Filed 10/17/18 Hink v. Mechanics Bank CA1/5

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FIVE

The probate court approved a proposal by respondent and trustee Mechanics Bank (respondent or Trustee) to reimburse Marilyn Ragan for attorney fees and costs incurred in establishing her entitlement to receive disbursements as an income beneficiary of a trust. We affirm.

Background[1]

In 1977, Lester Hink created the Lester W. Hink Trust and named respondent as Trustee. When he died, the trust became irrevocable and two subtrusts were created—only one of which remains in existence (hereafter the Trust). Marilyn Ragan (formerly Marilyn Hink) is the sole remaining income beneficiary of the Trust.

According to its terms, “[t]he principal purpose of [the Trust] is to provide income for” Lester Hink’s children and his daughter-in-law, Marilyn Hink (now Ragan), then married to James Hink (the income beneficiaries). Trust assets consist of income-generating real property. Equal monthly distributions of income are to be made to each surviving sibling, with James Hink’s share continuing to Marilyn in the event she survives James. The Trust directs that, when only one income beneficiary remains, that beneficiary is to be paid $1,000.00 per month. The Trustee has discretion “to determine, from time to time, that the aforesaid monthly payments may be increased . . . , if the trustee shall first determine that such increased payments are feasible in light of the then current net income of the trust, may be made without endangering corpus of the trust, and such increased income is reasonably necessary to assist the beneficiaries to cover their reasonable needs” (the discretionary payments provision). Upon the death of all income beneficiaries, the Trust corpus and any undistributed income is to be distributed (after an initial charitable contribution) equally to the children of the five siblings, or their issue (the remainder beneficiaries).

James and Marilyn Hink were much younger than James’s oldest sibling and younger than several of the issue of James’s siblings. James and Marilyn divorced in 1989. James died in 2013, survived by Marilyn (hereafter Ms. Ragan), who was then 62 years old. In February 2014, respondent Trustee petitioned for instructions about, as relevant here, whether to pay Ms. Ragan $1,000 monthly income distributions for the rest of her life pursuant to the terms of the Trust instrument; and, if so, whether to increase the monthly distributions to include all of the Trust’s net income for purposes of minimizing tax liability and whether to make additional discretionary payments to assist in covering Ms. Ragan’s reasonable needs. Respondent reported the Trust’s fair market value as of November 2013 was more than $4 million, annual Trust income was about $80,000, and annual charges against income were about $20,000. While James Hink was alive, respondent had exercised its discretion to make payments for the benefit of him and his dependents “for medical insurance, medical expenses, rent and the like.” In 2012, those discretionary payments totaled about $101,600, approximately $8,466 a month, yet the Trust still had $136,146.09 in retained income.

One of the remainder beneficiaries, Elizabeth Walker, objected, arguing Ms. Ragan should not be recognized as an income beneficiary. Ms. Ragan hired counsel and, in March 2014, the probate court made an interim order directing respondent to pay Ms. Ragan $1,000 monthly distributions retroactive to the date of her former husband’s death and continuing until September 2015 or further order of the court. Following mediation in July 2014, Ms. Walker dropped her objection to Ms. Ragan’s status as an income beneficiary. A dispute subsequently arose about whether respondent could make discretionary payments to Ms. Ragan in addition to the $1,000 monthly income distribution, and respondent petitioned for instructions.

In April 2015, the parties reached a partial settlement and, in June 2015, the respondent Trustee petitioned for instructions about whether to pay Ms. Ragan’s attorney fees (about $66,000) and, if so, whether to pay those fees from trust principal or income. Appellant Robert Hink (appellant), another remainder beneficiary, objected to payment of Ms. Ragan’s attorney fees and requested an evidentiary hearing on the issue. Following an unreported hearing, the probate court issued a summary order directing all of Ms. Ragan’s fees be paid from Trust principal. Appellant Hink appealed, and, in July 2016, this court reversed. (Mechanics Bank I, supra, A145963, at p. 6.) This court held the probate court erred in directing payment of fees from the Trust principal as an exercise of the court’s equitable powers. (Id. at p. 3.) We remanded “for the court to consider whether the fees should be awarded under the discretionary payments provision of the Trust instrument; if so, the court must direct that the fees be paid from Trust income rather than Trust principal. On remand, an evidentiary hearing must be held if material facts relevant to the fee request are in dispute.” (Id. at p. 3.)

