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.4th 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That result was affirmed in Estate of Basmajian, Case No. B251475 (2d Dist., Div. 3 May 21, 2015) (unpublished).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.