CALIFORNIA ATTORNEY'S FEES

Probate: Around $300,000 In Attorney’s Fees/Costs Incurred By Petitioner In Conservatorship Proceeding Affirmed On Appeal

Conservatorship Petition Was Successful And In Mother’s Best Interests.

            For those of you who have read our posts under the category “Probate,” you hopefully discerned that probate court is a court of equity, and that many of the fee decisions are guided by equitable principles.  The result in Conservatorship of Dubro, Case No. A157185 (1^st Dist., Div. 5 June 25, 2020) (unpublished) is consistent with those principles.

            There, a fifth sibling successfully obtained results for his mother against four other siblings in a conservatorship proceeding involving mother, resulting in revoking a power of attorney for one sibling and obtaining appointment of a professional fiduciary requested by the fifth sibling as conservator.  Fifth sibling Dennis moved for more than $300,000 in attorney’s fees and costs based on the conservatorship results, with the lower court—in line with a special master report—granting almost all except for a minor reduction.

            The fee order was affirmed on appeal.  The deciding factor in conservatorship reimbursement disputes is whether the expenses were incurred in good faith and in the best interests of the proposed conservatee, a determination usually being a discretionary call for the probate judge.  In this instance, Dennis’ activities did benefit his mother.  The fee order was justified by the fact that the other siblings roughly incurred the same amount of fees as Dennis, an indicia that his fees happened to be reasonable.  (Donahue v. Donahue, 182 Cal.App.4^th 259, 272 (2010).).

Probate: Probate Court’s Order For Attorneys Helping Resolving Ownership Claims And Rendering Tax Advice Properly Awarded

These Were Extraordinary Compensation Or Fees Properly Awarded.

            In Estate of Lund, Case No. A156410 (1^st Dist., Div. 1 June 3, 2020) (unpublished), a decedent’s son appealed two attorney’s fees awards which were rendered in a probate matter.  The first concerned an attorney’s efforts to resolve ownership claims by preparing a Probate Code section 9832 petition to clear title and then resolving it through a settlement agreement.  The appellate court found that this CRC 7.703 extraordinary compensation request was entitled to compensation.  The second involved fees for work by an estate’s tax attorney to resolve issues for an estate ultimately valued at $4 million and where the decedent lived in three different states over his lifetime.  This one was found reasonable, as it facially should have been. 

Probate: $117,436.24 Section 17211(b) Fees Award Affirmed On Appeal Against Trustee Who Was Found To Have Acted In Bad Faith

Although Appealing The Section 17211(b) Fees Award, Trustee Argued Against The Prior Bad Faith Finding And Not Against The Amount Of Fees Awarded Or Beneficiary’s Statutory Entitlement To Them.

            In Cronin v. Hurst, Case No. G057303 (4^th Dist., Div. 3 May 8, 2020) (unpublished), a trustee, who was found to have engaged in self-dealing and acting in bad faith in the administration of his mother’s revocable living trust, appealed a Probate Code section 17211(b) attorney fees award against him of $117,436.24.  

            On appeal, the trustee did not argue against the amount of fees awarded or the beneficiary’s statutory entitlement to the fees.  Rather, he argued that his due process rights were violated because the fees had been awarded without a noticed motion, and that the trial court had failed to consider evidence that he had acted in good faith in administering the trust.

            The 4/3 DCA found his arguments without merit and affirmed.

            As to the noticed motion, the appellate panel found that a noticed motion is not required for a trial court to make a determination that a beneficiary is entitled to fees.  Probate Code § 17211(b) gives discretion to a trial court to award attorney fees to a trust beneficiary contesting the trustee’s account and conduct as was the case here.  Following a full trial on these issues, the trial court issued a statement of decision finding the trustee had acted in bad faith and without reasonable cause.  Additionally, based upon its finding of bad faith, the trial court properly exercised its discretion to surcharge the trustee attorney fees and costs – an order that can be made in the statement of decision.  (612 South LLC v. Laconic Limited Partnership 184 Cal.App.4^th 1270, 1284 (2010).)  Once the trial court made the determination that the beneficiary was entitled to the section 17211(b) statutory fees, the only necessary noticed motion related to the fees was for the “prove-up” of the amount of fees to be awarded – a noticed motion that was brought by the beneficiary in this matter.

            As to the trustee’s evidence of good faith administration argument, the trustee did not appeal the order granting beneficiary’s petition wherein trustee was found to have acted in bad faith.  Beyond that, the record did not reflect – nor did the trustee contend – that he was denied the opportunity to present evidence at trial that he did not act in bad faith or engage in self-dealing. 

Probate, Request For Admissions, Sanctions: More Than $1.8 Million In CCP § 128.5 Sanctions Went POOF! On Appeal, But RFA “Cost Of Proof” Sanctions Of Over $1 Million Stuck On Appeal

128.5 Sanctions Went Away Because It Did Not Apply To The Action Datewise, While RFA “Sanctions” Were No Abuse Of Discretion Even Though Substantial In Nature.

            First of all, we hope all of our readers are safe—this pandemic has presented unprecedented, bizarre consequences, but hope you are well.  We are happy to report that the California appellate courts are doing a good job staying in business, which also means we get to post on the decisions which emanate from our busy California appellate courts.  So, let’s go to it on the one unpublished decision on April 28, 2020 dealing with fee issues.  Co-contributor Mike also wants to thank his paralegal, Shanna Strader, for her great work in making sure posts are timely made—not to mention that she writes some of them!

            In Estate of Khatri, Case No. A150546 (1^st Dist., Div. 3 Apr. 28, 2020) (unpublished), two brothers were involved in a long-running dispute over the divisions of family assets, primarily six commercial properties after their mother died.  Mother left all of the assets to one son, which triggered a brother-against-brother fight which featured undue influence allegations by the brother left out.  Ultimately, ousted brother lost after a 16-day bench trial.  Winning brother then sought fees under two regimes—CCP § 128.5 (sanctions) and CCP § 2033.420 (costs-of-proof sanctions for denying discovery requests for admissions without substantial justification).  The probate court was persuaded by winning brother’s submissions, giving him full relief as follows: (1) 128.5 motion -- $1,497,680.75 in attorney’s fees and $346,874.19 in costs; and (2) 2033.420 motion -- $865,559.25 in fees and $138,621.55 in costs.  As you can predict, losing brother appealed.

            The result on appeal?  A split verdict, but probably not the one desired by the losing brother/appellant.

            Initially, the good news for appealing brother.  He was able to get the 128.5 sanctions reversed as a matter of law.  The reason was that these sanctions only applied to actions filed (not pending) after January 1, 2015, the effective date of § 128.5 after some legislative “sunsets,” such that it simply did not apply to the case—all as clarified through 2017 amendments which were only declaratory of the result reached by the appellate court here.

            But now the bad news.  The appellate court found that the lower court did not abuse its discretion in awarding the costs-of-proof sanctions totaling over $1 million.  Losing brother did not meet his burden in showing that any good faith/substantial justification exceptions applied to his denials on critical undue influence requests for admissions—all the more so given his lack of medical proof to show there was undue influence.  So, substantial fees/costs affirmed on appeal.

Probate: 4/3 DCA Remands For Recalculation/Reduction Of Surcharge Against Personal Representative Removed For Breach Of Fiduciary Duty, But Affirms Attorney Fees Award Despite Trial Court’s Erroneously Stated Statutory Basis

Personal Representative Repeatedly Failed To Timely File Accurate Inventory & Appraisal and Accountings With The Court, Spent Estate Funds Without Authorization, Showed Hostility Toward Beneficiary, Failed To File Tax Returns, And Failed To Understand The Effect Of The Pour-Over Will Executed By Decedent.

            In Karamooz v. Karamooz, Case No. G056897 (4^th Dist., Div. 3 April 27, 2020) (unpublished), decedent mother created a revocable trust and pour-over will – naming one of her sons as the sole beneficiary of the trust, and another son as the personal representative of her estate.

            When beneficiary son filed a Heggstad petition to avoid having to probate the will (Prob. Code, section 850(a)(3); Estate of Heggstad 16 Cal.App.4^th 943 (1993)), personal representative son objected and claimed the will was not a pour-over will.  Personal representative then filed a petition to probate the will, but repeatedly failed to meet deadlines for filing an Inventory and Appraisal, filed inaccurate accountings, failed to file required tax returns, spent estate funds without authorization or court approval, and showed hostility toward beneficiary – in addition to his failure to understand/acknowledge the effect of the pour-over will and act accordingly.  After several years of this, beneficiary successfully moved to have personal representative removed and surcharged for his breaches of fiduciary duty, and moved for an award of attorney fees.  Personal representative appealed.

