McKinley v. Harris

Filed 10/13/26 CERTIFIED FOR PUBLICATION IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION THREE ANDREW P. MCKINLEY, Plaintiff and Respondent, G066032 v. (Super. Ct. No. 30-2024- 01398694) ERIN B. HARRIS, OPINION Defendant and Appellant. Appeal from an order of the Superior Court of Orange County, Megan Wagner, Judge. Affirmed. Katz Ruby & Carle, Michael I. Katz, Byron H. Ruby and David B. Sarfati for Appellant. Rutan & Tucker, Lisa N. Neal, Heather N. Blackinton and Samantha L.G. Papuchis for Respondent.  Trust beneficiary Andrew P. McKinley filed a Probate Code section 850 1 petition against trustee Erin B. Harris in both her individual and trustee capacities. After McKinley dismissed the petition, Harris filed two motions for attorney fees: one for fees incurred in her capacity as trustee, and another for fees incurred in her individual capacity. Harris cited the probate court’s equitable powers as the basis for the fee requests. The probate court denied both motions on the ground it lacked the power to award attorney fees absent statutory or contractual authorization. This appeal concerns only the order denying the motion Harris filed in her individual capacity. She contends the probate court’s broad equitable powers allow it to award attorney fees to a respondent sued in her individual capacity, even absent a fee-shifting statute or contractual provision. We disagree and affirm the trial court’s order. STATEMENT OF FACTS AND PROCEDURAL HISTORY I. PARTIES AND TRUST Appellant Harris and her spouse, Scott Harris, are the trustees of the McKinley Family Living Trust dated July 9, 2010 (the Trust), which Harris’s late parents established in 2010. Harris and her two siblings, respondent McKinley and nonparty Marcus J. McKinley, are the sole, equal beneficiaries of the Trust. Among the assets included in the Trust corpus at the outset of these proceedings were two hotels in San Clemente. 1 All statutory references are to the Probate Code unless otherwise indicated. 2  II. PETITIONS AND LIS PENDENS A. Original Petition In May 2024, McKinley filed a verified petition for recovery of estate assets pursuant to section 850. McKinley named Harris and Scott as respondents in their capacities as trustees. 2 He also named Harris as a respondent in her individual capacity. According to McKinley’s petition, the Trust required allocation of the hotels into separate shares for the benefit of each beneficiary, but the trustees instead “intentionally delay[ed] the administration” of the Trust and “have aggressively taken steps to control and liquidate” the properties “without regard to the best interests” of the Trust and beneficiaries. McKinley alleged he and his spouse had successfully managed the hotels for over two decades, but in January 2024 Harris demanded they cease all communications with hotel employees. In March 2024, Harris, “in her capacity as co-trustee,” notified him the Trust had listed the hotels for sale. In April 2024, the trustees’ counsel confirmed the properties were for sale and advised McKinley the trustees planned to terminate McKinley and his spouse as the property managers. McKinley alleged Harris did not provide “any factual or other basis” why these actions were in the best interest of the Trust, though she informed McKinley the sale would “produce the means for her to personally invest in other opportunities that hold the potential for 2 Consistent with our practice when parties or others involved in litigation share the same last name, we frequently refer to them by their first names to avoid confusion. We do so here with respect to Scott Harris to distinguish him from his co-trustee, Erin Harris, whom we refer to as Harris. 3 better financial gain.” McKinley promptly “request[ed] all documents” related to the sales plan, but the trustees did not provide them. McKinley asserted the Trust gave him a one-third interest in each of the hotels, and he requested an order requiring transfer of those interests into the Andrew P. McKinley Trust. McKinley additionally requested “double the value of the one-third share” pursuant to section 859, due to the trustees’ alleged wrongful and bad faith actions. B. Lis Pendens Shortly after filing the petition, McKinley recorded two lis pendens, one on each hotel property. Both lis pendens identified Harris and Scott as trustees, Harris individually, and Marcus individually as those with potential interests in the properties. C. First Amended Petition McKinley filed a first amended petition in August 2024. The substantive allegations and requests for relief mirrored those of the original petition in all relevant respects. Like the original petition, McKinley’s first amended petition sued Harris both in her individual capacity and in her capacity as trustee of the Trust. III. OBJECTION AND MOTION TO EXPUNGE The trustees filed an objection to the first amended petition. They contended the Trust authorized them to sell the hotels, McKinley’s petition was procedurally