There are no free passes: Section 859 awards can now go to whoever does the work | Downey Brand LLP

Newcomers to probate litigation are often surprised at how different things are in probate court compared to the more straightforward civil courts. (And how do these newcomers know how civil courts work? law and orderI suspect.) In civil litigation, for example, a plaintiff typically pursues his or her own claims. It is very rare for a civil plaintiff to go through the time and expense of litigation, obtain a judgment, and then distribute his or her profits to a group of unrelated third parties who have never hired an attorney, never presented evidence, never taken a deposition, never presented evidence, and never even appeared in court.

However, in estate litigation, this happens all the time. That’s because a party making a claim is often not doing so in their own name, but on behalf of a trust or estate. That trust or estate can have any number of beneficiaries. If the party is successful, the judgment awarded to them will not only go to the party who did all the work, but will ultimately be distributed to all the beneficiaries, even those who didn’t bother to show up.

Imagine a baby riding on mom’s bike in his car seat. The baby enjoys the cool breeze, the scenery, and the thrill of the high-speed ride while mom does all the hard pedaling. At the end of the ride, the baby enjoys all the rewards (a trip to the park) without any of the risks (like, I don’t know, a possible heart attack from overexertion? See, the metaphor isn’t perfect).

In estate litigation, non-litigant beneficiaries are the baby in the car seat. They reap the rewards of their success in court, but bear none of the risks of failure—they didn’t do the work and never paid a dime to a lawyer.

This, of course, creates a bit of an incentive problem. If you are the beneficiary of a trust or estate that has a valid claim, why would you go to the time, effort and expense of pursuing that claim when your responsible sister Annie could do it instead? Meanwhile, Annie is wondering why she should go to all the trouble of litigation when her best-case scenario is the exact same compensation that her lazy brother Nate receives? (Apologies to my lazy brother Nate, an anesthesiologist who definitely does not read this blog.)

The Court of Appeal recently took a major step toward resolving these existential questions by Asaro vs Maniscalco (2024) 103 Cal.App.5th 717. In AsaroPlaintiff Anthony Asaro filed a fiduciary duty and elder abuse suit against Jon Maniscalco, a former trustee of a trust of which Asaro was a beneficiary. The problem? Maniscalco was also a beneficiary of the trust, which presumably means that some of the compensation obtained would ultimately go directly back to Maniscalco.

“Stop right now,” the court said. Asaro sought damages under Probate Code Section 859, which provides that if a court finds that property was wrongfully taken from a trust, the offender is liable for “twice the value of the property recovered” … — double the damages. The court decided to award Asaro the full double the damages, believing that it would be unfair to award any portion of it to Maniscalco — the man who originally stole the property. Maniscalco appealed, arguing that damages under Section 859 can only be awarded to the trust or estate from which property was wrongfully taken, not to individual litigants.

Surprisingly, the Court of Appeals did not side with the elder abuser and fiduciary property thief. The Court noted that while Section 859 states that the offender is “liable” for double damages, it does not specify which party receives those damages. And, finding little support in legislative history or precedent, the Court of Appeals held that it was entirely appropriate to impose the entire penalty solely on the beneficiary making the claim if: (1) the trust had already been restored by the return of its misappropriated property; (2) imposing the penalty on the trust would result in part of it going to the offender; and (3) “none of the other beneficiaries joined Asaro in this litigation, so he must bear the burden alone.” Thus, Asaro reaped the fruits of his hard work, while the non-litigant beneficiaries who were merely party to the litigation did not.

The Court of Appeal did not say that the double damages under Section 859 always be awarded exclusively to the party taking over the working helm, it certainly allowed for exclusive awarding when circumstances demanded a fair result. Freeloaders of the world, beware: nobody sails for free.

(Note that the Asaro The Court also joined the debate, already covered in blogs here and here, over whether the return of misappropriated property to an estate or trust is considered part of the double damages penalty under Section 859 or an addition to that penalty (effectively providing for treble damages). Asaro on the site of Estate of Ashlockand against Guardianship for Ribalin favour of the interpretation of “treble damages”.)

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