{"id":275,"date":"2026-03-27T12:00:00","date_gmt":"2026-03-27T12:00:00","guid":{"rendered":"https:\/\/california.shuster.info\/?p=275"},"modified":"2026-03-27T12:00:00","modified_gmt":"2026-03-27T12:00:00","slug":"moramarco-nowakoski-section-859-double-damages-inability-to-pay","status":"publish","type":"post","link":"https:\/\/california.shuster.info\/?p=275","title":{"rendered":"Moramarco v. Nowakoski \u2014 Inability to pay is not a defense to Probate Code section 859 civil penalty for double damages against breaching trustee"},"content":{"rendered":"
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\n
Case<\/dt>\n
Moramarco v. Nowakoski<\/dd>\n
Court<\/dt>\n
4th District Court of Appeal<\/dd>\n
Date Decided<\/dt>\n
2026-03-27<\/dd>\n
Docket No.<\/dt>\n
E084620<\/dd>\n
Status<\/dt>\n
Reported \/ Citable<\/dd>\n
Topics<\/dt>\n
Probate Code section 859, double damages, trustee misappropriation, attorney misconduct, ability to pay, prejudgment interest, postjudgment interest<\/dd>\n<\/dl>\n<\/div>\n

Background<\/h2>\n

Edward J. Nowakoski, an attorney, drafted the John A. Moramarco Restated Living Trust and was named successor trustee. After the settlor died in 2016, Nowakoski took control of trust assets including two residential investment properties that were sold for net proceeds of more than $683,000. From 2016 to 2018, he made multiple electronic transfers from the trust account to other accounts that were not for client purposes or for the benefit of trust beneficiaries.<\/p>\n

Beneficiaries Jon and Anthony Moramarco repeatedly requested an accounting and ultimately petitioned the probate court to remove Nowakoski as trustee, instruct a successor trustee to account, and surcharge Nowakoski under Probate Code section 859, which authorizes double damages for bad-faith misappropriation of trust property. The State Bar separately concluded that Nowakoski had willfully misappropriated $394,681.88 and disbarred him, ordering restitution of $542,688 (principal plus prejudgment interest). The Riverside County District Attorney charged him with grand theft, money laundering, fraud, and embezzlement, and he entered a plea agreement that included probation, community service, fines, and restitution.<\/p>\n

In the probate court, after Nowakoski had paid the $542,688 in restitution, the court conducted the surcharge trial. Nowakoski asked the court to consider his financial inability to pay (he was 71, retired, with only Social Security income and a co-owned family home) in mitigation of any section 859 penalty. The probate court concluded as a matter of law that it could not consider inability to pay and ordered Nowakoski to pay the beneficiaries a $399,681 civil penalty under section 859 plus $61,702.54 in attorney fees and costs.<\/p>\n

The Court’s Holding<\/h2>\n

The Fourth District Court of Appeal, Division Two, affirmed in part and remanded with directions to amend the judgment so that postjudgment interest does not accrue on the prejudgment interest amount. The court’s published holding is straightforward: Probate Code section 859 does not allow the trial court to consider the wrongdoer’s inability to pay as a basis for mitigating the statutory civil penalty. The penalty is mandatory upon a finding of bad-faith misappropriation, and the statute does not include any ability-to-pay safety valve.<\/p>\n

The court explained that section 859 was enacted to deter and punish bad-faith conduct by fiduciaries and to make the trust whole. Allowing trial courts to reduce the penalty based on the wrongdoer’s financial circumstances would undermine those purposes. Other statutes do incorporate ability-to-pay considerations, but section 859 is not one of them, and the Legislature is the appropriate body to add such a provision.<\/p>\n

The court also addressed Nowakoski’s Eighth Amendment argument that the penalty constituted an excessive fine. Without deciding that the Eighth Amendment applies to civil penalties of this kind, the court explained that the penalty here was proportionate to Nowakoski’s misconduct, which involved repeated misappropriation, sustained concealment, and a failure to account, and that he had already received credit for the restitution he paid in the criminal and disciplinary proceedings. On postjudgment interest, the court agreed with Nowakoski that under the relevant statutory scheme, postjudgment interest should not accrue on the prejudgment interest portion of the award. The attorney fees award was affirmed because Nowakoski’s argument was forfeited for lack of legal authority and record citations.<\/p>\n

Key Takeaways<\/h2>\n