CALIFORNIA ATTORNEY'S FEES

Probate: No Absolute Right To Evidentiary Hearing On “Extraordinary” Trust Attorney Fees Where No Specific Offer Of Proof Was Made As To Relevancy

 

 

Judge’s Familiarity With The Work Sealed The Deal.

 

            In Estate of Redlich, Case No. D069436 (4^th Dist., Div. 1 May 22, 2017) (unpublished), a probate judge awarded “extraordinary fees” for attorney trust work, with the losing party claiming that this was error because the judge did not allow an evidentiary hearing.  The 4/1 DCA affirmed.  Although generally agreeing that a judge normally holds an evidentiary hearing on probate extraordinary fees, that rule is not ironclad in every situation.  Here, the losing party failed to provide a specific offer of proof as to relevancy, allowing the probate judge to determine the matter without an evidentiary hearing.  Especially compelling was the fact the probate judge stated having great familiarity with the case so as to fairly adjudicate the extraordinary fee issue.

Probate: Beneficiary Properly Denied Section 17211 Fee Recovery

 

 

However, Cost Denial Reversed So That Lower Court Can Exercise Discretion.

 

            A cantankerous beneficiary, who sent 8,000 – 10,000 emails to trustee during the period of his service, moved to recovery Probate Code section 17211 attorney’s fees and also routine costs based on having partial success in opposing trustee/lawyer’s fees for work (resulting in a surcharge, although trustee/lawyer did garner a 1.75 multiplier).  The trial court denied both fees and costs, prompting an appeal in Amster v. Mulberg, Case No. A147574 (1^st Dist., Div. 1 April 17, 2017) (unpublished).  The appellate court affirmed the fee request denial, finding that the trustee/lawyer had reasonable cause to oppose certain petitions and had no subjective bad faith until the Uzyel test.  However, with respect to the cost denial, there was no explanation as to why the lower court did not exercise its discretion to decide whether costs were awardable to beneficiary.  Although costs were not mandatory in nature given that Probate Code section 1002 expressly provides the probate court with discretion in this area, the cost denial had to be remanded so that the court “may appropriately exercise its discretion.” 

Probate: Pizarro Decision Reissued, Finding Equitable Basis For Probate Fee Recovery

 

However, No Basis To Award Fee Recovery Against Litigants Personally, Versus Against Their Trustee Shares.

 

    On January 19, 2017, we posted on Pizarro v. Reynoso, Case No. C077594 (3d Dist. Mar. 28, 2017) (published), where a trustee was found reliable and won some attorney's fees in probate battles against other family members. This decision was vacated but then republished on March 28, 2017, deciding that the probate court did have basis to award fees against the losing litigants, but not personally against them versus against their shares in the trust.

Probate: Constructive Trust Motion By Trust Beneficiaries Against Relied Trust Attorneys Properly Denied With Respect To Setting Aside Prior Fee Judgment

 

 

Trial Judge Rightly Found Set Aside Issue Needed To Be Addressed In A Separate Proceeding.

 

    In Sheen v. Sheen, Case No. B268762 (2d Dist., Div. 8 Mar. 10, 2017) (unpublished), relieved attorneys representing a trust successfully recovered an attorney's fees judgment by which moneys were received from the trust. Trust beneficiaries then moved to impose a constructive trust against the former attorneys, arguing that the fees paid by the trust to the former attorneys were ill-gotten fees. The trial judge denied the motion, reasoning that a set aside of the fee judgment should be addressed in a separate proceeding.

 

    The 2/8 DCA, in a 3-0 decision authored by Presiding Justice Bigelow, affirmed.

 

    The appellate court was swayed by the fact that equitable relief against a judgment is ordinarily given in an independent action. Although some support for the notion that a motion seeking a constructive trust could be utilized might found under different facts in the older case of Estate of DeBarry, 43 Cal.App.2d 715, 731 (1941), the 2/8 DCA panel found no cause of action or petition was pending against the former attorneys such that due process concerns required a fully adjudicated separate proceeding to set aside a fee judgment presumptively valid in nature.

Probate: Fee Recovery To Beneficiary Challenging Trustee’s Performance Reversed And Fee Denial To Trustee For Defending Lawsuit Reversed Based On An Overturning Of A Crucial Merits Ruling

 

Beneficiary Failed To Show Fee Entitlement As A Matter Of Law.

 

    In Morgan-Perales v. Savage, Case No. G052317 (4^th Dist., Div. 3 Mar. 9, 2017) (unpublished), an assigned trial judge surcharged a trustee's interest in a primary trust asset for failure to make rental payments, awarded a beneficiary attorney's fees for successfully challenging trustee's performance, and denied trustee's requests for attorney's fees in defending the lawsuit. Trustee appealed, obtaining for most purposes a successful reversal on most arguments.

 

    The appellate court reversed the surcharge of interest ruling. With respect to awarding fees to the challenging beneficiary, the 4/3 DCA—in an opinion authored by Justice Aronson—found a lack of fee entitlement: (1) Probate Code section 17211(b) was to no avail because the trustee had reasonable basis to oppose beneficiary's objections (a ruling which is a legal question reviewed de novo); and (2) the common fund doctrine did not apply because the dispute was one between only two parties.

 

    That took the court to the denial of fees to the trustee for defending against the lawsuit. The appellate court determined that its reversal of the surcharge merits ruling required a reconsideration of this fee request, although it did note that there were plenty of equities to consider as far as what might be awarded to trustee on remand.

Probate: Ordinary Compensation For Probate Attorneys Cannot “Double Account” The Value Of An Estate Asset.

Single Probate Asset Cannot Be "Double Dipped" In Single-Asset LLC Context.

    Bock v. Superior Court, Case No. B267174 (2d Dist., Div. 2 Mar. 6, 2017) (unpublished) is a case which involves ordinary compensation for probate attorneys representing personal representatives of a probate estate under Probate Code section 10810–calculated on a sliding scale based on the value of the probate estate. The problem here was what was the value of the estate for compensation purposes.

 

    The trial judge determined that the probate attorney was requesting fees based on the inflated value of the estate by double counting what was effectively a single asset, eventually awarding a much lesser value and much less ordinary fee compensation. The appellate court agreed with this analysis.

 

    The problem here was that the probate estate was a single real estate asset with a certain valuation. However, the bootstrap argument by appellants was that LLC membership interest only had a membership interest in the LLC divorced from the underlying real estate asset valuation, such that more value was justified. Didn't work—the real property was the only real asset, such that inclusion of anything else was an improper double counting for ordinary compensation "value of the asset" purposes.

Probate: Brother Beneficiary Dodged Probate Accounting Fees And Expenses Because Bad Faith Not Shown

Trial Court Denial on Bad Faith Basis Sustained Against Brother, Even Though Reasonable Cause Element Was Met.

