Source: http://erroldmoodyjudgment.com/index.html
Timestamp: 2018-03-20 01:39:33
Document Index: 620223303

Matched Legal Cases: ['§ 16002', '§ 543', '§ 170', '§ 543', '§ 16000', '§ 16002', '§ 16004', '§ 16006', '§ 16009', '§ 16012', '§ 16040']

Errold Moody - $286,000 Judgement for Breach of Fiduciary Responsibility
$286,000 Judgment Against
Errold F. Moody
for Breach of Fiduciary Responsibility
Judgment - Breach of Fiduciary Responsiblity Summary of Case No RP 09478054:
was the trustee of my mother's estate of approximately $2.4M. He lied to beneficiaries, took trust money for personal use, failed to keep receipts, caused the trust excessive accounting fees, overpaid himself and used trust money for legal fees to defend his breaches. The judge ruled that
overpaid himself by $82,000. He has fled the state and is refusing to reimburse any money to the family.
Please read the Judgment by Superior Court Judge Steven Brick:
Judgement in .pdf format
IN THE SUPERIOR COURT OF ALAMEDA COUNTY
In re Matter of Patricia L. Francis,
DAVID SHEVICK,
ERROLD F. MOODY, JR.
MATTHEW J. GONSALVES,
CASE NO. RP 09478054
[SECOND AMENDED PROPOSED] JUDGMENT
This case presented the question of whether respondent
, Jr., breached his fiduciary duties as trustee of the Patricia L. Francis Trust during the period of his trusteeship. For the reasons that follow, the Court finds that he did and that he must make restitution to the trust in the amount of $191,955.03 and to Mr. Shevick in the amount of $95,899.41.
This case involved a trust established by the late Patricia L. Francis. It is undisputed that Ms. Francis died on December 18, 2007, that petitioner David Shevick is decedent's son and a beneficiary of her trust, and that respondent
served as trustee from Ms. Francis' death until he was suspended by the Court (Hon. Sandra K. Bean) on April 13, 2011. Judge Bean ordered that an accounting be filed by May 13, 2011, and ordered that all trust files be delivered to the newly appointed temporary trustee, attorney Ruben Sundeen. On June 14, 2011, Judge Bean removed
as trustee and appointed Mr. Sundeen as successor trustee.
's second counsel, Matthew J. Gonsalves, substituted out of the case on October 14, 2011, and
began to represent himself. Two earlier trial dates were scheduled and vacated, and on August 16, 2012, the trial dates were scheduled and vacated, and on August 16, 2012, the Court (Hon. Cecilia Castellanos) set this case for trial in Dept. 1 for December 14, 2012.
On October 22, 2012, the Court denied Gonsalves' for good faith settlement determination. On December 14, 2012, the Presiding Judge continued the trial to January 4, 2013, a date agreed upon by the parties, so that a revised application for good faith settlement determination could be heard by the (Hon. Cecilia Castellanos) on December 19, 2012. On that date the Court granted Gonsalves' motion for good faith settlement determination (to which all parties stipulated), leaving Shevick and
as the remaining parties in this matter.
On January 4, 2013, this case was assigned to the Hon. Steven Brick, Dept. 17 of this court, by Presiding Judge Clay, as a three to four day probate hearing. Trial commenced on January 4, 2013, continued on January 7, 2013, and then recessed until January 14, 2013. The evidence was on January 17, 2013. Counsel offered their closing arguments on the afternoon of January 18, 2013.
The matter was then submitted for decision, subject to ruling on respondent's motion to disqualify the trial judge pursuant to C.C.P. section 170.3, which was submitted just before closing arguments. On February 28, 2013 the Honorable Kelly V. Simmon's Marin County Superior Court, denied respondent's motion to disqualify.
