Sacks Glazier Franklin & Lodise Successfully Defends Appeal In Probate Case

July 29, 2011

LOS ANGELES, CA – The trusts and estates litigation firm, Sacks Glazier Franklin & Lodise LLP, led by partner Terrence M. Franklin and Of Counsel Matthew W. McMurtrey, successfully defended an appeal brought by a defendant against the firm's clients, two trust beneficiaries. The main issue in the case involved whether the defendant, who did not appeal following a court order determining that the plaintiff's pleading would not violate the no contest clauses of a trust and a will, could later appeal that order after the initial time to appeal expired.

In the case (Amiad v. Cohen, 4th Dist., Div. 3, 5/25/11), two separate petitions were brought against the trustee, Irene Cohen, following the trustor's death. The first petition, brought by the trustor's son, Moshe Amiad, was filed only after the court issued an order declaring that his proposed pleading would not violate the no contest clauses of the trustor's will and trust. Moshe's petition challenged, among other issues, the validity of four amendments to the trust and requested that the trustee be removed. The second petition, brought by the trustor's grandson, Yariv Amiad, also requested trustee removal and challenged the trustee's financial decisions by seeking over $1.5 million in surcharges.

Although the cases were not formally consolidated, the trial court held a joint trial on both petitions, ultimately removing Cohen as trustee and surcharging her $1.5 million (1) for misuse of trust assets to pay for her own attorneys' fees, (2) for penalties and interest assessed by the Internal Revenue Service for late filing of a federal estate tax return, and (3) for trust investment losses.

The Court of Appeal affirmed the trial court's decision. On the first petition, the appellate court found that it had no jurisdiction to hear any issues relative to the no contest clause, stating that the "defendant's failure to timely appeal from the order declaring the first petition would not violate the no contest provisions of either the trust or the will bars her from asserting the issue in these appeals."

Regarding the second petition, the appellate court concluded that the surcharges were properly assessed. The trustee could not use trust assets to reimburse herself for her personal attorneys' fees; the trustee could not offset trust investment profits against principal losses to mitigate responsibility for such losses; and the trustee could not submit matters that occurred after the judgment was rendered in an attempt to reverse the penalties and interest assessed by the IRS.