            In an opinion authored by Justice Thompson, the 4/3 DCA affirmed the removal, but reversed and remanded the $500,000 surcharge against personal representative for a new judgment reducing and recalculating the surcharge to $80,000 for estate funds spent without authorization/approval, plus all liability for penalties and interest caused by personal representative’s failure to timely file tax returns. 

            As to the attorney fees, the 4/3 DCA agreed with personal representative’s argument that the award against him was not statutorily supported pursuant to the trial court’s reliance on Prob. Code section 11003(b) – which awards attorney fees for bad faith opposition in an accounting contest.  However, the attorney fees award was affirmed – with the 4/3 DCA finding the trial court justified in exercising its discretion to award fees under section 8804 for the repeated failures to timely make accurate inventory and appraisal filings, “regardless of [the trial court’s] stated basis.”

Probate, Section 1717: Attorney’s Fee Award Of $172,885 Affirmed Against Attorney/Law Firm Who Assisted Free-Lance Paralegal In Converting, To Free-Lance Paralegal’s Benefit, The Inheritance Of A Vulnerable, Impoverished, Paraplegic Beneficiary

The Trial Court Properly Awarded The Fees Pursuant to Civil Code Section 1717 Based On Provisions In The Escrow Agreement Drafted By Attorney/Law Firm Even Though That Agreement Was Determined By The Trial Court To Be Invalid.

            The 2/8 DCA described this next case as being “prompted by a sordid chain of events,” and we couldn’t agree more.

            Plaintiff in Revell v. Burlison Law Group, Case No. B289582 (2d Dist., Div. 8 March 13, 2020) (unpublished) is a vulnerable and impoverished paraplegic who is confined to a wheel chair due to a previous car accident.  Her mother and uncle were the primary beneficiaries, in equal shares, to her late grandmother’s trust – which included a Buena Park property.  Plaintiff was unaware of the existence of her grandmother’s trust, but knew that her mother had some interest in the Buena Park property. 

            When Plaintiff’s mother passed away, she – as sole heir to her mother’s estate – sought assistance in locating any assets in her mother’s name and in preparing documents to claim death benefits from her mother’s pension plan, and ended up signing a power of attorney with Free-Lance “Paralegal,” Bret Lovett to act on her behalf.  Lovett had a working relationship with attorney Robert C. Burlison, Jr. and his law firm Burlison Law Group, and also shared office space with the attorney/law firm.

            About a month after signing the POA, Plaintiff notified Lovett by phone that she was revoking the POA.  She then obtained the benefits she sought from her mother’s pension plan by contacting the plan directly.  Meanwhile, Lovett had learned of the Buena Park property, and – through misleading and forged letters – caused Plaintiff’s uncle to sell the property and deliver the $114,646.01 in proceeds to one of Lovett’s companies.  Lovett then got Burlison to create an escrow account to hold the funds.  The escrow agreement drafted by Burlison was signed by Burlison and Lovett – using the revoked POA.  After the $114,646.01 was transferred to the escrow account, Burlison disbursed $96,474.32 to Lovett and $1,146.46 to the Burlison Law Firm.  These disbursements were not authorized by Plaintiff, and left a balance of only $17,025.23 of Plaintiff’s inheritance funds in the so-called escrow account.

            When Plaintiff learned from her uncle that proceeds meant for her had been sent to Lovett, she demanded an accounting and disbursement of her funds.  Burlison/Burlison Law Group refused to disburse the remaining funds to Plaintiff unless she signed a release for the prior distributions – forcing her to sue to recoup her inheritance.

            The trial court found that Lovett and Burlison/Burlison Law Group had acted in concert to convert Plaintiff’s inheritance funds for the sole benefit of Lovett, and had each breached their fiduciary duty to Plaintiff.  Plaintiff was awarded $114,646.01 in compensatory damages, $229,292.02 in double damages, and $172,885 in section 1717 contractual attorneys’ fees – jointly and severally against Lovett, Burlison and Burlison Law Group – although the trial court had also determined the escrow agreement to be invalid.  Burlison and Burlison Law Group appealed.

            The 2/8 DCA affirmed the trial court’s ruling, but found the Statement of Decision and Judgment ambiguous as to whether the trial court found that Burlison and Burlison Law Group acted in bad faith for the purposes of determining liability for double damages under Probate Code section 4231.5.  The case was remanded as to this issue only – to allow the trial court to supplement its statement of decision as to whether Burlison/Burlison Law Group acted in bad faith.

            In finding the trial court had properly issued attorneys’ fees pursuant to section 1717, based on the attorney fee provision contained in the escrow agreement, and despite its finding that the escrow agreement was invalid, the 2/8 DCA cited PLCM Group, Inc. v. Drexler (2000) 22 Cal.4^th 1084, 1094-1095 [no. 1 on our list of leading cases], which provides the factors to be considered in setting a reasonable award  to a prevailing party – even if the prevailing party is successful in proving that the underlying contract is inapplicable, invalid, unenforceable or nonexistent. Santisas v. Goodin (1998) 17 Cal.4^th 599, 611 [no. 6 on our list of leading cases].

            BLOG NOTE:  For those of you who are curious to know more about the paralegal and attorney defendants in this case, the L.A. Times published an article on November 2, 2017 stating both had been arrested for involvement in a $1.2 million fraud scheme.  Also, according to the California State Bar website, Burlison was disbarred as of August 10, 2019.

Probate: Case Goes To The 4/3 DCA A Second Time For Trustee’s Attorney Fees With 4/3 DCA Overturning Lower Court’s Ruling To Reduce

4/3 DCA Declares The Reduction Undermined And Improperly Limited The Authority Of The Trustee To Pay Attorney Fees And Was An Abuse Of Discretion.

            Well, folks, in the famous words of Yogi Berra, “It’s déjà vu all over again.” 

            In a July 15, 2016 post, we reported on Shelton v. Larson, and now report on that case, again – this time as Kote v. Larson, Case No. G056820, (4^th Dist., Div. 3 January 27, 2020) (unpublished).

            Three siblings – Dana, Sharon, and Daniel – are beneficiaries under their deceased parents’ revocable trust. 

            In the original case, Sharon and Daniel successfully had Dana removed as trustee and her request for trustee fees/costs and attorney fees/costs denied – along with a requirement that she disgorge certain attorney fees, trustee fees, and costs already paid.  Dana successfully appealed the lower court’s order as to the fees/costs – with the 4/3 DCA reversing and remanding because trustees generally are awarded attorneys’ fees in contests involving accountings or beneficiary objections, unless some bad conduct is involved.  As bad conduct was not involved, some fees were justified.

            In the current case, heard by a different lower court judge, Sharon and Daniel successfully had the Successor Trustee – a professional trustee appointed by the lower court in the first case – removed and a reduction to the already paid trustee fees and attorney fees/costs.  Additionally, the lower court appointed Sharon as new successor trustee without requirement that she obtain a bond, and – on its own motion – ordered the Trust be court supervised.  Successor Trustee successfully appealed the lower court’s order as to the fees/costs and bond requirement – with the 4/3 DCA reversing and remanding.

            As to the bond issue - Probate Code 15602(a) requires a bond for a trustee not named in the trust excepting compelling circumstances.  The record did not reflect any compelling circumstances – so a remand for determination as to whether any exist, and an order for Sharon to obtain the bond if none exist. 

            As to the trustee’s fees - the lower court had reduced by about $12,466.18 based on its erroneous finding that there was no agreement for the Successor Trustee to charge a one percent (of the Trust assets value) fee.  The record clearly demonstrated that Successor Trustee presented a fee schedule that included the one percent fee to Sharon and Daniel before he was appointed.  Sharon and Daniel included that fee schedule as part of their Removal Petition and complained about the amount of trustee fees based on the fee schedule.

