Opinion
A151767
09-19-2018
Estate of MARLIN GENE BRIGGS, Deceased. GREGORY HOBBS, Objector and Appellant, v. TOM CARIVEAU, as Administrator, etc., Petitioner and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Lake County Super. Ct. No. PR501829)
Lake County resident Marlin Briggs died, with his primary assets consisting of several parcels of real property, two of which were in Florida. Following his appointment as special administrator, respondent Tom Cariveau hired a Florida law firm to open an ancillary probate proceeding there, a proceeding that appellant Gregory Hobbs had for months insisted on—indeed going so far as to file a petition seeking such appointment. And Cariveau paid the firm for its services, which were of substantial benefit to the estate.
Cariveau filed a final accounting, to which Hobbs filed objections. The Lake County Probate Court held a two-day hearing, at the conclusion of which it approved the accounting, finding among other things that it "was necessary and proper" for Cariveau to retain Florida counsel. Hobbs appeals, asserting primarily that the payments to Florida counsel were made without court order, and thus Cariveau should be surcharged for such payments. Hobbs also objects to a $181 payment made to the probate referee, argues that Cariveau should be surcharged $83 for three months of lost interest for not investing estate funds in an interest-bearing account, and $4.62 for a failure to timely pay real estate taxes. Finally Hobbs appeals a $2,715 sanction imposed on him for his failure to respond to special interrogatories. We affirm.
BACKGROUND
The General Setting
Marlin Briggs, a resident of Lake County, died on April 7, 2014. He lived with his partner Kenneth Hobbs. In May 2014 Jon Briggs, Marlin's son, filed a petition for probate, and in June Kenneth Hobbs filed a competing petition for probate of will and letters testamentary. In July two of Marlin's daughters filed a will contest against Kenneth Hobbs, which will contest was settled in January 2016, and Marlin's will dated April 2014 was admitted to probate. Under that will, Kenneth Hobbs, Marlin's partner, was to receive all of Briggs's personal property. The residue was to be divided equally among five people: Marlin's four children (Jon Briggs, Kara Van Den Berg, Lora Sammon, and Lisa Briggs Valdez) and appellant Gregory Hobbs (hereinafter Hobbs), brother of Marlin's partner Kenneth. In short, appellant was to receive one-fifth of the residue.
Briggs's primary assets were six parcels of real property, four of which were in Lake County, two in Tampa, Florida. The Lake County properties were in Clearlake Oaks, on East Highway 20 and New Long Valley Road. The Tampa properties were single-family residences on North B Street and North Tampania Avenue.
The Proceedings Below
On August 27, 2014 the public administrator was appointed the special administrator of Briggs's estate, and letters were issued. And at some point the public administrator ordered appraisals of the Florida properties. The public administrator thereafter determined that the estate had become too complex—and apparently too contentious—for the public administrator to handle, and he approached Cariveau, of Lakeport, a professional fiduciary for some 35 years, to inquire whether he would consider becoming involved as special administrator. Cariveau agreed, and on April 14, 2015 the court appointed Cariveau and issued letters of special administration to him. After his appointment Cariveau retained Mary Amodio, a Lake County attorney, to assist him as probate counsel. And in mid-July 2015 Cariveau received some funds from the public administrator, which he deposited into a checking account he had opened for the estate. The source of these funds was three $10,000 loans that three of Briggs's children had made to the public administrator to pay expenses, as Briggs's estate included virtually no liquid assets.
Meanwhile, within weeks of his appointment, Cariveau received the first of many letters from Hobbs's attorney Raymond Sandelman concerning the Florida properties. This was a letter of May 20, 2015 to attorney Amodio in which Sandelman demanded that Cariveau open an ancillary probate proceeding in Florida. As Sandelman would come to admit at the hearing, he intended his letter to convey to Cariveau that he had "a duty to secure the appointment of an ancillary Florida administrator."
Less than a month later, on June 17, Sandelman sent another letter to Amodio in which he reminded "Cariveau to take action to ensure that an ancillary administrator in Florida administered the Florida property properly." This was followed up thirteen days later by another letter in which Sandelman asserted that "Cariveau would have breached his fiduciary duty by not having an ancillary administrator appointed to administer the Florida assets." Seven days later, on July 7, Sandelman sent another letter to Amodio, admonishing that: "Prompt appointment of an ancillary administrator is needed so that such personal representative can collect all of the rent income since the decedent's death." And on July 27, Sandelman sent yet another letter to Amodio, this time threatening to seek a surcharge against Cariveau if he did not cause an ancillary probate matter to be opened in Florida to deal with the impending foreclosures. As Sandelman put it: "I am extremely concerned . . . that the Florida properties are in foreclosure. In case your client does not yet appreciate the gravity of the situation, please advise him that if there is a loss to the estate from non-action we will seek to have him (and the Public Administrator) surcharged for the failure to initiate ancillary administration."
