Opinion
A143714 A145053 A146707
02-22-2017
PATRICIA A. CAMPBELL, as Trustee, etc., Plaintiff, v. RON PATTERSON, as Trustee, etc., Defendant and Respondent; EUGENE SCHNEIDER, Appellant. RUBEN SUNDEEN, as Guardian, etc., Plaintiff and Respondent, v. EUGENE SCHNEIDER, Objector and Appellant. RON PATTERSON, as Trustee, etc., Plaintiff and Respondent, v. EUGENE SCHNEIDER, Objector and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Alameda County Super. Ct. No. RP06252983)
These three appeals arise out of legal proceedings involving a special needs trust that was established to benefit a profoundly disabled minor. The trial court appointed a guardian ad litem to investigate the trust's purchase of real property. That investigation led to a lawsuit against the original trustee, which concluded with a stipulated judgment that set aside the property purchase and appointed a successor trustee. Pursuant to the stipulated judgment, the guardian ad litem dismissed his complaint against the original trustee with prejudice. The appellant in all three of these appeals, Eugene Schneider, was the attorney for the original trustee in proceedings related to the guardian ad litem's investigation and complaint.
On the court's own motion, we consolidate the appeals in A143714, A145053, and A146707 for purposes of decision.
In the first appeal (A143714), Schneider challenges an order awarding attorney fees. He claims the court erred in reducing his requested fees for representing the initial trustee from over $130,000 to slightly under $18,000. The court reasoned that Schneider's efforts primarily benefited the initial trustee personally instead of the special needs trust. Schneider argues that the trial court erred in reducing his fees because the original trustee successfully defended against all the claims the guardian ad litem made against her, and he further claims the dismissal with prejudice of the guardian ad litem's lawsuit has a res judicata effect absolving the original trustee of all claims against her.
In the second appeal (A145053), Schneider challenges an order awarding fees and costs to the guardian ad litem, and in the third appeal (A146707), Schneider challenges an order awarding compensation to the successor trustee. Schneider claims he has standing to object to amounts paid by the trust to others because his ability to recover the entire amount of fees claimed in the first appeal might be jeopardized if the orders challenged in the second and third appeal are upheld.
We conclude the trial court did not abuse its discretion in reducing the fees claimed by Schneider. There is substantial evidence in the record to support a finding that Schneider performed extensive legal services that did not benefit the trust or its beneficiary. Further, the dismissal with prejudice of the guardian ad litem's complaint pursuant to a consent judgment does not have the res judicata effect that Schneider claims, nor does it somehow establish that the initial trustee acted properly or that the trust is obligated to pay all of her attorney fees. Accordingly, we affirm the order in the first appeal. In light of the fact that Schneider is not entitled to be paid any additional fees from the trust, and thus has no further pecuniary interest in the trust or amounts it may pay to others, we also affirm the orders in the second and third appeal.
FACTUAL AND PROCEDURAL BACKGROUND
The Larry Seldon III Special Needs Trust (the Seldon trust) was created by court order on June 26, 2006, with Patricia A. Campbell as its initial trustee. The Seldon trust's beneficiary, Larry Seldon III (Larry), was born in 2000 and underwent surgery in 2006 to correct a defect in his heart. As a result of complications associated with the surgery, he was left totally and profoundly disabled. Larry is legally blind and suffers from cerebral palsy caused by severe and irreversible brain damage. The Seldon trust was created to receive and manage proceeds from the ensuing medical malpractice lawsuit. At the outset, the Seldon trust was funded with net proceeds of approximately $161,300 from the litigation, less attorney and other fees, plus a $5,000 monthly annuity compounded at two percent for life.
Campbell filed her first account of the Seldon trust in January 2008 for the period from June 26, 2006, through October 31, 2007. The first account disclosed that the Seldon trust owned no real property at the close of the accounting period. The trial court approved the first account in March 2008.
Campbell filed her second account of the Seldon trust in October 2009 covering the period from November 1, 2007, through June 30, 2009. In the account, Campbell disclosed for the first time that as trustee she had orchestrated the "transfer and assumption" of a loan on residential real property in Chowchilla, California, where Larry resided with his family. A schedule attached to the second account reflected that the Seldon trust held real property located in Chowchilla, California, with an estimated market value of $471,941.16.
