Pizarro v. Reynoso, 1/18/17, 6DCA (Sacramento)
In trust litigation by a trust beneficiary against trustee, does the trial court have the inherent power to award attorney’s fees against a beneficiary’s interest in the trust (including against the interest of a non-suing beneficiary) for bad faith litigation tactics, like submitting false testimony in depositions, declarations and at trial? The trial court said, Yes. Held: Affirmed, in so far as the attorney’s fees awarded were chargeable against the beneficiary’s interest in the trust.
It is established that the court’s equitable power includes the power to charge attorney fees and costs against a beneficiary’s share of the trust if that beneficiary, in bad faith, brings an unfounded proceeding against the trust. Rudnick v. Rudnick(2009) 179 Cal.App.4th 1328, 1335. One of the beneficiaries sought to overturn the fee award because she was not the one who brought the action against the trustee. The court held that nothing in Rudnick requires instigation of an action against the trust by the offending beneficiary as a prerequisite to charging attorney fees and costs against the offending beneficiary’s share of the trust estate. Relying on the language of Rudnick and a similar case, the court held that the trial court’s authority exists as part of the inherent jurisdiction of equity to enforce trusts, secure impartial treatment among the beneficiaries, and to carry out the express or implied intent of the settlor.” And, “[w]here the expense of litigation is caused by the unsuccessful attempt of one of the beneficiaries to obtain a greater share of the trust property, the expense may properly be chargeable to that beneficiary’s share.” The fact that beneficiary took unfounded positions, acted in bad faith and testified falsely helped justify the trial court’s ruling.
Footnote: The appellate court reversed the grant of attorney’s fees only to the extent the fee award sought to impose personal liability against the beneficiary.