Filed 2/9/23 Zahnleuter v. Mueller CA3
NOT TO BE PUBLISHED
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 This opinion has not been certified for publication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
THIRD APPELLATE DISTRICT
(Nevada)
----
KATHERINE ZAHNLEUTER, as Beneficiary, C093909
Plaintiff and Respondent, (Super. Ct. No. CU19083601)
v.
THOMAS MUELLER, as Trustee, etc.,
Defendant and Appellant.
This appeal concerns a dispute related to a family trust. The successor trustee
named in the third amendment to the trust appeals from the order surcharging him for the
trust assets he expended to defend against a beneficiary’s contest to the validity of that
amendment. Finding no error, we shall affirm.
1
FACTUAL AND PROCEDURAL BACKGROUND
The Family
Richard J. Mueller and his wife, Joan R. Mueller (collectively, settlors), had two
children together: plaintiff Katherine Zahnleuter (formerly Mueller) and Amy Mueller.1
Richard also had a daughter from a previous marriage, Julie Van Patter. Defendant
Thomas Mueller is Richard’s brother, and Katherine and Amy’s uncle. Thomas has two
children: Sudha Mueller and Puja Mueller.
Establishment of the Trust
In August 2004, the settlors created the Richard J. & Joan R. Mueller Living Trust.
Under the terms of that document, Katherine and Amy were equal residual beneficiaries
of the trust estate after the payment of certain expenses and gifts, including a $10,000 gift
to their half-sister, Julie. Amy and then Katherine were named as the successor trustees
upon the death of both settlors.
The trust document authorized the trustee, in his or her discretion, to initiate or
defend, at the expense of the trust estate, any litigation the trustee considered advisable
related to the trust or any property of the trust. The trust document also authorized the
trustee to employ, at the expense of the trust estate, agents (e.g., attorney, accountant) to
assist in the administration of the trust.
The trust document included a no contest clause.2 It provided, in relevant part, as
follows:
1 Because several of the people referenced in this opinion share the same last name, we
refer to each person by their first name after the first reference for clarity.
2 A no contest clause is statutorily defined as “a provision in an otherwise valid
instrument that, if enforced, would penalize a beneficiary for filing a pleading in any
court.” (Prob. Code, § 21310, subd. (c); see Donkin v. Donkin (2013) 58 Cal.4th 412,
422 [a no contest clause “ ‘essentially acts as a disinheritance device, i.e., if a beneficiary
contests or seeks to impair or invalidate the trust instrument or its provisions, the
2
“If any beneficiary under a Trust created by this document shall . . . contest in any
court the validity of any Trust created by this document, . . . or shall seek to obtain an
adjudication in any proceeding in any court that this Trust or any of its dispositive
provisions are void, or otherwise seek to void, nullify, or set aside the Trust or any of its
provision, then the right of that person to take any interest given to him or her by this
document shall be determined as it would have been determined had the person
predeceased the execution of this declaration of Trust.
“The Trustee is authorized to defend, at the expense of the Trust Estate, any
contest or other attack of any nature on this Trust or any of its provision. This paragraph
shall not apply to any amendment of this document . . . executed after the date of this
document.” (Italics added.)
The First Amendment to the Trust
In November 2005, the settlors executed a first amendment to the trust, which did
not modify the succession of trustees, the distributive terms of the trust, or the language
of the no contest clause.
Joan’s Death and the Second Amendment to the Trust
In October 2017, Joan died. Two months later, Richard was diagnosed with
terminal cancer.
Shortly thereafter, in late December 2017, Richard executed a second amendment
to the trust. The primary purpose of this amendment was to name Amy and Katherine as
successor co-trustees. The amendment did not modify the distributive terms of the trust
or the language of the no contest clause in the trust document. Although the second
beneficiary will be disinherited and thus may not take the gift or devise provided under
the instrument’ ”].) A “direct contest” includes a pleading filed by a beneficiary that
alleges the invalidity of a trust document, or one or more of the terms of such a
document, based on certain grounds, including lack of due execution or undue influence.
(Prob. Code, § 21310, subd. (b).)
3
amendment included a separate no contest clause, this clause only applied to beneficiaries
who sought to contest the validity of that amendment. The clause did not authorize the
trustee to defend, at the expense of the trust estate, any contest to the amendment.
The Third Amendment to the Trust
In early 2018, Amy moved into the family home to care for Richard. In April
2018, Amy e-mailed a handwritten letter to an attorney, Gabriel Lenhart. This letter,
written by Amy, purported to express Richard’s “final wishes based on Katie’s behavior
and treatment toward himself and the family.”3 The letter outlined several specific
changes Richard wanted to make to the terms of the trust.
