California Trust, Estate & Probate Litigation

In our first Tools of War post we set out three general categories of information you need to know to be successful in trust and will litigation.  They were:

• Civil procedure—things like motions and demurrers
• Civil discovery—written discovery, depositions, and expert designations
• Rules of evidence—including foundation, hearsay, and relevance.

Civil procedure and civil discovery we have discussed.  Now let’s tackle evidence.

The rules of evidence apply in probate Court the same as in any other civil trial.  And a majority of judges hearing probate cases will enforce the rules of evidence, although some are more strict than others.

Evidence rules are meant to limit the information that comes before the trier of fact (either Judge or Jury).  The Judge or jury is only allowed to consider information that is “accepted” into evidence once it passes through the gauntlet of rules set down in the Evidence Code. 

You can’t just walk into Court with a box of documents and a slew of witnesses and expect all that information will be accepted into evidence.  The primary purpose of the evidence rules is to ensure the information presented is genuine (nothing made up by a party). 

To navigate the rules of evidence you need to know 3 broad concepts: (1) Foundation, (2) Hearsay, and (3) Relevance.  If you know these three concepts, then you have most of what you need to understand the rules of evidence.

1.   Foundation. 

Foundation, when referring to documents, just means “authentic”—all documents brought into Court must be authentic.  You have the burden of proving your documents are authentic before the Court will admit them into evidence.  Further, all witnesses must have personal knowledge of the facts on which they will testify, but that’s much easier to determine (either they do or they don’t).  So let’s focus on foundation for documents.

Documents can be authenticated by the person who created them.  So letters and emails can be authenticated by the person who drafted them.  But what about bank records, medical records, and police reports?  They have to be authenticated by the “custodian” of records for the institution who created the documents.  That means you either have to (1) subpoena the bank (or medical provider or whatever) asking that their custodian of records appear and testify to the authenticity of the documents, or (2) issue a subpoena duces tecum (called a trial subpoena) asking the bank to send the documents directly to the Court in a sealed envelope with a signed declaration from the custodian of records stating the documents are authentic.

Either option takes some advanced planning—subpoenas must be issued at least 20 days before trial (better if it’s 30 days).  You should never expect to simply walk into Court with a box full of bank records and have them admitted into evidence, that won’t work. 

Remember nothing comes in without foundation.  It is the critical first step that should never be overlooked—plan ahead!

A quick sidebar: typically, you prepare an exhibit binder where you compile all the documents you want to use at trial.  The Court then marks the exhibits.  But exhibits are NOT evidence until the Court admits them into evidence.  Don’t make the mistake of thinking your exhibits are evidence, they aren’t until the Court says they are.

2.   Hearsay. 

Everybody has heard the word “hearsay,” but what does it mean?  Hearsay is any (and I mean ANY) out of Court statement asserted as true in Court.  Hearsay applies not only to what people say, but to what they write as well.  Therefore, all (and I mean ALL) documents are hearsay if they are used as being true because all documents are prepared outside of Court. 

Generally, hearsay statements are not allowed in Court, except for the 20 or so exceptions to hearsay.  Yes, there are over 20 exceptions to the hearsay rule—it’s the Swiss cheese of rules. 

For example, bank records are hearsay because they were created outside of Court and we typically use them to prove the numbers listed on the statements.  But they also fall into the business-records exception to hearsay.  So they can come into evidence if you follow the rules for the business-records exception to hearsay.

Another exception is anything said or written by the opposing party.  We call that party admission. 

There’s too many exceptions to list here, but be aware that there are many exceptions to look at when preparing for trial.  The best approach is to look at each witness and each document you want admitted into evidence and find the corresponding hearsay exception for each one.  If you can’t find an exception, then you won’t be using that witness or document at trial.

3.   Relevance. 

Even if you overcome foundation and hearsay, no evidence is admitted that is not directly relevant to the issue at hand.  And the Court has discretion to exclude any evidence it determines is irrelevant or unduly prejudicial.  Of course, all evidence is somewhat prejudicial, that’s the whole point.  But where information is being used just to put the opposing party in a bad light, without having any relevant use at trial, the Court has the choice to keep it out. 

So you must be able to articulate to the Court how your particular document or witness is relevant and useful at trial.  Don’t take it for granted, plan it out ahead of time.  If you can’t figure out the relevance of a particular witness or document, then don’t use that evidence.  Besides, going into irrelevant areas is a great way to bore the socks off the judge or jury.  Better to be on the mark and keep things interesting.

