Filed 12/27/18 Estate of Trikha CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

Appeal from a judgment of the Superior Court of Orange County, Gerald G. Johnston, Judge. Affirmed. Request for judicial notice. Granted.

Law Offices of Mohammad A. Fakhreddine, Mohammad A. Fakhreddine for Respondent and Appellant.

Bidna & Keys, Richard D. Keys and Howard M. Bidna for Respondent Suchitra Trikha.

Michael B. Hicken for Respondents Neel Trikha and Rishi Trikha.

Avery M. Cooper for Respondent Avery M. Cooper, General Administrator of the Estate of Satish Trikha.

* * *

Appellant Satish Trikha, Jr. (Trika Jr.) successfully defended a will contest and then filed a motion to recover his attorney fees and costs under the common fund doctrine, arguing his efforts benefited the other beneficiaries of the will who did not actively participate in the will contest. Although the trial court granted his motion, it deferred payment and the determination of the fee award’s priority vis-à-vis other claims against the estate until the time of final distribution, finding “a sufficient showing ha[d] been made to justify” such a deferral. Trikha Jr.[1] argues the court was required to order prompt payment of his fees and give his fee award priority over all other claims against the estate.

We agree attorney fee awards under the common fund doctrine, as a general matter, should be made promptly and should take priority over other claims. However, the trial court had broad discretion to use its equitable powers to fashion a fee award tailored to the circumstances of the case. Applying the abuse of discretion standard of review to the limited record before us, we cannot say the court committed an abuse of discretion in deferring payment or determination of priority. We therefore affirm the order.

I.

Facts

A detailed discussion of the facts can be found in Estate of Trikha (2013) 219 Cal.App.4th 791 (Trikha). We will not restate them in full here but instead provide only a brief summary for context.

Decedent Satish Trikha died in 2009. (Trikha, supra, 219 Cal.App.4th at p. 794.) At the time of his death, he was married to Dr. Suchitra Trikha, although divorce proceedings were pending. (Ibid.) The couple had two sons, Neel and Rishi Trikha. (Ibid.) Decedent also had two children, including Trikha Jr., from a prior relationship. (Ibid.) Decedent’s last will and testament named his four children and several others as beneficiaries, but omitted Suchitra. (Ibid.)

Trikha Jr. and several others filed petitions to probate decedent’s will. Suchitra opposed those petitions and contested the will, alleging decedent had revoked the will and his estate should pass by intestate succession. (Trikha, supra, 219 Cal.App.4th at p. 794.) Suchitra also filed a creditor’s claim against the estate seeking about $2.4 million. Meanwhile, Neel and Rishi filed a joint petition to remove about $2 million from the estate and have those funds distributed to them out of probate.

Trikha Jr. was the only beneficiary who opposed Suchitra’s will contest. Following trial, the trial court entered a judgment sustaining the will contest and denying admission of the will into probate on the ground decedent destroyed his will with the intent to revoke it. (Trikha, supra, 219 Cal.App.4th at pp. 793, 795.) Trikha Jr. appealed the judgment. We reversed and remanded for a new trial, finding Trikha Jr. had introduced substantial contrary evidence to overcome the revocation presumption. (Id. at pp. 801, 808.)

The parties later settled the will contest. As part of that settlement, Suchitra waived any objection to admitting the will into probate, and it was admitted into probate in 2015. The settlement agreement also allowed Trikha Jr. to request reimbursement from the estate for his attorney fees incurred during the will contest.

Shortly thereafter, Trikha Jr. filed a motion for reimbursement of his attorney fees and costs based on the common fund doctrine discussed below. The trial court denied his motion without prejudice, finding it was premature because of Suchitra’s pending creditor’s claim, and Neel and Rishi’s pending petition. The court suggested Trikha Jr. could “re-file the motion once the estate has closed and/or the liquidity of the estate has been determined by the Administrator.”

Trial on Suchitra’s creditor’s claim went forward in 2016, and the trial court reportedly awarded her certain funds as her community interest.[2] Neel and Rishi’s petition was also resolved and dismissed in 2016. Various other components of the litigation remained pending, however. For example, the estate apparently filed a petition requesting that decedent’s share of the community assets in Suchitra’s possession, valued at about $1.75 million, be transferred into the estate.[3]

In 2017, Trikha Jr. renewed his motion for attorney fees and costs under the common fund doctrine. Neel and Rishi opposed the motion, arguing it would be premature to grant fees without more information on the assets comprising the estate and the amount of statutory and extraordinary fees owed by the estate.