The next day, Lenhart e-mailed Amy a copy of the third amendment to the trust.
Of relevance here, the amendment named Richard’s brother, Thomas, as successor
trustee, and provided that Thomas’s daughters, Sudha and Puja, would each receive a
$10,000 gift from the trust estate. The amendment also provided that Amy’s caregiving
services would be reimbursed from the trust estate without any impact on her inheritance,
and that Amy would receive a life estate in the family home (which was the most
valuable asset of the trust), but would be required to personally pay for maintenance,
insurance, taxes, and mortgage payments associated with her life estate. The amendment
further provided that the residue of the estate would be divided equally among Amy,
Katherine, and Julie. This modification to the trust was not one of the changes set forth
in Amy’s letter. The household expense provision was also inconsistent with Amy’s
letter, which provided that $100,000 would be set aside in an account under her name to
pay “all related household expenses, mortgage insurance and taxes.”
3 Although not relevant to the resolution of this appeal, we note there is evidence in the
record that Richard wanted to modify the terms of the trust after he and Katherine got
into an argument about her inheritance following Joan’s death.
4
The third amendment included a separate no contest clause, which was identical to
the no contest clause in the second amendment. Both clauses only applied to
beneficiaries challenging that amendment and did not authorize the trustee to defend, at
the expense of the trust estate, any contest to the amendment. Nor did the third
amendment modify the language of the trust document, which, as noted, explicitly did not
authorize the trustee to defend, at the expense of the trust estate, any contest to an
amendment to the trust. Richard purportedly executed the third amendment about an
hour after Lenhart e-mailed the document to Amy.
Less than a week later, Lenhart e-mailed Amy a different or second version of the
third amendment. This version differed from the first version in several respects. First, it
provided that Julie would receive a $10,000 gift from the trust estate. Second, it did not
name Julie as a beneficiary of the residue of the trust estate. Third, it did not require
Amy to personally pay certain expenses associated with her life estate in the family home
(i.e., maintenance, insurance, taxes, and mortgage payments). Instead, consistent with
Amy’s letter, the amendment provided that $100,000 would be set aside by the trustee to
pay for such expenses while Amy resided in the family home. In all other relevant
respects, the second version of the third amendment was identical to the first version of
the amendment, including the language of the no contest clause.
Richard’s Death and the Petition to Invalidate the Third Amendment to the Trust
In August 2018, Richard died. Three days later, Thomas gave Katherine a copy of
the second version of the third amendment.
In November 2018, Katherine filed a petition to invalidate the third amendment,
asserting that Thomas failed to comply with the execution and delivery requirements set
forth in the trust document. In January 2019, Katherine amended her petition to assert
that the third amendment was invalid because it was the product of undue influence.
5
In February 2019, Thomas, acting as the successor trustee under the terms of the
third amendment, filed an opposition to Katherine’s amended petition. Thereafter,
Katherine and Thomas filed cross motions for summary adjudication on the issue of
whether the third amendment had been validly executed pursuant to the terms of the trust
document. In January 2020, the trial court ruled in favor of Thomas.
Katherine’s Petition to Compel an Accounting and to Surcharge the Trustee
Meanwhile, in November 2019, Katherine requested an accounting of the trust.
Thomas did not respond. In January 2020, Katherine reiterated her request for an
accounting. Thomas, again, did not respond.
In April 2020, Katherine filed a petition to compel an accounting and to surcharge
the trustee (i.e., Thomas) for the trust assets he expended to defend her contest to the
validity of the third amendment.
Bench Trial on the Third Amendment to the Trust
In June 2020, a bench trial commenced on the issue of whether the third
amendment to the trust was invalid on the basis that it was the product of undue
influence. Upon questioning at trial, Lenhart conceded that there were two versions of
the third amendment, and that the terms of the second version (i.e., the challenged
version) were materially different than the terms of the first version, including a term that
provided that Julie would not share the residue of the trust estate with Amy and
Katherine. Lenhart acknowledged that there were “extra carriage returns” added to the
second version, and did not dispute that these carriage returns resulted in the pages and
clauses from that version to match the pages and clauses of the first version, such that the
signature pages of the two versions “line[d] up.” Lenhart also acknowledged that the
metadata from the Microsoft Word document used to create the third amendment showed
that the document was last saved five days after the first version was purportedly signed
by Richard. Thereafter, the trial court directed Lenhart to submit a declaration containing
6
his e-mail exchange with Amy about the third amendment as well as both versions of that
amendment.
