Second District, Division Three Rules on Scope and Reasonableness of Certain Fees Under Welfare and Institutions Code section 15657.5.
Welfare and Institutions Code section 15657.5, one segment of California’s Elder Abuse Act, is a mandatory fee-shifting provision. In relevant part, section 15657.5 provides: “(a) Where it is proven by a preponderance of the evidence that a defendant is liable for financial abuse, as defined in Section 15610.30, in addition to all other remedies otherwise provided by law, the court shall award to the plaintiff reasonable attorney’s fees and costs. The term ‘costs’ includes, but is not limited to, reasonable fees for the services of a conservator, if any, devoted to the litigation of a claim brought under this article.” The Second District, Division Three published a decision on whether $517,869.93 in trustee fees were recoverable under section 15657.5, as well as ruled in an unpublished portion of the opinion whether a $1,077,579.08 attorney’s fees award was excessive. As we show below, question number 1 was answered “no” and question 2 was answered “yes.”
In Sanders v. Lawson, Case No. B185999 (2d Dist., Div. 3 June 27, 2008), trustee as conservator of parents’ estate brought an action under the Elder Abuse Act against a beneficiary daughter, dealing with the manner in which daughter obtained title to a Santa Barbara residence through a quitclaim deed previously obtained from her elderly parents. After a bench trial, the trial judge awarded $583,769.83 damages to trustee from daughter’s financial abuse and $100,000 to conservator for daughter’s elder abuse. In the subsequent fee/cost proceeding (which was referred to a referee for recommendations), the trial court adopted the recommendations, awarding conservator $11,896.50, the trustee $517,869.93, and the attorneys $1,077,579.08 (with the attorney’s fees award being reduced 20% from the $1.3 million sought-after fees). Daughter appealed, and won a reversal in a 3-0 decision authored by Justice Aldrich.
The Second District panel reversed the entire judgment because the trial court erred in failing to grant daughter a trial continuance. However, it also proceeded to give guidance on issues that would be in play upon remand.
Initially, the Court of Appeal found that daughter’s challenge to the fee award was cognizable. Plaintiffs argued that her appeal from a July 2005 judgment awarding fees to plaintiffs, which fees were not fixed in amount until a subsequent June 2007 ruling that was not appealed, was premature and meant she appealed from the wrong order. The Second District panel disagreed, relying on Grant v. List & Lathrop, 2 Cal.App.4th 993, 997-998 (1992). Grant held that an earlier notice of appeal from a judgment awarding costs and fees subsumes a later order fixing the amounts of the award. In relying upon Grant, it distinguished numerous decisions that plaintiffs claimed had declined to follow Grant. (See Slip Opn., p. 13, fn. 8—unpublished portion of Opinion.) (BLOG NOTE—We discussed this issue in our June 7, 2008 post on P R Burke Corp. v. Victor Valley Wastewater Reclam. Auth., 98 Cal.App.4th 1047 (2002), which reached a similar result on appealability as set forth in Grant.)
In the published portion, Justice Aldrich determined that trustee fees were not recoverable under section 15657.5. Had the Legislature intended them to be compensable, it would have mentioned more than “conservator fees” as being covered. The appellate court refused to expand the “includes, but is not limited to” language to encompass anything more, reasoning that this reference was to the other routine costs set forth in Code of Civil Procedure section 1033.5(c)(5)—which did list trustee fees among the specified routine cost items. The Legislature is the best body to add trustee fees to the list of recoverable costs, the panel reasoned.
Justice Aldrich, in another unpublished part of the Opinion, found the $1,077,579.08 fee award to be excessive. After observing that Welfare and Institutions Code section 15657.1 directs the trial court to consider “unconscionable fee” factors under Rule 4-200 of the Rules of the Professional Conduct, the appellate panel found that the $1.1 million was “far out of proportion” to the $683,000 obtained given the relative size of the estate (especially where the trustee authorized disbursements of over $3 million out of an estate valued at less than that amount). In rather frank fashion, Justice Aldrich wrote, “The fees here have raised the shameful specter of the horrendous case of Jarndyce v. Jarndyce in Charles Dickens’s Bleak House, where because of protracted delays—albeit not at issue here—the corpus of the estates were depleted by court costs and legal fees.” (Slip Opn., at p. 18.) Using more traditional abuse of discretion analysis, the panel found the fees to be “avaricious” given the virtual lack of discovery, the absence of a jury, the mundane issues and facts at play, the noncontingent nature of the services, and the duplication in services for which a reduction was made by the referee. (BLOG OBSERVATION—This passage closely mimics, in terser fashion, similar observations made by defense counsel in successfully attacking a class action fee award. See Thayer v. Wells Fargo, N.A., 92 Cal.App.4th 819, 828-829 (2001).
The result was a sobering one: a complete retrial, plaintiffs’ inability to recoup over $500,000 in trustee fees, and the specter of plaintiffs never coming close to recovering their claimed attorney’s fees no matter what result is obtained in future remand proceedings.