Court Opinion

ID: 2802801
Source: CourtListenerOpinion
Date Created: 2015-05-21 21:09:05.690233+00
Date Added: 2024-06-11T11:29:46.044291
License: Public Domain

Filed 5/21/15 Estate of Basmajian CA2/3
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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 THREE

                                                                     B251475
Estate of JOHN BASMAJIAN, Deceased.

                                                                     (Los Angeles County
CARLA ADELMANN,                                                      Super. Ct. No. LP006178)

         Petitioner and Appellant,

         v.

RICHARD J. BASMAJIAN,

         Objector and Respondent.

         APPEAL from an order of the Superior Court of Los Angeles County, James A.
Steele, Judge. Affirmed.
         Beltran, Beltran, Smith, Oppel & MacKenzie and Thomas E. Beltran for Petitioner
and Appellant.
         Richard J. Basmajian, in pro. per., for Plaintiff and Respondent.
                                        _________________________
                                     INTRODUCTION
       Beneficiary Carla Adelmann appeals from the order of the probate court denying
her request to recover attorney fees she incurred in litigation with her brother
Richard J. Basmajian, while he was trustee of the John Basmajian Living Trust
(the trust). An award of attorney fees is authorized by Probate Code section 17211,
subdivision (b)1 for a beneficiary who contests the trustee’s account if the trustee’s
opposition to the contest was “without reasonable cause and in bad faith.” The probate
court determined that Adelmann’s evidence did not show that Basmajian acted
unreasonably or in bad faith and denied Adelmann’s fee request. We conclude Adelmann
has not demonstrated error. Accordingly, we affirm.
                   FACTUAL AND PROCEDURAL BACKGROUND
       1. The trust
       Some of the pertinent facts are set forth in our earlier three opinions in this case
(case Nos. B146995, B156908, & B191507). Basmajian, an attorney who had a real
estate license, and his sister Adelmann are the primary beneficiaries of the trust created in
1985 by their father (decedent). At his death, decedent’s assets were worth
approximately $1.4 million and consisted primarily of a house where Adelmann lived, an
apartment building, mutual funds, some accounts, and a promissory note in the sum of
$250,000. The trust provided, after gifts to each of decedent’s two ex-wives, that
Adelmann was to receive the house, and that Basmajian and Adelmann were to divide the
residue, including the apartment, equally. The siblings were to be cotrustees.
       With respect to the promissory note asset, decedent had loaned $250,000 to
Basmajian, and Basmajian executed the promissory note, which provided for 5 percent
annual rate of interest beginning November 1, 1995. Basmajian used the money to
purchase an interest in a banquet hall. He made no payments on the note during
decedent’s life.

1
       All further statutory references are to the Probate Code, unless otherwise noted.

                                              2
       Decedent executed an amendment to the trust dated December 1, 1997, that among
other things, designated Basmajian as the sole trustee. Decedent died two weeks later on
December 14, 1997. After decedent’s death, Basmajian, as sole trustee, forgave himself
the $250,000 loan and commenced managing the apartment building.
       2. Adelmann’s petitions and requests for accounting
       Between 1998 and 2000, Adelmann filed at least three petitions and requests
seeking, among other things, to declare the trust amendment void based on undue
influence, to have Basmajian removed as trustee, and to compel an accounting. She also
filed a request for instructions and distribution, a motion for restraining order, her own
account, and objections to Basmajian’s accounts. Among the issues Adelmann raised in
these many filings was her concern that Basmajian either omitted the $250,000
promissory note from the list of trust assets, or recharacterized the note as a gift.
       Basmajian submitted accounts that variously listed the $250,000 note as an asset
of the trust, omitted it, and ultimately listed it as “ ‘subsequently recharacterized as a
gift.’ ” Some of Basmajian’s accounts were rejected for filing for technical flaws.
       In May 2000, the probate court submitted to a referee the question of whether the
$250,000 note was a loan to Basmajian and part of the trust estate, or whether it was a
gift. Basmajian did not call any witnesses. The referee issued her findings that the
$250,000 promissory note “ ‘is an asset of the [trust]’ ” The probate court adopted the
referee’s findings.
       Basmajian appealed from that ruling contending that the referee lacked authority
to consider the characterization of the $250,000 note. Even if the referee had authority,
Basmajian contended he was not given adequate notice of the subject of the reference.
However, although he disagreed with the referee’s conclusion that the loan had not been
transmuted into a gift, Basmajian did not challenge the sufficiency of the evidence to
support that finding. He declared that the reason he opted not to raise a substantial
evidence challenge on appeal was that he had not called witnesses at the reference
hearing because he was unaware that the issue was to be raised and litigated at that time.