On October 14, Hobbs, through Sandelman, filed a petition in Lake County Probate Court in which he sought among other relief an order directing Cariveau to open an ancillary probate in Florida and address the foreclosure litigation. The petition asserted that Cariveau had "failed and refused to secure an ancillary administrator in the State of Florida," and also that Cariveau had a duty to make sure that the "ancillary administrator administers the out-of-state property properly." Finally, and as pertinent here, the petition asserted—and correctly—that Cariveau would not need prior court approval to expend necessary funds to do so, stating that: "where the special administrator expends estate funds in connection with the preservation of the out-of-state assets without prior court approval, the court is required to exercise its discretion in determining whether or not to ratify the expenditure; and it would be error for the court to refuse to exercise such discretion on the ground the special administrator has no duty at all in connection with the out-of-state property." (Italics added.)
That petition, it would develop, was essentially moot, as Cariveau had already acted. Two days before, on October 12, Cariveau had retained the Florida law firm of Phelps Dunbar LLP, a firm that had experience with both real estate and probate issues. Cariveau retained Phelps Dunbar for two purposes: (1) to appoint a "curator" (the Florida equivalent of an administrator), and (2) to handle the legal work necessary to an ancillary probate proceeding in Florida. As Cariveau would come to testify at the hearing, he contacted Phelps Dunbar because he and Amodio wanted to obtain as much information as they could regarding the "ramifications of having an ancillary probate in Florida," ultimately to determine that the properties in Florida could create liability for the California estate. Although Cariveau reached that conclusion independently, it is to be noted that the conclusion was consistent with what Hobbs and Sandelman had been claiming in the barrage of Sandelman's correspondence to Amodio described above. In short, Cariveau decided to hire Florida counsel to ameliorate potential liability caused by the foreclosure proceedings in that state.
Phelps Dunbar located Julie Goddard to serve as curator of the Florida ancillary estate. Cariveau paid her a $1,500 flat fee for her services, and provided a $1,000 deposit for maintenance expenses for the Florida property, both amounts paid from the California estate.
Phelps Dunbar informed Cariveau that Florida was a recourse state, meaning "that the heirs of the estate in California could be at risk for satisfying a judgment" resulting from foreclosure proceedings in Florida. Once Cariveau learned that, he determined that he "simply could not risk that kind of loss to the heirs," and he instructed Phelps Dunbar to contact the entities handling the foreclosures and negotiate assurances from them that they would not seek any deficiency judgments against the California estate or its beneficiaries. Indeed, Cariveau believed "it would have been malpractice" for him not to have done so.
Over the next several months, Goddard and Phelps Dunbar negotiated with creditors in Florida to resolve the foreclosure actions and secure agreements from the lenders that they would not seek deficiency judgments. And they did—successfully. On April 13, 2016, Goddard sold the North B Street property via short sale for $44,000, of which amount Goddard paid $39,742.25 to the lender. As part of the short sale agreement, Goddard and Phelps Dunbar obtained a deficiency release from the lender totaling $105,524.98, representing the difference between the total obligation of $145,267.23 owed and the $39,742.25 paid to the lender. Similarly, on June 24, Goddard sold the North Tampania property via short sale for $45,000, of which Goddard paid $40,545.67 to the lender. As part of the short sale agreement, Goddard and Phelps Dunbar obtained a deficiency release from the lender totaling $99,240.19, representing the difference between the total obligation of $139,785.86 owed and the $40,545.67 paid to the lender. In sum, between the two properties, Goddard and the Phelps Dunbar attorneys obtained deficiency releases totaling $204,765.17.
Cariveau received the invoices from Phelps Dunbar relating to the work on behalf of the Florida estate, reviewed them, and determined that they were "extremely reasonable for the amount of reward the estate got from the work." And so he paid Phelps Dunbar a total of $18,343.95 from the estate, approximately $13,318.73 of which was paid during the period covered by the accounting that is the subject of this appeal.
On July 18, 2016, Cariveau filed his "Amended First Account Current and Report of Administration and Petition for its Settlement and Approval, and for Authority to Continue Administration" (first amended accounting).
On July 28 Hobbs filed his response, objecting to Cariveau's first amended accounting, with a request for an evidentiary hearing. Hobbs's objections asserted five claimed improprieties by Cariveau: failure to file income tax returns and to pay taxes; failure to timely pay property taxes; improper payment of attorney fees and personal representative fees; failure to deposit estate moneys in interest-bearing accounts; and wrongful payment of $181 to probate referee.
We do not understand how Hobbs could even assert a failure to file estate or individual tax returns, as all necessary returns had been filed, as expressly set out in the first amended accounting.
Following Hobbs's response, on October 11, Cariveau served special interrogatories directed to Hobbs's objections. The interrogatories were 23 in number, well below the 35 interrogatory limit (Code Civ. Proc., § 2030.030). The interrogatories were simple, straightforward, and easy to understand. The interrogatories had a few instructions and seven "definitions," including of document, communications, estate, and decedent.
On November 14, the last day on which his responses were due, Hobbs served nothing responsive, only this identical objection to all 23 interrogatories: "Responding Party objects to the interrogatory on the grounds that it contains instructions not approved under Code of Civil Procedure section Chapter 17 (commencing with Section 2033.710). '(1) [8:967] No preface or instructions: No preface or instruction shall be included in a set of interrogatories unless it has been approved by the Judicial Council for use in an Official Form interrogatory. [See CCP §§ 2030.060(d), 2033.710]' Weil & Brown, California Practice Guide: Civil Procedure Before Trial (The Rutter Group 2016)."
