California Court of Appeals, Fourth District, Third Division
THOMAS E. MORGAN, as Trustee, etc., Petitioner,
THE SUPERIOR COURT OF ORANGE COUNTY, Respondent NANCY MORGAN SHURTLEFF et al., Real Parties in Interest.
Original proceedings; petition for a writ of mandate to
challenge orders of the Superior Court of Orange County No.
30-2014-00726771, Kim R. Hubbard, Judge. Petition denied.
Offices of Richard Pech, Richard Pech; Greenberg Taurig and
Scott D. Bertzyk for Petitioner.
appearance for Respondent.
Schubert Barer, Bruce A. McDermott and Daniel J. Vecchio for
Real Parties in Interest Nancy Morgan Shurtleff, John Morgan,
Jessica Shurtleff, and Kathleen Shurtleff.
& Glowacki, Cynthia V. Roehl, John P. Glowacki; Carico
Macdonald Kil & Benz, Christopher D. Carico and William
G. Benz for Real Parties in Interest Bruce Hitchman and Lee
Probate Code provides that a trust's provisions may not
absolve a trustee from liability due to intentional
misconduct, gross negligence, or reckless indifference. The
trust instrument here purports to allow the former trustee to
withhold from a successor trustee all of his or her
communications with legal counsel. Consistent with statute
and case law, we hold a trust may not allow a former trustee
to withhold from a successor trustee all communications
between that former trustee and the trust's legal
counsel. The attorney-client privilege vests in the office of
the trustee, not in any particular person. A provision
permitting a trustee to withhold documents from a successor
trustee violates public policy and is unenforceable. Allowing
a former trustee to withhold from a successor trustee
communications with the trust's former legal counsel
would permit a trustee to intentionally (or with gross
negligence or reckless indifference) violate duties with no
check on his or her conduct.
trial court ordered the former trustee to turn over specified
communications with the trust's former legal counsel to
the successor trustees and their current legal counsel. The
former trustee seeks a writ of mandate to reverse the trial
court's order. We deny the petition.
of Facts and Procedural History
C. Morgan (Beverly) amended and completely restated the
Beverly C. Morgan Family Trust on November 6, 2013 (the
Trust). Beverly had three adult children: Thomas Edward
Morgan III (Thomas), Nancy Morgan Shurtleff (Nancy), and John
Evans Morgan (John). Nancy, John, and Nancy's daughters
Kathleen Shurtleff and Jessica Shurtleff are referred to
collectively as the Shurtleffs. Beverly was the initial
trustee of the Trust. Thomas was named as the successor
Beverly Dies; Thomas Becomes Trustee.
died in January 2014, and Thomas succeeded her as trustee.
Litigation began almost immediately thereafter. In May 2014,
Nancy filed a petition to construe the Trust's terms,
asking that the Trust be reformed or invalidated on grounds
of lack of capacity, undue influence, and fraudulent
misrepresentations. Nancy filed another petition in September
2014 asking that the Trust be reformed or invalidated, that
Thomas be deemed to have predeceased Beverly, and that Thomas
be removed as trustee, among other things. In November 2014,
Nancy filed a petition to remove Thomas, suspend his powers
as trustee, and direct Thomas to turn over the Trust's
assets and records to Nancy or to a temporary trustee.
years later, Nancy filed a new motion to suspend Thomas as
trustee based on his alleged misuse of his powers to further
his own litigation goals and strategies to the detriment of
the Trust's other beneficiaries. Nancy alleged that
Thomas spent Trust funds on his personal attorneys, engaged
in self-dealing as trustee by using Trust funds for his
personal benefit, and caused businesses owned by the Trust to
engage in undocumented, inter-company, interest-free
“loans” totaling millions of dollars.
trial court denied the motion to suspend Thomas, conditioned
on the following: (1) Thomas would not use Trust funds to pay
for his personal defense in the litigation with the
Shurtleffs; (2) Thomas would not in any way impair the Trust
assets and would not cause the Trust to borrow money; and (3)
Thomas would file an accounting of all Trust assets used to
pay his personal litigation expenses and of all loans made by
or to the Trust. After Thomas filed the accounting, the
court, sua sponte, issued an order finding the accounting was
“so inadequate that its filing appears to be for the
sole purpose of paying lip service to the Court's
Trial Court Suspends Thomas as Trustee; the Hitchmans are
Named Interim Co-trustees.
April 4, 2017, the court suspended Thomas as trustee and
appointed Bruce Hitchman and Lee Ann Hitchman of Hitchman
Fiduciaries (the Hitchmans) as interim co-trustees. The court
ordered Thomas to cooperate with the Hitchmans, and
specifically ordered Thomas to “transfer and deliver to
the Interim Co-Trustees all communications, including, but
not limited to, letters, e mails, facsimile transmissions,
and text messages between Thomas Morgan and any person or
entity on behalf of the Trust; [¶]... [¶] deliver
to the Interim Co-Trustees any and all current and historical
account statements, cancelled checks, documents and records
concerning the Beverly C. Morgan Family Trust, its
transactions and its assets.”
April and June, the Hitchmans filed three status reports in
which they informed the court: “Counsel for the
Suspended Trustee has indicated that he does not intend to
turn over attorney-client communications or billing
invoices.” Thomas and his counsel refused to turn over
the requested documents based on language in paragraph 10.11
of the Trust, and statutory and case law.
Trial Court Orders Thomas to Give Documents to the Hitchmans
and the Hitchmans' Counsel.
trial court held a trial setting conference and review
hearing in June 2017. After discussing Thomas's refusal
to provide the Hitchmans with communications between Thomas
and the Trust's counsel while Thomas was trustee, the
court stated: “[T]here is to be a turnover of invoices,
billing statements, and fee agreements.... [¶] Those
will be produced to the Hitchmans only, not for review by
other counsel. I don't want to see redactions, but once
the issue of whether or not these fees were paid
personally-and by the way, counsel, I think you are
incorrect. As the trustee, he has a duty to know what's
going on. As the trustee, he has a duty to not pay his own
fees, whether he's the sole beneficiary or not, until the
matter has been wound up. And it has not been wound up here
and we don't know how this is going to fall out.
[¶]... [¶]... He, as a fiduciary, [cannot] use
trust assets to pay his own trust expense, I don't care
if he was a sole beneficiary or not, it would have been
inappropriate.” The minute order following that hearing
reads, in relevant part: “All invoices, billings, fee
agreements, copies of checks and wire transfers used to pay
any of the [sic] mentioned herein are to be turned
over to the Hitchmans and their attorney only.”
the hearing reconvened two days later, the issue of the
billing statements and invoices came up again.
Garrett [counsel for John, Jessica Shurtleff, and Kathleen
Shurtleff]: It's extremely important on the preserve and
protect aspect that those billing records be turned over.
They will fight tooth and nail about that and that was the
reason for the ex parte today. [¶]... [¶]
Court: How soon can you provide the records?
Pech [Thomas's counsel]: ...