Litigation Alert

• Publication year: 2022

LITIGATION ALERT

Written by Jeremiah J. Moffit, Esq.,^* Courtney A. Sorensen, Esq.^* Craig S. Weinstein, Esq.,^* and Sara Z. May, Esq.^*

WHILE THE PROBATE COURT'S EQUITABLE POWERS DO NOT AUTHORIZE AN AWARD OF ATTORNEY FEES AND COSTS TO EXCEED A BENEFICIARY'S SHARE OF THE TRUST, A STATUTORY AWARD OF ATTORNEY FEES AND COSTS FOR A BAD FAITH CLAIM TO REMOVE A TRUSTEE IS NOT LIMITED TO THAT AMOUNT

BRUNO V. HOPKINS (2022) 79 CAL.APP.5TH 801

The Sixth District Court of Appeal held that if a beneficiary brings a bad faith petition to remove a trustee, then the probate court has statutory authority to award attorney fees and costs against a trust beneficiary that exceeds the amount of the beneficiary's share of the trust.

A husband and wife created a trust providing two of their daughters specific cash gifts and two other daughters the residue of the trust estate. One daughter who received a specific cash gift filed a petition to remove the wife as trustee and invalidate the trust on the grounds of forgery. After a bifurcated trial on the issue of forgery, the trial court determined that the trust was authentic. The wife and the two residuary beneficiaries filed motions for attorney fees and costs pursuant to the probate court's broad equitable powers and Probate Code section 15642, subdivision (d), alleging that the removal claim was brought in bad faith. The trial court granted the motions and awarded fees and costs in an amount exceeding the daughter's specific cash gift. The daughter appealed.

The Court of Appeal affirmed. Although the probate court does not have broad equitable powers to award attorney fees and costs in excess of a beneficiary's share of the trust, Probate Code section 15642, subdivision (d), provides the probate court with statutory authority to impose personal liability against beneficiaries in an amount exceeding their beneficial share of the trust. The Legislature enacted section 15642 to address the damage to trust estates resulting from bad faith claims. A bad faith petitioner may be liable for "all or any part of the costs of the proceeding, including reasonable attorney's fees." The statute only states that the attorney fees must be reasonable in amount and does not further limit a potential award by amount. The Court of Appeal also affirmed the trial court's finding of substantial evidence that the claim was brought in bad faith notwithstanding the opinion rendered by the daughter's handwriting expert that the trust was a forgery because that opinion relied on evidence that the daughter knew to be false.

PRETRIAL ATTACHMENT CANNOT BE USED TO SECURE PUNITIVE DAMAGES OR STATUTORY PENALTIES ON A FINANCIAL ELDER ABUSE CLAIM

ROYALS V. LU (2022) 81 CAL.APP.5TH 328

The First District Court of Appeal held that the prospect of a punitive damage recovery on a financial elder abuse claim, in the form of exemplary damages or statutory penalties, may not be secured by pretrial attachment.

When a decedent passed away, his daughter became successor trustee and sole beneficiary of his trust. The decedent's spouse claimed that decedent intended to provide for the spouse through accounts that passed outside of the trust. The daughter claimed that the decedent did not intend to leave any of his assets to the spouse and the spouse misappropriated assets before death. The daughter filed a petition against the spouse including claims for the return of trust property under Probate Code section 850 and for financial elder abuse. The daughter applied for a pretrial right to attach order (RTAO)...