished), authored by Justice Moore, sole trust beneficiary earlier had obtained a $212,089.25 attorney’s fees award under Probate Code section 8804(c), a determination affirmed by the appellate court in a prior opinion.  Section 8804(c) allows a court to award fees when a personal representative of an estate is removed for refusing or negligently failing to timely file an inventory and appraisal.  Personal representative appealed the fee award, but to no avail.

            First, the earlier appellate opinion was law of the case on the propriety of the fee award.  Beyond that, there was no requirement under the statutory provision that beneficiary had to show damage to the estate as an additional requirement. 

            Appellant also argued the motion was untimely, but that argument lacked merit because the judgment was comprised of two documents such that the clerk’s service of one did not start the clock ticking.  Instead, it only started when beneficiary served notice of entry of both documents, with the fee motion being timely from that date. 

Laffey Matrix, Probate, Sanctions, SLAPP: Lower Court Did Not Err In Fixing SLAPP Defense Fees In Two Defendants’ Favor

Also, A Probate Court Properly Sanctioned Attorney For Violating Local Rule Page Limitations.

            In Tukes v. Richard, Case Nos. B307242 et al. (2d Dist., Div. 8 July 12, 2022) (published), plaintiff lost SLAPP motions against two defendants, with the lower court awarding mandatory prevailing party fees of $49,071.50 and $26,905, respectively, after making some downward adjustments for duplicative work by the firms representing different defendants.  Also, a litigant’s counsel was sanctioned $4,000 (out of a requested $8,085) for failing to comply with local rule page limitations in filing certain pleadings.  Different appeals were taken, but these two results were affirmed.

            As to the SLAPP fees, here were the takeaways: (1) fees expended in monitoring another action are compensable when necessary to prosecute the SLAPP motion; (2) prevailing on a standing issue does mean that a defendant prevailed for SLAPP fee recovery purposes; and (3) a trial court has discretion to use the Laffey Matrix when it comes to establishing attorneys’ reasonable hourly rates in California state courts even though some courts decline to utilize it (Syers Properties III, Inc. v. Rankin, 236 Cal.App.4^th 691, 702 (2014)).

            On the sanctions order, California Rule of Court, rule 2.30 does authorize a probate court to impose sanctions for failure to comply with applicable rules without good cause, including an award of “fees on fees” for bringing the sanctions motion.  The award was no abuse of discretion under the circumstances.

            BLOG OBSERVATION—Appellant on the fees awards misquoted and mischaracterized attorney declarations on appeal, which we believe led to a loss of credibility before the panel—which only gently chided Appellant on this transgression.

Probate, Sanctions: Sanctions Issued Against Beneficiary Contesting Trustee’s Account, Which Included $72,699 In Attorneys’ Fees, Affirmed On Appeal

Appellant’s Conclusionary Statements Were Not Sufficient To Meet Appellant’s Burden To Overcome Deferential Substantial Evidence Standard On Appeal.

            This next case provides a cautionary tale and affirms what we’ve said before – fee shifting statutes can be a real game changer.

            Appellant in Cavanagh v. Cavanagh, Case Nos. B294140/B299039 (2d Dist., Div. 6 April 18, 2022) (unpublished) incurred an alleged $105,021.48 in sanctions, which included $72,699 in attorneys’ fees, pursuant to Probate Code § 17211(a) – which allows for an award of the compensation and costs of the trustee and other expenses and costs of litigation, including attorney’s fees, against a beneficiary contesting the trustee’s account if the probate court determines that the contest was without reasonable cause and in bad faith.

            Appellant argued that the probate court did not have the authority to award sanctions because he did not contest Trustee’s account within the meaning of section 17211(a), but the appellate panel found the argument to be without merit based on appellant’s written objections to Trustee’s first draft account.  Appellant’s additional arguments – that he had not acted without reasonable cause and in bad faith, and that he had no reasonable alternative but to object – also went nowhere.  Determination as to reasonable cause – where the facts are disputed as they were in this case – and bad faith is made under the deferential substantial evidence standard.  As such, appellant had the burden of affirmatively showing that the record did not contain substantial evidence supporting the probate court’s findings.  (Denham v. Superior Court, 2 Cal.3d 557, 564 (1970).) However, appellant instead relied on conclusionary statements to prove his case on appeal.  Finally, as to appellant’s claim that he had no alternative but to object to Trustee’s account, he failed to show that Trustee’s account was facially defective.  In addition to the six-figure sanction award imposed on appellant, the 2/6 DCA also awarded Trustee his costs on appeal.

Probate: Award Of Fees To Trustee’s Attorneys Was No Abuse Of Discretion Where They Were California Bar Members, But Their Law Firm Was Not California Registered

Disqualification Based On Law Firm Registration Would Be Too Harsh.

            In Johnson v. Johnson, Case Nos. C090195/ C090522 (3d Dist. Dec. 27, 2021) (unpublished), trustee’s attorneys were awarded fees for beneficiaries making a bad faith contest of accountings.  On appeal, the aggrieved parties argued that the fee award was improper because the law firm for the winning attorneys was not registered in California.  That was true, but the individual attorneys were California state bar members, good enough to make an award justifiable.  (See Frye v. Tenderloin Housing Clinic, Inc., 38 Cal.4th 23, 48-50 (2006) [concluding that requiring disgorgement of fees by non-profit defendant because of failure to register is disproportionate to the wrong and “would constitute a totally unwarranted windfall” to plaintiff]; Olson v. Cohen, 106 Cal.App.4th 1205, 1215 (2003) [“To require disgorgement of fees because of a failure to register the corporation . . . is disproportionate to the wrong”].)

