Yianilos V Hunter Excellent Case

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Yianilos v. Hunter, Not Reported in Cal.Rptr.3d (2015)
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2015 WL 7423047
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Court of Appeal,
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Fourth District, Division 1, California.
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Karen Kerry YIANILOS, as Co Trustee etc., Plaintiff and Appellant,
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v.
\par
}
}
{\li100 \f3 \b0 \ri100 \fs20 \cf20 \qc \i0
Christine HUNTER et al., Defendants and Respondents.
\par
}
}
}
}
{\li0 \f2 \b0 \ri0 \fs20 \cf1 \qc \i0
{\f2 \b0 \fs20 \cf1 \i0
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D066333
\par
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}
}
{\f3 \b0 \fs20 \cf1 \i0
{\li200 \f3 \b0 \ri0 \fs20 \cf1 \qc \i0
|
\par
}
}
{\li200 \f3 \b0 \ri0 \fs20 \cf1 \qc \i0
November 23, 2015
\par
}
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
APPEAL from orders of the Superior Court of San Diego County, Julia Craig Kelety
, Judge. Affirmed. (Super. Ct. No. P174593)
\par
}
}
}
{\li0 \f2 \qj \b1 \ri0 \fs20 \cf25 \i0
{\*\bkmkstart co_attorneysAndLawFirms_1}{\*\bkmkend co_attorneysAndLawFirms_1}
Attorneys and Law Firms
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
Goodwin, Brown, Gross & Lovelace and
}
{\field {\*\fldinst HYPERLINK "http://www.westlaw.com/Link/Document/FullText?fin
dType=h&pubNum=176284&cite=0108966901&originatingDoc=I8c947520921b11e58b7fa63ea8
e8f9ce&refType=RQ&originationContext=document&vr=3.0&rs=cblt1.0&transitionType=D
ocumentItem&contextData=(sc.Search)" }{\fldrslt
Craig Gross
}}}
, for Plaintiff and Appellant.
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
Law Office of Herb Fox,
}
Herb Fox
}}}
\sb200
; Hughes & Pizzuto and
}
Laurie E. Barber
}}}
\sb200
, for Defendants and Respondents Christine Hunter, Nicholas Hunter and Alexandra
Moran.
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
Richard E. Showen
}}}
\sb200
, for Defendant and Respondent Becky Yianilos.
\par
}
}
}
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{\li0 \f2 \qj \b1 \ri0 \fs20 \cf25 \i0
{\*\bkmkstart co_opinion_1}{\*\bkmkend co_opinion_1}
Opinion
\par
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}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
IRION
}}}
\sa200
\sb200
, J.
\par
}
}
}
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{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
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\par
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{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
}
{\f2 \b1 \fs20 \cf1 \i0
{\*\bkmkstart co_pp_sp_999_1_1}{\*\bkmkend co_pp_sp_999_1_1}
*1
}
}
Karen Kerry Yianilos (Kerry),
}
{\f2 \b0 \fs16 \cf1 \i0
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1
}}}
}
a former cotrustee and a beneficiary of her late parents\rquote trust, appeals
from orders of the probate court surcharging her for certain costs unnecessaril
y incurred by the trust due to Kerry\rquote s breach of fiduciary duty as cotrus
tee. The surcharges were ordered following a trial on objections filed by trust
beneficiaries (Objectors) to accountings filed by Kerry. Specifically, Kerry con
tends the probate court erred in imposing the following surcharges against her:
(1) approximately $200,000 resulting from the cotrustees\rquote delay in sellin
g the trust\rquote s main asset, residential real property; (2) $97,214.30 for a
ttorney fees incurred by Objectors; and (3) $20,000 for attorney fees paid from
the trust to one of Kerry\rquote s attorneys.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
We conclude that Kerry\rquote s arguments are without merit, and we accordingly
affirm the probate court\rquote s orders.
\par
}
}
}
\u160\'3f
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
063d85a3ff11e598dc8b09b4f04}
\par
{\li0 \f2 \b0 \ri0 \fs20 \cf1 \qc \i0
{\f2 \b0 \fs20 \cf1 \i0
I
\par
}
}
}
{\li0 \f2 \b0 \ri0 \fs20 \cf1 \qc \i0
{\f2 \b0 \fs20 \cf1 \i0
FACTUAL AND PROCEDURAL BACKGROUND
\par
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
Spero and Theresa Yianilos were trustors of the Spero and Theresa Yianilos Famil
y Trust (the Trust). After Spero died, the Trust, by its terms, split into three
separate subtrusts (A, B and C) and Theresa became the surviving trustor. A thi
rd amendment to the Trust, made in 2007, appointed Theresa\rquote s two daughter
s, Becky Yianilos (Becky) and Kerry, as successor cotrustees upon Theresa\rquote
s death. The Trust identifies as beneficiaries Kerry, Becky, Kerry\rquote s dau
ghter Laurel, and Becky\rquote s children Christine Hunter, Alexandra Moran,
}
{\f2 \b0 \fs16 \cf1 \i0

ference_B00022037652657_ID0}
2
}}}
}
and Nicholas Hunter.
}
{\f2 \b0 \fs16 \cf1 \i0
ference_B00032037652657_ID0}
3
}}}
}
As a terminating trust, the Trust provides that upon the death of the surviving
trustor, the Trust\rquote s assets are to be distributed \u8220\'3f[a]s soon as
practical,\u8221\'3f and the trustee is instructed \u8220\'3fto obtain the fair
market value of the assets.\u8221\'3f
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
Theresa died on March 24, 2008, and Becky and Kerry accepted their appointment a
s successor cotrustees. At Theresa\rquote s death, the Trust had approximately $
90,000 in cash and owned real property in La Jolla (the Property), which had bee
n Theresa and Spero\rquote s home for many years. The home on the Property had b
een built by noted architect Cliff May, and sat on a large parcel of land, compr
ised of several different legal lots. However, due to several years of deferred
maintenance, the house was in disrepair and was also cluttered with an accumulat
ion of personal property, which was to pass to family members under the terms of
Theresa\rquote s will.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
Becky and Kerry started the process of cleaning out the house, and Kerry consult
ed with a real estate broker in October 2008, about possibly listing the Propert
y for sale. However, Becky and Kerry were not able to cooperate as cotrustees, a
nd the process of cleaning out the house and listing the Property for sale did n
ot significantly progress after the initial effort.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
}
{\f2 \b1 \fs20 \cf1 \i0
*2
}
}
Although Kerry received estimates from cleaning services in early 2009 indicati
ng that it would cost approximately $3,500 to clear out the house, she elected n
ot to spend the Trust\rquote s money on hiring such a service. Instead, Kerry to
ok control of the Trust\rquote s finances, depleting all of the Trust\rquote s c
ash on various expenditures that she failed to adequately document, including pa
ying her housekeeper, her daughter and others for cleaning work at the Property.
According to Kerry, the Trust\rquote s cash was depleted by the fall of 2009. D
espite these expenditures, the house was not completely cleared of personal prop
erty until 2013 and was still in disarray at least two years after Theresa\rquot
e s death.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
The initial attorney representing the cotrustees filed an estate tax return with
the Internal Revenue Service (IRS) in June 2009, which indicated that the estat
e owed $138,962.99 in estate taxes. Given the Trust\rquote s limited cash, the T
rust paid only $38,962.99 of the estate taxes and began to accrue penalties on t
he unpaid balance. Property taxes also came due, but were not paid, giving rise
to the accrual of penalties. As early as 2008, the cotrustees were advised by th
eir attorney that they should obtain a loan for the Trust so that taxes could be
paid, but they did not do so until 2011.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
Kerry purported to use some of her own money for the Trust\rquote s expenses aft
er the Trust\rquote s cash was depleted. She also conducted numerous undocumente
d transactions for the Trust in cash, without adequate receipts, totaling as muc
h as $50,000. Instead of properly utilizing the Trust\rquote s bank accounts, Ke
rry often ran transactions through her own bank accounts or through the client t
rust fund account that she maintained as a practicing attorney, or deposited her
clients\rquote payments into the Trust\rquote s bank accounts to fund Trust ex
penditures.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
One of the Trust\rquote s beneficiaries, Christine, spoke with Kerry in July 200
9 to request an accounting and to inquire about when the Property was going to b
e sold. As Christine described the encounter, Kerry was verbally and physically
aggressive, refused to provide an accounting, and stated that the Property would
not be listed for sale.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
Instead of promptly preparing to list the Property for sale, Kerry allowed her d
aughter, Laurel, to live on the Property without paying rent from October 2009 t
o September 2011, over the objection of Becky. In addition to providing free hou
sing to Laurel, Kerry made payments from the Trust to Laurel of at least $5,000
for Laurel\rquote s work at the Property to clean it up.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
Faced with actions by Kerry that she did not agree with, Becky hired her own att
orney in the summer of 2009 and started threatening to seek relief in court. Wit
hin days of being retained, Becky\rquote s attorney determined that the cotruste
es should have taken advantage of a fractional interest discount that would have
resulted in no estate taxes being owed, instead of $138,962.99, and advised tha
t an amended estate tax return be filed to seek a refund from the IRS. Becky was
in favor of filing an amended return, but Kerry opposed the idea, and the cotru
stees accordingly did not end up filing an amended return.
}
{\f2 \b0 \fs16 \cf1 \i0

