Pizarro v. Reynoso
10 Cal. App. 5th 172
| Cal. Ct. App. | 2017Background
- Settlor Willis Jensen executed a trust (2010) appointing granddaughter Melissa Reynoso as successor trustee and directing the El Verano property could be sold to Karen Bartholomew or her children at $100,000 below appraised value (or otherwise at fair market value).
- The El Verano property appraised at $365,000, so an authorized purchase price to family members was $265,000. Reynoso arranged financing through a short series of near-concurrent transfers and a Wells Fargo loan so Bartholomew could acquire the property for $265,000. Net sale proceeds (~$262,000) were deposited to the trust and remain there.
- Grandson Anthony Pizarro and Keith Jensen filed petitions alleging the sale was a sham, that Reynoso breached fiduciary duties, and seeking relief. The trial court found Reynoso credible, Bartholomew largely not credible, denied the petitions, and awarded Reynoso attorney fees and costs.
- On appeal, Pizarro challenged the merits of the sale but failed to present organized, properly headed arguments; the appellate court treated most merits claims as forfeited and upheld the trial court’s findings that the sale was valid.
- The trial court had charged attorney fees and costs against trust beneficiaries; the appellate court held the probate court may, under its equitable power, charge unreasonable/bad-faith challengers’ fees against their share of the trust but reversed to the extent the court imposed personal liability beyond trust shares and remanded for consideration of statutory fee provisions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether trustee’s sale to Bartholomew was a sham/self-dealing | Pizarro: transaction was a sham; trustee sold to herself/ husband using Bartholomew as a straw | Reynoso: sale was valid; near-concurrent financing transactions amounted to a sale to Bartholomew permitted by the trust | Forfeited on appeal by Pizarro for inadequate briefing; on merits appellate court agrees sale was valid and not a sham |
| Whether court can charge attorney fees and costs to beneficiary’s share for bad-faith/unfounded proceedings | Pizarro/Bartholomew: award improper/exceeds court power | Reynoso: probate court’s equitable power permits charging offending beneficiaries’ trust shares for fees (Rudnick/Ivey) | Court may, under equitable power, charge reasonable fees against an offending beneficiary’s share of the trust when proceedings are unfounded and in bad faith; trial court’s charge against trust shares upheld |
| Whether court may impose personal liability for attorney fees beyond trust shares | Pizarro/Bartholomew: personal liability is improper; Pizarro is not a beneficiary | Reynoso: personal liability appropriate if shares insufficient (court ordered joint/several liability for unpaid portion) | Reversed in part: trial court exceeded equitable power by imposing personal liability beyond trust shares; remanded to consider statutory fee mechanisms if appropriate |
| Whether appellant forfeited appellate review by poor briefing | Pizarro: raises various errors but with inadequate headings and organization | Respondents: briefing fails to comply with rules and does not overcome presumption of correctness | Affirmed that Pizarro forfeited most merits arguments due to inadequate, disorganized briefing |
Key Cases Cited
- Rudnick v. Rudnick, 179 Cal.App.4th 1328 (Cal. Ct. App.) (probate court may charge a beneficiary’s trust share for fees when beneficiary brings unfounded proceedings in bad faith)
- Estate of Ivey, 22 Cal.App.4th 873 (Cal. Ct. App.) (equitable power of probate court permits charging litigation expenses to beneficiary’s share when litigation was frivolous/bad faith)
- Knapp v. Doherty, 123 Cal.App.4th 76 (Cal. Ct. App.) (courts should look to substance over form in evaluating transactions)
- Landa v. Steinberg, 126 Cal.App. 324 (Cal. Ct. App. 1932) (briefing defects and failure to present clear headings can forfeit appellate issues)
- Foreman & Clark Corp. v. Fallon, 3 Cal.3d 875 (Cal. 1971) (appellate courts defer to trial court factual findings; failure to respect those findings forfeits claims on appeal)