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.

Appealability, Probate, Reasonableness Of Fees: Trustee’s Failure to Appeal Prior Separately Appealable Order On Fees Was Dispositive On Most Issues

As Far As Amount Of Fees, Failure To Include A Reporter’s Transcript Was Equally Damning.

            In Padlan v. Graves, Case No. A159576 (1^st Dist., Div. 3 Sept. 17, 2021) (unpublished), a trustee was ordered to pay certain attorney’s fees to a beneficiary based on reneging on a mediation settlement agreement.  That order was made in March 2019 and served by the trial court within 60 days.  Trustee did not appeal it.  Later, in a December 2019, the lower court refused to revisit the March 2019 fee orders, although this December 2019 order was appealed by trustee.  The 1/3 DCA decided that much of the fee challenges could not be entertained because trustee did not mention the March 2019 in her appeal of the December 2019 order and, also, the March 2019 order was separately appealable under Probate Code section 1300(g) relating to fixing of fees as it relates to a fiduciary.  With respect to the amount of the fees, that too failed because trustee failed to provide a reporter’s transcript as part of the record so as to show whether there was any abuse of discretion as far as amounts awarded. 

Probate: Attorney’s Fees Made Payable By The Trust For Trustee Beating Back Misconduct/Malfeasance Claims As To Trustee’s Accountings Were Proper

Broad Equitable Powers Of The Probate Court So Allowed, Even Though Section 17211(a) Was Denied As A Fee Entitlement Basis.

            In Key v. Tyler, Case No. B298739 (2d Dist., Div. 2 Aug. 30, 2021) (unpublished), trustee successfully defended accountings from charges of misconduct, self-dealing, and malfeasance as brought by a sister beneficiary of a family trust.  The lower court awarded fees to the trustee for prevailing, payable out of the trust, finding subjective bad faith but not that the objection lacked reasonableness—expressly denying fees under Probate Code section 17211(a), a fee-shifting provision we have discussed often as relating to accountings in our “Probate” category.

            The appellate court affirmed.  Beneficiary argued that there was no fee entitlement based on the denial of fees under the statutory provision, but fee entitlement can be based on the probate court’s broad equitable powers to administer the trust.  (Pizarro v. Reynoso, 10 Cal.App.5^th 172, 183 (2017.)  Also, the record showed that the trust was benefitted by putting to bed trustee malfeasance allegations, such that the benefit did not only flow to the trustee. 

Probate: Routine And Extraordinary Probate Attorney’s Fees Are Normally Payable Out Of The Estate

Appellate Court Rejected Ordering That Payment Of Fees And Costs Should Come From Personal Representative’s Attorney.

            In the probate area, Estate of Anderson, Case No. A161729 (1^st Dist., Div. 1 Aug. 17, 2021) (unpublished) confirms the general rule that routine and extraordinary probate attorney’s fees are normally payable out of the probate estate.  These expenses are not a personal charge against the executor, much less the executor’s attorney.  (Estate of Wong, 207 Cal.App.4^th 365, 375 (2012); Miller v. Campbell, Warburton, Fitzsimmons, Smith, Mendel & Pastore, 162 Cal.App.4^th 1331, 1339 (2008).)  

Probate, SLAPP: Trial Court SLAPPING Trustee/Joining Beneficiary’s Disinheritance (No Contest Clause) Petition Properly Granted $13,889 In SLAPP Fees Against Trustee/Joining Beneficiary In Their Individual Capacities

CCP § 1026 Was The Governing Costs Allocation Statute Regarding SLAPP Fee Award.

            Although this case is must reading for probate practitioners on the scope of actions for which “no contest” clauses encompass, Cadena v. Vose, Case No. F080428 (5^th Dist. July 28, 2021) (unpublished) shows how fees awardable under the SLAPP statute can be allocated under the probate code statutory scheme.

            In this case, two beneficiaries filed a petition challenging a settlor/prior trustee’s unilateral trust amendment after the death of his wife and filed a complementary civil court partition action, which triggered the current trustee (who was the prime beneficiary of asset distributions based on the unilateral trust amendments) and a joining beneficiary to strike back by filing a disinheritance petition based on a trust “no contest” clause.  The lower court granted the two beneficiary’s SLAPP motion as to the disinheritance petition, finding that the beneficiary’s actions were protected activity and the disinheritance petition was not likely to be meritorious.  The probate judge also assessed SLAPP fees against losing trustee/joining party, jointly and severally, in their individual capacities, to the tune of $13,889.  The losing parties appealed.

            The Fifth District affirmed.  The main appellate argument was that the probate court should have allocated the fee award (which is a “costs”) under CCP § 1026, which requires bad faith before it can be allocated against a trustee.  The reviewing panel disagreed, finding that Probate Code section 1002, a more liberal provision, controlled over section 1026.  In turn, section 1026 gives the trial judge wide discretion to allocate costs as he or she deems appropriate.  In this case, the record did bear out that trustee was acting to protect her personal interests as beneficiary, such that the costs allocation against her as an individual was justified.  The appellate court also remanded because the winning parties were entitled to fees on appeal under the SLAPP statute.