In an ex parte order filed in March 2010, the trial court appointed attorney Ruben Sundeen as Larry's guardian ad litem to independently review Campbell's second account. More specifically, the court charged Sundeen with the task of reviewing Campbell's purported purchase of a residence in Chowchilla with funds from the Seldon trust.
Sundeen issued a report in June 2010 addressing the second account and Campbell's purchase of a residence in Chowchilla. Sundeen noted that the Seldon trust is not a large special needs trust and must be administered frugally in order to ensure sufficient resources for Larry's care during his lifetime. Sundeen reported that Larry and his family live in a relatively new, five bedroom, four bath house situated next to a golf course. The home was built in 2005 and purchased in 2006 by Larry's grandfather, Jerry McClendon, for $590,000. McClendon sold the house to the Seldon trust for a little over $606,000 in April 2008. The Seldon trust assumed McClendon's purchase money loan (with $471,948.36 principal) and executed a promissory note in the amount of $134,248.08 in favor of McClendon that was secured by a second deed of trust. The April 2008 purchase was consummated without prior court approval, according to Sundeen.
Sundeen asserted in his June 2010 report that Campbell lacked authority to purchase the Chowchilla property because the terms of the Seldon trust limited the trustee's authority to invest in real property or unregistered investments without prior court approval. (See Prob. Code, §§ 2570, 2571, 2574.) Sundeen also claimed the sale was not an arm's length transaction and that the property's fair market value at the time of the purchase was substantially less than the amount paid by the Seldon trust in April 2008 in light of dramatic declines in property values between 2006 and 2008. Sundeen objected to the Seldon trust paying over $600,000 for a property that was currently worth less than $250,000. He proposed a number of options going forward, including setting aside the transaction, charging Campbell for the loss incurred by the Seldon trust, or setting aside only the promissory note and second deed of trust in favor of Larry's grandfather, McClendon, in light of the fact they had not been disclosed to the court in the second account. Sundeen also suggested that it may be appropriate to remove Campbell as trustee. He pointed out that Campbell had failed to obtain an appraisal for the Chowchilla property and had appeared to bow to the demands of Larry's family instead of solely considering Larry's interests. Among other things, Campbell had agreed to pay Larry's grandmother for visiting and caring for Larry, and had agreed to purchase a TV set for the family with Seldon trust funds even though Larry is legally blind. Sundeen urged the court not to approve Campbell's second account.
Schneider first became involved in this matter as attorney for Campbell after the issuance of Sundeen's June 2010 report. With Schneider as her attorney, Campbell filed a response to the report in which she noted she was a clinical social worker and not a licensed professional fiduciary at the time she was appointed as trustee. Campbell claimed to have relied upon her former attorney in order to assure that her actions conformed with the Seldon trust's requirements, and she claimed that at no time was she informed that court approval was required for purchase of the Chowchilla property. She also pointed out that her first account included mortgage payments being made by the Seldon trust on behalf of McClendon before the sale transaction was consummated.
In July 2010, the trial court authorized Sundeen, in his capacity as Larry's guardian ad litem, to file suit against Campbell. Sundeen filed a six count complaint on Larry's behalf against Campbell, McClendon, and Bank of America Corporation (Bank of America) in January 2011. Sundeen alleged that Campbell purchased the Chowchilla property from McClendon without court approval and that both Campbell and McClendon knew the fair market value of the property was far less than the amount paid by the Seldon trust to acquire it. Bank of America was alleged to hold the promissory note secured by a first deed of trust. Sundeen alleged that Campbell breached her fiduciary duties and sought a declaration that the purported April 2008 purchase of the Chowchilla property by the Seldon trust was void. The complaint sought to cancel all instruments relating to the April 2008 sale transaction, impose a surcharge on Campbell for losses incurred by the Seldon trust, remove Campbell as trustee, and appoint a successor trustee of the Seldon trust.
As reflected in the lower court's register of actions, extensive litigation followed the filing of Sundeen's lawsuit. Schneider represented Campbell in those proceedings. In addition to litigation on the complaint filed by Sundeen, Campbell filed a third party cross-complaint for malpractice and indemnification against her former attorneys as well as against McClendon's mortgage lender, Bank of America. The court ultimately sustained Bank of America's demurrer without leave to amend as to Campbell's cross-complaint. Campbell eventually settled her malpractice claims against her former attorneys. Although the settlement is confidential, there is no indication the Seldon trust benefited in any manner from the settlement.