ference_B00042037652657_ID0}
4
}}}
}
Further, according to Becky and her attorney, although they believed that the P
roperty should be sold, Kerry was not willing to list the Property.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
In approximately March 2011, the IRS began to take steps to collect the unpaid e
state tax liability and indicated that it intended to levy upon the Property. Fo
r several months, Becky and her attorney were not informed by Kerry about the IR
S activity.
}
Eventually, when it became clear to everyone that something had to be done rega
rding the IRS, Becky\rquote s attorney negotiated a reprieve from the IRS, and K
erry and Becky began looking for a loan to pay the delinquent estate taxes. Kerr
y then unilaterally obtained a $395,000 loan from a private lender on behalf of
the Trust in May 2011, not informing Becky until after the fact, and then hiding
the location of the funds from Becky by placing them in her client trust fund a
ccount. Of the loan proceeds, $100,000 was held back by the title company to be
applied toward the payment of the delinquent property taxes. However, for reason
s that were not fully explained at trial, Kerry did not obtain release of the $1
00,000 from the title company to pay the property taxes during her tenure as cot
rustee.
}
{\f2 \b0 \fs16 \cf1 \i0
ference_B00052037652657_ID0}
5
}}}
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
}
{\f2 \b1 \fs20 \cf1 \i0

*3
}
}
In June 2011, the cotrustees finally listed the Property for sale. The Property
had been appraised at a value of $3.6 million in 2008, but the 2011 listing was
set at a price range of $6.2 to $6.7 million. The real estate brokers handling
the listing testified that they thought the price was too high, but Kerry wanted
the Property listed at that price. When no offers were received after a few mon
ths, the realtors recommended dropping the price and Becky concurred, but Kerry
was opposed. The listing price stayed as originally set. No offers were made for
purchase of the Property while Becky and Kerry were cotrustees.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
In August 2011, Christine filed a petition to remove or suspend the cotrustees,
appoint a temporary trustee, order an accounting and award attorney fees. Nichol
as and Alexandra filed supporting declarations. The petition alleged, among othe
r things, that because of \u8220\'3fongoing bickering, fighting and disagreement
among the Co-trustees no meaningful administration leading to the distribution
of this Estate has occurred for over 3 years.\u8221\'3f At a January 23, 2012 he
aring on the petition for removal, the probate court suspended the cotrustees, a
nd on February 6, 2012, it appointed a private fiduciary, Diane Peters, as succe
ssor trustee.
}
{\f2 \b0 \fs16 \cf1 \i0
ference_B00062037652657_ID0}
6
}}}
}
A written order that formally suspended the cotrustees\rquote powers was enter
ed on March 27, 2012.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
When the successor trustee took over administration of the Trust in March 2012,
she lowered the listing price of the Property to $4.4 million and received an of
fer within 30 days. Although that buyer did not end up closing the sale, the suc
cessor trustee received two more offers, and the Property was eventually sold in
May 2013 for $3.5 million.

\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
After an order from the probate court on September 27, 2011, requiring Kerry to
file an accounting covering the period of Theresa\rquote s death through the end
of 2010, Kerry filed an accounting on January 23, 2012, and a petition for an o
rder settling and approving the account (the First Account) (
}
dType=L&pubNum=1000218&cite=CAPRS1060&originatingDoc=I8c947520921b11e58b7fa63ea8
e8f9ce&refType=LQ&originationContext=document&vr=3.0&rs=cblt1.0&transitionType=D
Prob.Code, \u167\'3f\u167\'3f 1060
}}}
\u8211\'3f
}
dType=L&pubNum=1000218&cite=CAPRS1064&originatingDoc=I8c947520921b11e58b7fa63ea8
e8f9ce&refType=LQ&originationContext=document&vr=3.0&rs=cblt1.0&transitionType=D
1064
}}}
,
}
dType=L&pubNum=1000218&cite=CAPRS16063&originatingDoc=I8c947520921b11e58b7fa63ea
8e8f9ce&refType=LQ&originationContext=document&vr=3.0&rs=cblt1.0&transitionType=
DocumentItem&contextData=(sc.Search)" }{\fldrslt
16063
}}}
,
}
8e8f9ce&refType=SP&originationContext=document&vr=3.0&rs=cblt1.0&transitionType=
DocumentItem&contextData=(sc.Search)#co_pp_277b00009cfc7" }{\fldrslt
17200, subd. (b)(5)
}}}
).
}
{\f2 \b0 \fs16 \cf1 \i0
ference_B00072037652657_ID0}

7
}}}
}
In February 2012, Kerry filed an accounting for 2011 (the Second Account), and
in May 2012 filed an accounting for the period January 1, 2012, to March 29, 201
2 (the Third Account), along with petitions for orders approving them.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
On July 26, 2012, the Objectors (i.e., Christine, Nicholas and Alexandra) filed
objections to the First Account, Second Account and Third Account (the Objection
s). Among the many issues raised, the Objectors alleged that Kerry had comingled
Trust assets with her personal or client funds and paid out Trust funds in cash
without proper documentation, that property taxes had not been paid, even after
Kerry obtained a loan to pay them, and that Kerry failed to file an amended est
ate tax return to receive a refund from the IRS and instead paid estate taxes th
at were not owed.
}
The Objectors sought an order (1) denying approval of the petitions to approve
the accounts; (2) denying or reducing any trustee fees claimed by the cotrustees
; (3) surcharging the cotrustees for various \u8220\'3funnecessary costs\u8221\'
3f incurred by the Trust; and (4) awarding attorney fees that Objectors incurred
in connection with the Objections.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
}
{\f2 \b1 \fs20 \cf1 \i0
*4
}
}
The probate court held a nine-day trial on the Objections over a 10\u8211\'3fmo
nth period between May 2013 and March 2014. After orally issuing its ruling on t
he last day of trial and considering a subsequent ex parte application by Kerry
to \u8220\'3fclarify and/or modify\u8221\'3f the ruling, the probate court issue
d three written orders on May 9, 2014, as to each of the three accounts.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
Among other things, the probate court denied approval of the accounts, ordered t
he cotrustees surcharged for certain costs incurred by the Trust, and ordered th
e cotrustees surcharged for the attorney fees and expert fees incurred by the Ob
jectors.
}
{\f2 \b0 \fs16 \cf1 \i0
ference_B00082037652657_ID0}
8
}}}
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
Each of the three orders contained the same prefatory finding that the cotrustee
s breached their fiduciary duties to the Trust\rquote s beneficiaries.
}
{\f2 \b0 \fs16 \cf1 \i0
ference_B00092037652657_ID0}
9
}}}
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
As relevant here, the probate court found:
\par
}
}
{\li200 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li200 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0

