Wendt v. Pullen (In re Wendt)

• Citation: 278 Cal.Rptr.3d 174,63 Cal.App.5th 647
• Decision Date: 28 April 2021
• Docket Number: C084083
• Court: California Court of Appeals
• Parties: IN RE the MARRIAGE OF Elizabeth Anne WENDT AND William Nicholas PULLEN. Elizabeth Anne Wendt, Respondent, v. William Nicholas Pullen, Appellant; Windham Bremer, as Trustee, etc., Respondent.

63 Cal.App.5th 647

278 Cal.Rptr.3d 174

IN RE the MARRIAGE OF Elizabeth Anne WENDT AND William Nicholas PULLEN.Elizabeth Anne Wendt, Respondent,

v. William Nicholas Pullen, Appellant;Windham Bremer, as Trustee, etc., Respondent.

C084083

Court of Appeal, Third District, California.

Filed April 28, 2021

Law Office of Leslie J. Shaw and Leslie J. Shaw for Appellant.

Gutierrez Marca and William F. Gutierrez, San Francisco, for Respondent Windham Bremer, as Trustee, etc.

No appearance for Respondent Elizabeth Anne Wendt.

BLEASE, Acting P. J.

Under the law governing dissolution proceedings, a wealthier party to the proceeding may be compelled to pay another party's attorney fees. (See Fam. Code, § 2030.)¹ Here, appellant William Nicholas Pullen appeals from the family court's denial of his section 2030 motion to compel respondent Windham Bremer, the trustee of the Elizabeth Anne Wendt Trust, to pay his attorney fees stemming from his successful motion to join the trustee as a third party to the dissolution action involving Pullen and his ex-wife Elizabeth Anne Wendt.

Pullen contends the family court's ruling was an abuse of discretion as it was based on legal error, and that it effectively precludes him from further litigating the matter.

Bremer counters that under California law a trustee cannot be compelled to disburse money absent a showing of bad faith. He argues that Pullen's claim is subject to Probate Code restrictions on claims against spendthrift trusts. He also claims that payment was barred under Indiana and Illinois law, and that appellant's underlying claim is specious.

Since the question before us involves the administration of the trust rather than interpreting its terms, Indiana law may apply, and Illinois law is inapplicable. However, choice of law is immaterial as both Indiana and California follow the modern interpretation regarding the liability of trusts and trustees to third parties. This modern approach allows third parties to obtain relief from the trust for matters arising out of the trust's administration, and is not limited by spendthrift provisions. Section 2030 provides for the award of attorney fees against parties other than spouses, like the trustee. Since the award of attorney fees stems from the administration of the trust and does not involve a claim against the beneficiary, payment from a spendthrift trust is not contingent on the bad faith of the trustee. It was an abuse of discretion for the family court to make the award of fees contingent on such a showing and we shall reverse and remand for additional proceedings.

BACKGROUND

On December 29, 1989, William Wendt (grantor) created the Elizabeth Anne Wendt Trust as an irrevocable spendthrift trust, with respondent Bremer as the trustee and his daughter Elizabeth Anne Wendt (Wendt) as the current beneficiary. Both the grantor and the trustee lived in LaPorte, Indiana at the time the trust was created and at all times since. Respondent has administered the trust exclusively in Indiana. The trust, which was drawn up by attorneys in Chicago, has choice of law provisions designating Illinois as the choice of law for interpreting the trust document, and all other questions "shall be governed by the law of the state in which the principal place of administration of that trust is located at the time of reference." In 1995, Wendt agreed to relinquish her rights to compel distributions to her in exchange for her father paying her money and putting more money in the trust. The trust has extensive assets that include stock and funds from the family business and real property in California.

Wendt and appellant married on September 13, 1997. Wendt filed a petition for dissolution of the marriage on August 8, 2013. The issues to be decided include child custody, division of property, child and spousal support, and attorney fees. Appellant and Wendt had three minor children when the petition was filed.

On January 21, 2015, Wendt made a written request of respondent to disburse trust funds to meet her support needs, which respondent denied on January 27, 2015.

On February 8, 2016, appellant filed a motion to join the trust and trustee to the dissolution action and to compel the trustee to disburse funds to Wendt as necessary to ensure payment of spousal or child support orders and for attorney fees. The family court granted the motion to join on February 16, 2016. It also ordered appellant to pay $73 a month in child support to Wendt. Finding the parties’ net incomes were substantially similar and that Wendt did not have access to the spendthrift trust's assets, it declined to order any spousal support to appellant, and denied appellant's request for attorney fees from Wendt.