In April 2012, Campbell and Sundeen, in his capacity as Larry's guardian ad litem, reached a settlement. The terms of the settlement provided that a stipulated judgment would be entered canceling and declaring as void the Seldon trust's purchase of the Chowchilla property. Sundeen was required to dismiss the complaint against Campbell. Campbell agreed to resign as trustee and be replaced by Ron Patterson, who would serve as successor trustee. The parties agreed that the successor trustee would not seek to recover reimbursement or damages from Campbell related to the purchase of the Chowchilla property. However, the successor trustee was vested with sole discretion whether to pursue McClendon to seek to recover mortgage payments, taxes, or other expenses associated with the Chowchilla property. The parties agreed that the court could approve Campbell's second account in all respects except as to her former attorney's request for fees. Campbell was directed to file a third and final account seeking payment of trustee and attorney fees, and Sundeen was authorized to file his own petition for compensation as guardian ad litem. Campbell and Sundeen agreed that neither would file objections to the other's fee requests. The settlement contained a standard acknowledgment that the agreement could not be construed as an admission of any allegations or liability.
The trial court approved the settlement agreement, which was incorporated into a stipulated judgment entered on February 26, 2013. Pursuant to the terms of the stipulated judgment and the settlement agreement, Sundeen agreed to dismiss the complaint against Campbell with prejudice. The court accepted Campbell's resignation as trustee and appointed Ron Patterson as temporary successor trustee.
In July 2013, Campbell filed her third and final account for the Seldon trust covering the period from July 1, 2009, through April 30, 2013. Campbell requested payment of her fiduciary fees and costs in the amount of $18,035.85. She also sought an order directing the Seldon trust to pay Schneider's attorney fees and costs of $130,118.39 incurred on her behalf. The attorney billing records that were submitted with the motion appear to encompass all aspects of Schneider's representation of Campbell, including prosecution of the cross-complaints against her former attorneys and Bank of America.
In August 2013, Sundeen filed a report responding to Campbell's third account, which provided the court with an overview of unresolved issues raised by the second account, the settlement agreement, and Campbell's third account. Sundeen noted that the terms of the settlement agreement prevented him from challenging the fee requests submitted by Campbell but that Patterson, the successor trustee, was not similarly bound. In late August 2013, Patterson filed an objection to Campbell's request for fiduciary and legal fees in the third account. Primarily, he argued that Campbell's attorney fees incurred in defending against the guardian ad litem's allegations should be her responsibility alone and not charged to the trust.
The court disagreed with this conclusion in a hearing on the third account, stating that the successor trustee, as successor in interest to the initial trustee, was bound by the agreement not to object to any party's fee request. The court nevertheless took the position it had discretion as to which fees to award and was not obligated to grant the fee requests as submitted. Schneider indicated that he did not "have any problem" with the court's position that it had discretion as to fees.
At the first hearing on Campbell's request for fees in September 2013, the court specifically requested Campbell to provide it with a legal brief supporting her request. Campbell filed a brief in November 2013 but has chosen not to include the brief in the record on appeal. In a subsequent hearing conducted in June 2014, the court asked Campbell to clarify her fee request by separately stating which fees were incurred for ordinary trust administration services, which fees were related to the guardian ad litem lawsuit, and which fees were related to her own action against her former attorneys. On behalf of Campbell, Schneider responded that it would take him three months to prepare the breakdown the court requested.
The register of actions reflects that Schneider filed a "miscellaneous amended fee request" in August 2014 although, again, Schneider chose not to include that document in the record on appeal. Accordingly, there is nothing before this court indicating that Schneider ever provided the court with the clarification and breakdown of the fee request that the court sought. Instead, Schneider filed on Campbell's behalf a response claiming that none of the issues raised in the settlement could be considered by the court in ruling on the fee request. The thrust of Schneider's submission was that the "res judicata effect of the settlement" precluded the court from denying fees associated with litigation arising out of the guardian ad litem's complaint. Schneider claimed the court was being asked to improperly reconsider issues raised and resolved by settlement in the action filed by the guardian ad litem in 2011. Nevertheless, Schneider's response purported to refute the various charges made by the guardian ad litem in the earlier litigation.