\u8220\'3f1. Co-trustees [Becky] and [Kerry] breached their fiduciary duties own
ed to the Trust beneficiaries because they failed to properly administer the Tru
st to the serious detriment of all the beneficiaries. They failed to act in a re
asonably prompt fashion to liquidate the real property and distribute the Trust
assets. They failed to work together.... Both Trustees failed to avoid conflicts
of interest and self-dealing; and failed to allocate between the sub-trusts.
\par
}
}
}
{\li200 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li200 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
\u8220\'3f2. [Kerry] breached her fiduciary duty by co-mingling her personal acc
ounts with trust accounts and her attorney-client trust account; failed to prope
rly manage the Trust\rquote s liquidity; and improperly accounted for transfers
between her personal and Trust accounts.
\par
}
}
}
{\li200 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li200 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
\u8220\'3f3. [Kerry] failed to maintain appropriate and complete Trust records.
\par
}
}
}
{\li200 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li200 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
\u8220\'3f4. The Co-trustees\rquote breaches of fiduciary duty caused damages t
o the Trust beneficiaries.\u8221\'3f
\par
}
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
In the three orders, Kerry was surcharged a total of $388,177.11. Becky was surc
harged a total of $242,423.02.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
No party requested a statement of decision (

}
dType=L&pubNum=1000201&cite=CACPS632&originatingDoc=I8c947520921b11e58b7fa63ea8e
8f9ce&refType=LQ&originationContext=document&vr=3.0&rs=cblt1.0&transitionType=Do
cumentItem&contextData=(sc.Search)" }{\fldrslt
Code Civ. Proc., \u167\'3f\u167\'3f 632
}}}
,
}
634
}}}
), and the probate court did not issue one.
\par
}
}
}
\u160\'3f
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
063d86a3ff11e598dc8b09b4f04}
\par
{\li0 \f2 \b0 \ri0 \fs20 \cf1 \qc \i0
{\f2 \b0 \fs20 \cf1 \i0
II
\par
}
}
}
{\li0 \f2 \b0 \ri0 \fs20 \cf1 \qc \i0
{\f2 \b0 \fs20 \cf1 \i0
DISCUSSION
\par
}
}
}
{\li0 \f2 \b0 \ri0 \fs20 \cf1 \qc \i0
A.
}
{\f2 \b0 \fs20 \cf1 \i1
Kerry\rquote s Challenges to the Surcharges for Unnecessary Costs Incurred by th
e Trust Because of the Delay in the Sale of the Property
\par
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
Kerry\rquote s first series of arguments pertain to the probate court\rquote s o
rders surcharging her for certain costs that the Trust incurred because the cotr
ustees unreasonably delayed the sale of the Property. Specifically, the probate
court found that the Property should have been sold by July 2009, and based on t
hat finding determined that Kerry was responsible for unnecessary costs incurred
by the Trust in a total amount of $193,151.84 after that date. The main compone
nts of the unnecessary costs consisted of (1) property taxes incurred after July
2009, including penalties incurred for nonpayment of those property taxes; (2)
the expenses associated with obtaining the $395,000 loan in May 2011; and (3) mi
scellaneous expenses related to maintaining the Property after July 2009, such a
s gardeners and utilities.
\par
}
}
}
\u160\'3f
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
063d87a3ff11e598dc8b09b4f04}
\par
{\li0 \f2 \b0 \ri0 \fs20 \cf1 \qc \i0
1.
}
{\f2 \b0 \fs20 \cf1 \i1
The Objections Sufficiently Set Forth a Claim for Surcharges Based on the Delay
in Selling the Property
\par
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
}
{\f2 \b1 \fs20 \cf1 \i0
*5
}
}
Kerry first argues that the probate court improperly ordered that she be surcha
rged for costs incurred by the Trust due to the delay in selling the Property be
cause Objectors purportedly did not raise that issue in the Objections.
}
As a legal basis for this argument, Kerry relies on the general principle that
\u8220\'3f \u8216\'3f[t]he complaint in a civil action serves ... to frame and l
imit the issues ... and to apprise the defendant of the basis upon which the pla
intiff is seeking recovery\u8217\'3f \u8221\'3f (

}
dType=Y&serNum=2030223971&pubNum=0004041&originatingDoc=I8c947520921b11e58b7fa63
ea8e8f9ce&refType=RP&fi=co_pp_sp_4041_1102&originationContext=document&vr=3.0&rs
=cblt1.0&transitionType=DocumentItem&contextData=(sc.Search)#co_pp_sp_4041_1102"
}{\fldrslt
{\f2 \b0 \fs20 \cf5 \i1
Centex Homes v. Superior Court
}
}
(2013) 214 Cal.App.4th 1090, 1102
}}}
), and cites case law stating that
}
{\f2 \b0 \fs20 \cf1 \i1
evidence
}
}
is properly excluded when it pertains to issues not raised by the pleadings. (
}
ea8e8f9ce&refType=RP&fi=co_pp_sp_226_751&originationContext=document&vr=3.0&rs=c
blt1.0&transitionType=DocumentItem&contextData=(sc.Search)#co_pp_sp_226_751" }{\
fldrslt
{\f2 \b0 \fs20 \cf5 \i1
Willis v. Bank of America
}
}
(1973) 33 Cal.App.3d 745, 751
}}}
;
}
}{\fldrslt
{\f2 \b0 \fs20 \cf5 \i1
Schweitzer v. Westminster Investments, Inc.
}
}
(2007) 157 Cal.App.4th 1195, 1214
}}}
.)
}
{\f2 \b0 \fs16 \cf1 \i0
ference_B00102037652657_ID0}
10
}}}
}
As we will explain, we conclude that Kerry\rquote s argument is without merit.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
As an initial matter, we reject the basic premise of Kerry\rquote s argument, na
mely that the Objections failed to allege that the Trust unnecessarily incurred
costs due to the cotrustees\rquote delay in selling the Property. Indeed, the O
bjections allege, \u8220\'3fthe Trust has been stymied for over four years witho
ut any forward progress. Ms. Yianilos has cost the Trust estate substantial loss
es due to her failure to properly administer the Trust. Specifically, the Trust
has ... lost revenue because the Co-trustees failed to list the properties for s
ale in a reasonable amount of time. Objectors are aware of several reasonable of
fers to purchase the Trust properties that were not considered by Ms. Yianilos d
espite the beneficiaries\rquote request to sell immediately, despite the need t
o sell immediately because of the looming tax liabilities, and despite the lack
of funds to hold on to the property without any rental income.... Ms. Yianilos\r
quote [s] actions have caused unnecessary costs to be incurred by the Trust....\
u8221\'3f (Capitalization omitted.) Although the prayer for relief in the Object
ions lists requested surcharges against Kerry for several specific items and doe
s not specifically identify the costs incurred as a result of the delay in selli
ng the Property, the prayer for relief also requests \u8220\'3fsuch further orde
rs or relief the Court deems appropriate.\u8221\'3f
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
\u8220\'3fIn the construction of a pleading, for the purpose of determining its
effect, its allegations must be liberally construed, with a view to substantial
justice between the parties.\u8221\'3f (
}
Code Civ. Proc., \u167\'3f 452
}}}
.) Further, the Probate Code gives the court broad authority to \u8220\'3fmake a
ny orders and take any other actions necessary or proper to dispose of the matte
rs presented.\u8221\'3f (\u167\'3f 17206.) Applying these general principles, we
conclude that the allegations in the Objections that the Trust unnecessarily in
curred costs based on the cotrustees\rquote delay in selling the Property, alon
g with the broadly stated prayer for relief, adequately pleads a claim for a sur
charge against Kerry for the costs incurred by the Trust because of the delay in
selling the Property.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
Moreover, even had the Objections lacked a specific allegation seeking a surchar
ge against Kerry for the unnecessary costs incurred by the Trust due to the cotr
ustees\rquote delay in selling the Property, a surcharge would still be proper
because the issue was fully and fairly litigated during trial. \u8220\'3f \u8216
\'3fIt has long been settled law that where (1) a case is tried on the merits, (
2) the issues are thoroughly explored during the course of the trial and (3) the
theory of the trial is well known to court and counsel, the fact that the issue
s were not pleaded does not preclude an adjudication of such litigated issues an
d a review thereof on appeal.\u8217\'3f \u8221\'3f (
}
ea8e8f9ce&refType=RP&fi=co_pp_sp_226_16&originationContext=document&vr=3.0&rs=cb
lt1.0&transitionType=DocumentItem&contextData=(sc.Search)#co_pp_sp_226_16" }{\fl
drslt
{\f2 \b0 \fs20 \cf5 \i1
Frank Pisano & Associates v. Taggart
}
}
(1972) 29 Cal.App.3d 1, 16
}}}
.) \u8220\'3f[V]ariance between pleadings and proof is not a basis for reversal
unless it prejudicially misleads a party.
}
A variance must be disregarded if the issues on which the decision is actually
based were fully and fairly tried.\u8221\'3f (
}
fldrslt
{\f2 \b0 \fs20 \cf5 \i1
Franz v. Board of Medical Quality Assurance
}
}