    Koppl v. Zimmerman, Case No. A146743 (1^st Dist., Div. 1 Feb. 27, 2017) (unpublished) is a good illustration that in order to recover expenses from a beneficiary, a trustee has to prove both that a beneficiary in an accounting contest must took actions without reasonable cause (legal question) and with bad faith (factual question) under Probate Code section 17211(a) and Uzyel v. Kadisha, 188 Cal.App.4^th 866 (2010). The problem in Koppl was that the trial judge denied there was bad faith in beneficiary's conduct, which is gauged under an abuse of discretion standard based on factual determinations. However, the trustee made an argument with a twist: trustee argued that sanctions were required based on a perceived difference between identical language in Probate Code sections 17211(a) and (b)—a distinction rejected by the trial and appellate courts. The trial court also decided the conduct was not sanctionable under Code of Civil Procedure section 128.5, which further showed no bad faith subjective mental state was demonstrated—even though the 128.5 ruling was discretionary also. Bottom line: no bad faith shown; no exposure under Probate Code section 17211.

Probate: L.A. Superior Court PVP Attorney Properly Awarded $7,148.93 In Attorney’s Fees And Costs

 

Case Concerns Trial Court Authority To Award Fees/Costs To Appointed Attorneys For Proposed Conservatees.

 

    This next case, Conservatorship v. Hilton, Case No. B267076 (2d Dist., Div. 2 Feb. 7, 2017) (unpublished), likely is of interest to probate/conservatorship attorneys.

 

    The Los Angeles County Superior court has a program to appoint experienced probate attorneys to represent proposed conservatees, which attorneys are on known as Probate Volunteer Panel Attorneys (PVP). Probate Code section 1472(a) gives the lower court authority to award fees and costs to such appointed attorneys, given that under LASC Local Rules, rule 4.127(b)(2), such attorneys agree to request compensation at
"below market" hourly rates—which in this case happened to be $250 per hour. The lower court awarded $7,148.93 in fees and costs to the PVP appointed to represent the conservatee.

 

    Conservatee objected, but the challenge was rejected on appeal. Conservatee, in pro per, did not develop an adequate record—inclusive of objections to the requested fees/costs—such that affirmance was required under settled appellate principles.

Probate: Under Equitable Powers, Probate Court Could Impose Attorney’s Fees Against Beneficiaries In Trust Proceeding, Litigated In Bad Faith By Beneficiaries, Even If Beneficiaries Did Not Instigate It

 

However, Fees Can Only Be Imposed Against Beneficiaries’ Trust Shares, Not Imposed Personally Against Them.

     Driving nail in coffin.  May, 1918.  Library of Congress.

     Pizarro v. Reynoso, Case No. C077594 (3d Dist. Jan. 18, 2017) (published) is a situation where a probate court imposed attorney’s fees against beneficiaries after finding the litigants in bad faith participated in an unfounded proceeding against the trust (the trustee, of course) even though the proceeding was not instituted by the beneficiaries. The court did so based on Rudnick v. Rudnick, 179 Cal.App.4^th 1328, 13356 (2009). The probate court ordered the fees personally paid by the non-prevailing beneficiaries.

     The Third District, based on the equitable powers of probate courts, affirmed the fee recovery, but with one modification. Beneficiaries argued that Rudnick literally only applied to a proceeding instigated by the beneficiaries, and they did not instigate it so that the probate court lacked authority to impose fees under Rudnick. Nope; “[n]othing in [the Rudnick] analysis, with which we agree, requires instigation of an action against the trust by the offending beneficiary as a prerequisite to charging attorney fees and costs against the offending beneficiary’s share of the trust estate.” (Slip Op., at 16.) However, there in was the rub—the beneficiaries could not be held personally liable under general probate equitable principles, so the award was modified to reflect that the fees and costs could only be imposed against beneficiaries up to the amount of their trust shares.

Fee Clause Interpretation/Probate: No Contest Clause In Amended Trust Instrument Did Not Confer Contractual Fee Entitlement Basis

 

$26,630 Fee Award Reversed On Appeal.

    A fertile ground for an appeal in the fee area is that the pertinent attorney’s fees clause simply does not allow for a fee recovery based on its wording where parol evidence is not introduced (and it rarely is in fee disputes).  Kiwata v. Kiwata, Case Nos. A147002/A147459 (1st Dist., Div. 1 Nov. 1, 2016) (unpublished) illustrates this point in the trust/probate area.

    There, the lower court ordered a successor trustee/brother to reimburse trustee/other brother to pay $22,630 in attorney’s fees for prevailing in a probate dispute based on the wording of a no contest clause in an amended trust instrument.  The appellate court reversed the fee award.  The no contest clause only allowed the trustee to charge all fees and other legal expenses in defending such an action “against the gift to [successor trustee/brother];” thus, the trustee could only discretionarily diminish any gift to the other side but the clause was not the equivalent of a contractual attorney’s fees provision, requiring reversal of the fee award.

Probate: $25,000 Attorney’s Fees Award Against One Co-Trustee By Fellow Co-Trustee/Beneficiary Reversed On Appeal

 

Losing Co-Trustee Had Reasonable Bases To Challenge Beneficiary’s Accounting Objections.

    In Levy v. Jones, Case No. G051661 (4th Dist., Div. 3 Oct. 25, 2016) (unpublished), one beneficiary/co-trustee successfully obtained a $25,000 attorney’s fees award against another co-trustee based on objections to the trustee’s accounting.  The appellate court, in a 3-0 decision authored by Justice Thompson, reversed.  Losing co-trustee has reasonable cause to oppose the other co-trustee/beneficiary’s objections, with the so-called winning beneficiary actually losing many of his objections.  That meant the fee award had to be overturned on appeal.  (Uzyel v. Kadisha, 188 Cal.App.4th 866, 927-928 (2010).) 

Probate: $140,000 In Fees To Prevailing Trustee Beneficiary And Named Trustee Affirmed On Appeal

 

Probate Court Has Broad Equitable Powers To Award Fees In Trust Challenges.

    In Tyler v. Davis, Case No. D069463 (4th Dist., Div. 1 Sept. 21, 2016) (unpublished), a trust beneficiary and a named trustee were awarded $140,000 in attorney’s fees by a probate court after defeating challenges by other trust beneficiaries based on statute of limitations and standing grounds.  That stood up on appeal.
   
    The probate court has broad equitable powers under both Probate Code sections and general equitable principles to award fees incurred in trust challenges, with fee entitlement being beyond reproach.  (Hollaway v. Edwards, 68 Cal.App.4th 94, 99-100 (1998); Rudnick v. Rudnick, 179 Cal.App.4th 1328, 1335 (2009).)  Fee award sustained.

Probate/SLAPP/Costs Trifecta: Couple Of Reversals And One Affirmance In Multi-Cross Over Areas Of Practice

 

Probate—Corman v. Corman, Case No. B251513 (2d Dist., Div. 7 Aug. 29, 2016) (Unpublished)—Partial Beneficiary Success Did Not Justify Fee Award.

     In this first one, there was a nasty probate fight (I guess one could conjecture whether any are other than nasty) over trust accountings, which pitted the trustees against beneficiaries in most situations. The lower court found that the beneficiaries had contested the accountings without reasonable cause and in bad faith, ordering them to pay from their trust shares almost $3 million in attorney’s fees and costs the trustees had incurred to defend against the losing beneficiaries’ objections. This one was reversed. The problem was that under Probate Code section 17211(a), beneficiaries did achieve some success in the contests, such that successful contests are not ones that every reasonable attorney would agree are totally and completely without merit. This fee award was reversed in entirety.