At oral argument on appeal, Schneider claimed he had filed a document in the lower court segregating out his fees as requested by the court, although he was unable to provide this court with a citation identifying where that document appears in the record on appeal. Schneider subsequently filed a letter in this court stating that he did not provide the lower court with a segregation of fees incurred before the filing of the third account and purportedly was not asked to do so. Instead, he claims that he was asked to segregate out litigation expenses incurred after Campbell had resigned as trustee and continued her pursuit of actions against her former attorneys as a plaintiff in a newly filed complaint instead of as a cross-complainant in the guardian ad litem litigation. Schneider did not provide record citations to support his characterization of what was requested of him by the lower court. Further, his characterization is inconsistent with our reading of the record. On at least two occasions, at hearings in December 2013 and June 2014, the court requested that Schneider provide a breakdown of his fees so that it could make a determination as to which services benefited the trust. We are not persuaded that the court limited its request for a segregation of fees as Schneider has suggested. Instead, it appears that Sundeen and the court requested Schneider to break out all fees associated with pursuing claims against Campbell's former attorneys, whether as a cross-complainant or as a plaintiff in litigation filed after Campbell resigned as trustee. While Schneider took the position below that actions taken by Campbell while she was trustee (including the filing of a cross-complaint for indemnification) benefited the trust, neither the court nor Sundeen endorsed that view, and the court continued to request that Schneider provide a breakdown of his fees and explain how the trust was benefited.
At the final hearing on Campbell's third account in September 2014, Schneider argued that actions taken against Campbell's former attorneys were for the benefit of the trust. He contended that an action against the trustee was, in essence, an attack on the trust.
In September 2014, Sundeen filed a petition for attorney fees and reimbursement of costs incurred as guardian ad litem. He sought fees totaling $56,290 as well as reimbursement for costs of $2,076.94. Sundeen charged a reduced rate of $250 per hour for his legal services.
On October 8, 2014, the court issued an order ruling on the fee request by Schneider. The court ordered $17,992 to be paid to Schneider, as attorney for the former trustee, Campbell. The court wrote, "Having reviewed the requested fees in detail, the court concludes that the remainder of Attorney Schneider's efforts were on behalf of client personally, not to benefit the Special Needs Trust." Schneider, acting in propria persona, timely appealed the October 2014 fee order in appeal number A143714. Campbell did not file a notice of appeal and is not a party to these appeals.
On November 26, 2014, Campbell discharged Schneider as her attorney of record.
Despite the fact that Campbell was no longer the trustee and Schneider was no longer her counsel of record as of November 2014, Schneider filed written objections to Sundeen's fee request in February 2015. He described himself as a "creditor or contingent creditor and an interested person." His objections largely consisted of re-arguing the merits of the 2011 guardian ad litem lawsuit and contending that Sundeen acted improperly in pursuing his claims against Campbell. He also asserted that Sundeen was not entitled to compensation at a rate greater than that at which guardians ad litem are normally compensated.
At the March 2015 hearing on Sundeen's fee petition, Schneider claimed to have filed a supplemental objection to the petition, although the court noted it had not seen the objection. The supplemental objection is not a part of the record on appeal. In response to the court's inquiry as to Schneider's standing to object, Schneider stated he was a creditor of the Seldon trust as well as a contingent creditor. Sundeen responded that Schneider is no longer a creditor because his fees were paid in full, and Schneider is a contingent creditor only to the extent he is successful on his appeal of the October 2014 fee order. Schneider replied that he was still owed $350 from the first fee order as a result of interest due. The court proceeded to overrule Schneider's objection and grant Sundeen's fee request in full. The court entered its written order granting Sundeen's fee request on March 2, 2015. Schneider, appearing in propria persona, timely appealed the order in appeal number A145053.
In April 2015, Patterson filed his first account as temporary successor trustee. He sought fees of 8,335.69 for his services as temporary successor trustee, attorney fees for his counsel, and reimbursement of costs for the period from February 26, 2013, through December 31, 2014. The total amount Patterson sought in fees and costs was $20,915.69. Patterson also sought appointment as permanent successor trustee.
Schneider filed written objections to the first account in August 2015. As before, he claimed standing to object as a "creditor and contingent creditor" of the Seldon trust. He argued that the court should not consider the fee petition until his appeal of the October 2014 fee order was complete. He contended that consideration of Patterson's first account while his appeal was pending "would negatively affect any decision of the appellate court returning the case to this court for further determination of my fees." His primary complaint appeared to be that, given the Seldon's trust's limited assets, granting any additional fee requests before his request was fully resolved on appeal might limit the court's ability to fully compensate him. Schneider did not raise any objection to the propriety of the amount of fees sought or the services rendered. Nor did he object to the appointment of Patterson as permanent successor trustee.