                                               3
       In our first opinion (case No. B146995) filed in July 2002, we held that the referee
had the authority to consider the status of the $250,000 and rejected Basmajian’s notice
contention. We ordered Basmajian to pay the costs of appeal personally after finding his
appeal was an attempt to benefit himself personally (§ 1002),2 but determined it was not
appropriate to sanction him for making misrepresentations to us on a procedural matter.
       While the first appeal was pending, the parties tried the question of whether the
trust amendment was procured by undue influence, an issue raised in a petition Adelmann
filed in 1998. In December 2001, six months before we filed our first opinion, the
probate court ruled that the amendment was the product of undue influence exerted on the
decedent by Basmajian and was therefore null and void. Basmajian filed his second
appeal.
       The probate court removed Basmajian as trustee in March 2002 and appointed a
successor trustee. In June 2003, we filed our opinion in the second appeal (case No.
B156908) affirming the probate court’s ruling that the trust amendment was the product
of undue influence.
       In the third appeal (case No. B191507), we reversed the probate court’s finding
that Basmajian’s two prior appeals were contests in violation of the trust’s no-contest
clause. Our third opinion in this case was filed in October 2007.
       3. Adelmann’s request for attorney fees pursuant to section 17211, subdivision (b)
at issue in this appeal
       On December 18, 2000, Adelmann filed a petition for, inter alia, (1) recovery of
trust property, (2) submission of the second account current, and (3) attorney fees. The
probate court took the matter off calendar because Basmajian’s first appeal was pending.
       After all three appeals were resolved, Adelmann returned to the probate court to
press the attorney fee request she filed on December 18, 2000. At the direction of the

2
        Section 1002 reads, “Unless it is otherwise provided by this code or by rules
adopted by the Judicial Council, either the superior court or the court on appeal may, in
its discretion, order costs to be paid by any party to the proceedings, or out of the assets
of the estate, as justice may require.”

                                              4
probate court, Adelmann supplemented her December 2000 petition on July 29, 2010,
June 24, 2011, and again on June 10, 2013.3 Adelmann’s petition and supplements
explained that she sought fees for what she called Basmajian’s opposition to her attempts
to obtain an accounting in 1998, and her responses to Basmajian’s opposition to her
objections to his account (§ 17211, subd. (b)). More specifically, although somewhat of a
moving target, Adelmann based her claim to section 17211 fees on “Basmajian’s delay,
bad faith opposition, which was without reasonable cause, first, to Adelmann’s request
that he render an account, and second, to her contest of the account, and third, to his
appeal, in which he admitted that the evidence against him was sufficient.”
       Counsel finally focused Adelmann’s claims by clarifying at the hearing on her
petitions and supplements that her fee request was for Basmajian’s unreasonable and bad
faith claim, made in his opposition to her request for an account, that the $250,000
promissory note was not a loan but a gift to him. She argued that Basmajian had
conceded in his first appeal that the note was a loan and hence an asset of the trust. As
evidence of this concession, Adelmann quoted from Basmajian’s appellate brief, reflected
in a statement in our first opinion, that he did not challenge the sufficiency of the
evidence to support the referee’s finding that the $250,000 promissory note was a trust
asset. Adelmann asserted that Basmajian’s decision to forgo a challenge to the referee’s
factual finding constituted his concession that the $250,000 note was a loan and belonged
to the trust. Therefore, she argued, he had no reasonable basis to bring his first appeal.
Counsel stated to the probate court, “What I’m hanging my hat on, really, though, is his
[Basmajian’s] statement in there that the evidence was sufficient against him. If the
evidence is sufficient against him and he said that before the appeal, then, what was -- as
a fiduciary, what was basis to contest? That’s really it. That’s the finding.” (Italics
added.) Adelmann also cited as evidence of Basmajian’s bad faith our decision to impose

3
        Adelmann’s June 10, 2013 supplement sought $105,571.75 in fees covering her
attorney’s work from March 12, 1999 through January 10, 2003, for expenses of
litigation in responding to Basmajian’s opposition to her objections to his account. Her
petition and supplements also sought other remedies not at issue here.

