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Even a court order approving an accounting may not protect a California fiduciary if the accounting is inaccurate. That’s the upshot of Hudson v. Foster (2021) 68 Cal.App.5th 640, a recent California Court of Appeal decision involving a conservatorship.

The conservatee in this case consented to the conservator’s account and four years passed before the conservatee complained about its accuracy. The appellate court nonetheless revived the conservatee’s motion to vacate the order approving the account. When a fiduciary misrepresents facts in an accounting, a court order settling or approving the account won’t immunize the fiduciary from a challenge to the order on an “extrinsic fraud” theory.

Foster Helps a Friend in Need, But Submits an Inaccurate Accounting

Nigel Hudson was severely injured in a car accident in 2007. His friend, Lucas Foster, was a film producer and the owner of Warp Films. Foster volunteered to serve as the conservator of Hudson’s estate, meaning that Foster would manage the personal injury proceeds and Hudson’s other resources.

Foster offered to advance funds to Hudson and to be reimbursed later, after Hudson resolved his personal injury action. From 2012-2013, Foster served as conservator, receiving $9.5 million in assets and disbursing $4.3 million.

Foster then filed a petition to approve his first and final account as conservator. His petition listed over a thousand disbursements made to various entities over the two-year period. Foster explained that 17 checks were paid to him personally or his film production company as reimbursements for funds advanced. Foster waived any fee for serving as conservator.

Defects in the disbursement schedule were not easy to spot. Amidst the many transactions were 28 checks, totaling $558,169.47, supposedly paid to third parties that had provided goods or services to Hudson, but in fact these checks were paid to Foster or one of his companies. Hudson did not receive copies of the checks that would reveal the discrepancies.

Eventually, four years after the probate court approved the accounting, Hudson filed a motion to vacate the order on the grounds of fraud and misrepresentation of material fact.

Hudson stated that he was unaware of any fraud until a third party vendor came forward with a nonpayment claim, which caused Hudson to retrieve the check images. In addition to the 28 checks directed to Foster or his companies, Hudson found four undisclosed checks to Foster totaling $60,000 that were written after the close of the accounting period.

Foster opposed the motion, contending that no fraud had been shown and that the motion was untimely.

A probate judge in Los Angeles County Superior Court conducted multiple hearings on the motion and received extensive briefing. The judge found that Hudson had not shown reasonable diligence in seeking to vacate the order approving the accounting based on information that Hudson knew or should have known.

Fiduciaries Can’t Hide the Ball

The Court of Appeal found that the probate judge had abused her discretion by denying the motion to vacate.

Foster as conservator had a fiduciary duty to account accurately to Hudson for all transactions involving Hudson’s property. Fiduciaries must provide “full disclosure of all material facts that advance the beneficiary’s interest.” Hence, an incomplete disclosure may amount to fraud because the “fiduciary’s obligation is affirmative.”

Under established fiduciary law, when one person places confidence in another person, the person who voluntarily accepted that confidence cannot take advantage of the situation.

Here, Hudson claimed that Foster’s account contained misrepresentations of material fact that amounted to “extrinsic fraud” sufficient to vacate the order approving the accounting. Hudson alleged that he was deprived of the opportunity to object to the accounting because of Foster’s fraudulent conduct.

Hudson did not have to audit the accounting, by requesting check images to verify payees, because he was entitled to rely on the accuracy of Foster’s account in the absence of facts that would have led a reasonable person to suspect wrongdoing. The fiduciary relationship relaxed Hudson’s duty of diligence.

As the appellate court explained, “when a judgment is obtained through a fiduciary’s violation of the duty of disclosure to the moving party, the policy to provide a fair adversary proceeding outweighs the policy in favor of finality, and the moving party’s reasonable reliance on the disclosures of a fiduciary is considered a satisfactory excuse for not presenting a defense in the prior proceeding.”

The probate judge improperly placed the burden on Hudson to show that he could not have discovered the misrepresentations in the account before it was approved. Hudson’s “mere access” to information such as the check images “did not trigger an obligation to comb through the records to verify the truth of Foster’s representations.” Instead, the judge should have determined when Hudson first discovered formerly unknown information sufficient to put a reasonable person on notice of fraud.

The Court of Appeal thus returned the case to the Los Angeles probate court for “Take 2,” i.e., further review of the motion to vacate under a standard that was more favorable to Hudson.


Hudson offers a cautionary tale for fiduciaries, professional and non-professional alike. Conservators, trustees, and personal representatives of probate estates who fail to disclose material facts in their accountings, especially as to disbursements they received, do so at their peril. Even if they obtain court approval for such accountings, the approval may be undone years later when the truth emerges.

The best way for fiduciaries to avoid such fraud claims is to ensure that their accountings are accurate. In addition, the fiduciary might consider providing a full set of account records to beneficiaries so that they have all the information needed to spot potential problems.