Opinion
G058326
06-29-2021
ROBERT A. ENDERLE, Plaintiff and Appellant, v. BRUCE ENDERLE, as Successor Trustee, etc., et al., Defendants and Appellants.
Murtaugh Treglia Stern & Deily, Thomas N. Fay and Devin Murtaugh for Plaintiff and Appellant. Bunt & Shaver and David N. Shaver for Defendants and Appellants.
NOT TO BE PUBLISHED
Appeal from a judgment of the Superior Court of Orange County No. 30-2014-00736530, David L. Belz, Judge. Affirmed.
Murtaugh Treglia Stern & Deily, Thomas N. Fay and Devin Murtaugh for Plaintiff and Appellant.
Bunt & Shaver and David N. Shaver for Defendants and Appellants.
OPINION
GOETHALS, J.
This case arises from a family's multigenerational dispute about the proper administration of an irrevocable trust, the trust's ground lease to a family member's development company, and an agreement requiring the development company to pay certain income to the trust's remainder beneficiaries. The case ultimately boils down to the following: one of the trust's remainder beneficiaries filed a petition to compel his uncle (then the sole trustee) to account for the trust, and he incurred attorney fees in doing so. The remainder beneficiary then filed additional petitions to redress his uncle's alleged breach of fiduciary duty, to recover the attorney fees he incurred in the first petition, to compel an accounting from the successor trustee (his cousin), and to remove the successor trustee.
The trial court found for the remainder beneficiary on some issues and for the former and current trustees on other issues. It found the former trustee had breached his fiduciary duty by objecting to the accounting and ordered him to pay the remainder beneficiary's attorney fees; it also granted the petition to remove the successor trustee and appointed a private professional fiduciary. The court found the former trustee had no duty to enforce the income agreement on behalf of the remainder beneficiaries, and it declined to surcharge the successor trustee for uncollected rent owed to the trust by the development company. The parties appealed. For the reasons set forth below, we find no error and affirm.
FACTS
1. The Trust and the Key Players
In 1968, Harriet Enderle created an irrevocable trust (Trust 2), which she funded with an undeveloped parcel of land in Tustin. The trust named Harriet's two sons, Wallace Owen Enderle (Wally) and Maurice Allan Enderle (Allan), as income beneficiaries, and it named Wally's and Allan's children as remainder beneficiaries. Wally has two sons, Bruce Enderle and Scott Enderle, and Allan has three sons, Robert Enderle, Stephen Enderle, and Eric Enderle.
We refer to the various members of the Enderle family by their first names for the sake of clarity. We mean no disrespect.
Wally served as the sole trustee of Trust 2 at all relevant times until 2015. The current litigation arises in large part from Wally's actions as trustee, as well as from Trust 2's various dealings with Allan's development company, EMS Development Co. (EMS).
2. EMS, the Ground Lease, and the 32 Percent Agreement
Allan and several others formed EMS in the 1970's. In 1976, EMS leased two adjacent plots of vacant land from Trust 2 and a group of individuals (Account 1), and it developed a commercial shopping center known as the Enderle Center, located near 17th Street and the 55 freeway in Tustin. EMS's 50-year ground lease with Trust 2 and Account 1 is set to expire in 2026. The land beneath the Enderle Center is Trust 2's sole asset, and the rental payments from EMS on the ground lease are Trust 2's sole source of income.
The other piece of land was owned by another trust created by Harriet in 1955 (Trust 1). Trust 1 was later distributed, and the parties refer to the tenants in common who now own that land as Account 1. Account 1 owns about 40 percent of the land leased by EMS, and Trust 2 owns the other 60 percent.
By the mid-1990's, EMS was having financial difficulties. The loans it had obtained to develop the Enderle Center became due. Also, after years of litigation among its owners, EMS needed to buy out one of its partners, Clyde Mitchell. As a result, EMS decided to refinance its loans.
The proposed replacement loan would encumber part of the land owned by Trust 2, so Allan and EMS offered to pay Trust 2's remainder beneficiaries (i.e., Bruce, Scott, Robert, Stephen, and Eric) 60 percent of the net disbursable income generated from Mitchell's 32 percent share in EMS, in exchange for their consent to the refinance and the increased risk. The remainder beneficiaries agreed, and in 1996, Allan (individually and as principal of EMS), Wally (individually and as trustee of Trust 2), and the remainder beneficiaries entered into an agreement known as the 32 Percent Agreement, under which the remainder beneficiaries would each receive an income interest in the profit generated from Mitchell's share in EMS, to be paid monthly. Wally, as trustee of Trust 2, petitioned the probate court for authorization to cooperate in the extension of the encumbrance on the trust's real property and to subordinate that property, and the court issued an order of authorization in early 1996, thereby approving the 32 Percent Agreement.