The trial court granted Trikha Jr.’s motion and ordered the payment of about $154,000 from the estate to Trikha Jr.’s counsel of record, but it deferred payment and the determination of priority until the time of final distribution. Trikha Jr. timely appealed the order under Probate Code section 1300, subdivision (e), which permits an appeal from any order “[f]ixing, authorizing, allowing or directing payment of compensation or expenses of an attorney.”

II.

Discussion

A. The Common Fund Doctrine

Before turning to the merits of Trikha Jr.’s appeal, it is helpful to discuss the common fund doctrine which, as already noted, was the basis for Trikha Jr.’s fee motion.

The common fund doctrine is an equitable exception to the general rule that the person employing an attorney must pay the attorney fees. (Cziraki v. Thunder Cats, Inc. (2003) 111 Cal.App.4th 552, 557.) The doctrine provides that “‘when a number of persons are entitled in common to a specific fund, and an action brought by a plaintiff or plaintiffs for the benefit of all results in the creation or preservation of that fund, such plaintiff or plaintiffs may be awarded attorney’s fees out of the fund.’” (Serrano v. Priest (1977) 20 Cal.3d 25, 34.) The doctrine “is grounded in ‘the historic power of equity to permit . . . a party preserving or recovering a fund for the benefit of others in addition to himself, to recover his costs, including his attorneys’ fees, from the fund of property itself or directly from the other parties enjoying the benefit.’” (Id. at p. 35.)

Generally speaking, “[t]he cases out of which the common fund doctrine originated each involved three common elements: (1) without the litigation there would have been no recovery; (2) the recovery was an available fund out of which the beneficiaries of the litigation would be paid; and (3) the applicant seeking contribution in respect to costs and attorney fees was the sole ‘active litigant’ and as such obtained the recovery that provided the fund. [Citations.]” (Lindsey v. County of Los Angeles (1980) 109 Cal.App.3d 933, 936.)

“The purpose of the doctrine is to allow a party, who has paid for counsel to prosecute a lawsuit that creates a fund from which others will benefit, to require those other beneficiaries to bear their fair share of the litigation costs. [Citation.] In other words, the common fund doctrine permits plaintiffs’ attorneys to recoup their fees from the fund.” (Northwest Energetic Services, LLC v. California Franchise Tax Bd. (2008) 159 Cal.App.4th 841, 878 (Northwest Energetic).) “By this means all of the beneficiaries of the fund pay their share of the expense necessary to make it available to them.” (Winslow v. Harold G. Ferguson Corp. (1944) 25 Cal.2d 274, 277 (Winslow).) “Because the common fund doctrine ‘rest[s] squarely on the principle of avoiding unjust enrichment’ [citations], attorney fees awarded under this doctrine are not assessed directly against the losing party (fee shifting), but come out of the fund established by the litigation, so that the beneficiaries of the litigation, not the defendant, bear this cost (fee spreading).” (Lealao v. Beneficial California, Inc. (2000) 82 Cal.App.4th 19, 27.)

Our Supreme Court has identified three underlying policies supporting the common fund doctrine. “The bases of the equitable rule which permits surcharging a common fund with the expenses of its protection or recovery, including counsel fees, appear to be these: fairness to the successful litigant, who might otherwise receive no benefit because his recovery might be consumed by the expenses; correlative prevention of an unfair advantage to the others who are entitled to share in the fund and who should bear their share of the burden of its recovery; [and] encouragement of the attorney for the successful litigant, who will be more willing to undertake and diligently prosecute proper litigation for the protection or recovery of the fund if he is assured that he will be promptly and directly compensated should his efforts be successful.” (Estate of Stauffer (1959) 53 Cal.2d 124, 132 (Stauffer).)

Importantly, “[c]ompensation of an attorney from a common fund is an equitable doctrine and its application depends upon all of the circumstances of the case.” (Estate of Ott (1979) 99 Cal.App.3d 605, 614 (Ott).) “Whether to grant or deny such an award depends largely on the discretion of the trial court.” (Ibid.; see Estate of Gump (1982) 128 Cal.App.3d 111, 118 [“application of the doctrine is committed to the sound discretion of the court”].)