At the outset of the proceedings the following day, Thomas and Amy’s counsel
asked the trial court to declare a mistrial or continue the matter. In support of this
request, counsel stated, “We have a suspicion of fraud on the Court . . . by Mr. Lenhart,”
and “we can’t continue at this point” because “[w]e cannot advocate for a document that
was the product[] of fraud.” Counsel explained that there was “no reason to trust” that
Lenhart did not modify the third amendment after Richard signed it. Counsel claimed
that he was not aware of “this problem,” adding that “never in a million years would [he]
think that an officer of th[e] Court would take a signed and executed document, modify it
and send it back to the client in a modified form.” In response, the court suspended the
proceedings until further notice.
Around a week later, the trial court issued a written order suspending the trial
pursuant to the parties’ mutual request. In so doing, the trial court explained: “During
the testimony [at trial], it became apparent that the version of the challenged Third
Amendment [i.e., the second version] . . . might not be th[e] actual Third Amendment
executed by the Trustor Richard Mueller, and that the version of the Third Amendment
[i.e., the first version] . . . might instead be the version that was executed by Trustor
Richard Mueller.” The court did not remove Thomas as the trustee, but ordered him not
to make any expenditures from the trust estate, unless he was authorized to do so by court
order or by stipulation of all potential trust beneficiaries. The court directed Thomas to
expend up to $1,500 from the trust estate to provide Julie notice that she was a potential
beneficiary under the terms of the third amendment.
Amy’s Petition to Invalidate the Third Amendment to the Trust
The next day, Amy filed a petition to invalidate both versions of the third
amendment for lack of due execution. In support of her petition, Amy asserted that the
first version of the amendment did not reflect Richard’s “final testamentary wishes,” and
7
that, while the second version did in fact reflect Richard’s wishes, he did not sign that
version of the amendment. According to Amy, Richard never intended for Julie to share
the residue of the trust estate with her and Katherine as provided in the first version of the
amendment, and that Lenhart modified the first version of the amendment without her or
Richard’s knowledge. In addition to an order invalidating both versions of the third
amendment, Amy also sought an order dismissing Katherine’s amended petition to
invalidate the third amendment as moot, removing both Amy and Katherine as co-
trustees and replacing them with a fiduciary appointed by the court, and approving the
validity of the trust, as modified by the first and second amendments.
In August 2020, the trial court granted Amy’s request to invalidate both versions
of the third amendment due to lack of proper execution. In so ruling, the court noted that
both Amy and Katherine agreed that neither version of the third amendment was properly
executed by Richard, and that neither Thomas nor any of the other purported
beneficiaries under the third amendment (i.e., Thomas’s children, Julie) objected to
Amy’s petition. The court also found that the trust, as amended by the first and second
amendments, was valid and enforceable and appointed a private fiduciary as successor
trustee.
Accounting
In August 2020, the trial court issued an order granting Katherine’s petition to
compel an accounting of the trust, and deferred ruling on her request to surcharge the
trustee (i.e., Thomas) for the trust assets he expended in defending against her contest to
the validity of the third amendment.
In September 2020, Thomas filed an accounting and a first corrected accounting,
both of which indicated that he expended $201,164.15 on attorney fees from
November 15, 2018 to May 11, 2020. The first corrected accounting provided the date
the fees were paid, the payee, and the amount paid. However, the accounting did not
8
include any information regarding the specific services that were performed for the fees
incurred.
Ruling on Katherine’s Petition to Surcharge the Trustee
In February 2021, the trial court granted Katherine’s petition to surcharge the
trustee, ordering Thomas to pay the full amount of trust assets he expended on attorney
fees--$201,164.15. The court found the express terms of the trust authorized the trustee
to defend, at the expense of the trust estate, “any contest or other attack of any nature on
th[e] Trust or any of its provisions,” but not “any amendment” to the trust. (Italics
added.) The court concluded that neither the trust document nor the first or second
amendment to the trust authorized Thomas to expend trust assets to defend against a
contest to the third amendment. Further, the court found Thomas breached his duty to
deal impartially with all beneficiaries, as he did not take a neutral position in the dispute
over the validity of the third amendment. Instead, he represented the interests of one side
(Amy and others) over the other side (Katherine).
Appeal
Thomas timely appealed. On September 7, 2022, we granted respondent’s motion
for calendar preference. The case was fully briefed in October 2022, and assigned to the
current panel on October 31, 2022. The parties did not request argument and the case
was submitted on January 23, 2023.
DISCUSSION
I
Surcharge Order
Thomas contends the surcharge order must be reversed because he properly
expended trust assets to defend against Katherine’s contest to the validity of the third
amendment. We disagree.