Probate: Beneficiary Successfully Defeating Settlement Agreement Based On Subject Matter Jurisdiction Argument Improperly Denied A Request For Fees

Any Argument Was Circular—Subject Matter Jurisdiction Win Did Not Mean Fee Request Evaporated, So A Remand Was In Order.

            A beneficiary won a successful defense to a trustee’s effort to enforce a settlement agreement on the basis that the probate court lacked subject matter jurisdiction to enforce that agreement, but the beneficiary was denied fees in Dunlevie v. Valletta, Case Nos. E072846 et al. (4^th Dist., Div. 2 July 7, 2021) (unpublished).  The appellate court reversed because the beneficiary win on the subject matter jurisdiction did provide a basis for an award of fees (because they did prevail, and that argument did not divest the probate court of ability to award fees).  Remanded for another try!

Probate, Section 1717: Section 1717 Prevailing Party Attorney Fees Of $84,402 Awarded To Plaintiff Pursuant To Trust’s No-Contest Clause Reversed On Appeal

No Basis For Fees Under No-Contest Clause Because Trust And Its Terms Were Not Contested, And Plaintiff Forfeited Argument For Fees Under Prob. Code § 17211(b) By Not Raising It Below.

            In Haley v. Konatich, Case No. A160725 (1^st Dist., Div. 2 June 29, 2021) (unpublished), three siblings were the beneficiaries of their late mother’s Trust. After the sister died, her husband – as executor of sister’s estate – sued the two brothers, and a related LLC controlled by the brothers, for his late wife’s share of the distributable trust estate. After prevailing against the brother who was the trustee of the mother’s estate, husband successfully moved to recover § 1717 attorney fees under a no-contest clause of the Trust – with the trial court awarding husband $84,402 against trustee brother, both individually and in his capacity as trustee, and against the related LLC.

            The 1/2 DCA reversed. As relevant in this case, a no-contest clause “shall only be enforced against . . . [a] direct contest that is brought without probable cause.” (Prob. Code § 21311(a)(1).) Pursuant to § 21310(b), a direct contest is narrowly defined as “a contest that alleges the invalidity of a protected instrument or one or more of its terms, based on one or more of the following grounds”: forgery; lack of due execution; lack of capacity; menace, duress, fraud, or undue influence; and/or revocation of a will pursuant to § 6120, revocation of a trust pursuant to § 15401, or revocation of an instrument other than a will or trust pursuant to the procedure for revocation that is provided by statute or by the instrument. As husband acknowledged, his lawsuit was not a contest of the Trust’s terms, but an effort to enforce the Trust. Trustee brother also did not contest the Trust or its terms. Rather, this dispute was ultimately over the interpretation of the Trust as a whole – with trustee brother being found by the trial court to be in breach of his fiduciary duty as to his sister.  Because there was no contest of or attack on the Trust or its terms, there was no basis to award legal fees under the Trust’s no-contest clause.

            Additionally, the panel declined consideration of husband’s argument that he was entitled to fees under Prob. Code § 17211(b) – which allows a trial court to award fees where a beneficiary contests the trustee’s account and the trustee opposes the contest without reasonable cause and in bad faith – because husband forfeited the argument by not raising it below.

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.

Appeal Sanctions, Probate: 4/1 DCA Grants Brothers’ Request For $25,087.91 In Appeal Sanctions Against Sisters And Orders Sisters To Pay Additional $8,500 Sanction To The Clerk Of The Court

Sisters Were Previously Found To Be “Vexatious Litigants” Under Code Civ. Proc. § 391(b), Forfeited Claims On Appeal By Failing To Raise Them In The Trial Court And Failing To Follow Appellate Procedures, And Sought To Relitigate Claims Previously Decided By The Appellate Panel.

            Family members were involved in disputes over their deceased mother’s estate – with two sisters on one side, who were previously found to be "vexatious litigants" under Code Civ. Proc. § 391(b), and two brothers on the other – in Estate of Schooler, Case No. D076490 (4^th Dist., Div. 1 June 28, 2021) (unpublished). 

            In what was Sisters’ approximate 29^th action before the 4/1 DCA, involving family trusts and/or their mother’s estate, Sisters attempted to appeal claims and issues that had previously been decided against them by the appellate panel.  Additionally, Sisters' opening brief did not “include a fair and accurate factual and procedural summary to support their arguments,” contained little or no citation to the record – nor, in most instances, any legal support or analysis – and raised claims never raised in the trial court. 

            Based on its conclusion that Sisters’ appeal was both objectively and subjectively frivolous, the appellate panel dismissed the appeal and awarded Brothers $25,087.91 in sanctions imposed against Sisters to account for the attorney fees incurred by Brothers, the impact of the unnecessary delay on the probate proceedings, and to deter future misconduct.   (CRC, Rule 8.276(a); Code Civ. Proc. § 907.)  Additionally, the panel imposed another $8,500 sanction against Sisters, payable to the Clerk of the Court, for the estimated cost to the government and taxpayers of processing Sisters’ frivolous appeal. (Finnie v. Town of Tiburon, 199 Cal.App.3d 1, 17 (1988).)

