Tyler v. Davis CA4/1

• Court: California Court of Appeal
• Decided: September 21, 2016
• Docket: D069463
• Status: Unpublished

Opinion

Filed 9/21/16 Tyler v. Davis CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

MARY TYLER et al., D069463

Plaintiffs and Appellants,

v. (Super. Ct. No. 37-2008-00150792- PR-TR-CTL) BILLY E. DAVIS et al.,

Defendants and Respondents.

APPEAL from a judgment of the Superior Court of San Diego County, Julia C.

Kelety, Judge. Dismissed in part, affirmed in part

John L. Dodd & Associates, John L. Dodd and Benjamin Ekenes, for Plaintiffs

and Appellants.

Goodwin Brown Gross & Lovelace, James J. Brown and Gina D. Stein, for

Defendant and Respondent Billy E. Davis.

Beamer, Lauth, Steinley & Bond, Stephen A. Bond and Phillip A. Bond, for

Defendant and Respondent Zoological Society of San Diego. INTRODUCTION

In this probate matter, Mary Tyler and her son Mark Tyler1 appeal the dismissal

of their petition challenging the validity of trust amendments and the actions of the

named trustee, Billy E. Davis. They also appeal the probate court's award of attorney

fees to the Zoological Society of San Diego (Zoo), a trust beneficiary, and Davis, the

named trustee. The Zoo and Davis contend the appeal from the dismissal of the Tylers'

petition is untimely because the Tylers did not file their notice of appeal within 60 days

of when they were served with a notice of entry of the dismissal order. We agree and

dismiss the appeal as to the dismissal order. We affirm the order awarding attorney fees

to the Zoo and Davis because we conclude the probate court had equitable power to enter

the awards and properly exercised its discretion to award fees in this case because the

Tylers commenced their action in bad faith.

BACKGROUND

A

Martha A. Bobbitt (Martha) and James R. Bobbitt (James) created the Bobbitt

Trust in 1985. James died on January 21, 2003. After his death, according to the terms

of the trust, the estate was divided into three subtrusts (Trust A, B, and C), which were

held for the benefit of Martha during her lifetime. The original trust provided, upon the

1 Because they share a surname, we refer to Mary and Mark by their first names when we refer to them individually. We intend no disrespect. We refer to them together as the Tylers.

2 death of the surviving spouse, Trusts B, C, and any of Trust A not disposed of under the

terms of the trust would be distributed in two equal shares, one share to James's heirs and

one share to Martha's heirs.

B

Martha, as the surviving spouse, retained the right to revoke or amend the Bobbitt

Trust. She executed an amendment to the Bobbitt Trust in January 2003. Apparently

two versions of the first amendment exist. Both versions modified the terms of the

original trust to name Martha as the sole trustee, eliminating a cotrustee designated in the

original trust. One version of the amendment designated Davis as the sole successor

trustee in the event of Martha's death or resignation, the other did not.

In December 2005, Martha executed a second amendment to the Bobbitt Trust

revising the distribution of the trust following Martha's death. According to the terms of

the second amendment, Martha's sister, Mary, was to receive $2 million and Mary's son,

Mark, was to receive $500,000. Davis and his wife were to receive $100,000 and each of

their four daughters were to receive $100,000. The second amendment provided for

pecuniary gifts to five charitable organizations, including the Zoo, which was to receive

$3 million and its share of the residue of the trust, which was to be divided equally

among the five charitable organizations.

Martha died in November 2007 leaving no parents or issue. She was survived by

Mary and Mark.

3 C

Davis began to serve as the successor trustee of the Bobbitt Trust and retained an

attorney (who is now deceased) to represent him as the trustee of the estate. Davis,

through his attorney, filed a petition for an order to declare property to be included in the

trust estate. The petition identified Davis as the trustee and referred to the two trust

amendments. Davis lodged copies of the amendments with the court. Mary and Mark

were listed as beneficiaries of the trust and on the proof of service with their correct

address. The parties stipulated that a copy of the notice of hearing, together with a proof

of service by mail on January 16, 2008, was found in the records maintained by Davis's

attorney as well as in the court file related to the trust proceedings.

After Martha's death, Mary consulted a lawyer. Although the parties disputed the

scope of the representation, Mary agreed she hired the lawyer to obtain items of personal

property that had belonged to her deceased brother. The lawyer sent a letter to Davis's

attorney on April 15, 2008, asking about items of personal property and also for "a full

accounting of the trust estate" and an estimated distribution date. "[Mary] realizes that it

has not been quite six months from the date of death, and we are mindful that Martha has

a taxable estate, accordingly your best good faith distribution estimate will be appreciated

as opposed to a hard and fast promised distribution date." The same letter enclosed "the

original receipts signed by my client and her son, [Mark], for the notices given to them

under Probate Code [s]ection 16061.7." The letter enclosed notices, apparently signed by

both Mary and Mark in February 2008, identifying Davis as the trustee and stating the

4 trust documents, including amendments, were provided with the notice. The Tylers

dispute the veracity of the signatures.