FINDINGS OF FACT ESTABLISHING LIABILITY AND DAMAGES
The testimony at trial established that
had been decedent's friend and paid financial consultant for some 20 years at the time of her death. Nonetheless, he claimed to have no knowledge of decedent's many
arrived at decedent's house shortly after her death and began his work as trustee he made no inventory of the furnishings of the house. He said he took pictures of each of the rooms, but subsequently lost the pictures. He began selling and giving away various items but did not set up any system for keeping track of income and expenses of the trust or what items had gone to whom. He lost any receipts he may have obtained for the sale of furnishings and furniture.
was capable of using computers (indeed, he testified to having owned several computers which crashed during the period of his trusteeship), but did not turn on Ms. Francis' computer to see whether she had information which would have been helpful with his administration of the trust (she did, in a Quicken program that was easily accessible). Instead, he sold the computer at a garage sale.
made a habit of paying expenses with cashiers' checks or cash. He did not keep the 'stubs' of the cashiers checks.
also acknowledged that he took for himself a teak grandfather's clock from decedent's home without the knowledge or permission of the beneficiaries. He still has it. He also took some $5,000 of trust money and used it to go to Florida for his own personal reasons. He later returned the money to the trust.
Based upon information he says decedent told him over the years before her death,
distrusted petitioner and his sister at the time of decedent's death (and earlier) and thought them capable of taking trust property without permission. In fact
knows of no such property that was taken. Petitioner asked for and received permission from
to take some family photographs from decedent's home on the day of the funeral. His sister, Sarah, asked for and received permission to take two sets of silver from decedent's home.
When, in December 2008, after a year of
's managing the trust, petitioner first asked
what assets remained and how much he had charged the estate,
did not respond to that request for information.
When, in March 2009, petitioner complained that his prior request had gone unanswered, and asked for a full accounting,
insisted that petitioner make his request through a lawyer, citing the 'privacy' of the estate. Of course, the trust had no privacy interest vis a vis a beneficiary.
When petitioner correctly pointed out that as a beneficiary he had a right to the information he was asking for,
, nonetheless, insisted on petitioner hiring a lawyer. When petitioner did hire a lawyer,
hired his own lawyer and began charging the legal fees he incurred to the trust.
In fact, in the spring of 2009,
had not organized the decedent's files and could not have provided a meaningful accounting. Correspondence from the fall of 2008 through the fall of 2009 between
and the CPA firm charged with filing the trust's IRS form 706 showed that, contrary to
's representations to the beneficiaries, he had not provided to the CPAs the documents they needed to complete and file form 706. Indeed, despite having obtained a one year extension of form 706 filing deadline.
's delays in providing the required documents to the CPAs caused the trust to incur IRS penalties.
charged the trust for his own time were plainly excessive. In the accounting he claims that he paid himself $33,330.79 for probate of the Oregon condominium. A document produced by
in discovery, '
RPD 003007, instead shows that his fee for the probate was $37,330.97, which included $7,036.40 for the probate of the Oregon condominium, plus $30,294.57 as 1% of the value of the gross estate that he reported in Oregon. Thus the amount of
's fees, was misrepresented as $101,623.97 when with the correct Oregon number added, it was $105,624.17. Adding in the value of the Cadillac that
also took for himself as a portion of his trustee's fees, $4,000.00, brings
's total trustee's fees to $109,624.17.
Ruben Sundeen, Esq., the successor trustee, is the founding partner of his law firm, specializes in trust and estates litigation, and has been involved in more than 200 cases involving fee disputes. He testified that a nonprofessional trustee such as
would be allowed $40.00/hr. in Alameda County, not the $250.00/hr. that
charged to the trust. Mr. Sundeen also testified that this amount would be capped at 1% of the value of the administered estate, or up to 1.5% if the estate was complex. Mr. Sundeen testified that the trust was not complex, involving two residential properties and approximately 25 investment and bank accounts.
agreed with Mr. Sundeen's characterization, and testified that it was his own inept state of mind and disorganization that led to the difficulty in producing an accounting. The value of the estate administered by
was $2,097,529.38. Thus the maximum 1% fee should have been $20,975.94. The Oregon Probate fee of $37, 330.97 was excessive. In trial
refused to stipulate to the amount listed as compensation for the Oregon condominium probate, and instead testified that he spent about twenty hours on that matter. Using the rate commonly allowed for non-professional trustees in Alameda County, $40.00 an hour, that leaves
with a fee of $800.00 for the Oregon probate. Although
did not testify in detail as to the extent of his work to sell the house in Riverside, he did testify that he made several trips there, stayed at the home, and helped to prepare it for sale. The Court will allow $5,000.00 in fees for the sale of the Riverside residence. An appropriate fee for
's work in this matter was $26,775.94. Subtracting this from the $109,624.17 that
wrongfully took for his fees, he is ordered to reimburse $82,848.23 to the trust.
