{"id":10848,"date":"2020-04-20T21:19:21","date_gmt":"2020-04-20T21:19:21","guid":{"rendered":"https:\/\/probatestars.com\/?p=10848"},"modified":"2020-04-20T21:20:19","modified_gmt":"2020-04-20T21:20:19","slug":"substantial-benefit-doctrine-as-a-basis-for-fees-in-california-probate","status":"publish","type":"post","link":"https:\/\/probatestars.com\/substantial-benefit-doctrine-as-a-basis-for-fees-in-california-probate\/","title":{"rendered":"Substantial Benefit Doctrine As A Basis For Fees In California Probate"},"content":{"rendered":"

The substantial benefit doctrine permits a California probate court to award attorney\u2019s fees to a party if the party\u2019s efforts in the litigation result in a substantial benefit to other parties.\u00a0 The benefits do not have to be pecuniary.<\/p>\n

The substantial benefit doctrine was applied for the first time in a California probate<\/a> case in Smith v. Szeyller<\/a>, a January 2019 opinion from California\u2019s Second District Court of Appeals.<\/p>\n

The Facts of Smith v. Szeyller<\/h2>\n

Don Smith, Jr. and Gladys Smith created a family trust.\u00a0 Their five children were named as the beneficiaries of the trust.\u00a0 Don died before Gladys.\u00a0 After Don\u2019s death, Gladys amended the trust many times to benefit one of their children, Joann.<\/p>\n

After Gladys\u2019 death, Joann and her husband became the co-trustees of the trust.\u00a0 Joann\u2019s brother Don filed a petition demanding an accounting of the trust and alleged several breaches of trust against Joann and her husband.\u00a0 All of the other siblings were named in the proceedings and given notice of Don\u2019s action, but none of them participated in the probate proceedings.<\/p>\n

The litigation settled in the middle of trial.\u00a0 In the settlement, the trustees agreed, among other things, to pay a sum to Don from Joann\u2019s share of the trust, and to pay Don\u2019s $721,258.28 in attorney\u2019s fees and costs from the trust and its subtrusts (meaning the subtrusts of the nonparticipating beneficiaries bore a portion of this amount).\u00a0 The settlement agreement was approved by the California probate court.<\/p>\n

After the California probate court approved the settlement, one of the other siblings, Donna (who had not participated in the litigation until this point, despite receiving notice), filed post-trial motions asking for a new trial and to vacate the order. \u00a0She argued that the fee award to Don was not warranted under the substantial benefit doctrine, and that she was not afforded due process.<\/p>\n

The California probate court denied Donna\u2019s motions and the Court of Appeal affirmed the decision.<\/p>\n

What Is The Substantial Benefit Doctrine?<\/h2>\n

The substantial benefit doctrine in California permits a trial court to award fees to be shared by others upon whom a benefit was conferred when a litigant, proceeding in a representative capacity, obtains a decision that results in a substantial benefit.\u00a0 The substantial benefit can be of a pecuniary or nonpecuniary nature.\u00a0 The court explained the substantial benefit doctrine as follows:<\/p>\n

Trust beneficiaries must generally pay their own attorney’s fees incurred challenging a trustee’s conduct, even if they succeed. (Leader v. <\/em>Cords\u00a0(2010) 182 Cal.App.4th 1588, 1595 [107 Cal. Rptr. 3d 505];\u00a0Code Civ. Proc., \u00a7 1021.)\u00a0But under the substantial benefit exception, the trial court may exercise its \u201cequitable discretion \u2026 [to] determine[] whether the interests of justice require those who received a benefit\u00a0to contribute to the legal expenses of those who secured the benefit.\u201d (Pipefitters\u00a0Local No. 636 Defined Benefit Plan v. Oakley, Inc., supra<\/em>, 180 Cal.App.4th at p. 1547.)\u00a0The doctrine is an \u201coutgrowth\u201d of the common fund doctrine. (Serrano v. Priest<\/em>\u00a0(1977) 20 Cal.3d 25, 38 [141 Cal. Rptr. 315, 569 P.2d 1303].)<\/p><\/blockquote>\n

We have written about attorney’s fees and costs in California probate cases here<\/a>.<\/p>\n