9
A. Applicable Legal Principles and Standard of Review
“On acceptance of the trust, the trustee has a duty to administer the trust according
to the trust instrument and, except to the extent the trust instrument provides otherwise,
according to this division.” (Prob. Code, § 16000.)4 Under the Probate Code, a trustee is
entitled to reimbursement by the trust for “[e]xpenditures that were properly incurred in
the administration of the trust,” and “[t]o the extent that they benefitted the trust,
expenditures that were not properly incurred in the administration of the trust.” (§ 15684,
subds. (a), (b).)
“[A]mong the ordinary powers and duties of a trustee of a private trust are those of
doing all acts necessary and expedient to collect, conserve and protect the property of the
trust, to maintain and defend the integrity of the trust for the benefit of the beneficiaries
and to employ such assistants as may be necessary for said purposes.” (Evans v. Superior
Court (1939) 14 Cal.2d 563, 574.) “[W]here litigation is necessary for the preservation
of the trust, it is both the right and duty of the trustee to employ counsel in the
prosecution or defense thereof, and the trustee is entitled to reimbursement for his
expenditures out of the trust fund.” (Metzenbaum v. Metzenbaum (1953) 115 Cal.App.2d
395, 399.) “If the trustee acts in good faith, he has the power to employ such assistants
and to compensate such assistants out of the assets of the trust even though he may not
ultimately succeed in establishing the position taken by him as such trustee.” (Evans v.
Superior Court, supra, 14 Cal.2d at p. 574.)
“The foregoing rules, of course, presuppose that the litigation was for the benefit
of the trust estate. [Citation.] For example, the defense of a lawsuit that has the potential
for depleting trust assets would be for the benefit of the trust, justifying the employment
of counsel. However, litigation seeking to remove or surcharge a trustee for
4 Further undesignated statutory references are to the Probate Code.
10
mismanagement of trust assets would not warrant the trustee to hire counsel at the
expense of the trust. Such litigation would be for the benefit of the trustee, not the trust.”
(Whittlesey v. Aiello (2002) 104 Cal.App.4th 1221, 1227 (Whittlesey).)
When a trust has two or more beneficiaries, “the trustee has a duty to deal
impartially with them and shall act impartially in investing and managing the trust
property, taking into account any differing interests of the beneficiaries.” (§ 16003.)
In litigation concerning the trust, the duty of the trustee and its counsel is to aid the
court in deciding on the correct administration of the trust estate, without regard to
conflicting interests of beneficiaries. (In re Gartenlaub’s Estate (1921) 185 Cal. 648,
655.) “[W]hen a dispute arises as to who is the rightful beneficiary under a trust,
involving no attack upon the validity or assets of the trust itself, the trustee ordinarily
must remain impartial, and may not use trust assets to defend the claim of one party
against the other.” (Doolittle v. Exchange Bank (2015) 241 Cal.App.4th 529, 537
(Doolittle).) However, a trustee may defend against a contest by a beneficiary, even if
the beneficiary’s contest will have no other effect on the trust except for modifying the
dispositive provisions for the trust estate, when the authority granted by the trust
document directs the trustee to defend against any contest brought by a beneficiary. (Id.
at pp. 537-538, 544; see Hearst v. Ganzi (2006) 145 Cal.App.4th 1195, 1208 [a trustee is
bound to deal impartially with all beneficiaries, unless the trust document provides
otherwise; if the terms of the trust give the trustee discretion to favor one beneficiary over
the other, the court will not “ ‘control the exercise of such discretion, except to prevent
the trustee from abusing it’ ”].)
We review the trial court’s decision to disallow the payment of litigation expenses
out of the trust estate for an abuse of discretion. (Whittlesey, supra, 104 Cal.App.4th at p.
1230.) “ ‘The underlying principle which guides the court in allowing costs and
attorneys’ fees incidental to litigation out of a trust estate is that such litigation is a
benefit and a service to the trust.’ [Citation.] Consequently, where the trust is not
11
benefited by litigation, or did not stand to be benefited if the trustee had succeeded, there
is no basis for the recovery of expenses out of the trust assets.” (Ibid.)
