Trusts and Estates

People ex rel. Becerra vs. Shine

Cite as A15590
Filed February 19, 2020; Certified for Partial Publication March 11, 2020
California Court of Appeal, First District, Div. Five

By Golnaz Yazdchi
Sheppard Mullin Richter & Hampton LLP
https://www.sheppardmullin.com

Headnote:  Charitable Trusts – Awards of Attorney Fees and Costs to Attorney General

Summary:  The trial court is not required to employ an effectiveness test before awarding attorneys’ fees and costs to the Attorney General in a charitable trust enforcement action.

The Attorney General brought an action to remove and surcharge William Shine, the trustee of a charitable trust.  Based on nineteen separate acts of wrongdoing the Attorney General alleged that Shine breached his fiduciary duties as trustee by, among other things, failing to create and fund a charitable foundation pursuant to the terms of the trust, allowing improper tax returns to be filed, allowing a Subchapter S corporation status to be lost, and using trust funds to loan money to friends.  The court found in favor of the Attorney General on seven acts of wrongdoing, and surcharged Shine over a million dollars.  The court also ordered Shine to pay the Attorney General’s attorney fees and costs in the amount of $1,654,083.65.

Held: Affirmed.  The Attorney General is entitled to reimbursement of reasonable attorney fees and costs in charitable trust enforcement actions, and such an award will not be disturbed absent an abuse of discretion.  Shine contended that the trial court erred because it was required to consider the Attorney General’s relative success and failure in the litigation when issuing its fee award.  There is no longer any requirement that the court employ an “effectiveness test,” or that it consider the fact that Shine prevailed on twelve of the nineteen alleged breaches of fiduciary duty.  The Attorney General proved that Shine’s conduct was grossly negligent in numerous ways, prevailed in surcharging and removing Shine as trustee, and the trial court did not abuse its discretion in awarding the Attorney General’s fees and costs.

https://www.courts.ca.gov/opinions/documents/A155903.PDF

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