Opinion
C076290
02-28-2018
Estate of DAVID KOKUS, Deceased. KAREN FIELD, as Executor, etc., Petitioner and Respondent, v. SUSAN VOLLSTEDT, Objector and Appellant; AUDREY ANNE KOKUS, an Incompetent Person, etc., Claimant and Respondent.
NOT TO BE PUBLISHED California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published,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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 34-2011-00109260-PR-LS-FRC)
This appeal arises from a probate court's decision to supervise a testamentary special needs trust, to order the administrator of the estate to withhold distribution of certain funds, and to award extraordinary attorney fees to the administrator's attorney. The appellant trustee contends the court did not have jurisdiction to supervise the trust, and that it abused its discretion in ordering the withholding and the extraordinary fees. We affirm the probate court's orders.
SUMMARY OF FACTS
David Kokus died on July 28, 2011, in Sacramento. After liquidation of tangible assets, his estate totaled just over $1 million.
David was single and had no children. His immediate heirs were his brother, John Kokus, and his sister, respondent Audrey Anne Kokus. Audrey is developmentally disabled and lives in a board and care home. She is a conservatee under a limited conservatorship; her brother John is her conservator.
Appellant Susan Vollstedt is David's first cousin. She and her husband, Karsten, live in Appleton, Wisconsin.
David left a holographic will that was admitted to probate in November 2011. The probate court appointed petitioner and respondent Karen Field as special administrator. It also appointed Linda Dankman as guardian ad litem to Audrey.
The administrator filed a petition to determine distribution rights. The will was ambiguous in two respects relevant here. First, David intended his remaining cash to go to Susan and Karsten, but it was unclear whether he intended an outright gift or for the funds to go into trust for Audrey's benefit with Susan and Karsten to serve as trustees. Placing the money in trust for Audrey, however, would render her ineligible to continue receiving government benefits unless the trust was a third party special needs trust.
Second, the will contained a general residuary clause, but David did not name a residuary beneficiary. Generally, property not disposed by a will passes to a decedent's heirs by intestate succession (Prob. Code, §§ 6400, 6402), but David clearly intended to disinherit his brother John.
Undesignated references to sections are to the Probate Code.
The parties agreed to mediate, and they eventually settled the petition to determine distribution. They agreed that, among other things:
• they would request the court to allow David's will to be reformed to provide for creation of a third party special needs trust for Audrey's benefit;
• $200,000 of the estate would be distributed to Susan and Karsten;
• the balance remaining in the estate after other specific bequests and administrative fees would be distributed to Susan and Karsten as trustees of Audrey's special needs trust;
• on Audrey's death, assets remaining in the trust would be divided one-half to Susan and Karsten and one-half to John and his wife; to the survivors of each couple; or, if neither couple survived Audrey's death, to their issue; and
• Nothing in the settlement and release limited Audrey's rights regarding the administration of the special needs trust.
The parties submitted to the court a written stipulation for judgment to carry the settlement into effect. The stipulation incorporated the settlement agreement and a trust instrument creating Audrey's special needs trust. The court signed and entered the stipulated order on October 25, 2012.
In February 2013, the administrator filed her first and final account of the will and petition for its settlement and distribution. The administrator asked for, among other things, statutory and extraordinary attorney fees for her counsel. She also asked the court for authority to retain $5,000 for closing expenses. Susan filed objections.
At a hearing on the final account on August 1, 2013, the court confirmed Dankman as guardian ad litem and court-appointed counsel for Audrey.
On August 13, 2013, Dankman filed, on Audrey's behalf, a petition to declare the special needs trust subject to the jurisdiction of the Sacramento County Superior Court and to request court supervision, an accounting, and other directions to the trustees. In the petition, Dankman alleged a number of concerns. Susan and Karsten received $150,000 in May 2013 in their capacities as trustees per agreement of the parties, but Dankman claimed they had not spent any of that money for Audrey's special needs. The trustees' attorney refused requests for an accounting. He also asserted Dankman's services were unnecessary to the final distribution of the will and the trustees wanted her removed from Audrey's representation. Further, Dankman contended the trustees had a conflict of interest, "not so apparent at the time" they were named as trustees, due to their interest in one-half of the assets in the special needs trust remaining upon Audrey's death. Dankman argued the trust was subject to the court's continuing jurisdiction under section 3604.
