Second District, Division 8 Reverses Probate Court’s Denial of Fees.
In Rutter Hobbs & Davidoff Inc. v. Bessemer Trust Co. of Calif., N.A., Case No. B209835 (2d Dist., Div. 2 Nov. 24, 2009) (unpublished), a probate judge denied trustee’s attorneys petitions for payment of attorney’s fees and costs based on their representation of the former trustee of the Mark Taper Trusts A, C, and 1. Attorneys appealed and won, demonstrating the importance of the standard of review—with the appellate court applying a de novo standard and determining that the lower court erred in its interpretation of certain statutes.
Here is what was wrong with the lower court’s ruling:
- Under Probate Code sections 18000-18005, the trust is liable on a contract claim arising from a contract entered into by a trustee in the trustee’s representative capacity even if the trustee is found to be personally liable for the claim (in that case, the remedy is to require the trustee to reimburse the trust for fees);
- Probate Code section 18000, contrary to the probate judge’s ruling, has no requirement that the trustee-attorney contract benefit the trust, with the provision only requiring that the trustee reveal his/her representative capacity and identify the trust (requirements which were met);
- Probate Code section 16247 did not prevent the trustee from hiring attorneys to defend her in the primary trust beneficiary’s surcharge action, because this retention was necessary to the continued performance of her duties as trustee;
- Probate Code section 15684 was not a basis to deny fee payments, because it only applied to situations where a trustee seeks repayment for trustee’s expenditures (not expenditures that were made to a third party based on a contractual obligation of the trust).
BLOG OBSERVATION—Co-contributor Mike notes that Terence S. Nunan was one of the attorneys successfully representing the law firm on appeal. He worked with Terry at Kadison, Pfaelzer, Woodard, Quinn & Rossi during the 1980s. Good job on appeal.