On May 24, 2016, respondent filed a motion to quash for lack of jurisdiction and/or dismiss for forum non conveniens, which the family court denied on July 15, 2016. We denied respondent's petition for a writ of mandate on August 25, 2016. Respondent filed a demurrer to the joinder on September 6, 2016, which the family court overruled on August 28, 2017.

On September 16, 2016, appellant filed a section 2030 request for $76,141 in attorney fees and costs from the trustee for expenses incurred in bringing the successful motion to join the trust and trustee. The family court denied the request, finding it was precluded from making an award absent a finding of bad faith by the trustee. Appellant filed a petition for writ of mandate, prohibition, or other appropriate relief, which we denied on January 12, 2017.

DISCUSSION

I

We begin by examining the basis of appellant's claim, section 2030 and the law regarding spendthrift trusts upon which the family court's decision rests.

A. Section 2030

A party's ability to recover attorney fees and other expenses and costs in a dissolution proceeding is governed by section 2030,² which provides in pertinent part:

"In a proceeding for dissolution of marriage, nullity of marriage, or legal separation of the parties, and in any proceeding subsequent to entry of a related judgment, the court shall ensure that each party has access to legal representation, including access early in the proceedings, to preserve each party's rights by ordering, if necessary based on the income and needs assessments, one party, except a governmental entity, to pay to the other party, or to the other party's attorney, whatever amount is reasonably necessary for attorney's fees and for the cost of maintaining or defending the proceeding during the pendency of the proceeding." ( § 2030, subd. (a)(1).)

Parties to the dissolution proceeding other than spouses can be required to pay under this statute. "Any order requiring a party who is not the spouse of another party to the proceeding to pay attorney's fees or costs shall be limited to an amount reasonably necessary to maintain or defend the action on the issues relating to that party." ( § 2030, subd. (d).) A spouse does not have to demonstrate the likelihood of success or establish a prima facie case linking the third party to the dissolution proceeding. ( In re Marriage of Bendetti (2013) 214 Cal.App.4th 863, 865, 154 Cal.Rptr.3d 329.) The spouse is entitled to relief so long as the matter underlying the fees was not specious. ( In re Marriage of Siller (1986) 187 Cal.App.3d 36, 53, 231 Cal.Rptr. 757.)

California has a strong public policy of ensuring a level playing field between the parties to a dissolution proceeding. " ‘California's public policy in favor of expeditious and final resolution of marital dissolution actions is best accomplished by providing at the outset of litigation, consistent with the financial circumstances of the parties, a parity between spouses in their ability to obtain effective legal representation.’ " ( Droeger v. Friedman, Sloan & Ross (1991) 54 Cal.3d 26, 41, fn. 12, 283 Cal.Rptr. 584, 812 P.2d 931.) Accordingly, "[t]he purpose of section 2030 is to ensure that the overall cost of litigating a proceeding for the dissolution of marriage, nullity of marriage, or legal separation ( § 2030, subd. (a) ) is apportioned equitably depending on what is ‘just and reasonable under the relative circumstances of the respective parties.’ [Citations.]" ( In re Marriage of Perry (1998) 61 Cal.App.4th 295, 310-311, 71 Cal.Rptr.2d 499.)

Since a party does not have to prevail or even establish a prima facie claim to get attorney fees from a third party brought into the litigation, conditioning section 2030 relief on the third party's bad faith, as the family court did here, is inconsistent with that statute. The family court's reasons for this approach is found in the other body of law relevant to this case, the law of trusts.

B. Trusts

" ‘A spendthrift trust is created where the settlor gives property in trust for another, and provides that the beneficiary cannot assign or otherwise alienate his or her interest, and that it shall not be subject to the claims of the beneficiary's creditors.’ [Citations.]" ( Chatard v. Oveross (2009) 179 Ca.App.4th 1098, 1104, 101 Cal.Rptr.3d 883.) "Creditors of the beneficiary generally cannot reach trust assets while those assets are in the hands of the trustee, even if they have secured a judgment against the beneficiary. Rather, creditors must wait until the trustee makes distributions to the beneficiary. The law permits such trusts because donors have ‘the right to choose the object of [their] bounty’ and to protect their gifts from the donees’ creditors. [Citation.] Providing donors some measure of control over their gifts encourages donors to make those gifts, to the benefit of the donor, the beneficiary, and ultimately the beneficiary's creditors." ( Carmack v. Reynolds (2017) 2 Cal.5th 844, 849, 215 Cal.Rptr.3d 749, 391 P.3d 625.)

California generally follows the common law of trusts, except as modified by statute. ( Estate of Giraldin (2012) 55 Cal.4th 1058, 1074, 150 Cal.Rptr.3d 205, 290 P.3d 199.) The law regarding spendthrift trusts is stated as follows:

"Under the Probate...