Patterson filed a response to Schneider's objection. Among other things, he argued that Schneider lacks standing to object, and that any claim Schneider is owed $350 as interest on the prior fee award does not afford him continuing standing to insert himself into proceedings involving the Seldon trust. Patterson offered to pay Schneider the interest owed at the hearing on the first account. He also disputed that Schneider's appeal of the October 2014 fee order stayed all further proceedings related to the Seldon trust.
Following a hearing, the court granted Patterson's fee request in its entirety. The court entered an order to that effect on August 24, 2015. Schneider, acting in propria persona, timely appealed from the August 2015 order in appeal number A146707.
DISCUSSION
1. Standing to appeal October 2014 attorney fee order
As a preliminary matter, we address Patterson's contention that Schneider lacks standing to prosecute his appeal of the October 2014 attorney fee order. For reasons we explain, Schneider has standing to appeal the order awarding a portion of his requested fees.
"An appeal may be taken only by a party who has standing to appeal. [Citation.] This rule is jurisdictional." (Sabi v. Sterling (2010) 183 Cal.App.4th 916, 947.) The rule is codified in section 902 of the Code of Civil Procedure, which provides in relevant part that "[a]ny party aggrieved may appeal . . . ." Thus, in order to have standing to appeal, an appellant must be both (1) a party and (2) legally aggrieved. (See Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2016) ¶ 2:270.1, p. 2-169.)
As a general matter, only parties of record in the trial court have standing to appeal. (See County of Alameda v. Carleson (1971) 5 Cal.3d 730, 736.) "A party of record is a person named as a party to the proceedings or one who takes appropriate steps to become a party of record in the proceedings." (In re Joseph G. (2000) 83 Cal.App.4th 712, 715.) A party is considered aggrieved if that party's "right or interests are injuriously affected by the judgment." (County of Alameda v. Carleson, supra, 5 Cal.3d at p. 737.) The interest " ' "must be immediate, pecuniary, and substantial and not nominal or a remote consequence of the judgment." ' " (Ibid.)
Patterson contends that Schneider lacks standing to appeal because he was not a party below. While it is true that Schneider was not a party in the trial court, an exception to the " 'party of record' requirement exists in cases where a judgment or order has a res judicata effect on a nonparty." (Marsh v. Mountain Zephyr, Inc. (1996) 43 Cal.App.4th 289, 295.) A person who would be bound by a judgment under res judicata principles may be entitled to appeal even if that person is not a party in the trial court. In order to have standing to appeal, the person who claims to be bound under res judicata principles must be personally aggrieved by the judgment. (Ibid.)
In this case, the challenged fee order has a res judicata effect on Schneider. In any further proceedings Schneider may pursue to recover unpaid fees from Campbell, he is not free to relitigate the question of whether the Seldon trust is obligated to pay more or less of the attorney fees incurred by Campbell. Consequently, the exception to the "party of record" requirement applies under these circumstances, provided that Schneider can establish he is personally aggrieved by the judgment.
Patterson contends that Schneider is not legally aggrieved because the court's order merely decided which portion of Schneider's fees are payable by the Seldon trust. According to Patterson, Schneider is free to recover the unpaid portion of his attorney fees from Campbell. But merely because Schneider may have a right to pursue recovery of his unpaid fees from Campbell does not mean he is not personally aggrieved by the court's order limiting the fees payable by the Seldon trust. Insofar as the order requires him to pursue a further action to vindicate his rights, with all of the uncertainties that action may entail, the order injuriously affects his rights and interests. (See County of Alameda v. Carleson, supra, 5 Cal.3d at p. 737.) Schneider is therefore legally aggrieved by the order for purposes of assessing standing to appeal.
Accordingly, we conclude that Schneider has standing to appeal the October 2014 fee award under the circumstances presented here.
2. Res judicata effect given to stipulated judgment and prior orders
Schneider contends, in essence, that the trial court was required to award Campbell her attorney fees for work performed by Schneider because Campbell successfully defended against the claims asserted by the guardian ad litem. His argument rests on the proposition that it is an abuse of discretion for a court to deny attorney fees for a successful defense of claims brought against the trustee. (See Estate of Beach (1975) 15 Cal.3d 623, 645.) Consequently, according to Schneider, the court had no discretion to deny his fee request on the ground the work he performed benefited Campbell personally.