                                              5
costs on Basmajian personally because his first appeal was designed to benefit himself.
Adelmann argued that an evidentiary hearing on her section 17211, subdivision (b)
attorney fee request was unnecessary because the statements made in Basmajian’s
appellate brief and our opinion constituted her evidence.
       The probate court ruled, with respect to Adelmann’s petition for fees under section
17211, subdivision (b), that “the evidence does not support a finding that [] Basmajian
acted both objectively unreasonably or subjectively in bad faith.” Adelmann’s appeal
ensued.
                                     CONTENTIONS
       Adelmann contends that Basmajian’s opposition was without reasonable cause and
in bad faith with the result the probate court should have awarded her attorney fees under
section 17211, subdivision (b).
                                      DISCUSSION4
       Section 17211, subdivision (b)5 authorizes the award of attorney fees and costs to
a beneficiary who contests the trustee’s account if the trustee’s opposition to the contest
was “without reasonable cause and in bad faith.” (Italics added.) We analyzed section
17211, subdivision (b) in Uzyel v. Kadisha (2010) 188 Cal.App.4th 866 (Uzyel). We held
that “reasonable cause” is ordinarily “synonymous with ‘probable cause’ as used in the
malicious prosecution context,” although unlike malicious prosecution, reasonable cause
under section 17211, subdivision (b) is analyzed with reference to the defense, rather than
the prosecution of a proceeding. (Uzyel, supra, at pp. 926-927.)

4
       This order was appealable as an order refusing to allow the payment of
compensation or expenses of an attorney (§ 1300, subd. (e); Code Civ. Proc., § 904.1,
subd. (a)(10)).
5
       Basmajian raises a procedural basis for denying Adelmann’s fee request based on
Code of Civil Procedure section 1033.5 and California Rules of Court, rule 3.1702,
concerning proceedings in civil court, not the probate court. This procedural contention
overlooks the fact that Adelmann’s fee petition relies on section 17211, subdivision (b) of
the Probate Code.

                                             6
       “Reasonable cause” to defend, i.e., oppose a contest to an account “requires an
objectively reasonable belief, based on the facts then known to the trustee, either that the
claims [raised in the contest] are legally or factually unfounded or that the petitioner is
not entitled to the requested remedies. Conversely, there would be no reasonable cause to
oppose a contest of an account only if all reasonable attorneys would have agreed that the
opposition was totally without merit, or, in other words, no reasonable attorney would
have believed that the opposition had any merit.” (Uzyel, supra, 188 Cal.App.4th at
p. 927.) This reasonable cause “is a low threshold designed to protect a litigant’s right to
assert arguable legal claims even if the claims are extremely unlikely to succeed.
[Citations.]” (Ibid.) On appeal, if there is no factual dispute about the trustee’s
knowledge at the time of the opposition, we independently review the probate court’s
finding of reasonable cause. (Ibid.)6
       “ ‘[B]ad faith’ in this context concerns the trustee’s subjective state of mind and
cannot be inferred from the absence of probable cause alone. [Citation.]” (Uzyel, supra,
188 Cal.App.4th at p. 927, fn. 47, citing Downey Venture v. LMI Ins. Co. (1998)
66 Cal.App.4th 478, 498-499 [concerning malicious prosecution’s “malice” element].)
The “evidence must include proof of either actual hostility or ill will on the part of the
defendant or a subjective intent to deliberately misuse the legal system for personal gain
or satisfaction at the expense of the” beneficiary. (Downey Venture v. LMI Ins. Co., at
pp. 498-499.)
       Thus, to recover fees under section 17211, subdivision (b), the petitioner must
show “an unsuccessful [opposition], which any reasonable attorney would regard as
totally and completely without merit [citation], for the intentionally wrongful purpose of
injuring another person.” (Downey Venture v. LMI Ins. Co., supra, 66 Cal.App.4th at
p. 499; Uzyel, supra, 188 Cal.App.4th at p. 926.)

6
        Adelmann cites us to Estate of Gonzalez (2002) 102 Cal.App.4th 1296, at
page 1306 for the meaning of “reasonable cause.” We do not consider Estate of Gonzalez
as it involved the meaning of that phrase in former section 21306, whereas our opinion in
Uzyel is considerably more recent and involves section 17211, subdivision (b) itself.

