Matthews v. Righetti

Filed 9/30/08 Matthews v. Righetti CA2/6

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

SECOND APPELLATE DISTRICT

DIVISION SIX

Appellants Paul T. Righetti and Paula Pyche appeal from an order of the probate court awarding attorney fees to respondent Anita Matthews in an action to compel an accounting. We correct a clerical error in the judgment to reflect that the attorney fees awarded were incurred in the petition proceeding and otherwise affirm.

FACTS AND PROCEDURAL HISTORY

Righetti, Pyche and Matthews are siblings and income beneficiaries of their father's trust, the Paul A. Righetti Trust (Trust). Righetti and Pyche were co-trustees of the Trust. The Trust's main asset is a 25 percent undivided interest in a 5,600-acre ranch.

Righetti and his family live on the ranch. They also conduct several businesses on the ranch, including cattle grazing, horse boarding, and a specialty foods business. Righetti paid $6 per acre annually to the Trust for use of the ranch. The income from the businesses was not shared with the other trust beneficiaries.

In 1999 and 2000, Matthews and other trust beneficiaries requested that Righetti sign a lease with higher rent. Righetti refused and continued to live and operate his businesses on the ranch without a lease while continuing to pay minimal rent.

By May 2001, Pyche was not competent to conduct her own affairs. Righetti hired caregivers for her and managed her financial affairs pursuant to a power of attorney. However, Righetti did not remove Pyche as trustee and the Trust continued to pay her trustee fees.

In November 2003, Righetti and Pyche initiated an action seeking to partition the ranch in kind. Matthews was named a defendant but was voluntarily dismissed six months later. Subsequently, Matthews asked Righetti to include her as a party to the action. He refused and Matthews sought to intervene. Righetti and Pyche opposed the motion and it was denied. The trial court ordered partition by sale and division of the proceeds. In an unpublished opinion, we affirmed the judgment.[1]

Beginning in April 2004, Matthews repeatedly asked Righetti for an accounting. He did not comply. Matthews filed a petition for an accounting on February 17, 2005. Her petition also sought to have Righetti and Pyche removed as trustees and pay surcharges. On March 3, 2005, Righetti told Matthews that Pyche had resigned and that Righetti's adult daughter had been appointed as successor trustee. Matthews received no prior notice of the change of trustee.

A hearing on the petition for accounting commenced in October 2005. At the end of the first day, the probate court ordered the parties to mediation. Mediation was unsuccessful and the hearing resumed. On the second day of the hearing, Righetti served Matthews with notice of his resignation as trustee and appointment of his adult son as successor trustee. Righetti asserted that Matthews's request seeking his removal as trustee was moot. The court found the tactic to be in bad faith and refused to allow the resignation. The court ordered Righetti to file an accounting.

Righetti filed the accounting as ordered and Matthews filed objections. Matthews requested attorney fees in the amount of "$60,099 [sic]" for (1) fees incurred in partition action-$6,164; (2) pre-litigation attempts to obtain an accounting-$2,980; and (3) trust petition proceeding-$50,995. Righetti filed opposition to Matthews's objections and her request for surcharges and attorney fees.

The court issued a statement of decision in which it ordered Righetti removed as trustee. The court found that he had breached his fiduciary duty by operating the ranch as if he personally owned it, paying insufficient rent for use of the ranch property, failing to provide an accounting, and failing to share Trust revenues with Matthews. The court also found that Righetti violated Probate Code section 16061.7[2] by failing to give prior notice that Pyche had resigned as trustee and been replaced by Righetti's daughter. The court also found that Righetti was in breach of his fiduciary duties by waiting until the hearing to resign as trustee and appoint his son as successor trustee, paying fees to Pyche after she became unable to act as a trustee, and using Trust funds to finance the partition action.

The court ordered Pyche removed as trustee, appointing Matthews her successor. In making the order, the court found that Pyche breached her fiduciary duty to Matthews by receiving fees from the Trust for administration without performing such duties, failing to provide copies of financial records when requested to do so, and failing to provide written notice of her resignation as trustee.