As support for the contention that Campbell successfully defended against the claims asserted by the guardian ad litem, Schneider turns to principles of res judicata. In effect, he claims that the dismissal with prejudice of the guardian ad litem's complaint as a result of the settlement establishes that Campbell was successful in her defense of the complaint. He relies on the principle that "[a] dismissal with prejudice is equivalent, for purposes of res judicata, to a judgment on the merits in favor of the defendant who is dismissed." (Torrey Pines Bank v. Superior Court (1989) 216 Cal.App.3d 813, 820-821.) Schneider claims the dismissal with prejudice absolved Campbell of all the claims against her. He also argues that court approval of Campbell's first account confirmed that she had the court's permission to purchase the Chowchilla property, and he contends that approval of Campbell's second account following entry of the stipulated judgment, as required by the settlement agreement, also confirmed that she acted within her authority in purchasing the property.
Schneider's reliance on res judicata principles is misplaced. A consent judgment entered as a result of a settlement, such as the stipulated judgment here, is generally not given preclusive effect with respect to the resolution of particular issues unless the parties manifest an intent to give it such preclusive effect. (Tennison v. California Victim Comp. & Government Claims Bd. (2007) 152 Cal.App.4th 1164, 1176.) This general rule is based on the proposition that parties to a consent judgment " 'generally intend merely to put an end to the litigation at hand.' " (Ibid.) " 'In the case of a judgment entered by confession, consent, or default, none of the issues is actually litigated. . . . The judgment may be conclusive, however, with respect to one or more issues, if the parties have entered an agreement manifesting such an intention." (Id. at pp. 1176-1177.)
Here, the parties did not manifest an intention to give preclusive effect to the stipulated judgment, other than in the sense that the settlement and stipulated judgment fully and finally resolved the dispute between them. But there was no expressed intent that Campbell was deemed to have prevailed or that Sundeen's allegations were disproven. Indeed, the parties specifically recited in their settlement agreement that the claims remain disputed and that the agreement cannot be construed or treated as an admission as to any facts or allegations "for any purpose." Under similar circumstances, courts have declined to give a consent judgment res judicata effect in subsequent litigation on a different cause of action. (See Rice v. Crow (2000) 81 Cal.App.4th 725, 737, fn. 1; accord, Landeros v. Pankey (1995) 39 Cal.App.4th 1167, 1172-1173.) For example, in Rice v. Crow, the court refused to give preclusive effect to a consent judgment where the settlement agreement "acknowledge[d] that it is a compromise of disputed claims in order to avoid unnecessary expense." (Rice v. Crow, supra, at p. 737, fn. 1.) In sum, the stipulated judgment does not establish that Campbell prevailed, that she successfully defended against the guardian ad litem's allegations, or that the court was obligated to award Schneider's fees for the work he performed on behalf of Campbell.
Furthermore, Schneider misconstrues the effect of the settlement agreement and the various court actions he claims establish that Campbell acted properly. The settlement agreement expressly reserved fee applications for later determination. Although it contained a provision limiting the parties' ability to file objections to fee applications, the agreement did not in any respect deprive the court of its discretion to consider whether requested fees were associated with work that benefited the Seldon trust. Nothing in the settlement agreement required the court to grant the parties' fee applications or conclude that all of the work performed by attorneys benefited the trust.
Moreover, insofar as Schneider attempts to claim that the court's approval of Campbell's first and second account somehow vindicated Campbell and showed that she acted properly at all times, he is mistaken. The court's approval of the first account in no way constituted an endorsement of Campbell's purchase of the Chowchilla property. The first account did not mention the purchase of the property, did not list it as an asset, and did not seek approval for the purchase. Instead, it merely listed in a schedule of expenses mortgage payments that had been made for some period of time on behalf of McClendon, without any explanation as to whether the Seldon trust had assumed the mortgage or intended to do so. The fact the court accepted an accounting including these periodic expenses hardly constitutes an approval to use trust assets to purchase the property.
As for Campbell's second account, the settlement agreement provided that it was to be approved in part only after the court entered the stipulated judgment voiding and cancelling the purchase of the Chowchilla property. Consequently, the trial court's partial acceptance of the second account pursuant to the settlement agreement cannot be construed as a declaration that Campbell acted properly in purchasing the property. Further, the express reservation in the settlement agreement precluding the parties from construing it as an admission of any fact, allegation, or liability forecloses the construction urged by Schneider.
