Filed 1/6/16

                     CERTIFIED FOR PARTIAL PUBLICATION*


               IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                            FOURTH APPELLATE DISTRICT

                                     DIVISION TWO



MICHAEL ALAN GRAY, as Co-Trustee,
etc. et al.,
                                                      E059761
        Plaintiffs and Appellants;
                                                      (Super.Ct.No. INP015818)
MARTHA JIMENEZ, as Co-Trustee, etc.
                                                      OPINION
        Plaintiff and Respondent,

v.

JEWISH FEDERATION OF PALM
SPRINGS AND DESERT AREA,

        Defendant and Appellant;



        APPEAL from the Superior Court of Riverside County. James A. Cox, Judge.

Affirmed.

        Russell L. Davis for Plaintiffs and Appellants.




        *  Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this opinion
is certified for publication with the exception of section II, parts B through F.


                                              1
      Law Offices of Michael Zitomer and Michael Zitomer for Plaintiff and

Respondent.

      Schlecht, Shevlin & Shoenberger, John C. Shevlin; and Michael S. Kahn for

Defendant and Appellant.

      Plaintiff and appellant Laura Gray1 was the sole net income beneficiary of the

Edward B. Cantor Trust (the Cantor Trust). Defendant and appellant, the Jewish

Federation of Palm Springs and the Desert Area (Jewish Federation) was one of three

remainder beneficiaries of the Cantor Trust. Cantor died in August 1991. The main asset

of the Cantor Trust was an interest in commercial rental property located on Arville

Street in Las Vegas, Nevada (Arville). In 2001, respondent Martha Jimenez was

appointed the trustee of the Cantor Trust. In 2005, Gray was appointed co-trustee along

with Jimenez.

      In 2007, Gray and Jimenez made an attempt to provide an appropriate accounting

to the remainder beneficiaries of the Cantor Trust when Jimenez wanted to resign as

trustee. Jewish Federation objected to the accounting. Gray filed several other amended

accountings to which Jewish Federation objected. Gray was advised to prepare an

accounting that addressed the income and principal that was distributed by the Arville

management company. Gray filed a Petition for Instructions to Ascertain Beneficiaries to

the Cantor Trust (the Petition) seeking a determination that Jewish Federation was a

      1   On February 27, 2015, Laura Gray passed away; we granted the motion for
substitution of attorneys, substituting Michael Alan Gray and Michelle Frances Holguin
as they are co-executors of Laura Gray’s will. For clarity and ease of reference, with no
disrespect intended, we refer to Laura Gray in the body of this opinion.


                                            2
proper remainder beneficiary as the name of the beneficiary in the trust documents was

Project Exodus. The Petition was denied as “bogus.” Gray was ordered removed as the

co-trustee of the Cantor Trust on March 25, 2009. Gray and Jimenez filed one more

accounting. Jewish Federation’s objections were set for trial.

       Gray appealed her removal as trustee and also the trial court’s order that she must

provide a complete accounting of distributions to income and principal from the

management company for Arville. In our prior unpublished opinion Martha Jimenez et.

al. v. Jewish Federation of Palm Springs (August 4, 2010, E048898 [nonpub. opn.]), we

denied Gray’s arguments finding that an accounting from the management company was

necessary and that the trial court properly removed Gray as the trustee.

       The case was remanded. Gray and Jimenez filed two additional accountings for

the time period they were trustees; Jewish Federation objected and a trial date was set.

After a trial, the trial court found that Gray had to reimburse the Cantor Trust for items

improperly distributed to income rather than principal; was ordered to pay Jewish

Federation’s attorney’s fees for unreasonable and bad faith opposition to Jewish

Federation’s objections to the accountings and for filing the Petition; and Gray was

ordered to repay the Cantor Trust for trustee fees she was paid. Jimenez was relieved

from any liability.

       Gray contends on appeal as follows: (1) Probate Code section 16373 2 required

that disbursements for extraordinary repairs, tenant allowances, leasehold improvements,


       2   All further statutory references are to the Probate Code unless indicated.


                                               3
and broker’s commissions be allocated to principal; (2) there is no statutory authority to

apportion broker’s commissions, tenant allowances, and leasehold improvements over the

initial term of the lease; (3) Gray, in her capacity as co-trustee, is not liable for attorney’s

fees under section 17211, subdivision (b), as she did not file any opposition in bad faith

to the Jewish Federation’s objections to her accountings; (4) “The trustees’ opposition to

an objection that they failed to set aside a reserve for depreciation is not without

reasonable cause nor in bad faith” (all caps. omitted); (5) Gray had a right to file the

Petition and it should not have been considered to have been filed without reasonable

cause or in bad faith; and (6) the trial court erred by denying Gray a right to trustee fees

and the fees of her attorney, which were incurred to defend the Cantor Trust.

       Jewish Federation filed a cross-appeal. It contends that the trial court erred by

relieving Jimenez of liability for breaches of duty and finding no bad faith on her part.

                                               I

                      FACTUAL AND PROCEDURAL HISTORY

       A.     FACTS LEADING TO FIRST APPEAL

       As amended on February 21, 1989, Edward B. Cantor created an inter vivos trust,

which effectively provided that the net income of the residuary trust estate upon his death

be distributed to his friend, Gray, during her lifetime. Upon Gray’s death, 50 percent of

the corpus of the trust was to be distributed to Project Exodus. The primary asset of the

trust was a 21 percent undivided interest in Arville. Arville was held as tenants in

common. In addition, Gray owned a 36 percent interest in her own name.




                                               4
       When Cantor died, two trustees managed the Cantor Trust: Robert Murray and

Helen Mae Rose. Rose resigned on November 17, 2000. On April 18, 2001, Gray and

the remainder beneficiaries entered into a stipulation to appoint Jimenez as the successor

trustee. On November 22, 2005, Jimenez filed a petition to appoint Gray the co-trustee

because Gray was very active in the day-to-day operations of Arville. Gray was

appointed the co-trustee. On September 18, 2006, Jimenez sought to be removed as the

co-trustee.

       On February 28, 2007, Gray petitioned the court for approval of an accounting by

co-trustee Jimenez for the period of March 1, 2001, through January 31, 2007. On April

26, 2007, Jewish Federation objected to the accounting on the grounds that (1) the period

between February 14, 2006, and January 31, 2007, was not presented by both co-trustees;

(2) Jimenez did not file a bond as required by a stipulation entered into on April 18, 2001;

and (3) the format failed to meet the guidelines of the Probate Code. On June 12, 2007,

Gray filed an amended accounting (First Amended). Jewish Federation objected. On

August 27, 2007, Jimenez was allowed to resign.