(1982) 31 Cal.3d 124, 143\u8211\'3f144
}}}
.)
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
}
{\f2 \b1 \fs20 \cf1 \i0
*6
}
}
Here, the evidence and argument during trial covered, at length, the costs to t
he Trust caused by the cotrustees\rquote delay in selling the Property. Among o
ther things, after numerous percipient witnesses testified about the delays in l
isting the Property for sale and the costs to the Trust associated with the dela
y, Objectors\rquote expert witness, Vickie Wolf, presented a comprehensive anal
ysis of the monetary damage to the Trust due to the delay in selling the Propert
y. Counsel for Kerry made no objection to any of that testimony on the basis tha
t it related to issues outside the scope of the pleadings. Further, the parties\
rquote closing arguments discussed at length whether the cotrustees should be s
urcharged for the various costs that were associated with the delay in selling t
he Property. Counsel for Kerry argued in closing that the surcharges should not
be imposed because they were speculative and because the Objectors had not estab
lished causation, but he did not argue that the issue was not raised in the Obje
ctions.
}
{\f2 \b0 \fs16 \cf1 \i0
ference_B00112037652657_ID0}
11
}}}
}
\u8220\'3f \u8216\'3fA party cannot permit an issue to be litigated and on appe
al escape the consequences by claiming that such issue was not pleaded.\u8217\'3
f \u8221\'3f (
}
fldrslt
{\f2 \b0 \fs20 \cf5 \i1
Collison v. Thomas
}
}
(1961) 55 Cal.2d 490, 498
}}}
.)
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
We accordingly conclude that there was no error in assessing surcharge damages a
gainst Kerry for the delay in selling the Property as that issue was presented i
n the Objections and was also fully and fairly litigated at trial without any me
aningful objection by Kerry.
\par
}
}
}
\u160\'3f
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
063d88a3ff11e598dc8b09b4f04}
\par
{\li0 \f2 \b0 \ri0 \fs20 \cf1 \qc \i0
2.
}
{\f2 \b0 \fs20 \cf1 \i1
Substantial Evidence Supports a Finding That the Property Should Have Been Sold
by July 2009
\par
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
As we have explained, the probate court based the surcharges against Kerry on it
s finding, made orally at the end of the trial, that the Property should have be
en sold by July 2009. Kerry challenges this finding, arguing that the evidence d
oes not establish that the Property could have been sold by July 2009, so that t
he surcharge based on that finding was impermissibly speculative. As we will exp
lain, we disagree.
\par
}
}
}

\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
As relevant here, \u8220\'3fcase law establishes that a court may not surcharge
a fiduciary without substantial evidence that the particular loss was caused by
the fiduciary\rquote s fault.\u8221\'3f (
}
ea8e8f9ce&refType=RP&fi=co_pp_sp_4040_531&originationContext=document&vr=3.0&rs=
cblt1.0&transitionType=DocumentItem&contextData=(sc.Search)#co_pp_sp_4040_531" }
{\fldrslt
{\f2 \b0 \fs20 \cf5 \i1
Borissoff v. Taylor & Faust
}
}
(2004) 33 Cal.4th 523, 531
}}}
.) Further, \u8220\'3f \u8216\'3f[i]t is fundamental that \u8220\'3fdamages whic
h are speculative, remote, imaginary, contingent, or merely possible cannot serv
e as a legal basis for recovery.\u8221\'3f \u8217\'3f \u8221\'3f (
}
{\fldrslt
{\f2 \b0 \fs20 \cf5 \i1
In re Estate of Kampen
}
}
(2011) 201 Cal.App.4th 971, 991
}}}
.) We apply a substantial evidence standard of review in determining whether the
findings underlying an award of damages is supported by the record. (
}
{\fldrslt
{\f2 \b0 \fs20 \cf5 \i1
Id.
}
}
at p. 992
}}}
.) We accordingly turn to the evidence in the record that supported a finding th

e Property could have been sold by July 2009.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
Theresa died on March 24, 2008, and there was evidence at trial that days later,
on April 3, 2008, Kerry was sent a letter from William Warren, a wealthy indivi
dual who was interested in possibly buying the Property. Kerry ignored Warren\rq
uote s letter, and Warren followed up by trying to make contact through a third
party, but Kerry rudely rejected the inquiries. Other witnesses testified that K
erry was aware of Warren\rquote s interest but did not want to consider him as a
buyer. Warren testified at trial that he would have been very interested to eng
age in a negotiation for the Property if the sale price was between $3.6 and $3.
8 million, and he would have paid cash for any eventual purchase.
}
Although, as the probate court recognized, Warren may not have ended up being t
he ultimate buyer, the record supports a reasonable inference that willing buyer
s existed in the 2008 and 2009 timeframe had the Property been listed for sale.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
}
{\f2 \b1 \fs20 \cf1 \i0
*7
}
}
Further, the evidence supports a reasonable inference that the cluttered and ne
glected state of the Property would not have been an impediment to promptly list
ing it for sale had the cotrustees sought to do so. According to Kerry\rquote s
own testimony, she received offers from cleaning services to prepare the Propert
y for sale for approximately $3,500. Further, according to the real estate broke
r that Kerry initially consulted in 2008, only a few cosmetic repairs were recom
mended to prepare the Property for sale (repairs to the floors and walls, and re
painting), which he estimated would have cost approximately $50,000, as any pote
ntial buyer would likely be planning to undertake a complete remodel of the hous
e.
\par
}
}
}

\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
Kerry argues that the Property was difficult to sell, pointing to evidence that
(1) there were no offers on the Property while the cotrustees had it listed betw
een June 2011 and March 27, 2012, when the successor trustee took over; (2) the
Property was unique in that the house was potentially entitled to a historical d
esignation, which would have made the Property more difficult to develop; and (3
) 2008 to 2012 was a slow period in the local real estate market. However, as a
real estate broker testified at trial, the lack of offers during the cotrustees\
rquote administration of the Trust was attributable to the unreasonably high pr
ice at which Kerry insisted the Property be listed, not the slow real estate mar
ket. After the successor trustee lowered the listing price for the Property, an
offer was received in less than 30 days. This evidence supports a reasonable inf
erence that the cotrustees could have sold the Property much earlier had they li
sted it at a reasonable and realistic price, despite any slowdown in the real es
tate market during the relevant time period or any unique features of the Proper
ty that may have discouraged certain buyers.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
In addition, the evidence shows that it took the successor trustee a total of 14
months to close the sale on the Property. Applying that same 14\u8211\'3fmonth
timeframe in deciding whether the cotrustees could have reasonably sold the Prop
erty by July 2009, we note that Theresa died 16 months prior to July 2009, which
would have given the cotrustees two months to prepare the Property for sale and
14 months to find a buyer. Based on that evidence, the probate court could reas
onably find that the Property should have been sold by July 2009.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
In sum, we conclude that substantial evidence in the record supports the probate
court\rquote s finding that the Property should have been sold by July 2009, an
d the probate court therefore properly calculated the surcharge against Kerry ba
sed on costs incurred by the Trust after July 2009.
}
{\f2 \b0 \fs16 \cf1 \i0
ference_B00122037652657_ID0}
12
}}}
\par
}
}
}
\u160\'3f
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
063d89a3ff11e598dc8b09b4f04}
\par
{\li0 \f2 \b0 \ri0 \fs20 \cf1 \qc \i0
3.
}
{\f2 \b0 \fs20 \cf1 \i1
The Trust Provisions Conferring Discretion to Hold Property and Delay Distributi
ons Do Not Bar the Surcharges Against Kerry for Unnecessary Expenses Caused by t
he Delay in Selling the Property
\par
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
}
{\f2 \b1 \fs20 \cf1 \i0
*8
}
}
Kerry contends that the probate court erred in finding that she breached her fi
duciary duty by failing to sell the Property by July 2009 because Trust provisio
ns purportedly gave the cotrustees absolute discretion to decide when to sell Tr
ust assets. For her argument, Kerry relies on three provisions of the Trust.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
First, under the heading \u8220\'3fTrustee\rquote s Discretion,\u8221\'3f sectio
n 6.12 of the Trust states:
}
\u8220\'3fAll discretions granted to or vested in the Trustee by any provision o
f this instrument are to be exercised in the sole and absolute discretion of the
Trustee.\u8221\'3f
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
Second, under the heading \u8220\'3fRetention of Assets,\u8221\'3f section 6.03
of the Trust states: \u8220\'3fThe Trustee is expressly authorized to hold and r
etain any securities, properties, or other investments, ... and continue to hold
, manage, and operate any property ... received or acquired at any time hereunde
r, as long as in its discretion it elects to do so, the profits or losses theref
rom, if any, to inure to or be chargeable against the Trust Estate and not the T
rustee.\u8221\'3f
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
Third, under the heading \u8220\'3fTiming of Distributions,\u8221\'3f section 7.
12 of the Trust provides: \u8220\'3f(a) The Trustee hereof may delay the divisio
n of the Trust Estate and/or the distribution of Trust assets therefrom for a pe
riod of up to six months following the death of any Trustor. Said delay ... may
occur ... if it is contemplated that the alternate valuation date may be selecte
d in connection with the filing of any United States Estate Tax Return. [\u182\'
3f] (b) Notwithstanding any other provisions hereof, the Trustee may delay the d
istribution of Trust assets here from for up to one year following the date that
said distribution would otherwise be made. Said delay shall occur, if in the Tr
ustee\rquote s sole discretion, unnecessary expenses would be incurred in connec
tion with sale of Trust assets at that time, if said distribution would create u
nnecessary expenses for the Trust that could otherwise be avoided by the delay,
and/or a loss in principle value may be suffered with regard to one or more trus
t assets to accomplish the distribution.\u8221\'3f
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
Based on these provisions, Kerry contends that \u8220\'3fthe co-trustees were gi
ven
}
{\f2 \b0 \fs20 \cf1 \i1