The court surcharged Righetti and Pyche $25,391 to be paid to Matthews as her proportionate share of profits from the ranch businesses and trustee fees paid to Pyche. The court imposed an additional surcharge of $18,778.48 to be paid to Matthews, representing one-third of attorney fees "paid by the Trust for respondents' partition lawsuit and respondents' opposition in this proceeding." The court imposed an additional surcharge of $5,711.06 to be paid to the Trust. The court also ordered Righetti and Pyche to pay Matthews $50,955, in attorney fees "incurred in Respondents' partition lawsuit and in this proceeding."

In this appeal, Righetti and Pyche challenge only the $50,995 award of attorney fees to Matthews.

DISCUSSION

Standard of Review

We review the basis for an award of attorney fees de novo. (Mitchell Land Imp. Co. v. Ristorante Ferrantelli, Inc. (2007) 158 Cal.App.4th 479, 484.)

Attorney Fee Award

Righetti argues the trial court erred in awarding $50,995 in attorney fees to Matthews. He claims (1) the court awarded attorney fees for the partition lawsuit, (2) the court did not make a finding of bad faith required to support a fee award under section 17211, and (3) no other statutory basis exists for an award of attorney fees. These arguments are without merit.

Righetti is correct that the statement of decision states that the court awarded $50,995 for fees "incurred in [the] partition lawsuit and in this proceeding." A review of the record and the entire statement of decision, however, shows that the court intended the fee award to be for fees incurred in the accounting proceeding only and that the reference to the partition lawsuit was a clerical error. Matthews's request for attorney fees clearly indicates that she incurred $50,995 in fees for the petition proceeding only. In the statement of decision, the court explained the factual basis for the award as follows: "Respondents refused Anita Matthews'[s] pre-litigation requests for an accounting and failed to satisfy their fiduciary obligations when Anita Matthews complained about Respondents' conduct. [] . . . [] She was forced to incur attorney's fees to have Respondents removed, to obtain sums wrongfully taken from or charged to the Trust, and to receive and contest the account." At the hearing on attorney fees, the court said: "[A]s I understand it from . . . looking at the bills, . . . the attorney's fees in this action total $50,995. [] . . . [] I'm inclined to award that amount of money to Anita . . . to be paid from the trust."[3]

"It is well settled that clerical errors in a judgment, where they are shown by the record, may be corrected at any time. . . . [Citation.] [A]n appellate court may correct a judgment containing an obvious clerical error or other defect resulting from inadvertence by modifying the judgment." (Hennefer v. Butcher (1986) 182 Cal.App.3d 492, 506, citing Dreyfuss v. Tompkins (1885) 67 Cal. 339, 340; Professional Engineers in California Government v. Wilson (1998) 61 Cal.App.4th 1013, 1027; see also In reEstate of Goldberg (1938) 10 Cal.2d 709, 713-714 ["when on the face of the record it appears that a clerical error has been committed and carried into the judgment or decree, the court has the authority and the power to correct such error"].) We will modify the judgment accordingly.

Righetti correctly asserts that attorney fee awards in probate actions must have a statutory basis. (See Estate of Trynan (1989) 49 Cal.3d 868, 874 [without express contractual, statutory or case law authority, attorney fees in probate actions are generally to be paid by the party employing the attorney and are not recoverable as damages or costs].) If an express provision provides for fees, the probate court "is vested with wide discretion in awarding counsel fees for services to the trust and its findings will not be disturbed in the absence of a showing of a palpable abuse of such discretion. [Citations.]" (In re Vokal's Estate (1953) 121 Cal.App.2d 252, 260-261.)

The statement of decision sets forth the statutory basis for the fee award: "Probate Code section 17211 [subdivision] (b) provides that a trustee who opposes a contest to the trustee's account without reasonable cause and in bad faith may be liable to pay the contestant's costs of litigation, including attorney's fees. Probate Code section 16061.7 provides that a trustee who fails to give notice of a change in trustees may be responsible for all damages, attorney's fees, and costs caused by the failure."

