California Partition Law Blog
Yes. Judgments should properly name the fiduciary in their representative capacity when the fiduciary is involved in legal proceedings on behalf of a trust, estate, or other entity. Fiduciaries, such as trustees or executors hold a position of legal responsibility to manage and protect the interests of the beneficiaries or estate that they represent. Ensuring that fiduciaries are properly named and identified in their representative capacity clarifies their role in the proceeding and helps eliminate confusion about personal and official liability. Overall, properly naming fiduciaries in their representative capacity safeguards the fiduciary and the trust or estate they manage by providing clear understanding of the fiduciary’s duties and limitations.
What is a Fiduciary?
A fiduciary is an individual who assumes a position of legal responsibility to act in their client’s best interests. This role includes serving their client as a personal representative, guardian, trustee, conservator, attorney-in-fact, or custodian under the California Uniform Transfers to Minors Act. (Prob. Code, § 39.) The fiduciary relationship begins when the individual starts acting on behalf of the client for the client’s benefit.
Fiduciary relationships exist anywhere an individual is legally obligated to act in a client or partner’s best interests by upholding professional duties. Some of the most recognized fiduciary relationships exist between attorneys and their clients, trustees and trust beneficiaries, banks and borrowers, and spouses.
What are Fiduciary Duties?
Fiduciaries must uphold a series of professional duties in their client relationships. Each of these duties exist to protect the client’s interests, such as the Duty of Loyalty, the Duty of Confidentiality, and the Duty to Represent the Estate in Legal Matters. (Huong Que, Inc. v. Luu (2007) 150 Cal.App.4th 400; California Business and Professions Code, § 6068; Prob. Code, § 17200.)
A fiduciaries duties include the responsibility to represent the estate in any litigation, including defending and pursuing legal claims on behalf of the estate. (Prob. Code, § 17200.) Inherent in this duty is the obligation to act in the estate and its beneficiaries’ best interests throughout the litigation. (Id.) In litigations, fiduciaries act on behalf of the estate, trust, or other entities, they are representing. A fiduciary is not acting in their personal capacity, meaning they are not personally liable for any judgments entered against the estate, trust, or entity. (13 Witkin, Summary of California Law (11th ed.), Trusts § 133.) To ensure this important distinction is properly addressed in litigations, it is crucial that judgments properly name and identify fiduciaries in their representative capacity, when the estate is involved in a litigation.
Naming Fiduciaries in their Representative Capacity
Trustees or beneficiaries can petition courts to address internal trust matters, resulting in litigations against the estate or trust. (Prob. Code, § 17200.) For example, a beneficiary can petition the court to resolve disputes about the trust instrument’s interpretation, validity of the trust’s provisions, or other issues relating to the trust’s assets and their distribution. (Id.) Likewise, a trustee has the duty to enforce claims that are a part of the trust property and defend any other claim brought against the estate. (Prob. Code, § 16011.) The California Probate Code obligates trustees to represent the estate in court proceedings, acting in their representative capacity, when lawsuits or petitions are filed against or on behalf of an estate. (Id.)
Trusts do not fall into the statutory definition of a “Judgment Debtor” meaning “the person against whom a judgment is rendered.” (Code Civ. Proc., § 680.250.) This means that claims against a trust, based on contracts or other actions entered by the trustee, must be brought against the trustee in their representative capacity, because a trust is not an entity and therefore cannot sue, be sued, or hold title to property. (Prob. Code, § 18004.) Therefore, when a judgment is mistitled by naming the trust instead of the trustee in their representative capacity, the judgment is invalid. (Portico Management Group v. Harrison (2011) 202 Cal.App.4th 464.) To avoid invalid judgments, drafting attorneys must ensure the individual acting in a representative capacity is properly named and identified in that capacity.
The Estate of Douglas provides attorneys with a remedy to correct clerical errors and avoid invalid judgments when judgments misname trustees. In Estate of Douglas the court held that clerical errors resulting in misnaming estate administrators can be fixed by filing a motion to correct the judgment. ((2022) 83 Cal.App.5th 690.) Here, Audrey Douglas, the executor of the Estate of Billy Joe Douglas (“estate”), was identified as the petitioner in a 2008 judgment authorizing and directing the petitioner to pay respondent over $100,000.00 in attorney’s fees. Years later, in 2015, the respondent filed an Application for and Renewal of Judgment listing Audrey Douglas as the judgment debtor but failing to identify her representative capacity as administrator of the estate. (Id.) The clerk issued the Notice of Renewal as requested by respondent later that same day. Five years later in 2020, respondent filed a motion to correct the clerical error resulting in the misnaming of Audrey Douglas, seeking to now insert her title “Administrator of the Estate of Billy Joe Douglas” next to her name as the judgment debtor.
A beneficiary of the estate opposed the motion to correct the clerical error, claiming the error had transformed the obligation into Audrey’s personal obligation, and could no longer be pursued against the estate, thus releasing the estate’s assets. The court rejected the beneficiary’s arguments, restating that the “law respects form less than substance,” and ultimately permitting the clerical error’s correction under California Code of Civil Procedure Section 473(d) because the clerk entered the judgment as ministerial function. (Id.; Civ. Code, § 3528.)
What is an Example?
“Shawn” is the beneficiary of an estate, suing the trustee, “Julie” for failing to administer the estate properly. Shawn is suing Julie in her role as trustee of the estate. When Shawn files his lawsuit against Julie as trustee, he names the suit Shawn Underwood v. Julie Law. Shawn has improperly named Julie in this suit by failing to identify her as trustee acting in her representative capacity. Any judgment issued with this misnaming is invalid if the error is not corrected.
To avoid creating confusion about whether Shawn is suing Julie in her personal or representative capacity, Shawn should properly identify Julie in her representative capacity as trustee by naming the suit Shawn Underwood v. Julie Law, Trustee of the Underwood Law Trust. While the naming difference may seem insignificant, properly naming Julie ensures any actions taken in the litigation are taken against the estate, rather than Julie’s personal assets. Shawn can correct this misnaming error by filing a motion to correct the judgment by inserting “Trustee of the Underwood Law Trust” next to Julie’s name.
Conclusion
The Underwood Law Firm has a team of experienced lawyers who can help guide you through your partnerships end and help you pursue solutions to ensure you recover the entirety of what you are legally entitled to. We are here to help.