absolute
}
}
discretion as to the method and timing for sale of property of the Trust and in
regard to the timing of distribution following the settlor\rquote s death,\u822
1\'3f so that the probate court erred in concluding that Kerry breached her fidu
ciary duty by not selling the Property by July 2009. As we will explain, we reje
ct Kerry\rquote s argument.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
As an initial matter, we note that Kerry\rquote s claim that she was afforded ab
solute discretion by section 6.12 of the Trust is necessarily limited by a statu
tory provision stating that even when a trustee is afforded absolute discretion,
the trustee must nevertheless avoid bad faith and act in accordance with fiduci
ary principles. Specifically, section 16081 states that \u8220\'3fif a trust ins
trument confers \u8216\'3fabsolute,\u8217\'3f \u8216\'3f sole,\u8217\'3f or \u82
16\'3funcontrolled\u8217\'3f discretion on a trustee, the trustee shall act in a
ccordance with fiduciary principles and shall not act in bad faith or in disrega
rd of the purposes of the trust.\u8221\'3f (\u167\'3f 16081, subd. (a).) Thus, \
u8220\'3feven a trustee with \u8216\'3fabsolute discretion\u8217\'3f may not \u8
216\'3fneglect its trust or abdicate its judgment,\u8217\'3f ... or show a \u821
6\'3freckless indifference\u8217\'3f to the interests of the beneficiary.\u8221\
'3f (
}
fldrslt
{\f2 \b0 \fs20 \cf5 \i1
Estate of Collins
}
}
(1977) 72 Cal.App.3d 663, 672
}}}
, citation omitted.) Therefore, to the extent that the record supports a finding
that Kerry acted in bad faith or in disregard of the purposes of the trust or t
he interests of the beneficiaries, she may be found to have acted improperly des
pite the Trust\rquote s conferral of sole and absolute discretion on the cotrust
ees in certain instances.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
}
{\f2 \b1 \fs20 \cf1 \i0
*9
}
}
Turning to section 6.03 of the Trust, although that provision gives the cotrust
ees discretion to continue to hold property, we conclude that the evidence reaso
nably supports a finding that Kerry did not act according to fiduciary principle
s and engaged in bad faith in continuing to hold the Property beyond July 2009 r
ather than selling it.
}
{\f2 \b0 \fs16 \cf1 \i0
ference_B00132037652657_ID0}
13
}}}
}
Kerry contends that she acted in good faith by delaying the sale of the Propert
y because she wanted to wait until the real estate market improved and the Prope
rty would sell at a higher price and benefit the beneficiaries. However, that vi
ew of Kerry\rquote s conduct is not the only possible interpretation of the evid
ence presented at trial. Indeed, the probate court could reasonably find that in
stead of delaying the sale of the Property to obtain a higher price in an improv
ed market to profit the beneficiaries, Kerry delayed selling the Property becaus
e of any of a number of unacceptable reasons, including being motivated by means
pirited intrafamily conflicts, inattention and neglect of her duties, or the des
ire to provide her daughter with a free residence for two years. Under that reas
onable interpretation of the evidence, the probate court could properly conclude
that Kerry was motivated by bad faith or disregarded the interests of the benef
iciaries. Based on that implied finding, section 6.03 of the Trust does not auth
orize Kerry\rquote s delay in selling the Property and does not absolve her from
liability for the costs incurred by the Trust due to the delay.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
Although Kerry also relies on section 7.12 of the Trust, that provision does not
advance her argument. Specifically, section 7.12 allows the Trustee to delay a
distribution of assets to the beneficiaries for
}
{\f2 \b0 \fs20 \cf1 \i1
up to a year
}
}
if doing so will avoid expenses or increase value. Here, however, Kerry delayed
far more than a year, not even attempting to start selling the Property until m
ore than three years after Theresa\rquote s death.
\par
}
}
}
\u160\'3f
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\*\bkmkstart co_anchor_I09063d8aa3ff11e598dc8b09b4f04}{\*\bkmkend co_anchor_I09
063d8aa3ff11e598dc8b09b4f04}
\par
{\li0 \f2 \b0 \ri0 \fs20 \cf1 \qc \i0
4.
}
{\f2 \b0 \fs20 \cf1 \i1
Substantial Evidence Supports the Probate Court\rquote s Decision to Surcharge O
nly Kerry for the Penalties on the Unpaid Property Taxes
\par
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
As a result of not selling the Property by July 2009, the Trust incurred $137,41
6.22 in property taxes that would not otherwise have been incurred, and due to n
onpayment of those property taxes, the Trust also incurred penalties of $53,507.
39. The probate court ordered that Becky and Kerry each be surcharged half of th
e property taxes unnecessarily incurred, but as to the penalties for nonpayment
of those taxes, it ordered that
}
{\f2 \b0 \fs20 \cf1 \i1
only
}
}
Kerry be surcharged, imposing a surcharge against her for the entire amount of
$53,507.39. Kerry argues that the probate court erred in failing to order that B
ecky be surcharged for half of the penalties. According to Kerry, the probate co
urt\rquote s order was \u8220\'3finconsistent with the [probate] court\rquote s
determination that \u8216\'3fboth [Kerry] and [Becky] breached their fiduciary d
uties ...\u8217\'3f and \u8216\'3ffailed to act in a reasonably prompt fashion t
o liquidate the real property.\u8217\'3f \u8221\'3f As we will explain, we rejec
t Kerry\rquote s argument.
\par
}
}
}