B. Standard of Review

The parties dispute the standard of review applicable to the trial court’s order granting Trikha Jr.’s fee motion. We review the court’s exercise of its equitable powers in granting or denying fees under the common fund doctrine for abuse of discretion. (City of Barstow v. Mojave Water Agency (2000) 23 Cal.4th 1224, 1256 [abuse of discretion standard applies in reviewing trial court’s exercise of its equitable powers]; Ott, supra, 99 Cal.App.3d at p. 614 [trial court’s decision whether to grant or deny fees under common fund doctrine “should not be reversed unless that discretion was abused”].) This makes sense: “[i]n fashioning an equitable remedy, the trial court is in the best position to determine whether the criteria for a fee award have been met.” (Pipefitters Local No. 636 Defined Benefit Plan v. Oakley, Inc. (2010) 180 Cal.App.4th 1542, 1548 (Pipefitters).)[4]

C. The Trial Court’s Order

In finding the common fund doctrine applicable here, the trial court reasoned: “The will named several persons as beneficiaries who would not have inherited had the decedent died intestate . . . . None of these parties participated in the defense of the will contest, and all will benefit from the result. In addition, the four children of the decedent benefit since the successful defense of the will contest means that all of the decedent’s separate property and half of the community property will be distributed to the will beneficiaries, as opposed to the children receiving only 2/3 of the separate property and none of the community property.” The court further reasoned that although the majority of parties were represented by counsel, “the only active litigant in the will contest defense was [Trikha Jr.].” (Italics added.)

After concluding counsel’s bills were reasonable, the trial court granted Trikha Jr.’s motion for fees, but deferred payment and the determination of priority of the fee award vis-à-vis other claims against the estate until the time of final distribution.

D. The Trial Court Did Not Abuse Its Discretion

1. Timing of the Payment

Trikha Jr. contends the trial court erred in deferring payment of Trihka Jr.’s fee award, asserting “well-settled” case law on the common fund doctrine “required” the court to order “prompt” payment of his attorney fees. As outlined below, while we are sympathetic to Trikha Jr.’s desire for prompt payment, we cannot find an abuse of discretion on the limited record before us.

Trikha Jr. chiefly relies on a single sentence originating in Stauffer, in which our Supreme Court identified the three public policies supporting the common fund doctrine. As noted above, the Supreme Court described the third policy as “encouragement of the attorney for the successful litigant, who will be more willing to undertake and diligently prosecute proper litigation for the protection or recovery of the fund if he is assured that he will be promptly and directly compensated should his efforts be successful.” (Stauffer, supra, 53 Cal.2d at p. 132, italics added.) In the nearly 60 years since Stauffer was decided, over a dozen published decisions have echoed the above-quoted language from Stauffer in discussing the policy behind the common fund doctrine. (See, e.g., Progressive West Ins. Co. v. Superior Court (2005) 135 Cal.App.4th 263, 275; Estate of Korthe (1970) 9 Cal.App.3d 572, 575.) However, in our review of these cases we found no case explicitly holding the trial court must order prompt or immediate payment when awarding attorney fees under the common fund doctrine.[5]

We agree courts generally should order prompt payment when awarding fees under the common fund doctrine. But because the doctrine is equitable in nature, courts also have discretion to fashion an order matching the circumstances of the case. “The equitable powers of a court are not curbed by rigid rules of law, and thus wide play is reserved to the court’s conscience in formulating its decrees. These powers are broad enough to address novel conditions and meet the requirements of every case. [Citation.] In other words, . . . equitable remedies are flexible . . . . Inflexible rules are not permitted to curtail the power of equity to accomplish justice.” (Lickiss v. Financial Industry Regulatory Authority (2012) 208 Cal.App.4th 1125, 1133.)

Here, in excising its discretion, the trial court deferred payment and “the determination of priority until a later time” because it concluded “a sufficient showing ha[d] been made to justify” such a deferral. Trikha Jr. did not provide us with a reporter’s transcript from the hearing on his motion, and it is impossible to tell from the court’s minute order what exactly occurred below. We have no way of knowing how the court reached its decision or what evidence it considered in deciding a “sufficient showing” had been made to justify deferral. The incomplete record hampers our analysis of whether the court’s exercise of its equitable powers constituted an abuse of discretion.

