Texas: Surety Not Liable for Counsel Fees in Excess of Bond

In the recent case of Colonial American Casualty and Surety Co. v. Scherer, -- S.W.3d --, 2007 WL 135969 (2007), a Texas appellate court ruled that a surety issuing an administrator's bond was not liable for attorney's fees in excess of the stated penal amount on the face of the bond. In that case, the stated penal sum was $30,000.

This case has some significance to California because while the Texas appellate court was applying Texas law, and was interpreting the language of the specific bond, the court cited numerous California cases in reaching its decision.

But yet a California court would probably still use a somewhat different approach given that the Bond and Undertaking Law [Cal. Code of Civil Procedure § 995.010] establishes a regime for asserting claims against bonds given in a proceeding, which would include probate matters. No matter what the bond provides there are avenues for seeking counsel fees from a surety on a "proceeding bond" if the surety fails to honor a claim in a timely manner [see Cal. Code of Civil Procedure § 996.480].

Probate Assets vs. Non Probate Assets

Post death transfers of assets in California roughly fall into two categories: probate transfers, and so-called "non probate" transfers. An example of an asset which would probably require some sort of probate administration (i.e., constituting a probate asset) would be a piece of real property, for example, having a form of title such as "John Doe, a single man."

An example of a probable non probate asset (which would likely not require the intervention of a probate court) might be: "John Doe, a single man and Jane Roe, a single woman, in joint tenancy with right of survivorship." If Jane Roe were to die, for example, the property would immediately transfer to John (at the moment of her death) by operation of law.

To decide whether property is a probate or non-probate asset, ask yourself: Does the property have anywhere to go? In other words, without an order would the property automatically transfer to someone else? If the answer is "yes" (because some form of transfer already took place) then it is probably not a probate asset. On the other hand, if the property has "nowhere to go" otherwise, then it probably is a probate asset requiring administration.

This is a very general rule, however; there are exceptions. In California, for example, administration would not be required in the case of a small estate, even though the asset might be considered a probate asset. Also, a spousal property petition [Probate Code § 13502.5] is a form of a probate proceeding. But the proceeding is sharply abbreviated, and is essentially an order that probate administration is not required.