Court Opinion

ID: 4649546
Source: CourtListenerOpinion
Date Created: 2021-01-06 21:02:17.644583+00
Date Added: 2024-06-11T08:01:25.845837
License: Public Domain

Filed 1/6/21 Kvassay v. Kvassay CA2/2
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                        DIVISION TWO

 ROBERT V. KVASSAY, as Trustee,                                         B297461
 etc.,
                                                                        (Los Angeles County
           Plaintiff and Respondent,                                    Super. Ct. No. BP122477)

           v.

 PETER E. KVASSAY et al.,

           Defendants and Appellants.

     APPEAL from an order of the Superior Court of Los
Angeles County, Maria E. Stratton, Judge. Affirmed.
     Troy A. Stewart for Defendants and Appellants.
     Matthew C. Brown for Plaintiff and Respondent.
      In this most recent appeal from a seemingly never-ending
dispute between appellants Peter Kvassay and Richard Kvassay
and their brother, respondent Robert Kvassay, appellants
challenge probate court orders dated December 14, 2018 and
January 28, 2019 (1) denying their petition to remove Robert1 as
trustee of the Kvassay Family Trust (the Trust), and (2)
approving an amended second accounting. We affirm the orders.

                         BACKGROUND2
       Robert, Peter, and Richard are equal beneficiaries of the
Trust. The Trust’s sole asset is a 3.5-acre residential property
located at 1554 Hill Drive in Los Angeles, California (the
property). Robert has served as trustee of the Trust since 2007.
       In five previous appeals filed by Peter and Richard, this
court (1) affirmed an order evicting appellants from the property,
(2) affirmed a judgment (a) awarding Robert as trustee $196,660
in damages for the lost value of the use and occupancy of the
property during the pendency of appellants’ appeal from the
eviction order, and (b) releasing to Robert as trustee $196,660

1    Because the parties share the same surname, we refer to
them by their first names to avoid confusion. We refer to Peter
and Richard collectively as appellants.

2      The facts concerning the parties’ longstanding dispute are
set forth in nonpublished opinions we issued in five previous
appeals by Peter and Richard. (See Kvassay v. Kvassay (May 15,
2019, B288555), Kvassay v. Kvassay (Aug. 1, 2018, B284976),
Kvassay v. Kvassay (Aug. 5, 2015, B250855), Kvassay v. Kvassay
(May 14, 2014, B246941), Kvassay v. Kvassay (Feb. 3, 2012,
B227557).) We reiterate the underlying facts only as necessary to
adjudicate this appeal.

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from a $216,000 cash deposit appellants posted to stay
enforcement of the eviction order pending their appeal; (3)
affirmed orders (a) authorizing Robert as trustee to convey to the
Trust loan funds appellants fraudulently obtained by
encumbering the property, (b) offsetting against appellants’
distributive shares of the Trust the amount of the unaccounted
for proceeds of their fraudulently obtained loan, and (c) affirmed
in part an amended first account prepared by Robert as trustee;
(4) affirmed a judgment in Robert’s favor after the probate court
granted Robert’s special motion to strike Peter’s and Richard’s
causes of action for conversion and declaratory relief concerning
the $216,000 cash deposit they forfeited upon losing their appeal
of the eviction order; and (5) affirmed orders authorizing Robert,
as trustee, to sell the property and to use sale proceeds to pay off
the loan encumbering the property.

The parties’ respective petitions
      Peter and Richard filed a verified petition to remove Robert
as trustee on November 26, 2014. The petition alleged, among
other things, that Robert and his wife made the property their
permanent residence and paid no rent to the Trust. The petition
further alleged that Robert and his wife executed a promissory
note for a $1.5 million loan payable to Oak Tree Funding
Corporation secured by a deed of trust on the property recorded
on May 21, 2014, and that Robert, as trustee, recorded a
quitclaim deed on June 3, 2014 transferring the property to
himself and his wife as joint tenants.
      Robert filed a petition for settlement of an amended second
account and report of administration on September 1, 2017.
Pursuant to directions given by the probate court on June 9,

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2017, the account covered the period July 1, 2010 through
December 1, 2016.
      Robert served requests for admissions pertaining to
appellants’ petition to remove him as trustee. Neither Richard
nor Peter responded. Robert thereafter moved for an order
deeming admitted the unanswered requests for admissions, and
the probate court granted the motion as to each of Richard and
Peter.