\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
Section 16402, subdivision (b) provides: \u8220\'3fA trustee is liable to the be
neficiary for a breach committed by a cotrustee ...:(1) Where the trustee partic
ipates in a breach of trust committed by the cotrustee. (2) Where the trustee im
properly delegates the administration of the trust to the cotrustee. (3) Where t
he trustee approves, knowingly acquiesces in, or conceals a breach of trust comm
itted by the cotrustee. (4) Where the trustee negligently enables the cotrustee
to commit a breach of trust. (5) Where the trustee neglects to take reasonable s
teps to compel the cotrustee to redress a breach of trust in a case where the tr
ustee knows or has information from which the trustee reasonably should have kno
wn of the breach.\u8221\'3f Applying this standard, although the probate court f
ound that both Kerry and Becky shared fault for the delay in selling the Propert
y as they failed to work together to get the Property listed for sale, substanti
al evidence supports an implied finding that Kerry\rquote s breach of fiduciary
duty alone was the cause of the penalties for the nonpayment of property taxes i
ncurred by the Trust.
}
{\f2 \b0 \fs16 \cf1 \i0
ference_B00142037652657_ID0}
14
}}}
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
}
{\f2 \b1 \fs20 \cf1 \i0
*10
}
}
The evidence at trial established that Kerry took control of the Trust\rquote s
finances and did not allow Becky to participate in decisions about how the Trus
t\rquote s funds were used and did not provide Becky with an accounting. Accordi
ngly, there is no evidence that Becky played any part in the decision as to whet
her to apply the Trust\rquote s funds to pay property taxes on the Property whil
e the Trust still had the liquidity to do so. Second, when it became apparent th
at the cotrustees would have to obtain a loan to pay the tax liabilities because
the Property was not going to be listed for sale and the Trust\rquote s cash wa
s depleted, Becky\rquote s attorney advocated to Kerry that she obtain a loan, b
ut Kerry refused to do so, and delayed obtaining a loan until 2011. When that lo
an was finally obtained, Becky was shut out by Kerry from anything having to do
with the loan or the use of its proceeds. Although $100,000 of the loan was supp
osed to be applied to the delinquent property taxes, Kerry did not have those fu
nds released from the title company, causing the property tax penalties to conti
nue to increase. Accordingly, the record supports a finding that Kerry alone was
responsible for the property tax penalties and was thus properly surcharged for
the full amount of those penalties.
\par
}
}
}
\u160\'3f
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\*\bkmkstart co_anchor_I09063d8ba3ff11e598dc8b09b4f04}{\*\bkmkend co_anchor_I09
063d8ba3ff11e598dc8b09b4f04}
\par
{\li0 \f2 \b0 \ri0 \fs20 \cf1 \qc \i0
B.
}
{\f2 \b0 \fs20 \cf1 \i1
The Probate Court Properly Surcharged Kerry for the Attorney Fees and Expert Fee
s Incurred by the Objectors in Litigating Their Objections
\par
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
In addition to surcharging Kerry for the costs associated with the delay in the
sale of the Property, the probate court surcharged Kerry in the amount of $97,21
4.30 for half of the attorney fees incurred by the Objectors in litigating the O
bjections, surcharging Becky for the other half.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
The Objections include a general request that probate court award Objectors the
attorney fees and costs incurred in connection with the Objections, but do not s
pecify the legal basis for the fee request. However, in their trial brief and du
ring closing argument, the Objectors identified section 17211, subdivision (b) a
s one of the grounds for requiring the cotrustees to pay the attorney fees.
}
{\f2 \b0 \fs16 \cf1 \i0
ference_B00152037652657_ID0}
15
}}}
}
Although not specifically referencing section 17211 when ordering the surcharge
for the attorney fees, the probate court generally identified section 17211 as
the basis for the surcharges that it imposed during its rulings on the Objection
s to the three accounts.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
Section 17211, subdivision (b) provides: \u8220\'3fIf a beneficiary contests the
trustee\rquote s account and the court determines that the trustee\rquote s opp
osition to the contest was without reasonable cause and in bad faith, the court
may award the contestant the costs of the contestant and other expenses and cost
s of litigation, including attorney\rquote s fees, incurred to contest the accou
nt. The amount awarded shall be a charge against the compensation or other inter
est of the trustee in the trust.\u8221\'3f (See
}
}{\fldrslt
{\f2 \b0 \fs20 \cf5 \i1
Leader v. Cords
}
}
(2010) 182 Cal.App.4th 1588, 1595
}}}
(
}
{\f2 \b0 \fs20 \cf1 \i1
Leader
}
}
) [explaining that \u167\'3f 17211 is an exception to the rule that \u8220\'3f[
t]rust beneficiaries must ordinarily pay their own attorney fees in challenging
the trustee\rquote s conduct, even when they are successful\u8221\'3f].)
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0

{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
Based on this provision, Kerry could be surcharged for the Objectors\rquote att
orney fees if her opposition to the Objections was without reasonable cause and
in bad faith. Here, because the parties did not request a statement of decision,
we imply all necessary findings supported by substantial evidence in the record
. (
}
{\fldrslt
{\f2 \b0 \fs20 \cf5 \i1
Acquire II, supra,
}
}
213 Cal.App.4th at p. 970
}}}
.) The issue presented, accordingly, is whether substantial evidence in the reco
rd supports a finding that Kerry opposed the Objections without reasonable cause
and in bad faith.
}
{\f2 \b0 \fs16 \cf1 \i0
ference_B00162037652657_ID0}
16
}}}
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
}
{\f2 \b1 \fs20 \cf1 \i0
*11
}
}
Within the meaning of
}
section 17211
}}}
, \u8220\'3f \u8216\'3freasonable cause\u8217\'3f ... to oppose a contest of an
account\u8221\'3f means \u8220\'3fan objectively reasonable belief, based on the
facts then known to the trustee, either that the claims are legally or factuall
y unfounded or that the petitioner is not entitled to the requested remedies.\u8
221\'3f (
}
{\fldrslt
{\f2 \b0 \fs20 \cf5 \i1
Uzyel v. Kadisha
}
}
(2010) 188 Cal.App.4th 866, 927
}}}
.) \u8220\'3f \u8216\'3f[B]ad faith\u8217\'3f in this context concerns the trust
ee\rquote s subjective state of mind....\u8221\'3f (
}
{\fldrslt
{\f2 \b0 \fs20 \cf5 \i1
Id.
}
}
at p. 926, fn. 47
}}}
.) \u8220\'3f[I]n enacting
}
section 17211
}}}
, the Legislature intended to discourage frivolous litigation about a trustee\rq
uote s accounting....\u8221\'3f (
}
}{\fldrslt
{\f2 \b0 \fs20 \cf5 \i1
Chatard v. Oveross
}
}
(2009) 179 Cal.App.4th 1098, 1110
}}}
.)
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
Here, based on the extensive evidence at trial about Kerry\rquote s poor record
keeping that made it impossible to understand the specific transactions concerni
ng the Trust; the tens of thousands of dollars in undocumented cash transactions
involving Trust funds; and Kerry\rquote s comingling of Trust funds with her ow
n funds and those of her clients, which also made it impossible to understand th
e relevant transactions and cash flow, the
}
{\f2 \b1 \chcbpat22 \fs20 \cf20 \i0
probate
}
}
}
court reasonably could conclude that Kerry had no reasonable cause to oppose th
e
}
Objections
}
}
}
to the
}
accountings
}
}
}
. Specifically, it is a reasonable inference from the evidence presented at tria
l that any objective person would know that the accountings could not be approve
d due to Kerry\rquote s failure to maintain proper records and properly document
transactions. Further, based on evidence of Kerry\rquote s animosity and hostil
e attitude toward Christine as described in Christine\rquote s testimony, the pr
obate court could reasonably find that Kerry\rquote s opposition to the petition
to approve the accountings was made in a bad faith attempt to cause the Objecto
rs to incur unnecessary attorney fees and thereby deplete the value of any event
ual distribution of the Trust funds to them rather than in a good faith effort t
o defend the accountings that she prepared.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
We accordingly conclude that substantial evidence supports an implied finding th
at Kerry acted without reasonable cause and in bad faith in opposing the Objecti
ons, and that she was properly surcharged for the attorney fees and expert fees
incurred by the Objectors under the authority of
}
8e8f9ce&refType=SP&originationContext=document&vr=3.0&rs=cblt1.0&transitionType=
DocumentItem&contextData=(sc.Search)#co_pp_a83b000018c76" }{\fldrslt
section 17211, subdivision (b)
}}}
.
\par
}
}
}
\u160\'3f
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\*\bkmkstart co_anchor_I09063d8ca3ff11e598dc8b09b4f04}{\*\bkmkend co_anchor_I09
063d8ca3ff11e598dc8b09b4f04}
\par
{\li0 \f2 \b0 \ri0 \fs20 \cf1 \qc \i0
C.
}
{\f2 \b0 \fs20 \cf1 \i1
Kerry\rquote s Challenge to the Surcharge for the Trust\rquote s Payment of Her
Attorney Is Without Merit
\par
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
The probate court surcharged Kerry for $20,000 paid from the Trust to her attorn
ey, Susan Wilson, to defend against the petition to remove her as cotrustee. Ker
ry argues that \u8220\'3fto the extent this Court sets aside the trial court\rqu
ote s surcharge damages award against [Kerry], or any portion thereof, the surch
arge for Ms. Wilson\rquote s fees should then also be set aside.\u8221\'3f Altho
ugh Kerry\rquote s reasoning is not clearly expressed, she appears to contend th
at in the event there is merit to any of her other arguments in this appeal, we
must necessarily find that Wilson\rquote s fees incurred in defending the petiti
on to remove Kerry as cotrustee are a reasonable expense of the Trust.
\par
}
}
}
\u160\'3f
\par
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
We reject Kerry\rquote s argument because it is contingent on her prevailing on
any of her other appellate challenges to the surcharges imposed by the probate c
ourt. As we have concluded that the whole of Kerry\rquote s appeal lacks merit,
we necessarily also reject her argument challenging the surcharge of $20,000 for
the Trust\rquote s payment of Wilson\rquote s fees.
}
{\f2 \b0 \fs16 \cf1 \i0
ference_B00172037652657_ID0}
17
}}}
\par
}
}
}
\u160\'3f
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\*\bkmkstart co_anchor_I09063d8da3ff11e598dc8b09b4f04}{\*\bkmkend co_anchor_I09
063d8da3ff11e598dc8b09b4f04}
\par
{\li0 \f2 \b0 \ri0 \fs20 \cf1 \qc \i0
{\f2 \b0 \fs20 \cf1 \i0
DISPOSITION
\par
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
}
{\f2 \b1 \fs20 \cf1 \i0
*12
}
}
The probate court\rquote s orders are affirmed.
\par
}
}
}
\u160\'3f
\par
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
WE CONCUR:
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
BENKE
}}}
\sb200
, Acting P.J.
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
O\rquote ROURKE
}}}
\sb200
, J.
\par
}
}
}
}
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
{\li0 \f2 \qj \b1 \ri0 \fs20 \cf25 \i0
{\*\bkmkstart co_allCitations_1}{\*\bkmkend co_allCitations_1}
All Citations
\par
}
}
Not Reported in Cal.Rptr.3d, 2015 WL 7423047
\par
}
}
{\li0 \f2 \qj \b0 \ri0 \fs20 \cf1 \i0
}
}
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Footnotes
\par
}
}
}\f4 \li0 \strike0 \ul0 \b0 \sa0 \ql \sb0 \fs20 \ri0 \cf1 \i0 \intbl \cell \row
}
\clbrdrl \trql \clvertalt \clwWidth600 \cellx600
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\intbl
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\par
}
}
}\f4 \li0 \b0 \ql \fs24 \ri0 \cf1 \i0 \intbl \cell \intbl
{\li0 \ri0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
The evidence at trial was that appellant is known by the name \u8220\'3fKerry,\u
8221\'3f and we will accordingly refer to her as such. Further, to avoid confusi
on when referring to family members, we will use first names, and intend no disr
espect by doing so.
\par
}
}
}
}
}\f4 \li0 \strike0 \ul0 \b0 \qj \sa0 \sb0 \fs18 \ri0 \cf1 \i0 \intbl \cell \row
}
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{\f4 \b0 \fs24 \cf1 \i0
657_1}
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2
\par
}
}
{\li0 \ri0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
The Trust documents refer to Alexandra by the surname Hunter, but the record ref
lects that Alexandra\rquote s current surname is Moran.
\par
}
}
}
}
}
\intbl
{\li0 \ri0
{\li0 \f4 \b0 \ql \ri0 \fs24 \cf1 \i0
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657_1}
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\par
}
}
{\li0 \ri0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
In respects not relevant here, the percentage interests of the beneficiaries var
ied between the three different subtrusts.
\par
}
}
}
}
}