SLAPP—Woodward v. Church of Scientology, Case No. B261813 (2d Dist., Div. 3 Aug. 29, 2016) (Unpublished)—Mandatory SLAPP Fee Award Of $90,567.50 Affirmed On Appeal.

    L. Ron Hubbard.  December 31, 1949.  Wikipedia.

     The second case involves the Church’s recovery of mandatory defense fees for a SLAPP grant, with the lower court awarding $90,567.50. The appellate court affirmed under the deferential abuse of discretion standard. The lower court only awarded 70% of requested fees, with a $463 hourly rate for Los Angeles litigators. No problem on appeal.

Costs—Garibaldi v. City of Long Beach, Case No. B257300 (2d Dist., Div. 7 Aug. 29, 2016) (Unpublished)—Party Obtaining Dismissal, Without Stipulation Otherwise, Entitled To Routine Fees.

     Last, this one shows how parties through stipulations can govern their fate in many disputes. A party was dismissed from the suit, but there was no stipulation to waive costs. So, the prevailing party filed a costs memorandum which was stricken by the lower court. The appellate court determined this was error; after all, a party dismissed from a suit is entitled to routine costs under most normal situations. The other side could have asked for a costs waiver, but this was not done. The appellate court also rejected the unity in interest exception under the circumstances. Reversed so that the dismissed party could obtain an award of routine costs.

Probate Two-Fer: Two Reversals—Denial Of Attorney’s Fees For Trustee Work Overturned And Income Beneficiary Fee Recovery Reversed And Remanded

 

Shelton v. Larson, Case No. G050935 (4th Dist., Div. 3 July 13, 2016) (Unpublished).

    In this first one, trustee’s fees and attorney’s fees incurred by trustee were denied altogether in disputes with trust beneficiaries, further complicated by the fact that the probate court never determined the trustee engaged in willful misconduct or gross negligence.  This one got reversed and remanded because trustees generally are awarded attorney’s fees in contests involving accountings or beneficiary objections, unless some bad conduct is involved—not the situation here, so some fees were justified.  (See, e.g., Prob. Code, §§ 16243, 15684(a).)  Justice Thompson penned the 3-0 panel decision.

Mechanics Bank v. Hink, Case No. A145963 (1st Dist., Div. 5 July 13, 2016) (Unpublished).

    This second case involved a situation where a trust income beneficiary successfully litigated a challenge to her status and entitlement to trust payments by a remainder beneficiary.  The lower court granted about $66,000 in attorney’s fees to income beneficiary, payable out of the trust principal.  The remainder beneficiary challenged the fee award, which was a good challenge (at least for the time being).  The appellate court overturned the award, finding no equitable basis for it given that the result only benefitted the income beneficiary—meaning that such a beneficiary usually bears her own fees in the absence of recognized challenges to trustee actions, which were not involved here.  However, this one was remanded to see if fees should be paid from trust income pursuant to a discretionary payment provision in the trust instrument, an issue not confronted below.  (Estate of Marre’s, 18 Cal.2d 191, 192-193 (1941).) 

Probate: Attorney Drafter Of Will/Living Trust Subject Of Undue Influence/Fraud Presumption Liable For $1,256,971 In Fees Under Probate Code Section 21380(d) And Denied Attorney’s Fees Based On Unclean Hands

 

Case Involved Renowned Interior Designer John Patton.

    This next case involved John Patton, a renowned interior designer, who fell on bad times before he died:  according to his housekeeper, he was drunk more than sober during the last sixth months of his life, howled like a dog, and fell down so as to injure himself.  However, the 2/6 DCA in Butler v. LeBouef, Case No. B259534 (2d Dist., Div. 6 June 20, 2016) (published) was critical of a probate attorney who failed to rebut that he drafted a trust/living will which named himself as the principal beneficiary to a $5 million estate.  In the end, a trial court found that attorney drafted/transcribed the will and trust such that it was presumed to be the product of undue influence and fraud given that attorney was the main beneficiary, invalidating the trust and removing attorney who also happened to be trustee.  Attorney was ordered to turn over trust assets and pay $1,256,971 in attorney’s fees to Mr. Patton’s nieces under Probate Code section 21380(d), which provides that a beneficiary unsuccessful in rebutting the presumption of undue influence/fraud “shall all bear costs of the proceeding, including reasonable attorney fees.”  In addition, the lower court denied trustee any trustee’s fees, attorney’s fees, or out-of-pocket expense reimbursement because it would be inequitable and reward attorney for his misconduct.

    The 2/6 DCA affirmed, authored by Justice Yegan in a 3-0 decision.

    Attorney failed to rebut the presumption of undue influence/fraud as the drafter of the will/trust naming himself as primary beneficiary.  He could have rebutted in several ways:  production of a certificate of independent review trumping the section 21380 presumption or presentation of evidence that he did not draft/transcribe the will and trust, but this rebuttal was either not presented or not credibly presented.  “Drafters” are liable under section 21380(d), especially given a 2011 legislative enactment making this abundantly clear (changing a former provision not encompassing “drafters”).”  The lower court did reduce requested fees by 20%, which showed the fee was hardly excessive in a case with five weeks of testimony.

    Furthermore, the appellate court properly found attorney was not entitled to trustee fees, attorney’s fees, or out-of-pocket expenses based on the unclean hands rationale of the lower court.

    FAVORITE QUOTE FROM CASE—“Like Sherlock Holmes’ ‘dog in the night’ that failed to bark (2 Doyle, Silver Blaze, The Annotated Sherlock Holmes (Baring-Gould, ed. 1967) pp. 277, 280), the absence of estate planning documents showed that something was amiss.”

Costs/Probate: Probate Code Section 1002 Does Not Allow Costs To Be Paid By Attorneys In Probate Proceeding

 

Costs Only Was The Subject Of The Opinion.

    In Sheen v. Sheen, Case No. B263952 (2d Dist., Div. 8 May 26, 2016) (unpublished), the 2/8 DCA decided that claimed fees and costs incurred on an appeal could not be sought from persons who were not liable for such costs.  Specifically, attorneys were charged with costs under Probate Code section 1002, but that provision only allows costs to be paid by any party to the proceedings, not by attorneys.  So, this one had to be reversed on this narrow basis, although there were other matters pending where the attorneys might yet have to pay moneys based on other statutes. 

Probate: Conservatorship of Bower Opinion Now Published

 

Case Deals With Probate Code Section 3809’s Focus On Conservatee Support Expenses, Not Conservatorship Professional Expenses.

    On April 16, 2016, we posted on Conservatorship of Bower, a Fourth District, Division 3 decision which was unpublished at the time.  It dealt with whether Probate Code section 3809 was a proper vehicle to award conservatorship professional expenses (such as attorney’s fees).  We can now provide an update—the decision was certified for publication on May 16, 2016.

Probate/Sanctions: $76,598.32 In Attorney’s Fees For Filing Of Frivolous Probate Petition Under CCP § 128.7 Affirmed On Appeal

 

Plethora Of Procedural Issues Considered In 2/1 DCA Unpublished Opinion.