       On October 4, 2007, Gray filed a second amended petition for approval of

accounting (Second Amended). Jewish Federation objected on the grounds: (1) there

were unexplained differences between the first and second accounting; (2) the accounting

failed to explain how the distributions to the life income beneficiary were calculated;

(3) it did not allocate any depreciation or reserve for principal disbursements for

payments of income from principal; (4) did not account for reserves obtained from a

refinance of Arville; and (5) there were disbursements to Gray personally rather than as


                                             5
co-trustee, which failed to allocate between principal and income. Gray agreed to file an

amended accounting. Richard Jandt was appointed co-trustee.

         A third amended accounting (Third Amended) was filed on July 14, 2008. Jewish

Federation objected to the accounting as follows: (1) rent incomes were distributed from

the management company at Arville directly to Gray without a proper determination of

net income; (2) there was no reserve for depreciation; (3) the co-trustees did not provide

an accounting from the Arville management company, only the net income received;

(4) dispersal of income receipts by the Arville management company directly to Gray

personally and not as co-trustee; (5) no accounting for Arville management company’s

cash balance; (6) there was payment of attorney’s fees out of the trust for Gray’s personal

legal matters; (7) failure to appropriately account for fees paid and requested by Gray as

co-trustee; and (8) reimbursements to Gray that did not appear to be for the benefit of the

trust.

         Gray’s counsel contended at the hearing on August 15, 2008, that the accounting

was correct and addressed all the previous objections. The trial court found that Jewish

Federation’s objections were well taken. Gray was receiving the full amount of rent but

no expenses were taken out. It appeared Gray had been overpaid. Jewish Federation was

concerned that the accounting did not address what the Arville property manager was

doing with the money. The trial court ordered a fourth amended accounting.

         The fourth amended accounting (Fourth Amended) was filed on October 2, 2008.

Jewish Federation objected that the accounting failed to address the receipts and

disbursement of the management company that operated Arville. The management


                                             6
company was receiving rent income, security deposits, and had refinanced Arville. The

management company was receiving principal and income as defined in the Uniform

Principal and Income Act (§ 16320, et seq.) (the Act). The transactions needed to be

analyzed to determine the allocations to income and principal.

      At the hearing, the trial court admonished Gray that Jewish Federation was asking

for the back-up figures on Arville management company’s dealings and it was entitled to

such figures. Gray’s counsel argued that the management company was an independent

company and Gray, as the trustee, had accounted for the trust. Gray posited that an audit

of the management company would be required. The trial court advised Gray’s counsel

that such audit must be done, and if it was not done, Gray would be removed as co-

trustee and sanctioned. Further, if it was not provided, then Gray may be held in

contempt.

      A fifth amended accounting was filed on January 27, 2009 (Fifth Amended). Gray

cited to section 16352 as grounds that she did not have to provide an accounting from the

Arville management company because it was a business entity. It was within Gray’s

discretion to account separately for the management company; she need only account for

the income disbursements to her. Jewish Federation again filed objections for failure to

account for security deposits, roof repairs, and an accounting of the Arville management

company.

      The trial court found that Arville was not a business entity; it was a tenancy in

common. Nothing in section 16350 exempted Gray from providing an accounting of the

management company. The trial court believed that there had to be an accounting of the


                                            7
amount of money received by the management company, the expenses and the

disbursements to Gray, and the other owners. The trial court believed that such

documentation existed. Gray’s counsel stated that there had been a computer problem at

the management company and the backup figures were lost. Gray also stated that

Jimenez never received an accounting from the Arville management company while she

was the trustee.

       The trial court noted that Gray had been asked to provide the appropriate

accounting three to four times. The Fifth Amended accounting was rejected, Gray was

removed as co-trustee, Jandt became the sole trustee, and a trial was set on Jewish

Federation’s objections to the Fifth Amended accounting.

       Further, on November 18, 2008, prior to the first appeal, Gray filed the Petition.

Gray contended that the Cantor Trust provided for the remainder beneficiary to be Project

Exodus; it was not clear that Jewish Federation was the appropriate beneficiary. Gray

asked that the trial court determine the remainder beneficiaries. Gray verified the

Petition. The Petition was denied by the trial court. The trial court expressed concern

that the Petition was brought by Gray to rid herself of “an objector to her activities as co-

trustee.” The trial court also noted that Gray had previously in her capacity as co-trustee

acknowledged Jewish Federation as the rightful beneficiary.

       B.     FIRST APPEAL

       In Gray’s first appeal to this court, she argued the trial court erred by finding that

Arville was not a business entity, and by removing her as co-trustee. We affirmed the




                                              8
trial court’s ruling finding that Arville was not a business entity. We also rejected that all

distributions must automatically be allocated to income.

       We also concluded that the trial court properly removed Gray as the co-trustee

based on her failure to provide a separate accounting from the Arville management

company despite repeatedly being asked to provide such accounting. There was no way

to determine the appropriate allocation of receipts and expenses without a full accounting

of the Arville management company. We found that the accountings filed by Gray did

not appropriately account for security deposits, depreciation, repairs, improvements,

reserves, and refinancing of the property, which would substantially affect allocation of

receipts and expenses. We found her statement that the records were lost “suspect.”

Gray did not appeal the denial of the Petition. The case was remanded.

       C.     JEWISH FEDERATION’S PETITION TO SURCHARGE TRUSTEES

       Jewish Federation’s Petition to Surcharge Trustees and for Attorney’s Fees (the

Surcharge Petition) was filed on December 2, 2010. Jewish Federation contended that

the actions of Jimenez and Gray in failing to provide the appropriate accounting caused

waste, delay, misuse of Cantor Trust funds, and was an attempt to cover up Jimenez’s

misappropriation of trust funds. Jewish Federation sought attorney’s fees under section

17211, subdivision (b).

       D.     ADDITIONAL ACCOUNTINGS

       On December 16, 2010, the sixth amended accounting was filed by Gray (Sixth

Amended). It covered the period of 2001 through 2008. There was a breakdown of the

principal and income for the years 2001 through 2006, and a separate accounting for


                                              9
2006 through 2008. It also included amounts paid for repairs and services on Arville;

disbursements for legal fees to Best, Best and Krieger (BB&K); disbursements for

accounting services; and amounts paid to Gray as trustee fees.

       Jewish Federation objected. Once again it faulted Gray and Jimenez for not

setting up a reserve or depreciation account by transferring income to principal. It

recognized the account was discretionary, but asserted Gray could not exercise her

discretion in favor of the Cantor Trust because she would not benefit as the net income

beneficiary. Jewish Federation also argued, citing sections 16370 and 16371, that there

were inappropriate principal and income allocations. Jewish Federation set forth the

amounts that needed to be charged against income and not principal.3 Jewish Federation

also asked that the trial court reject that Gray was entitled to attorney’s fees paid out of

the Cantor Trust.