That’s the basics of evidence.  There’s more to it of course, but once you know foundation, hearsay and relevance you are well on your way to getting your evidence admitted at trial…OR blocking the opposing party from admitting their evidence at trial if they fail to follow the rules.  You can use your knowledge of evidentiary rules as both shield and sword.

The tangled web of litigation can cause some pretty funny alliances at times.  Emily Green of the Daily Journal reported on February 28, 2013 that the estate of Mark R. Hughes, founder of Hebalife, Ltd., who died in 2000, is still being litigated in the appellate court.  The latest turn of events comes from a claim for $3 million in attorneys’ fees made by the law firm of Mitchell Silberberg & Knupp LLP and attorney Hillel Chodos (Mitchell Silberberg & Knupp LLP and Hillel Chodos vs. Suzan Hughes, et. al., A130802).

The $3 million fee is for services provided to the guardian (Suzan Hughes) of Mr. Hughes’ minor son, Alex.  At the time of the litigation, Alex was a minor and Suzan Hughes was fighting to remove the Trustees of Mr. Hughes’ Trust, which had an estimated value of $300 million.  The Guardian’s attorneys (Mr. Chodos and company) were allegedly paid $3 million for their services, but they had outstanding fees due of another $3 million.  Apparently, the lawsuit to remove the Trustees was unsuccessful.

Once the $3 million bill was asserted, both the guardian (Suzan Hughes) and the Trustees objected to payment of the fees—bringing these former enemies into alliance.  At the trial court level, the $3 million fee was denied because the Judge reasoned that the litigation was unsuccessful and was carried out primarily for the personal gratification of the guardian and NOT for the benefit of the minor.  Mr. Chodos and company disagreed, saying that during their representation they were following the instructions of the guardian and fighting a lawsuit that they honestly believed was in the best interests of the minor.

The First District Court of Appeal in San Francisco heard arguments and is expected to rule later this year.

Just goes to show that fee issues are a universal truth, the only difference being the amounts.  Most people don’t have to argue over $3 million in fees because not everyone has a Trust worth $300 million.  While the amounts may be large, the underlying arguments are no different.  Fiduciaries of all types, be they Trustees, guardians, executors, or agents under a power of attorney, owe a duty to act reasonably and only take action that is in the best interest of their beneficiaries and wards.  Violate that universal truth, and fees may be denied—not just attorney’s fees, but Trustees’ fees too (and executor fees, guardian fees, agent fees, etc).

Notice I said “may” be denied.  Why not “must” be denied?  Because so much is left to the discretion of the trial court.  If you can convince a Judge that your actions were reasonable, even if unsuccessful, then you have a chance of getting those fees approved.  Not so black and white after all. 

Every party to a lawsuit would like to have their attorneys’ fees paid by the other side, especially if the other side loses.  That rarely happens in the U.S. because we have the “American System” of attorneys’ fees—that is each party pays their own.

There are a few exceptions, such as when parties enter into a contract that says the prevailing party is to be paid their attorneys fees.  There are a few other statutory exceptions, but overall Court’s are very reluctant to shift attorneys’ fees from one side to the other even where it is authorized by statute.

In cases that operate under the Probate Code (Trust cases, Will matters, and Conservatorships/Guardianships) there are a few areas where attorneys’ fees can be awarded, but rarely are.

Consider this: Trustees have a duty to render accountings at least annually.  Let’s say you’re a Trust beneficiary and after a year goes by the Trustee refuses to provide an accounting.  You send a written request to account and the Trustee either ignores you, or refuses to provide an accounting.  As a beneficiary, you have rights and you can assert those rights in Court, so you bring a petition in Probate Court asking the Court to order the Trustee to account.  The Trustee finally complies and provides you with a Trust accounting.  Can the Trustee be forced to pay your attorneys’ fees for the petition to compel an accounting?  No.  There is no provision that allows the Court to shift your fees to the Trustee. 

It would seem like this type of action should carry with it an AUTOMATIC requirement that the Trustee pay your fees—especially if the Trustee refused to account.  But it does not.

There are some instances when Courts are given the discretion to award attorneys’ fees, but they rarely do.  One of those instances is when either a Trustee fights an objection to his or her accounting “in bad faith” or a beneficiary brings objections to an accounting “in bad faith.”  The problem is that fighting an accounting is not enough, by itself, to trigger the shifting of attorneys’ fees from one party to another.  The fight must be done “in bad faith”—a higher standard and one that is difficult to meet in most cases. 