Shortly after Dankman filed her petition, the administrator filed an amended first and final account and petition for settlement. Susan filed objections to this report.
Susan moved to strike Dankman's petition and the court's order confirming her as court-appointed counsel for Audrey. She also filed objections to the petition on the same grounds. She argued the court did not have continuing jurisdiction because section 3604 did not apply to the special needs trust and Audrey was never a party for purposes of section 3604. She also contended Dankman had no standing to file her petition as an interested person because she failed to file a responsive pleading to the administrator's petition for distribution and, as a result, was prohibited under section 11702, subdivision (b) from participating further in the proceeding.
Susan further argued the court should strike its order confirming Dankman as court-appointed counsel because the order was not drawn or filed in compliance with the California Rules of Court or in conformity with the court's own minute order.
Dankman opposed Susan's motion to strike. She argued the court had continuing jurisdiction under sections 3604 and 17200 to address the trustees' abuse of discretion and their acting in bad faith and not in the best interests of the disabled beneficiary. Dankman also requested the court withhold $200,000 of estate funds for legal fees Audrey and the administrator were likely to incur due to Susan's objections.
The trial court granted Dankman's petition in part and it denied Susan's motion to strike. It ruled Dankman, as guardian ad litem and court-appointed counsel for Audrey, was entitled to bring a petition for court oversight under section 17200. The court declared it had authority to supervise special needs trusts, and it ordered Audrey's trust to be subject to the continuing jurisdiction and supervision of the Sacramento County Superior Court. It ordered the trustees to file an accounting and serve it on Dankman.
The trial court also approved the administrator's account and petition for settlement, and it overruled Susan's objections to the same. In doing so, the court approved the administrator's requests for statutory and extraordinary attorney fees for the administrator's counsel. The court also approved the withholding of $200,000 for potential litigation costs and expenses.
DISCUSSION
I
Superior Court's Jurisdiction
Susan contends the trial court did not have jurisdiction over the trust and thus could not entertain Dankman's petition. She claims sections 17300 and 17301 authorize the court to exercise continuing jurisdiction only if the trust provided it was subject to the court's continuing jurisdiction. Audrey's trust did not so provide. Susan also argues the trial court, by approving the settlement in 2012, effectively transferred the trust to Wisconsin by approving her and Karsten as trustees. She thus argues the Wisconsin court had exclusive jurisdiction over any proceeding concerning the trust's administration. She further argues she did not waive any jurisdictional defects by appearing in this matter.
We disagree with Susan's arguments and conclude the trial court had jurisdiction to grant Dankman's petition for supervision. A trial court may exercise jurisdiction for proceedings under the Trust Law (§ 15000 et seq.) on any basis not inconsistent with the California or United States Constitutions. (§ 17004; Code Civ. Proc., § 410.10.) The court here did not violate the constitutional prescriptions for personal and subject matter jurisdiction. First, Susan waived any claim that the court did not have personal jurisdiction of her. She did not contest or object to the trial court's exercise of personal jurisdiction at any time until her opening brief in this appeal. At no time did she move to quash or dismiss the petition based on lack of personal jurisdiction. Instead, she appeared in the matter by filing a motion to strike and an opposition on the merits, and by arguing on the merits at the hearing. Her appearances in this proceeding constituted a general appearance and waived any claim of lack of personal jurisdiction. (Hamilton v. Asbestos Corp. (2000) 22 Cal.4th 1127, 1147; Code Civ. Proc., § 410.50, subd. (a).) "It is well established that a party's general appearance is the equivalent to personal service of summons . . . ." (Kern County Dept. of Human Services v. Superior Court (2010) 187 Cal.App.4th 302, 311.) Her waiver of personal jurisdiction in the trial court forfeits the claim on appeal as well as her arguments that she did not waive personal jurisdiction by her appearances. (In re Aaron B. (1996) 46 Cal.App.4th 843, 846.)