On remand, the probate court held an evidentiary hearing in April 2017. Mary Ann Abreu, an employee of respondent Mechanics Bank, testified. She testified that the Trust held over $200,000 in accumulated income that was available to cover an increased payment to Ms. Ragan. An account statement to that effect was admitted into evidence. Ms. Abreu also opined it was reasonable for Ms. Ragan to retain counsel to defend her status as income beneficiary and the fees amount appeared reasonable. Finally, Ms. Abreu opined that paying the fees was reasonably necessary to cover Ms. Ragan’s reasonable needs.

In June 2017, the probate court issued a Statement of Decision concluding that the Trust held sufficient income to pay Ms. Ragan’s attorney fees without endangering the Trust corpus and that the fees were reasonably incurred in defending Ms. Ragan’s interests as an income beneficiary. The court held respondent could pay the fees and costs request in the amount of $65,741.62 under the Trust’s discretionary payment provision.

This appeal followed.

Discussion

Appellant Hink contends the probate court erred in three ways. He argues the payment for Ms. Ragan’s attorney fees is not an authorized “monthly payment” under the Trust’s discretionary payment provision, respondent failed to show the payment was “feasible” in light of the “current net income” of the Trust, and the probate court should not have authorized payment for fees incurred after July 29, 2014. We reject appellant’s claims.

First, appellant contends the reimbursement of attorney fees at issue in the present case is not within the scope of the discretionary payment provision, which authorizes only increases in the “monthly payment” to income beneficiaries. Appellant’s claim is based on Ms. Abreu’s testimony describing the proposed payment as a “one-time lump sum” payment rather than as an increase in the monthly payment. Appellant points out that, when respondent made previous one-time reimbursements, such as for home repairs, it did so by a separate payment rather than by an increase to the monthly payment amount. In her testimony, Ms. Abreu described the reimbursement process as a one-time increase in the monthly payment amount, but she acknowledged “there’s two transactions.” Appellant fails to explain why the payment process described by Ms. Abreu violates the Trust. In particular, appellant fails to explain why the circumstance that the reimbursement is made in a separate transaction means that it cannot be viewed as a one-time increase to the total monthly payment amount. Appellant has not shown error.[2]

Second, appellant contends respondent Trustee failed to show the reimbursement for Ms. Ragan’s attorney fees was “feasible” in light of the “current net income” of the Trust. Appellant points to evidence that in 2016 the Trust distributed more funds than it received in income and that the Trust had little 2017 income at the time of the April 2017 evidentiary hearing. On the other hand, respondent argues the evidence showed it easily had enough accumulated income from prior years to cover the proposed attorney fees reimbursement. Appellant asserts “current net income” does not include accumulated income.[3] The problem with appellant’s claim is he points to no controlling definition of “current net income.” Instead, he simply assumes “current net income” means the income received during the present year minus distributions. But the probate court accepted the Trust’s view that the phrase as used in the discretionary payment provision refers to the net income currently held by the Trust, including accumulated income. Appellant fails to cite authority or explain why his proposed definition is more reasonable and consistent with the intent of the Trust.[4] We will not develop appellant’s arguments for him. (Alvarez v. Jacmar Pacific Pizza Corp. (2002) 100 Cal.App.4th 1190, 1206, fn. 11 [“It is not our responsibility to develop an appellant’s argument.”]; see also Nelson v. Avondale Homeowners Assn. (2009) 172 Cal.App.4th 857, 862; Interinsurance Exchange v. Collins (1994) 30 Cal.App.4th 1445, 1448.)

Finally, appellant contends Ms. Ragan’s attorney fee reimbursement should have been limited to fees incurred prior to July 29, 2014, when beneficiary Elizabeth Walker dropped her objection to Ms. Ragan’s status as an income beneficiary. However, respondent points out in its brief that Ms. Ragan’s “status as income beneficiary and the Trustee’s discretion to distribute sums in excess of $1,000 per month was not confirmed in a final order until the May 11, 2015 order.” The probate court observed that until entry of that order, “any remainder beneficiary could again seek to undermine Ms. Ragan’s status on precisely the same grounds advanced by Ms. Walker.” Appellant fails to respond to those points in his reply brief; the issue requires no further discussion.[5]

Disposition

The probate court’s orders are affirmed. Costs on appeal are awarded to respondent.

SIMONS, J.

We concur.

JONES, P.J.

BRUINIERS, J.

(A152033)