improper, and the request for damages under section 859 should be denied as “baseless.” The trustees also moved to expunge the two lis pendens in August 2024. In a supporting declaration, Scott testified a buyer had offered to purchase the hotels for $15.5 million, and he and Harris believed the sale 4 was in the best interest of the Trust beneficiaries. Scott testified McKinley’s petition and lis pendens have “obstructed our ability to get finalized contracts for the sale of the Properties or move forward with the additional procedures for the sale of the Properties.” Marcus also filed a declaration in support of the sale and motion to expunge. IV. WITHDRAWAL OF LIS PENDENS AND DISMISSAL OF PETITION In mid-September 2024, McKinley withdrew both lis pendens, asserting he did so “[b]ased on the representations made by [the trustees] to the [c]ourt regarding [the] offer to purchase the Property . . . .” McKinley reserved the right to refile the lis pendens if the trustees “misrepresented the offer or otherwise fail to sell the Property in accordance with the representations to the [c]ourt for $15,500,000 . . . .” In October 2024, McKinley filed a request to dismiss his petition without prejudice. The probate court granted the request in December 2024, after a hearing McKinley did not attend. After the hearing, the probate court entered judgment in favor of Harris and Scott as trustees and Harris in her individual capacity. The parties subsequently litigated whether the judgment should be set aside for procedural reasons and replaced with an entry of dismissal; the record does not disclose the outcome of that dispute. V. MOTIONS FOR ATTORNEY FEES AND COSTS In February 2025, Harris filed two motions for attorney fees and costs. She filed the first motion in conjunction with Scott, in their capacities as trustees. Harris filed the second motion in her individual capacity. 5 The probate court heard both motions in August 2025 and shortly after issued orders denying both. Only the ruling on the second motion is the subject of this appeal. A. The Trustees’ Motion The trustees’ motion sought recovery of a total of $656,929.02 in attorney fees and costs the trustees incurred on behalf of the Trust while defending against McKinley’s petition and both lis pendens. Invoking the probate court’s equitable powers, the trustees asserted McKinley brought the petition in bad faith and requested the fees and costs be charged against McKinley’s share of the Trust. McKinley opposed the motion. The probate court denied the motion as to both fees and costs. The court concluded it lacked equitable authority to award prevailing party fees to the trustees. It noted, however, they “might be entitled to reimbursement for attorney’s fees out of trust property pursuant to Probate Code section 15684 and 16243” and the court would have discretion to charge any such fees against McKinley’s share of the Trust, but “such request for fees must be made by petition, not in a post-judgment [sic] motion for fees.” That order is not at issue on this appeal. B. Harris’s Motion in Her Individual Capacity Harris also filed her own, separate attorney fee and cost motion. Acting solely in her individual capacity, Harris sought an award against McKinley of $83,434.50 in attorney fees and $238.60 in costs she personally incurred in responding to McKinley’s petition. Harris argued the probate court had “equitable discretion to award attorneys’ fees and costs, and to require payment of those fees and 6 costs to come from [McKinley’s] share of the trust assets.” 3 Harris asserted “the [c]ourt’s ability to impose attorneys’ fees under California law is not rooted in any particular section of the probate code,” but rather in “the equitable powers of the probate courts to award attorneys’ fees to a successful party in a probate action.” She argued “[e]quity dictates that [she] recover the attorney’s fees she incurred individually, which were substantial, and entirely unnecessary,” because McKinley’s petition was frivolous and filed in bad faith. The only statute Harris cited in connection with this argument was section 1002, which gives the probate court discretion to “order costs to be paid by any party to the proceedings, or out of the assets of the estate, as justice may require.” 4 (§ 1002.) She did not assert that litigation of the claims brought against her personally benefited the Trust in any way. McKinley opposed Harris’s motion, which he contended was filed in bad faith. McKinley argued the fees requested were “excessive and unsupported” and therefore inequitable. He asked the probate court to deny the motion in its entirety and surcharge Harris for breach of trust pursuant to section 16440. 3 In both motions, Harris alternatively argued a choice-of-law provision in the Trust required application of Arizona law and several Arizona statutes authorized the award of attorney fees. The probate court concluded California law applied to both motions. Harris does not challenge that ruling on appeal. 