Second, the court had subject matter jurisdiction in addition to personal jurisdiction to entertain the petition. Section 17000 vested the court with exclusive jurisdiction of proceedings initiated by a trust beneficiary such as Audrey concerning the internal affairs of the trust. (§§ 17000, subd. (a), 17200, subd. (a).) Such internal affairs include, but are not limited to, determining the existence of any duty, passing upon the acts of the trustee, instructing the trustee, ordering the trustee to provide information about the trust, and compelling redress of a breach of the trust. (§ 17200, subd. (b)(2), (5), (6), (7)(B), (12).) Audrey's petition sought the court's authority to address these very matters.
In addition, "the probate court has the 'inherent power to decide all incidental issues necessary to carry out its express powers to supervise the administration of the trust.' (Estate of Heggstad (1993) 16 Cal.App.4th 943, 951, italics added.) This inherent equitable power of the probate court has long been recognized to encompass the authority to take remedial action. 'Under California trust law, a court can intervene to prevent or rectify abuses of a trustee's powers. [Citations.]' (Edwards v. Edwards (1998) 61 Cal.App.4th 599, 604.)" (Schwartz v. Labow (2008) 164 Cal.App.4th 417, 427.) The court thus had express and inherent subject matter jurisdiction to hear Susan's petition and render relief.
Susan, however, contends the court did not have continuing jurisdiction. She asserts a court may exercise continuing jurisdiction over a testamentary trust only when the trust was created by a will executed before July 1, 1977, or the trust provides it is subject to the court's continuing jurisdiction, as sections 17300 and 17301 provide. The point is irrelevant. Whether or not the court had continuing jurisdiction, it had jurisdiction to grant relief under section 17200. "Trusts not subject to continuing court jurisdiction under Sections 17300-17302 are subject to the intermittent jurisdiction of the courts when invoked pursuant to Section 17200." (Recommendation Proposing the Trust Law (Dec. 1985) 18 Cal. Law Revision Com. Rep. (1985) p. 801.)
" '[T]he official comments of the California Law Revision Commission "are declarative of the intent not only of the draftsman of the code but also of the legislators who subsequently enacted it" [citation], [and thus] the comments are persuasive, albeit not conclusive, evidence of that intent [citation].' " (Metcalf v. County of San Joaquin (2008) 42 Cal.4th 1121, 1132.) The comment in the text refers to the predecessor statute of section 17200. The current statute is identical to the former. (See Stats. 1986, ch. 820, § 40, pp. 2787-2788.)
Susan asserts Audrey has no standing to petition the trial court to supervise the trust, and, because Audrey has no standing, that Dankman's continuing appointment as Audrey's guardian ad litem is void. Susan contends Audrey, as a beneficiary, has no interest in the estate, and Audrey and Dankman were no longer interested persons in the probate proceeding because once the trial court approved the stipulated settlement and the special needs trust as its distribution order, any claim or property right Audrey had in the estate transferred to the trust.
Susan misunderstands the authority under which Audrey filed her petition for supervision. Audrey was not making a claim upon or securing an interest in the estate. Rather, she was exercising her right—as a beneficiary—under sections 17000 and 17200 to petition the probate court to review the trust's internal affairs. Those affairs included "passing upon the acts of the trustee, including the exercise of discretionary powers." (§ 17200, subd. (b)(5).) She thus has standing to file her petition and defend the trial court's order on this appeal, and Dankman's appointment is not void.
Susan argues the parties agreed, and the court approved, transferring the trust to her residence in Wisconsin, and thus the Wisconsin court had exclusive jurisdiction over any proceeding concerning the trust and Wisconsin law controlled. Susan did not raise these arguments in the trial court. As a result, they are forfeited. (In re Aaron B., supra, 46 Cal.App.4th at p. 846.)
II
Reservation of $200,000
Susan claims the trial court erred by reserving $200,000 from distribution to provide for further litigation. She contends the 2012 stipulated order allocating distribution of the estate precluded the court from reserving additional funds. We disagree.
The 2012 order gave the court authority to reserve the funds. The order stated the balance of the estate would be distributed to Susan and Karsten as trustees "after administration expenses." The final amount of administration expenses has not been determined, as the estate continues to accrue them at a minimum in the form of attorney fees owed for this litigation. (See Estate of Wong (2012) 207 Cal.App.4th 366, 374-375 [compensation for the administrator's attorney is paid from the estate itself as an expense of administration].)