When the 32 Percent Agreement was entered, Wally estimated it would provide the remainder beneficiaries about $42,000 per year in income. As the years passed, however, there were times when the remainder beneficiaries received no payments at all; at other times they received less than what they thought they were owed. Ultimately, the parties could not agree on a proper interpretation of the 32 Percent Agreement on calculating “net income”; neither Allan nor Wally took immediate steps to address or resolve the dispute.
3. The Arbitration
In 2012, in accordance with the 32 Percent Agreement's arbitration provision, Robert initiated an arbitration against his father Allan, individually and doing business as EMS, for damages under the 32 Percent Agreement. The matter settled when Allan agreed to pay $120,000 to his three sons, Robert, Stephen, and Eric, to resolve their claims under the 32 Percent Agreement.
Neither Wally nor his sons, Bruce and Scott, were parties to that settlement agreement. Bruce and Scott contend they are still owed money.
4. The First Petition and Wally's Resignation
In June 2014, Robert sent Wally a written request for an accounting of Trust 2. In support of the request, Robert cited Probate Code section 16061: “on reasonable request by a beneficiary, the trustee shall report to the beneficiary by providing requested information to the beneficiary relating to the administration of the trust relevant to the beneficiary's interest.”
All further undesignated statutory references are to this code.
Wally refused to provide an accounting. He asserted section 16061 references beneficiaries, and since Robert was not a beneficiary, but rather a remainder beneficiary, he was not entitled to an accounting.
In July 2014, Robert filed a petition to compel an accounting of Trust 2 and to remove Wally as trustee (the first petition). Wally objected to the petition, asserting he had no duty to account to Robert.
In 2015, Wally resigned as trustee of Trust 2, making the portion of Robert's petition requesting his removal moot. Wally's son Bruce (Robert's cousin) became trustee. While serving as trustee, Bruce lived in the Ukraine for six months each year and was going through a divorce, so he delegated many of his duties to his brother, Scott.
Meanwhile, Robert filed a motion for summary judgment on his demand for an accounting of Trust 2, asserting he had standing to request an accounting as a remainder beneficiary and under the terms of the trust. Wally opposed the motion, again asserting he had no duty to account to Robert or the other remainder beneficiaries.
In February 2016, after considering the matter, the trial court found Robert was entitled to an accounting of the ground lease (Trust 2's only asset) and granted Robert's summary judgment motion. It then vacated the trial date on Robert's first petition. Despite the court's order, Wally still did not provide an accounting.
In their opening brief, Scott and Bruce imply that the trial court refused to order an accounting of Trust 2, the 32 Percent Agreement, or EMS. We do not read the court's order that way. In granting Robert's summary judgment motion, the court found Robert was entitled to an accounting and ordered an accounting of the ground lease, which was Trust 2's only asset; as Wally himself admitted in his verified objection to the second petition, that amounts to ordering an accounting of Trust 2. The court's order does not mention EMS or the 32 Percent Agreement at any point.
5. EMS's Unpaid Rent on the Ground Lease
Allan (EMS's sole proprietor) died in 2016, at which point his son Eric and his nephew Scott became comanagers of EMS.
Both before and continuing after Allan's death, EMS fell behind on its rent payments to Trust 2 and Account 1 under the ground lease, with unpaid rent eventually exceeding $600,000. According to Eric, although EMS paid the base ground rent, it did not pay any additional rent; he and Scott agreed EMS should instead put its money toward addressing the property's many maintenance problems, including leaky roofs and noncompliance with the Americans with Disabilities Act (42 U.S.C. § 12101 et seq.), to avoid litigation with its tenants.
Bruce, now the trustee of Trust 2, was aware EMS was behind on its rent, but he never sent a notice of default to EMS. According to Bruce, rather than start “another legal process, ” he and Scott spent close to a year “attempting to work out a solution” with EMS. They were still in negotiations at the time of trial.
