Fourth District, Division 1 Also Provides Guidance on Fee Recovery For Family Code Section 1102 Violations.
Well, for all of you probate practitioners out there, the Fourth District, Division 1 has issued an interesting unpublished decision on a fee award that fell based on a subsequent reversal on major issues in the case.
In Estate of Hazewinkel, Case No. D054657 (4th Dist., Div. 1 June 4, 2010) (unpublished), successor trustee (son) for late father was embroiled in trust litigation against father’s second wife Wanda. The appellate court, in an earlier unpublished decision in May 2009, had upheld a determination by the probate court that a certain trust transfer deed was ineffective for lack of Wanda’s consent, but reversed for retrial of discrete issues on Wanda’s trust beneficiary status. Before issuance of the earlier appellate opinion, the probate court awarded Wanda attorney’s fees of $153,591 and costs of $15,347.65, with the fee recovery premised on Family Code section 1101(g) [providing for fee and costs recovery in a situation where one spouse transfers a community asset in breach of certain fiduciary duties]. Son appealed the postjudgment award of fees and costs.
The Court of Appeal reversed, but also provided some guidance to the probate court on remaining issues and the refusal to entertain a motion to tax costs based on an untimeliness ruling.
The overarching basis for reversal stemmed from the earlier reversal on major issues. Although the reversal was not unqualified in nature, it did sent the matter back for retrial on major issues on the case such that there was no existing final judgment. This meant that Wanda could not claim complete or partial prevailing party for purposes of fees and costs. The merits partial reversal caused the entire fees/costs award to fall as incidental to the judgment.
However, the appellate court did give some guidance on fee entitlement on remand.
The main issue boiled down to whether section 1101(g) fees were available for a fiduciary duty breach under Family Code section 1102, which is not expressly incorporated into section 1101(g) as a predicate breach allowing for fee recovery. The deciding point was that the section 1102 breach was sustained in the prior appeal, with the actual impairment theory for such a breach having been found to sustain section 1101(g) fees under In re Marriage of Hokanson, 68 Cal.App.4th 987, 9920993 (1998). So, if actual impairment of Wanda’s interest was shown in remand proceedings (because there was never any full litigation of this issue), she might have future entitlement to fees.
However, the appellate court also instructed the parties and probate court that there needed to be an apportionment of fees between certain claims. Beyond that, the probate court may have broad equitable powers to award fees in a trust dispute, such that this power needed to be addressed after remand determinations were made. (Estate of Ivey, 22 Cal.App.4th 873, 883-885 (1994); Hollaway v. Edwards, 68 Cal.App.4th 94, 99 (1998).)
The Court of Appeal also chastised the probate court for denying son’s motion to tax costs after finding it was untimely. Given a rather convoluted procedural history, it found that the motion to tax was a continuation of an activity existing before the matter was trailed, meaning that some laxity in procedural niceties was in order. The substantive issue that would have to be addressed, on remand, was whether Probate Code section 1002 expands the list of allowable costs set forth in Code of Civil Procedure section 1033.5 so that Wanda could recoup her expert witness fees as costs.
Stay tuned on this one; we would predict there might be another appellate decision in this probate imbroglio.