Plus, since Courts most often apply the American System of fee payment (each party pays its own way), Judges seem reluctant to shift attorneys’ fees even when they are authorized to do so.

What does this mean for you and your case?  Don’t count on getting your attorneys’ fees reimbursed.  I usually advise every client to go into litigation on the assumption you will NOT receive reimbursement for your attorneys’ fees and costs.  If you are one of the lucky ones who are awarded attorneys’ fees, then take it as an unexpected bonus.

Not fair you say?  I agree.  But it’s just the American way of pay to play in our Court system.

In our last post we set out three general categories of information you need to know to be successful in trust and will litigation.  They were:

• Civil procedure—things like motions and demurrers
• Civil discovery—written discovery, depositions, and expert designations
• Rules of evidence—including foundation, hearsay, relevance, etc.

Civil procedure we discussed.  Now let’s tackle civil discovery. 

The Discovery Act was instituted to (get this) make trials easier and more fair to all parties.  But so much of litigation has become bogged down in the use, and misuse, of discovery.  Rather than preparing a case for trial using discovery, many lawyers seem to be using discovery for the sake of harassing people and forcing settlements. 

But discovery is far more important than simply using it for harassment.  It is best used for its intended purpose—to prepare a case for trial.  And if you are serious about going to trial (which you should be), then discovery will help you get there, and make trial easier to conduct.

Discovery can be broken down into (1) written discovery, and (2) oral discovery (i.e., depositions). 

Here is a quick breakdown of the most commonly used discovery devices and a quick statement about what it is, when to use it, and some basic rules (not all the rules, just the basics you should know):

1.         Document demands

What are they?  Document demands are used to request relevant documents from the opposing party.  They are also called “Requests for Production of Documents.”

What’s their best use?  They are best used to determine what documents, if any, the opposing party has to support that party’s claims or defenses.  Used properly, they can help establish the universe of documents that will be used at trial.

What are the rules?  In requesting documents, you have to describe the category of documents you are looking for with reasonable specificity.  For example, “all documents relating to the Smith Trust” would be a proper description of trust documents, and any documents relating to the trust documents. 

The opposing party has 30 days in which to respond to document demands once they are served, plus an additional 5 days if the demands are served by mail, or 2 days if the demands are served by overnight delivery.  For more information take a look at Code of Civil Procedure (CCP) Section 2031.010 as so forth.

2.         Interrogatories

What are they?  Interrogatories simply ask questions of the opposing party, which must be answered in writing under penalty of perjury.  Interrogatories come in two forms: form interrogatories (which are pre-printed by the Judicial Council), and special interrogatories (which are drafted by a party or a party’s attorney).  Form interrogatories are basic questions provided on a pre-printed form.  Special interrogatories are drafted by a party or attorney and ask whatever relevant questions are necessary to determine the facts, witnesses or documents the opponent is using to support his claims or defenses.

What’s their best use?  Both form and special interrogatories are an important tool to gain knowledge about the other side’s case and position.  They are best used to determine the facts, witnesses and documents the other side intends to rely on at trial to support its claims and defenses.

What are the rules?  A party is limited to using only 35 special interrogatories, however, additional interrogatories can be used so long as they are accompanied by a declaration setting forth why the additional information is necessary.  And special interrogatories can only contain one question per interrogatory—no compound questions allowed.

The opposing party has 30 days in which to respond to interrogatories once they are served, plus an additional 5 days if the interrogatories are served by mail, or 2 days if the interrogatories are served by overnight delivery.  See CCP Section 2030.010 as the related provisions.

3.         Requests for Admissions

What are they?  Requests for Admissions ask the opposing party to admit certain facts as true.  If admitted, then the fact is conclusively presumed true for purposes of trial.  An opposing party does not have to admit a fact as true, they can deny it, but if that fact is later proven true at trial, then the party who denied it may have to pay the opposing party’s attorneys’ fees to prove the fact at trial.  

What’s their best use?  Admissions are best used to either (1) establish as true some basic, uncontested facts of the case, or (2) authenticate documents.  Once a document is admitted as authentic, then there is no need to lay foundation for that document at time of trial.  In other words, it makes trial easier to prepare for and conduct.  It’s rare for an opposing party to admit a damaging fact in a Request for Admission.

What are the rules?  Each party is limited to 35 requests for admission, unless accompanied by a declaration supporting the need for additional requests.  The requests are unlimited when asking an opposing party to authenticate documents.