On November 16, Cariveau's attorney sent a meet and confer letter to Hobbs's attorney, quoting and citing this court's leading case of Clement v. Alegre (2009) 177 Cal.App.4th 1277, 1288-1289, where in an analogous setting we noted among other things that the focus of Code of Civil Procedure, section 2030.060, subdivision (d) "is upon the prohibition of prefaces, instructions, definitions, and subparts . . . to 'prevent wrangling' about whether the propounding party is attempting to evade the 35 question limit." Nevertheless, the letter went on to invite Hobbs's attorney to discuss any concerns he might have. To no avail, as Hobbs's response to the meet and confer letter was abject refusal.
Cariveau filed a motion to compel, which included a request for a discovery sanction of $2,715. Hobbs filed opposition, Cariveau a reply, and by order of December 21 the trial court granted the motion and awarded the sanctions sought.
The hearing on the first amended accounting and Hobbs's objections matter was on February 1, 2017, prior to which both parties filed trial briefs. The hearing lasted two days, presided over by a most experienced trial judge, the Honorable Arthur Mann, who heard testimony from three witnesses, including Cariveau and Sandelman. Following the conclusion of the evidence counsel argued the matter, in the course of which Hobbs requested a statement of decision.
Judge Mann thereafter issued a tentative decision that stated it would become the statement of decision unless a party specified additional controverted issues or made proposals not covered in the tentative decision. Hobbs timely filed an objection, and Cariveau a response. And on April 7 Judge Mann adopted his tentative decision with one modification.
The decision was comprehensive indeed, and began with a description of the issues raised by Hobbs: "(1) Improper expenditures arising out of an Ancillary Probate in the State of Florida involving a payment of $181.00 to the Lake County Probate Referee, a payment of $1,000.00 to the Curator of the Florida Ancillary probate, and the retention and payment of attorney's fees in the sum of $13,318.73, to local counsel in Florida, (2) failure of the Administrator to timely pay property taxes on three parcels of land in the Lake County probate, (3) failure of the Administrator to keep the estate funds in interest bearing accounts, (4) and Administrator's failure to file income taxes for the estate. In his opening statement, Counsel for the Objectors indicated that he was dropping the objection as to the income taxes, but he did present evidence and argued this point at the conclusion of the [h]earing, so the Court will address it."
Following that Judge Mann went on to deny each of Hobbs's objections, giving reasons why. It was as follows:
"ISSUES RELATED TO THE ANCILLARY PROBATE. [¶] During the administration of the estate, it was discovered that the decedent owned two parcels of real property in the State of Florida. Objectors filed a motion to compel the Administrator to open an ancillary probate in Florida. That motion was denied by another Judge of this Court; however, the Administrator subsequently retained counsel in Florida to open such an ancillary probate. Prior to [Cariveau] being appointed as the Administrator, the prior Special Administrator, and the Lake County Public Administrator requested the Lake County Probate Referee to value the Florida properties, and subsequently paid his fee of $181.00. The Florida properties were both in foreclosure, and [Cariveau] was informed by his Florida counsel that Florida was a 'recourse' state, and that the estate could suffer a deficiency judgment on each parcel. The two parcels were the subject of a short sale in the ancillary probate, which was approved by the Florida court. Pursuant to the approval, the Florida Curator (Florida's equivalent to an Administrator) was paid her fee. [¶] The objection to the $181.00 fee paid to the Lake County Probate Referee is overruled. This was not an action or payment made by [Cariveau], but by his predecessor. [¶] The objection to the payment of $1,000.00 to the Florida Curator is overruled. [Cariveau] was not required to obtain an order from the Lake County Probate Court to pay this fee. The Florida Court had jurisdiction over the Florida real property, and the order for payment of the Curator's fee was all the authorization [Cariveau] needed. [¶] The objection to the payment for local counsel in Florida is overruled. Although the best practice might have been to petition the Lake County Probate Court for authorization to pay the Florida attorneys, [Cariveau] was under a duty to protect the estate and its heirs from the possibility of a deficiency judgment. The evidence showed that a potential liability of $105,524.98 from one short sale, and $99,240.19 from the other could have occurred. It was necessary and proper for [Cariveau] to retain local counsel to protect the estate, and . . . he acted reasonably under the circumstances. The Florida counsel negotiated each of the short sales to insure that each lien holder waived any recourse against the estate.
"FAILURE TO FILE AND PAY INCOME TAXES. [¶] This objection is overruled; the evidence [citations] showed that the taxes were filed. There was no penalty or interest due; in fact the estate received a refund.
"FAILURE TO KEEP THE ESTATE FUNDS IN INTEREST BEARING ACCOUNTS. [¶] This objection is overruled. During the administration of the estate, at times funds were in an interest bearing account and at times they were not. [Cariveau] testified that it was his opinion that the estate needed liquidity due to repairs needed on the Lake County real properties, and the Florida Ancillary Probate. The foregoing coupled with the miniscule interest rates available during the period covered by this accounting substantiates [Cariveau's] decision. His actions were reasonable and in good faith under the circumstances.
