Filed 122309 Harper v Amov CA42 NOT TO BE PUBLISHED IN by sofiaie

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									Filed 12/23/09 Harper v. Amov CA4/2

                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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.



           IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                   FOURTH APPELLATE DISTRICT

                                                 DIVISION TWO



PAUL HARPER, et al.,

         Petitioners and Appellants,                                     E045982

v.                                                                       (Super.Ct.No. INP019617)

SHARON AMOV,                                                             OPINION

         Objector and Respondent.




         APPEAL from the Superior Court of Riverside County. James A. Cox, Judge.

Affirmed.

         Michael R. Daymude for Petitioners and Appellants.

         Slovak, Baron & Empey, Peter M. Bochnewich, for Objector and Respondent.

         Petitioners and appellants Paul Harper and Michael Daymude (appellants) appeal

from the trial court’s order denying their amended petition to fix and allow compensation

to Paul Harper (Harper), successor in interest to Juanita Lane (Lane), former trustee of

the Curtis W. Johnson 1992 Trust (Trust), and compensation and reimbursement for costs


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to Michael Daymude (Daymude), attorney for former trustee Lane. As discussed below,

we conclude that the trial court acted within its discretion in denying all fees, costs and

compensation to appellants. Although the former trustee Leon Amov improperly took an

early distribution of Trust assets without making provisions to pay the expenses of Lane’s

life estate, his widow Sharon Amov remedied that error early on in the ensuing litigation.

The record clearly supports the trial court’s conclusions that the litigation appellants

pursued during Lane’s trusteeship was brought primarily for the personal benefit of Lane

and/or to garner attorney fees for Daymude, rather than to benefit the Trust.

                         STATEMENT OF FACTS AND PROCEDURE

       In December 1992, trustor Curtis W. Johnson established the Trust. The Trust was

amended in 1998, 1999 and twice in 2000, the last time three days before Johnson’s

death.1 Curtis W. Johnson was the initial trustee of the Trust. Leon Amov was the

primary beneficiary of the Trust as modified, and was to receive the “residue and

remainder” of the trust. Lane was also a beneficiary of the Trust, in that she held a life

estate in a home in Los Angeles. Lane was to live in the home rent-free during her

lifetime and the Trustee was to pay the property taxes, fire insurance and utilities from

Trust assets. Upon Lane’s death, the property was to be distributed to The Hospice




       1 As granted January 8, 2009, we take judicial notice of the record in Case No.
E042512. “2CT” refers to the clerk’s transcript prepared for Lane and Daymude’s appeal
from the court’s orders approving Amov’s account and denying Lane’s petition to
determine whether Amov’s account violated the Trust’s no-contest clause in Case No.
E042512.


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Foundation. The only other bequest was a $500 monthly sum to a Mildred Bunno, not to

exceed a total of $47,000. This monthly sum was guaranteed by an annuity.

       Curtis W. Johnson died on February 11, 2000. Leon Amov was named successor

trustee. Leon Amov, apparently improperly, took a distribution of the bulk of the Trust

assets, approximately $545,000. Amov did not establish a fund from which to pay the

expenses of Lane’s life estate. Leon Amov died on December 1, 2003. In April 2004,

Leon Amov’s attorney, Norman Rasmussen, wrote to Lane to tell her that her utilities

were about to be turned off for nonpayment and that no funds remained in the Trust to

pay the expenses of Lane’s life estate.2

       The trusteeship remained vacant until Leon Amov’s widow, Sharon Amov

(Amov), was appointed interim trustee on November 17, 2004. At some point, Amov

began to pay the expenses of Lane’s life estate. On June 30, 2005, Amov resigned as

interim trustee and Lane was appointed her successor. On August 10, 2006, the court

suspended Lane’s powers as trustee for violating her fiduciary duties by pursuing

frivolous litigation against the trustor’s former attorney to benefit herself personally and

seeking to have the Trust pay her attorney fees for that litigation.3 Also at that hearing,

       2   The letter was worded as follows: “Enclosed is a billing from the Los Angeles
Department of Water and Power for utility services to your property. This billing is dated
March 22. The total due is $492.92. The billing indicates it is a “FINAL NOTICE”. Mr.
Amov is now deceased and there are no funds left in the Curtis Johnson Trust to pay the
utilities. You are on your own on this one.”

       3  The subjects of this appeal are attorney fees and trustee compensation for the
litigation that Lane pursued during her trusteeship, from June 30, 2005 to August 10,
2006. That litigation is described in detail in the Discussion section of this opinion.


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the trial court: 1) approved a First and Final Account of former Interim Trustee Sharon

Amov; and 2) denied Lane’s Petition to Determine former Interim Trustee Sharon

Amov’s First and Final Account and Report violated the Trust’s no-contest clause.4 A

successor trustee, Enzo G. Provenza (Provenza) was appointed on October 16, 2006.