Family Law, Probate, Sanctions: Lower Court Properly Sanctioned Putative Spouse’s Attorney $3,617.50 Under CCP § 128.7 For Filing A Frivolous Putative Spouse Petition

Putative Spouse Failed To Show She Had A Legal Marriage With The Respondent Under Indian Law, Based On A Res Judicata Finding In A Prior Conservatorship Petition Proceeding.

            The problem for putative spouse and her attorney in Nijjar v. Nijjar, Case No. F078265 (5^th Dist. June 10, 2021) (unpublished) is that they earlier lost a conservatorship position by which she claimed to be the lawful spouse of the proposed conservatee under Indian law.  In the earlier proceeding, there were various inconsistencies in her and other witnesses’ testimony such that the trial judge found no competent evidence that a legal marriage took place between the two.  Losing putative conservator then filed a putative spouse petition, which triggered respondent (the winning putative conservatee in the previous proceeding) to send a Code of Civil Procedure section 128.7 motion.  The safe harbor period expired such that respondent filed the 128.7 motion, including a request for sanctions against petitioner’s attorney, and a request for dismissal of the putative spouse petition.  The lower court granted the 128.7 motion, dismissed the petition, and imposed monetary sanctions on petitioner’s attorney in the amount of $3,617.50.

            Even though no appeal was taken from the judgment of dismissal (given that the sanctions were below the $5,000 appealability threshold of CCP § 904(a)(11), (12)), the Fifth District went ahead as treating the appeal from the judgment of dismissal given that everyone briefed the merits and respondent did not move to dismiss the appeal.  Also, even though better practice was for the aggrieved attorney to appeal, notices of appeal are to be liberally construed to include the attorney who filed the appeal on behalf of a party.

            That brought the appellate court to the merits of the 128.7 sanctions order.  The principal problem was that the “no legal marriage” finding in the conservatorship proceeding had res judicata effect in the putative spouse petition proceeding.  But there was more.  Petitioner’s good faith belief in the validity of the marriage was not supported and, even under the “good faith” test of Family Code section 377.60(b), the evidence was not there, especially given the findings in the conservatorship proceeding.  With respect to showing improper purpose prong of section 128.7, documents showed that petitioner had a history of filing repetitive pleadings to reargue positions she had lost earlier.  The sanctions order was affirmed.

BLOG OBSERVATION—This unpublished opinion also had some instructive points on what should and should not be included in an appellant’s appendix, not to mention some formatting requirements.  (We would remind readers that e-filing is now mandatory in the DCAs, and you have to benchmark items in the appendix—which requires extra work and attention.)

Probate: Trustee Removal Petition Fee Request Properly Denied And Beneficiary’s Fee Request Correctly Denied Given Accounting Was Rejected For Future Determination

Trustee Removal Petition Fees Are Discretionary In Nature.

            In Albrecht v. Albrecht, Case No. B306601 (2d Dist., Div. 4 June 7, 2021; posted June 8, 2021) (unpublished), successor trustee appealed a probate court’s order declining to award fees for an opposing side’s demurrer to a petition to remove the trustee.  Beneficiary moved for fees and costs incurred during the administration of the trust despite an order that an accounting had been rejected for not meeting formalities, a further fees request also denied.  The appellate court affirmed.  On the petition to remove a trustee, fees are discretionary under Probate Code section 15642(d), which requires determinations that the removal petition was filed in bad faith and contrary to settlor’s intent.  Here, the lower court determined that the other side’s failure to comply with a settlement agreement contributed to confusion such that the discretionary fee request should be denied—no abuse of discretion.  On the second request, the denial of accounting without prejudice meant that any fee award to beneficiary was premature until further events developed. 

Probate: Trust Income Beneficiary Losing Fiduciary Breach Petition Against Trustees Properly Had To Bear Trustees’ Costs Under Probate Code Section 1002

Costs Award Was Not Under General Equitable Powers, But Section 1002—Which Has No Bad Faith Requirement.

            In McClatchy v. Pruitt, Case No. A160367 (1^st Dist., Div. 5 May 4, 2021) (unpublished), trust income beneficiary lost a fiduciary duty petition against certain current and former trustees, with the lower court awarding trustees some litigation costs under Probate Code section 1002.  Beneficiary, on appeal, argued that the costs award was infirm because there was no determination that he acted in bad faith. 

            That argument was rejected on appeal.  Beneficiary’s personal liability for costs arose from section 1002, which provides: “Unless it is otherwise provided by this code or by rules adopted by the Judicial Council, either the superior court or the court on appeal may, in its discretion, order costs to be paid by any party to the proceedings, or out of the assets of the estate, as justice may require.” (Emphasis added.)  The probate court had discretion “to decide not only whether costs should be paid, but also, if they are awarded, who will pay and who recover them.” (Hollaway v. Edwards, 68 Cal.App.4th 94, 99 (1998) emphasis omitted.)