In addition, he caused the trust to incur unnecessary fees of his attorney, the CPA firm which worked on the tax filings, the Mowat, Mackie CPA firm which created the final accounting, and a bookkeeper who sought to organize the trust records after
had made a shambles of them. The amounts of these excessive and unnecessary charges are detailed below.
The form 706 CPA, through deposition testimony read out in Court, stated that her firm's usual fee for preparing a form 706 accounting for this size of estate would be less than $15,000.00, and that because of
's noncooperation and delays, the final cost of the trust accounting was $40,500.00.
is ordered to reimburse the trust $25,500.00 for these excess fees.
Additionally, Mr. Sundeen testified that the final accounting for the trust should have cost no more than $15,000.00. In testimony and evidence presented to the court,
showed the same pattern of disorganization and failure to timely provide documents to the Mowat, Mackie accounting firm as he did with the CPA that completed the IRS form 706 accounting. In December of 2012, more than three years after Ms. Francis' passing,
still was missing seventeen categories of account statements, including many bank statements. The accounting took more than six months, and the Mowat, Mackie firm charged $42,000.00 for the accounting. The excess amount of $27,000.00 will be added to the amount that
is ordered to pay to the trust.
hired a bookkeeper to organize the files, and he should have done that work himself. The total paid to the bookkeeper was $8,435.80. The total accounting and bookkeeping reimbursement to the trust for the two accounting firms and for the bookkeeper is $60,935.80
When asked on adverse examination why he had done such a poor job of managing the trust's assets and documenting his work,
explained that he had health problems which made him incapable of fulfilling his duties. In his words, he had a 'meltdown.' He again pointed to his health issues as a reason for not responding to petitioner's December 2008 request for information and for going to Florida using trust money, and for disobeying the probate court's order to turn over documents and complete the final accounting in 2010.
volunteered that he had similar health problems in the late 1990s and had to struggle to reestablish his business as a financial consultant because he had pretty much destroyed it.
When asked on adverse examination why he had insisted that petitioner make his requests for an accounting through a lawyer,
acknowledged that he wanted to hire a lawyer to protect himself because of his negative perception of petitioner and his sister, not based on anything they had said or done after decedent's death, but based on things decedent supposedly confided in him over the years before her death.
acknowledged multiple breaches of his duties as a fiduciary, by not properly administering the assets of the trust, not keeping records of the disposition of trust property, taking trust property for his own use, causing the trust to incur unnecessary and unreasonable professional expenses, overcharging the trust for his fees and not responding to the reasonable requests for information by petitioner, instead causing petitioner to incur the expenses of his own attorneys' fees to pursue his rights as a beneficiary.
offered no legitimate excuse for his behavior, which can only be viewed as malicious and oppressive (which was proven by clear and convincing evidence) within the meaning of Civil Code section 3294.
The duty of loyalty, requiring a trustee to administer the trust solely in the interest of the beneficiaries (Â§ 16002, subd. (a)), is the most fundamental duty of a trustee. (Bogert & Bogert, The Law of Trusts and Trustees (rev. 2d ed. 1993) Â§ 543, p. 217 (Bogert); 2A Scott & Fratcher, The Law of Trusts (4th ed. 1987) Â§ 170, p. 311.) Its purpose is to protect the best interests of the beneficiaries. The duty of loyalty requires a trustee to subordinate his or her interests to those of the beneficiaries in every regard. (Bogert, supra, Â§ 543, pp. 217-219.).