“In construing trust instruments, as in the construction and interpretation of all
documents, the duty of the court is to first ascertain and then, if possible, give effect to
the intent of the maker.” (Estate of Gump (1940) 16 Cal.2d 535, 548.) “[I]f the court can
ascertain the testator’s intent from the words actually used in the instrument, the inquiry
ends. [Citation.] ‘ “Where the terms of [the instrument] are free from ambiguity, the
language used must be interpreted according to its ordinary meaning and legal import and
the intention of the testator ascertained thereby.” ’ ” (Trolan v. Trolan (2019) 31
Cal.App.5th 939, 949 (Trolan).) The proper interpretation of a trust instrument is a
question of law subject to independent review, “ ‘unless interpretation turns on the
credibility of extrinsic evidence or a conflict therein.’ ” (Doolittle, supra, 241
Cal.App.4th at pp. 539-540.)
B. Analysis
As we next explain, Thomas’s claim that he properly expended trust assets to
defend against Katherine’s contest to the validity of the third amendment is foreclosed by
Whittlesey, supra, 104 Cal.App.4th 1221 and Terry v. Conlan (2005) 131 Cal.App.4th
1445 (Conlan).
In Whittlesey, a trust was created that named the decedent’s niece (Joyce) as the
trustee and primary beneficiary of the trust. (Whittlesey, supra, 104 Cal.App.4th at pp.
1224, 1228.) Later, an amendment to the trust was executed that named the decedent’s
second wife (Margaret) as the trustee and made Margaret and her son the primary
beneficiaries of the trust. (Ibid.) Joyce challenged the validity of the amendment, which
was executed shortly before decedent’s death. (Id. at pp. 1224-1225.) After Margaret
died, the successor trustee retained the attorney hired by Margaret to defend the
amendment. (Id. at pp. 1225, 1228.) Following a bench trial, the amendment was
invalidated on the basis that it was the product of undue influence, and the trial court
12
denied the trustee’s request for reimbursement of attorney fees and costs incurred in
defending the amendment. (Id. at p. 1225.) On appeal, a panel from this court affirmed
the denial of reimbursement, reasoning, “where the trust is not benefited by litigation, or
did not stand to be benefited if the trustee had succeeded, there is no basis for the
recovery of expenses out of the trust assets.” (Id. at p. 1230.)
The Whittlesey court explained that it would be inequitable to use trust assets to
defend against Joyce’s undue influence claim against Margaret because, if Joyce
prevailed, she “would be required to finance her own trust litigation and that of her
opponent, despite the fact she prevailed.” (Whittlesey, supra, 104 Cal.App.4th at p.
1230.) In rejecting the claim that reimbursement was proper because the trustee acted in
accordance with his fiduciary duties, as he had subjective good faith and made an
objectively reasonable decision to participate in the litigation given the facts and
circumstances, the Whittlesey court stated: “[T]he existence of facts that would have led
the trustee to believe the trust amendment was valid does not establish the objective
reasonableness of the trustee’s defense of the trust amendment. While it would not have
been proper for the trustee to have allowed a default in the litigation, there was no basis
for the trustee to have taken other than a neutral position in the contest . . . . [T]he parties
primarily interested in the outcome of the litigation were [Joyce] on the one hand and
[Margaret] on the other. To the extent [the trustee’s attorney] defended the amendment,
he was representing the interests of one side of the dispute over the other, not
representing the interests of the trust or the trustee.” (Id. at pp. 1230-1231.) The
Whittlesey court observed that, to the extent the trustee represents the interests of one side
of the contest over the other, the trustee must look to the parties who stand to gain from
the litigation for reimbursement, not the trust. (Id. at p. 1231.)
In Terry, the appellate court approved of and followed Whittlesey. There, the
dispute was over the validity of two competing trust documents. (Terry, supra, 131
Cal.App.4th at p. 1448.) The parties to the dispute were decedent’s widow (Ione) and his
13
three children from a previous marriage. (Ibid.) The first trust document, which Ione
claimed was valid, left all of decedent’s community property to Ione. (Ibid.) The second
trust document, which was drafted shortly before decedent died, left all of decedent’s
property to his children. (Ibid.) The appellate court held that the trustee named in the
second trust document, who was one of decedent’s children and a named beneficiary in
that document, was not permitted to recover attorney fees incurred in defending against
Ione’s challenge to the document. (See Terry, supra, 131 Cal.App.4th at pp. 1462-1464.)
In so holding, the Terry court explained that the trustee “has not participated in this
litigation as a neutral trustee to defend the trust and protect its assets; rather, she has
consistently pursued her own interests and those of her siblings [beneficiaries under the
second trust document], to the detriment of [the beneficiary under the first trust
document]. As such, she must bear her own costs in this litigation, rather than be
reimbursed from the trust.” (Id. at p. 1464.)