     Enlisted men going through obstacle course.  Daniel Field, Georgia.  July 1943.  Jack Delano, photographer.  Library of Congress.

     In Kerkorian v. Mandekie, Case No. B252861 (2d Dist., Div. 1 Apr. 26, 2016) (unpublished), an attorney’s fees award of $76,598.32 (the full request) was granted as a CCP § 128.7 sanction for the filing of a frivolous probate petition. Despite numerous procedural challenges, the 2/1 DCA rebuffed them in affirming the order as follows:

· Safe Harbor Period. Because the rescheduled hearing did allow for running of the 21-day safe harbor period, there was no infirmity on this ground.

· Failure to Indicate Hearing Date and Time In Original Motion Papers. This requisite only needs to be met if a motion date and time are ascertainable; they were not at first, but the rescheduled motion papers were compliant in indicating a location, date, and time.

· Failure to Serve Judicial Notice Request Contemporaneously With Motion Papers. Failure to do this does not render the motion defective (because a judicial notice request is technically not among the required motion “papers”), but the trial court can decide not to consider them at the hearing.

· Refusing to Read Opposition Memorandum After Page 15. For most civil law and motions, practitioners in California state court know that opposition memoranda are limited to 15 pages unless one is dealing with certain particular motions or the lower court allows for greater page limits. The trial judge here refused to read after page 15 of an excessive opposition brief. The appellate court found this was no abuse of discretion, determining that the 15-page limit did apply to probate proceedings. See CRC, rule 3.10.

· 128.7 Motions Contemplate a Hearing With Oral Argument. This principle was found applicable given the severity of a sanctions request.

Probate: Probate Order Dividing Community Property To Pay For Conservatorship Fees, Inclusive Of Attorney’s Fees, Was Legally Erroneous Under Probate Code Section 3089

 

Section 3089 Deals With Conservatee Support and Maintenance, While Sections 2640 and 2647 Concern Conservatorship Fee Compensation.

     In Conservatorship of Bower, Case No. G050468 (4^th Dist., Div. 3 Apr. 15, 2016) (unpublished), our local Fourth District, Division 3, courtesy of authoring Justice Bedsworth on behalf of a 3-0 panel, dealt with a probate court’s order dividing community property of a husband conservatee (who had serious dementia/associated problems) and his wife after wife failed to comply with the letter of an order of support and maintenance for conservatee by directly paying professional conservator fees and conservatorship attorney’s fees. The probate court was irked that wife had made direct payments in noncompliance with the Probate Code section 3089 support/maintenance order, acting “like Frank Sinatra, she gets to do it her way.”

    The appellate panel reversed because the probate court committed legal error of a prejudicial nature by ordering a community property division under section 3089, which focuses on the support and maintenance needs of the conservatee rather than compensation due to conservatorship professionals. In the latter situation, fee compensation is governed by Probate Code sections 2640 and 2647, which has very important and different safeguards/protections. Nothing in section 3089 indicates that community property divided sans divorce was intended as a way of paying professional fees attendant to conservatorships. Reversed and remanded to determine if wife’s actions in paying conservatorship fees was necessary for the support and maintenance of her husband conservatee.

Appealability/Probate: Prevailing Party Determinations Under Fee-Shifting Statutes, Without Fixing Of Fee Amounts, Were Prematurely Appealed

 

Once Amounts Fixed, Appeal Of Actual Postjudgment Awards Would Be Proper.

     The Fifth District case of Estate of Kinerson, Case No. F070309 (5^th Dist. Feb. 22, 2016) (unpublished) concerned certain rulings in a probate estate about whether classic cars, shop tools and household furnishings belonged to the surviving spouse as separate property or the as estate property. After determining ownership issues, the trial court determined the estate was the prevailing party entitled to costs and attorney’s fees under both Probate Code section 859 (allowing fee-shifting against a person who in bad faith wrongfully takes, conceals or dispose of property belonging to a decedent’s estate) and Welfare and Institutions Code section 15657.5 (an elder abuse fee-shifting provision against a defendant found liable for financial abuse). The non-prevailing party appealed from these determinations.

     The appellate court determined that the appeal was premature. The trial court had yet to determine the amount of the fee award, such that review was not warranted at this time—it had to wait until the fees were “fixed” in amount and then could be challenged in a subsequent appeal. (P R Burke Corp. v. Victor Valley Wastewater Reclamation Authority, 98 Cal.App.4^th 1047, 1054-1055 (2002).)

Probate: Daughter Not Prevailing On Probate Code Petition For Redress Based On Rejected Creditor’s Claim Properly Assessed With Adverse Fee Award Of $540,418

 

Probate Code Section 9354(c) Was Proper Fee Entitlement Authority, With Daughter’s Petition Found To Be Objectively Unreasonable By Lower Court.

     Do not think for a minute that probate proceedings cannot be time consuming, emotionally exhausting, or financially draining. Adverse fee awards can be substantial and, when there are bases for them and well-reasoned decisions by the probate court in support, they will be affirmed on appeal.  Estate of Eng, Case Nos. B255829/B258567 (2d Dist., Div. 1 Jan. 29, 2016) (unpublished) illustrates this point in dramatic fashion.

     Daughter Amelia brought a petition for redress under Probate Code sections 21700 and 580(c) based on her probate position, stemming from a dispute with convoluted facts, that a certain contract signed by father determined whether a will had been revoked or not. The petition for redress was based on facts which were drawn from a prior rejected creditor’s claim filed by Amelia. After a 16-day trial, testimony was adduced that Amelia was far from sure that the contract she was basing her claim on did indeed govern or that her father did intend it to revoke a prior will. The lower court found she did not prevail on her petition, awarding the other siblings and administrator fees totaling $540,418 under Probate Code section 9354(c), a fee-shifting section allow a probate judge to award a prevailing party on a rejected creditor’s claim litigation expenses (including attorney’s fees) if the judge determines that the prosecution or defense of the action was unreasonable.

     The appellate court found that the probate judge got it right. Section 9354(c) was properly utilized, because Amelia’s petition for redress was based on the same facts as the rejected creditor’s claim. Also, the probate judge correctly found that an objective reasonableness standard applied, utilizing Code of Civil Procedure section 1038 by analogy—an analogy Amelia agreed with and with substantial evidence showing that the action was unreasonably prosecuted. To her likely horror, the large fee award was sustained on appeal.

     Justice Johnson authored the 3-0 panel decision in Estate of Eng.

Probate: Megillah Of A Probate Dispute Ends With Fee Award Against Income Beneficiary And Trustee Remanded After Appellate Court Reversed Substantial Portions Of Probate Court Award For Remainder Beneficiary

 

However, Income Beneficiary Was Assessed With $45,967.53 In Fees In Favor Of Remainder Beneficiary For Filing False Affidavit In Colorado Probate Action.

     DeJohn v. Wheeler, Case Nos. A137825/A138421 (1^st Dist., Div. 3 Jan. 21, 2016) (unpublished) involved a contentious probate dispute involving an income beneficiary, an independent trustee, and remainder beneficiary, with remainder beneficiary dismissing a Colorado probate action given representations about obtaining an accounting and with remainder beneficiary obtaining a substantial compensatory award of close to $1.7 million jointly and severally against income beneficiary and trustee in a California probate case based on various breach of fiduciary duty and improper accounting contest claims.