       Gray and Jimenez filed a response to the objections to the Sixth Amended

accounting. They argued that in 1998 the trial court rejected that a reserve for

depreciation was required. Jewish Federation could not raise the argument as it was

already decided. Further, Gray and Jimenez justified all of the expenses for items

allocated to principal. Gray contended that section 16373, subdivision (b)(3) should be

applied to determine which items should be charged to principal. Gray also set forth that

the accountings were not done in bad faith or in order to thwart court orders. Both Gray

and Jimenez verified the response to the objections.

       3The figures need not be discussed as they are not relevant to the issues raised by
Gray on appeal.


                                              10
       Gray filed a seventh amended accounting (Seventh Amended), which merely

corrected an error on the Sixth Amended accounting. Jewish Federation raised the same

objections against the Seventh Amended accounting. Jimenez and Gray filed the same

response to the objections. Gray and Jimenez filed objections to Jewish Federation’s

Surcharge Petition. They argued there was not a breach of trust with a resulting loss.

Jewish Federation could not show bad faith.

       E.     TRIAL

       Prior to trial, the parties argued the issue of allocation of principal and income

within the meaning of sections 16370, 16371, and 16373, which we will discuss in more

detail post. The objections to the Seventh Amended accounting were heard along with

the Surcharge Petition.

       Jimenez testified she became the sole trustee in 2001. Jimenez had never been a

trustee. Gray’s lawyer, David Erwin, prepared the paperwork in order for Jimenez to be

appointed. Erwin never advised her of her fiduciary duties as a trustee. She signed a

letter claiming to have trust experience, but she did not have any experience. At the time

Jimenez was appointed, Richard Artz was the property manager for Arville. Artz was

also an accountant. He collected rents and paid the expenses. She received no

compensation from the Cantor Trust and resigned in 2006.

       When she wanted to resign, Jimenez hired an accountant to do a final accounting.

Jimenez gave the accountant her checkbook and bank statements for the Cantor Trust and

nothing else. She also gave tax returns from 2001 through 2006, given to her by Artz, to

the accountant. She was told by Erwin the accounting was wrong. She hired another


                                             11
accountant, Linda Sinclair, who prepared another accounting. Jimenez was told the

accounting prepared by Sinclair was also rejected; Jimenez was not asked to do another

accounting. Jimenez relied on the accountants and lawyers to file the appropriate

accountings. Artz never gave her a complete accounting of Arville despite her asking

him for one for several years. Jimenez did not participate in the Cantor trust after 2007.

       Jimenez was advised to file a bond as the trustee in 2001 but did not file the bond

until 2007. Jimenez did recall giving Gray’s counsel permission to represent her on the

Sixth and Seventh Amended accountings. No one asked for an accounting until 2006.

Once Jewish Federation filed the Surcharge Petition asking for money from Jimenez, she

got her own attorney.

       John Shevlin was an attorney who was specialized in trusts and estates; he

represented Jewish Federation on the first appeal. Gray did not raise the issue of the

denial of the Petition on appeal. Shevlin’s total bill was $54,782.52.

       David Erwin testified that he was a partner with the law firm BB&K. Erwin’s

firm represented Gray starting in 2000. Erwin did recall at some point meeting with

Jimenez. Erwin insisted he advised Jimenez, prior to her appointment, of her fiduciary

duties. Erwin represented Jimenez in 2006 when she was ordered to do an accounting

and file a bond. Jimenez was appointed in 2001. Jimenez did not file an annual

accounting until 2007; she did not file a bond until 2007. Erwin knew that Jimenez had

no experience as a fiduciary.

       Gillett Henry Welles was a lawyer employed by BB&K. Welles started working

with Gray in 2008. Gray was a difficult client. Welles submitted the Third and Fourth


                                            12
Amended accountings to the court. Gray instructed him to file them although he had

some questions. However, Welles believed that the accountings provided the proper

information. After the Fourth Amended accounting, Russell L. Davis started advising

Gray. An email was sent from Davis to Welles advising him that they should file the

Petition to put Jewish Federation on the defensive. The Petition was filed four days after

the email. Welles filed the Petition. Welles felt they had to file the Petition; it was

authorized by Gray.

       John Maxwell was an accountant. Maxwell tried to present an accounting that

addressed Jewish Federation’s objections to the Third Amended accounting. He admitted

that he did not have records for the Arville management company going back to 2001.

Maxwell did not have extensive experience in trust accounting. Gray advised Maxwell

she could not find the Arville records.

       Robert Baltes was an accountant who also was hired by Welles to do the Fourth

Amended accounting. Baltes was to address the objections to the accounting. He did not

contact Jimenez. Gray got him whatever documents she could obtain from the Arville

accounting manager. Baltes did not have all the receipts and disbursements.

       Gray testified. Gray relied upon Davis that the first appeal needed to be filed.

Gray relied on the accountants and Erwin in filing the earlier accountings. She relied

upon Davis in filing the Sixth and Seventh Amended accountings.

       Jimenez agreed to be co-trustee, even though she would not be compensated,

because she liked “challenges.” Gray assumed she had experience as a fiduciary. Gray

asked Jimenez for accountings but never received a proper accounting. Gray did not


                                             13
recall if she was informed by Erwin that a yearly accounting was required. Gray was

made co-trustee just to help Jimenez until a new trustee could be found.

        Gray insisted she did everything to try to get the proper accounting including

going to the bank, and hiring lawyers and accountants. Gray insisted that Jimenez was in

sole control between 2001 and 2006.

        Gray admitted she provided documents, that were kept in her garage with the Fifth

Amended accounting; these included tenant leases and repairs. She filed large binders of

the documents with the trial court. Gray got additional boxes out of her garage for the

Seventh Amended accounting. The documents came from Artz but she was not sure

when she received them. Gray received income and expense statements from Arville

management as a co-trustee starting in 2000. She put them in the boxes in her garage and

home.

        Gray wanted the Petition filed to ascertain whether Jewish Federation was Project

Exodus. Project Exodus helped Russian Jews return to Israel. Cantor wanted to help the

organization. However, there no longer was an issue as to Jews leaving Russia. Gray

was not sure if Jewish Federation was Project Exodus but the Petition was necessary

because the reason for donating to the charity no longer existed. The appeal was filed

with her permission. Gray acknowledged that she signed a replacement of trustee Rose

in December 2000. It listed the beneficiaries as Jewish Federation, also known as Project

Exodus. It was filed with the court.

        She relied on the accountants and attorneys to prepare all of the accountings; she

relied on their conclusions. She felt all the information in the binders filed with the Fifth


                                             14
Amended accounting addressed the trial court’s concerns regarding what was done on

Arville. Gray said that between 2001 and 2006 she would contact the Arville

management company monthly to check on the amount of her distribution.

       At one point, the trial court admonished Gray to answer questions without making

any additional comments. She was not helping her credibility by the way she was acting

in court.