\intbl
{\li0 \ri0
{\li0 \f4 \b0 \ql \ri0 \fs24 \cf1 \i0
{\f4 \b0 \fs24 \cf1 \i0
657_1}
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4
\par
}
}
{\li0 \ri0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
Eventually, when a successor trustee took over, an amended estate tax return was
filed taking advantage of the fractional interest discount, and the IRS refunde
d the estate taxes and penalties that had been paid by the Trust.
\par
}
}
}
}
}
\intbl
{\li0 \ri0
{\li0 \f4 \b0 \ql \ri0 \fs24 \cf1 \i0
{\f4 \b0 \fs24 \cf1 \i0
657_1}
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5
\par
}
}
{\li0 \ri0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
The successor trustee appointed by the probate court eventually obtained release
of the $100,000 to pay some of the property taxes. In addition, by the time the
successor trustee took over the administration of the Trust, the $395,000 loan
was in default because Kerry had once again depleted the Trust\rquote s cash and
could not make the loan payments.

\par
}
}
}
}
}
\intbl
{\li0 \ri0
{\li0 \f4 \b0 \ql \ri0 \fs24 \cf1 \i0
{\f4 \b0 \fs24 \cf1 \i0
657_1}
rslt
6
\par
}
}
{\li0 \ri0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
As there was still personal property devised to Becky and Kerry that had not bee
n cleared out of the Property several months after the successor trustee took ov
er, the probate court ordered on October 15, 2012, that Becky and Kerry remove a
ll the personal property by November 19, 2012, and that they coordinate access t
o the Property with the successor trustee.
\par
}
}
}
}
}
\intbl
{\li0 \ri0
{\li0 \f4 \b0 \ql \ri0 \fs24 \cf1 \i0
{\f4 \b0 \fs24 \cf1 \i0
657_1}
rslt
7
\par
}
}
{\li0 \ri0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
Unless otherwise indicated, all further statutory references are to the Probate
Code.
\par
}
}
}
}
}
\intbl
{\li0 \ri0
{\li0 \f4 \b0 \ql \ri0 \fs24 \cf1 \i0
{\f4 \b0 \fs24 \cf1 \i0
657_1}
rslt
8
\par
}
}
{\li0 \ri0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
Ruling on a petition filed by Becky, the probate court also issued an order auth
orizing a payment of trustee fees of $5,000 to Becky and $25,000 to her attorney
for fees incurred. Kerry was awarded trustee fees of $15,000.
\par
}
}
}
}
}
\intbl
{\li0 \ri0
{\li0 \f4 \b0 \ql \ri0 \fs24 \cf1 \i0
{\f4 \b0 \fs24 \cf1 \i0
657_1}
rslt
9
\par
}
}
{\li0 \ri0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
A slight and immaterial difference in wording appears in the order ruling on the
First Account, which we do not reflect here. The quoted language appears exactl
y as stated in the order on the Second Account and Third Account.
\par
}
}
}
}
}
\intbl
{\li0 \ri0
{\li0 \f4 \b0 \ql \ri0 \fs24 \cf1 \i0
{\f4 \b0 \fs24 \cf1 \i0
657_1}
rslt
10
\par
}
}
{\li0 \ri0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
Significantly, although Kerry primarily cites case law concerning
}
{\f4 \b0 \fs18 \cf1 \i1
the exclusion of evidence
}
}
that pertains to issues outside the scope of the pleadings, Kerry does not argu
e on appeal that any evidence should have been excluded as being outside the sco
pe of the pleadings.
\par
}
}
}
}
}
\intbl
{\li0 \ri0
{\li0 \f4 \b0 \ql \ri0 \fs24 \cf1 \i0
{\f4 \b0 \fs24 \cf1 \i0
657_1}
rslt
11
\par
}
}
{\li0 \ri0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
We note that in November 2013, after three days of trial had taken place, Kerry
filed a supplemental trial brief with a topic heading stating, \u8220\'3fObjecto
rs\rquote efforts at trial to claim additional surcharge damages from a delay i
n listing should fail as it was never claimed, lacks requisite causation, and is
speculative.\u8221\'3f (Capitalization omitted.) Although Kerry argues that thi
s constitutes a substantive objection to the imposition of a surcharge for delay
in selling the Property on the ground that the issue was not presented in the O
bjections, we do not view this topic heading as raising a substantive argument.
Specifically, although the topic heading states the surcharge associated with a
delay in listing the Property \u8220\'3fwas never claimed,\u8221\'3f that statem
ent is not explained or substantiated in any following discussion after the topi
c heading and was never mentioned at trial.
\par
}
}
}
}
}
\intbl
{\li0 \ri0
{\li0 \f4 \b0 \ql \ri0 \fs24 \cf1 \i0
{\f4 \b0 \fs24 \cf1 \i0
657_1}
rslt
12
\par
}
}
{\li0 \ri0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
Kerry also argues that substantial evidence does not support a finding that she
caused the Trust to incur any costs after she was removed as cotrustee, and acco
rdingly we should reduce the surcharge against her to include only those costs i
ncurred by the Trust until the time that the successor trustee took over in Marc
h 2012. Specifically, Kerry was surcharged for certain property tax liability an
d loan interest charges incurred after the successor trustee took over. Kerry\rq
uote s argument lacks merit. As a matter of logic, if \u8212\'3f as the probate
court found \u8212\'3f the cotrustees\rquote breach of duty caused the Property
to remain unsold at the time the successor trustee took over, the ramifications
of that breach would not have immediately ceased when the cotrustees were remov
ed. Instead, the negative impacts caused by the cotrustees\rquote failure to se
ll the Property continued
}
{\f4 \b0 \fs18 \cf1 \i1
until the Property was sold
}
}
because the Property would continue to incur property taxes and loan interest li
ability. All of the evidence shows that the successor trustee took prompt and re
asonable steps to sell the Property as soon as possible to mitigate the costs th
at continued to accrue due to the cotrustees\rquote failure to sell the Propert
y. Accordingly, substantial evidence supports a finding that
}
{\f4 \b0 \fs18 \cf1 \i1
all
}
}
of the expenses attributable to the delay in selling the Property, even
}
{\f4 \b0 \fs18 \cf1 \i1
after
}
}
the successor trustee took over, were proximately caused by the cotrustees\rquo
te breach of their fiduciary duty to the Trust\rquote s beneficiaries, not by t
he successor trustee.
\par
}
}
}
}
}
\intbl
{\li0 \ri0
{\li0 \f4 \b0 \ql \ri0 \fs24 \cf1 \i0
{\f4 \b0 \fs24 \cf1 \i0
657_1}
rslt
13
\par
}
}
{\li0 \ri0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
Although the probate court did not make an express finding that Kerry acted in b
ad faith, because the parties did not request a statement of decision, we apply
the doctrine of implied findings and presume that the probate court made all nec
essary findings supported by substantial evidence. (
}
{\fldrslt
{\f4 \b0 \fs18 \cf5 \i1
Acquire II, Ltd. v. Colton Real Estate Group
}
}
(2013) 213 Cal.App.4th 959, 970
}\f4 \strike0 \ul0 \b0 \sa0 \sb0 \fs18 \cf5 \i0 }}
(
}
{\f4 \b0 \fs18 \cf1 \i1
Acquire II
}
}
).)
\par
}
}
}
}
}
\intbl
{\li0 \ri0
{\li0 \f4 \b0 \ql \ri0 \fs24 \cf1 \i0
{\f4 \b0 \fs24 \cf1 \i0