         Upon Lane’s death on July 8, 2007, the Los Angeles home was to be transferred to

The Hospice Foundation. The property remaining in the Trust estate, approximately

$48,000, was to be distributed to Amov, as personal representative of the Estate of Leon

Amov. On November 13, 2007, Provenza filed a petition for final accounting and

distribution, to fix and allow compensation to trustees and attorney, and to terminate the

Trust.

         On December 20, 2007, Daymude and Harper filed a petition to fix and allow

compensation to former trustee and attorney. The petition sought: 1) $5,000 in trustee

fees for Lane5 during her trusteeship from June 30, 2005 to August 10, 2006; and 2)

$34,500 to Daymude for attorney fees for that same period, as well as $9,000

reimbursement for costs. Daymude and Harper filed a first amended petition on

December 26, 2007.



         4Lane and Daymude appealed these orders in February 2007. Lane passed away
during that appeal and Harper was substituted in as Lane’s Trustee and successor-in-
interest. On November 20, 2007, this Court dismissed the appeal for mootness and lack
of standing.

         5   Harper sought the trustee fees as “successor-in-interest to former trustee Juanita
Lane.”


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       On January 28, 2008, Amov filed her objections to the amended petition. On

January 29, 2008, the court filed an “Order settling first and final account; for final

distribution; fixing and allowing compensation to trustee and attorney; and for

termination of trust.” In the order, the court approved Provenza’s accounting and

directed Provenza to distribute the remaining trust assets to Amov in the amount of

$48,449.70.

       On February 19, 2008, Daymude and Harper filed their answer and response to

Amov’s objections to their amended petition. On February 20, 2008, Amov filed her

reply to the answer and response. On March 20, 2008, the court held a hearing on the

amended petition. After hearing argument from the parties, the court denied the amended

petition.

       In its written order filed on April 10, 2008, the court stated: “The fees requested

are not justified, given the nature of the frivolous litigation pursued by Petitioner Juanita

Lane, and her counsel, Michael Daymude, at all relevant times, which in the Court’s

opinion after careful review, related more to the furtherance of Juanita Lane’s interests

and the interests of her attorney, than the interests of the Trust. For these reasons, Ms.

Lane was removed as trustee in August 2006, for a blatant conflict of interest. The Court

finds the conflict of interest in this matter is so strong that the request for fees out of the

Trust is inherently unreasonable.” This appeal followed.




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                                        DISCUSSION

       An order denying compensation to a trustee and fees and costs to a trustee’s

attorney is subject to review under the abuse of discretion standard. (Whittlesey v. Aiello

(2002) 104 Cal.App.4th 1221, 1230; Nestande v. Watson (Songstad) (2003) 111

Cal.App.4th 232, 239-240.) Further, the appellant bears the burden of demonstrating the

existence of reversible error on appeal. (In re Marriage of Falcone & Fyke (2008) 164

Cal.App.4th 814, 822.)

       Here, appellants contend the trial court erred when it denied compensation for the

periods June 30, 2005 to February 9, 2006 and from February 10, 2006 to August 10,

2006. We will address these time periods in order, as that is how appellants have

structured their argument.

       1. June 30, 2005 to February 9, 2006 – Objections to Amov’s Account

       Appellants first address the denial of compensation for Lane’s actions in objecting

to Sharon Amov’s first and final account and report of administration (Amov’s account)

up to the initial hearing date of February 9, 2006. Amov filed her account on November

1, 2005. The purpose of Amov’s account was to settle and account for her administration

of the Trust during her term as interim trustee from November 17, 2004 to June 30, 2005.

In the account, Amov also requested that the trial court order her to pay the utility,

property tax and insurance bills on the Los Angeles home. Finally, Amov requested a

lien against the Los Angeles home to be paid upon Lane’s death and the anticipated sale




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of the house by the Hospice Foundation. The lien was to reimburse Amov for paying the

expenses of Lane’s life estate, and for trustee and attorney fees.

       On December 28, 2005, Lane filed an objection to Amov’s account. On January

10, 2006, Lane filed an ex-parte application seeking to have the court order Amov to turn

over to Lane all trust documents and the contents of a Smith Barney account from which

Amov paid the expenses of Lane’s life estate. On January 25, 2006, Lane filed

supplemental objections.