"FAILURE TO PAY PROPERTY TAXES. [¶] At the time [Cariveau] took over the administration of the estate, the property taxes were in default. Subsequently, and during the pendency of the sale of the local properties, another installment became due. Both properties were being sold as part of the administration of the estate. [Cariveau] testified that it was appropriate to pay all the taxes and penalties out of the escrow. [Cariveau] cannot be responsible for any unpaid taxes prior to his appointment, and the amount incurred during the sale was miniscule. Again the Court finds that [Cariveau]'s actions were reasonable and done in good faith. This objection is overruled."
On May 10, Judge Mann filed an order approving the first amended accounting, from which Hobbs filed a timely notice of appeal, also appealing the December 21, 2016 order.
DISCUSSION
I. Introduction and Summary of Hobbs's Contentions
Hobbs has filed a 56-page, 13,778 word opening brief. The brief cites 40 cases, 31 California statutes, two Florida statutes, and numerous texts and commentaries, authorities that result in a six-page table of authorities, all this in support of arguments that appeal from four portions of Judge Mann's order, including two that rejected Hobbs's positions seeking surcharges of $4.62 and $83.
The brief raises numerous issues in five separate "Arguments," one of which, argument A, has six subparts, one of which subparts, A2, itself has five subparts. It is hardly a model of appellate advocacy.
Overlooking this deficiency, we observe that the first four of Hobbs's arguments attack aspects of Judge Mann's order, set forth as arguments A through D. They are as follows: "Cariveau's Payment Of Attorney's Fees And Personal Representative Fees Without A Court Order Was Improper," "Fees Paid To The Probate Referee To Appraise Florida Real Property Were Improper," "Cariveau Should Be Surcharged For His Failure To Deposit Estate Monies In Interest Bearing Accounts," "Cariveau And The Public Administrator Should Be Surcharged For Property Tax Penalties." The fifth argument attacks the order awarding the discovery sanctions, arguing that the sanctions against him were improper because "there was substantial justification for objecting" to the interrogatory.
Hobbs's brief is also subject to criticism to the extent the brief asserts that the standard of review is de novo. As will be seen, the standard of review is abuse of discretion. (Estate of Gilkison (1998) 65 Cal.App.4th 1443, 1448.)
As Hobbs would have it: "Because there is no dispute that payments were made without a prior court order, review involves the selection of the applicable rule of law (Haworth v. Superior Court (2010) 50 Cal.4th 372, 384) or a determination that can be reached only by the application of legal principles (Crocker National Bank v. City and County of San Francisco (1989) 49 Cal.3d. 881, 888, Board of Education v. Jack M. (1977) 19 Cal.3d 691, 698 fn. 3." The three cases are inapplicable here. Haworth v. Superior Court involved a trial court's determination of whether an arbitrator exceeded its authority; Crocker National Bank v. City and County of San Francisco a trial court's classification of a particular item of personal property as a fixture for tax purposes; and Board of Education v. Jack M. a fitness hearing for a teacher—and applied the substantial evidence standard of review!
On top of all that—Hobbs's opening brief is subject to criticism on another, and most fundamental, basis, in light of his several arguments attacking Judge Mann's rulings that are based on his view of the evidence. That is, in attacking Judge Mann's rulings, Hobbs sets forth the "evidence" as he would have it, that is, the evidence favorable to him. This is most improper and, as we said in In re Marriage of Davenport (2011) 194 Cal.App.4th 1507, 1531, such conduct is "not to be condoned," going on to explain why:
"California Rules of Court, rule 8.204(a)(2)(C) provides that an appellant's opening brief shall '[p]rovide a summary of the significant facts . . . .' And the leading California appellate practice guide instructs about this: 'Before addressing the legal issues, your brief should accurately and fairly state the critical facts (including the evidence), free of bias; and likewise as to the applicable law. [¶] Misstatements, misrepresentations and/or material omissions of the relevant facts or law can instantly "undo" an otherwise effective brief, waiving issues and arguments; it will certainly cast doubt on your credibility, may draw sanctions [citation], and may well cause you to lose the case!' (Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2010) ¶ 9:27, p. 9-8 (rev. # 1, 2010), italics omitted.) [Hobbs's] brief does ignore such instruction.
"[Hobbs's] brief also ignores the precept that all evidence must be viewed most favorably to [Cariveau] and in support of the [decision]. (Nestle v. City of Santa Monica (1972) 6 Cal.3d 920, 925-926; Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881.) This precept is equally applicable here, where [Judge Mann] issued a statement of decision: 'Where statement of decision sets forth the factual and legal basis for the decision, any conflict in the evidence or reasonable inferences to be drawn from the facts will be resolved in support of the determination of the trial court decision.' (In re Marriage of Hoffmeister (1987) 191 Cal.App.3d 351, 358.)"