Over the next several years, Mary received payments from Davis as the trustee,

consistent with the gifts under the second amendment. Mary received $2,050,000 and

Mark received $500,000.

D

The Zoo filed a petition in November 2012, seeking to hold Davis accountable for

breach of fiduciary duties owed to the Zoo and other beneficiaries of the trust. It alleged

some of the individuals entitled to pecuniary gifts under the trust, including Mary, had

not received full distribution. Because the individual beneficiaries had not been paid in

full, charitable beneficiaries such as the Zoo had not received a distribution from the

trust. The Zoo complained Davis failed to carry out the terms of the trust in a timely

fashion and engaged in self-dealing by paying himself excessive compensation. The

court issued an interim order suspending Davis's powers as trustee and appointing a

temporary trustee.

E

In February 2014, the Tylers filed a "Petition for Fraud; Conversion; Cancellation

of Trust Amendments; Removal of Trustee and Appointment of Successor Trustee; to

Compel Accounting; Surcharge; Constructive Trust; Injunction." The petition denied the

Tylers were served with the trust documents or amendments and claimed they first

discovered the amendments "in late September, 2013." The Tylers alleged Davis

5 modified the trust without authority and falsified an amendment to add himself as a

successor trustee. They stated Davis "had virtually no connection with the Bobbitt

family." They further alleged Davis "wrongfully and fraudulently" caused to be created

the second amendment to the trust "whereby the rightful heirs to the [Bobbitt] Trust were

deprived of their inheritance and said inheritance was instead given to [Davis], [Davis's]

family and others." Among other things, the Tylers sought to invalidate the second

amendment and remove Davis as trustee. They also sought an accounting and surcharge.

The Zoo opposed the petition asserting it was barred by the statute of limitations

and the doctrine of laches. The Zoo also asserted Mark had no standing to object to the

validity of the trust amendments because he was not entitled to any distribution from the

trust as an heir and his only entitlement was as a beneficiary under the second

amendment, the validity of which he sought to challenge. Davis joined in the Zoo's trial

brief on the issues of the statute of limitations and the doctrine of laches.

F

The court held a bifurcated trial on the issue of the statute of limitations. At the

outset of the hearing, the court determined Mark had no standing because he only became

a beneficiary of the trust through the second amendment, which he was seeking to set

aside. If the second amendment was set aside, he would have no entitlement to the estate

and, therefore, had no action to pursue. Because he suffered no injury by virtue of the

existence of the trust amendments, he lacked standing to challenge them.

6 The court then heard the evidence and argument regarding the issue of the statute

of limitations. The court found Mary was served with a notice of lodgment, including

copies of the trust and its amendments, by mid-January 2008. The court found Mary's

testimony that she did not receive the documents to be not credible because it was

inconsistent both with her deposition testimony and with the letter sent from her attorney.

Based on these factual findings, the court concluded Mary's petition was barred even by

the most generous four-year statute of limitations (Code Civ. Proc., § 343). She had

sufficient notice no later than April 2008 to require her to inquire about the existence of

the trust and its amendments.

The signed order dismissing Mary's petition was entered on July 31, 2015. On

August 4, 2015, the Zoo served notice of entry of the order stating the petition was

dismissed with prejudice and attached a copy of the signed order. A judgment including

an award of costs to the Zoo and Davis was later entered on September 25, 2015.

G

The court awarded attorney fees to the Zoo and Davis based upon the court's

equitable powers arising from various sections of the Probate Code. The court found

Mary was aware of the terms of the amendments and knew or should have known facts

giving rise to her claims by April 2008, more than six years before she filed her petition.

Therefore, her action was brought in bad faith. Similarly, the court found Mark, who

received substantial distributions as a result of the very amendments that allowed him to

inherit, asserted a position in litigation that was frivolous and in bad faith. The court

7 entered an amended judgment awarding attorney fees to the Zoo in the amount of

$114,536.68 and to Davis in the amount of $25,570.

DISCUSSION

I

The Appeal of the Dismissal is Untimely

Davis and the Zoo contend the Tylers' appeal on the merits must be dismissed as

untimely. We agree.

A notice of appeal must be filed within "60 days after the party filing the notice of

appeal … is served by a party with a document entitled 'Notice of Entry' of judgment or a

filed-endorsed copy of the judgment, accompanied by proof of service." (Cal. Rules of

Court, rule 8.104(a)(1)(B),2 italics added.) A written dismissal signed by the court and

filed in the action constitutes a judgment. (Code Civ. Proc., § 581d.) "Compliance with

the time for filing a notice of appeal is mandatory and jurisdictional." (Laraway v.