       Michael Kahn, Jewish Federation’s counsel, testified. He billed Jewish Federation

for attorney’s fees in the amount of $176,818.75. Scott Sklar also represented Jewish

Federation. He had fees of $43,312.50. Kahn believed that Gray had all of the records in

her home but refused to do the accounting. The trial court at this point noted that just

attaching the tax returns and giving the court several binders of invoices and receipts was

not an appropriate accounting.

       Davis, Gray’s attorney, also testified. He was hired in 2008. Davis thought the

first appeal was meritorious. Davis claimed that the issue of Jewish Federation’s right as

a beneficiary had never been established. Davis always got Gray’s approval for any legal

action. Davis had Gray review the appeal. After the appeal, Davis asked Kahn if the tax

returns from Arville could be used for an accounting and Kahn stipulated to their use.

       F.     STATEMENT OF DECISION

       The trial court entered its statement of decision on July 2, 2013. The trial court

noted that Gray was involved in the day-to-day operations of the trust when Jimenez was

the trustee. The trial court had been involved with the Cantor Trust since 2005. The trial

court noted, “In all of the nearly 16 years this judge has heard probate calendars, this


                                             15
court has seen few trust accounting proceedings wherein the trustees have so obstinately

refused to address the sustained objections to the filed accounts as the trustees have done

in this proceeding.” The trial court faulted Gray with having filed binders with over

1,000 pages of receipts and checks with the Fifth Amended accounting, expecting the

trial court to conduct the accounting. The trial court faulted the “trustees,” specifically

Gray, with claiming to have lost records and blaming the multiple accountings on the

advice of counsel. As trustees, they were tasked with keeping proper records. The court

noted that a trustee who does not keep proper records or fails to file a proper accounting

can be liable for breach of fiduciary duty, attorney’s fees, damages and contempt; it cited

to sections 16060 and 17211, subdivision (b).

       The trial court found the first two accountings filed were not done in bad faith.

However, the filing of the Third Amended accounting and all further accountings were

filed in direct violation of the court’s order to prepare a proper accounting, including the

records of the Arville management company. Gray testified she had boxes of receipts

and expenses in her garage, and that she received monthly expense and income

statements from Arville starting in 2000. The trial court noted, “Why these records were

not utilized to prepare the proper account is a mystery.”

       The trial court found that the direct violation of the trial court’s orders was bad

faith, and caused the remainder beneficiary to incur great expense to obtain the

information. The trial court required Gray to pay attorney’s fees to Jewish Federation for

the Third, Fourth, Fifth and Sixth Amended accountings.




                                             16
       The trial court noted that Gray filed the Petition on her own. The evidence at trial

and the earlier proceedings supported that the Petition was filed in order to rid Gray of an

objector to the accounting. Gray presented the defense that she followed the advice of

counsel. However, Gray in her own verified pleadings, which were filed with the trial

court since 2000, showed she had acknowledged Jewish Federation was a remainder

beneficiary. The trial court did note the issue was ultimately abandoned on appeal. It

assessed Gray 10 percent of Jewish Federation’s attorney’s fees for the appeal and all of

the fees paid by Jewish Federation to object in the trial court.

       The trial court additionally found no evidence was presented that contradicted

Jewish Federation’s assertion the principal was overcharged. Gray was to return the

trustee fees she was paid. The court found Gray’s conduct as trustee “deficient,

improper, in breach of her duty of impartiality, and outrageous in the delays.” The trial

court also ordered that the two other remainder beneficiaries must share equally in the

attorney’s fees that were not being reimbursed to Jewish Federation. That amount would

be deducted upon Gray’s death.

       The trial court also found that despite Jimenez being the named trustee from 2001

through 2006, Gray was in fact operating and acting as the trustee. Jimenez was acting as

trustee but in a “lesser role.” The trial court noted it found that Gray was not forthcoming

in her testimony and was intentionally evasive. There was no indication of bad faith on

the part of Jimenez. Jimenez was held jointly responsible for costs.

       The final judgment order set forth all of the awarded fees and the approval of the

Seventh Amended accounting. The judgment included the decision that disbursements


                                             17
for repairs, tenant allowances, leasehold improvements and broker’s commissions were

chargeable to income. The expenses could be apportioned over the term of the lease.

Based on this determination, Gray was owed $47,913.58 in underpaid income. The

principal was overcharged $61,749.01. Gray would pay the difference out of income.

      Gray was to pay $28,000 in attorney’s fees to Jewish Federation for bad faith and

unreasonable objections to accountings pursuant to section 17211, subdivision (b). Gray

was to pay $12,709.45 to Jewish Federation for the objections and appeal to the Petition.

Gray was to reimburse the Cantor Trust $12,608 for her trustee fees. One-half would be

charged to income, and the other one-half to principal.

      Payment was to come from the distributable income in the Cantor Trust. Any

additional amount owed would be obtained from the succeeding accounting period.

Gray’s own petition to surcharge Jewish Federation for the attorney’s fees incurred on

behalf of the Cantor Trust was denied.4 Gray filed her notice of appeal.

                                             II

                                      DISCUSSION

      A.      PROBATE CODE SECTION 16373

      Gray contends the trial court erred by concluding that the expenses for leasehold

improvements; broker commissions; expenses to prepare the spaces for rent; and capital

improvements, such as a new roof, should have been allocated to income under section

16373. She insists the trial court erred by concluding that section 16373 allowed for the


      4   This petition does not appear in appellant’s appendix.


                                            18
trustee to borrow from principal to pay excessive income expenses but that such amounts

must be paid back. She interprets section 16373 to provide that the items listed in that

section were to be charged to principal, and the trial court improperly found they were

chargeable to income. She also claims that the amounts to be paid back out of income

could not be spread across the term of the lease.

              1.     ADDITIONAL FACTUAL BACKGROUND

       The Cantor Trust provided that the principal and income should be distributed in

accordance with the Act. The trial court held a hearing to determine the proper

interpretation of the Act. The trial court first acknowledged that it could not force the

trustee to set aside a reserve from income to fund depreciation. However, by not setting

up the fund, the trial court felt it could surcharge Gray for the amounts where principal

was used to pay income expenses.

       The trial court noted that section 16370 defined those items that should be charged

to income; section 16371 defined principal disbursements; and that section 16373

referred to the discretion to regularize income payments by allowing the trustee to pay

large expenses from principal, but that the principal must be paid back over time.

       Gray’s counsel argued that section 16373 defined those items that were chargeable

to principal. Gray also argued that by looking at the code section superseded by section

16373, section 16312, it was clear that the items in section 16373 were to be charged to

principal. It was very clear the prior section referred to what was to be paid out of

principal. The trial court interpreted section 16373 to mean that it allowed the trustee to

pay expenses for income expenses from principal but the expenses had to be paid back.


                                             19
This was done to regularize income for the income beneficiary. The trial court relied on

the Law Review Commission Comments to determine the meaning of section 16373.

        The trial court believed that section 16373 was not a definitional statute.