The opposing party has 30 days in which to respond to a request for admission once they are served, plus an additional 5 days if the admissions are served by mail, or 2 days if served by overnight delivery.  See CCP 2033.710 as so forth.

4.         Subpoenas

What are they?  Subpoenas are used to obtain documents and the testimony of witnesses who are not a party to the lawsuit.  Subpoenas are most commonly used to obtain things like bank records, medical records, and other third-party documents. 

What’s their best use?  Subpoenas are best used to obtain independent information.  For example, in a trust accounting the only way to be sure that the information being reported by the trustee is accurate is to subpoena the bank records and double check the trustee’s work.  Once independently verified through the bank records, an accounting can be relied upon as being accurate.

What are the rules?  Subpoenas must be personally served on the party who has the documents or witnesses you need.  And there are special requirements you must follow whenever you are seeking records of a consumer.  See CCP 2020.010.

5.         Depositions

What are they?  A deposition is when a party gives live testimony under oath in front of a certified court reporter.  Even though the testimony is given outside of court, it has the same weight and use as if it were in court.

What’s their best use?  Depositions have two main functions: (1) to gather information that otherwise cannot be obtained through other discovery mechanisms (or to confirm information already obtained), and (2) to establish and lock-in the facts the opposing party intends to testify to at trial.  Since a deposition is given under oath, the testimony can be used at time of trial to impeach a witness.

What are the rules?  Technically, you can only depose a given person once.  The deposition must be taken within either 75 or 150 miles of the witness’s residence depending on whether the place of deposition is in the same County as the lawsuit.  See CCP 2025.010 and related provisions.

Once you know what type of information you are looking for, you can choose the appropriate discovery method and start finding out the facts of your case.

You can take a look at our informal description of disocvery in our handouts on What to Expect in Your Written Discovery, and What to Expect At Your Deposition.

Beneficiaries have all the legal rights, and none of the legal obligations, when it comes to California Trusts and Wills.  But beneficiaries, at times, have one very practical obligation—paying to enforce their rights.

For beneficiaries of California Trusts, it’s every beneficiary for him or herself.  That means there is no governmental oversight of  Trustees until the matter is brought to Court.  And every Trust has the potential to wind up in Court if not managed properly.  But just because you may have the right to challenge a Trustee in court does not mean that it comes free of charge.

Most beneficiaries don’t know this, but our judicial system follows the “American Rule” when it comes to attorneys’ fees.  That means each party to a lawsuit pays his or her own fees and generally does NOT get them reimbursed even if successful in the lawsuit.  You read that right, you can win your lawsuit, but still be out the attonreys’ fees it took to get you there.  Seems unjust, and un-American (remember “justice for all”), but that’s the American Rule for attorneys’ fees. 

Contrast that with the English Rule (used in Great Britain and many other Countries) where the losing party to a lawsuit pays the winner’s attorneys’ fees and costs. 

There are a few exceptions to the American Rule even in our own judicial system.  For example, parties in a contract can agree that the winner gets his attorneys’ fees.  There are also a few statutes that only apply to very limited cases where fees can be shifted so the winner is compensated.  Such as with Trust accountings, where the losing party can be forced to pay the winner’s fees if the losers acted in “bad faith” (which can be a tricky standard to prove in court).

The problem is that California Courts are reluctant to shift fees even where doing so is authorized by statute.  In other words, the default rule that everyone pays their own fees, actually weighs against fee shifting even where authorized.  It’s just human nature, when everyone pays their own fees, why should the Court shift the burden of paying in a particular case?  And where the Court can exercise discretion and award fees to the winner, the Court typically will not do that because it goes against the norm. 

What does that mean to you, the Trust or Will beneficiary?  It means you have rights, but it may cost you to enforce those rights.  And you may as well assume that you will not be reimbursed for your attorneys’ fees. 

Given the American Rule, is it still worth enforcing your rights as a beneficiary?  Only you can decide that question.  It obviously is worth it to some people or else there wouldn’t be a backlog of Trust and Will cases congesting our Court system.  But before you go head-long into litigation, be sure to consider your own practical burden of being a beneficiary.  

At the end of every case—whether it’s settled or by way of judgment after a trial—I ask the opposing attorney to sit down with me to do a full review of the case. All issues in the case are open for discussion, except for attorney-client communications or any other privileged matters.