Thus, an appellant challenging the sufficiency of the evidence to support a finding is required to state in the opening brief all evidence pertinent to that point. If not done, the reviewing court may treat the issue as waived. (In re Marriage of Fink (1979) 25 Cal.3d 877, 887; Foreman & Clark Corp. v. Fallon, supra, 3 Cal.3d at p. 881; see Schmidlin v. City of Palo Alto (2007) 157 Cal.App.4th 728, 738 ["Where a party presents only facts and inferences favorable to his or her petition, 'the contention that the findings are not supported by substantial evidence may be deemed waived.' "].) In sum, "an attack on the evidence without a fair statement of the evidence is entitled to no consideration when it is apparent that a substantial amount of evidence was received on behalf of the respondent." (Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1246.)
In light of these rules, and in further light of the de minimis amounts involved in some of Hobbs's arguments—$4.62 in one case, $83 in another—we are sorely tempted to treat most of Hobbs's arguments as waived.
II. Judge Mann Was Right to Approve the Accounting
A. The Payments to Phelps Dunbar
Hobbs's first argument attacks the payments to Phelps Dunbar, primarily arguing that the payments were made without a court order. Though less clear, he apparently also argues that there was no substantial evidence to support Judge Mann's finding that the payments were for reasonable and necessary expenses. The argument fails.
It is perhaps enough to note that in the petition filed below seeking an order requiring Cariveau to appoint an ancillary administrator in Florida, Hobbs stated that " 'the court is required to exercise its discretion in determining whether or not to ratify the expenditure' " to appoint Florida probate professionals. To now argue the contrary is less than candid. So is Hobbs's utter failure to mention the evidence discussed in detail above demonstrating that Hobbs repeatedly and aggressively threatened to sue—and in fact did sue—Cariveau to require him to retain Florida professionals and open an ancillary probate proceeding there. Such inconsistency is not to be tolerated.
In John H. Spohn Co. v. Bender (1937) 18 Cal.App.2d 447 plaintiff filed a complaint seeking the appointment of a receiver for Spohn Company. Defendant was appointed receiver and assumed control of the business pursuant to court order, and ultimately filed an accounting for fees for serving as receiver. (Id. at pp. 449-450.) Plaintiff filed petitions to remove the receiver, vacate the order upon which he was appointed, and recover all sums paid to the receiver, alleging that the trial court lacked jurisdiction to appoint the receiver, and that his appointment and all related orders were void. (Id. at p. 450.) The trial court ruled for the defendant, and the Court of Appeal affirmed, holding among other things that plaintiff could not recover any sums paid to the receiver because plaintiff itself procured the receiver's appointment, and was "therefore estopped to recover any sums paid to him." (Id. at p. 452.) Thus, under the doctrine of "acquiescence" or "quasi estoppel," plaintiff was estopped from demanding one action from the courts (i.e., the appointment of a receiver) only to subsequently demand the opposite (i.e., the removal of the receiver and rescission of all payments thereto). (Id. at p. 451.) And allowing a party to take such divergent positions would "be to allow one to trifle with the courts." (Ibid.; see also Hensgen v. Silberman (1948) 87 Cal.App.2d 668, 673 [a party " 'shall not be permitted to act in a manner inconsistent with his former position or conduct to the injury of another' "].)
But even if Hobbs were not estopped to make the argument, he would still not prevail, for several reasons, beginning with the Probate Code.
Probate Code section 9610 provides that, unless otherwise specified, "the powers and duties set forth in this part may be exercised by the personal representative without court authorization, instruction, approval, or confirmation." Such powers include, among others, the power to manage and control the estate (Prob. Code, § 9600), the power to "[c]ommence and maintain actions and proceedings for the benefit of the estate" (Prob. Code, § 9820), and the power to settle claims (Prob. Code, § 9830). Cariveau's payments to the Florida professionals represented a valid exercise of Cariveau's powers for which prior court approval was not required.
Probate Code section 9610 is relied on by Cariveau. The section is not mentioned, much less discussed, in Hobbs's reply brief.
Along these same lines is the rule that where estate funds have been expended without court authority the "trial court must determine whether the expenditures were necessary and reasonable." These matters " 'must of necessity be left to the discretion of the judge in settling the account, and unless it appears that such discretion has been abused, it is not subject to review.' " (Estate of Massaglia (1974) 38 Cal.App.3d 767, 774 (Massaglia) (quoting Estate of Moore (1891) 88 Cal. 1, 4).) Or as the Supreme Court put it slightly differently, court permission is not "absolutely essential to the allowance of an expenditure made by the administrator." (Estate of Burke (1926) 198 Cal. 163, 169.)
The applicable law is collected in Estate of Gilkison, supra, 65 Cal.App.4th at p. 1448: "The law with respect to the allowance of fees claimed for extraordinary services rendered in probate proceedings is well settled. The grant or denial of such fees is addressed to the sound discretion of the probate court. (Prob. Code, § 10811, subd. (a); Estate of Trynin (1989) 49 Cal.3d 868, 874; Estate of Hilton [(1996)] 44 Cal.App.4th 890, 914; Estate of Downing (1982) 134 Cal.App.3d 256, 266-267; see also 12 Witkin, Summary of Cal Law (9th ed. 1990) Wills and Probate, § 510, p. 531 ['The wide discretion of the probate court in the allowance and the amount of such fees will mostly be upheld.'].) 'If, under all the relevant circumstances, the amount awarded as ordinary compensation is fair and reasonable for all the attorney services, the court may disallow a request for extraordinary compensation even though some extraordinary services have been performed.' (Estate of Trynin, supra, 49 Cal.3d at p. 874.)" Accord Estate of Moore (2015) 240 Cal.App.4th 1101, 1105 [imposing surcharge].)