            As to the reduction in trustee’s attorney fees/costs – although the lower court found the billings to demonstrate reasonableness in time spent, matters handled, and hourly rates charged, it reduced by roughly $5,000 based on some ambiguities and vagueness in some of the descriptions of work performed.  In a 3-0 opinion authored by Justice Thompson, the 4/3 DCA found that “[r]eduction of the attorney fees on that basis had the effect of undermining and improperly limiting the authority of the trustee to pay them and was an abuse of discretion” in the context of this case.  The lower court was not reviewing a petition to pay attorney fees but was reviewing an accounting.  Successor Trustee had the power to retain and pay attorneys from the trust property, and had done so.  The attorneys hired by Successor Trustee to aid in administering the trust were entitled to reasonable fees paid from the trust assets (Kasperbauer v. Fairfield (2009) 171 Cal.App.4^th 229, 235) [reviewed in our January 27, 2009 post]. 

            Finally, as to the removal of Successor Trustee and placing the Trust under court supervision, the 4/3 DCA found no abuse of discretion nor error.  It was in the best interest of the Trust to remove Successor Trustee based on the substantial hostility between him and the beneficiaries, and the court holds authority to make necessary orders to supervise administration of a Trust.

            Interestingly, it seems the Successor Trustee may have missed a key argument.  As the 4/3 DCA pointed out, “The court did not reserve the issue of removal of the trustee or give notice it would make a ruling on it in the December Minute Order setting the 2018 hearing, thus raising the due process issue of lack of notice.”  However, because Successor Trustee did not argue that on appeal, nor raise it in his objections to the lower court’s 2018 Tentative Decision, he waived any potential due process claim.  This, too, applied to the appointment of a new successor trustee and court supervision of the Trust.

            So that’s it, folks.  Maybe there will now be a final resolution of this case without need for additional appeal.  But you know what Yogi Berra would say . . .  “It ain’t over ‘til it’s over.”

Probate: Beneficiary Presumed To Be Missing Or Deceased Surfaces In Time To Unsuccessfully Object To Settlement Of Trust And Approval Of $295,000 In Attorney Fees To Trustee

Trustee’s Efforts Were Reasonable And Appropriate For The Benefit Of The Trust And Resulted In Restoration Of Beneficiary’s Trust Benefits.

            Father of two sons was trustee to the trust established in his late wife’s name in Polonsky v. Polonsky, Case Nos. B290480 and B293958 (2d Dist., Div. 3 November 22, 2019) (unpublished).  The trust held a 50% undivided interest in the Beverly Hills family home for the benefit of the two sons.  The father owned the other 50% of the property. 

            Father remarried sometime later and eventually executed a grant deed to convey the son’s 50% interest in the property held in the trust to himself.  To replace his sons’ interest in the property, Father formed a new trust with the intention of funding it with $747,500, which equated to 50% of the appraised value of the property at the time of transfer.  However, father only funded the new trust with $100,000 before passing away.

            With one son being deceased, the other son missing or deceased, and no trustee to administer the original trust upon Father’s passing, the former wife of the missing son stepped in and became appointed trustee.  Once appointed, she sought restoration of the 50% property interest to the trust pursuant to Probate Code section 850. 

            After two years of litigation, she reached a settlement with Father’s new wife which restored to the trust, for her former husband’s benefit, the value of his interest in the Beverly Hills property at the time Father executed the grant deed.

            The missing son surfaced and objected to the settlement agreement and trustee’s attorney fees.  However, at the hearing for approval of the settlement agreement, he admitted that he wanted the settlement agreement to be approved.  As to the attorney fees, beneficiary did not claim they were excessive.  Rather, he claimed Trustee had obtained no benefit for the trust.  The trial court approved both the settlement agreement and the attorney fees.  Beneficiary appealed.

            The 2/3 DCA found no abuse of discretion.  Beneficiary admitted he wanted the settlement agreement approved, and his argument that fees should not be awarded because Trustee had not obtained a benefit for the trust was without merit.  It was Trustee’s actions that caused beneficiary’s trust benefits to be restored.

Probate: No Abuse Of Discretion In Lower Court’s Denial Of Probate Code § 2642 Petition For Attorney Fees Of $64,398.75 And $4,145.31 Costs To Law Firm Representing Co-Guardians Of Minor’s Estate

Law Firm Failed To Cease Work As Instructed By One Of The Co-Guardians.

            Probate Code § 2105(c)(1) requires that “[w]here there are two guardians or conservators, both must concur to exercise a power.”  Unfortunately for the law firm seeking fees in Guardianship of the Estate of L.T., Case No. B288733 (2d Dist., Div. 5 November 22, 2019) (unpublished), it filed a legal malpractice action under authorization from only one of two co-guardians.  As a result, the malpractice action had to be withdrawn, and although the law firm eventually received temporary authorization from other co-guardian to continue work, that authorization was revoked with instruction to cease work less than two weeks later – an instruction the law firm did not follow. 

            In the meantime, co-guardians brought in other counsel to resolve the dispute they had with their former attorney/firm.  Once that dispute was resolved, the law firm that had been instructed to cease work petitioned for $64,398.75 in attorney fees and $4,145.31 in costs.  The trial court denied – with its implied finding that the $10,000 retainer fee paid to the law firm to be reasonable and adequate compensation for the work performed during the time period work was authorized by both co-guardians.  Everything else

            The 2/5 DCA affirmed – finding substantial evidence supported the trial court’s ruling – and included a nice discussion on Cal. Rules of Court, Rules 7.751 and 7.702 (interest of ward considered instead of interest of beneficiaries of estate, and the showing required for an attorney filing a petition for extraordinary compensation) and Probate Code section 2642 (attorney providing legal services for guardian may petition for fees with court determining reasonable compensation).

POOF!, Probate: Four Successor Trustees’ Attorney’s Fees Of $74,824.50 Went POOF! Based Upon Failure To Show One Beneficiary Petition Was Prosecuted In Bad Faith And With No Differentiation Of Fees Between Two Petitions

Trustees Failure To File A Respondents’ Brief Sealed The Result!

            A beneficiary filing two petitions concerning two qualified personal residence trusts likely was shocked when a probate court granted $74,824.50 in attorney’s fees to four successor trustees after beneficiary voluntarily dismissed petitions after obtaining some desired results.  Beneficiary did well to appeal in Sterne v. Sterne, Case Nos. B289907/B290099 (2d Dist., Div. 2 Nov. 26, 2019) (unpublished).

            The appellate court reversed the fees award as a matter of law.  Beneficiary was successful in obtaining results via his first petition.  Trustees failed to apportion their fees between the two petitions, such that the success on the first petition meant the whole fees award had to fall.  Beyond that, the probate court imposed fees against beneficiary personally, not out of his share of the trust estates--an order beyond the equitable power of the probate court.  (Pizarro v. Reynoso, 10 Cal.App.5^th 172, 189 (2017).) 

            It also bears noting that trustees filed no Respondents’ Brief—bad idea, where the other side raises cognizable arguments for reversal on appeal. 

Prevailing Party, Probate: Appellate Court’s Reversal Of A Probate Court Asset Characterization Required A Reexamination Of Whether Trustee’s Attorney’s Fees Were Proper Because She Was Really The Prevailing Party

A Re-Do Was Ordered To Be Done By The Trial Judge In The First Instance.

            In Placencia v. Strazicich, Case No. G055631 (4^th Dist., Div. 3 Nov. 26, 2019) (published), our local Santa Ana appellate court reversed a trial judge’s characterization of bank account funds which had led the lower court to award attorney’s fees to trustee as the prevailing party.  Given that the appellate ruling might have undermined that conclusion, the trial judge had to revisit the fee entitlement issue and amount of any fees to be awarded on remand.  Justice Ikola authored the decision, which deals with an interpretation of provisions of California’s Multiple-Party Accounts Law.

Probate: Beneficiary’s Continuous Bad Faith Objections To Trustee’s Activities and Accountings Cost Him A Surcharge Of $153,245.25 In Attorneys Fees and $11,339.79 In Costs

Beneficiary’s Contention That Trial Court Erred In Concluding His Objections Were Made In Bad Faith Was Not Supported With Evidence Or Authority.

            In Ettinger v. Gaskin, Case No. B287857 (2d Dist., Div. 3 November 4, 2019) (unpublished), two brothers, Roger and Arnold, were beneficiaries to their parents’ trust.  After their father passed, their mother divided the trust into 3 sub-trusts.  She named her grandnephew attorney as successor trustee to one (the “Survivor’s” trust), and Roger and Arnold as co-successor trustees to the other two.  Grandnephew assumed his duties about a year before mother passed and, at some point, also assumed ministerial duties on the other two trusts.

