First District, Division One Discusses This Equitable Doctrine.
In our September 16, 2008 post, we discussed Estate of Daley, which summarized the normal compensation principles applicable in probate proceedings. Usually, the court awards compensation as either “ordinary” or “extraordinary” in categorical nature. “Extraordinary compensation” includes attorney’s fees that the probate court, in its discretion, may award to the personal representative and his/her attorney to compensate unusual activities. (Prob. Code, secs. 10801, 10811; Estate of Hilton, 44 Cal.App.4th 890, 895 (1996).) However, the First District, Division One, in the unpublished decision of Estate of Morra, Case No. A119574 (1st Dist., Div. 1 Sept. 24, 2008) (unpublished), reminds us that there are equitable doctrines that do allow persons other than personal representatives or their attorneys to obtain compensation for legal services.
Morra involved a situation where a son filed a probate petition of his father Louis’s estate after his stepmother Bobbye claimed control over the universe of the couple’s community assets. Both the probate and appellate courts rejected Bobbye’s claim and ordered the estate to be funded with Louis’s 50% share of community assets. However, the probate court declined to reimburse son for any attorney’s fees incurred in pursuing his successful probate petition. He appealed, and enter the appellate court to pass upon this fee denial.
Justice Margulies, writing on behalf of a 3-0 panel of the 1/1 DCA, reversed the fee denial to son.
After noting the ordinary “extraordinary compensation” rules which usually operate, the appellate panel highlighted an equitable exception (or add-on, depending on your perspective). Where a probate plaintiff succeeds in protecting, preserving or increasing a fund for the benefit of himself or others, compensation may be awarded from the fund pursuant to the equitable “common fund” doctrine. (See Estate of Reade, 31 Cal.2d 669, 671-672 (1948); accord, Estate of Stauffer, 53 Cal.2d 124, 131-132 (1959); Hutchinson v. Gertsch, 97 Cal.App.3d 605, 614-615 (1979); Estate of Gopcevic, 228 Cal.App.2d 280, 281 (1964).)
Applied to the facts before it, one could make the argument that Louis’s estate was funded solely as a result of the efforts of son John, who filed a probate petition and prevailed over Bobbye’s argument that all of Louis’s assets were subject to distribution under her new living trust. As Justice Margulies succinctly summarized: “Had John Morra taken no action, Bobbye’s position would have left Louis’s estate bare. On its face, this appears to be an appropriate situation for application of the common fund doctrine.” (Slip Opn., at p. 9.)
Because the probate court failed to consider the impact of the “common fund” doctrine, the fee denial was reversed and remanded for reconsideration. (BLOG OBSERVATION—Given the language used by the appellate panel, we would be surprised if son John does not obtain a recovery of fees upon remand.)