Trial on petitions
       The parties’ respective petitions were tried before the
Honorable Maria Stratton on December 14, 2018. After hearing
testimony from the parties, Judge Stratton found that appellants
failed to present any evidence of breach of fiduciary duty,
negligence, or misconduct by Robert as trustee and denied the
petition to remove him as trustee.
       Judge Stratton also heard testimony from Robert about
preparation of the accounting and from Robert’s attorneys
concerning fees and costs he incurred as trustee in defending
against the multiple lawsuits filed by appellants. Judge Stratton
found that Robert sustained his burden of justifying the accuracy
of the accounting and the reasonableness of the expenses,
overruled appellants’ objections to the accounting, and approved
the amended second account as supplemented.
       Judge Stratton’s written ruling granting Robert’s petition
and denying appellants’ petition was entered in the minutes of
the Superior Court on December 14, 2018. After Judge Stratton
took her position as an Associate Justice in the Second Appellate
District, the Honorable Michael C. Small signed the January 28,
2019 order after trial on petitions.

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                  CONTENTIONS ON APPEAL
      Appellants raise the following contentions on appeal:
I. The probate court improperly excused Robert’s duty as trustee
to account annually to the beneficiaries.
II. The probate court lacked jurisdiction to approve trust
disbursement and expense claims that were purportedly
discharged in appellants’ respective bankruptcy proceedings.
III. The probate court erred by not following binding legal
principles in approving Robert’s attorney fees claims. The court
further erred by awarding attorney fees absent any evidence that
the Trust has funds to pay the fees.
IV. The probate court erred in deeming admitted the requests for
admissions to which appellants failed to respond.
V. Judge Small lacked jurisdiction to enter the January 28, 2019
order after trial on petitions. Appellants were denied the
opportunity to move to challenge Judge Small under Code of Civil
Procedure section 170.6.

                          DISCUSSION
I. Duty to account
       A. Applicable law and standard of review
       Probate Code section 16062, subdivision (a) requires the
trustee of a trust to “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.” (Prob. Code,
§ 16062, subd. (a).)
       Section 6.02 of the Trust similarly provides that “[t]he
Trustee shall periodically, at least annually, prepare[] and

                                 5
deliver to each beneficiary . . . an accounting in writing of the
Trustee’s administration of the trust.”
      The probate court’s settlement and approval of a trustee’s
accounting is reviewed for abuse of discretion. (In re McLennan’s
Estate (1938) 29 Cal.App.2d 666, 668.)

      B. No abuse of discretion
      The probate court addressed appellants’ argument that
Robert breached his duty as trustee to account annually to the
trust beneficiaries as follows:
      “Objectors also complain that Robert never gave them
      the annual accounting to which they were entitled by
      the trust instrument. The court finds that in light of
      the obstructionist tactics used by objectors to thwart
      the proper and orderly administration of the trust by
      Robert, any failure by Robert to provide an annual
      accounting is excused. The accountings he has filed
      to date are precise and complete, in proper format,
      and in accordance with deadlines set by the court.
      Objectors have not shown any prejudice in this
      regard. Their belated objections now are overruled.”
      Appellants fail to demonstrate any abuse of discretion.
Substantial evidence supports the probate court’s finding that
appellants engaged in obstructionist tactics to thwart the orderly
and proper administration of the Trust. The record shows that
appellants encumbered the Trust property with fraudulently
obtained loans; obstructed Robert’s efforts to repair, renovate,
and market the property; and filed multiple lawsuits against
Robert in state, federal, and bankruptcy court. All of the
lawsuits were resolved in Robert’s favor. The accountings

                                6
prepared by Robert were filed in accordance with deadlines set by
the probate court. Nothing in the record indicates that
appellants raised any objection at the time those deadlines were
set, and appellants have demonstrated no resulting harm or
prejudice.