We do note that when Neel and Rishi opposed Trikha Jr.’s renewed motion for fees, they argued it would be premature to grant fees without knowing what assets ultimately will comprise the estate and what will be paid in statutory and extraordinary fees. Specifically, they argued: “There is currently a trial set in May on the Administrator CTA’s fee petition. There is yet to be set a trial on an 850 Petition by the Administrator. Further, the prior Special Administrator has yet to submit his fee petition for extraordinary fees. The cumulative total of all fees requested may actually consume the estate.”[6] Trikha Jr. does not cite anything in the record showing Neel and Rishi’s arguments in favor of deferral were factually incorrect or procedurally inaccurate.

The trial court may have had those pending and anticipated petitions (which are not in the appellate record) in mind when it concluded “a sufficient showing ha[d] been made to justify” deferring the payment. In the absence of a reporter’s transcript, we have no way of knowing.

Perhaps the trial court was concerned whether sufficient funds would be available to distribute under the common fund doctrine after the resolution of those petitions. To that end, Trikha Jr. argues the common fund he created was valued at over $1,100,000, but he fails to support that contention with evidence in the record. He cites several appraisals filed in 2013 and 2014 reflecting certain assets that were reportedly marshalled into the estate, but these filings, without more, do not provide a complete picture of the actual value of the estate when the court was considering his fees motion in 2017. Trikha Jr. also cites his moving and reply papers from his fees motion, but arguments are not evidence. “Citing points and authorities filed in the trial court is not appropriate support for factual assertions in a brief. Points and authorities are not presented under penalty of perjury. Matters set forth in points and authorities are not evidence.” (Alki Partners, LP v. DB Fund Services, LLC (2016) 4 Cal.App.5th 574, 590.)

In short, we are sympathetic of Trikha Jr.’s desire for prompt payment, but the limited appellate record prevents us from evaluating whether the trial court’s deferral of payment constituted an abuse of discretion. We therefore must presume the court correctly concluded “a sufficient showing ha[d] been made to justify” deferring the payment. (Foust v. San Jose Construction Co., Inc. (2011) 198 Cal.App.4th 181, 187 [an “order of the trial court is presumed correct,” and “‘“if the record is inadequate for meaningful review, the appellant defaults and the decision of the trial court should be affirmed”’”].)

The trial court was in the best position to fashion a fee award tailored to the circumstances of the case, and “[w]e will not disturb its judgment on this issue unless we are convinced the court abused its discretion.” (Pipefitters, supra, 180 Cal.App.4th at p. 1548.) Based on the limited record and the broad discretion granted to courts in fashioning equitable decrees, we cannot say the court’s decision was “clearly wrong and without reasonable basis” so as to warrant reversal. (Ibid.)

2. Priority

In addition to attacking the timing of payment, Trikha Jr. argues the trial court erred in deferring the determination of priority until the time of final distribution. He further contends his claim for fees must be senior to all other claims and should be paid from the entire fund. In support Trikha Jr. relies exclusively on Winslow, supra, 25 Cal.2d 274, in which our Supreme Court observed that attorney fee awards based on the common fund doctrine “are customarily made senior to other claims against the fund,” “should come from the entire fund saved for all classes concerned before it is distributed,” and should not be “subordinated” to the claims of creditors. (Id. at pp. 283, 284, 286.)

We agree in principle an attorney fee award based on the common fund doctrine should take priority over other claims, but we cannot review an issue that has yet to be decided. The trial court expressly deferred determination of that issue. Its tentative ruling was to grant the motion “with the caveat that this expense appears to fall under Category 7 of Probate Code § 11420(a) and shall not be paid until all those debts of prior classes are paid in full.” After oral argument, however, the court decided to “modif[y] the tentative to remove the determination the requested fees fall into priority category 7 under Probate Code Section 11420(a)” and instead deferred “the determination of priority until a later time.” The court thus has not yet ruled on the question of priority, leaving us nothing to review in this regard. In light of the court’s ruling, however, we note in passing that Trikha Jr. should receive the amount awarded by the court unless compelling circumstances demonstrate other claims take precedence.

III.

Disposition

The order is affirmed. In the interests of justice, each party shall bear his or her own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(5).)

ARONSON, ACTING P. J.

WE CONCUR:

IKOLA, J.

GOETHALS, J.