The Section includes periodically sends email with New Case Alerts to its members. Recent New Case Alerts are listed below. Most cases can be found on the California Courts website. Please note: Opinions more than 120 days old can be found through the process described HERE.
Cite as H044213
Filed January 30, 2019, Sixth District
By Matthew R. Owens
Withers Bergman LLP
Headnote: Trusts – Termination - Method and Timing of Trust Distribution
Summary: Despite the trust’s general provision authorizing retention of trust property, the specific provision requiring the co-trustees to distribute the trust assets after the settlors died and all beneficiaries reached age 30 controlled, although they had discretion over the method of distribution.
Howard and Alice executed a trust in 1974 leaving their assets in equal shares to their six children. After they died, their six children became co-trustees with the power to act by majority vote. Nellie, one of the six children, wanted her share to be distributed in cash, while the other five siblings wanted to leave their shares in the trust for the next generation. After a disagreement with Nellie over the value of her share, the other five siblings petitioned the court asking for, among other things, determination of the value of Nellie’s share and authority to leave their own shares in the trust based on a trust provision authorizing the co-trustees to hold trust property. Nellie objected to the petition relying on the trust’s provision requiring distribution of all trust assets after both settlors died, assuming the beneficiaries had reached age 30, which they had. Finding no ambiguity in the trust and therefore declining to consider extrinsic evidence, the court ruled the age-30 provision was a specific provision that prevailed over the trust’s more general provision authorizing the co-trustees to hold trust assets. The court removed the co-trustees, appointed a private professional fiduciary as successor, and ordered that the trust assets be liquidated and distributed. The five siblings appealed.
The appellate court affirmed in part and reversed in part. The trial court correctly determined based on the specific-general rule of construction that the trust was to be distributed upon the death of the second settlor, assuming all beneficiaries had reached age 30. The trust’s retention clause was only relevant during the life of the trust and could not be used to postpone required distributions. The trial court erred, however, by compelling asset liquidation. The trust gave the co-trustees discretion regarding the method of distribution, including authority to make in-kind distributions. Although liquidation was one option available to them, it was not mandatory and the trial court could not substitute its own judgment for that of the co-trustees as to the best distribution method. The trial court also erred by removing the co-trustees since it did so based on its faulty determination they were required to liquidate the trust assets.
Cite as G056105
Filed January 18, 2019, Fourth District
By Daniel C. Kim
Weintraub Tobin Chediak Coleman Grodin Law Corporation
Headnote: Probate Code § 859 – No Treble Damages
Summary: Probate Code § 859 damages do not allow for trebling the value of property wrongfully taken.
The domestic partnership of Joseph Ribal and Lu Tuan Nguyen was annulled in 2012 due to Ribal’s lack of capacity. Linda Rogers was appointed as his conservator. In 2014, Rogers filed a petition against Nguyen for return of conservatorship property and damages for financial and physical elder abuse. Rogers prevailed and was awarded $179,982. The amount consisted of $79,991 in damages, which were doubled to $159,982 under Probate Code section 859, plus personal injury damages of $20,000. Subsequently, Rogers was also awarded additional attorneys’ fees and costs, which were affirmed on appeal. On remand, Rogers moved for additional attorneys’ fees of $45,807 incurred in enforcing the underlying judgment. In opposing the motion, Nguyen argued that he had already fully satisfied the underlying judgment, that Rogers was in fact attempting to obtain treble damages, and that her motion was untimely because it was not made before the judgment was satisfied. The trial court granted the motion.
The appellate court reversed. Rogers’s argument erroneously interpreted Probate Code section 859 as providing for an award of double damages in addition to the underlying damages, in effect trebling the damages. The statutory language stating that the remedies in that section are “in addition to any other remedies” does not support treble damages. Had the Legislature intended to provide for such treble damages, it knew how to do so but did not. Accordingly, based on the payments already made, Nguyen had fully satisfied the judgment as properly construed. Rogers’s motion was, therefore, untimely.
Cite as B281758
Filed January 16, 2019
California Court of Appeal, Sixth District
By Golnaz Yazdchi
Sheppard Mullin Richter & Hampton LLP
Summary: Under the substantial benefit doctrine a probate court may award attorneys’ fees to a litigant whose efforts have resulted in a substantial benefit to other parties, whether such benefits are pecuniary or non-pecuniary.