Hobbs has shown no abuse—indeed, he does not even attempt to do so.
Hobbs's fundamental argument is that Judge Mann had no discretion to approve payments to Florida professionals because Cariveau did not comply with California Rules of Court, rule 7.702 (rule 7.702) and the Superior Court of Lake County Local Rules, rule 11.4 (local rule 11.4) before paying them. Elaborating, Hobbs puts it this way: "Lake County Superior Court Local Rule 11.4 (hereafter referred to as 'Local Rule 11.4') provides for a surcharge when fees or commissions are paid without Court approval. Local Rule 11.4 is mandatory for decedent's estates, other than one exception (written consent by any residuary beneficiaries to the payments). The Tentative Decision/Statement of Decision did not discuss Local Rule 11.4. Neither Cariveau's Trial Brief or his counsel's closing argument discussed Local Rule 11.4." (Fn. omitted.) We have several observations.
First, Hobbs's criticism of the failure to cite or discuss local rule 11.4 is disingenuous at best, as his objections to the tentative decision did not mention local rule 11.4. And the now relied-on rule 7.702 was barely mentioned in Hobbs's trial brief, and is not even quoted in his brief here. And while rule 7.702 was in fact mentioned in Hobbs's objections to the tentative decision, it was only as follows: "The controverted issue before the Court was not whether counsel should be retained, but whether the fees paid were reasonable after consideration of the factors articulated in California Rules of Court Rule 7.702 ('The statement of facts must: ¶ (1) Show the nature and difficulty of the tasks performed; . . . ¶ (6) Describe the services rendered in sufficient detail to demonstrate the productivity of the time spent . . ')"
Rule 7.702 provides in its entirety as follows: "A petition for extraordinary compensation must include, or be accompanied by, a statement of the facts upon which the petition is based. The statement of facts must: [¶] (1) Show the nature and difficulty of the tasks performed; [¶] (2) Show the results achieved; [¶] (3) Show the benefit of the services to the estate; [¶] (4) Specify the amount requested for each category of service performed; [¶] (5) State the hourly rate of each person who performed services and the hours spent by each of them; [¶] (6) Describe the services rendered in sufficient detail to demonstrate the productivity of the time spent; and [¶] (7) State the estimated amount of statutory compensation to be paid by the estate, if the petition is not part of a final account or report."
As we understand Chapter 15 of the California Rules of Court, it seems to address payments to personal representatives—not by them: Chapter 15 is entitled "Compensation of Personal Representatives and Attorneys." Moreover, the rules govern payment of professionals in California probate matters, not payment to Florida professionals in an ancillary probate in Florida. That is, California Rules of Court, rule 7.702 limits application of California's Probate Rules to those proceedings where the Probate Code applies (i.e., California probate proceedings). Hobbs cites no authority, and we have found none, for the proposition that California's rules apply to probate proceedings in other jurisdictions.
Massaglia is instructive. There, the California decedent owned a two-thirds interest in a New Mexico hotel as well as other real and personal property in that state. (Massaglia, supra, 38 Cal.App.3d at pp. 772-773.) The special administrator obtained court approval to pay a $2,500 advance to the ancillary administrator in New Mexico, and then advanced an additional $33,548.09 to the ancillary estate without prior court approval. (Ibid.) The special administrator sought approval of an accounting. A beneficiary objected on the grounds that the special administrator had no duty with respect to the New Mexico property except to appoint an ancillary administrator, and sought to surcharge the special administrator for the $33,548.09 advanced to the ancillary estate without prior court approval. (Id. at p. 774.) The trial court sustained the objection.
The special administrator appealed, arguing that the surcharge was improper because the special administrator had "a responsibility to preserve the estate's equity in the New Mexico assets," and the payments advanced without prior court approval were done for that purpose. (Massaglia, supra, 38 Cal.App.3d at p. 773.) The Court of Appeal agreed, holding that the special administrator had "a duty . . . with respect to real property located in a foreign jurisdiction" that went beyond simply appointing an ancillary administrator. And, the court went on, the special administrator must also "look to the next step involved in an ancillary probate administration" in order to preserve value for the domiciliary estate. (Id. at p. 774.) The Court of Appeal thus remanded with directions to the trial court to (1) consider the special administrator's duty with respect to foreign real property; and (2) use its discretion to determine whether to ratify expenditures made without prior express approval in light of the aforementioned duty. (Id. at p. 775.) Which, of course, is precisely what Judge Mann did here. And properly so.