However, the trial court recognized that even an accountant could be confused by the Act

and that it took reading the statute several times, and the Law Review Commission’s

Comment, to help understand it.

               2.     SECTION 16373 REGULARIZES DISTRIBUTATION

        Here, the trial court found that the income was undercharged in the accounting,

based on its interpretation of section 16373. It concluded that disbursements for repairs

(whether extraordinary or not), tenant allowances, leasehold improvements and broker’s

commissions are chargeable to income. It also found, “All expenses listed in Probate

Code § 16370 (c) are chargeable solely to income and are not apportionable under

Probate Code § 16373.”

        “We review issues of statutory interpretation de novo. [Citation.] The primary

purpose of statutory construction is to ascertain the Legislature’s intent. [Citation.] We

first consider the statutory language, ‘being careful to give the statute’s words their plain,

commonsense meaning.’ [Citation.] ‘If the language of the statute is not ambiguous, the

plain meaning controls and resort to extrinsic sources to determine the Legislature’s

intent is unnecessary.’ [Citation.] If our analysis of the statutory language ‘leaves doubt

about its meaning, we may consult other evidence of the Legislature’s intent, such as the

history and background of the measure.’” (Soria v. Soria (2010) 185 Cal.App.4th 780,

786.)


                                              20
       Section 16370 sets forth a list of items that shall be chargeable to income.5 These

items include half of the regular compensation of the trustee, and ordinary expenses

incurred in connection with the administration, management and preservation of trust

property. (§ 16370, subds. (a) & (c).) Section 16371 sets forth the list of items that shall

be disbursed from principal. Section 16373 provides in pertinent part follows: “(a) If a

trustee makes or expects to make a principal disbursement described in this section, the

trustee may transfer an appropriate amount from income to principal in one or more

accounting periods to reimburse principal or to provide a reserve for future principal

disbursements. [¶] (b) Principal disbursements to which subdivision (a) applies include

the following, but only to the extent that the trustee has not been and does not expect to

be reimbursed by a third party. [¶] (1) An amount chargeable to income but paid from

principal because it is unusually large, including extraordinary repairs. [¶] (2) A capital

improvement to a principal asset, whether in the form of changes to an existing asset or

the construction of a new asset, including special assessments. [¶] (3) Disbursements

made to prepare property for rental, including tenant allowances, leasehold

improvements, and broker’s commissions.”6

       The Law Revision Commission comments to section 16373 include the following

language: “The sources of Section 504 [Prob. Code, § 16373] are Section 13(b) of the


       5  Income is defined as “money or property that a fiduciary receives as current
return from a principal asset.” (§ 16324.)

       6We have found no cases interpreting section 16373 and the parties have
provided no cases.


                                             21
1962 Act [former Prob. Code § 16312(c)], which permits a trustee to ‘regularize

distributions.’” If charges against income are unusually large, by using ‘reserves or other

reasonable means’ to withhold sums from income distributions; Section 13(c)(3) of the

1962 Act [former Prob. Code § 16312(d)(3)], which authorizes a trustee to establish an

allowance for depreciation out of income if principal is used for extraordinary repairs,

capital improvements and special assessments; and Section 12(3) of the 1931 Act, which

permits the trustee to spread income expenses of unusual amount ‘throughout a series of

years.’ Section 504 [Prob. Code, § 16373] contains a more detailed enumeration of the

circumstances in which this authority may be used, and includes in subsection (b)(4) the

express authority to use income to make principal payments on a mortgage if the

depreciation charge against income is less than the principal payments on the mortgage.”

       Former section 16312, subdivision (c) provided, “If charges against income are of

unusual amount, the trustee may by means of reserves or other reasonable means charge

them over a reasonable period of time and withhold from distribution sufficient sums to

regularize distributions.”

       Based on the language of section 16373, and the Law Revision Commission

Comments, it is reasonably interpreted to state that if an amount is to be distributed from

income, such as a broker’s commission on a new lease, but there is not enough income to

pay for the item and maintain disbursements to the income beneficiary, the trustee can

pay for the items out of the principal. However, the trustee must pay back the principal

over time for the use of principal to pay income expenses if it did not set up a reserve to

pay for the items. Although the statute uses the term “principal disbursement,” it is


                                             22
clearly intended to mean those items paid for out of principal, but for which they must be

paid back from income.

       The trial court believed that the section essentially authorized the trustee to use the

principal account as a lender/bank in order to be able to pay large charges that were to be

paid by income but still have money to distribute to the net income beneficiary. The

definitions for what is chargeable to income and principal are clearly found in sections

16370 and 16371. Such an interpretation is the most reasonable based on looking to the

statutory scheme as a whole. In determining the meaning of a statute, “[t]he language

must be construed ‘in the context of the statute as a whole and the overall statutory

scheme, and we give “significance to every word, phrase, sentence, and part of an act in

pursuance of the legislative purpose.’” [Citation.] In other words, ‘“we do not construe

statutes in isolation, but rather read every statute ‘with reference to the entire scheme of

law of which it is part so that the whole may be harmonized and retain effectiveness.’”’”

(Smith v. Superior Court (2006) 39 Cal.4th 77, 83.)

       Gray contends that section 16373 defines those items that are chargeable to

principal. She relies on former section 16312, subdivision (d), which provided language

that, “[t]he following charges shall be made against principal: [¶] (2) . . . expenses for

preparation of property for rental or sale . . . . [¶] (3) Extraordinary repairs or expenses

incurred in making a capital improvement to principal . . . .” However, section 16373

superseded section 16312, subdivision (d)(3). Further, based on the wording of section

16373, and reading it in conjunction with sections 16370 and 16371, which are statutes

defining what shall be charged to income and principal, it is clear that this statute


                                              23
authorizes the use of principal for some disbursements, but those disbursements must be

paid back by income. The trial court properly interpreted section 16373.

              3.     APPORTIONMENT OVER LEASE TERM

       In addition, Gray appears to contend that the trial court erred by ruling that

disbursements for broker’s commissions, tenant allowances and leasehold improvements

may be subject to being apportioned over the initial term of the lease and any portion that

exceeds the period of income interest is chargeable to principal. Gray insists that there is

no statutory authority for such a proposition.

       In its statement of decision, the trial court found, “With regard to the Arville

property, broker’s commissions, tenant allowances and leasehold improvements may be

subject to being apportioned over the initial term of the lease, and any portion which

exceeds the period of the income interest7 is chargeable to principal.” Section 16373

clearly supports this determination. It provides that an amount from income can be

transferred in one or more accounting periods. (§ 16373, subd. (a).) There was no error

occasioned by the trial court’s ruling.




       7  “Income interest” is defined as “the right of an income beneficiary to receive all
or part of net income, whether the trust requires it to be distributed or authorizes it to be
distributed in the trustee’s discretion.” (§ 16326.)


