Business Law Journal

The underlying probate case involved a dispute concerning the estate of decedent Charles Frazier (“Frazier”). Having fallen ill with a very aggressive form of cancer in late 2019 at 83 years old, Frazier became physically impaired and could no longer live independently. After being discharged from the hospital on November 15, 2019, Frazier was taken into the care and home of his close friends and former neighbors, Michael and Kelly Pagano. 

On December 3, 2019, Frazier met with the Paganos’ estate planning attorney with the intent of modifying his existing estate plan solely to remove his estranged biological daughter from his trust documents. Instead, these meetings resulted in the creation of an entirely new trust, which was executed on December 20, 2019, and provided that the Paganos would receive a large portion of Frazier’s assets.

On January 8, 2020, the Paganos moved Frazier into a hospice care facility due to his continually declining health. The following day, Frazier was visited at the facility by his nephews, Jeff Frazier and Theodore Haun, during which Frazier told his nephews that he did not want to sign the December 2019 trust and that he felt pressured to do so by the Paganos. On January 11, 2020, at Frazier’s request and with assistance from his nephews and a new estate planning attorney, Frazier executed a new trust which modified his estate plan back to its previous form. Frazier passed away just over one week later.

In May 2020, Haun, as trustee of the January 2020 trust, filed a petition in probate court seeking confirmation that the January 2020 trust was enforceable and demanding the return of any assets taken by the Paganos from Frazier’s estate. The petition also included allegations of financial elder abuse against the Paganos. Kelly filed a competing petition in probate court in June 2020, which sought to settle the parties’ rights under the December 2019 and January 2020 trusts and similarly included financial elder abuse allegations against Jeff and Haun.

The probate court found that the requirements for a presumption of undue influence by the Paganos with respect to the December 2019 trust had been satisfied. Specifically, the probate court found that a confidential relationship existed between Frazier and the Paganos, Kelly was an active participant in the preparation of the December 2019 trust, and that the December 2019 trust provided an undue profit to the Paganos. In contrast, the probate court found that there was not undue influence by Jeff and Haun with respect to the January 2020 trust, and as such, denied Kelly’s petition. Accordingly, the probate court granted Haun’s petition and awarded him compensatory damages of $78,870.

The probate court also found the Paganos liable for financial elder abuse under section 15610.30, and Haun subsequently filed a motion requesting $595,574.50 in attorneys’ fees for all work performed on the case throughout the three years of litigation. In their opposition, the Paganos relied primarily on the Appellate Court’s decision in Carver v. Chevron U.S.A., Inc. (2004) 119 Cal.App.4th 498 (“Carver”) to support their argument that Haun was not entitled to recover any attorneys’ fees because all of the fees Haun incurred while prosecuting his claim of financial elder abuse were simultaneously incurred defending against their competing claim.

After argument, the probate court granted Haun’s fee request in part, finding the Paganos’ competing financial elder abuse claim did not deprive Haun of his right to fees under section 15657.5(a), and that apportionment of the fees was not possible because Haun’s prosecution of his financial elder abuse claim was entirely intertwined with his defense of the Paganos’ claim. The probate court ultimately awarded Haun reduced fees totaling $536,448.00 based on findings of various issues contained within the billing records that accompanied Haun’s motion.

On appeal, the Paganos again argued that, under the rationale adopted by the Court of Appeal in Carver and its progeny, Haun was not entitled to any of his fees. In Carver, the plaintiffs brought suit alleging various causes of action against Chevron including, amongst others, claims for breach of contract and for antitrust violations under the Cartwright Act. (Carver, 119 Cal.App.4th at 503-504.) Chevron prevailed and moved for an award of attorney fees under a contractual fee provision, but the trial court refused to award fees for defense of the Cartwright Act cause of action and other causes of action where there was an “inextricable overlap” with Cartwright Act issues. (Id.) On appeal, Chevron conceded it was not entitled to fees for defending the Cartwright Act cause of action, but argued that it was entitled to fees on issues in common with causes of action for which fees are awardable. (Id. at 503.) Pointing to the Cartwright Act’s unilateral fee shifting provision which awards fees only to a prevailing plaintiff, the Court of Appeal rejected Chevron’s argument and noted that allowing Chevron to recover fees for work on Cartwright Act issues simply because they overlap issues related to other causes of action would create a judicially imposed reciprocity and undermine the Legislature’s deliberate stratagem of implementing such unilateral fee shifting provisions designed to encourage more effective enforcement of certain important public policy. (Id. at 503-504.)

The Court of Appeal in Haun rejected the Paganos’ argument and affirmed the probate court’s fee award to Haun, finding Carver distinguishable on several grounds. As an initial matter, the Court noted that unlike Carver and its progeny (which all held that an award of fees to a successful defendant contravened the Legislature’s intent to encourage prosecution of certain claims by allowing prevailing party fees only to plaintiffs), there was no infringement of legislative intent in the underlying probate matter because the prevailing party (Haun) was the petitioner (i.e., plaintiff), not the defendant.

Additionally, the Court stressed that although Haun successfully defended against Kelly’s competing financial elder abuse claim, he did not seek an award of fees under a contract clause or statute that would otherwise support an award of fees to a prevailing defendant. The Court noted that it is this “direct conflict” – between a bilateral fee-shifting provision or contract clause and a unilateral statutory fee-shifting provision (such as section 15657.5(a)) authorizing a fee award only to a prevailing plaintiff – which underlies the holdings in Carver and its progeny. In those cases, the prevailing parties, although entitled to recover fees pursuant to contract or statute, were denied overlapping fees arising out of their defense to a claim with a unilateral fee-shifting provision. In contrast, the Court in Haun found that the legislative intent to encourage the prosecution of financial elder abuse claims is not undermined by awarding fees under section 15675.5(a) to a prevailing petitioner where there is no such “direct conflict” with any such contract or bilateral fee-shifting provision. 

Accordingly, the Court of Appeal held that section 15657.5(a) does not bar an award of fees for defense work that overlaps entirely with the successful prosecution of the petitioner’s own financial elder abuse claim; rather, only those fees incurred for work attributable solely to defending against the unsuccessful, competing petition would be unavailable for an award. Because the nature of the underlying probate matter was centered entirely upon the two competing claims of financial elder abuse, and because all of Haun’s fees were incurred in the prosecution of his claim or in his defense of Kelly’s claim but which were inextricably intertwined with the prosecution of his claim, the Court of Appeal found that the probate court did not abuse its discretion by awarding fees to Haun as calculated and affirmed the judgment.

In sum, the Court’s decision in Haun provides important context into fee requests under section 15657.5(a) and could have further ramifications in future cases involving fee requests sought through different unilateral fee-shifting statutory provisions.

For a thorough review of the considerations of what you might be entitled to recover as a prevailing party in a pending or contemplated lawsuit, or of how to best protect yourself against opposing fee requests, please contact the authors or your usual counsel at Atkinson, Andelson, Loya, Ruud & Romo for assistance. 

This AALRR publication is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process.

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