            When grandnephew filed his second accounting for the Survivor’s trust, Roger filed objections – just as he had unsuccessfully done with the first accounting and the accountings filed for the other two trusts.

            Substantial evidence presented at trial showed Roger as having malicious intent, his  continuous efforts to obstruct Arnold’s and grandnephew’s attempts to administer the trusts, his efforts to hire an assassin to kill Arnold and Arnold’s wife, and Roger’s efforts to sabotage other litigation matters related to the mother’s estate.  Additionally, Roger’s visitations with his mother before her death had been court restricted. 

            To perform his duties as successor trustee, grandnephew had hired two attorneys to represent him – one specializing in estate law and elder abuse, the other in estate law and accounting.  The two attorneys provided reasonable explanation and careful analysis for their billing practices and apportionment of litigation issues between them – which the trial court found to be reasonable under the circumstances.  Roger’s testimony, however, was found to be “manifestly not credible” and “patently false” by the trial court.

            In the end, all fees and costs in the second accounting were approved, and all of Roger’s objections were overruled as being made without reasonable cause and in bad faith.  Grandnephew filed a petition requesting a surcharge amount against Roger’s share of the Survivor Trust, of $153,245.25 in attorneys’ fees and $11,339.79 in costs – which was granted in full.

            Roger apparently found the trial court’s decision objectionable because he appealed.  However, he went to the appellate court without evidence, argument, or authority supporting his contention that the trial court erred in its conclusion that his objections were unreasonable and made in bad faith.  Instead, he complained that the trial court had denied his request for a trial continuance and had excluded an exhibit at trial.

            When this happens, the appellate court may decline to consider the issue and treat the appellant’s contentions as waived.  However, the 2/3 DCA addressed the appellant’s contentions – despite the shortcomings in the appellate brief.

            First, his complaint about the denial of the trial continuance – made on the day before trial – was without merit.  Roger had requested a 60-day continuance to allow his attorney, who had substituted into the case, to get up to speed with the case.  This motion was renewed on the day of trial with Roger’s attorney informing the court that a 7-day continuance would suffice.  The 7-day continuance was granted over the objections of Arnold and grandnephew.

            Next, the 2/3 DCA found no abuse of discretion in the trial court’s exclusion of one exhibit.  The exhibit was a declaration that was not included on the joint exhibit list, had not been shared with opposing counsel, and did not pertain to the main issue at trial.  Therefore, there was also no prejudice to Roger in the exclusion of this exhibit.

Experts, Probate: First District Affirms $24,755.60 Expert Costs Award And $180,285.25 Fees Award, Which Included $8,245 In Fees On Fees, To Defendants Successfully Contesting Decedent’s New Will

Plaintiff Seeking To Probate New Will Was Decedent’s Long-Time Attorney Friend Who Drafted And Benefited From New Will.

            A person challenging the validity of a will on the grounds of undue influence or lack of testamentary capacity bears the burden of proof under Probate Code § 8252(a).  This burden shifts, under Probate Code § 21380, when a presumption of undue influence arises from the challenger’s showing that the person accused of undue influence (1) had a confidential relationship with the testator; (2) actively participated in procuring the instrument’s preparation or execution; and (3) would benefit unduly by the testamentary instrument. (Rice v. Clark (2002) 28 Cal.4^th 89, 97.)  When this happens, the proponent of the will has the burden of proving the absence of undue influence.  If he/she cannot, Probate Code § 21380(d) mandates the beneficiary to bear all costs of the proceeding, including reasonable attorney’s fees.

            This is what happened in Laguatan v. Pablo, Case Nos. A152115, A152250 (1^st Dist., Div. 3 Sept. 30, 2019) (unpublished).  Here, decedent executed a holographic will that left most of his estate to his two cousins.  Seven months later, he was admitted to a hospital suffering sepsis, pneumonia, heart failure, senility, and other ailments.  During this time, his long-time friend, a California-licensed immigration attorney, had him execute a new will that the attorney had actively procured.  The new will revoked the holographic will, reduced the gifts to the cousins, named attorney friend as the sole executor, and provided attorney friend the residue of the estate – after payment of debts and distribution of specific gifts – to “manage and dispose of . . . according to guidelines relating to Christian humanitarian charitable principles which we both agree on and accede to.”  The new will provided no oversight for management and disposal of the residual estate assets.

            When attorney friend sought to probate the new will, the cousins successfully challenged on the grounds of undue influence and lack of testamentary capacity, and successfully moved to have the holographic will admitted to probate.  Cousins’ successful challenge triggered fees and costs under § 21380(d), and the trial court awarded them with $27,427 in costs, which included $24,755.60 in expert costs, and $180,285.25 in fees after a $7,950 reduction for some duplication.  The fees award included fees on fees in the amount of $8,245.

            Attorney friend appealed the trial court’s judgment denying his petition to probate the new will and the post-judgment award of fees and costs, but the 1/3 DCA affirmed – finding the trial court had properly applied the presumption under section 21380 and had not abused its discretion in the post-judgment fees/costs awards. 

            Attorney friend’s arguments that the fees were excessive with too many hours billed, too many timekeepers, inflated rates for the attorneys and paralegals, vague time entries, non-compensable clerical work, and block billing went nowhere as he failed to meet his burden to point to the specific items he challenged, with sufficient argument and citations to the record.  The 1/3 DCA agreed with the trial court’s findings that fees were driven up by Friend’s own actions – meritless summary judgment motion and evidentiary objections, two trial continuances, and refusal to enter stipulations of undisputed facts.  Cousins had submitted detailed billing records and declarations in support of their initial request for fees and subsequent request for fees on fees.  As to attorney friend’s argument that the costs award was excessive and that the expert billed for two trial days, even though testifying on only one day, the 1/3 DCA found no abuse of discretion.  The expert fees were driven up by attorney friend’s actions – requesting a continuance on the day the expert had arrived prepared to testify. The continuance caused the expert to prepare for and attend a second trial day and testify when trial resumed over four months later.

Appealability, Probate: Trustee’s Attorney’s Appeal Of Order Denying Fees Without Prejudice Was Not A Final Appealable Order

Appeal Was Dismissed, But Attorney Could Renew Request In Civil Court.

            In Katzen v. Callan, Case No. G055985 (4^th Dist., Div. 3 Sept. 23, 2019) (unpublished), the 4/3 DCA—in an opinion authored by Presiding Justice O’Leary—dismissed an appeal by a trustee’s former attorney denying a fee request because the denial was without prejudice.  So, there was no final appealable order worthy of appellate jurisdiction, not to mention that the request could be renewed in civil court at the right time. 

Probate: Former Trustee Properly Surcharged With Attorney’s Fees For Bad Faith Trustee Conduct Relating To Contesting Accounting Objections/Presenting Unsupported Objections To Successor Trustee’s Accountings

However, Lack Of Admissible Evidence Did Require A $78,000 Reduction In The Total Surcharges.

            Justice Fybel in Bronson v. Jones, Case No. G055462 (4^th Dist., Div. 3 Sept. 13, 2019) (unpublished), except in two respects, affirmed a lower court’s surcharging of a former trustee’s attorney’s fees based on her bad faith conduct as a trustee in opposing objections to her reports and in objecting to the successor trustee’s reports.  The 4/3 DCA panel found that the fees incurred by beneficiaries were necessary and reasonable.  Furthermore, bad faith had been demonstrated because former trustee had brought 19 separate objections to successor trustee’s accountings and did not prove any with supporting evidence.  (Prob. Code, § 17211; Powell v. Tagami, 26 Cal.App.5^th 219, 234 (2018).)

            In doing so, Justice Fybel penned an excellent discussion of how a fee claimant presents evidence so it is admissible as far as obtaining reimbursement for an attorney’s work.  Invoices and billing statements authenticated by attorneys (including an attorney who is familiar with a former attorney’s work, if that attorney died or was otherwise unavailable) will support a fee award so as to avoid a hearsay objection.  (See, e.g., Powell v. Tagami, 26 Cal.App.5th at 230 [attorney’s declaration attaching his billing statements as well as billing statements for other attorneys was sufficient basis to determine attorney fees award]; Horsford v. Board of Trustees of California State University, 132 Cal.App.4th 359, 396 (2005) [“[T]he verified time statements of the attorneys, as officers of the court, are entitled to credence in the absence of a clear indication the records are erroneous”]; Cates v. Chiang, 213 Cal.App.4th 791, 821-822 (2013) [trial court may award attorney fees for work performed by previous counsel based on later counsel’s reconstructed summary of their work]; Weber v. Langholz, 39 Cal.App.4th 1578, 1587 (1995) [declaration of counsel made under penalty of perjury and verified cost memorandum is sufficient to support award of attorney fees].)  One should also read Justice Fybel’s prior decision in Copenbarger v. Morris Cerullo World Evangelism, Inc., 29 Cal.App5th 1, 13 (2018) [reviewed in our October 20, 2018 post before it was certified for publication], where a trial court judgment was reversed because a client improperly attempted to authenticate attorney invoices such that there was no admissible evidence to support the judgment.

