Fiduciary Trust International of California v. Klein
9 Cal. App. 5th 1184
| Cal. Ct. App. | 2017Background
- Long-running probate dispute over the Mark Hughes Family Trust; Alexander Hughes is sole non-contingent beneficiary and FTI was appointed successor trustee after prior trustees (Klein, Reynolds, Pair) were removed for breach related to a real property sale.
- Prior trustees submitted accountings (First and Second Accountings); beneficiaries objected and asserted surcharge/removal claims totaling large sums.
- After removal, FTI demanded trust legal files; court ordered trustees to produce a privilege log describing withheld trust documents and to deliver trust files to FTI with segregated claimed-privileged items.
- Appellants submitted a supplemental privilege log identifying 234 documents relating to the First and Second Accountings; court ultimately allowed withholding of 45 documents (Privilege-Upheld) and ordered production of the remainder (Privilege-Denied); both sides appealed.
- Central legal question: whether a removed/predecessor trustee may withhold documents from a successor trustee on attorney-client privilege grounds and what showing is required to prove communications were personal (defensive) rather than fiduciary (administrative).
Issues
| Issue | Plaintiff's Argument (FTI/Alexander) | Defendant's Argument (Klein et al.) | Held |
|---|---|---|---|
| Whether a removed trustee may withhold trust legal-file communications claimed as privileged | Trustee privilege belongs to the office; successor trustee (FTI) holds privilege for communications made for trust administration — predecessor must not block access | Predecessor trustees may withhold communications that are "defensive" (personal) in nature even if in trust files | Court follows Moeller: successor generally inherits privilege for administrative communications; narrow exception for personal/defensive communications if predecessor shows they sought personal advice and took steps to distinguish it |
| What burden and proof required to withhold documents as personal/defensive | Predecessor must make a prima facie showing (facts) that communications were personal: show dominant purpose of attorney relationship, identify separate counsel/payment, or contemporaneous steps distinguishing personal advice | Labeling communications "defensive" after the fact or broad descriptions tied to petitions is sufficient; in-camera review can protect interests | Court held appellants failed to meet burden for many documents; mere labeling (e.g., referencing surcharge/removal) is insufficient; order reversing privilege on many documents and remanding for proper application of Moeller/privilege standards |
Key Cases Cited
- Moeller v. Superior Court, 16 Cal.4th 1124 (1997) (distinguishes trustee communications made in fiduciary capacity from personal/defensive communications; successor trustee generally inherits privilege for administrative advice)
- Costco Wholesale Corp. v. Superior Court, 47 Cal.4th 725 (2009) (attorney-client privilege rules; party claiming privilege bears prima facie burden; abuse of discretion review for discovery rulings)
- Wells Fargo Bank v. Superior Court, 22 Cal.4th 201 (2000) (payment source is only one indicium of attorney-client relationship; trustee may use trust funds for legal advice on trust administration)
- City of Petaluma v. Superior Court, 248 Cal.App.4th 1023 (2016) (dominant purpose of attorney-client relationship governs privilege inquiry)
- Kasperbauer v. Fairfield, 171 Cal.App.4th 229 (2009) (Probate Code provisions authorize trustees to hire and be reimbursed for counsel in trust administration)