657_1}
rslt
14
\par
}
}
{\li0 \ri0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
In the absence of a statement of decision explaining the basis for the probate c
ourt\rquote s decision to surcharge Kerry alone for the amount of the property t
ax penalty, we imply all necessary findings supported by substantial evidence. (
}
{\fldrslt
{\f4 \b0 \fs18 \cf5 \i1
Acquire II, supra,
}
}
.)
\par
}
}
}
}
}
\intbl
{\li0 \ri0
{\li0 \f4 \b0 \ql \ri0 \fs24 \cf1 \i0
{\f4 \b0 \fs24 \cf1 \i0
657_1}
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15
\par
}
}
{\li0 \ri0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
The Objectors also identified the common fund theory as a possible basis for an
order requiring Kerry to pay their attorney fees. (See
}
fldrslt
{\f4 \b0 \fs18 \cf5 \i1
Estate of Reade
}
}
(1948) 31 Cal.2d 669, 671\u8211\'3f672
.) As we conclude that the attorney fee award is supported by section 17211, we
need not, and do not, discuss whether the common fund theory is applicable here.
\par
}
}
}
}
}
\intbl
{\li0 \ri0
{\li0 \f4 \b0 \ql \ri0 \fs24 \cf1 \i0
{\f4 \b0 \fs24 \cf1 \i0
657_1}
rslt
16
\par
}
}
{\li0 \ri0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
This case is distinguishable from
}
ea8e8f9ce&refType=RP&originationContext=document&vr=3.0&rs=cblt1.0&transitionTyp
e=DocumentItem&contextData=(sc.Search)" }{\fldrslt
{\f4 \b0 \fs18 \cf5 \i1
Leader, supra,
}
}
182 Cal.App.4th 1588
, upon which Kerry relies. In
}
{\f4 \b0 \fs18 \cf1 \i1
Leader
}
}
, the probate court erroneously concluded that section 17211 did not apply, and
it accordingly had no occasion to make a finding as to whether the trustee acted
without reasonable cause and in bad faith. (
}
{\f4 \b0 \fs18 \cf1 \i1
Id.
}
}
at p. 1599.)
}
{\f4 \b0 \fs18 \cf1 \i1
Leader
}
}
remanded for the probate court to make findings on those issues. (
}
}{\fldrslt
{\f4 \b0 \fs18 \cf5 \i1
Id.
}
}
at pp. 1599\u8211\'3f1600
.) Here, in contrast, because relief was expressly sought under
}
section 17211, and the probate

court cited that provision in making the surcharge award, in the absence of a s
tatement of decision we imply findings supporting the probate court\rquote s dec
ision (
}
{\fldrslt
{\f4 \b0 \fs18 \cf5 \i1
Acquire II, supra,
}
}
), namely that Kerry acted without reasonable cause and in bad faith in opposing
the Objections.
\par
}
}
}
}
}
\clbrdrb \clbrdrl \trql \clvertalt \clwWidth600 \cellx600
\clbrdrb \clbrdrr \trql \clwWidth9480 \cellx10080
\intbl
{\li0 \ri0
{\li0 \f4 \b0 \ql \ri0 \fs24 \cf1 \i0
{\f4 \b0 \fs24 \cf1 \i0
657_1}
rslt
17
\par
}
}
{\li0 \ri0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
{\li0 \f4 \qj \b0 \ri0 \fs18 \cf1 \i0
In their respondents\rquote brief, Objectors state that \u8220\'3fthey are enti
tled to their fees and costs on appeal\u8221\'3f and contend that we \u8220\'3fs
hould award such fees and costs in an amount to be determined on remand,\u8221\'
3f either pursuant to
}
section 17211
or the common fund theory. We express no view on whether respondents should be
awarded their attorney fees on appeal, as that issue should be raised in the fir
st instance in the probate court. (See
}
{\fldrslt
{\f4 \b0 \fs18 \cf5 \i1
Nestande v. Watson
}
}
(2003) 111 Cal.App.4th 232, 238
[\u8220\'3fwhether a party has met the statutory requirements for an award of a
ttorney fees is a question best decided by the trial court in the first instance
\u8221\'3f].)
\par
}
}
}
}
}}\par
}
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End of Document
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\u169\'3f 2016 Thomson Reuters. No claim to original U.S. Government Works.
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}\sect }

Yianilos V Hunter Excellent Case

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Yianilos V Hunter Excellent Case

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{\*\bkmkstart co_footnoteReference_B00042037652657_ID0}{\*\bkmkend co_footnoteRe

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May 2013 for $3.5 million.

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No party requested a statement of decision (

intiff is seeking recovery\u8217\'3f \u8221\'3f (

{\f2 \strike0 \ul0 \b0 \sa0 \sb0 \fs20 \cf5 \i0

{\f2 \strike0 \ul0 \b0 \sa0 \sb0 \fs20 \cf1 \i0

.) We accordingly turn to the evidence in the record that supported a finding th

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could not make the loan payments.

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}\f4 \strike0 \ul0 \b0 \sa0 \sb0 \fs18 \cf5 \i0 }}

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