                                             24
       B.     ATTORNEY’S FEES AWARDED TO JEWISH FEDERATION UNDER

              SECTION 17211, SUBDIVISON (B) FOR OBJECTIONS TO

              ACCOUNTINGS

       Gray insists that the trial court erred by finding she acted in bad faith, and that her

oppositions to the objections to the Third, Fourth, Fifth and Sixth Amended accountings

filed by Jewish Federation were unreasonable within the meaning of section 17211,

subdivision (b). She insists the court proceedings confirm that she voluntarily attempted

to resolve all objections and did not oppose the objections until the Fourth Amended

accounting was filed.

       The trustee of a trust has a duty to keep the beneficiaries of the trust reasonably

informed of the trust and its administration. (§ 16060.) To this end, the trustee shall

provide an accounting to the beneficiaries at least annually and upon certain specified

events, including upon a change of trustee. (§ 16062, subd. (a).) The accounting must

comply with statutory requirements, including the requirements that it contain a statement

of receipts and disbursements, a statement of assets and liabilities, and a disclosure of the

trustee’s compensation. (§ 16063, subds. (a), (b).)

       “If a beneficiary contests the trustee’s account and the court determines that the

trustee’s opposition to the contest was without reasonable cause and in bad faith, the

court may award the contestant the costs of the contestant and other expenses and costs of

litigation, including attorney’s fees, incurred to contest the account. The amount awarded

shall be a charge against the compensation or other interest of the trustee in the trust. The

trustee shall be personally liable and on the bond, if any, for any amount that remains


                                              25
unsatisfied.” (§ 17211, subd. (b).) As explained in Estate of Bonaccorsi (1999) 69

Cal.App.4th 462, 473, “where successful, the beneficiaries must bear their own attorney

fees in contesting an accounting of an estate. An exception exists only where the

administrator opposes the contest ‘without reasonable cause and in bad faith.’”

       In determining reasonable cause within the meaning of section 17211, it “does not

require an objectively reasonable belief, based on the facts then known to the trustee, that

the trustee would be completely exonerated. Instead, . . . reasonable cause to oppose a

contest of an account requires an objectively reasonable belief, based on the facts then

known to the trustee, either that the claims are legally or factually unfounded or that the

petitioner is not entitled to the requested remedies. Conversely, there would be no

reasonable cause to oppose a contest of an account only if all reasonable attorneys would

have agreed that the opposition was totally without merit, or, in other words, no

reasonable attorney would have believed that the opposition had any merit.” (Uzyel v.

Kadisha (2010) 188 Cal.App.4th 866, 927.) Whether there is reasonable cause is a legal

question. “Any controversy as to what facts were known . . . presents a question of fact

for the trier of fact.” (Ibid.) On review of these claims, “[W]e independently review the

trial court’s finding on the existence of reasonable cause absent any factual dispute as to

[the trustee]’s knowledge at the time.” (Ibid.)

       We note that Gray spends an inordinate amount of time explaining, as to the initial

accounting through the Fifth Amended accountings, that she either did not understand the

objections, that it was Jimenez’s obligation to file the accountings, or that she voluntarily

agreed to amend the accountings without filing any opposition. Essentially she argues


                                             26
that the objections were not clear and that she had filed the appropriate accountings.

However, in our prior opinion, we noted that the trial court was within its discretion to

require a more detailed accounting. We also noted that all of the prior accountings failed

to account for several items including reserves, depreciation, and security deposits. We

have already determined that they were not proper accountings and will not reconsider

the issue. The only issue in the trial was whether such refusal to follow the trial court’s

orders was done in bad faith or without reasonable cause.

       Gray admitted at trial that she received monthly income and expense statements

for Arville starting in 2000. She kept those records in her garage. She also had other

records received from Arville, including receipts for repairs, in her garage. Despite this

information, she represented to the court at the hearing on the Fourth Amended

accounting that the records could not be obtained because the computers had crashed at

the Arville management company. The trial court noted that starting with the Third

Amended accounting, it was clear the accounting had to contain the income and expenses

pertaining to Arville. The trial court felt it was a “mystery” why the records possessed by

Gray were not used in the accountings.

       Further, Gray attached some records to the Fifth Amended accounting, but there

were thousands of pages and the trial court was expected to do the accounting. This was

not a proper accounting and it was in violation of the trial court’s order. The trial court

properly determined that Gray should be responsible for the attorney’s fees incurred by

Jewish Federation in objecting to the accountings.




                                             27
       Moreover, despite Gray only being appointed co-trustee from 2006 through 2008,

it was apparent to the trial court, and this court, that Gray was directing all matters of the

Cantor Trust beginning at least in 2001. Jimenez testified that she was instructed only to

write a check to Gray, and had no prior experience as a trustee. Further, Jimenez had a

very limited role in the accountings after the First Amended accounting. Gray voluntarily

provided all of the accountings after the First Amended accounting.

       The trial court could reasonably conclude that Gray was acting as the trustee prior

to her appointment as co-trustee based on her involvement in the day-to-day operations.

       Finally, the trial court made the factual determination that the objections by Jewish

Federation and the request for an accounting were sufficiently clear after the Second

Amended accounting. Such determination was not an abuse of discretion. As such, any

accounting done after the Second Amended accounting, which was done in direct

violation of the court’s order, was not done with reasonable cause.

       Moreover, the Third, Fourth, Fifth and Sixth Amended accountings were filed in

bad faith. Bad faith concerns the trustee’s subjective state of mind. (Uzyel v. Kadisha,

supra, 188 Cal.App.4th at p. 926, fn. 47.) Advice of counsel cannot be a “‘mere cloak to

protect one against a suit.’” (Bertero v. National General Corp. (1974) 13 Cal.3d 43,

54.) These accountings, as found by the trial court, were done in violation of the court’s

order to provide an accounting of the Arville management company. Further, Gray

admitted to having access to the records as early as 2000, and did not explain why a

detailed accounting using those records was not prepared earlier. Her accountants and

attorneys cannot be faulted for filing these accountings without the records when it


                                              28
appeared they were unaware she possessed more detailed records. Moreover, there was

no explanation in the Sixth Amended accounting as to how Gray suddenly was able to

provide more information regarding the repairs and receipts.

       Gray also claims that she did not file any opposition to the objections until the

Fourth Amended accounting. We assume her argument is that attorney’s fees could not

be ordered under section 17211, subdivision (b) because an opposition must be filed

based on the language of the statute.

       “[S]ection 17211[, subd. ](b) is a remedial statute and therefore must be liberally

construed.” (Soria v. Soria, supra, 185 Cal.App.4th at p. 786.)

       In Leader v. Cords (2010) 182 Cal.App.4th 1588, 1591 (Leader), the beneficiaries

sought attorney’s fees under section 17211, subdivision (b) for a petition to compel a

distribution. The court found that under section 17211, subdivision (b), the language

provided that it was a “contest to the trustee’s account” that was eligible for attorney fees.