6. The Second and Third Petitions
Meanwhile, in June 2016, Robert filed a second petition, this time seeking to redress former trustee Wally's alleged breach of his fiduciary duty and to recover the attorney fees and costs Robert incurred in litigating the first petition. Wally objected to the petition in December 2016. Then, in May 2017, while the petition was still pending, Wally died before providing an accounting.
In July 2017, Robert filed a third petition to compel an accounting of Trust 2, to compel the distribution of Trust 2, and to remove Bruce as trustee and appoint a successor trustee. Among other things, Robert alleged Bruce (like his father Wally) had failed to provide an accounting, failed to investigate his father's acts as prior trustee, and failed to take reasonable steps to redress his father's breaches. Bruce objected to the petition.
Just before trial on Robert's second and third petitions, Bruce filed an accounting of the ground lease on behalf of himself and Wally, covering the periods of January 2002 to August 2018. He also filed a motion in limine asking the trial court to decide whether the trustee of Trust 2 has a duty to ensure Robert received a distribution under the 32 Percent Agreement. Trial on Robert's second and third petitions went forward in May 2019.
7. The Trial Court's Statement of Decision
In its final statement of decision, the trial court found Wally had breached his fiduciary duty as trustee of Trust 2 by objecting to Robert's requests for an accounting. It further found Wally's refusal to account and his opposition to the motion for summary judgment in the first petition were pursued without reasonable cause and in bad faith, warranting an award of attorney fees to Robert under section 17211, subdivision (b). However, the court found the evidence insufficient to prove Wally failed to maintain adequate records or breached his duty of loyalty. It also concluded Wally, as trustee of Trust 2, had no duty to ensure Robert or the other remainder beneficiaries received a distribution under the 32 Percent Agreement, and any claim against Wally for breach of trust based on his failure to ensure those payments occurred was time-barred by the three-year statute of limitations. Finally, it found Wally's estate could charge Trust 2 for the attorney fees Wally incurred in defending Robert's second petition, but it could not charge Trust 2 for the attorney fees Wally incurred in unreasonably opposing Robert's first petition.
As for Bruce, the trial court found he breached his duty as trustee by failing to file a timely account, and it ordered an accounting of Trust 2 from October 2015 (when Bruce became trustee) onward. The court further found Bruce breached his fiduciary duty by failing to distribute Trust 2 in a timely fashion, and he failed to collect rents owed to Trust 2 on the ground lease, failed to actively oversee the trust and its administration, and at times did not act in the trust's best interests. The court therefore granted Robert's request to remove Bruce as trustee and appointed a professional fiduciary. However, the court denied Robert's request to surcharge Bruce for not collecting ground lease payments, finding Bruce had not acted unreasonably “given the complexities of the various properties and the various interests therein.”
Scott and Bruce filed a notice of appeal, and Robert filed a separate notice of appeal.
DISCUSSION
1. The Attorney Fee Award Against Wally
Scott and Bruce first challenge the trial court's decision to award Robert attorney fees against Wally under section 17211, subdivision (b). For the reasons set forth below, we reject their arguments.
Trust beneficiaries normally must pay their own attorney fees when challenging a trustee's conduct, even if they prevail, but section 17211 creates an exception to this rule if the trustee opposed the petition unreasonably and in bad faith: “If a beneficiary contests the trustee's account and the court determines that the trustee's opposition to the contest was without reasonable cause and in bad faith, the court may award the contestant the costs of the contestant and other expenses and costs of litigation, including attorney's fees, incurred to contest the account.” (§ 17211, subd. (b), italics added.)
As noted, Robert asked Wally for an accounting of Trust 2 in 2014, and Wally opposed his request. Robert brought his first petition to seek an accounting, and Wally objected to the petition. Robert then brought a motion for summary judgment on his accounting request, and Wally opposed that motion. The trial court granted summary judgment for Robert and ordered Wally to account for Trust 2's ground lease (Trust 2's only asset).
In granting summary judgment, the trial court acknowledged Robert does not have the right to compel an accounting under section 16062. The court found Robert was nevertheless entitled to an accounting because he is a vested remainder beneficiary of an irrevocable trust, he made a written request to the trustee for information, and the trustee did not comply within 60 days. (See §§ 16060 & 16061 [requiring trustee to keep trust beneficiaries reasonably informed of, and report to them on, the trust's administration]; § 17200, subd. (b)(7) [beneficiary may petition for an accounting if the trustee has failed to submit an accounting within 60 days of beneficiary's written request].) In support of its ruling, the court also cited our opinion in Esslinger v. Cummins (2006) 144 Cal.App.4th 517, 525 (Esslinger), in which we held that a remainder beneficiary may request an accounting under section 16061 and then petition the court for an accounting if the trustee does not comply within 60 days.
