Price v. Fireman's Fund Insurance Companies

California Court of Appeal Jul 23, 1987 No. A034770Published

Before: King, Low, Haning

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Holding. An action against a surety on a guardian's bond cannot be maintained until the plaintiff has obtained a prior probate court surcharge order determining the guardian's liability, unless the plaintiff pleads specific facts establishing an exception such as the guardian having absconded or the liability being ascertainable without an accounting.

Issues

Whether a probate surcharge order is a prerequisite to a civil action against a surety on a guardian's bond.
Whether the plaintiff's allegations sufficiently established an exception to the requirement of a prior surcharge order.
Whether the surety waived or was estopped from asserting the requirement of a prior surcharge order.

Disposition. affirmed

Quotations verified verbatim against the opinion

“Avoiding service of process does not place one beyond the court’s jurisdiction or amount to absconding for purposes of excusing a surcharge order.”

“Because none of the exceptions to the general rule were applicable here, the court did not err in requiring an allegation of a prerequisite surcharge order.”

Opinion

KING, J.

Stephanie Dale Price appeals from a judgment of dismissal of a surety defendant, Fireman’s Fund Insurance Companies, in an action arising from the purported conversion of property by her mother, Shirley Price, as guardian of her estate. Stephanie contends the court erred in ruling she could not proceed against the surety until she established the amount of her loss through a surcharge order in probate court. We affirm.

[1540]

According to Stephanie’s second amended complaint, Shirley was appointed guardian of her estate in 1969, when she was five years old. The estate consisted primarily of the $20,000 proceeds of a life insurance policy on Stephanie’s deceased father. Upon Shirley’s appointment she posted a $20,000 surety bond written by Fireman’s Fund Insurance Companies (hereafter Fireman’s Fund). When Stephanie turned 18 in 1982, she learned that Shirley had converted all of her estate.

By informal letter Stephanie’s counsel sought the assistance of the probate court in San Luis Obispo to determine the status of the estate. The court ordered Shirley to appear and show cause why she had not filed yearly accountings and why she should not be discharged and surcharged. Shirley failed to appear and a bench warrant was issued. She appeared pursuant to the bench warrant on April 4, 1983, and the matter was continued upon an order that she render an accounting or reappear before the court on April 25. Shirley failed to comply with the order, and another bench warrant was issued. Stephanie took no further action in the probate court.

In late 1984 Stephanie demanded payment from Fireman’s Fund, which subsequently refused to make payment. Stephanie filed a complaint for damages against multiple defendants, including Fireman’s Fund, on March 12, 1985. The complaint stated causes of action against the surety for breach of contract, bad faith, breach of fiduciary duties, fraud, and breach of statutory duties.

The court sustained a demurrer by Fireman’s Fund on the ground the complaint did not allege a prerequisite probate court surcharge order or allege facts that would excuse a surcharge proceeding. The court granted leave to amend. Stephanie filed a first amended complaint, to which Fireman’s Fund successfully demurred on the same grounds. Stephanie again received leave to amend. She filed a second amended complaint, to which Fireman’s Fund once again successfully demurred on the same grounds. This time the court did not grant leave to amend, and rendered a judgment of dismissal as to Fireman’s Fund.

Price v. Fireman's Fund Insurance Companies

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KING, J.

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