Don Smith Sr. and Gladys Smith created a family trust, naming their five children as beneficiaries. Don predeceased Gladys. Gladys amended the Survivor’s Trust several times to benefit one of the children, JoAnn. JoAnn and her husband, Edward, became co-trustees of the trust following Gladys’s death. JoAnn’s brother, Don, filed an action seeking an accounting and alleging various breaches of trust, amongst other claims, against JoAnn and her husband. None of the other siblings participated in the probate proceedings, despite receiving notice. The parties settled mid-trial. Under the terms of the settlement, the trustees agreed to pay tax penalties and interest for undisclosed gifts on behalf of the trusts, to pay for the appointment of a referee to oversee accountings and an amended IRS Form 706 on behalf of the trusts, to a certain sum to Don from JoAnn’s share, and to reimburse Don’s attorneys’ fees and costs from the trusts. The trial court approved the settlement as part of an order after trial. One of the non-participating beneficiaries, Donna, filed post-trial motions for a new trial and to vacate the judgment, arguing that Don’s fee award was not warranted under the substantial benefit doctrine. The trial court denied Donna’s motions.
The Court of Appeal affirmed. Under the substantial benefit doctrine, a trial court may award fees to be shared by others upon whom a benefit was conferred, when a litigant, proceeding in a representative capacity, obtains a decision that results in a substantial benefit of a pecuniary or nonpecuniary nature. Although Donna had notice of all of the proceedings, she failed to participate in the underlying action. By failing to participate, Donna forfeited her objections, and was not deprived of due process. In the first published case to apply the substantial benefit doctrine in a probate context, substantial evidence existed to support the court’s exercise of discretion to order fees to be split amongst the trust beneficiaries, because the non-litigating beneficiaries received pecuniary and nonpecuniary benefits as a result of the litigation.
Cite as A152538
Filed December 19, 2018, First District, Div. One
Headnote: Wills - Distribution of Failed Residuary Gift
Summary: A lapsed gift to a residuary beneficiary passes to the other residuary beneficiaries instead of intestacy, regardless of whether the beneficiary whose gift lapsed was kindred.
Cheryl executed a holographic will leaving her entire estate to her life partner, John, and her aunt related by marriage, Patricia. Patricia predeceased Cheryl and the will contained no provision directing the disposition of Patricia’s share in that event. After Cheryl died, her will was admitted to probate and John petitioned the court for a determination he was entitled to Cheryl’s entire estate under Probate Code section 21111(b) because he was the sole surviving residuary beneficiary. Cheryl’s half-brother, Bruce, filed a competing petition arguing the lapsed gift to Patricia must instead be distributed to Cheryl’s estate under Section 21111(a)(3) and ultimately to him as Cheryl’s sole surviving heir under the laws of intestacy. Both parties agreed Patricia’s share did not pass to her heirs under the antilapse statue because she was not Cheryl’s kindred. The court applied the definition of “transferee” from Probate Code section 21110 to Section 21111 and ruled that because Patricia was not Cheryl’s kindred she was not a “transferee.” Section 21111’s requirement that lapsed residuary gifts to “transferees” pass to the other residuary beneficiaries therefore did not apply to Patricia’s gift, so the lapsed gift instead passed to Cheryl’s estate. John appealed.
The appellate court reversed. The gifts under Cheryl’s will of 65% and 35% to John and Patricia, respectively, were residuary gifts, but the trial court misconstrued the statute governing disposition of lapsed residuary gifts. The definition of “transferee” found in Section 21110 does not apply to Section 21111 as that definition is expressly limited to Section 21110. Instead, the Probate Code’s more general definition of “transferee” found in Section 81.5 applies, and Patricia was a transferee under that statute as it does not hinge on status as kindred. Since Patricia was a transferee, Section 21111(b) applied to her gift, resulting in her lapsed gift passing to the other residuary beneficiary, John. The legislative history makes clear that California abandoned the no-residue-of-a-residue rule in favor of modern trust law aimed at avoiding intestacy.