     The appellate court found that trustee was not liable, so that portion was reversed. The fee award in the California case was reversed, mainly because the reviewing court overturned several portions of the compensatory award such that income beneficiary’s success on appeal made it necessary to reexamine whether her accounting positions were unreasonable and in bad faith under Probate Code section 17211(b). However, the fee award relating to remainder beneficiary’s expenses in the Colorado action was affirmed given that the false defensive affidavit showed that income beneficiary’s positions were unreasonable and in bad faith.

Probate: Adverse Fee Awards Against Co-Trustee For Bad Accountings Affirmed On Appeal

 

Co-Trustee Not Understanding Objections Did Not Get It Done.

    Although the discussion on the fee issue was unpublished, a trustee needs to know that it must understand objections and respond to them soundly in a probate accounting context for purposes of avoiding fee exposure.

    In Gray v. Jewish Federation of Palm Springs and Desert Area, Case No. E059761 (4th Dist., Div. 2 Jan. 6, 2016) (partially published; fee discussion not published), sole net income beneficiary/co-trustee and remainder beneficiary of a trust squared off regarding a Las Vegas property, with the co-trustee being removed and with the co-trustee losing a failure to properly account.  That did justify an award of adverse attorney’s fees under Leader v. Cords, 182 Cal.App.4th 1588, 1591 (2010)—not a lot involved, but a good lesson to trustees or probate attorneys reading this blog.

Civil Rights, Employment, Family Law, Probate, Settlement: Four Unpublished “Power Ball” Post

 

Meyer v. Brown, Case No. D066226 (4th Dist., Div. 1 Oct. 14, 2015) (Unpublished)—Family Law.

    In this one, after an evidentiary hearing in which the court dismissed a domestic violence restraining order (DVRO), the prevailing party recovered $7,500 out of a requested $15,800 in fees.  The fee-assessed, losing party appealed, but to no avail.  The fee issue can be raised after the DVRO hearing, Faton v. Ahmedo, 236 Cal.App.4th 1160, 1170 (2015), especially given prevailing party checked wanting fees under Judicial Council Form DV-120; the lower court actually denied the DVRO request without prejudice rather than an outright dismissal; and there is no statutory or court rule indicating when the fee request could be brought—using general laches principles, the request was not untimely in prejudicial fashion (even though brought two months later).

Deutsch v. Martin, Case No. B259527 (2d Dist., Div. 7 Oct. 14, 2015) (Unpublished)—Settlement.

    In this second case, the lower court granted about $12,000 in fees and costs under a settlement agreement signed by the parties in a CCP § 664.6 proceeding.  That award had to be reversed because the settlement agreement clearly provided each side would bear fees/costs connected with the settlement agreement; the lower court had no ability to create new terms never agreed to by the parties.

Storm v. Rite Aid Corp., Case No. B254328 (2d Dist., Div. 2 Oct. 14, 2015) (Unpublished)—Civil Rights/Employment.

    The third case involves a plaintiff winning a wrongful termination suit against Rite Aid, then moving for attorney’s fees of about $1.6 million (lodestar times two) under the private attorney general statute, CCP § 1021.5.  The lower court denied the fees, a result affirmed on appeal.  The reason was that plaintiff was only vindicating an individual self-interest, not some greater public interest in the wrongful termination action.

Estate of Maciel, Case No. B258896 (2d Dist., Div. 5 Oct. 14, 2015) (Unpublished)—Probate.

    Fees were awarded to an estate administrator’s attorney to the tune of a little under $8,000.  The objector appealed, claiming no fee entitlement basis.  But that did not hold up on appeal, given that Probate Code section 1064(b) does allow for compensation to an estate administrator’s attorney.

Probate: Trustee, In His Personal Capacity, Not Entitled To Attorney’s Fees Under Settlement Agreement Only Benefitting The Trust

 

Trustee Was Not Being Pursued In His Personal Capacity.

     The lesson from Secrest v. Vaughn, Case No. D066702 (4^th Dist., Div. 1 Oct. 9, 2015) (unpublished) is clear: how a settlement agreement fees clause is worded and who the parties are in this agreement are crucial in determining whether there is fee entitlement to a prevailing trustee.

     In this one, a trustee and beneficiary entered into a settlement agreement with the fees clause, an agreement the trustee signed in his capacity as a trust fiduciary. The fees clause allowed the court to decide whether a party prevailed for purposes of obtaining a fee recovery. Upon a motion to enforce the settlement agreement, the lower court found that trustee was not personally liable for his action as trustee but did award beneficiary fees for prevailing on a trust management claim given she was a party to the settlement. Trustee, personally, moved to recover postjudgment fees of $45,272.75, a request denied by the lower court on the basis that the fees clause covered trustee in his representative capacity not his personal capacity (the latter status being under which he claimed a right to fees).

     The appellate court agreed with the trial court. Although trustee could have been held personally liable on the contract, he is protected from personal liability if the agreement was properly arranged in the trustee’s fiduciary capacity in the course of trust administration. (Stoltenberg v. Newman, 179 Cal.App.4^th 287, 293-295 (2009).) Here, the beneficiary’s petition was directed against trustee in a fiduciary duty, such that he individually did not stand in the shoes of trustee qua fiduciary and there was no indication that trustee, individually, was a third-party beneficiary of the fees clause.

Probate: $96,077.14 For Excessive Fees/Expenses By Dual Trustee/Trust Attorney Affirmed On Appeal

 

Not Pretty Facts At All ….. But Surcharge Sustained.

     Conservatorship of Moore, Case No. B253538 (2d Dist., Div. 6 Sept. 30, 2015) began in a not so pretty way, not involving particularly pretty facts: “Retained counsel for an elderly person suffering from dementia must safeguard the well-being of the person and his or her financial resources. As we shall explain, here the attorney did neither. The probate court expressly indicated that counsel put his own financial interests ahead of the interests of his client. It surcharged counsel. We agree with the probate court's ruling and its rationale. We commend it. We affirm the judgment.”

     What happened here was that a trustee/trust attorney was surcharged for $96,077.14 in fees and expenses as being unreasonable and excessive in nature. The appellate court agreed. The “client” trustor was 82 years olds, with dementia. So, arguments that he approved the fees did not resonate on appeal, where the focus was on the fees being reasonable but double barreled in nature—reasonable in general and reasonable as to the trust. (Donahue v. Donahue, 182 Cal.App.4^th 259, 263 (2010).) The appellate court did not have difficulty in sustaining that the dementia-ridden trustor could not approve fees and many of the activities were spent on needlessly proving that the trustor was suffering from elder symptoms. Also, with respect to block billing, no problem that the lower court only surcharged for 5% on these entries given it was hard to decipher between trustee, attorney, and personal advisor services.

     Beyond that, the appellate court sent the opinion to the State Bar for consideration on whether further action was necessary as to the attorney.

Probate, Private Attorney General, Civil Rights, Costs, Discovery Sanctions: Lots Of Topics Covered In Four Unpublished Decisions For September 29, 2015

 

Chang v. Chang, Case No. G049309 (4th Dist., Div. 3 Sept. 29, 2015) (Unpublished; Ikola, J.).—Probate.