4 Both motions, prepared by different counsel, erroneously cited “Probate Code § 1022” instead of section 1002. Section 1002 authorizes the probate court to award costs; section 1022 provides, “An affidavit or verified petition shall be received in evidence when offered in an uncontested proceeding under this code.” We proceed on the understanding they intended to cite section 1002. 7  In reply, Harris argued the motion should be granted pursuant to the probate court’s equitable authority because McKinley did not dispute that contention in his opposition. This apparently prompted McKinley to file a sur-reply, in which he asserted there was “no basis to . . . dispute the [c]ourt’s equitable discretion to award fees under Probate Code section 1002” and his opposition “argue[d] at length why the [c]ourt should not exercise its equitable discretion to award fees in this case.” (Italics omitted.) The probate court heard Harris’s motion in August 2025. After hearing argument, it granted the motion as to costs and denied it as to fees. The probate court explained, “California follows the American Rule which holds that attorney fees incurred in litigation are not recoverable unless authorized by statute or contract.” The court found no contract or statute authorized the recovery of fees here. It rejected Harris’s reliance on section 1002, because it found that provision “pertains only to costs, not attorney’s fees.” The probate court further concluded, “contrary to [Harris’s] argument, California probate courts do not have equitable power to award attorney’s fees to a prevailing party in a trust proceeding. Rather, probate courts have equitable power to allocate and apportion any fees that may be awarded to a trustee pursuant to statute.” The court distinguished several authorities Harris cited, including Estate of Ivey (1994) 22 Cal.App.4th 873 (Ivey), Hollaway v. Edwards (1998) 68 Cal.App.4th 94 (Hollaway), Rudnick v. Rudnick (2009) 179 Cal.App.4th 1328 (Rudnick), and Powell v. Tagami (2018) 26 Cal.App.5th 219 (Powell). The court found these authorities involved orders for “attorney fees based on statutes,” and “provide that probate courts have broad equitable power to deny or allocate costs and statutory attorney’s fees, and to charge such costs and/or statutory fees against one or more 8 beneficiary’s [sic] share of the estate. These cases do not provide an independent, equitable basis for awarding prevailing party fees to a trustee or any other party in a probate case.” The court ultimately concluded, “Here, there is no statute or contract providing for fees awardable to [Harris] in her individual capacity. Thus, the motion for fees must be denied.” (Boldface omitted.) Harris timely appealed the denial of her individual fee motion. (See Code Civ. Proc., § 904.1, subd. (a)(10); Prob. Code, §1300, subd. (e).) DISCUSSION Harris contends the probate court erroneously concluded it lacked equitable authority to award attorney fees. She maintains “[d]ecades of California authority,” vest the probate court with broad equitable powers to award fees “irrespective of any statutory authority.” We review this legal issue de novo. (Butler-Rupp v. Lourdeaux (2007) 154 Cal.App.4th 918, 923.) “As a general matter, probate proceedings are statutory in nature, such that the trial court ‘“has no other powers than those given by statute and such incidental powers as pertain to it and enable the court to exercise the jurisdiction conferred upon it, and can only determine those questions or matters arising in the estate which it is authorized to do.”’” (Bruno v. Hopkins (2022) 79 Cal.App.5th 801, 816–817 (Bruno).) The Probate Code is a significant source of that statutory authority, but the Code of Civil Procedure governs procedural matters “unless the Probate Code provides its own applicable rules.” (Bridgeman v. Allen (2013) 219 Cal.App.4th 288, 295, italics omitted; see § 1000, subd. (a).) It has long been recognized that the general rule governing fee awards in the Code of Civil Procedure applies to probate proceedings. (Estate of Myers (1964) 230 Cal.App.2d 465, 467.) That 9 rule, Code of Civil Procedure section 1021, requires each party to bear its own attorney fees unless a statute or agreement of the parties provides otherwise. The Probate Code includes several provisions authorizing an award of attorney fees. (See, e.g., §§ 859, 2653, subd. (c)(1), 11003, 15642, subd. (d), 17211, subd. (a); see also Hollaway, supra, 68 Cal.App.4th at p. 97 [“the Probate Code is studded with provisions authorizing the trustee to hire and pay (or seek reimbursement for having paid) attorneys to assist in trust administration”].) Harris does not argue any of these provisions applies to her individual motion; she also appears to have abandoned any reliance on section 1002, which by its terms governs only costs. Harris likewise does not seek to rely on any provisions from the Code of Civil Procedure, such as Code of Civil Procedure section 128.5, or argue the Trust or