            However, in Bronson, $78,000 of the surcharges had to be excised from the judgment, otherwise affirmed, because no admissible evidence was introduced to support the awarded amounts. 

Probate: Intestate Estate Co-Administrators/Beneficiaries, Defending An Appeal By Which Distribution Of Assets Denied To Certain Claimed Beneficiaries, Justified Compensation For Appellate Fee Work Incurred By Them

Common Fund Doctrine Or Expenses Of Administration Theory Justified Compensation.

            In Estate of Ochoa, Case No. A150018 (1^st Dist., Div. 2 Aug. 27, 3019) (unpublished), a dispute arose involving intestate inheritance rights between statutory heirs of the decedent and siblings of the decedent’s predeceased spouse erupted, with the probate court determining the estate should be distributed to the decedent’s heirs.  Respondents were co-administrators of the estate and decedent’s niece and nephew, contesting the objections by the siblings of the predeceased spouse.  Respondents petitioned the lower court to have the estate pay for their attorney’s efforts in defending against the appeal (which was affirmed on the merits eventually), a request which was denied.

            The appellate court reversed the fee reimbursement request from the estate.  Respondents represented the interests of all decedent’s heirs, given that the unsuccessful objections to the estate distribution would have reduced the total inheritance to those heirs by half.  So, respondents—even though they too were beneficiaries—maintained a benefit for many other heirs, such that the common fund doctrine supported awarding appellate fees to respondents.  Furthermore, in line with Estate of Stauffer, 53 Cal.2d 124, 132 (1959), the fees were also compensable as administration expenses given that total estate property was involved.  So, the matter was remanded to the lower court to determine the amount of appellate attorney’s fees to be paid by the estate for respondents’ successful defense on appeal. 

Probate: Where Beneficiary’s Petition For Distribution/Accounting Seen As Driven More By Emotion Than Necessity, Denial Of Attorney’s Fees For Getting Some Results Not Erroneous

Probate Court’s Conclusion Of No Bad Faith By Trustee Was Factual And Deferential Standard Meant It Was Held Up On Appeal.

            The opinion in Mappus v. Mendonca, Case No. A149974 (1^st Dist., Div. 4 June 20, 2019) (unpublished) demonstrates that motives for probate proceedings do make a difference and that a lower court determination of “no bad faith” has a very persuasive value on appeal (given it is factual finding and entitled to deference).

            In this one, brother trust beneficiary engaged in battles against trustee (a friend of his grandparents, after he was replaced as trustee) with respect to distributions, holding back reserves, and a trust accounting timing.  (The other trust beneficiary was brother’s sister.)  Trustee indicated, in response to brother’s demands, that an accounting would be forthcoming, but brother brought a petition to obtain distributions, to challenge reserves, and to force the accounting, with the accounting delivered shortly after the petition was filed in line with what trustee indicated before.  Although partially prevailing with respect to obtaining distributions, the probate court denied other relief and found that trustee’s accounting actions were not undertaken in bad faith.  The probate court awarded $10,000 in attorney’s fees to trustee’s attorney and denied brother’s request for attorney’s fees.  Brother appealed.

            The 1/4 DCA affirmed.

            Because trustee provided the accounting as promised and the probate court found “no bad faith,” these factual conclusions were found to be supported with substantial evidence in light of the deferential review accorded to them on appeal.  (In this area, bad faith accounting fee-shifting is discretionary under Probate Code section 17211(b) anyway, with both subjective bad faith and objective unreasonableness needing to be shown, see Uzyel v. Kadish, 188 Cal.App.4^th 866, 926-927 (2010)).  Ultimately, the appellate court found that brother’s actions were driven more by emotion than necessity, given that positive actions by trustee happened fairly quickly anyway.  Sister should not have to pay any costs or fees, because brother’s activities only benefited himself, not the trust.  Finally, it was no abuse of discretion to award $10,000 in fees to trustee’s attorney.

            BLOG COMMENT—The appellate court has an interesting discussion of whether a trustee’s attorney’s bad faith could be imputed to the trustee.  Although implying it could, there was no evidence that to support attorney’s egregious bad faith, so the issue did not need to be squarely confronted on appeal.

Probate, Substantiation Of Reasonableness Of Fees: Trustee Benefiting Herself, Not The Trust, Not Entitled To Reimbursement Of $500,000 In Attorney’s Fees And Costs In Various Probate Proceedings

Besides That, Fee Substantiation Of A Re-created, Severely Redacted Nature Did Not Support Fee Recovery. 

            Decedent in In re Andersen Family Trust, Case Nos. B286565/B286867 (2d Dist., Div. 4 June 5, 2019) (unpublished) left about $1.3 million in assets to three beneficiaries, one of which was designated as the trustee.  After a to-do on distribution of assets which was largely won by beneficiaries, trustee sought $500,000 in attorney’s fees and costs for doing battle in various proceedings with the beneficiaries.  The lower court denied the request on several grounds.

            The 2/4 DCA affirmed.  The main problem was that trustee failed to do an allocation, with most of the work relating to protection of trustee’s own interests rather than for the benefit of the trust—with the trust’s benefit being of pivotal concern when it comes to reimbursement of fees and costs in the probate arena.  (Whittlesey v. Aiello, 104 Cal.App.4^th 1220, 1231 (2002).)  Beyond that, the fee substantiation was flimsy, consisting of re-created time and severely redacted billing entries such that the lower court was correct in concluding it was impossible to apportion fees for trustee’s versus the trust’s true interest. 

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. 

Probate: $1.867 Million Probate Fee Award To A Prevailing Party Was No Abuse Of Discretion Based On Complexity Of The Case

Fee Entitlement Existed Under Probate Code Sections 21351 And 17211.

            In Estate of Ashlock, Case Nos. F076941 et al. (5^th Dist. May 3, 2019) (unpublished), a prevailing party in a complex probate case with high stakes was awarded $1.867 million out of a requested $2.885 million, which included a positive 1.5 multiplier. Losing party was aghast and appealed, but no different result followed.

            With respect to the argument that the appeal was not timely filed under CRC 3.1702(a), the Fifth District agreed with prevailing party that those deadlines did not apply to probate cases, but any error was harmless because the lower court had good cause to extend the deadline filing date anyway.

            Losing party argued a statement of decision was required on the fee issues, but that was dismissed because it is not the case under existing California law.

            Fee entitlement bases did exist for a fee award. Because losing party was a drafter of the germane trust and a putative beneficiary, Probate Code section 21351(d), (e)(1) did have a statutory fee provision applying to this same situation where there was fraud/undue influence by the trust drafter. Beyond that, Probate Code section 17211, a statutory fee provision relating to trustee challenges, was intertwined with other issues so as to provide a second basis for fee entitlement.

            The billing records provided adequate substantiation, with losing party failing to raise the proper hearsay objection that the records were not properly authenticated as business records.

            Finally, the lodestar and multiplier awards by the lower court was not erroneous, with this opinion having a good survey of multipliers in complex cases.

Probate: Fees Of Probate Administrator Wrongfully Not Given Administrative Priority Over Other Estate Distributions

Probate Code Section 11420 Dictated, Although Appellate Court Was Disturbed By Administrator’s Counsel’s Potential Conflicts Of Interest.

            In Estate of Steinberg (Hooy & Hooy v. Steinberg), Case No. A150046 (1^st Dist., Div. 2 April 30, 2019) (unpublished), a law firm serving as counsel for an initial administrator of a probate estate had payment of its fees subordinated by the probate court to other payments from the estate’s assets. That result was reversed on appeal based on Probate Code section 11420, which allows ordinary and extraordinary expenses to have priority over other expense distributions from an estate. However, although the parties did not really raise the issue or the fee disgorgement implications, the appellate court was disturbed by potential conflicts of interest and ethical violations by the appealing counsel, such that the question did not have to be confronted—but observing in the process that “this probate matter is an issue-spotting exercise in professional ethics that could rival a law school exam.”