    In this and a companion appeal, the appellate court cut some surcharges to the trustee of about $345,000.  Because of this companion ruling, the appellate court sent back a $187,900 fee award against trustee and in favor of beneficiary (his brother) under Probate Code section 17211(b).  The surcharge cut might impact the lower court’s view of whether fees should be the same or different.

L.A. County Regional Park and Open Space Dist. v. City of Whittier, Case No. B257541 (2d Dist., Div. 1 Sept. 29, 2015) (Unpublished)—Private Attorney General.

    Petitioner won mandate based on a contract-based claim under a project agreement with Whittier, but not claims based on Proposition A violations, the public trust doctrine, and CEQA.  Petitioner moved to obtain fees of $1,105,651.20 under CCP § 1021.5, but the trial and appellate said “no.”  The reason was that vindication of contractual rights alone was not equivalent to vindication of a significant public right under 1021.5.

Cooter v. Angeles National Golf Club, Case No. B245137 (2d Dist., Div. 7 Sept. 29, 2015) (Unpublished)—Civil Rights/Costs.

    Here, the appellate court reversed an order denying in part a FEHA losing plaintiff’s motion to strike certain routine costs incurred after a CCP § 998 offer.  In doing so, the appellate court determined that the expert fees awarded under 998 were proper because they do not have to survive the frivolous/unreasonable standard.  (Holman v. Altana Pharma U.S., Inc., 186 Cal.App.4th 262, 282 (2010).)  However, the award of other routine costs had to be reexamined to see if the action was frivolous/unreasonable/without basis after the state supreme court’s ruling in Williams v. Chino Valley Independent Fire Dist., 61 Cal.4th 97 (2015). 

Gray1CPB, LLC v. Gulfstream Finance, Case No. G047966 (4th Dist., Div. 3 Sept. 29, 2015) (Unpublished) (Moore, J.)—Discovery Sanctions.

    Last but not least, the court of appeal affirmed more than $159,000 in monetary sanctions against a party for discovery abuse, based on 30 reports from a discovery referee, but reversed as to another party not given adequate due process notice of the sanctions until a too-late point in one discovery referee proceeding.

Probate, Requests For Admissions, Section 998: Lower Court Properly Denied Probate Estate’s Request For Costs-Of-Proof Sanctions And Routine Costs

 

Section 998 Inapplicable In Probate Proceeding.

    In a dispute involving the reformation of the terms of a “tontine” or survivalist partnership agreement, a probate estate was denied “costs-of-proof” attorney’s fees under Code of Civil Procedure section 2033.420 and had stricken its memorandum seeking post-remand costs based on Code of Civil Procedure section 998 and Probate Code section 1002.  Those determinations were affirmed on appeal in Estate of Silveira, Case Nos. A141310/A141421 (1st Dist., Div. 3 Aug. 31, 2015) (unpublished).

    The estate served trustee of a related trust with RFAs about the book value of the deceased’s partnership interest at the time of death, with the trustee serving objection-only responses claiming they were premature and called for expert opinions.  The court ordered further responses, and the trustee responded that she was unable to admit the matters based on a reasonable inquiry and information known/obtainable.  Rather than challenge the responses directly, estate’s attorney chose to send out an identical, new set of RFAs, drawing the same responses from trustee as before—with the estate not challenging these RFA responses either.  After entry of judgment, the estate sought cost-of-proof sanctions of $173,690.72 in fees and costs.  The lower court denied the motion because the estate did not properly challenge the second or third RFA requests and because the trustee had reasonable grounds for denying the RFAs.  The appellate court agreed.  Estate’s failure to timely move to compel RFA responses waived the right to compel further responses as well as costs-of-proof sanctions.  (Code Civ. Proc., § 2033.290(c); Wimberly v. Derby Cycle Corp., 56 Cal.App.4th 618, 635-636 (1997).) 

    Estate served the trustee with two pre-hearing offers to compromise, neither of which was accepted.  Estate then moved to recover over $88,300 in costs and expert witness fees, prompting a motion to tax costs from trustee under CCP § 998, a ruling also sustained by the appellate court.  Initially, it agreed that Probate Code section 1002, which authorizes the lower court in its discretion to impose costs “as justice may require,” trumps the mandatory language of CCP § 998—citing an analogous family law case.   (In re Marriage of Green, 213 Cal.App.3d 14, 24 (1989).)   Beyond that, the lower court’s conclusion that the overall results of the litigation were “mixed,” requiring each side to bear its own costs, constituted no abuse of discretion.

     Trivia:  The antic movie The Wrong Box, with a cast that included Peter Sellers, Michael Caine, Dudley Moore, and other wonderful English actors, involved the last survivors of a tontine fighting over the fortune.  The movie is based on a comic novel by Robert Louis Stevenson and Lloyd Osbourne.

Probate: Litigant’s Failure To Challenge Order Fixing Attorney Compensation Timely Was Fatal, With Appeal Being Dismissed

 

Probate Code Section 1304 Makes These Orders Immediately Appealable, Not Interlocutory Orders Appealable From A Final Judgment.

      For probate practitioners, Gonzalez v. Thomas, Case No. B250492 (2d Dist., Div. 8 June 5, 2015) (unpublished) is a good refresher course on appeal deadlines for Probate Code cases involving the “fixing” of attorney fee compensation. Probate Code sections 1300 and 1304 govern probate appeals, making certain orders—including fixing, authorizing, allowing, or directing payment of attorney compensation or expenses—immediately appealable. (Leader v. Cords, 182 Cal.App.4^th 1588, 1594-1959 (2010).) Because the litigant proceeded under the assumption that the orders were interlocutory and could be appealed from a final judgment later, this assumption backfired and was wrong given the specific directives of sections 1300/1304 to the contrary. The failure to appeal the attorney compensation orders in quicker fashion was dispositive in a negative fashion.

     BLOG OBSERVATION—In this area, why not appeal anyway; the worst that could happen is the appellate court says it is premature and has to await another day.

Probate: Failure To Award Attorney’s Fees To Beneficiary As Against Trustee Was No Error

 

Beneficiary Did Not Meet Burden Of Proof Under Probate Code Section 17211(b).

     An attorney was both the sole trustee and one of two beneficiaries of deceased father’s trust estate, with the other beneficiary being his sister. The two got involved in protracted probate litigation and appeals culminating in these results: (1) attorney’s forgiveness of a $250,000 loan from the trust (which he characterized as a “gift”) was nullified, because it was a trust asset to be repaid; (2) a trust amendment was the product of undue influence; and (3) attorney trustee’s two prior appeals were not contests in violation of the trust’s no-contest clause.

     Sister then filed for recovery of fees under Probate Code section 17211(b), which allows them to a beneficiary who contests the trustee’s account if the trustee’s opposition to the contest is “without reasonable cause” (a malicious prosecution “without probable cause” standard) and in bad faith (actual hostility or ill will on the part of the trustee of a subjective intent to deliberately misuse the legal system for personal gain or satisfaction at the beneficiary’s expense). (Uzyel v. Kadisha, 188 Cal.App.4^th 866, 926-927, 927 n. 47 (2010) [discussed in our Sept. 23, 2010 post].) The trial court denied the request.