other agreement of the parties authorizes the award of fees to her in her individual capacity. She instead asserts the probate court has inherent equitable authority to grant her request for an award of her personal attorney fees. “[A]lthough the probate court has no general equity jurisdiction, it does have the power to apply equitable and legal principles in order to assist its function as a probate court.” (Barefoot v. Jennings (2020) 8 Cal.5th 822, 828–829.) None of the authorities on which Harris relies, however, holds that equitable power can be used to award attorney fees to a trustee who incurred them solely for her personal defense or benefit. Instead, they stand for the unremarkable proposition that the probate “court’s equitable power includes the power to charge attorney fees against a beneficiary’s share of the trust if that beneficiary, in bad faith, brings an unfounded proceeding against the trust.” (Pizarro v. Reynoso (2017) 10 Cal.App.5th 172, 183 (Pizarro), italics added.) 10  For example, in Rudnick, the Court of Appeal affirmed an order awarding attorney fees to a trustee and charging them against appellants’ future trust distributions. (See Rudnick, supra, 179 Cal.App.4th at p. 1330.) The trustee incurred the fees in his capacity as trustee, for the benefit of the trust. (See id. at p. 1333.) The trust expressly provided that “all expenses incurred by the trustee in administering or protecting the trust shall be a charge upon the trust estate,” and the court also noted that “attorneys hired by a trustee to aid the trust are entitled to reasonable fees paid from the trust assets.” (Ibid.) In affirming the award charging those recoverable fees to appellants’ “future trust distributions rather than the trust as a whole” (id. at p. 1334), the court held that “when a trust beneficiary instigates an unfounded proceeding against the trust in bad faith, a probate court has the equitable power to charge the reasonable and necessary fees incurred by the trustee in opposing the proceeding against that beneficiary’s share of the trust estate.” (Id. at p. 1335.) The court explained this rule dates to at least 1933, when Conley v. Waite (1933) 134 Cal.App. 505, 506 held that “‘[w]hen an unfounded suit is brought against [the trustee] by the cestui que trust, attorney’s fees may be allowed [the trustee] in defending the action and may be made a charge against the interest in the estate of the party causing the litigation.’” (Rudnick, at p. 1334.) The court further noted that more recent authorities, including Ivey, supra, 22 Cal.App.4th at page 883 and various treatises, continued to apply this longstanding principle when a beneficiary pursued frivolous litigation against the trust. (Rudnick, at p. 1334.) Harris asserts Rudnick is “squarely on point.” It is not. Unlike the trustee in Rudnick, Harris alleges McKinley pursued frivolous litigation against her personally, not against the Trust or the trustees acting in their capacity as such. She seeks recovery of attorney fees she personally incurred, 11 in her individual capacity, independent of any benefit to the Trust. Indeed, the trustees were represented by separate counsel, and the fees they incurred were the subject of a separate fee motion. None of the cases Harris cites holds that a trustee sued in her individual capacity may recover attorney fees incurred solely in her own defense pursuant to equitable powers of the probate court. Ivey, supra, 22 Cal.App.4th at page 883, held that “a probate court has equitable power to charge one beneficiary’s share of a trust for frivolous litigation against the trust.” (Italics added.) Hollaway, supra, 68 Cal.App.4th at page 99, concluded fees were properly awarded to a trustee who defended herself because her personal defense “also benefited the trust by eliminating charges raising serious questions about whether she had and could continue to administer the trust properly.” Similarly, in Powell, supra, 26 Cal.App.5th at pages 236– 237, the court affirmed an award of fees to a trustee who retained a personal attorney to advise her regarding trust administration matters because that advice incidentally benefited the trust. It cited both Rudnick and Hollaway in doing so. (See ibid.; see also Rudnick, supra, 179 Cal.App.4th at p. 1333 [attorney fees incurred to “aid the trust” or “incidental to litigation that benefits the trust” are recoverable].) The probate court “has broad equitable powers to protect the trust estate” (Bruno, supra, 79 Cal.App.5th at p. 817), not the trustee’s personal assets. Because those assets are the only thing at issue in this fee motion, “the trial court here lacked authority under equity to impose attorney fees and costs.” (Bruno, at p. 818.) Harris did not proffer another, proper source of authority to support her attorney fee motion. The probate court correctly denied the motion. 12  DISPOSITION The order is affirmed. McKinley shall recover costs on appeal. GOODING, ACTING P.J. WE CONCUR: SCOTT, J. SERVINO, J. 13