Righetti asserts neither of the cited statutes provides a basis for the award. Section 17211, subdivision (b), states: "If a beneficiary contests the trustee's account and the court determines that the trustee's opposition to the contest was without reasonable cause and in bad faith, the court may award the contestant the costs of the contestant and other expenses and costs of litigation, including attorney's fees, incurred to contest the account. The amount awarded shall be a charge against the compensation or other interest of the trustee in the trust. The trustee shall be personally liable . . . for any amount that remains unsatisfied."

Section 16061.7 states that a trustee shall provide notice to the trust beneficiaries of a change of trustee before the change occurs. Section 16061.9, subdivision (b), states that if such notice is not given, a beneficiary may recover all costs, including attorney fees, caused by the lack of notice.

Righetti argues section 17211, subdivision (b), does not apply because the court did not find bad faith and no finding of bad faith is possible because he prevailed on some of his objections. He contends sections 16061.7 and 16061.9 do not apply because the court made a finding that no resignation had taken place. He also asserts that, even if the statute applied, Matthews did not establish that she incurred costs because of the lack of notice.

Righetti failed to object to the statement of decision in the trial court and, under well-established case law, has waived his right to appeal these issues. (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133-1134; see also Estate of Fain (1999) 75 Cal.App.4th 973, 994 [where party fails to object to statement of decision, reviewing court must "conclude that the statement of decision was supported by the evidence presented"]; see Sommers v. Erb (1992) 2 Cal.App.4th 1644, 1652 [rules of appellate review precludes party from raising issues involving factual matters for first time on appeal].)

Righetti asserts his failure to object did not constitute a waiver because he is objecting to the legal basis for the award. (United Services Auto. Assn. v Dalrymple (1991) 232 Cal.App.3d 182, 186.) We disagree with his characterization of the issues. The probate court made an express finding of bad faith and the statement of decision contains detailed findings of the many acts of misconduct constituting a breach of fiduciary duty. Bad faith and breach of duty are factual issues that require objection in the trial court to be preserved on appeal. (See, e.g., Johnstone v. Panama-Pacific International Exposition Co. (1921) 187 Cal. 323, 329 ["It requires no citation of authority to support the proposition, that whether or not acts were committed which would constitute a breach of duty was a question of fact for the jury"]; Evans v. Paye (1995) 32 Cal.App.4th 265, 270 [same]; Hamaker v. Bryan (1918) 178 Cal. 128, 129 ["The bad faith of the vendors was a question of fact to be determined by the jury"]; Dawson v. Toledano (2005) 109 Cal.App.4th 387, 401 [same].)

Contrary to Righetti's assertion that the court made a finding that no resignation occurred, the court found that Righetti had resigned, but the manner in which he did so did not comply with section 16061.7 and was in bad faith. This is sufficient to trigger the attorney fee provision of section 16061.9.

Similarly, Righetti's argument that, even if these two attorney fee statutes were triggered, they do not justify the amount of fees awarded is a factual argument which he did not raise in the trial court.

The judgment is modified to reflect that the $50,995 attorney fee award was for the petition proceeding. In all other respects, the judgment is affirmed. Respondent shall recover costs.

NOT TO BE PUBLISHED.

PERREN, J.

We concur:

YEGAN, Acting P.J.

COFFEE, J.

J. William McLafferty, Judge

Superior Court County of Santa Barbara

______________________________

The Law Office of John Derrick and John Derrick for Appellants.

Hutkin Law Firm and Maria L. Hutkin for Respondent.

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[1] (Righetti v. Righetti (Nov. 20, 2006, B185392) [nonpub. opn.].)

[2]All statutory references are to the Probate Code.

[3] Neither party raised the issue of clerical error in their briefs. However, we may decide a case on any point that its proper disposition may require, whether raised by counsel or not. (In re Marriage of Ankenman (1983) 142 Cal.App.3d 833, 837, fn. 2.)