In Whittlesey and Terry, as here, the essence of the underlying action was not a
challenge to the existence of the trust; rather, it was a dispute over who would control and
benefit from it. Regardless of whether Katherine’s petition contesting the validity of the
third amendment was successful, the trust would remain intact. The challenged version
of the third amendment--its second version--named Thomas as the successor trustee, and
modified the terms of the trust to provide that Thomas’s two daughters and Julie would
each receive a $10,000 gift from the trust estate, that Amy’s caregiving services would be
reimbursed from the trust estate without any impact on her inheritance, and that Amy
would receive a life estate in the family home, with up to $100,000 for homeowner-
related expenses to be paid from the trust estate. Thomas opposed Katherine’s contest to
the third amendment. To the extent Thomas incurred attorney fees in doing so, he, in
effect, sought to benefit the interests of his two children, Julie, and Amy, not the interests
of the trust estate. (See Whittlesey, supra, 104 Cal.App.4th at p. 1231.) A trustee is not
entitled to reimbursement of litigation expenses from the trust estate when, as here, “[t]he
14
dispute was, and continues to be, over who will enjoy the benefits and who will control
the trust.” (Terry, supra, 131 Cal.App.4th at p. 1462; see also Whittlesey, at p. 1231.)
The record makes clear that Thomas did not participate in the litigation as a
neutral trustee to defend the trust and protect its assets. Instead, he pursued the interests
of others, including his two daughters, to the detriment of Katherine. As a consequence,
he must bear his own litigation costs, rather than be reimbursed from the trust estate.
(Terry, supra, 131 Cal.App.4th at p. 1464.) Indeed, requiring the trust estate to pay for
the attorney fees incurred by Thomas in defending the third amendment would be
inequitable, as it would require Katherine to pay her own litigation costs plus the
litigation costs incurred by Thomas. (See Whittlesey, supra, 104 Cal.App.4th at p. 1230.)
Accordingly, we conclude the trial court did not abuse its discretion in surcharging
Thomas for the trust assets he expended to defend the third amendment.
We find no merit in Thomas’s contention that Whittlesey and Terry are inapposite
because he did not have a beneficial interest in the trust and was not seeking to advance
his own interests at the expense of other trust beneficiaries by defending the third
amendment. The outcome in Whittlesey and Terry did not turn on the trustee having a
beneficial interest in the trust and taking a position that advanced their own interests over
the interests of other beneficiaries. Rather, the dispositive issue in those cases was that
the trustee did not participate in the litigation as a neutral party to defend the trust and
protect its assets. Relying on authority addressing when a trustee may obtain
reimbursement of litigation costs from the trust estate, both the Whittlesey and Terry
courts focused on whether the litigation at issue provided a benefit and service to the
trust. (Whittlesey, supra, 104 Cal.App.4th at pp. 1226-1227, 1230-1231; Terry, supra,
131 Cal.App.4th at pp. 1461-1464.) Both courts concluded that the trustee was not
entitled to reimbursement of litigation costs from the trust estate because they were
15
representing one side of the dispute over the other, not the interests of the trust.
(Whittlesey, at pp. 1230-1231; Terry, at pp. 1462-1464.)5
Thomas’s reliance on Doolittle is misplaced. There, a trust provision specifically
directed the trustee to defend, at the expense of the trust estate, any contest to the trust,
including any amendment to the trust. (Doolittle, supra, 241 Cal.App.4th at p. 534.) The
Doolittle court acknowledged that Whittlesey and Terry remain good law, but
distinguished them on the basis that the trust documents in those cases did not contain an
explicit directive to the trustee to defend, at the expense of the trust estate, any contest to
the validity of an amendment to the trust. (Id. at p. 538.) The Doolittle court noted that
“authoritative form books” recommend such a directive to avoid the application of the
holding in Whittlesey. (Ibid.) Here, by contrast, the trust document did not direct the
trustee to defend against a contest to any amendment to the trust. Rather, as noted ante,
the language of the trust document explicitly did not authorize the trustee to do so. In
relevant part, the trust document states: “The Trustee is authorized to defend, at the
expense of the Trust Estate, any contest or other attack of any nature on this Trust or any
of its provision. This paragraph shall not apply to any amendment of this document . . .
5 We reject Thomas’s contention that he properly expended trust assets to defend the
third amendment because he subjectively believed that the expenditure of such assets was
necessary and appropriate to carry out the purpose of the trust and his belief was
objectively reasonable. Thomas forfeited this claim by failing to raise it in the trial court.