II. Effect of bankruptcy discharges
      Appellants’ argument that their respective bankruptcy
discharges precluded the probate court from approving the trust
disbursement and expense reimbursement claims is both
meritless and frivolous. As we noted in a prior appeal, the scope
and effect of appellants’ respective bankruptcy discharges on
Robert’s administration of the Trust is an issue that was
previously adjudicated in Robert’s favor. On May 31, 2018, the
bankruptcy court adjudicated summary judgment motions filed
by Robert individually and as trustee of the Trust against Peter
and Richard. The judgments entered declared that appellants’
respective bankruptcy discharges did not prohibit Robert from
paying Trust administration expenses from trust assets; from
seeking and receiving reimbursement from the Trust for trust
administration expenses paid by him from non-trust funds; from
seeking damages against appellants for any obligations,
expenses, or liabilities arising after their respective petition
dates; or from recouping from appellants’ respective share of the
Trust residue any obligations owed by appellants to the Trust.
On February 11, 2019, the United States Bankruptcy Appellate
Panel for the Ninth Circuit affirmed the bankruptcy court’s
judgments entered against Peter and Richard. (Kvassay v.
Kvassay (May 15, 2019, B288555).) On May 4, 2020, the United
States Court of Appeals for the Ninth Circuit affirmed the

                                7
Bankruptcy Appellate Panel’s decisions pertaining to appellants’
respective bankruptcy proceedings.3 The bankruptcy court
judgments, as affirmed by the Ninth Circuit, make clear that the
discharge orders entered in appellants’ respective bankruptcy
actions do not deprive the probate court of jurisdiction to approve
Trust disbursement and expense reimbursement claims.

III. Attorney fees
       “‘Attorneys hired by a trustee to aid in administering the
trust are entitled to reasonable fees paid from trust assets.
Preparing the accounting and responding to the beneficiaries’
objections to that accounting are aspects of trust administration.’
[Citation.]” (Donahue v. Donahue (2010) 182 Cal.App.4th 259,
267.) The fees incurred must be reasonable and appropriate to
the circumstances of the trust. (Id., at p. 268.) The evidence
submitted to support the fee request must be sufficient to “‘allow
the court to consider whether the case was overstaffed, how much
time the attorneys spent on particular claims, and whether the
hours were reasonably expended.’ [Citation.]” (Id., at p. 271.)
We review the probate court’s decision granting Robert’s request
for fees payable from the Trust assets under the abuse of
discretion standard. (Id., at p. 268.)
       Appellants fail to establish any abuse of discretion. The
probate court’s written order states that “the multiple legal
actions filed by Richard and Peter since the death of
grantor - actions which challenged the manner in which Robert
acted as trustee and his authority to act as trustee – were
appropriately defended by Robert and the fees should be paid by

3     We grant Robert’s request that we take judicial notice of
the relevant bankruptcy court documents.

                                 8
the trust. To the extent Robert seeks reimbursement of attorney
fees and costs he paid personally, that reimbursement is
approved. Robert is entitled to reasonable attorney fees for
defending his administration of the trust and the court finds,
based on his testimony and the testimony of counsel that the
requested attorney fees are reasonable in amount and in hourly
rate.” The court found that testimony to be credible and that
each attorney “testified in painstaking detail” to the legal
services provided, authenticated the invoices, and described in
detail the multiple lawsuits brought by appellants. The probate
court further found that the defense of the actions benefitted the
Trust by allowing Robert to complete repair of the sole trust asset
and to sell it at or above fair market value.
      The probate court found that Robert’s retention of three
separate law firms to defend against appellants’ lawsuits was
neither excessive nor unreasonable, given the multiple forums
(Superior Court, California Court of Appeal, U.S. Bankruptcy
Court, and the Ninth Circuit Court of Appeals) in which
appellants litigated against Robert.
      The record does not support appellants’ claim that the
Trust lacks assets to pay the attorney fees. The amended second
account shows that as of December 16, 2017 the property, the
sole Trust asset, had an estimated fair market value of
$4,564,268.60.