We conclude there is no merit to Schneider's assertion that the court was obligated to award Campbell's requested attorney fees on the ground she acted properly in purchasing the Chowchilla property and successfully defended against the guardian ad litem's claims. The stipulated judgment and the court's approval of Campbell's first and second accounts do not establish that she prevailed or that the court endorsed her actions in purchasing the property.
3. Court's evaluation of Campbell's request for attorney fees
We next turn to the question of whether the court acted within its discretion in ruling on Campbell's fee application. The trial court has a duty under Probate Code sections 15680 and 15684 to independently review and assess requests for trustee compensation, including reimbursement of expenses such as attorney fees. "Probate courts have a special responsibility to ensure that fee awards are reasonable, given their supervisory responsibilities over trusts. 'Presented with a [Probate Code] section 17200 petition to settle an account, "the probate court has a duty imposed by law to inquire into the prudence of the trustee's administration." ' " (Donahue v. Donahue (2010) 182 Cal.App.4th 259, 269.)
We review the court's decision to grant or deny a fee request for abuse of discretion. (Donahue v. Donahue, supra, 182 Cal.App.4th at p. 268.) "Long established principles of trust law impose a double-barreled reasonableness requirement: the fee award must be reasonable in amount and reasonably necessary to the conduct of the litigation, but it also must be reasonable and appropriate for the benefit of the trust." (Id. at p. 263.) "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 service to the trust." (Dingwell v. Seymour (1928) 91 Cal.App. 483, 513.) "A trustee cannot compel the trust to pay his attorney's fees unless the services so employed were incurred in the management and preservation of the trust estate. Certainly, he cannot incur indebtedness for fees incurred in litigation hostile to the estate." (Estate of Vokal (1953) 121 Cal.App.2d 252, 260.)
In this case, there is substantial evidence in the record supporting the court's finding that Schneider performed extensive legal services that did not benefit the Seldon trust or its beneficiary, Larry. Campbell's legal malpractice and indemnity actions against her former attorneys were not a defense to her actions as trustee. Rather, those actions sought to shift her potential personal liability in the action filed by the guardian ad litem to her former attorneys. Although that action was settled, there is no indication the Seldon trust benefited in any respect from that settlement or the litigation of that action in general. Likewise, Schneider cannot claim that Campbell's action against Bank of America benefited the Seldon trust. The action was finally dismissed without leave to amend.
Moreover, despite the trial court's repeated direction, there is no indication that Schneider ever submitted a breakdown of his fees apportioning them among defense of the guardian ad litem suit, routine trust administration, pursuit of the malpractice action, and any other areas of work Schneider may have performed. Instead, Schneider's position appears to be that no such apportionment was required in view of his claim that Campbell was deemed to have prevailed in the litigation and therefore was owed her attorney fees for having successfully defended claims against the trust. Schneider failed to make a proper record in the trial court and therefore forfeited any argument that the court erred in allocating fees between those attributable to services that benefited the trust and those attributable to services that benefited Campbell personally.
We conclude the trial court acted within its discretion in concluding that much of the legal work performed by Schneider did not benefit the trust. Further, Schneider has not offered any basis for this court to question the lower court's allocation between compensable and non-compensable fees. Schneider has therefore failed to demonstrate that the trial court abused its discretion in reducing his requested fees from over $130,000 to $17,992.
4. Orders awarding fees to Sundeen and Patterson
In the second and third appeals filed by Schneider, he challenges the orders awarding fees to Sundeen as guardian ad litem and to Patterson as successor trustee. He argues that the trial court was obligated to refrain from considering any further fee petitions while his appeal of the October 2014 fee order remained pending. He also contends in both appeals that the court erred in denying him standing to object to the fee petitions as an interested party. These contentions are unavailing.
Schneider argues the trial court was bound not to consider additional fee requests as a result of the automatic stay provision of Code of Civil Procedure section 916, subdivision (a), which provides in relevant part that "the perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon matters embraced therein or affected thereby . . . ." This provision " 'prevents the trial court from rendering an appeal futile by altering the appealed judgment or order by conducting other proceedings that may affect it.' " (Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 189 (Varian).) According to Schneider, because the Seldon trust is not a large trust and cannot afford to pay substantial fees at the risk of depleting the trust, the granting of subsequent fee petitions negatively affects his ability to recover additional fees from the trust if he were to prevail on appeal.