In Leader, “[t]he trustee’s account . . . revealed that the trust had remaining assets and no

liabilities. The trustee, however, refused to make a final distribution based on a collateral

dispute that did not pertain to the trust. The beneficiaries successfully petitioned the

probate court for an order compelling the trustee to distribute the remaining assets. The

sole question on appeal [was] whether the court erred by finding section 17211,

subdivision (b) is inapplicable as a matter of law because the proceeding [did] not

constitute a contest of the trustee’s account.” (Leader, at p. 1591.)

       The Leader court concluded that based on the language and purpose of section

17211, the beneficiaries were entitled to attorney’s fees despite not technically filing


                                             29
opposition to objections to accounting. It noted that “[a] remedial statute ‘“must be

liberally construed ‘to effectuate its object and purpose, and to suppress the mischief at

which it is directed.’”’” (Leader, supra, 182 Cal.App.4th at p. 1598.) The court

concluded, “We do not envision that the Legislature intended to leave beneficiaries . . .

without potential recourse under section 17211, subdivision (b), for the unreasonable and

bad faith opposition to a petition for distribution, merely because they do not challenge

the accuracy of the account’s enumerated receipts and distributions, or assets and

liabilities. Such a narrow reading of 17211, subdivision (b) would defeat its remedial

purpose. Accordingly, we conclude the court misinterpreted section 17211, subdivision

(b) as inapplicable . . . .” (Id. at p. 1599.)

       Here, there is no doubt that each of the objections filed by Jewish Federation

contested the accounting of the trustee. Although Gray did not file written opposition to

the objections until the Fourth Amended accounting, she quickly filed amendments that

never addressed or provided an appropriate accounting despite having the documents to

support the income and expenses. As we found in our prior opinion, the trial court

properly concluded that she had not provided appropriate accountings. Gray’s tactics in

filing amended accountings that continued to defy the court’s orders and to which Jewish

Federation had to file objections certainly qualifies under section 17211, subdivision (b).

       The trial court properly imposed attorney’s fees of $28,000 against Gray.

       C.      RESERVE FOR DEPRICIATION

       Gray’s next argument is entitled, “The trustees’ opposition to an objection that

they failed to set aside a reserve for depreciation is not without reasonable cause nor in


                                                 30
bad faith.” (All caps. omitted.) Gray provides authority for the fact that setting aside

reserves for depreciation is discretionary. She also contends that she consistently

provided, with all of the accountings filed in the trial court, the income tax returns from

Arville in the form of a “Schedule E,” which was identical to information that is required

under the federal tax form “Schedule C.”8 She insists she never took trust property

without accounting for it. She also states that any reasonable attorney would find Jewish

Federation’s claim that she was required to set aside a reserve for depreciation lacked

merit. Gray then concludes, “For this reason, Gray has requested an award of attorney

fees pursuant to Section 17211(a) which was denied by the court.”

       Gray’s argument is unintelligible. Although Gray attempts in the reply brief to

clarify that she is entitled to trustee and attorney’s fees for the work she did in defending

the Cantor Trust, the opening brief is indecipherable. Although it does appear that Gray

filed a petition to surcharge Jewish Federation for attorney’s fees and trustee fees, it is not

included in the record. We note the trial court did provide that Gray’s attorneys could be

paid out of income and principal in the amount of $41,849.15. It is entirely unclear as to

what attorney’s fees Gray is claiming she should have been paid. Jewish Federation was

unable to decipher the argument and was unable to respond appropriately. An appellant

must “‘present their cause systematically and so arranged that those upon whom the duty

devolves of ascertaining the rule of law to apply may be advised . . . of the exact question

       8 On May 27, 2014, Gray filed a motion for judicial notice of a blank Schedule C
tax form to support this argument that she has always provided a proper accounting. We
deny the motion as it is not relevant to the issues raised on appeal. (People ex.rel.
Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2.)


                                              31
under consideration, instead of being compelled to extricate it from the mass.’” (Opdyk

v. California Horse Racing Bd. (1995) 34 Cal.App.4th 1826, 1830-1831, fn. 4.) We

reject the claim.

       D.     ATTORNEY’S FEES PAID TO JEWISH FEDERATION FOR THE

              OPPOSITION TO THE PETITION TO ASCERTAIN BENEFICIARIES

              OF THE CANTOR TRUST

       Gray further contends that the trial court should not have ordered her to pay

Jewish Federation’s attorney’s fees to oppose the Petition. She insists it was filed with

reasonable cause and was not filed in bad faith.9 She sought a clarification that Jewish

Federation was also known as Project Exodus. We have set forth section 17211,

subdivision (b), ante.

       The trial court provided in its statement of decision that Gray acted in bad faith in

filing the Petition because she had acknowledged Jewish Federation as a remainder

beneficiary since 2000. It was clear that she only filed the Petition in order to avoid

providing a proper accounting.

       Assuming that Gray had standing to file the Petition, no reasonable attorney would

have believed that the Petition had any merit. (Uzyel v. Kadisha, supra, 188 Cal.App.4th

at p. 927.) For years, Gray had acknowledged that Jewish Federation was also known as

       9  We note that such Petition is not listed in section 17211 as a basis for awarding
attorney’s fees. However, Gray has not raised a claim that it was not appropriate to
award attorney’s fees under section 17211, subdivision (b). Moreover, Jewish Federation
has described the Petition as opposition to their objections to accounting, which would
clearly fall under section 17211, subdivision (b). In her reply brief, Gray does not dispute
this characterization of the Petition.


                                             32
Project Exodus. She continually filed amendments to the accountings based on

objections by Jewish Federation. She did not appeal the denial of the Petition in the first

appeal. Based on the circumstances, Gray acquiesced in filing the Petition in order to rid

herself of her objector. The evidence she presented, that she was only following the

advice of her attorneys, was not credible. This constituted bad faith. The trial court

properly ordered Gray to pay the attorney’s fees incurred by Jewish Federation for

objecting to the Petition.

       E.     DENIAL OF TRUSTEE FEES

       Gray disputes the trial court’s determination that she was not entitled to any

trustee fees. She also insists that she could not be held liable for any actions prior to

2006, when Jimenez was the trustee.

       Initially, Gray appears to make an additional argument that she was entitled to her

attorney’s fees for defending the Cantor Trust. However, she does not detail the

attorney’s fees. As noted ante, the trial court allowed $41,849.15 to be paid to Gray’s

attorneys out of the Cantor Trust. We simply cannot determine what amount of

attorney’s fees she was denied.

       As for the refusal to grant her trustee fees, the trial court ordered Gray to

reimburse the Cantor Trust $12,608 for fees she took for performing as the trustee. It

found that her conduct as co-trustee had been “deficient, improper, in breach of her duty

of impartiality, and outrageous in delays of performance of her duties” within the

meaning of California Rules of Court, rule 7.776. She was to receive no compensation.