     That result was affirmed in Estate of Basmajian, Case No. B251475 (2d Dist., Div. 3 May 21, 2015) (unpublished). Sister’s main argument was that trustee, in a prior appeal, did not deny there was substantial evidence to support the loan characterization determination, a tacit concession that there was no reasonable cause to the trustee’s actions. The appellate court disagreed, finding that trustee likely had reasonable cause to not argue otherwise given that he failed to call any witnesses at the reference hearing which produced the ruling. In one of the earlier appeals, trustee was not sanctioned for a frivolous appeal, which also showed his lack of bad faith.

Attorney Lien/Probate: Attorney With Broad Contractual Attorney Lien Did Not Have To File Creditor’s Claim To Preserve Lien Against Trust “After Acquired” Assets

 

Matter Reversed and Remanded to Determine Value of Attorney’s Lien in Trust.

     Novak v. Kay, Case No. B256889 (2d Dist., Div. 5 Apr. 28, 2015) (published) involved an attorney with broad contractual attorney’s fees language in a retainer letter with a client who died but who was determined to be a pretermitted spouse having an interest with a separate trust with assets. The lower court denied the attorney’s effort to enforce the lien through a probate petition, based on the theory that attorney did not timely file a creditor’s claim against deceased client’s estate. The appellate court reversed, determining that an equitable lienholder like attorney did not have to file a creditor’s claim or initiate an independent action to foreclose the lien under Probate Code section 9391. It also remanded the matter so that the probate court could determine the value of lawyer’s interest in the trust.

     BLOG UNDERVIEW—This case is must reading for counsel inserting attorney lien provisions in retention agreements because it quotes the broad contractual charging lien language which was honored on appeal.

Probate: Unsuccessfully Objecting Beneficiary Had To Bear Trustee’s Attorney’s Fees For Defending Against Unreasonable, Bad Faith-Inspired Objections

 

Lower Court’s Factual Findings Below Buttressed Affirmance.

     Beneficiaries objecting to trustees’ accountings need to make sure their objections are reasonable and not inspired by bad faith. If not, you face having to bear the exposure of trustees’ attorney’s fees in defending against such objections. (Prob. Code, § 17211; Uzyel v. Kadsha, 188 Cal.App.4^th 866, 926-927 (2010).)

     In Okonski v. Jones, Case No. G048475 (4^th Dist., Div. 3 Mar. 5, 2015) (unpublished), this reality became truth when a lower court approved a successor trustee’s account and report, overruling all of beneficiary’s objections in the process. The lower court also found the objections to be unreasonable and brought in bad faith, awarding trustee certain fees and costs for defending against the meritless objections.

     Although beneficiary appealed, no relief would result from this move. Reasonable cause is reviewed de novo, but the record showed no merit to the 12 objections at all. Bad faith is reviewed based on substantial evidence, but the record showed the objections were motivated by anger and disappointment rather than truly objective concerns. So, with that being said, the fees/costs award was affirmed given the detailed statement of decision by the lower court showing the propriety of the award.

     Justice Fybel authored the 3-0 decision on behalf of the panel.

Probate: Daughter Trust Beneficiary Hit With $204,420.32 Attorney Fee Tab Aggregately Run Up By Sibling Beneficiaries In Defending Forfeiture/Surcharge Petition Found To Be In Bad Faith

 

Equitable Powers of Probate Court Provided the Fee Entitlement Ground.

     In Zankich v. Zuckerman, Case No. B247274 (2d Dist., Div. 8 Dec. 5, 2014) (unpublished), a petition seeking forfeiture and surcharge was filed by one daughter beneficiary against the trust distribution interests of her sibling beneficiaries, all involving deceased mother’s trust and alleging that the other siblings were guilty of elder abuse/breached fiduciary duties. The lower court found that mother’s care before she died had been appropriate and determined that the petition had been filed in bad faith. The probate court then awarded a total of $204,420.32 to the respective attorneys representing the prevailing sibling beneficiaries.

     Substantial evidence supported the bad faith ruling by the probate court. The fee entitlement was authorized based on the broad equitable powers of the probate court such that the fees award was affirmed on appeal. (Rudnick v. Rudnick, 179 Cal.App.4^th 1328, 1334 (2009); Estate of Ivey, 22 Cal.App.4^th 873, 878 (1994).)

Probate: Niece Successfully Obtaining Appointment of Independent Conservator For Person Of Conservatee Not Entitled To Fee Recovery Under Probate Code Section 2640.1

 

Niece Not Entitled to Common Fund Recovery, However Maybe Indirect Recovery Appropriate Under Probate Code Section 2642, But That Section Was Never Raised.

     Conservatorship of Mazzocco, Case No. E057485 (4^th Dist., Div. 2 Nov. 25, 2014) (unpublished) involved some dueling conservatorship petitions for a consevatee having millions in assets even though he had dementia after a heart attack. Basically, the contest revolved around dueling conservatorships by conservatee’s companion and primarily one of his nieces. Ultimately, niece obtained appointment of an independent conservator over the conservatee’s person—which is what she wanted—making companion dismiss her petition for a like conservator, although niece was unsuccessful in getting appointment of a conservator over conservatee’s estate. Niece then moved for recovery of $12,050 in fees and $464.12 in costs under Probate Code section 2640.1. The probate court denied the request, prompting an appeal by niece.

     Niece did not get any further relief on appeal. Section 2640.1(a) provides: “If a person has petitioned for the appointment of a particular conservator and another conservator was appointed while the petition was pending, but not before the expiration of 90 days from the issuance of letters, the person who petitioned for the appointment of a conservator but was not appointed and that person’s attorney may petition the court for an order fixing and allowing compensation and reimbursement of costs, provided that the court determines that the petition was filed in the best interests of the conservatee.” The problem here was that niece was successful in obtaining appointment of an independent conservator over the person of conservatee, so no statutory basis existed under this provision for fee recovery.

     No “common fund” relief was available because there was no communal sharing in the Trust.

     Finally, the appellate court did express the opinion that fees/costs might have been justified indirectly under Probate Code section 2642, allowing fee entitlement to attorneys rendering services to the actual conservator (the independent conservator actually appointed), but this ground was never raised as a basis for entitlement so it was waived.

Common Fund/Probate: Former Trustee Obtaining Appointment Of Neutral Corporate Trustee And Distributions Of Benefits To Younger Generation Beneficiaries Were Entitled To Recovery Of $260,948.34 From Trust Under Common Fund Theory

 

Actions Resulted in Younger Generations Getting $1 Million in Distributions Where Prior Distributions Only Went To Senior Generation Beneficiaries.

     Neither the lower nor appellate courts in Gaynor v. Bulen, Case No. D064872 (4^th Dist., Div. 1 Nov. 20, 2014) (unpublished) had much trouble with awarding certain former trustees of a trust attorney’s fees of $260,948.34 under a common fund fee-recovery theory. The reason was that the former trustees were able to obtain an appointment of a neutral corporate trustee and $1 million in distributions were made to younger generation beneficiaries, while only senior generation beneficiaries got multi-millions in distributions in the past. Although the common fund theory was enough, we surmise the appellate court would have affirmed under the substantial benefit theory also—although it did not have to pass on this ground for recovery.