Section 16062 provides in relevant part: “(a) Except as otherwise provided in this section and in Section 16064, the trustee shall account at least annually, at the termination of the trust, and upon a change of trustee, to each beneficiary to whom income or principal is required or authorized in the trustee's discretion to be currently distributed. [¶] (b) A trustee of a living trust created by an instrument executed before July 1, 1987, is not subject to the duty to account provided by subdivision (a).” The trial court found section 16062 inapplicable because Robert is a remainder beneficiary (id., subd. (a)) and because Trust 2 was created before July 1, 1987 (id., subd. (b)).
In his second petition, Robert sought to recover the attorney fees and costs he incurred in litigating the first petition, citing section 17211. The trial court granted his request, finding Wally had acted without reasonable cause and in bad faith by refusing to provide an accounting of Trust 2 in response to Robert's written request for an accounting and by opposing Robert's motion for summary judgment in the first petition. Scott and Bruce now ask us to set aside that fee award.
In its final statement of decision, the trial court reserved its right to rule on the amount of the fee award and ordered Robert to file a noticed motion for attorney fees with supporting declarations and an itemized billing statement. Robert did so in October 2019, but neither his motion nor the court's ruling on that motion are part of the record on appeal. Thus, it is unclear what amount was awarded, if any.
A trial court may only award attorney fees and costs under section 17211, subdivision (b), if it finds the trustee's opposition to the accounting request “was without reasonable cause and in bad faith.” In reviewing a fee award under section 17211, we independently review whether the trustee's objections were brought without reasonable cause (Uzyel v. Kadisha (2010) 188 Cal.App.4th 866, 927), but we review the court's finding of bad faith for substantial evidence (Powell v. Tagami (2018) 26 Cal.App.5th 219, 234).
Applying those standards here, we find no basis for overturning the fee award. Wally had no reasonable or good faith basis for objecting to Robert's request for accounting or for opposing his summary judgment motion. (See §§ 16060, 16061, 17200, subd. (b)(7); Esslinger, supra, 144 Cal.App.4th at p. 525.) Bruce and Scott do not argue otherwise.
Instead, Bruce and Scott insist Wally's duty to account on the ground lease was not the “actual controversy” in Robert's first petition, and thus Robert had “no standing” in the second petition to recover the attorney fees he incurred in the first petition in obtaining an accounting of the ground lease. According to Bruce and Scott, Robert only filed the first petition because he wanted to force an accounting of the 32 Percent Agreement, as evidenced by his testimony at trial on the second and third petitions. From this, they maintain that Robert's right to an accounting of the ground lease was a “moot issue, ” and his claim for attorney fees incurred in litigating that moot issue fails because there was “no justiciable controversy.”
This argument misconstrues the record. Robert never testified he did not want an accounting of the ground lease. And irrespective of whatever Robert may have said at trial in 2019 about his litigation objectives over the years, his June 2014 written request expressly sought an accounting of Trust 2; his first petition expressly sought an accounting of Trust 2; his motion for summary judgment expressly sought an accounting of Trust 2; and the trial court ruled in his favor on that motion, ordering an accounting of the ground lease (Trust 2's only asset). Because Wally repeatedly opposed that accounting request without reasonable cause and in bad faith, the court had the power to award attorney fees under section 17211.
Robert testified that “one of the big things” he was suing Wally for was Wally's obligation to enforce the 32 Percent Agreement, and he believed an accounting of Trust 2 necessarily included an accounting of EMS.
Bruce and Scott alternatively contend the trial court erred in finding Wally acted unreasonably and in bad faith, considering Wally was not ordered to account for the 32 Percent Agreement or for EMS and thus was the prevailing party at trial. But section 17211 is not a prevailing party fee statute. In deciding whether to award fees under section 17211 for Wally's refusal to account for Trust 2, the relevant question was whether Wally's refusal to account for Trust 2 was made without reasonable cause and in bad faith. Wally's failure to account for the 32 Percent Agreement or for EMS is irrelevant, as is the identity of the prevailing party in the overall matter.