Probate: Beneficiary Winning Undue Influence Challenge To Adverse Trust Amendment Entitled To Appellate Fees Under Trust’s “No Contest” Expense Clause

Lower Court’s Denial of Winning Beneficiary’s Appellate Fees Reversed In This Appeal.

            One beneficiary in Key v. Tyler, Case No. B283979 (2d Dist., Div. 2 April 19, 2019) (published) successfully challenged a disinheriting, adverse trust amendment as being the product of undue influence by the trustee, who was also a trust beneficiary. Winning beneficiary also was successful in obtaining affirmance of this ruling in a prior appeal by trustee. However, when winner petitioned to enforce the trust’s “no contest” clause against trustee/beneficiary and to obtain attorney’s fees for prevailing on appeal, the probate court granted a SLAPP motion to the “no contest” enforcement petition and denied appellate fees to winning beneficiary in the prior proceedings.

            The 2/2 DCA reversed both orders. With respect to the denial of fees, the appellate court found a fee entitlement basis for an award of appellate fees to winning beneficiary based upon language in the “no contest” clause providing that “[e]xpenses to resist any contest or attack [of] any nature upon any provision of this Trust shall be paid from the Trust Estate as expenses of administration.”

Probate: Trustee Successfully Winning Baseless Accounting Challenge Not Entitled To Reimbursement Of Expert Witness Fees

Nothing In General Costs Statutes Or Probate Code Section 17211 So Allows.

           In Ramirez v. Rue, Case Nos. B283677/B286574 (2d Dist., Div. 4 April 18, 2019) (unpublished), a trustee prevailed in a battle by co-beneficiaries challenging certain accountings. Trustee won because the probate court determined the contested accounting dispute was brought/prosecuted in bad faith and without reasonable cause under Probate Code section 17211. The lower court awarded the expenses of a privately-retained expert to the trustee. That order was reversed on appeal, given that nothing in the general costs statute or section 17211 allows for recovery of such expenses.

POOF!, Probate: Plaintiffs’ Award Of $500,000 In Attorney Fees Necessarily Falls With Reversal And Remand Of Trial Court’s Judgment On Appeal

The Trial Court’s Inconsistencies In Its Findings And A Lack of Substantial Evidence Means A New Trial Is Required To Re-Evaluate The Claims And Defenses.

            Miranda v. Alford, Case No. G054897 (consolidated with G055167) (4^th Dist., Div. 3 March 8, 2019) (unpublished) is a case involving a man’s wife of eight years, and his two adult daughters, who have been embroiled in litigation over his estate since his passing in 2014 from an aggressive form of brain cancer.

            Daughters filed a petition challenging the validity of a restated trust and will executed by their father in 2014 that left Wife with 1/3^rd of his estate – claiming Wife had exerted undue influence and father lacked the mental capacity to understand the documents he signed in early 2014, after being moved to an assisted living facility due to diminished mental capacity stemming from the brain cancer.

            The case was tried over 15 days in May and June of 2016. After the daughters presented their case-in-chief, Wife moved for judgment in her favor on the lack of capacity and undue influence claims – pursuant to Code Civ. Proc. section 631.8. The trial court granted the motion as to the lack of capacity claim, but denied it as to the undue influence claim. Trial then continued with Wife’s defense to the undue influence claim. At the conclusion of trial, the trial court accepted closing briefs and took the matter under submission. In its tentative ruling, the trial court found the restated trust and will were invalid – based on both the lack of capacity and undue influence claims.

            In its ruling, the trial court found “[t]here was a rush by [Wife] to get estate documents in order before [Daughters] came back to town in March,” that it was “not credible that James initiated the topic of a new trust and will or transfers of his real property in March 2014,” and that [Wife] acted on her influence over her now mentally and physically weak husband over whom she had physical control over his residential care and finances in order to persuade him to provide for her on his death . . .” On the flipside, the trial court also observed that “[t]here is no credible evidence that [Wife’s] actions were primarily motivated by malice. She was his wife and the day to day responsibility was hers and she appears to have acted as a caring wife throughout this final illness,” and that “[he] may well have said he wanted to take care of [Wife] and probably did.”

            In a later hearing, Wife’s counsel pointed out the trial court’s inconsistencies between its mid-trial section 631.8 ruling in Wife’s favor on the lack of capacity claim and its tentative ruling, but the court explained it was reconsidering the 631.8 ruling. Wife’s counsel then pointed out the prejudice to Wife who did not defend against the lack of capacity claim based on the 631.8 ruling – requesting a vacate of the trial court’s findings and a new trial. The trial court denied the request, and entered a final decision changing the “lacked the necessary capacity” language from the tentative ruling to “had diminished capacity” in the final statement of decision, and further awarded daughters $500,000 in attorney fees. Wife appealed.

            In an opinion authored by Justice Goethals, the 4/3 DCA observed the following about the parties and this case: “Our record suggests they may have collectively incurred as much as $1 million in attorney fees through the end of the May 2016 trial. The intensity of the litigation does not seem to have abated in the wake of trial and, unfortunately, our resolution of the issues before use will not bring it to a close.”

            Ultimately, based on inconsistencies in the trial court’s rulings, and the lack of substantial evidence for the undue influence ruling, the 4/3 DCA reversed the final statement of decision, and remanded the matter back to the trial court for a new trial on the undue influence and lack of capacity claims. Because the judgment was reversed, Wife’s appeal of attorney fees awarded to daughters became moot as the award fell with the judgment.

Probate: Brother Properly Denied Fees In Failing To Obtain Conservatorship Over Mother

His Anger Over Another Probate Dispute Was The Driving Cause So That Claimed Conservatorship Fees Were Unreasonable.

            Probate is one of those areas where attorney’s fees recoveries are guided, overwhelming, by equitable principles. Reaume v. Reaume, Case No. G054759/G054864 (4^th Dist., Div. 3 March 12, 2019) (unpublished) well demonstrates this reality.

            There, one brother of a mother’s estate petitioned to invalidate a quitclaim deed executed by his mother to another brother, prior to her death, based on her incapacity and undue influence. The trial court rejected both theories, as well as denying one brother’s attorney’s fees incurred in unsuccessfully petitioning for a conservatorship in relation to his mother.

            Everything was affirmed on appeal, in an opinion authored by Justice Goethals. With respect to the fees award, the lower court rationally determined that the conservatorship request was an angry reaction by one brother to an estate sale by the other brother such that the fees were not tethered to any need for protection of the mother. The record showed mother’s needs were being met such that fees were not warranted for the unsuccessful conservatorship efforts.

Probate: Where Judgment Was Satisfied, Trial Court Erred In Awarding Post-Satisfaction Fees Against Satisfying Objector

4/3 DCA Also Determines Probate Court Section 859 Allows Doubling, But Not Trebling, Of Damages.

            Objector in Conservatorship of Ribal, Case No. G056105 (4^th Dist., Div. 3 Jan. 18, 2019) (published) was ordered to return funds to the conservatorship and, on remand, the trial court awarded conservator post-judgment attorney’s fees incurred in attempts to enforce the judgment of $43,507.50 against objector. This one was reversed because the record showed that the judgment had been satisfied before the fee motion was brought, meaning the fee motion was untimely under Code of Civil Procedure section 685.080(a). The 4/3 DCA, in the opinion authored by Acting Presiding Justice Moore, also construed the scope of Probate Code section 859, determining that it allows for doubling, but not trebling, of damages for the value of property taken or disposed of by a person committing financial elder abuse.

Probate: Trust Beneficiary Obtaining Concrete Substantial Benefits On Behalf Of The Trust Was Entitled To Have $721,258.28 In Attorney’s Fees, Expert Fees, And Costs Paid From The Trust

2/6 DCA Has Nice Discussion Of Similarities And Differences Between The Substantial Benefit Versus Common Fund Theories Of Fee Recovery.