's failure to take an inventory, taking of trust property and cash, paying expenses with cash and cashier's checks, misrepresenting facts to beneficiaries, paying for his attorney from trust funds, forcing petitioner to hire an attorney to seek an accounting, failure to work competently with accountants, and other actions comprise multiple and severe breaches of what was
's foremost duty.
violated several provisions of the California Probate Code, including the following, evidenced by the foregoing findings of fact:
P.C. Â§ 16000 (duty to follow the terms of the trust and the law governing trusts);
P.C. Â§ 16002 (duty to administer the trust solely for the benefit of the beneficiaries of the trust); P.C. Â§ 16004 ( duty to avoid transactions with the trust that will benefit the trustee personally); P.C. Â§ 16006 (duty to marshal trust assets and take reasonable steps to preserve them);
P.C. Â§ 16009 ( duty to keep the assets of the trust separate from the trustee's assets);
P.C. Â§ 16012 (duty to perform actions on behalf of the trust rather than having others act on behalf of the trust); and
P.C. Â§ 16040 (duty to manage other professionals competently).
The court finds clear and convincing evidence that
's mismanagement of the trust went beyond ordinary breaches of trust into the realm of intentional malice and oppression. Under Civil Code section 3294, malice means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.
's taking of trust property and funds and the teak grandfather clock, and failing to keep any records, and in trial not only failing to take responsibility but trying to blame Shevick and his sister were despicable and malicious.
Under Civil Code section 3294, oppression means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights.
's conduct as described above was also oppressive in that it put Shevick and all other beneficiaries through years of delay, the stress and costs of litigation, and reduction in the value of their mother's estate and their inheritance, which were unjust hardships in conscious disregard of their rights.
's malicious and oppressive behavior, the court assesses punitive damages.
testified that 'there is no money', and no evidence was offered that
has any substantial assets or net worth. Based upon this lack of financial information, the Court assesses the minimum punitive damages award of $1.00. This amount does not diminish the seriousness of the Court's finding.
is also ordered to turn over the grandfather clock to successor trustee Sundeen.
Probate Code Section 17211(b) provides that the trustee is liable for a petitioner's legal fees if the court determines that the trustee's opposition to a petition contesting the account was without reasonable cause and in bad faith. Petitioner did challenge
's account, including the inept process by which he failed to account for trust property, failed to keep receipts, failed to track cash transactions, and caused excessive accounting fees to create the final, deficient accounting (which, for example, understated
's fee by $8,000.00).
This Court concludes that
did not have the capacity to function as a competent trustee at all times pertinent to this matter. He was asked several times to resign, did not, and continued to overcharge the trust over $75,000.00 for his inept work. He ran up excessive accounting fees through not gathering trust account data and records, and not cooperating in good faith with the accountants. Worse, he paid his attorneys from trust funds to defend his indefensible actions. These were all bad faith actions. At trial,
and his attorney put forth no substantive or successful defense, and with the one-sided documentary evidence clearly and convincingly showing
's many breaches of trust, and
's own testimony, his opposition to Shevick's petition was without reasonable cause.
must reimburse Shevick for all reasonable attorneys fees and costs in this case, reduced by the amount that Shevick previously received from the settlement with Gonsalves.
Respondent and his counsel did not address the amount of damages or restitution Shevick claimed in this matter, except that
did stipulate to turn over the grandfather clock and the Cadillac. With the amounts of restitution to the trust essentially uncontested, the Court finds that judgment should be entered against
and in favor of Shevick, and that the following amounts must be repaid by
to the trust as restitution:
Excessive Accounting and Bookkeeping Fees: $65,485.80
Excessive Trustee's Fees: 82,848.23
IRS Penalty: 12,000.00
Improperly Incurred Attorneys' Fees: 20,720.00
Portion of Mr. Sundeen's Fees Improperly Caused
's Obstructive Conduct During Litigation: 20,450.00
Punitive Damages: 1.00
Less Amount Paid to Trust by Gonsalves: (15,000.00)
Total Restitution to the trust: $191,955.03
The amount to be paid to Mr. Shevick for attorneys fees and costs is as follows:
Shevick's Attorneys Fees and Costs: 125,899.41
Less Amount paid to Shevick by Gonsalves: (30,000.00)
Total Restitution to Mr. Shevick: $95,899.41
must return the teak grandfather clock to successor trustee Ruben Sundeen. If
does not make a restitution payment of at least $4,000 within 60 days of his receipt of service of the executed Judgment in this matter, he shall turn over the Cadillac, with signed deed for the transfer, to Ruben Sundeen, trustee.
HONORABLE STEVEN A. BRICK