            Probate courts also have equitable powers “to charge attorney fees and costs against a beneficiary’s share of the trust if that beneficiary, in bad faith, brings an unfounded proceeding against the trust.” (Pizarro v. Reynoso, 10 Cal.App.5th 172, 183 (2017), emphasis added; accord, Rudnick v. Rudnick, 179 Cal.App.4th 1328, 1335 (2009).) However, such equitable powers do not support an award of fees and costs against a beneficiary personally. (Pizarro, supra, at pp. 187-189.)  Here, the problem was that beneficiary faced costs under section 1002, which carried no bad faith requirement such that the postjudgment order was affirmed. 

Family Law, Probate: Husband Of Spendthrift Trust’s Beneficiary, Successfully Joining Trustee To Dissolution Proceeding, Potentially Entitled To Needs-Based Fees Even If No Bad Faith Demonstrated Against Trustee

Collision Between Family Law And Probate Principles Came Out In Favor Of Section 2030.

            In Marriage of Wendt and Pullen, Case No. C084083 (3d Dist. Apr. 28, 2021) (published), the Third District encountered the intersection of Family Code section 2030’s need-based fees award statute with Probate Code/spendthrift provisions relating to trust administration practices (including that fees are frequently not awarded unless bad faith is demonstrated against a trustee).  What happened in this case is that Mr. Pullen, the former husband of a wife who was the trust beneficiary, successfully moved to join the trust and trustee to the dissolution action based on certain child and spousal support claims.  He did ask for section 2030 needs-based fees, which was denied because the family law judge believed that bad faith of the trustee was a necessary requirement.  The Third District reversed, finding that section 2030 prevailed over probate principles given that no bad faith by the trustee is required to obtain 2030 fees.  Beyond that, Indiana law (the choice of law for trust administration issues) and California law were not different in concluding that spendthrift trusts can be ordered to pay routine trust administration costs, including 2030 fee requests.  Lower court’s 2030 fee request reversed, but the appellate court remanded to engage in the classic needs-based analysis.

Costs, Probate: $1,910.84 Costs Award In Indispensable Estate Affirmed As Against Two Brothers

Appellate Court Was Peeved At Appeal Of Costs Award Under $2,000.

            Bilaver v. Bilaver, Case No. B296881 (2d Dist., Div. 3 Apr. 27, 2021) (unpublished) is another reality check where two brothers appealed a $1,910.84 costs award in favor of an indispensable party probate estate.  Because it was an indispensable party, the estate did not have to pay a filing fee to claim certain specified costs.  The estate’s costs for exhibit copies,  court reporter fees, and costs of publication in related, separate litigation were properly allowed, with no abuse of discretion shown.  The appellate court seem exasperated that an appeal was undertaken for costs under $2,000, understandably so!

Liens for Attorney Fees, Probate: 4/3 DCA Affirms Probate Court’s Denial Of Fee Petition By Attorney Who Represented Client In Civil Litigation Prior To Client’s Death

Client’s Death Did Not Transform Completed Civil Litigation Into A Probate Administration Task For Which The Probate Court Could Award Fees, Nor Did Client’s Death Waive Requirement That Attorney’s Charging Lien Had To Be Adjudicated.

            In Belcher v. Bakkers, Case No. G058893 (4^th Dist., Div. 3 April 5, 2021) (unpublished), attorney seeking payment of fees and costs, for services rendered in civil litigation prior to his client’s death, filed a petition for payment in probate court.  The trial court denied the petition – concluding the legal services were rendered before client’s death and were not services to the probate estate – and found the proper form for recovering fees owed to attorney from client’s estate was a creditor’s claim (a claim attorney had also filed, but was yet unresolved pending the appointment of a special administrator to the estate).

            Attorney appealed, but the 4/3 DCA, in a 3-0 opinion authored by Justice O’Leary, affirmed.

            Attorney’s argument that his fee petition was the proper mechanism for seeking fees because the trial court authorized fees payments to two other attorneys overlooked the fact that those fees were incurred by client’s conservator and guardian ad litem and were specifically authorized by Prob. Code § 2631(a).

            Attorney also argued, for the first time on appeal, that his contingency fee agreement with client created an attorney charging lien and the trial court’s conclusion that attorney had to file a creditor’s claim for payment of his fees/costs failed to consider his status as a lienholder.  However, an attorney charging lien is only effective if the attorney has filed an independent action – such as a declaratory relief action – to establish the lien’s amount and enforceability.  (Mojtahedi v. Vargas, 228 Cal.App.4th 974 (2014) [reviewed in our July 13, 2014 post].) Here, the lien’s amount and enforceability had not been adjudicated as client died before attorney was able to file a separate, independent action for such determination. As such, the proper avenue for adjudicating the lien’s amount and enforceability was for attorney to file a creditor’s claim.    

Probate: Reversal Of $12,584 In Prob. Code § 2640.1 Attorney Fee Award To Two Adult Children Who Petitioned To Establish A Conservatorship For Their Mother

No Conservator Was Ever Appointed, And Mother Never Became A Conservatee, As The Parties Settled The Litigation Without Need For A Conservatorship.

            In Conservatorship of Brokken, Case No. B303898 (2d Dist., Div. 6 March 15, 2021) (published), two adult children petitioned to establish a conservatorship for their mother – over her vigorous objections – claiming their mother suffered from mental health issues and exhibited erratic behavior.  After the matter was settled without the need for a conservatorship, petitioners successfully moved to recover $12,584 in attorney fees, under Prob. Code § 2640.1, from mother’s estate.  Mother appealed.