          Generally, trust beneficiaries must pay their own attorney’s fees incurred in challenging a trustee’s conduct, even if they ultimately succeed. (Leader v. Cords, 182 Cal.App.4^th 1588, 1595 (2010).) However, a court in its equitable discretion can order a trust to pay for the fees incurred by a trustee beneficiary providing a substantial benefit to the trust or the trust beneficiaries. (Serrano v. Priest, 20 Cal.3d 25, 38 (1977) [our Leading Case No. 3].) These principles were applied by the 2/6 DCA to affirm a substantial attorney’s fee, expert fees, and costs award in favor of a trust beneficiary who provided concrete pecuniary and nonpecuniary benefits to the trust.

            In Smith, Jr. v. Szeyller, Case No. B281758 (2d Dist., Div. 6 Jan. 16, 2019) (published), one trust beneficiary expended hefty sums to challenge the conduct of some trustees to a $14 million trust estate, given that they had apparently spent over $2 million on expenditures, gambling, and gifts from a survivor’s trust accounts during the last year of the wife (who was a co-trustee along with one of the trustees accused of making extravagant expenditures). The litigating trust beneficiary (Don) eventually obtained a settlement by which the trustees froze accounts, had a referee appointed to do accountings, and had the challenged trustees pay some past due tax penalties/interest on behalf of the trust. The lower court also ordered that the trust, in proportion to beneficiaries’ interests, pay Don’s $721,258.28 in attorney’s fees, expert fees, and costs based on the “substantial benefit” doctrine. A nonparticipating beneficiary along the way (Donna) challenged this award, although she failed to contest or object to the fees even through being provided notice of same.

            The 2/6 DCA affirmed. It found that Donna’s failure to object largely gutted her challenges to what Don had accomplished for the trust. With respect to fees, her failure to object had large impacts. The appellate court did believe that Don produced concrete benefits for the trust, and it noted that Donna only had to pay a small amount of the fees given her more limited beneficiary interests in the operative trust, sub-trusts, and related accounts. In doing so, the reviewing court reminded us that, although the substantial benefit doctrine is an outgrowth of the common fund doctrine, the substantial benefit doctrine applies to both pecuniary and nonpecuniary benefits while the common fund doctrine applies only to pecuniary benefits.  

Probate: Probate Court’s Failure To Entertain Evidentiary Objections To Extraordinary Fees Results In Reversal

Although Not Raised Artfully, Merits Of Objections Required An Evidentiary Hearing.

            Estate of Willard, Case No. 282122 (2d Dist., Div. 7 Jan. 2, 2019) (unpublished) is a case where an estate administrator of his mother’s estate did not gain any attention to his challenges to an attorney’s request for statutory and extraordinary probate fees. The trial court overruled his objections without allowing an evidentiary hearing, even though he was an in pro per litigant.

            This one got reversed on appeal, where the reviewing court determined that there were meritorious challenges which did not get vetted by an in pro per party. It did not matter that the objections were inartfully “aired,” because this was an unusual situation where the merits showed that the objections should have been considered.

            On appeal, the 2/7 DCA decided that the merits were very compelling because this was a contested matter such that an evidentiary hearing was justified on these issues: (1) failure to respond to a tax assessor’s notice resulting in some penalties; (2) responsibility for an 18-month delay in administering a probate estate; (3) billing charges which were duplicative, excessive, or inaccurate in nature; (4) improperly demanding and receiving compensation from a litigant personally; (5) deciding whether the attorney billed the right client for services; and (5) considering whether the requesting attorney properly communicated with his clients.

Common Fund, Probate: Decedent’s Son By A Prior Relationship Successfully Defended A Will Contest, Creating A Common Fund From Which Attorney’s Fees Were Appropriately Paid By The Estate

Although Such Fees Should Usually Be Paid Forthwith, Probate Code Has Discretion To Defer Them For Payment Until Final Distributions Are Made.

            The common fund doctrine, which usually is at play in class action or probate cases, allows the person obtaining a benefit for a number of persons to be awarded attorney’s fees out of the fund created, based on the theory that the other persons should have to bear their fair share of fees rather than just the person who led to the creation of the fund. (Serrano v. Priest, 20 Cal.2d 25, 34-35 (1977); Northwest Energetic Services, LLC v. California Franchise Tax Bd., 159 Cal.App.4^th 841, 878 (2008).)

            In Estate of Trikha, Case No. G054909 (4^th Dist., Div. 3 Dec. 27, 2018) (unpublished), a son of decedent by a prior relationship successfully defended against a will contest so as to create a common fund for others to share. He, in turn, moved to recoup his attorney’s fees. The trial judge agreed that fees were warranted, awarding about $154,000 from the estate to son’s counsel of record. However, the judge deferred payment and determination of priority until the time of final distribution. Son appealed, claiming prompt payment of fees should have been ordered and the fees deemed to have priority.

            The 4/3 DCA, in an opinion authored by Acting Presiding Justice Aronson, affirmed the deferment order under the abuse of discretion standard. Although agreeing that payment of such fees normally should be prompt in nature, the panel could locate no case saying that the trial court must order prompt or immediate payment. Review was hampered by the lack of a reporter’s transcript of the hearing, such that deferment was within the discretion of the probate judge in this particular situation.

Costs, Probate, Section 998: Insurance Company Controlling Litigation Is De Facto Party Under Probate Code, Liable For Litigation Costs Under Rejected CCP § 998 Offer

Because Insurance Company Controls The Litigation, Court Looks Past "Legal Fiction" That Decedent's Estate Is The Party.

        Amanda Meleski was injured when Albert Hotlen ran a red light and collided with her vehicle. But by the time Mr. Hotlen could be served with a summons, he was dead. However, Mr. Hotlen had purchased a $100,000 policy from Allstate. Ms. Meleski offered to settle with Allstate for one dollar less than policy limits, to wit, for $99,999. Allstate rejected the offer, went to trial, and took a hit from the jury for $180,613.86. Ms. Meleski then sought to recover expert witness fees and other litigation costs, in the amount of $66,017.08, pursuant to section 998, having done better at trial than the offer that Allstate rejected. However, the trial court held that her recovery against Allstate was limited by the policy limit of $100,000. She appealed. Meleski v. Estate of Hotlen, Case No. C080023 (3rd Dist. Nov. 29, 2018) (published).   

        The appellate court refused to ignore the reality that Allstate controlled the litigation, adding: "Moreover, we find it manifestly unfair that section 998 could be employed by Allstate to recover costs from the plaintiff (which costs it would have no obligation to pay to the estate), but Allstate would have no corresponding responsibility to pay costs merely because it is not the named party." The Third District reversed the order denying an award of costs from Allstate, modifying the award to add $66,017.08 to the $100,000 in damages.

Probate: Attorney Guardian Ad Litem (GAL) Fees Can Be Paid From Mother’s Trust

Probate Code Section 1003 So Allows.

            In Berwick v. Walsh, Case No. G054632 (4^th Dist., Div. 3 Oct. 30, 2018) (unpublished), the issue on appeal was whether a probate court could award GAL fees for a mother’s husband to be paid out of mother’s share of the trust. Temporary successor trustee contested that the court could order disbursement from mother’s trust, with the fees being just over $12,000. The 4/3 DCA, in a 3-0 opinion authored by Justice Goethals, affirmed. Probate Code section 1003 expressly provides that the GAL’s expenses, including compensation and attorney’s fees, “shall be … paid as the court orders, either out of the property of the estate involved or by the petitioner or from such other source as the court orders.” Given that the statute allows payment from “such other source as the court orders,” the probate court did not abuse its discretion in ordering GAL fees paid from mother’s trust.

Appealability, Probate: $19,125 Attorney’s Fees And $537.94 Cost Orders Affirmed On Appeal For Beneficiaries’ Bad Faith Accounting Petition Directed Against Trustee

Decision Reminds Us That Probate Court Orders, For Appealability Purposes, Are Determined Under the Probate Code.

            Armstead v. De Macias, Case No. B284275 (2d Dist., Div. 4 Oct. 16, 2018) (unpublished) involved beneficiaries’ appeal of a probate court determination that $19,125 in attorney’s fees and $537.94 in costs should be awarded to trustee for beneficiaries’ bad faith filing of an accounting petition. The orders were affirmed on appeal.

            As far as appealability, this case reminds us that most probate court orders are governed by Probate Code section 1300. In this case, fixing of compensation or expenses of an attorney is appealable under Probate Code section 1300(e), while a final order under the bad faith accounting statute is appealable under section 1304(a) subject to exceptions which were not applicable in this particular matter.