As the Supreme Court explained in Varian, the automatic stay does not apply to a proceeding simply because it may have some impact upon the appeal. (Varian, supra, 35 Cal.4th at pp. 189-190.) "The fact that the postjudgment or postorder proceeding may render the appeal moot is not, by itself, enough to establish that the proceeding affects the effectiveness of the appeal and should be stayed under [Code of Civil Procedure] section 916. Rather, something more is needed. For example, the trial court proceeding must directly or indirectly seek to 'enforce, vacate or modify [the] appealed judgment or order.' [Citation.] Or the proceeding must substantially interfere with the appellate court's ability to conduct the appeal. [Citation.] [¶] A trial court proceeding also affects the effectiveness of an appeal if the possible outcomes on appeal and the actual or possible results of the proceeding are irreconcilable." (Ibid.)
Application of the factors identified in Varian demonstrates that the automatic stay did not apply to subsequent fee applications filed by Sundeen and Patterson. The orders on Sundeen's and Patterson's fee applications did not seek to enforce, vacate, or modify the order challenged in Schneider's first appeal. Nor do the orders interfere in any way with this court's ability to decide the first appeal. In addition, we could reverse or uphold the trial court's order in the first appeal without creating any irreconcilable conflict with the court's subsequent fee orders. The remote possibility that the subsequent fee orders would make the trial court less likely to award additional fees to Schneider if he were to prevail on his first appeal is far too attenuated a "conflict" to justify imposition of the automatic stay. Otherwise, a trial court would be precluded from considering any further fee applications in almost any case in which a fee award was on appeal and the assets available to satisfy the fee awards were claimed to be limited. Schneider has offered no authority to support the proposition that the automatic stay of Code of Civil Procedure section 916 applies under those circumstances.
Our disposition of the first appeal has technically rendered Schneider's stay argument moot. Because we ruled against him, there is no longer even a remote possibility the subsequent fee orders may affect his right to recover additional fees.
Schneider's claims that the court erred in denying him standing to object to Sundeen's and Patterson's fee petitions are similarly unmeritorious. With respect to the appeal of the order awarding fees to Sundeen, Schneider's sole argument is that the court denied him standing to object. He wants the matter returned to the trial court to consider his objections. But the record does not support Schneider's claim that the court denied him standing to object. The court allowed Schneider to file a written objection and heard argument on his substantive objections, in addition to considering the issue of standing. At the conclusion of argument, the court overruled Schneider's objections and granted the fee request. The court did not rule that Schneider lacked standing. Indeed, there would have been no reason to hear argument on Schneider's substantive objections if Schneider lacked standing to appear. We decline to remand the matter to the trial court for consideration of Schneider's objections when the record indicates the court has already done so. Further, in light of our disposition of Schneider's first appeal, Schneider no longer has an interest in the Seldon trust as a contingent creditor that would afford him continuing standing to object. He has no further material interest in the trust that would justify consideration of his objections.
Insofar as Schneider may claim he is still an interested party as a creditor of the trust because $350 of interest owed on his attorney fee award remains to be paid, we are not persuaded. The successor trustee, Patterson, offered to satisfy that amount at the hearing on Patterson's first account. Schneider cannot generate standing by refusing to accept full payment of the de minimis sum that he is allegedly owed. --------
As for the appeal of the order awarding fees to Patterson, Schneider's standing argument likewise fails. He claims he was denied standing to assert the applicability of the automatic stay of Code of Civil Procedure section 916. But we have already determined the automatic stay did not apply, so any failure to afford Schneider standing to assert that objection was harmless error. He also claims it was error to decide the petition on the basis of affidavits, citing the principle that it is error to admit affidavits into evidence over objections. However, he did not offer any objections to evidence offered by Patterson, nor did he object to the propriety of the amount of fees sought or services rendered. Under the circumstances, the court did not err in deciding Patterson's first account on the basis of affidavits. Thus, even if the court erred in declining to consider Schneider's argument on the ground that Schneider lacked standing, any such error was harmless because the argument lacked merit.
DISPOSITION
The orders of October 8, 2014, March 2, 2015, and August 24, 2015 are affirmed. Respondents shall recover costs on appeal.
/s/_________
McGuiness, P.J. We concur: /s/_________
Pollak, J. /s/_________
Siggins, J.