Meet Edward Nowakoski. Once a practicing attorney and trustee, he is now disbarred, on criminal probation, and has paid more than $542,000 in restitution. The final cherry on top? An additional $399,681 civil penalty from the probate court.

That final penalty is the focus of the California Court of Appeal’s partially published opinion in Moramarco v. Nowakoski (Mar. 27, 2026, No. E084620). The decision provides a useful primer on Probate Code section 859, explaining both what the statute does and, just as importantly, does not do.

The Trustee’s Misconduct

John Moramarco died on July 24, 2016. His Restated Living Trust, which Nowakoski had drafted, named Nowakoski as successor trustee. After two of the trust’s real properties were sold, the trust held approximately $684,000 in a trust account managed by Nowakoski. Over the next two years, that money disappeared.

Rather than preserve the trust’s assets for the beneficiaries, Nowakoski transferred virtually all of the funds out of the trust account for his own benefit. By the time one of the beneficiaries petitioned the court to suspend Nowakoski as trustee in 2019, just $41.06 remained in the trust account. 

The fallout was extensive. In a separate action stemming from a complaint made by one of the trust beneficiaries, the California State Bar concluded that Nowakoski had willfully and intentionally misappropriated $394,681.88 in trust assets. As a result, Nowakoski was disbarred and ordered to pay a total of $542,688 in restitution. The Riverside County District Attorney also charged him with grand theft, money laundering, fraud, embezzlement, and perjury. Nowakoski entered into a plea agreement, paid the $542,688 in restitution, and was placed on probation. 

Following a separate trial, the probate court imposed an additional civil penalty of $399,681 under Probate Code section 859, plus $61,702.54 in attorney fees and costs.

Probate Code Section 859 Question: Penalty or Punishment?

The published portion of the Moramarco opinion addresses a recurring question in probate litigation: is a Probate Code section 859 award a punitive damages award, or is it a civil penalty? The answer matters, because under California law, a punitive damages award requires the court to consider evidence of the defendant’s financial condition when imposing the award. The practical effect: a defendant facing a punitive damages award may argue that the proposed award is excessive in light of their ability to pay, potentially reducing the amount ultimately imposed.

This is exactly what Nowakoski attempted to argue in this case. He urged the probate court to consider his financial condition, arguing that his inability to pay a section 859 award was relevant to determining whether the civil penalty would violate federal and state constitutional protections against excessive penalties. 

Nowakoski represented that he was 71 years old, unable to obtain employment, had no present or foreseeable ability to satisfy the award, and his assets had been largely depleted in paying the restitution order. While the court acknowledged that Nowakoski’s misconduct had left him in a challenging position, it ultimately concluded that it had no authority to consider Nowakoski’s financial condition when imposing the civil penalty under section 859. The Court of Appeal agreed.

In its opinion, the Court of Appeal noted that while a section 859 is punitive “in nature,” it is not equivalent to a punitive damages award that requires evidence of the defendant’s financial condition. The penalty structure articulated in section 859 is mandatory: once a court finds (1) that property is recoverable under Probate Code section 850, and (2) that the taking was done in bad faith, the penalty shall be twice the value of the property recovered.

The statute does not grant the probate court discretion to consider mitigating circumstances, including the defendant’s ability to pay. Unlike some other penalty statutes (the Court of Appeal specifically noted Business and Professions Code section 17206, which expressly directs courts to consider “the defendant’s assets, liabilities, and net worth”), section 859 is silent on mitigation.

The Court also distinguished a section 859 award from the statutory penalty articulated at Civil Code section 789.3, which accrues automatically at a rate of $100 per day. In Hale v. Morgan, the California Supreme Court struck down a Civil Code section 789.3 penalty, holding that its “mandatory, mechanical, potentially limitless…effect regardless of circumstance” violated due process. The Court of Appeal noted that in contrast, a section 859 award provides a fixed multiple of actual damages and only applies when there is bad faith. Those structural differences were significant, and the Court of Appeal was not persuaded that the section 859 award in Nowakoski’s case was unconstitutionally excessive in the same manner as the penalty in Hale.

Ultimately, the Court emphasized that the purpose of section 859 is deterrence, and that purpose applies regardless of the identity or financial circumstances of the person who committed the misconduct.

The Practical Limits of Probate Code Section 859

The Moramarco decision adds meaningful teeth to section 859 and supports a strict, mandatory construction of the statute. Once the requisite conditions are met, the double penalty is mandatory and the offender’s financial condition cannot mitigate the penalty.

That said, the decision also underscores an important limitation: the Court retains substantial discretion in deciding whether the taking was in “bad faith” in the first place warranting an award under section 859.  The statute’s enhanced penalty does not apply simply because a trustee or fiduciary made a mistake, exercised poor judgment, or engaged in questionable conduct.

Moramarco is an extreme case. The offender was a licensed attorney who had drafted the trust he later misappropriated from, and the court distinguished that conduct from the actions of an ordinary family member serving as trustee or administrator who makes self-dealing errors or mishandles trust property.  While section 859 provides a powerful remedy, beneficiaries should carefully evaluate the strength of the bad-faith evidence before assuming that a double-damages award is likely.

A Note on Attorney Fees

The Court of Appeal also upheld the award of $61,702.54 in attorney fees and costs under Probate Code section 859. On appeal, Nowakoski challenged this fee award, arguing that a substantial portion of the fees resulted from unnecessary work, including the pursuit of an inflated surcharge theory that ultimately failed.

The Court of Appeal rejected the challenge in the unpublished portion of its opinion, concluding that Nowakoski had forfeited the argument on appeal. Although he made the argument that the fees were excessive, he failed to support that argument with citations to the record or legal authority demonstrating why the probate court’s fee award constituted an abuse of discretion. Without that supporting analysis, the appellate court concluded that it could not meaningfully evaluate the merits of his objection.