Pasadena Unified Sch. Dist. (2002) 98 Cal.App.4th 579, 582 (Laraway).) "If a notice of

appeal is filed late, the reviewing court must dismiss the appeal." (Rule 8.104(b).)

The court dismissed the Tylers' petition by a written minute order of July 31, 2015,

which was electronically signed by the court and entered in the action. This constituted

an appealable order under Code of Civil Procedure section 581d. (Brehm v. 21st Century

Ins. Co. (2008) 166 Cal.App.4th 1225, 1233-1234 [a minute order "signed by the court

2 Further rule references are to the California Rules of Court.

8 (or at least stamped with a replica of the trial judge's signature)" is an appealable order];

cf. Powell v. County of Orange (2011) 197 Cal.App.4th 1573, 1577-1579 [unsigned

minute order dismissing the complaint is not effective as a judgment.)3 Here, the

July 31, 2015, order "contemplated no further action, such as the preparation of another

order or judgment [citation], and disposed of all issues between all parties." (Laraway,

supra, 98 Cal.App.4th at p. 583.)

On August 4, 2015, the Zoo served the Tylers with a document entitled "Notice of

Entry of Order Dated July 31, 2015," stating the order was entered "dismissing with

prejudice the Petition for Fraud; Conversion; Cancellation of Trust Amendments;

Removal of Trustee and Appointment of Successor Trustee; to Compel Accounting;

Surcharge; Constructive Trust; Injunction presented by [Mary] and [Mark]." The notice

of entry document also attached the signed minute order. This notice satisfied rule

8.104(a)(2) and triggered the 60-day period for the Tylers to appeal. (Alan v. American

Honda Motor Co., Inc. (2007) 40 Cal.4th 894, 899 (Alan).)

The Tylers contend the minute order did not comply with rule 8.140(a)(1) because

it was not file stamped. A file stamp is required by the rule to trigger the time for appeal

only if a court clerk or a party serves a copy of the judgment in lieu of a notice of entry.

There is no requirement for the notice of entry to attach a file-stamped copy of the

3 Although the court in Brehm encouraged trial courts to use signed dismissal orders rather than minute orders, it concluded a signed minute order constitutes an appealable order. (Brehm, supra, 166 Cal.App.4th at p. 1234, fn. 5.)

9 judgment or order. The parties do not dispute the July 31, 2015, order dismissing the

action was entered in the action.

In Alan, supra, 40 Cal.4th at pages 902-903, the court concluded a minute order

was an appealable order, but the clerk's mailing of that order without either a file stamp

or a document bearing the title "Notice of Entry" did not comply with rule 8.104(a)(1).

Here, the Zoo served a document properly titled "Notice of Entry," which advised the

parties of the entry of the order dismissing the Tyler's entire petition.

The subsequent judgment entered on September 25, 2015, was a repetition of the

July 31 dismissal order and merely added awards of costs for the Zoo and Davis. It did

not restart the time for appeal. (Laraway, supra, 98 Cal.App.4th at p. 583.) There was

no substantial modification of the judgment materially affecting the rights of the parties.

(Ellis v. Ellis (2015) 235 Cal.App.4th 837, 842.) There is no ambiguity to allow us to

resolve this issue in the Tylers' favor. If they were confused about the effect of the

signed dismissal order and the subsequent judgment, the prudent course of action would

have been to appeal both the July 31, 2015 dismissal order and the September 25, 2015

judgment. (Id. at pp. 845-846.)

The Tylers did not do so. They filed their notice of appeal on November 23, 2015,

more than 100 days after service of the notice of entry of the dismissal order. On the first

appeal, they contest the merits of the dismissal order, not the award of costs. Therefore,

the appeal as to the dismissal order is untimely and must be dismissed. (Laraway, supra,

98 Cal.App.4th at p. 583.)

10 II

Attorney Fees

The Tylers separately appeal award of attorney fees to the Zoo and Davis

contending there was no statutory or equitable basis for the award. We disagree.

"We independently review any legal issue regarding the appropriate criteria for a

fee award. But once those criteria are identified, we defer to the trial court's discretion in

determining how they are to be exercised. [Citation.] In fashioning an equitable remedy,

the trial court is in the best position to determine whether the criteria for a fee award have

been met. We will not disturb its judgment on this issue unless we are convinced the

court abused its discretion. [Citation.] A trial court abuses its discretion only where its

action is clearly wrong and without reasonable basis." (Pipefitters Local No. 636 Defined

Benefit Plan v. Oakley, Inc. (2010) 180 Cal.App.4th 1542, 1547-1548.)