       On February 9, 2006, the court held a hearing on Amov’s account, Lane’s

objections and Lane’s ex-parte application. As a result of Lane’s three filings, the court

on this date: 1) found that Amov’ s account was not made in the proper form; and 2)

ordered Amov to file an amended account for her period as trustee, as well as for the

period during which her husband, Leon Amov, acted as trustee. The hearing was then

continued to May 12, 2006. However, the court at the February 9, 2006, hearing declined

to enter any orders on and continued to May 12, 2006, Lane’s requests to: 1) order Amov

to turn over trust documents; 2) order Amov to turn over the Smith Barney account from

which Amov paid the expenses of Lane’s life estate; 3) place a surcharge of $100,000 for

attorney fees against Amov’s beneficial interest in the $545,000 that Leon Amov

previously distributed to himself from the Trust; and 4) impose a constructive trust on the

$545,000.

       Further, the court commented on February 9, 2006 that “[B]ecause Miss Lane’s

interest is such a limited interest in the trust, and provided her – her interests are secured



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and there’s sufficient money placed in a – in an account to secure the payment of the

taxes and utilities on the house that she has the life estate in, I don’t see why she would

even care too much about the accounting.” Finally, in encouraging the parties to resolve

the entire matter by simply arranging for Amov to fund an account that would pay for the

expenses of Lane’s life estate, the court specifically warned Daymude “I urge you to

consider this very strongly. Because if this litigation continues, and you’re going to have

to ask for fees, you’re not likely going to get them.” At the end of the hearing, the court

also commented “Settle it. I don’t think you want to try it because you’re just wasting a

lot of money for both sides.”

       Appellants argue that the trial court erred when it denied Lane compensation for

the period June 30, 2005 to February 9, 2006. This is because Lane’s December 28,

2005, objection to Amov’s account caused the trial court to order Amov to revise her

accounting to place it in the proper form and to include an accounting of Leon Amov’s

time as trustee. However, appellants do not carry their burden to establish that the trial

court abused its discretion in denying compensation for this period. This is because, as

the trial court commented at the hearing on February 21, 2008, the interests of each of the

beneficiaries were adequately secured without need for the litigation initiated by Lane,

and the trial court informed Daymude of this fact “every time you were in court.”

Further, as of February 9, 2006, the court had taken no action on Lane’s application filed

January 10, 2006, seeking to have Amov turn over all trust documents and the contents of

a Smith Barney account from which Amov paid the expenses of Lane’s life estate. These



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requests were later rendered moot when the court suspended Lane’s powers as trustee on

August 10, 2006. We conclude that the trial court did not abuse its discretion in denying

compensation for this period because appellants have not established that the litigation

pursued by Lane and Daymude materially benefitted the Trust or any of the beneficiaries.

       1. February 10 to August 10, 2006

       Appellants contend the trial court erred when it found that Lane pursued frivolous

litigation subsequent to February 9, 2006. Specifically, Lane refers to two petitions.

              A. Petition to Approve Settlement of Los Angeles Litigation

       The first petition Lane filed on May 12, 2006, was entitled “Petition for approval

of compromise of claim against Norman Rasmussen.” In this petition, Lane sought the

court’s approval of a settlement agreement between Lane, individually, and Norman

Rasmussen, former attorney for trustor Curtis W. Johnson. Rasmussen had drafted the

Trust documents and later served as attorney for Leon Amov and Amov when they

served as successor trustees. The causes of action in this Los Angeles County litigation

were professional negligence and breach of fiduciary duty. The complaint alleged that

Rasmussen: 1) drafted the Trust amendment that deleted Lane’s income interest in a

specific bank account for payment of the expenses of her life estate, and instead allowed

the trustee to pay the expenses from the Trust fund generally; 2) failed to advise Leon

Amov regarding his duties as trustee, so that Leon improperly distributed all of the trust

assets to himself without leaving a fund from which to pay the expenses of Lane’s life

estate; 3) wrote to Lane after Leon Amov died, telling her that no more expenses of the



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life estate would be paid and “you are on your own on this one;” 4) had a conflict of

interest in that he represented both Johnson and Leon Amov at the time he drafted Trust

documents benefitting Leon Amov; and 5) assisted Leon Amov in converting Trust assets

for his personal use and later assisted Amov in covering up Leon Amov’s improper

actions regarding the Trust assets.

       The settlement agreement proposed that Rasmussen’s insurance company issue a

check for $50,000 jointly to Lane and Daymude, who was also Lane’s attorney in the Los

Angeles litigation. In return, Lane agreed that this amount was in full settlement of her

claims against Rasmussen as an individual, and that she would dismiss with prejudice all

claims against Rasmussen in her capacity as trustee. After several continued hearings, on

August 10, 2006, the trial court in Riverside County approved payment of the $50,000

settlement to the trustee who would be named once Lane was formally removed.