(Ochoa v. Pacific Gas & Electric Co. (1998) 61 Cal.App.4th 1480, 1488, fn. 3 (Ochoa)
[“It is axiomatic that arguments not asserted below are waived and will not be considered
for the first time on appeal.”].) In any event, the claim has no merit. A similar argument
was rejected in Whittlesey. There, the court assumed the soundness of the legal theory
advanced, but concluded that “the existence of facts that would have led the trustee to
believe the trust amendment was valid does not establish the objective reasonableness of
the trustee’s defense of the trust amendment.” (Whittlesey, supra, 104 Cal.App.4th at pp.
1230, 1231 [concluding that “there was no basis for the trustee to have taken other than a
neutral position in the contest” of the trust amendment, as expending attorney fees to
defend the amendment would result in the trustee representing the interests of one side of
the dispute over the other, not the interests of the trust].)
16
executed after the date of this document.” (Italics added.) Neither version of the third
amendment directed or authorized the trustee to defend against a contest to the
amendment. In short, because Doolittle is clearly distinguishable, it does not assist
Thomas. Under the circumstances presented, Thomas’s duty to deal impartiality with
beneficiaries required him to stay neutral in the litigation over the validity of the third
amendment, as there was no language in the trust document or in any of the amendments
to the trust providing otherwise--that is, language directing or authorizing him to favor
one beneficiary (Amy) over another (Katherine). (See Doolittle, supra, 241 Cal.App.4th
at p. 537 [“[u]nless the language of a trust provides otherwise, a trustee is bound to deal
impartially with all beneficiaries”]; Hearst v. Ganzi, supra, 145 Cal.App.4th at p. 1208
[same].)6
Finally, we reject Thomas’s contention that the no contest clause in the third
amendment should be construed as directing (i.e., requiring) the trustee to defend against
any contest to that amendment. As Thomas acknowledges, the clause (which appears in
both versions of the third amendment and contains identical language) does not include
express language supporting such an interpretation. The text of the clause is not
ambiguous, and it neither directs nor authorizes the trustee to defend the third amendment
at the expense of the trust estate. Indeed, the clause only applies to contests by
beneficiaries, and it makes no mention of any duty or obligation on the part of the trustee
6 We are unpersuaded by Thomas’s assertion that he did not “litigate a single issue,
motivated by bias against . . . Katherine.” During his deposition, Thomas referred to
Katherine as a “greedy, manipulative, deceiving individual,” and claimed that, after
Richard’s death, Amy took “precedence” over Katherine. Thomas admitted that his
defense of the third amendment, if successful, would benefit Amy and harm Katherine,
and that he was more concerned about Amy than Katherine. Thomas also conceded that
he did not treat the beneficiaries equally. He explained that he distributed $135,000 from
the trust estate to Amy as well as $10,000 each to Julie and his two daughters, but he
refused to distribute the $100,000 he was “supposed to give Kate” because of the “golden
rule”--“[h]e who has the gold rules.”
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to defend against such contests. Further, there is nothing in either version of the third
amendment indicating an intent on the part of Richard to modify the language of the trust
document, which (as noted ante) explicitly did not authorize the trustee to defend, at the
expense of the trust estate, any contest to an amendment of the trust. In short, because
there is no ambiguity in the relevant language of the no contest clause in the third
amendment, the plain meaning controls. (Trolan, supra, 31 Cal.App.5th at p. 949.)7
II
Remaining Contentions
Thomas contends the trial court erred in surcharging the entire amount of the trust
assets he expended on attorney fees because some of those fees were properly incurred.
In support of his position, Thomas points to three possible sources of “legitimately
incurred” fees. As we next explain, we are unpersuaded.
First, Thomas points to the $1,500 the trial court authorized him to expend from
the trust estate to provide Julie notice that she was potentially a beneficiary under the
terms of the third amendment. But Thomas does not cite anything in the record showing
that he expended any trust assets for this purpose. And, in any event, the record reflects
that the surcharge order did not include any trust assets that were expended to give Julie
7 Without citation to the record, Thomas asserts that the record includes evidence--a
letter from Richard to Katherine and oral representations Richard made to Thomas--
showing that Richard intended Thomas, as the successor trustee, to defend the third
amendment against any contest brought by Katherine. Later in his opening brief, Thomas
suggests that Richard’s oral representations to Thomas amounted to extrinsic evidence
offered to interpret the no contest clause in the third amendment. Thomas forfeited this
argument by failing to raise it in the trial court. (Ochoa, supra, 61 Cal.App.4th at p.
1488, fn. 3.) In any event, the argument has no merit. Because the language of the no
contest clause is not ambiguous, no extrinsic evidence was necessary to interpret it.