            The 2/6 DCA reversed – finding that while § 2640.1 authorizes attorney fees in certain probate cases in which a conservator is appointed, it does not support an award of attorney fees where no conservator was appointed.  Mother never became a conservatee, and petitioners failed to cite any authority allowing the trial court to order a non-conservatee to pay their attorney fees.

Probate: Denial Of Probate Code Section 2642(b) Fees To Attorney Representing Minor’s Guardians Reversed And Remanded

The Reason Was That The Record Did Not Show Whether The Services Benefited Minor Also And Whether They Were Reasonable In Nature.

            In Guardianship of Soto, Case No. C078801 (3d Dist. March 9, 2021) (unpublished), attorney for minor’s guardians were awarded two rounds of attorney’s fees under Probate Code section 2642(b), which provides that a trial judge shall make an order allowing reasonable fees to attorneys rendering services rendered to the guardian (payable from the estate).  However, the lower court denied a third round of requested fees of $5,109.75 to the attorney representing minor’s guardians.  The Third District reversed and remanded.  The problem was that nothing in the record rebutted the fact that services were rendered to the guardians or that the services performed had zero worth.  That being so, a remand was necessary to determine whether the services were in the best interest of the ward and, if so, were reasonable in nature.  (Conservatorship of Lefkowitz, 50 Cal.App.4^th 1310, 1313-1316 (1996).)  Attorney also contended he was entitled to appellate fees, which was in play on remand if the lower court determines they were necessary and reasonable.  (Estate of Trynin, 49 Cal.3d 868, 880 (1989).) 

Probate, Reasonableness Of Fees: Probate Court’s $26,900 Reduction To Fees Request Of $73,400 By Attorney Appointed To Represent Proposed Conservatee Affirmed On Appeal

Attorney Appealed Reduction With Only Speculation As To How The Probate Court Reached Amount Awarded – Providing No Reporter’s Transcript Or Settled Statement On Appeal.

            In Conservatorship and Estate of Bessard, Case No. A156773 (1^st Dist., Div. 2 January 29, 2021) (unpublished), an attorney who had been appointed by the probate court to represent a 92-year-old proposed conservatee sought fees for her services after the probate court granted her petition to have a private professional fiduciary conservator appointed as conservator of the person and estate for the proposed conservatee.

            Specifically, the attorney sought $73,400 in fees and $2,099.41 in costs, and conservatee’s daughter opposed – challenging the reasonableness of approximately $30,000 of the attorney fees and costs requested by attorney, and proposing an additional reduction of approximately $13,700 based on an hourly rate of $325 rather than $400.  Additionally, daughter noted the small size of conservatee’s estate and that conservatee’s monthly income was approximately $1,200.  After rounds of briefing and a hearing, the probate court took the matter under submission – ultimately awarding attorney $46,500 in fees and $2,055.41 in costs.

            Attorney appealed – arguing that the trial court abused its discretion when it reduced her attorney fees request by $26,900.  However, as she provided no reporter’s transcript or settled statement on appeal, she could only speculate as to how the probate court reached the fee award.  As such, the 1/2 DCA had no basis to find error and affirmed – noting the burden is on the appellant to establish error.

Probate: Where Attorney Only Delayed Distribution But Did Not Conceal Or Remove Funds, Attorney’s Fees Recovery Under Probate Code Section 859 Was Improper

Only Three Forms Of Specified Misconduct Give Rise To Fee Entitlement, With None Present Here.

             Probate Code section 859 provides that “If a court finds that a person has in bad faith wrongfully taken, concealed, or disposed of [estate] property[,] . . . the person may, in the court’s discretion, be liable for reasonable attorney’s fees and costs.”

            In Khatirine v. Marquez, Case No. A159348 (1^st Dist., Div. 4 Jan. 26, 2021) (unpublished), an attorney appealed an order compelling him to pay about $104,000 (twice the value of about $52,000 in funds) and $7,504.46 in a section 859 penalty to an estate’s personal representative.  The 1/4 DCA reversed, finding that the representative was only entitled to routine costs as the prevailing party but no section 859 penalty or attorney’s fees.  The reason was that attorney did not conceal or remove property, but only delayed distributing the $52,000 until ordered to do so by the probate court.  Section 859 is not a general “misconduct” statute, but only allows for fee recovery if three specified forms of misconduct occurred—and none of them did under the circumstances of the case. 

Probate: $74,970 Attorney’s Fees Award To Law Firm Providing Services To Trust Affirmed On Appeal

Although No True Successor Trustee Was Appointed, Legal Services To The Person Administering The Trust Were Proper Because The Services Benefited The Trust And Because Person’s Services Were Ratified Through A Settlement Agreement.

            In Orsinger v. Kemp & Associates, Inc., Case No. B303111 (2d Dist., Div. 6 Jan. 20, 2021) (unpublished), son of a couple who set up a family trust was the acting successor trustee and the sole trust beneficiary.  Son hired Orsinger to help repair a house (the main asset) and remove squatters, also asking Orsinger to be the executor of his estate and the successor trustee of the family trust.  However, son unexpectedly died with no will, no spouse, and no children.  Orsinger hired a law firm to assist with trust administration, with the trust taking a lot of time to liquidate before the house was sold.  Kemp & Associates, a company specializing in heir location services, notified Orsinger that son’s six intestate heirs assigned a percentage of their inheritance to K&A.  K&A objected to a final accounting, contending Orsinger was never appointed successor trustee—an authority issue that initially troubled the probate judge.  Eventually, K&A and Orsinger entered into a settlement agreement ratifying his actions as well as indicating he would be paid and non-attorney professional fees would be paid.  Orsinger requested approval of $74,970 in fees incurred by the law firm assisting in trust administration, a request honored by the probate judge. 