The purpose of the meeting is to become a better attorney by learning from the strategic missteps I made during the course of the litigation. When I say “missteps”, I don’t mean legal malpractice, I mean what strategic decisions I made that had little or no value, versus the strategic decisions I made that have better or greater value in the eyes of the opposing attorneys. Of course I encourage the opposing attorney to ask me the same questions about his/her strategic decisions—which ones I felt were good or not so good.

Less than a third of opposing attorneys agree to do this exercise with me. I’m not sure why it’s not 100 percent after some of the meetings I’ve done in the past. I’ve learned so much about what is effective in prosecuting my case and what isn’t. Additionally, I hear opposing counsel tell me his/her thoughts of the case as the litigation was unfolding. What stressors they had. What stressor they didn’t have. His/her view on settlement versus going to trial. And on and on…

I agree to keep the postmortem meeting with the opposing attorney confidential. And I trust they will return the same courtesy.

I challenge all California attorneys to offer to do a postmortem analysis of their cases with opposing counsel. We would all be better for it—learning and becoming better attorneys based on the analysis of our work from the impressions formed by the opposing attorney during the lawsuit and vice versa. And, doing this type of meeting would help foster better relationships between plaintiff and defense attorneys who may meet again in future cases.

In an earlier blog post, I shared a handout we give our clients so that they will know what to expect in their lawsuit.  All lawsuits are different, but there is one thing you can count on in every lawsuit: uncertainty.  A case can go from looking good, to looking bad, to looking good again all based on the facts and evidence discovered throughout the litigation process.

Thus, each case must be built, fact by fact, until the best case possible is assembled and rolled out for trial.  It’s a bit like making lasagna, it can only be done one layer at a time.

For example, in a typical Trust or Will contest, there are some facts known to the parties at the outset, such as the general condition of the decedent.  If they are challenging the Will or Trust based on a lack of capacity, they may know that the decedent suffered from dementia.  But did the dementia cause a lack of capacity at the time the contested document was signed?  This takes medical evidence and expert testimony to determine.  Once the medical evidence is received it can change the case--for better or worse. 

After every step of the discovery process (the process whereby we obtain facts and evidence) the view of a case can change.  Yet each stage provides us with another opportunity to layer in more facts and legal positions regarding the case.

And so we build, layer by layer, until we have the best case possible to take to trial.  Or the best case possible to take into a mediation for settlement purposes.  Either way, it takes a process, some patience, and ever increasing facts and evidence to blend a case together for just the right mix needed to prevail.

I enjoy reading books about many different subjects, not just law.  And occassionally I come across an idea or concept that originates outside law but applies well to the practice of law.  I did just that recently after reading a book called Start With Why--How Great Leaders Inspire Everyone To Take Action written by Simon Sinek.  Simon Sinek is not a lawyer and he did not write his book for lawyers.  His book is bigger than that.  Sinek's purpose is to inspire and he has developed a method that anyone can use to stay on purpose and thereby become (and remain) inspirational.

Simon Sinek talks about starting with the "why" or purpose of what you do.  For example, you may be a lawyer and know what kind of law you practice, but why do you do it?  Why do you get out of bed day after day?  It's not to make money, Simon explains that is just a result of what you do.  The "why" is bigger than that.  For us (meaning myself and my law partner, Stewart), we are lawyers because we believe in helping people resolve their problems, we like to think differently to resolve those problems and we beleive in fighting for justice and fairness.  This then forms the basis of how we help our clients and eventually the things we do in practice.

What I like about Sinek's book is that it applies equally well to my legal cases.  When I present a case to a judge or jury I must be able to tell them the "why" of the case.  Why are we here in Court and why should my client prevail?  I am not referring to all the legal rationale--that is important and needs to be included of course--I am talking about the human rationale: why is my side favorable from a practical perspective? 

This same concept is discussed by Rick Friedman, a well known trial attorney, in his book Polarizing the Case.  Freedman beleives that we should tell the jury why we are before them and he uses a simple statement to do it: "we are here because...."  It is up to the lawyer to fill in the blank.  For example, we are here because the insurance company defendant refuses to fairly compensate my client for her harms and losses.  Or we are here because the Trustee beleives he has unlimited power to do whatever he likes with the Trust assets.  Or we are here because the decedent was manipulated to change his Will at a time when he was mentally and physically weak.  

You get the idea.  By looking at the legal case and detecting, with clarity, the "why" of that case, we can build a strong argument that is not only legally sound, but morally and humanly compelling so people want to side with us because we have the fair outcome on our side.