Trustee Awarded Fee and Costs Based on Trial Court’s Determination that Beneficiary Presented Petition for Breach of Trust and Removal in Bad Faith.
“No good deed goes unpunished.” Although this saying frequently captures the moment, the next case actually demonstrates the opposite—a trustee’s kindness to his sister in a probate estate situation was actually awarded by a recovery of fees and costs as against a beneficiary (deceased sister’s son) who attempted to punish his prior kindness.
Leach v. Kleveland, Case No. D054532 (4th Dist., Div. 1 Mar. 24, 2010) (unpublished) involved a probate dispute over the division of trust assets between a brother (the trustee) and his sister (who subsequently died and had her beneficiary interest pass to her son, or the beneficiary). Brother and sister reached a tentative deal on dividing up the estate, with a residence going to her, some liquid trust assets to brother, and an equalization payment from sister to brother. Although sister later reneged on the deal, brother did let her move into the house, and brother assumed control over the liquid assets in the trust and used them for his own personal use. After sister died, her son (the beneficiary) took the position that the house had to be conveyed to him without any equalization payment. Trustee filed a petition for instructions to compel the sale of the house so trust assets could be divided evenly, and beneficiary filed a petition for breach of trust and removal of brother as trustee.
Trustee eventually prevailed on all petitions and was awarded his attorney’s fees and costs from beneficiary’s share of the estate based on a determination beneficiary had filed and prosecuted his petition in bad faith. Among other things, the lower court determined that trustee had been very kind to sister in letting her move in the house (even though she reneged on the tentative division) and that trustee, as a layman, had inadvertently taken the liquid assets but cooperated in any accountings for purposes of dividing the estate. Beneficiary appealed both the merits and fee determinations, losing across the board on appeal.
Because substantial evidence supported the lower court’s determination that trustee acted reasonably and in good faith in trust administration activities, no award of attorney’s fees were allowable to beneficiary under Probate Code section 17211(b), which provides that fees can be awarded where the court determines that a trustee’s opposition to a contest was unreasonable and in bad faith. (BLOG OBSERVATION—This same appellate court examined this probate code section in Leader v. Cords, a recent published decision reviewed in our March 24, 2010 post.)
Beneficiary then challenged the award of fees to trustee. His due process challenge was rejected, because beneficiary’s own removal petition was brought under Probate Code section 15642 (which allows for fee recovery where a removal petition is filed in bad faith and removal would be contrary to the settlor’s intent) such that this gave beneficiary adequate notice that he could be subjected to fees as a losing party. Fees did not have to be demanded in a complaint or a petition outside of a default setting, with the noticed fee motion satisfying due process requirements. (Chinn v. KMR Property Mgt., 166 Cal.App.4th 175, 194 (2008).)
The lower court did not err in relying on some of beneficiary’s settlement correspondence as proof of bad faith, because settlement negotiations are admissible to show that a case was litigated for an improper purpose. (HMS Capital, Inc. v. Lawyers Title Co., 118 Cal.App.4th 204, 219 (2004).)
Beneficiary’s challenge to the amount of the fee award (which is not mentioned in the decision) did not go very far because (1) fees were unapportionable given the intertwinment of issues in both petitions, and (2) he forfeited the argument by only incorporating by reference arguments made in papers below rather than tender the arguments in his appellate briefs. (Paterno v. State of California, 74 Cal.App.4th 68, 109 (1999).)
BLOG UNDERVIEW—So, in this case, a good deed did not get punished. However, who originated the saying “No good deed goes unpunished”? Looks like the origin is unclear, with some saying it should be attributed to American financier John P. Grier, banker Andrew W. Mellon, director Billy Wilder, writer Oscar Wilde, writer Dorothy Parker, or the widely-quoted gossip columnist Walter Winchell. If there is a majority view of attribution for this saying, writer Clare Boothe Luce appears to be the winner. There you go!