Reported / Citable
Background
Andrew P. McKinley and Erin B. Harris are siblings and equal beneficiaries of the McKinley Family Living Trust, of which Harris and her spouse Scott serve as co-trustees. In May 2024, McKinley filed a Probate Code section 850 petition against Harris in both her trustee and individual capacities, alleging the trustees improperly delayed trust administration and moved to sell trust assets—two San Clemente hotels—for Harris’s personal benefit.
McKinley recorded lis pendens on the properties. After the trustees represented a $15.5 million offer existed, McKinley withdrew the lis pendens and dismissed his petition without prejudice in October 2024. Harris then filed two separate attorney fee motions: one jointly with Scott as trustees, and another in her individual capacity seeking $83,434.50 in fees and $238.60 in costs. The probate court denied both, ruling it lacked equitable authority to award prevailing-party attorney fees absent statutory or contractual authorization. Harris appeals only the denial of her individual-capacity motion.
The Court’s Holding
The Court of Appeal affirmed the probate court’s denial of Harris’s individual fee motion. The court held that California’s American Rule (Code Civ. Proc., § 1021) applies to probate proceedings: attorney fees are recoverable only when authorized by statute or contract. The probate court’s equitable powers do not extend to awarding fees to a trustee sued in her individual capacity for fees incurred solely in her personal defense. The equitable authority recognized in cases like Rudnick v.
Rudnick, Estate of Ivey, Hollaway v. Edwards, and Powell v. Tagami permits charging a beneficiary’s share for fees the trustee incurred on behalf of the trust when the beneficiary brings a bad-faith, unfounded proceeding against the trust. Here, Harris sought fees for her personal defense, did not allege her defense benefited the trust, and cited no applicable statute or contract. The court also rejected reliance on Probate Code section 1002, which governs only costs, not attorney fees.
Key Takeaways
- Probate courts lack inherent equitable authority to award prevailing-party attorney fees to a trustee in her individual capacity; fees must be authorized by statute or contract.
- The equitable power to charge a beneficiary’s share for trustee attorney fees applies only when the fees were incurred in the trustee’s official capacity for the benefit of the trust, not for purely personal defense.
- Probate Code section 1002 authorizes awards of costs, not attorney fees.
- Cases such as Rudnick, Ivey, Hollaway, and Powell support allocation of statutorily recoverable trustee fees against a bad-faith beneficiary’s share, not creation of an independent fee-shifting right.
- The American Rule (Code Civ. Proc. § 1021) governs probate proceedings absent a specific statutory or contractual exception.
Why It Matters
This decision clarifies the limits of probate courts’ equitable powers regarding attorney fees. It confirms that a trustee sued individually cannot recover personal defense costs from a beneficiary’s trust share merely by invoking equity, even if the underlying petition was allegedly frivolous.
The ruling reinforces the statutory framework of the Probate Code and the American Rule, ensuring that fee-shifting in trust litigation remains tethered to specific legislative authorization or contractual agreement. It also distinguishes between a trustee’s official capacity (where fees may be reimbursed from trust assets and allocated equitably) and individual capacity (where no such equitable reimbursement exists).