2. Wally's Request for Attorney Fees
Scott and Bruce next challenge the trial court's determination that Wally cannot charge Trust 2 for the attorney fees he incurred in unreasonably opposing Robert's first petition to compel an accounting. They cite section 15684, which provides that a trustee is entitled to the repayment out of the trust property for (a) expenditures properly incurred in the administration of the trust and (b) expenditures that were not properly incurred in the administration of the trust, to the extent those expenditures benefited the trust. We review an award or denial of fees under section 15684 for abuse of discretion. (Terry v. Conlan (2005) 131 Cal.App.4th 1445, 1461.)
According to Scott and Bruce, because the trial court did not order Wally to account for the 32 Percent Agreement, he should be permitted to pay all his attorney fees from the trust. We disagree. Since Wally's refusal to account to Robert on Trust 2 was without reasonable cause and in bad faith, we fail to see how attorney fees incurred in defending that conduct could have possibly “benefited the trust” or been “incurred in the administration of the trust” within the meaning of section 15684. We find no abuse of discretion in the court's ruling.
3. The Removal of Bruce as Trustee
Scott and Bruce also contend the trial court erred in removing Bruce as trustee of Trust 2. They assert Bruce's removal was improper because he was the prevailing party overall, he actively oversaw the trust, and his failures to distribute Trust 2, account to Robert, and collect back rent were justifiable under the circumstances. We disagree.
A trustee may be removed if he or she has committed a breach of the trust, failed or refused to act, or for other good cause. (§ 15642, subd. (b)(1), (4) & (9).) “A violation by the trustee of any duty that the trustee owes the beneficiary is a breach of trust.” (§ 16400.) That includes the duty to administer the trust solely in the interest of the beneficiaries (§ 16002) and the duty to report to the beneficiaries about the trust and its administration (§ 16061). The removal of a trustee is largely within the trial court's discretion; we review an order removing a trustee under the deferential abuse of discretion standard. (Estate of Gilmaker (1962) 57 Cal.2d 627, 633.)
Here, the trial court found Bruce “has not acted in the best interest of the trust, ” “was not aware of details as to the administration of the Trust, ” failed to explain “why he did not take action to clear the cloud to title to the property, ” and gave a “lacking” “explanation for why timely distributions had not been made.” It further found Bruce “failed to provide timely information and account to the beneficiaries after a request for information and account was made, ” “failed to collect rents owed to the trust on the ground lease, ” and “failed to actively oversee the trust and its administration.” Any one of these findings would support the court's decision to remove Bruce as trustee. The fact that it took Bruce nearly three years to file the accounting ordered by the court in 2016 (an accounting which Bruce admitted was “rather simple” and “not hugely complicated”) justifies his removal. On this record, there was no abuse of discretion.
4. Wally and Bruce's Duty to Enforce the 32 Percent Agreement
Turning to Robert's appeal, Robert first contends the trial court erred in concluding that Wally, as trustee of Trust 2, had no duty to enforce the 32 Percent Agreement on behalf of Trust 2's remainder beneficiaries. Whether Wally had such a duty is a legal question that we review de novo.
As noted, the 32 Percent Agreement came about because EMS needed to refinance the loans it had used to develop the Enderle Center, and because the proposed replacement loan would encumber part of the land owned by Trust 2. To compensate Trust 2's remainder beneficiaries for the increased risk and obtain their consent on the refinance, EMS agreed to pay them 60 percent of the net disbursable income generated from a 32 percent share in EMS. The parties and signatories to the 32 Percent Agreement were Allan (individually and as principal of EMS), Wally (individually and as trustee of Trust 2), Bruce, Scott, Robert, Stephen, and Eric.
The 32 Percent Agreement's payment provision mandates that following Allan and EMS's purchase of Clyde Mitchell's share of EMS, 60 percent of the net profits attributable to Mitchell's share “shall be distributed... to the Remaindermen of the Trust” as follows: 25 percent each to Bruce and Scott, and 16.66667 percent each to Robert, Stephen, and Eric. Allan and Wally (the trust's income beneficiaries) expressly waived receipt of any part of that interest in favor of their respective sons.
We must decide whether Wally, as trustee of Trust 2, had a duty to ensure EMS paid those amounts to the trust's remainder beneficiaries. A trustee has a duty to control and preserve trust property and to enforce claims that are part of the trust property. (§§ 16006, 16010.) Our analysis therefore turns on whether the proceeds due to Bruce, Scott, Robert, Stephen, and Eric under the 32 Percent Agreement constitute trust property.