(Trolan, supra, 31 Cal.App.5th at p. 949.) Further, the “extrinsic evidence” relied on by
Thomas does not show it was Richard’s intent that Thomas defend any contest to the
third amendment brought by Katherine. The evidence Thomas points to makes no
mention of an obligation or duty on the part of Thomas to defend the third amendment.
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notice. The trial court entered its order authorizing the $1,500 expenditure on June 24,
2020, and the attorney fees subject to surcharge only included fees incurred from
November 15, 2018 to June 11, 2020.
Second, Thomas points to probate code provisions providing that a trustee is
entitled to reimbursement for expenditures that were properly incurred in the
administration of a trust (§ 15684), and that a trustee has the power to hire and pay
attorneys to assist in the administration of a trust (§§ 16247, 16243). Thomas, however,
never claimed in the trial court that he incurred any attorney fees related to the
administration of the trust, and therefore he has forfeited this argument. (Ochoa, supra,
61 Cal.App.4th at p. 1488, fn. 3.) Moreover, even if we were to overlook forfeiture,
Thomas’s accounting failed to include any information about the specific services
provided for the attorney fees incurred. Each line of the accounting simply states the
name of the attorney or law firm and “Attorney Fees,” “Retainer,” or “Attorney Fees-
Forensic.” Nothing in the accounting shows that any attorney fees were incurred in
connection with the administration of the trust. It is well settled that a trustee bears the
burden “to prove that charges made by [him or her] are proper.” (Purdy v. Johnson
(1917) 174 Cal. 521, 530; see also Estate of McCabe (1950) 98 Cal.App.2d 503, 505
[“Trustees are . . . under the duty to prove every item of their account by ‘satisfactory
evidence’; the burden of proof is on them and not on the beneficiary; and any doubt
arising from their failure to keep proper records, or from the nature of the proof they
produce, must be resolved against them.”].) Where a trustee negligently fails to keep true
accounts, “all presumptions will be against the trustee.” (Purdy, at p. 527.) Although
Thomas claims that a portion of the surcharged attorney fees must have been incurred in
administering the trust estate, he has not directed us to anything in the record
demonstrating as much. And our independent review of the record reveals no
documentation of any such expenses (e.g., billings, invoices).
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Third, Thomas argues that the trial court improperly surcharged him for the
attorney fees incurred in connection with his successful defense of the third amendment.
While it is true that the trial court found in favor of Thomas with respect to Katherine’s
claim that the third amendment was not properly executed and delivered, Thomas did not
(as we have explained) participate in the underlying litigation as a neutral trustee to
defend the trust and protect its assets for the benefit of the trust. Instead, he pursued the
interests of others, including his two daughters, to the detriment of Katherine. As a
consequence, he must bear his own litigation costs, rather than be reimbursed from the
trust estate. (Terry, supra, 131 Cal.App.4th at p. 1464; see also Whittlesey, supra, 104
Cal.App.4th at pp. 1227, 1230 [attorney fees are only chargeable to the trust when they
benefit the trust]; see also Butler v. LeBouef (2016) 248 Cal.App.4th 198, 213 [same];
Donahue v. Donahue (2010) 182 Cal.App.4th 259, 273 [same].)8
8 We reject Thomas’s attempt to recast his defense of the third amendment as a valid
defense against a petition to remove him as trustee. Thomas forfeited this issue by failing
to raise it in the trial court and in his opening brief on appeal. (Ochoa, supra,
61 Cal.App.4th at p. 1488, fn. 3 [failure to raise argument in the trial court]; United
Grand Corp. v. Malibu Hillbillies, LLC (2019) 36 Cal.App.5th 142, 158 [failure to raise
argument in opening brief on appeal].) In any event, Thomas has not shown error.
Thomas was named as the successor trustee in the third amendment, and Katherine’s
petition to invalidate that amendment was based on two grounds: the failure to comply
with the execution and delivery requirements in the trust document and undue influence.
As such, we fail to see how Katherine’s petition to invalidate the third amendment could
be construed as a petition to remove Thomas as trustee. (See § 15642, subd. (b)
[specifying grounds for removal of a trustee by the court (e.g., breach of trust)].) And
Thomas cites no authority supporting such a conclusion. As a consequence, no further
discussion of this issue is necessary. (See Benach v. County of Los Angeles (2007) 149
Cal.App.4th 836, 852 [when a party fails to support a point with reasoned argument and
citation to authority, we treat the point as waived].)
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DISPOSITION
The surcharge order is affirmed. Katherine shall recover her costs on appeal.
(Cal. Rules of Court, rule 8.278(a).)
/s/
Duarte, J.
We concur:
/s/
Robie, Acting P. J.
/s/
Boulware Eurie, J.
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