As in Massaglia, Cariveau had a duty to "look to the next step" regarding the ancillary proceedings in Florida, and understood that one possible "next step" if he ignored the Florida foreclosures was that the Florida creditors could have obtained deficiency judgments that would have affected the California estate and its beneficiaries. Cariveau rightly believed he had a duty to prevent that from occurring; as a result he paid the Florida professionals to achieve a final resolution of those matters. Thus, Judge Mann properly exercised his discretion when he found that such payments were "necessary and proper," and that Cariveau "acted reasonably under the circumstances" when he authorized them.
Hobbs argues that Cariveau's payment to the Florida professionals could not have been reasonable or necessary because the Florida lenders did not timely file creditor's claims in the California probate estate, and therefore any potential claim would have been time barred. Cariveau disagrees that any potential claim against the California estate would necessarily have been time barred. In any event, Cariveau acted entirely properly by paying Florida professionals to resolve potential liabilities of the California estate. The Probate Code gives Cariveau the express power to settle any "claim, action, or proceeding" against the estate. (Prob. Code § 9830.) That power to settle extends even to "doubtful claims against the estate." (Estate of Lucas (1943) 23 Cal.2d 454, 464.)
Moreover, the mere fact that the lenders on the Florida properties did not file a creditor's claim in the California estate was not a sufficient justification for Cariveau to ignore the Florida properties. To begin with, it may be that the reason no creditor's claims were filed was because of the negotiations that were ongoing in Florida. But even if the lenders might not have prevailed in deficiency litigation against the California estate, the estate could very well have spent tens of thousands of dollars or more litigating complicated legal issues. Judge Mann ruled Cariveau's decision was entirely proper, a ruling that was a sound exercise of his discretion.
On top of all the above, Hobbs ignores a fundamental principle of surcharge law, the "good faith" protection afforded to a representative even if he or she had done something in technical violation of the rule—a violation Hobbs has not demonstrated here. As set forth in the Rutter Group book that Hobbs claims to rely on (citing it 12 times in his opening brief): "General 'good faith' protection: Liability for a loss or other injury to the estate occasioned by the representative's failure to exercise 'ordinary care and diligence' ([Prob. Code] § 9600) may be excused if the court finds that the representative otherwise acted 'reasonably and in good faith under the circumstances' and that relieving the representative from liability in whole or in part would be 'equitable.' [[Prob. Code] § 9601(b); Estate of Kampen (2011) 201 [Cal.App.]4th 971, 988]." (Ross & Cohen, Cal. Practice Guide: Probate (The Rutter Group 2017) ¶ 16:178, p. 16-51.) That aptly describes the setting here.
B. The $181 Payment to the Probate Referee
Hobbs argues that "Tom Cariveau, Administrator" inappropriately disbursed $181 by paying the probate referee to appraise the Florida property, and sought a surcharge against him for "inappropriate disbursements." Judge Mann overruled Hobbs's objection, finding that the $181 payment was "not an action or payment made by Mr. Cariveau, but by his predecessor." Which it was.
Notwithstanding that, Hobbs claims that the propriety of the public administrator's $181 payment is properly before this court, apparently on the basis that the public administrator was Cariveau's agent. Such argument was not made below. It has no place here. (Greenwich S.F., LLC v. Wong (2010) 190 Cal.App.4th 739, 767; Giraldo v. Department of Corrections & Rehabilitation (2008) 168 Cal.App.4th 231, 251.)
In any event, the public administrator's $181 payment to the probate referee to appraise the Florida property was entirely appropriate. As Betsy Salmans from the public administrator's office testified, the public administrator paid the probate referee to appraise the Florida properties in order to determine what amounts, if any, were owed on those properties. This was a reasonable and necessary decision given the public administrator's duty with respect to foreign property. (See Massaglia, supra, 38 Cal.App.3d at p. 774.)
C. The $83 in Lost Interest
Hobbs's third argument is that Cariveau should be surcharged $83 for lost interest for his failure, for a period of three months, to invest estate funds in an interest-bearing account. Judge Mann overruled the objection below, finding that Cariveau's investment decisions were "reasonable and in good faith under the circumstances," especially due to the liquidity required to pay for the repairs needed for the Lake County properties and expenses of the Florida ancillary proceeding. Hobbs has shown no abuse of discretion.
Probate Code section 9652 requires that an administrator keep all cash in "interest-bearing accounts," except that "reasonably necessary for orderly administration of the estate." Neither that section nor any reported California decision has specified the amounts "reasonably necessary" to administer an estate. That determination must necessarily be made on a case-by-case basis, as every estate is different, and therefore any decision regarding what amounts were "reasonably necessary" for ordinary estate administration must fall within the exercise of the trial court's discretion. (See Estate of Toler (1957) 49 Cal.2d 460, 468.)
As mentioned above, Briggs's estate initially had no liquid assets, requiring the public administrator to obtain loans from three of Briggs's children so that the estate could pay expenses. When Cariveau received the funds from the public administrator, he understood they were the remaining proceeds of that loan, and therefore decided to keep the cash in a checking account to pay expenses as they arose, including for ongoing expenses and possible repairs of the real properties owned by decedent. Once he was satisfied, the estate's checking account has been earning interest "since the time there was a sufficient amount of cash to generate meaningful interest."