                                              7
       Here, it appears that Adelmann’s December 18, 2000 petition for an account and
her many supplements constitute a “contest” of the trustee’s account as contemplated by
section 17211, subdivision (b). This is because Basmajian’s duty to account is
inseparable from his duty to carry out the terms of the trust by marshalling and
distributing assets, and Adelmann’s petition arose from and was related to that duty.
(Leader v. Cords (2010) 182 Cal.App.4th 1588, 1598-1599 [holding petition seeking
order compelling trustee to distribute remaining trust assets concerns internal affairs of
trust and is a contest under § 17211, subd. (b)].)
       However, although procedurally Adelmann’s petition falls within the ambit of
section 17211, subdivision (b), she has not demonstrated a right to recover fees under that
statute. Her claim that Basmajian lacked reasonable cause is premised on his decision in
the first appeal not to challenge the evidentiary basis for the referee’s finding that the
$250,000 promissory note was a trust asset. She argues here, as she did below, that
Basmajian’s omission of that contention on appeal constitutes his acknowledgement that
the promissory note belonged to the trust, with the result his opposition to her contest, in
which he claimed the $250,000 was a gift to him, was unreasonable.
       “The ‘substantial evidence rule’ is one of the most formidable hurdles facing
appellants after a trial on the merits. [¶] When the case was tried on its merits, the court
of appeal invokes several presumptions in support of the judgment. All evidentiary
conflicts are resolved in favor of the judgment; and, so long as the judgment was
supported by ‘substantial evidence,’ the appellate court will not reweigh the evidence.”
(Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2014)
§ 1:45, p. 1-11 (Civil Appeals & Writs); accord Winograd v. American Broadcasting Co.
(1998) 68 Cal.App.4th 624, 631-632.) “In practice, reversal for ‘insufficient’ evidence
[citation] is relatively rare.” (Civil Appeals & Writs, supra, § 8:38, p. 8-19, italics
added.) “Defendants raising a claim of insufficiency of the evidence assumes [sic] a
‘daunting burden.’ [Citation.]” (Whiteley v. Philip Morris Inc. (2004) 117 Cal.App.4th
635, 678.) “The substantial evidence standard of review is generally considered the most
difficult standard of review to meet, as it should be, because it is not the function of the

                                              8
reviewing court to determine the facts.” (In re Michael G. (2012) 203 Cal.App.4th 580,
589.) Accordingly, counsel bringing an appeal must assess, among other things, whether
a claim of error would be defeated by the substantial evidence rule. (Civil Appeals &
Writs, supra, § 1:52, p. 1-12.) A determination not to raise a challenge to the sufficiency
of the evidence, then, arises from an exercise of legal judgment.
       Basmajian did not call witnesses at the reference hearing and so he had no
evidence to submit on appeal to counter the referee’s finding. Thus, he made the
determination not to challenge the sufficiency of the evidence. In no way is Basmajian’s
decision to forgo a substantial evidence challenge tantamount to a “concession” that the
referee was correct. The daunting hurdle that the substantial evidence rule poses for
appellants shows that Basmajian had reasonable cause to omit from his appeal any
contention based on substantial evidence and his decision was not totally and completely
without merit. Stated otherwise, we cannot say that no reasonable attorney would have
made the same decision.7 (Uzyel, supra, 188 Cal.App.4th at p. 927.) Likewise, although
we imposed fees on Basmajian on appeal on the ground his first appeal was an attempt to
benefit himself personally (§ 1002), we decided not to sanction him for frivolous appeal.
The imposition of section 1002 fees is not a determination that Basmajian acted
unreasonably as that term is used in section 17211, subdivision (b). Therefore, we hold
that Adelmann has failed to demonstrate that Basmajian lacked reasonable cause to
oppose her petitions for an account and so we need not address the question whether
Basmajian’s conduct constituted bad faith. (§ 17211, subd. (b) [written in the
conjunctive, requires a showing of both lack of reasonable cause and bad faith].)8

7
       Adelmann’s brief on appeal raises three other reasons why she believes Basmajian
lacked reasonable cause to oppose her contest. We have considered those reasons and
conclude two bases do not demonstrate Basmajian acted unreasonably and the third
reason does not fall within the statute.
8
       Basmajian’s request for sanctions filed on December 10, 2014 is denied.

                                             9
                                    DISPOSITION
      The order of July 22, 2013 denying Carla Adelmann attorney fees under section
17211, subdivision (b) is affirmed. Each party to bear its own costs on appeal.

      NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                                ALDRICH, J.

We concur:

             KITCHING, Acting P. J.

             EGERTON, J.*

*
      Judge of the Superior Court of Los Angeles County, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.

                                           10