BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 156|
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THIRD READING
Bill No: SB 156
Author: Beall (D)
Amended: 4/8/13
Vote: 21
SENATE JUDICIARY COMMITTEE : 7-0, 4/23/13
AYES: Evans, Walters, Anderson, Corbett, Jackson, Leno, Monning
SUBJECT : Conservatorships and guardianships: attorney's fees
SOURCE : California Senior Legislature
DIGEST : This bill authorizes the court to award litigation
costs, including attorney's fees to the prevailing party (of an
estate petition) if an objection is made to the petition for
compensation.
ANALYSIS :
Existing law:
1.Requires that a guardian or conservator be allowed payment for
reasonable expenses incurred in the exercise of the powers and
performance of his/her duties (including costs of surety bonds
furnished, reasonable attorney's fees, and other just and
reasonable compensation for services rendered to the
conservatee or ward) and for other reasonable expenses, as
specified.
2.Provides that, at any time after the filing of the inventory
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and appraisal, but not before the expiration of 90 days from
the issuance of letters or any other period of time as the
court for good cause orders, the guardian or conservator of
the estate may petition the court for an order fixing and
allowing compensation to the guardian or conservator of the
estate or person for services rendered at that time or to the
guardian's or conservator's attorney for services rendered to
that time. (Prob. Code Sec. 2640 (a).)
3.Requires, upon the hearing, the court to make an order
allowing (1) any compensation requested in the petition the
court determines is just and reasonable to the guardian or
conservator of the estate and/or person for services rendered,
and (2) any compensation requested in the petition the court
determines is reasonable to the guardian's or conservator's
attorney for services rendered. The compensation allowed to
the guardian or conservator of the person or estate, and to
the attorney, may, in the discretion of the court, include
compensation for services rendered before the date of the
order appointing the guardian or conservator. The
compensation allowed shall thereupon be charged to the estate.
(Prob. Code Sec. 2640 (c).)
4.Provides that the guardian or conservator shall not be
compensated from the estate for any costs or fees that the
guardian or conservator incurred in unsuccessfully opposing a
petition, or other request or action, made by or on behalf of
the ward or conservatee, unless the court determines that the
opposition was made in good faith, based on the interests of
the ward or conservatee. (Prob. Code Sections. 2623 (b), 2640
(d).)
This bill:
1.Deletes Probate Code Sec. 2640 (d) and instead provides that,
if the court, upon an objection to the petition, reduces the
compensation requested in the petition, the objector shall be
deemed the prevailing party and the court may award the
objector his or her costs and other expenses and costs of
litigation, including attorney's fees, incurred to contest the
petition. The amount charged is a charge against the
compensation of the guardian or conservator, and the guardian
or conservator is liable personally and on the bond, if any,
for any amount that remains unsatisfied.
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2.Provides that, if the court, upon an objection to the
petition, does not reduce the compensation requested in the
petition, the guardian or conservator shall be deemed the
prevailing party and the court may order the objector to pay
the compensation and costs of the guardian or conservator and
other expenses and costs of litigation, including attorney's
fees, incurred to defend the petition. The objector shall be
personally liable to the guardianship or conservatorship
estate for the amount ordered.
3.Provides a two-way fee shifting provision as follows:
A. If the guardian's /conservator's fees are reduced
because of opposition to the fee petition, the objector is
deemed the prevailing party and may be awarded his/her
costs, including attorney's fees, and this amount is
charged against the compensation of the guardian
/conservator, who is then personally liable for any
unsatisfied amounts; and
B. If the guardian /conservator successfully defends the
fee petition, the objector may be ordered to pay the
compensation and costs of the guardian/conservator and
costs of litigation, including attorney's fees, and the
objector is personally liable for the amount ordered.
Background
In California, if an adult is unable to manage his/her financial
matters, a conservator of the estate may be appointed by a court
to manage the adult's (conservatee) financial matters. If the
adult is unable to manage his/her medical and personal
decisions, a conservator of the person may be appointed.
Similarly, a guardian of the estate or person may be appointed
for a minor child (ward).
A guardian or conservator is authorized to charge the
conservatee's or ward's estate for services rendered in
connection with managing the conservatee's or ward's financial
or personal matters. The guardian or conservator is required to
file a petition for fees for services rendered with the court.
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If the fee petition is challenged (filed as an objection to the
fee petition), presumably by an individual acting on behalf of
the conservatee or ward, and the guardian or conservator does
not prevail on the fee petition, the guardian or conservator is
prohibited from receiving compensation from the estate for any
costs or fees that the guardian or conservator incurred in
litigating the fee petition, unless the court determines that
the guardian's or conservator's opposition to the fee petition
objection was made in good faith, based on the interests of the
ward or conservatee.
A recent Mercury News article exposed a problem with the
difficulty of conservatees and wards in challenging exorbitant
fee petitions. The article reported that "a six-month
investigation by this newspaper found a small group of [Santa
Clara] [C]ounty's court-appointed personal and estate managers
are handing out costly and questionable bills - and charging
even more if they are challenged. The troubling trend is
enriching these private professionals - working as conservators
and trustees - and their attorneys, with eye-popping rates that
threaten to force their vulnerable clients onto government
assistance to survive." (de Sá, Santa Clara County's
court-appointed personal and estate managers are handing out
costly and questionable bills, Mercury News (June 30, 2012)
[as of Apr. 14, 2013].) Conservatees and wards,
under existing law, may be required to pay the litigation costs
of the conservator and guardian, but existing law does not
similarly allow a conservatee or ward to recover their
litigation costs, even if he/she is successful in challenging
the fee petition.
This bill alters the existing one-way fee shifting provision and
provides a two-way fee shifting provision to authorize an award
of attorney's fees and costs to the prevailing objector to a fee
petition.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 4/25/13)
California Senior Legislature (source)
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OPPOSITION : (Verified 4/25/13)
Professional Fiduciary Association of California
ARGUMENTS IN SUPPORT : According to the author's office,
conserved adults who are being overcharged by estate managers
face a dilemma when they go to court to contest questionable
costs: They must pay the conservator's legal fees - even if a
judge ultimately finds the conservators had filed unjustified or
exorbitant bills. Many times, this gap in the law has placed
California's elderly and disabled adults in the untenable
position of choosing to accept the overcharges solely because it
will cost more to challenge them in court, win or lose.
SB 156 provides judges with greater discretion to protect
estates from exorbitant billing and fees. The bill also
balances the scales by creating a "loser pays" scenario in which
both sides risk paying their opponent's legal fees if they lose.
SB 156 will act as a deterrent to any unfair padding of costs,
thereby reducing incidences of contested cases. And for the
conservatee's or their families who do file frivolous
objections, they may still be required to pay "fees-on-fees."
ARGUMENTS IN OPPOSITION : The Professional Fiduciary
Association of California appreciates the objective of SB 156 to
protect the interests of conservatees. However, in PFAC's view
the provisions of SB 156 would increase the opportunities for
exorbitant amounts of attorneys' fees to be paid by the losing
party: conservator personally or, alternatively, the interested
party initiating the lawsuit.
SB 156 would delete subdivision (d) of Section 2640 of the
Probate Code that provides an important protection in requiring
that opposition to a petition be in good faith in order for the
guardian or conservator to receive compensation from the estate
for costs or fees.
AL:ej 4/26/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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