The estate "regularly incurred administration expenses exceeding $5,000 per month." The average monthly expenses from the estate exceeded $7,000.
Judge Mann overruled Hobbs's objection on this issue, expressly holding that: "the estate needed liquidity due to repairs needed on the Lake County real properties, and the Florida Ancillary Probate. The foregoing coupled with the miniscule interest rates available during the period covered by this accounting substantiates Mr. Cariveau's decision. His actions were reasonable and in good faith under the circumstances." Indeed.
D. The Property Taxes
Hobbs's fourth argument is that Cariveau should be surcharged for failure to timely pay real estate taxes, a total of $202.50 in penalties to be exact. However, as Hobbs concedes in his opening brief, only $4.62 in property tax penalties accrued after Cariveau's appointment. And as to the $4.62 penalty during Cariveau's tenure, Judge Mann found that Cariveau's actions regarding property taxes were reasonable and undertaken in good faith. Indeed again.
The bulk of the penalties, $197.96 to be precise, were based on the public administrator's failure to timely pay the property taxes, as to which Judge Mann properly held Cariveau could not be held responsible. --------
Cariveau testified that the property for which those penalties accrued was already under contract to be sold and that the taxes were scheduled to be paid from the proceeds of the sale. Cariveau testified that at the time those taxes became due (in December of 2015) he was still trying to conserve cash. The majority of the funds in the estate's account at that time were proceeds of the loan from the beneficiaries. At that time, Cariveau was facing potentially significant legal issues in Florida that could have required significant expenses. He therefore believed it was in the best interests of the estate to pay the taxes and minimal penalty associated therewith from escrow in order to preserve estate cash.
Hobbs cites two cases for the proposition that an executor has a duty to pay taxes legally imposed when there are sufficient funds in the estate: Estate of Harvey (1964) 224 Cal.App.2d 555 and Estate of Lock (1981) 122 Cal.App.3d 892. Neither is applicable. As Estate of Harvey held, negligence is a prerequisite to surcharging a personal representative for failure to pay taxes. (Estate of Harvey, at pp. 557-558.) And in both cases, the probate court determined that the personal representative had been negligent regarding the payment of taxes, and that negligence proximately caused damage to each of the respective estates. (Ibid.; Estate of Lock, at p. 903.) There was no negligence here, as Judge Mann found Cariveau's conduct "reasonable."
III. The Discovery Sanction Was Proper
As noted, Hobbs was sanctioned $2,715 for his objection to the interrogatories that necessitated Cariveau's successful motion to compel. Hobbs appeals that sanction. We easily reject that appeal.
Where monetary sanctions are sought in connection with discovery motions, the court is required to impose such sanctions against the losing party unless it finds the losing party acted with substantial justification or other circumstances make the imposition of the sanction unjust. (Code Civ. Proc. §§ 2025.480(j), 2023.030(a).)
Thus, unless the court makes express findings to support a denial of sanctions, the court has no discretion to refuse them. (Rodriguez v. Brill (2015) 234 Cal.App.4th 715, 726-727; Parker v. Wolters Kluwer United States, Inc. (2007) 149 Cal.App.4th 285, 294 [plain language of Code of Civil Procedure section 2030.300(d) requires that the trial court impose a monetary sanction, "even for the first offense"].) And we review the order for abuse of discretion. (New Albertsons, Inc. v. Superior Court (2008) 168 Cal.App.4th 1403, 1422; see Doe v. United States Swimming, Inc. (2011) 200 Cal.App.4th 1424, 1435 [imposition of discovery sanctions " 'is "subject to reversal only for manifest abuse exceeding the bounds of reason" ' "].) There was no abuse here.
We could go on at length to demonstrate why, but this opinion is already too long. Suffice to quote from our oft-cited Clement v. Alegre case, where we discussed an analogous issue: "We have no difficulty in affirming the trial court's determination that in this case plaintiffs forced to court a dispute that was not 'genuine.' Indeed, the record here strongly indicates that the purpose of plaintiffs' objections was to delay discovery, to require defendants to incur potentially significant costs in redrafting interrogatories that were clear and that did not exceed numerical limits, and to generally obstruct the self-executing process of discovery. That plaintiffs seized upon an arguable deficiency in the interrogatories based on slim authority does not provide 'substantial justification' for their objections. The trial court could look at the whole picture of the discovery dispute and was well within its discretion in rejecting plaintiffs' claim of substantial justification." (Clement v. Alegre, supra, 177 Cal.App.4th at p. 1292.) Likewise here.
The so-called prohibited "prefaces" or "instructions" to which Hobbs objected did nothing but attempt to assist Hobbs in responding to the interrogatories. Despite that, Hobbs did what he did, a manifestation to us of the utmost gamesmanship—and in utter violation of the spirit of the Civil Discovery Act.
DISPOSTION
The orders of December 21, 2016 and May 10, 2017 are affirmed. Cariveau shall recover his costs on appeal.
/s/_________
Richman, J. We concur: /s/_________
Kline, P.J. /s/_________
Stewart, J.