Trustee Was Not Being Pursued In His Personal Capacity.
The lesson from Secrest v. Vaughn, Case No. D066702 (4th Dist., Div. 1 Oct. 9, 2015) (unpublished) is clear: how a settlement agreement fees clause is worded and who the parties are in this agreement are crucial in determining whether there is fee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.4th 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.