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Pizarro v. Reynoso (2017) ___ Cal.App.4th _____
The case revolved around the sale of real property between family members. One of the arguments on appeal was the awarding of attorney fees to the prevailing party from the losing parties' share of the trust.
"The trial court's award of attorney fees stated: JENSEN, BARTHOLOMEW, and PIZARRO are jointly and severally liable for REYNOSO['s] attorneys' fees and costs incurred herein. These fees shall first be charged against the estate shares of JENSEN and BARTHOLOMEW due to them from the Trust. To the extent that REYNOSO's fees and costs exceed such shares, JENSEN, PIZARRO, and BARTHOLOMEW, jointly and severally, shall be personally liable for the unpaid portion of the fees."
The trial court relied on the case cited above, Rudnick, as the basis for the awarding fees of attorney from the contestants' share of the trust. The problem with this ruling, the appellate court found, was not the awarding of attorney fees but the extent to which the attorney fees applied.
"Neither Rudnick nor any other case supports the reach of the trial court's award of attorney fees and costs beyond a beneficiary's share of the trust. The effect of Rudnick and Ivey is to allow the trial court, in its equitable jurisdiction over trusts, to direct that the share of the trust assets that would be distributed to an offending beneficiary would instead be used to pay attorney fees and costs to the benefit of the trust, specifically to the benefit of those trust beneficiaries who did not improperly cause the trust to expend funds for attorney fees and costs. Ordering Pizarro and Bartholomew to potentially pay attorney fees and costs out of their own pockets is beyond the equitable power of the court over trusts because the court has no equitable jurisdiction over that money. We therefore strike the part of the award assessing personal liability for attorney fees and costs against Pizarro and Bartholomew."