                                              33
       California Rules of Court, rule 7.776, provides for a trustee to be compensated as

follows: “In determining or approving compensation of a trustee, the court may consider,

among other factors, the following: [¶] (1) The gross income of the trust estate; [¶]

(2) The success or failure of the trustee’s administration; [¶] (3) Any unusual skill,

expertise, or experience brought to the trustee’s work; [¶] (4) The fidelity or disloyalty

shown by the trustee; [¶] (5) The amount of risk and responsibility assumed by the

trustee; [¶] (6) The time spent in the performance of the trustee’s duties; [¶] (7) The

custom in the community where the court is located regarding compensation authorized

by settlors, compensation allowed by the court, or charges of corporate trustees for trusts

of similar size and complexity; and [¶] (8) Whether the work performed was routine, or

required more than ordinary skill or judgment.” (See also Estate of Nazro (1971) 15

Cal.App.3d 218, 221.)

       “‘Allowance of compensation rests in the sound discretion of the trial court, whose

ruling will not be disturbed on appeal in absence of a manifest showing of abuse.’”

(Estate of Gump (1991) 1 Cal.App.4th 582, 597.) In setting fees and compensation, it is

within that courts province to consider the conduct of the trustee in the management of

the trust property. (In re Estate of McLellan (1939) 35 Cal.App.2d 18, 22.)

“Compensation may be reduced or denied where the trustee acts negligently or in breach

of the trust.” (Gump, at p. 597.) We review these matters for an abuse of discretion.

(Estate of McLaughlin (1954) 43 Cal.2d 462, 465; Gump, at p. 597.)

       The trial court reasonably determined that Gray had failed to provide an accurate

accounting of Arville, the only asset in the Cantor Trust. Further, she hid documents and


                                             34
was not forthcoming in her trial testimony. Gray’s negligence in managing the trust was

grounds to deny her compensation.

       Gray’s further contention that she should not be responsible for any acts prior to

2006 when Jimenez was the trustee lacks merit. As previously stated, the trial court

reasonably could find that Gray was acting as the trustee and that Jimenez was not

managing the trust. Gray was involved in the day-to-day operations and was receiving

the accounting from Artz. However, she refused to disclose that accounting to the

remainder beneficiaries. Additionally, Jimenez never received any compensation as

trustee, which was further evidence that she was not acting as the trustee. Moreover, if

Gray was not acting as the trustee from 2001 through 2006, she would not be entitled to

any compensation during that time period.

       The court clearly acted within its discretion in considering Gray’s conduct when

evaluating whether she should have received trustee fees for managing the only asset in

the Cantor Trust, Arville. We find no error in the court’s refusal to grant trustee fees.

       F.     LIABILITY OF JIMENEZ

       Jewish Federation claims that the trial court erred by absolving Jimenez of liability

for her actions while the appointed trustee. In particular, Jewish Federation claims that

she should be held jointly responsible with Gray for the $28,000 in attorney’s fees

awarded to it for filing objections to the accountings.

       The trial court in its statement of decision found, “There was no indication of any

bad faith on the part of Jimenez. Liability in the matters discussed above, are ascribed to

Gray and not to Jimenez, including for such periods in which Jimenez was the named


                                             35
trustee. The court relieves Jimenez for liability for the breaches of duty mentioned

above, in the interest of justice and pursuant to [section] 16440[, subdivision ](b).

Jimenez shall, however, remain jointly responsible for awarded costs.” (Boldface

omitted.)

       Section 16440, subdivision (a) provides, “If the trustee commits a breach of trust,

the trustee is chargeable with any of the following that is appropriate under the

circumstances: (1) Any loss or depreciation in value of the trust estate resulting from the

breach of trust, with interest. [¶] (2) Any profit made by the trustee through the breach of

trust, with interest. [¶] (3) Any profit that would have accrued to the trust estate if the

loss of profit is the result of the breach of trust.” Subdivision (b) of section 16440

provides that “If the trustee has acted reasonably and in good faith under the

circumstances as known to the trustee, the court, in its discretion, may excuse the trustee

in whole or in part from liability under subdivision (a) if it would be equitable to do so.”

       The trial court’s determination of liability is reviewed for abuse of discretion.

Under this standard, “‘[d]iscretion is abused whenever, in its exercise, the court exceeds

the bounds of reason, all of the circumstances before it being considered. The burden is

on the party complaining to establish an abuse of discretion, and unless a clear case of

abuse is shown and unless there has been a miscarriage of justice a reviewing court will

not substitute its opinion and thereby divest the trial court of its discretionary power.’”

(Denham v. Superior Court (1970) 2 Cal.3d 557, 566.)

       As stated by Jimenez in response to this claim, all of the attorney’s fees imposed

were under section 17211, subdivision (b). No loss to the trust was alleged or proven.


                                              36
None of the fees were imposed based on Jimenez’s, or even Gray’s, breach of trust

pursuant to section 16440.

       Here, Gray was found liable for the attorney’s fees for the accountings under

section 17211, subdivision (b). This required, as detailed ante, a showing of bad faith.

The trial court found no bad faith was proven as to Jimenez. Jimenez never received a

complete accounting from Artz while she was trustee. Further, no evidence established

Jimenez was aware that Gray possessed records that would assist with the accounting.

       Jewish Federation details breaches of trust committed by Jimenez, including that

she lied about her experience and she never obtained any records from Arville. Jewish

Federation insists that none of the problems with the accountings would have arisen had

Jimenez just provided an accounting the first year that she was the trustee. This failure to

provide these accountings was the reason the trial court awarded the attorney’s fees. Her

failure to provide accountings constituted bad faith. Jewish Federation additionally

argues that by abandoning her duties, Jimenez should be held responsible.

       We disagree with Jewish Federation’s claims. First, it is pure speculation that had

Jimenez provided a first accounting, none of the other accountings would have been

required. Further, there simply was no showing of bad faith by Jimenez within the

meaning of section 17211, subdivision (b). As admitted by Jewish Federation, although

Jimenez was the named trustee, Gray was managing the Cantor Trust. Finally, even if we

were considering that Jimenez abandoned her duties, we would not find this constituted

bad faith within the meaning of section 17211, subdivision (b). We affirm the trial




                                            37
court’s statement of decision rejecting that Jimenez was liable for attorney’s fees under

section 17211, subdivision (b).

                                            III

                                       DISPOSITION

       We affirm the judgment. Jewish Federation, as the prevailing party on appeal, is

awarded its costs on appeal. Jimenez, as the prevailing party on the cross-appeal, is

awarded her costs on appeal.

       CERTIFIED FOR PARTIAL PUBLICATION



                                                        MILLER
                                                                                            J.


We concur:


KING
                       Acting P. J.


CODRINGTON
                                  J.




                                            38