Probate: Co-Trustee Brother Awarded Attorney Fees Of $178,850.15 While Co-Trustee Sister Denied Paralegal Fees Of $29,873.38

 

Abuse of Discretion Standard Justified Brother’s Fees, While Sister Did Not Adequately Substantiate Paralegal Reimbursement Request.

     In Arthur v. Davies, Case No. B249810 (2d Dist., Div. 6 Aug. 21, 2014) (unpublished), brother and sister had spent over $300,000 to compel trustee accountings, at times when they were both co-trustee. Brother eventually was awarded fees for his attorney doing work for his co-trustee activities/accounting challenges to the tune of $178,850.15, while the lower court denied sister’s request for reimbursement of $29,873.38 in paralegal fees.

     Both awards “stuck” on appeal. Sister did not surmount the abuse of discretion standard with respect to brother’s fee award, while she did not adequately substantiate the paralegal’s qualifications or explain what the paralegal invoices related to task-wise with specificity. (CRC 7.703(e)(2)-(3).)

Probate/Section 998: 998 Offer In Probate Court Found To Be Uncertain Based On Nonmonetary Terms Which Could Not Be Easily Ascertained

Judgment Modification Terms Were Too Speculative in Nature.

            Katz v. El Paseo Collection Elegante, Case No. G049807 (4^th Dist., Div. 3 July 7, 2014) (unpublished) is a nice follow-on to our July 2, 2014 post in which we explored case law on what type of nonmonetary provisions in a CCP § 998 offer were valid or not—with the issue being whether the provisions were reasonably capable of valuation without conjectural brain surgery in a probate proceeding.

            What happened is that an estate executor was denied attorney’s fees after a special probate court proceeding where executor got some of his relief, which he felt was better than the conditional 998 offer made earlier to the other side.  The problem here was the nature of some of the conditions, speculative in nature such that “better” was somewhat of a metaphysical concept at best and incapable of valuation.

            The first suspect condition was that the executor or a residuary beneficiary could move to modify the judgment under three conditions, including if a business was sold or certain parties contended another entity had unreasonably withheld its consent to a sale of the business.  The extent of this condition and its valuation were highly speculative.  The second condition would allow a motion to modify the judgment to withdraw funds from a blocked account if circumstances indicated a reduction in the amount is “appropriate.”  No definition of appropriate was provided in the 998 offer, so totally guesswork on how much money was appropriate so as to justify withdrawal was at play in evaluating the offer.    Denial of attorney’s fees affirmed, in a 3-0 opinion authored by Justice Thompson.

            BLOG UNDERVIEW—The probate court also denied fees under Probate Code section 1002, which it interpreted as allowing a “trump” of fees normally awarded under CCP § 998.  Our local appellate court did not have to confront this issue based on the uncertainty ground.  However, we will comment that this conflict will have to be confronted at some stage, given some unpublished decisions suggesting section 1002 does preempt in the probate (versus civil) context.  (See Blanchard v. Blanchard, Case No. A137777 (1^st Dist., Div. 2 Feb. 25, 2014) (unpublished) [reviewed in our Feb. 26, 2014 post].)

Arbitration/Probate/Sanctions: Trust Beneficiary Gets Hit With Settlement Agreement Fees/Costs And CCP § 128.7 Sanctions

Problem Was That Arbitrator Could Construe Settlement Agreement, While Probate Court Could Control Arbitrator Appointment Issues.

            This is a case where a trust beneficiary in Estate of Buser Trust, Case No. Do63381 (4^th Dist., Div. 1 July 3, 2014) (unpublished) somewhat stepped into litigation “goo,” especially where both a probate court and arbitrator were concerned in somewhat parallel proceedings.

            The probate court confirmed an arbitration award based on a settlement agreement.  Beneficiary argued that the award impermissibly includes attorney’s fees and costs before the settlement agreement was formally approved by the probate court.  The problem was that the settlement agreement language was broad and the arbitrator interpreted it against the beneficiary.  However, the real rub was that beneficiary was ordered to reimburse fees and costs against beneficiary’s share of the trust estate, all in line with an arbitrator ruling.  The appellate court saw no issue with this, given that the probate court referred the matter to the arbitrator and effectively “delegated” its powers to surcharge a beneficiary trust interest to the arbitrator.  (Estate of Ivey, 22 Cal.App.4^th 873, 882-885 (1994).)

            Then, the beneficiary complained about a CCP § 128.7 sanctions award for pursuit of an unmeritorious renewed motion or reconsideration petition.  Here, the main thrust of these activities focused upon appointment of the arbitrator, actions which the probate court controlled.  That meant the probate court was within reason to impose sanctions for these events.  

Common Fund/Deadlines/Probate: Trust Beneficiaries Seeking Fees Under Common Fund Doctrine Should Have Been Allowed Something

CRC Rules on Filing Fee Motions Did Not Govern Probate Proceedings.

​The overall, convoluted probate dispute in Sheen v. Sheen, Case No. B243847 (2d Dist., Div. 8 July 1, 2014) (unpublished)—although colorful—does not involve extended discussion on the facts, although the appellate court did reverse lower court failures to award attorney’s fees to beneficiaries given undisputed benefit to the trust under the "common fund" doctrine.

​However, there are some "takeaways" from this opinion.

​The first significant point was procedural in nature. The parties resisting fee recovery claimed that the trial judge correctly ruled that CRC 3.1702.1(b)(1) time limitations barred the probate "common fund" fees request. Nope, the lower court was incorrect. Rule 3.1702.1(b)(1) applies to a civil case, not a probate case to recovery trust assets under the common fund doctrine. No go in holding these deadlines applicable in this context. (Hollaway v. Edwards, 68 Cal.App.4th 94, 98-99 (1998).)

​The second important point was that no one argued that the common fund doctrine did not justify some fees, just the amount of fees. A complete denial, under the factual circumstances, was an abuse of discretion—especially given that the adverse party did not dispute that something should be awarded.

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Probate/Special Fee Shifting Statute: $4,812 Venue Denial Order Properly Assessed Against Attorney In Probate Case

Bad Faith Not Required, But Found and Sustained On Appeal.

​The interesting thing about this blog is that we, the co-contributors, learn something each day.

​Here is what we learned in the probate dispute of McDonnell v. Jarvis, Case No. H037704 (6th Dist. June 30, 2014) (unpublished), after we briefly summarize the case. The probate court ordered an attorney moving to change venue in a probate dispute to pay $4,812 because the motion was brought in bad faith and for purposes of delay. ​So far, so good. But we did not know if there are any special probate rules relating to change of venue, or whether normal civil procedure rules apply. We learned that normal CCP § 396b rules apply to venue change requests in trust proceedings. With that being said, prior inconsistent venue positions taken by the losing party and the fact bad faith in not an essential requirement under section 396b sealed the deal, with no abuse of discretion occurring under the circumstances. However, the attorney—not the party—had to bear the fee award based on the wording of the specific venue costs-shifting statute.

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