       Appellants argue that the trial court abused its discretion in denying attorney fees

for the petition to approve the Los Angeles litigation because the $50,000 recovery

ultimately went to the Trust rather than to Lane. However, appellants fail to

acknowledge the following: 1) Lane initiated the litigation solely on her own behalf as an

individual, and only later added her role as trustee; 2) Lane never joined the Trust in the

litigation; 3) the settlement for which Lane sought approval purported to waive all claims

against Rasmussen on behalf of the trust but accepted the $50,000 payment to Lane as an

individual; 4) the trial court told Daymude that if the court were to approve the $50,000

payment to Lane individually, then the court would relieve the Trust of all obligation to



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pay the expenses of Lane’s life estate; 5) Daymude then indicated that he had planned to

take his attorney fees out of the $50,000 if it were to be paid to Lane individually6; and 6)

the trial court then ordered that the $50,000 not be paid to Lane individually but rather to

the successor trustee. Further, the record indicates that the parties anticipated using the

$50,000 plus a $13,000 contribution from Amov to establish a fund from which the

expenses of Lane’s life estate would be paid. Because Lane brought the litigation to

benefit herself individually rather than to benefit the Trust, the trial court did not abuse its

discretion when it chose not to award attorney fees for the petition to approve settlement

of that litigation.

               B. Petition to Determine Will Contest

       The second pleading for which the appellants seek attorney fees is Lane’s petition,

also filed May 12, 2006 “to determine if Interim Trustee Sharon Amov’s First and Final

Account, etc., Violate the No Contest Clause.” The petition asked the trial court to

determine whether the following requests in Amov’s account dated November 1, 2005,

violated the “no contest” clause in the Trust. First, Amov asked the trial court to order

Amov “to continue to pay all reasonable property taxes, fire insurance and utilities upon

the presentment of bills therefore to [Amov] in a timely fashion.” Lane argued this

violated the Trust’s no contest clause because it both contained the qualifier

       6    “Let me mention something to the court. Has the court considered she has an
expense incurred in that litigation? She has administrative expenses. That’s not $50,000
free and clear. She’s got bills. She’s had to pay to get that money, and I don’t think it’s -
-I don’t think it’s fair to the -- of the court to treat that money that it is being found
or . . . .”


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“reasonable,” which was not in the language contained in the Trust, and implicitly

challenged the Trust provisions requiring a resigning trustee to transfer all trust assets and

an accounting to the successor trustee. Second, Amov asked the trial court to impose

liens on the Los Angeles home for $23,810 Amov had already paid for the utility, tax and

insurance expenses for the home, $1,000 for trustee fees, and $3,000 for attorney fees.7.

       At the hearing on August 10, 2006, the trial court denied the petition. In doing so,

the trial court commented that Lane and Daymude were wasting the court’s time with the

motion because, even if the court granted the motion, Amov was not a beneficiary of the

Trust and so there was nothing to take away from her under the Trust, and thus no

remedy. The trial court also stated that Lane had violated her fiduciary duties to the Trust

by bringing “completely frivolous and unnecessary litigations” and that it would not

order the Trust to pay either trustee fees or attorney fees for the litigation.

       Appellants argue that, under Dingwell v. Seymour (1928) 91 Cal.App.483, 513, the

trial court should have ordered costs and attorney fees because the “no contest clause”

litigation was a benefit and a service to the Trust. However, appellants fail to

convincingly articulate what that service and benefit are. Appellants argue it was Lane’s

duty as Trustee “to seek a determination whether Amov’s requested orders ran afoul of

the trust’s no-contest clause . . . .” However, as the trial court pointed out, there was no

benefit to the Trust in the form of a remedy because Amov was not a beneficiary of the

Trust and thus could not be forced to give up any benefit that could be returned to the

       7   Amov withdrew the request for liens prior to the August 10, 2006 hearing.


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Trust. Appellants also argue that, if a violation were to be found, Amov would be

required to provide “a full and complete accounting that established the amount of the

Amov remainder interest, which had never been determined.” Appellants assert that this

accounting would be a benefit to the Trust because: 1) it would be “essential to any trust

recovery”; and 2) it would provide proof for Lane’s claims on behalf of the trust estate

against Rasmussen, should they go to trial. These arguments are not well taken because:

1) there could be no trust recovery from Amov because she was not a trust beneficiary;

and 2) Lane had already waived any claims against Rasmussen on behalf of the Trust.

Further, the trial court had already ordered Amov to provide a full accounting of the

period during which Leon Amov was trustee. For these reasons, we conclude that the

trial court did not abuse its discretion when it denied appellants their fees for the “no

contest” petition proceedings.

                                        DISPOSITION

       The trial court’s orders denying trustee and attorney fees are affirmed. Daymude

alone is to pay Amov’s costs on appeal.

       NOT TO BE PUBLISHED IN OFFICIAL REPORTS
                                                                 RAMIREZ
                                                                                            P.J.


We concur:

McKINSTER
                           J.

KING
                           J.


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