The probate court "enjoys broad equitable powers over the trusts within its

jurisdiction. [Citation.] This discretion derives not simply from judicial gloss, but from

the Probate Code itself." (Hollaway v. Edwards (1998) 68 Cal.App.4th 94, 99.) The

Hollaway court differentiated the limitation of awarding costs under Code of Civil

Procedure section 1032, subdivision (b), to a prevailing party in ordinary civil litigation

from the discretion provided to a probate court by Probate Code section 1002 "to decide

not only whether costs should be paid, but also, if they are awarded, who will pay and

who recover them." (Hollaway, supra, at p. 99; see Prob. Code, §§ 17211 [the court may

award costs, including attorney fees, incurred to defend an action contesting a trustee's

11 account when the action is brought "without reasonable cause and in bad faith"], 15642,

subd. (d) [the court may order a person seeking removal of the trustee to bear the costs,

including attorney fees, if the removal action was brought in bad faith and contrary to the

settlor's intent], 17206 [probate court has discretion to make "any orders and take any

other action necessary or proper to dispose of the matters presented" by a Prob. Code,

§ 17200 petition].)

The probate court has broad discretion to award attorney fees incurred in a

challenge to a trust. (Hollaway, supra, 68 Cal.App.4th at pp. 99-100 [court had

discretion to award attorney fees to trustee for successfully defending against removal

petition and clarifying her role].) "[W]hen a trust beneficiary instigates an unfounded

proceeding against the trust in bad faith, a probate court has the equitable power to charge

the reasonable and necessary fees incurred by the trustee in opposing the proceeding

against that beneficiary's share of the trust estate." (Rudnick v. Rudnick (2009) 179

Cal.App.4th 1328, 1335.) Similarly, "beneficiaries who have incurred attorney fees,

either to vindicate their position as beneficiaries [citation] or for the benefit of the trust

[citation], are entitled to have those fees paid." (Id. at p. 1334, fn. 2.) If the assets of the

trust have been distributed to the beneficiaries to be charged, the court may order a

portion of the trust assets returned for payment of the fees awarded to the trustee or other

beneficiaries. (See Kasperbauer v. Fairfield (2009) 171 Cal.App.4th 229, 238.)

The Rudnick court considered and rejected an argument similar to the one asserted

by the Tylers here, i.e., that the Supreme Court cases of Bauguess v. Paine (1978) 22

12 Cal.3d 626 and Estate of Beach (1975) 15 Cal.3d 623 preclude an award of attorney fees

not authorized by statute. The Rudnick court explained, " the issue in Bauguess v. Paine

was whether a trial court, not sitting in probate, could award attorney fees as a sanction

under its supervisory power. Here, the award was made pursuant to the probate court's

broad equitable powers. Moreover, the Bauguess court affirmed that a court's equitable

powers are distinguishable from its supervisory powers when the court noted that 'Courts

have used their inherent equitable power in limited situations to award attorney's fees

when it was warranted by the equities of the case.' " (Rudnick, supra, 179 Cal.App.4th at

p. 1335, quoting Bauguess v. Paine, supra, at p. 636.)

The Rudnick court also distinguished Estate of Beach, supra, 15 Cal.3d 623

stating, "[i]n Estate of Beach, an executor successfully defended a contest filed by three

out of the four beneficiaries of a testamentary trust. The California Supreme Court

reversed the trial court's order charging the executor's attorney fees against the

contestants' share of the trust on the ground that the trial court had exceeded its authority.

[Citation.] However, in Estate of Beach there was no finding that the contest had been

filed in bad faith. Rather, the court concluded, 'A contrary rule would unduly deter

contestants such as these from questioning the stewardship of executors and

administrators through proceedings brought in good faith.' " (Rudnick, supra, 179

Cal.App.4th at p. 1335, quoting Estate of Beach at p. 646, italics added by Rudnick.) We

agree with the Rudnick court's analysis and conclude the probate court had the authority

13 to award attorney fees in this case based on a finding the Tylers litigated this action in

bad faith.

As to Mary, the court concluded she knew or should have known of the facts

giving rise to her action more than six years before she filed her petition and, thus, the

commencement of this action was frivolous. The court found Mark's pursuit of this

action to set aside the very documents that entitled him to inherit substantial amounts, to

be frivolous and in bad faith. We conclude substantial evidence supports these findings

and the trial court did not abuse its discretion in awarding fees to the Zoo and Davis.

DISPOSITION

The appeal from the dismissal order is dismissed as untimely. The order awarding

attorney fees is affirmed. The respondents shall recover their costs on appeal.

MCCONNELL, P. J.

WE CONCUR:

BENKE, J.

PRAGER, J.*

* Judge of the San Diego Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution. 14