            K&A appealed, raising several arguments against the fee award.  All of them were dispatched on appeal.  First, the fact that Orsinger was never appointed successor trustee was a “form-over-substance argument” which failed because the settlement agreement ratified his actions and the lower court had authority to make a quantum meruit award for the reasonable value of the legal services provided (Prob. Code, §§ 16247, 16243).  The probate judge had jurisdiction to award fees given that the settlement agreement stated the parties consented to continuing jurisdiction of the superior court.  K&A argued that the trust assets became part of son’s estate upon his death such that title to the assets immediately vested in the son’s intestate heirs.  The 2/6 DCA rejected this argument, finding it hyper-technical and waived through the settlement agreement. The probate court had the power to apply equitable principles to determine the entire controversy before it, including the ability to approve payments to counsel aiding administration of the family trust. 

Probate, Substantiation Of Reasonableness Of Fees: Attorney Fees By Three Firms Granted To Trustee In Long-Standing Dispute Were Affirmed On Appeal

Fees To Three Firms Representing Trustee In Multiple Venues Was Just Fine In This Context.

            A beneficiary under a trust, which engaged in a long-standing dispute against trustee in multiple venues (California superior court, California appellate court, U.S. bankruptcy court, and the Ninth Circuit Court of Appeals), was not happy when well-documented fees incurred by trustee through three law firms were ordered to be paid by the trust.  The appellate court in Kvassay v. Kvassay, Case No. B297461 (2d Dist., Div. 2 Jan. 1, 2021) (unpublished) affirmed the propriety of the fee award based on (1) painstaking substantiation showed the amounts were justified, and (2) the fact that the work of three law firms was warranted given the battle raging against trustee in various venues.

Probate: $21,053.33 In Attorney Fees Awarded To Stepdaughter Executor, Which Included § 10811 Additional Fees For Extraordinary Services, Affirmed On Appeal Along With $5,075 In § 859 Penalties Imposed Against Decedent’s Son

Failure To Provide The Appellate Court With An Adequate Record Doomed Self-Represented Son’s Appeal.  

            In Estate of Greer, Case No. C087492 (3^rd Dist., December 21, 2020) (unpublished), decedent’s will gave his entire estate to the trustee of his trust – with his son and stepdaughter each being a fifty percent beneficiary – and appointed his son and stepdaughter as co-executors.

            Son had lived with decedent in decedent’s home and continued to live there after decedent passed.  When son filed a petition for letters of administration, he claimed decedent had died intestate and had partially revoked his trust for the purpose of allowing his real property to pass to son through intestate succession.  Stepdaughter objected and filed a petition for probate of decedent’s will.  The probate court determined the will was valid, admitted it to probate, denied son’s petition, and appointed stepdaughter as executor after determining son and stepdaughter were unable to work together.  Additionally, the probate court partially granted stepdaughter’s Prob. Code § 850 petition – requiring son to vacate decedent’s home, surrender decedent’s property, pay $10,200 in unpaid rent to the estate (reduced from $20,400 because son was a 50% beneficiary) and imposed a penalty against son of $5,075 under Prob. Code § 859 for son’s bad faith possession of the estate property.  Finally, the probate court awarded administration costs, some reimbursements to son and stepdaughter, $7,605.83 to stepdaughter as executor, plus $7,605.83 in fees for her attorney and an additional $13,447.50, pursuant to Prob. Code § 10811, in attorney fees for “extraordinary services” for litigation on son’s various motions, services related to the sale of decedent’s home, and litigation on the § 850 petition – all of which the probate court found went beyond the scope of a typical probate proceeding. 

            Son appealed, but forfeited arguments and limited the appellate panel’s ability to review the case by providing an incomplete record on appeal – with no reporter’s transcript and key evidentiary items excluded from the record.  Although son represented himself, “[p]ro. per. litigants are held to the same standards as attorneys.”  Kobayashi v. Superior Court (2009) 175 Cal.App.4th 536, 543 (2009).  The probate court’s judgment was affirmed.

Probate: Lower Court’s Decision To Reduce Removed Trustee’s Requests For Attorney Fee Reimbursement By 75% Was No Abuse of Discretion

Trustee Violated Statutory Duties And His Attorney Missed Analysis Of Other Beneficiaries’ Claims, Such That The Large Reduction Was In Order.

            We know our blog has a diverse readership.  Thank you all for following us, especially in these unprecedented times.  Now, we have one for probate practitioners—yes, we remember you and will post on cases which may be of interest in this important area of practice.