IV. Requests for admissions
      Appellants demonstrate no abuse of discretion in the
probate court’s ruling deeming admitted the matters in the
unanswered requests for admissions. (See Solv-All v. Superior
Court (2005) 131 Cal.App.4th 1003, 1007.) Appellants cite no

                                 9
authority to support the argument that they were not obligated to
respond because Robert’s attorney, Matthew Brown, had not filed
a notice of association of counsel. The argument is without merit
in any event. Appellants have known since at least 2014 that
Brown was Robert’s counsel, as Brown has appeared as such in
multiple prior appeals adjudicated by this court. (See Kvassay v.
Kvassay (May 15, 2019, B288555), Kvassay v. Kvassay (Aug. 1,
2018, B284976), Kvassay v. Kvassay (Aug. 5, 2015, B250855),
Kvassay v. Kvassay (May 14, 2014, B246941).)
      We reject appellants’ argument that the probate court’s
order was improper because Robert’s motion was not filed and
served within 16 court days of the hearing. Appellants did not
seek a continuance of the hearing or additional time to prepare
their opposition. Neither in their opposition to the motion nor at
the hearing did appellants argue they had insufficient time to
address the motion. Rather, the record shows appellants had
ample time to, and did, address the motion, failed to seek a
continuance, and failed to demonstrate any prejudice from the
allegedly untimely service.

V. Jurisdiction to enter order
      Judge Small had both jurisdiction and authority to enter
the January 28, 2019 order after trial on petitions. That order
was entered after Judge Stratton’s December 14, 2018 ruling was
entered in the court minutes, and Judge Stratton became
unavailable because she assumed her position as an Associate
Justice in the Second Appellate District. Code of Civil Procedure
section 635 authorizes Judge Small’s entry of the January 28,
2019 order. The statute provides: “In all cases where the
decision of the court has been entered in its minutes, and when

                               10
the judge who heard or tried the case is unavailable, the formal
judgment or order conforming to the minutes may be signed by
the presiding judge of the court or by a judge designated by the
presiding judge.” (Code Civ. Proc., § 635.)
       Appellants’ argument that they were denied an opportunity
to move to challenge Judge Small under Code of Civil Procedure
section 170.6 is without merit. That statute is inapplicable.
Code of Civil Procedure section 170.6 prohibits a judge of the
Superior Court from trying a civil action or proceeding, or from
hearing a matter that involves a contested issue of law or fact
when it is established that the judge is prejudiced against a party
or attorney.4 Judge Small did not try any part of this case or
hear any matter in the case that involved a contested issue of law
or fact. He merely signed the order after trial on petitions, as
authorized under Code of Civil Procedure section 635, after Judge
Stratton became unavailable.

4       Code of Civil Procedure section 170.6, subdivision (a)(1)
states: “A judge, court commissioner, or referee of a superior
court of the State of California shall not try a civil or criminal
action or special proceeding of any kind or character nor hear any
matter therein that involves a contested issue of law or fact when
it is established as provided in this section that the judge or court
commissioner is prejudiced against a party or attorney or the
interest of a party or attorney appearing in the action or
proceeding.” Subdivision (a)(2) of Code of Civil Procedure section
170.6 sets forth the procedure for establishing the alleged
prejudice of a judge, court commissioner, or referee. (Code Civ.
Proc. § 170.6, subd. (a)(2).)

                                 11
                         DISPOSITION
      The probate court’s December 14, 2018 and January 28,
2019 orders are affirmed. Robert shall recover his costs on
appeal.
      NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

                             ____________________________, J.
                             CHAVEZ

We concur:

__________________________, Acting P. J.
ASHMANN-GERST

__________________________, J.
HOFFSTADT

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