26 Cal.App.5th 219
Cal. Ct. App.2018Background
- Kenneth M. (Matazo) and Kazu Tagami created a revocable family trust; professional fiduciary Claudia Powell was appointed trustee in 2011 after removal of a prior trustee. Two prior trust accounts (2011–2012 and 2012–2014) were settled without objection.
- Powell filed a third (predeath) account for Oct. 1, 2014–June 20, 2015 (date of Kazu's death), listing trustee compensation and attorney/mediator fees; Charles Tagami objected and demanded supporting documentation.
- Powell (through counsel Kent Thompson) produced the Third Account and later submitted supplemental documentation (redacted billing statements, bank reconciliations, engagement letter for Thompson).
- Charles filed extensive objections and a voluminous supplemental objection, challenging trustee fees, fees paid to Thompson, fees to trust drafter Nancy Ewin, and mediation fees, and making inflammatory personal accusations.
- The probate court overruled Charles’s objections, found many issues either previously settled, outside the accounting period, or without merit, and concluded Charles’s contest was without reasonable cause and brought in bad faith under Probate Code § 17211(a).
- The court ordered Charles to pay attorney fees and costs (charged against his trust interest or personally) totaling $42,115.38. Charles appealed two consolidated orders; the Court of Appeal affirmed.
Issues
| Issue | Plaintiff's Argument (Powell) | Defendant's Argument (Tagami) | Held |
|---|---|---|---|
| Whether local rule 4.16.2(C)(4) required a declaration for fees in the Third Account | Local rule did not apply because the Third Account itemized previously made disbursements and did not seek new fee approval; Probate Code governs account content | Rule 4.16.2(C)(4) required a declaration and its absence invalidated approval | Court: Local rule did not bar settlement; Probate Code controls account content and Third Account complied; rule could not impose additional mandatory requirements |
| Whether there was substantial evidence that fees paid to Thompson, Ewin, and the mediator were reasonable and for the benefit of the trust | Fees were reasonable given trustee’s authority to hire advisors, the contentious family disputes, mediation results, and prior approvals of similar fees | Fees were excessive, duplicative, included nonlegal work, and some work could have been performed by Powell at lower cost | Court: Substantial evidence supported reasonableness of Thompson’s, Ewin’s, and mediator’s fees; trial court’s allowance of compensation not an abuse of discretion |
| Whether Charles’s objections were brought without reasonable cause and in bad faith under Prob. Code § 17211(a) | Many objections were meritless, repetitive, raised matters previously settled or outside the accounting period, and included inflammatory attacks; thus awardable | Charles contends his documentation demands and objections were proper and not in bad faith | Court: Objective lack of reasonable cause and circumstantial evidence supported inference of bad faith; award of fees under § 17211(a) upheld |
| Whether fees for Powell’s personal attorney were recoverable under § 17211(a) and whether awarded fees were excessive or duplicative | Personal counsel costs were proper because defending individual attacks also protected the trust; requested fees were reasonable given the voluminous, meritless objections | Charles argued personal-attorney fees were solely for Powell’s personal benefit and therefore not recoverable; also argued overall fees were excessive/duplicative | Court: Personal-attorney fees were recoverable where they defended trust-related attacks; trial court reasonably awarded the requested fees; no abuse of discretion |
Key Cases Cited
- Elkins v. Superior Court, 41 Cal.4th 1337 (local rules may not impose requirements that conflict with statute)
- Donahue v. Donahue, 182 Cal.App.4th 259 (court may assess trustee fee reasonableness on settled accounting; trustee counsel fees review)
- Uzyel v. Kadisha, 188 Cal.App.4th 866 (objective standard for reasonable cause; bad faith defined and assessed by circumstantial evidence)
- Hollaway v. Edwards, 68 Cal.App.4th 94 (trustee may recover individual defense fees when allegations threaten trust administration)
- Rudnick v. Rudnick, 179 Cal.App.4th 1328 (equitable charge of fees against beneficiary who instigates bad-faith proceedings)
- Laffitte v. Robert Half Internat. Inc., 1 Cal.5th 480 (trial judge is best judge of value of professional services; appellate review deferential)