On the one hand, the 32 Percent Agreement references the trust; indeed, it was designed to compensate Trust 2's remainder beneficiaries for the increased risk of encumbering the land owned by Trust 2, and for that reason was authorized by the probate court. Additionally, Wally signed the 32 Percent Agreement not just individually, but also in his capacity as trustee of Trust 2.
On the other hand, there is no language in the 32 Percent Agreement suggesting it modified Trust 2, nor is there any language expressly requiring the trustee of Trust 2 to ensure that Allan and EMS pay the right amounts to Bruce, Scott, Robert, Stephen, and Eric. And under the language of the agreement, EMS's payment obligation was not to Trust 2; it was to pay Bruce, Scott, Robert, Stephen, and Eric. If these individuals felt they were not paid the amounts owed under the agreement, they were free to pursue a claim in arbitration against EMS for amounts owed; indeed, Robert did so in 2012 when he secured a settlement payment for himself and his two brothers, Eric and Stephen.
We conclude the funds due under the 32 Percent Agreement's payment provision are not trust property; they are the property of Bruce, Scott, Robert, Stephen, and Eric as individuals. Accordingly, we agree with the trial court that Wally had no duty as trustee to enforce the 32 Percent Agreement against EMS on their behalf.
Given this holding, we need not address Robert's additional argument that the statute of limitations does not bar his claim against Wally for breaching that duty.
5. Surcharge of Unpaid Rent
Finally, Robert contends the trial court erred by not surcharging Bruce for his failure to collect unpaid rent on EMS's ground lease. Again, we must disagree.
As noted, EMS was behind on its rent payments to Trust 2 and Account 1 when Bruce took over as trustee in 2015, and it remained behind on rent through the time of trial. Despite that, Bruce, the successor trustee of Trust 2, never sent a notice of default to EMS. According to Robert, this was a “flagrant breach of his fiduciary duty, and the court should have surcharged him for it.”
If a trustee breaches his fiduciary duty, a probate court may surcharge the trustee for that breach and award that money to the trust's beneficiaries. (§ 16420, subd. (a)(3).) The trustee is chargeable with any loss or depreciation in the value of the trust estate resulting from the breach. (§ 16440, subd. (a)(1).) However, “[i]f the trustee has acted reasonably and in good faith under the circumstances as known to the trustee, the court, in its discretion, may excuse the trustee in whole or in part from liability [for that loss] if it would be equitable to do so.” (Id., subd. (b).)
In denying Robert's request to surcharge Bruce for rent, the trial court reasoned that EMS's “ground lease payments before Wally and Allan passed away would have been income to Wally and Allan [not Robert]. As to the ground lease payments that have not been collected by Bruce following the death of Wally and Allan, ... it was not unreasonable for Bruce to not collect on the ground lease given the complexities of the various properties and the various interests therein.” Thus, while the court did not expressly say so, it seems to have found any breach of fiduciary duty was reasonable and in good faith under the circumstances, and therefore excused Bruce from liability under its equitable powers. (See § 16440, subd. (b).)
A beneficiary's remedies against the trustee are exclusively in equity, and the trial court has wide play in formulating its decrees. (Orange Catholic Foundation v. Arvizu (2018) 28 Cal.App.5th 283, 293.) “Consistent with the equitable nature of a beneficiary's remedies, section 16440 gives trial courts wide latitude in deciding whether and what types of damages to impose on a trustee who commits a breach of trust....” (Ibid.) “We review the trial court's exercise of its equitable powers-including its decision to excuse a trustee for breach of trust under section 16440[, subd. ](b)-for abuse of discretion, ” and we review its factual findings of reasonableness and good faith for substantial evidence. (Id. at pp. 292, 294; see also Estate of Moore (2015) 240 Cal.App.4th 1101, 1105 [surcharge order reviewed for abuse of discretion].)
Applying those standards here, we find no basis to reverse the trial court's ruling. According to Bruce, rather than foreclose on the property or start “another legal process, ” he and Scott were “attempting to work out a solution” with EMS; they were still in negotiations at the time of trial. This constitutes substantial evidence that supports the court's findings of good faith and reasonableness. On this record, the court's decision to excuse Bruce from liability for the uncollected rent was not a manifest abuse of discretion.
DISPOSITION
The judgment is affirmed. In the interest of justice, each party is to bear his own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(5).)
WE CONCUR: O'LEARY, P. J., FYBEL, J.