What Is The Difference Between The Common Fund Doctrine and The Substantial Benefit Doctrine?<\/h2>\n

In describing the substantial benefit doctrine as an \u201coutgrowth\u201d of the common fund doctrine, the California appeals court explained:<\/p>\n

The common fund doctrine applies only to pecuniary benefits; the substantial benefit doctrine applies to both pecuniary and nonpecuniary benefits. (Serrano v. Priest, supra<\/em>, 20 Cal.3d at p. 38.) It \u201cpermits the award of fees when the litigant, proceeding in a representative capacity, obtains a decision resulting in the conferral of a \u2018substantial benefit\u2019 of a pecuniary or nonpecuniary nature.\u00a0In such circumstance[s], the court, in the exercise of its equitable discretion, thereupon may decree that under dictates of justice those receiving the benefit should contribute to the costs of its production.\u201d (Ibid.<\/em>)<\/p><\/blockquote>\n

Therefore, the common fund doctrine applies only to pecuniary benefits, while the substantial benefit doctrine applies to both pecuniary and non-pecuniary benefits.<\/p>\n

Probate courts have used the common fund doctrine to confer equitable fees awards when litigation creates or preserves a fund from which others benefit.\u00a0(E.g.,\u00a0Estate of Reade<\/em>\u00a0(1948) 31 Cal.2d 669 [191 P.2d 745].) The courts \u201chave applied the \u2018substantial benefit\u2019 theory in a wide variety of circumstances\u201d when the benefit is nonpecuniary.\u00a0(Serrano v. Priest, supra<\/em>, 20 Cal.3d at p. 38.)\u00a0No published decision applies the substantial benefit doctrine in the probate context, \u201cbut it plainly would apply, for example, \u2026 to an action to remove a trustee who has breached the trust\u00a0or to a petition to compel an accounting.\u201d (Hartog & Kovar, Matthew Bender Practice Guide: Cal. Trust Litigation (2018) \u00a7 15.32[2], p. 15-31.)<\/p><\/blockquote>\n

The Actions Of One Beneficiary Benefited All Of The Beneficiaries<\/h2>\n

Here, the California probate court had the equitable power to award the agreed upon fees to Don under the \u201csubstantial benefit doctrine.\u201d<\/p>\n

The court stated:<\/p>\n

With respect to Don’s attorney’s fees, the court added its finding on the record that, \u201cthis action by Don Smith, Jr., has benefitted all of the beneficiaries of the [family] trust, including himself and [JoAnn and Edward], by acting as a catalyst to the improved preparation of the accountings.\u201d<\/p><\/blockquote>\n

Failure To Participate After Receiving Notice Is Not A Due Process Violation<\/h2>\n

Donna also urged that her due process rights in the California probate proceeding<\/a> were violated by the settlement approved during the trial.\u00a0 However, Donna had notice of all the proceedings, but she failed to participate in the underlying action.\u00a0 Donna\u2019s failure to participate meant that she forfeited all of her objections to the fee award.\u00a0 Because Donna had notice, she was not deprived of due process.\u00a0 The court had no sympathy for the due process argument:<\/p>\n

Donna chose not to participate\u00a0in the trial and cannot now second-guess the resolution of Don’s objections. The litigating parties resolved disputed facts, and the court was bound by that resolution.<\/p><\/blockquote>\n

Not every beneficiary wants to become involved in probate litigation.\u00a0 However, a beneficiary must be mindful that a failure to participate means that they have no say in the outcome.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

The substantial benefit doctrine permits a California probate court to award attorney\u2019s fees to a party if the party\u2019s efforts in the litigation result in a substantial benefit to other parties.\u00a0 The benefits do not have to be pecuniary. The substantial benefit doctrine was applied for the first time in a California probate case in […]<\/p>\n","protected":false},"author":1,"featured_media":7994,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[4107],"yoast_head":"\nSubstantial Benefit Doctrine As A Basis For Fees In California Probate<\/title>\n<meta name=\"description\" content=\"A California probate court can award attorney fees under the substantial benefits doctrine if a party\u2019s efforts substantially benefit other parties.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/probatestars.com\/substantial-benefit-doctrine-as-a-basis-for-fees-in-california-probate\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" 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