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Doolittle v. Exchange Bank

Filed October 20, 2015, First District, Div. Three Cite as A143422

Susan Doolittle filed petitions to invalidate her mother’s restated trust on grounds of lack of capacity, undue influence, and financial elder abuse. The trust’s no contest clause directed the trustee to defend a contest at the expense of the trust estate. Susan and the trustee, Exchange Bank, filed competing petitions for instructions to address the trustee’s authority to use trust funds to pay for litigation expenses. The trial court found that the defense directive is not a no contest clause, and authorized the trustee to use trust funds to defend against Susan’s petitions.

The appellate court affirmed. The Doolittle trust specifically directed the trustee to defend against claims challenging the validity of the trust at the expense of the trust. The appellate court determined that since the clause on defense of claims was not a no contest clause itself, it was not necessary to first make a determination that Susan’s claims were asserted without merit or probable cause before it granted authorization for fees to defend the trust. Assuming Susan has probable cause for her claims, the residue will be reduced by defense costs. If the rule were otherwise, there would be no means to implement the trustor’s intentions until after the litigation is adjudicated, which would render the defense directive meaningless.

http://www.courts.ca.gov/opinions/documents/A143422.PDF


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