26 Cal. App. 5th 219
Cal. Ct. App. 5th2018Background
- Kenneth and Kazu Tagami created a restated family trust; professional fiduciary Claudia Powell was appointed trustee after suspected prior embezzlement. Powell served as trustee and hired attorney Kent Thompson; attorney Nancy Ewin drafted the trust restatement and attended mediations.
- Powell filed a Third Account after Kazu’s death (Oct. 1, 2014–June 20, 2015) showing distributions and administrative expenses (trustee fees; attorney and mediator fees). Charles Tagami objected, demanding supporting documents and attacking fees and trustee conduct spanning multiple accounting periods.
- The probate court overruled Charles’s objections, found the Third Account complied with statutory accounting requirements, and determined trustee and professional fees were reasonable and for the benefit of the Trust.
- The court found Charles’s contest was without reasonable cause and brought in bad faith under Probate Code § 17211(a), and directed Charles to pay trustee’s litigation-related fees and costs from his trust share (or personally if inadequate).
- On the fee-amount hearing the court awarded specified sums to Thompson’s firm, Powell’s personal attorney, and Powell for fees and costs. Charles appealed both the settlement order (Powell I) and the fee award (Powell II); the appellate court affirmed.
Issues
| Issue | Plaintiff's Argument (Charles) | Defendant's Argument (Powell/Trust) | Held |
|---|---|---|---|
| Whether Local Rule 4.16.2(C)(4) required a declaration to settle the Third Account | Local rule required a declaration supporting fees; absence was error | Local rule did not apply to accounting that merely itemized prior disbursements; statutory accounting controls and account complied | Court: Rule did not apply; statutory account requirements met; no error |
| Whether substantial evidence supported reasonableness of fees (Thompson, Ewin, mediator) | Fees were excessive, duplicative, for nonlegal tasks; should be reduced or disallowed | Fees were authorized by trust and statutes; work was reasonable given family disputes and mediator necessity | Court: Substantial evidence supports reasonableness; no abuse of discretion |
| Whether Charles’s contest was without reasonable cause | Charles contends requests for documentation and objections were legitimate | Trustee: objections were fishing, re-litigated prior settled matters, inflammatory and groundless | Court: Contest lacked objective reasonable cause and was brought in bad faith; §17211(a) award proper |
| Whether trustee’s personal attorney fees were recoverable under §17211(a) | Personal counsel were for trustee’s individual benefit, not trust defense | Defense: personal defense also protected the trust by rebutting allegations that threatened trustee’s administration; equitable power to charge beneficiary | Court: Personal counsel fees were properly awarded as they benefited the trust and were allowable under precedent |
Key Cases Cited
- Elkins v. Superior Court, 41 Cal.4th 1337 (2007) (local rules cannot conflict with statutory probate accounting requirements)
- Donahue v. Donahue, 182 Cal.App.4th 259 (2010) (trial court has discretion to review trustee fee reasonableness on settlement)
- Uzyel v. Kadisha, 188 Cal.App.4th 866 (2010) (objective reasonable-cause standard and subjective bad-faith inquiry for fee-shifting)
- Gemini Aluminum Corp. v. California Custom Shapes, Inc., 95 Cal.App.4th 1249 (2002) (bad faith means pursuit for improper motive; state of mind inferred from circumstantial evidence)
- Diaz-Barba v. Superior Court, 236 Cal.App.4th 1470 (2015) (deferential review of bad-faith findings)
- Hollaway v. Edwards, 68 Cal.App.4th 94 (1998) (trustee’s personal defense can also benefit the trust and be chargeable to beneficiary under equitable powers)
- Rudnick v. Rudnick, 179 Cal.App.4th 1328 (2009) (probate court may charge reasonable fees incurred opposing unfounded proceedings to beneficiary’s trust share)
- Laffitte v. Robert Half Internat. Inc., 1 Cal.5th 480 (2016) (trial judge’s valuation of professional services is entitled to deference)
- Estate of Gump, 1 Cal.App.4th 582 (1991) (allowance of compensation rests in trial court’s sound discretion)