            On the merits, beneficiary-appellants could not surmount the deferential substantial evidence standard applicable to the probate court’s factual findings that the accounting petition was in bad faith under section Probate Code section 17200. The trustee did report/provide an accounting to the beneficiaries, asked for form waivers to avoid further probate expenses, and was reasonable in rejecting options to keep a property in the family given that the siblings disagreed on how to dispose of it (resulting in an eventual sale).

Prevailing Party, Probate, Section 1717: 1/1 DCA Affirms “No Prevailing Party” Determination In Hotly Contested Probate Promissory Note Dispute Between Two Siblings

Although Trial Court Lacked Jurisdiction Over The Dispute In California, Fee Denials On Dueling Motions Was Justified Because Siblings Had To Await Determination In Texas Action.

            In Savage v. Savage, Case No. A150984 (1^st Dist., Div. 1 Oct. 15, 2018) (unpublished) [parenthetically, maybe a good case name for court disputes – no?], two siblings had quite a dispute about promissory notes, with litigation over the dispute occurring in California probate court and then a Texas court. The California probate court determined the California notes were extinguished, but denied dueling motions for contractual attorney’s fees by both sides on the basis that no one prevailed.

            The appellate court affirmed, but for a very different reason. It first determined that the probate court had no jurisdiction to determine the sibling dispute, although having jurisdiction to determine the fee proceeding based on Barry v. State Bar of California, 2 Cal.5^th 318, 320-321 (2017). However, affirmance was required because no merits determination was made of the sibling dispute given that this required awaiting what occurred in Texas. (DisputeSuite.com, LLC v. Scoreinc.com, 2 Cal.5^th 968, 973, 977 n. 1, 981 (2017) [our Leading Case No. 21].)  

Probate: Powell v. Tagami Opinion Now Published

Deals With Compensability of Mediation, Personal Attorney, and Accounting Objection Fees.

            In an August 9, 2018 post, we discussed the unpublished opinion in Powell v. Tagami, a Fourth District, Division 1 decision relating to probate compensation for mediation work, personal litigant work, and accounting objector work where unwarranted ad hominem attacks were levied against opposing siblings and/or their attorneys. We can now report that this case was certified for publication on August 15, 2018.

Probate Two-Fer: $237,000 In Fees Against One Objecting Sibling Stood After Merits Challenges Rebuffed And Improperly Objecting Beneficiary In Second Decision Reviewed Below Socked With $14,115.39 In Fees Under Probate Code Section 17211

Blech v. Blech, Case No. B268326 (2d Dist., Div. 3 Aug. 6, 2018) (Partially Published; Fee Discussion Unpublished).

            In this one involving a trust dispute between one objecting sibling against his other three siblings, the appellate court rejected objector’s merits challenges on appeal, which also affirmed the fee awards of $237.000 in aggregate amount as to several fee awards in favor of the three siblings. Just goes to show you that probate litigation can be expensive and even more expensive for the loser.

Powell v. Tagami, Case Nos. D072566/D073083 (4^th Dist., Div. 1 Aug. 6, 2018) (Unpublished).

            Probate Code section 17211 authorizes an award of fees against a beneficiary who improperly challenges a trustee’s accounting without reasonable cause and in bad faith. One beneficiary was hit with a $14,115.39 fee award under this provision, a determination sustained on appeal. Among other things, the appellate court found that the work and costs at mediations were justifiable, the work by a personal attorney for trustee can be compensated in the probate court’s discretion, and the bad faith of the objector was corroborated by his personal attacks on his siblings and their attorneys. That goes to show you how ad hominem attacks are never good, bolstering any findings of willfulness or bad faith in many situations.

Probate: 5th Dist. Court Of Appeal Reversed Award To Atty Not Representing Conservator For Providing Assistance To Public Guardian, But Recognized Equitable Cases Allowed Partial Fee Award For Atty In Obtaining Appointment of Conservator Public Guardian

Probate Code Section 2642 Was Not The Right Statute, But Estate of Moore Allowed For Partial Fees To Attorney Upon Equitable Grounds.

            In Conservatorship of Smith, Case No. F073436 (5^th Dist. May 24, 2018) (unpublished), the lower court granted an attorney assisting the Public Guardian as conservator after helping obtain the conservatorship appointment. The probate court awarded fees and costs of slightly under $19,000 under Probate Code section 2642, payable to the non-conservator representing attorney out of the conservatorship estate given that the conservatorship was over a person and that person’s estate. One of the involved parties appealed, claiming section 2642 was the wrong statute for distribution to fees to the assisting attorney.

            The appellate court agreed. Section 2642 only applied to compensation to the actual conservator’s attorney, which the attorney receiving fees/costs was not. However, not all was lost. It further held that the reasoning of Estate of Moore, 258 Cal.App.2d 458, 460-462 (1958), on equitable grounds, allowed the attorney to receive fees for work successfully leading to appointment of the Public Guardian as conservator. So, the matter was remanded to recalculate the fees due under an apportionment-out of fees relating to work other than appointment of the Public Guardian.

Probate: Administrator’s Counsel Submitted Proper Proof To Allow A Claim For Extraordinary Fee Service Compensation

California Rules Of Court, Rules 7.702 And 7.703 Were Followed.

        A probate court in Estate of Kokus, Case No. C076290 (3d Dist. Feb. 28, 2018) (unpublished) awarded administrator’s counsel $34,492 in extraordinary fees for helping the court address ambiguities in a will, drafting a special needs trust, and handling the sale of several items of property that were part of the estate. Also, the court carved out $200,000 from distribution to pay attorney’s fees for unresolved issues and litigation.

        Sister objected to these rulings, but the appellate court found no error in what the trial judge. The administrator’s counsel provided detailed billings under California Rules of Court, rules 7.702 and 7.703, so as to establish a solid basis for extraordinary fee compensation reimbursement and that the services which were claimed were extraordinary in nature. It also was no abuse of discretion to reserve distribution proceeds for future payment of fees necessary to close the trust.

Probate: Appellate Court Reverses Award Of Attorney’s Fees To Resigning Co-Trustee Sister In Dysfunctional Fight With Co-Trustee Brother

Reviewing Court Felt That Sister Also Breached Her Fiduciary Duties And Did Not Get All She Wanted, So It Was An Abuse Of Discretion To Award Her Fees Out Of Trust Property.

            In what the parties themselves and the appellate court described as a dysfunctional relationship between a brother and sister who were at one point co-trustees of a trust, the trial judge awarded sister $88,000 out of a requested $106,880.52 in attorney’s fees payable out of the trust. 

            The appellate court found this to be an abuse of discretion in Winter v. Winter, Case Nos. D070847/D072017 (4^th Dist., Div. 1 Feb. 26, 2018) (unpublished).  The primary reason was that sister did not obtain all of her litigation objectives in terms of forcing a sale of some real property and that she herself breached fiduciary duties to the trust such that it was unfair to award fees based on these and other circumstances.

Probate/Record: Lack Of Transcript On Probate Objection To Award Of Ordinary Fees Dooms Appeal By Objecting Party.

Probate Fee Order Presumed Correct.

            A probate court in Estate of Marshall, Case No. A150296 (1^st Dist., Div. 2 Feb. 27, 2018) (unpublished) awarded an attorney $7,500 in ordinary attorney’s fees to a former attorney for an estate.  An objection was filed stating that the fee should be shared with a court-appointed administrator, which objection was not sustained.  An appeal followed, but the appellate court affirmed for a transgression we see a lot:  the lack of a reporter’s transcript on the hearing with respect to the objection, which made review impossible. 

Probate/SLAPP: Trustee Properly Not Granted SLAPP Motion Directed At Probate Surcharge Petition

Allegations Of Petition Involved Breach Of Loyalty Claims, Not Just Litigation Positions.

            Gaynor v. Bulen, Case No. D07097 (4^th Dist., Div. 1 Jan. 23, 2018) (published) involved a surcharge petition brought by certain beneficiaries against co-trustees which, among other things, challenge attorney’s fees claimed by the trustees.  One of the trustees filed a SLAPP motion against the petition, claiming the petition challenged his earlier litigation positions which were absolutely privileged in nature.  The trial court denied the SLAPP motion, a determination affirmed on appeal.  The basis was that the surcharge petition also alleged breaches to loyalty by the trustees, conduct above and beyond just litigation conduct protected under the Civil Code section 47 privilege.