In addition, section 11461 granted the court authority to order the withholding. That statute authorizes a probate court to make or modify orders when, in its discretion, it determines an order is appropriate to provide adequately for a debt that is contingent, disputed, or not due, if the debt becomes absolute, established, or due. Here, the court determined the estate would incur additional attorney fees and provided for their eventual payment. The court was well within its discretion under section 11461 and the terms of the 2012 order when it directed $200,000 be reserved from distribution.
III
Award of Extraordinary Attorney Fees
The trial court awarded extraordinary attorney fees to the administrator's counsel, Elizabeth Ikemire, in the amount of $34,492. The amount consisted of $26,269 for extraordinary services performed up to the administrator's filing of her amended report, and $7,800 for fees incurred responding to Susan's objections to the amended report. Susan contends the trial court erred by awarding these extraordinary attorney fees to the Ikemire.
We review the grant of extraordinary fees for an abuse of discretion. (Estate of Gilkison (1998) 65 Cal.App.4th 1443, 1448.) We conclude the trial court did not abuse its discretion when it awarded extraordinary fees to Ikemire.
"Attorneys who probate estates are statutorily entitled to compensation based upon a sliding scale of percentages of the value of the estate. This fee is known as a 'statutory' or 'ordinary' fee for services rendered in the typical probate case. Attorneys may also be entitled to compensation for services which are not involved in the typical probate case. For unusual services, the probate court may allow additional compensation for extraordinary services. This is known as an 'extraordinary' fee. [Citation.]" (Estate of Gilkison, supra, 65 Cal.App.4th at p. 1446, fn. 1.)
Activities for which extraordinary compensation may be awarded to an administrator's attorney include, but are not limited to, legal services in connection with the sale of property, litigation undertaken to benefit the estate or to protect its interests, and litigation in support of the attorney's request for extraordinary compensation. (Cal. Rules of Court, rule 7.703(c)(1), (3), (9).)
Ikemire's extraordinary services fall into these categories. Her services included researching the petition for determining distribution to help the court address the will's many ambiguities, drafting a special needs trust, and handling the sale of several items of real and personal property that were part of the estate.
Ikemire submitted a statement of facts justifying her request as required by rule 7.702 of the California Rules of Court. She explained the nature and difficulty of the tasks performed, showed the results achieved and the benefits of her services to the estate, and provided the hours, rates, and descriptions of the services, all as required by California Rules of Court, rule 7.702. Counsel's verified time records and statements are entitled to a presumption of credibility in the absence of a clear indication the records are erroneous. (Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359, 396.) No such clear indication appears in the record.
Susan contends the court erred in approving the extraordinary fees incurred for work on the administrator's petition for determining distribution. Ikemire prepared a detailed legal analysis that accompanied the petition. It discussed the administrator's possible interpretations of David's will and provided case law that was relevant to the trial court's interpretation of the will, including the ramifications to Audrey if David's money was given to Audrey in trust. Susan claims the analysis was excessive, premature, and biased. To the contrary, the analysis assisted the estate by providing the parties and the court with unbiased explanations and possible ramifications of the most likely interpretations the court could apply to the will. The fact the parties settled their disagreements in part by creating a third party special needs trust, as Ikemire described in her analysis, indicates Ikemire's work was valuable to the estate.
Susan also contends the court erred in approving the extraordinary attorney fees because it did not truly exercise its discretion in doing so. Susan claims the court's approvals of the administrator's and Ikemire's requests for fees indicate the court merely "rubber-stamped" the requests and approved them without question. Susan's argument is mere conjecture, as she provided no supportive evidence from the record. What evidence exists in the record shows the trial court performed its obligation to review the fee requests and did not abuse its discretion in approving them.
DISPOSITION
The judgment is affirmed. Costs on appeal are awarded to the administrator and Audrey. (Cal. Rules of Court, rule 8.278(a).)
NICHOLSON, J. We concur: MURRAY, Acting P. J. RENNER, J.
Retired Associate Justice of the Court of Appeal, Third Appellate District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.