            Strojan v. Strojan, Case No. C086485 (3d Dist. Oct. 28, 2020) (unpublished) began with a BANG!   It confirmed that the Probate Code is “studded” with provisions allowing trustees reimbursement for attorney’s fees to the extent those fees assist in trust administration activities.  (Hollaway v. Edwards, 68 Cal.App.4^th 94, 97 (1998).)  However, this broad principle is tempered, reasonably, by the caveat that those activities must benefit the trust rather than just the trustee.  (Whittlesey v. Aiello, 104 Cal.App.4^th 1221, 1230 (2002).)  Now we go to the application of these principles to the case which is the subject of this post.

            After a three-day bench trial, a trustee was removed and his request for trust-driven attorney’s fees was reduced by 75%.  That result was affirmed on appeal, because the record showed that trustee violated statutory duties and his attorney failed to properly assess countervailing arguments by beneficiaries which ultimately prevailed.  Large reduction affirmed, confirming that a trustee’s attorney needs to make sure his client’s actions are reasonable or defensible.  If not, you might get an unanticipated slash in your fees, and do not count on your disgruntled, removed trustee client to pay them!

Probate: Interim Fees Awardable Out Of Trust Were Compensable To Attorney Assisting Trustee On Appeal

No Appellate Costs Awarded Per Se, But Probate Court Has Broad Powers To Award Attorneys Assisting Trusts Even On An Interim Basis.

            A beneficiary/removed trustee was flummoxed that the probate court approved the successor trustee’s request for payment of interim attorney’s fees and costs incurred in representing the trust on appeal out of the trust.  That determination was appealed in Blickenstaff v. Cumming, Case No. E073007 (4^th Dist., Div. 2 Oct. 14, 2020) (unpublished), but affirmed.  The reason was that the probate court has broad powers to aid the trust in defending itself on appeal, as was the case here even though interim fees/costs were awarded.  (Rudnick v. Rudnick, 179 Cal.App.4^th 1328, 1333 (2009).)

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].)

Probate: $48,625 Out Of Requested $68,175 In Extraordinary Attorney’s Fees Under Probate Code Section 10811 Affirmed On Appeal

No Abuse Of Discretion Shown By Probate Judge.

            Probate Code section 10811 gives a probate court discretionary authority to allow fees for extraordinary services by an attorney for the personal representative of an estate, with examples being listed in CRC, rule 7.703(c).  Furthermore, Probate Code section 10832 authorizes the probate court to allow extraordinary fees before final distribution of the estate if certain conditions are met, such as where the estate administration will continue for a long time, a present payment will benefit the estate/its beneficiaries, or “other good cause.” 

            In Estate of Chatelain, Case No. B295318 (2d Dist., Div. 2 July 29, 2020) (unpublished), a probate court awarded $48,625 out of a requested $68,175 in requested extraordinary fees for attorneys representing the administrator/special administrator two estates, including a $8,625 fee request which enabled one estate to recover a $250,000 estate tax refund (with this latter one paid out of the other estate).  This interim award was affirmed on appeal, even though no final accounting had been approved.  Given the work by the attorneys (especially on the tax refund), the Probate Code and CRC provisions justified the award—no abuse of discretion.

Appealability, Probate: Plaintiff’s Appeal Of Trial Court’s Interim Order Allowing Defendant Trustee Access To Trust Funds For Defense Is Rendered Moot When Trial Court Issues New Order Effectively Granting Same Relief As Appealed Order

Unique Provision Of The Probate Code Provided An End Run Around The Stay Created When Plaintiff Appealed And Posted A Bond.

            Probate Code § 1310(b) provides that, “for the purpose of preventing injury or loss to a person or property, the trial court may direct the exercise of the powers of the fiduciary . . . as if no appeal were pending.”  Actions taken under section 1310(b) while the appeal is pending “are valid, irrespective of the result of the appeal.”  As such, an appeal – even if meritorious – cannot reverse nor stop a trustee’s act pursuant to a section 1310(b) order.  Section 1310(b) also provides that “[a]n appeal of the directions made by the court under this subdivision shall not stay these directions.”

            In Mitchell v. Lingelbach, Case No. G057641 (4^th Dist., Div. 3 July 27, 2020) (unpublished), plaintiff daughter filed a petition to invalidate amendments and restatements of her deceased father’s Trust based on capacity, undue influence, mistake and fraud issues.  Additionally, she sought to remove and surcharge her father’s wife as co-trustee; to restrain wife from using Trust assets to defend the action; for an accounting; and to cancel beneficiary designations and deeds acquired by wife and her adult children.

            When the trial court granted wife’s request to access Trust funds to pay for her defense of the Trust, with the trial court granting an initial withdrawal of $150,000 for that purpose, daughter immediately appealed and posted a bond to stay enforcement of the trial court’s fees order.

            Wife responded to the stay by moving under § 1310(b) to lift the stay to allow her to access funds to defend the Trust – with the trial court granting wife’s request and issuing a new order granting the same relief as the interim order on appeal.  Wife then paid her attorneys the $150,000 for their fees, and filed a successful motion to dismiss daughter’s appeal as moot based on the trial court’s § 1310(b) order effectively granting the same relief. 

            Based upon the statutory language of section 1310(b), the appellate panel's hands were essentially tied.  The 4/3 DCA was unable to provide daughter relief from the appealed interim fees order, nor reversal of the 1310(b) fees order, and dismissed daughter’s appeal as moot.  (In re Jessica K. 79 Cal.App.4^th 1313, 1315 (2000).)