Third in our series regarding attorney’s fees and “Do I really Have to Pay for This?!?!? The general answer is that the American rule is that each side has to bear attorneys’ fees. (California Code of Civil Procedure §1021; In Re Bevelle’s Estate, (1947) 81 Cal.App.2d 720.) However, there are some exceptions. Some exceptions for trust cases include: California Probate Code 859: Attorney’s fees “may” be awarded if a court finds that a person has in “bad faith” wrongfully taken, concealed, or disposed of property belonging to a conservatee, a minor, an elder, a dependent adult, a trust, or the estate of a decedent, or has taken, concealed, or disposed of the property by the use of undue influence. The Probate Code does not clearly define “Bad faith,” but it essentially means an intentional dishonest act. Contrast this with “good faith,” where folks are genuinely doing what they think is right, even if it later turns out to be wrong. California Probate Code 18100.5(h): Anyone who demands trust documents in addition to a certification of trust shall be liable for attorneys fees, if the request was made in “bad faith.†California Probate Code 15642(d): If the court finds that a petition to remove a trustee has been made in bad faith and that removal would be contrary to the settlor’s intent, the court may award reasonable attorneys’ fees. California Probate Code 17211: A trustee of a trust may, in some instances, be required to prepare an accounting. If a person contests such an accounting without “reasonable cause†and in “bad faith,†the court may award attorneys fees to the trustee. Those attorney’s fees will be deducted from the contestant’s share of the trust if awarded. If the person’s share is not large enough to satisfy the award, the person will be personally liable for the difference. AND If the person filing the accounting (the trustee) opposes a contest to the accounting without “reasonable cause or in bad faith, the court may award attorneys fees to the contestant. If awarded, the fees go against whatever compensation the trustee is entitled to for their role as trustee and/or their share of the trust if they are also a beneficiary. If that share is not large enough to satisfy the award of attorneys’ fees, the trustee will be personally liable for the difference. California Probate Code 16061.9(a): When a trust becomes irrevocable (and in certain other situations), a trustee must serve a notification of trust, which must contain certain information. (See Probate Code 16061.7) A trustee who fails to do so “shall†be responsible for attorneys’ fees, unless the trustee makes a reasonably diligent effort to comply. California Probate Code 19255(e): In cases where the decedent left a trust, folks who think the decedent owed them money (creditors) can file creditor’s claims. The trustee can accept or reject these claims (the subject of creditor’s claims could be an entire article unto itself). The creditor can file an action in court on that rejected claim if rejected. If the court determines that the prosecution or defense of such an action was “unreasonable,†the court “shall†award attorney’s fees to the prevailing party. The “prevailing party†is the trustee if the creditor recovers an amount equal to or less than the amount of the claim allowed by the trustee, and is the creditor if the creditor recovers an amount greater than the amount of the claim allowed by the trustee. California Probate Code 15645: If the trustee of an irrevocable trust refuses to transfer administration of the trust to a successor trust company, after request of the beneficiaries, and the court makes an order removing the existing trustee and appointing a trust company as successor trustee, the court “may†award reasonable attorney’s fees to the petitioner. Those fees can be paid by the trustee or from the trust as ordered by the court. California Probate Code 21380(d): Certain transfers in a will or trust are presumed to be the product of fraud or undue influence, including transfers to the person who drafted the instrument and care custodians. If such a person is unsuccessful in rebutting that presumption, that person “shall†have to pay the petitioners attorneys fees. Leader v. Cords, (2010) 182 Cal.App.4th 1588: This case is a judicial interpretation of California Probate Code 17211 (mentioned above). The case holds, essentially, that if a beneficiary sues a trustee to compel a distribution, that beneficiary is entitled to attorneys fees if the court finds that the withholding of the distribution was without “reasonable cause†and in “bad faith, as outlined in California Probate Code 17211. Estate of Ivey, (1994) 22 Cal.App.4th 873: This case presents a unique factual scenario. In the Ivey case, one trust beneficiary objected to the trustee’s accounting. The objections were found to be frivolous and in bad faith. The court determined that it would be inequitable to the other income beneficiaries to bear the expenses the trust bears. The court awarded reasonable costs and attorneys’ fees to the trustee and the other beneficiaries and instructed the trustee to pay those amounts to the other beneficiaries and itself out of future distributions from the trust to which the beneficiary would otherwise be entitled. These two cases, along with Rudnick v. Rudnick, (2009) 179 Cal.App.4th 1328, and Pizarro v. Reynoso, (2017) 10 Cal.App.5th 172, stand for the general proposition that the probate court, using its broad equitable powers, can order fee shifting to parties who have brought and maintained frivolous and/or bad faith actions that cost the trust unnecessary money at the expense of its beneficiaries. It must be noted that these cases are confined to factual situations in which the offending beneficiary has brought an action against the trustee or the trust itself.
General Ways to Obtain Attorney Fees
California Code of Civil Procedure 128.5: A court may order a party, the party’s attorney, or both to pay reasonable attorneys’ fees incurred as a result of actions or tactics made in bad faith that are frivolous or solely intended to cause unnecessary delay.
Actions or tactics include, but are not limited to, the making or opposing of motions or the filing and service of a complaint, cross-complaint, answer, or other responsive pleading. The mere filing of a complaint without service on an opposing party does not constitute “actions or tactics for purposes of this section.
Frivolous means totally and completely without merit or for the sole purpose of harassing an opposing party.
Malicious Prosecution: This is a separate lawsuit brought after an underlying lawsuit’s conclusion. To succeed in a malicious prosecution lawsuit, the plaintiff must show: (1) that the defendant was actively involved in bringing or continuing the lawsuit; (2) that the lawsuit ended in plaintiffs favor; (3) that no reasonable person in defendants circumstances would have believed that there were reasonable grounds to bring the lawsuit against plaintiff; (4) that defendant acted primarily for a purpose other than succeeding on the merits of the claim; (5) that plaintiff was harmed; (6) and that defendants conduct was a substantial factor in causing plaintiffs harm.
Most of these statutes contain words such as may and reasonable. These equivocal words give judges broad discretion to decide whether to award such fees, and if so, in what amount. Judges can, and often do, award lower amounts than what was paid or incurred. Judges have the luxury of examining the fees incurred after the outcome is known, something the attorneys and parties cannot see as they strategize and litigate the case. It is, therefore, essential to have an attorney who understands that fee-shifting statutes are available and can effectively and efficiently obtain the best overall outcome under the specific facts of your matter.
If you are wondering if you’re entitled to attorneys’ fees or if someone has threatened to sue you and stated that you have to pay their attorney’s fees, we encourage you to contact us to see if we can help.
