Brazil v. Vallone

Filed 10/24/06 Brazil v. Vallone CA2/4

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

APPEAL from a judgment of the Superior Court of Los Angeles County, Joseph E. DiLoreto, Judge. Reversed and remanded.

Long & Levit, Kim O. Dincel, and Beth A. Trittipo for Defendants and Appellants.

Stacker, Hoting & Associates, Patrick C. Stacker, and Marc T. Fitch for Plaintiff and Respondent.

Catherine M. Vallone and Ludd Dias (collectively referred to as appellants) appeal from the order granting the Probate Code section 21320 application of Mickey Brazil (respondent).[1] We reverse and remand.

FACTUAL AND PROCEDURAL BACKGROUND

Ronald J. Negri (Ronald)[2] was married to Faye Negri (Faye). Faye had two sons, respondent and Donald Hoffman, but Ronald was not their father.

Ronald’s mother is Bernice Negri (Bernice). In 1990, Bernice created a trust named the Bernice I. Negri Revocable Trust (the Bernice Trust). Initially, Ronald was the sole beneficiary of the Bernice Trust. Ronald and Faye also created their own trust, the Negri Family Trust (the Family Trust). Respondent and Hoffman were the cotrustees and sole beneficiaries of the Family Trust. The Family Trust funds were held in a Wells Fargo Bank account.

Faye died in April 2003.

In July 2004, Ronald transferred approximately $50,000 from the Family Trust account into a Bank of America account held jointly in his name and Bernice’s.

Ronald died unexpectedly in October 2004. Three days later, Bernice amended the Bernice Trust, naming appellants as the new beneficiaries.[3] In November, 2004, Bernice died.

Respondent then requested that the $50,000 be returned to the Family Trust but appellants refused to do so.

Article Ten of the Family Trust instrument provides that “If any beneficiary in any manner, directly or indirectly, contests or attacks this instrument or any of its provisions, any share or interest in the trust given to that contesting beneficiary under this instrument is revoked and shall be disposed of in the same manner provided herein as if that contesting beneficiary had predeceased the settlor without issue.”

Respondent filed an application pursuant to section 21320 seeking a declaration that his request to have the transfer of funds set aside was not in violation of the Family Trust’s no contest clause. Appellants opposed the application, and after a hearing on September 8, 2005, the trial court granted the application.

DISCUSSION

A. Standard of Review

Section 21320 provides a safe harbor for beneficiaries who seek an advance judicial determination of whether a proposed legal challenge would constitute a contest. (Estate of Kaila (2001) 94 Cal.App.4th 1122, 1130.)

Section 21300 defines a contest as “any action identified in a ‘no contest clause’ as a violation of the clause.”[4] “‘Whether there has been a “contest” within the meaning of a particular no-contest clause depends upon the circumstances of the particular case and the language used.’ [Citations.] ‘[T]he answer cannot be sought in a vacuum, but must be gleaned from a consideration of the purposes that the [testator] sought to attain by the provisions of [his] will.’ [Citation.]” (Burch v. George (1994) 7 Cal.4th 246, 254-255.)

No contest clauses are strictly construed and are not extended beyond the testator’s wish. (Zwirn v. Schweizer (2005) 134 Cal.App.4th 1153, 1159.) In ascertaining the testator’s intent, we first look to the terms of the trust instrument. (Burch, supra, 7 Cal.4th at p. 256.)

In reviewing the trust agreement, we are not bound by the lower court’s interpretation if it does not turn on the credibility of extrinsic evidence. (Burch, supra, 7 Cal.4th at p. 254; Estate of Friedman (1979) 100 Cal.App.3d 810, 815.)

B. Relevant Trust Provisions

The instrument creating the Family Trust (the Trust Agreement) provides in Article Four: “On the deceased spouse’s death, the Trustee shall continue to administer the trust estate, including any additions made to the trust by reason of the deceased spouse’s death, such as from the decedent’s will or life insurance policies on the deceased spouse’s life, according to the terms of the trust set out in Article 2 with respect to the surviving spouse and without distinction as to whether any property was derived from community property or separate property. The surviving spouse shall have full power of revocation and amendment over the entire trust corpus.”

The Trust Agreement also provides at Article One that a single signature of either Ronald or Faye is sufficient to transfer trust assets.

Article Seven provides for the powers of the trustee. Upon Faye’s death, Ronald was the sole trustee. Thus, Ronald was empowered to retain or abandon property, convey or exchange trust property, invest and reinvest in any kind of investment, buy or sell securities of any nature, open managed accounts in securities, currencies, or real estate, lend money, borrow money, and encumber trust property.

It is clear from these provisions that Faye unequivocally intended that Ronald would be able to dispose of trust funds in any manner he chose after her death. Ronald was also given the discretion to eliminate the trust entirely if he wished.

C. Does the Petition Constitute a Contest?

“The word ‘contest’ as used in a no-contest clause means any legal proceeding designed to result in the thwarting of the testator’s wishes as expressed in his will. [Citations.]” (Estate of Friedman, supra, 100 Cal.App.3d at pp. 817-818.)

The proposed petition, if filed, would result in thwarting Faye and Ronald’s intent that they be able to do what they wished with the trust corpus, thus constituting a violation of the no contest clause. (Id. at p. 818.)

Respondent asserts that Ronald “never intended for these funds to become part of [Bernice]’s estate.” Respondent also claims that he is “only acting in his capacity as a fiduciary in an attempt to recover funds that were deposited into the joint account of two individuals which was later incorrectly included in the [Bernice Trust].” There is no extrinsic evidence offered for these propositions other than a statement in respondent’s declaration that he “will demonstrate at trial that [Ronald] intended to only have his trust assets available if necessary to pay his 95 year old mother’s bills. As he was the sole beneficiary of his mother’s trust they were for all intent and purposes still Trust assets, as his name was jointly on the account and they were not transferred to an account solely in the name of the Bernice . . . Trust.”

Varney v. Superior Court (1992) 10 Cal.App.4th 1092, 1107, cited by respondent, is distinguishable. Varney filed a creditor’s claim against the decedent’s estate based on an alleged oral agreement he had with the decedent. The trial court’s determination that this action constituted a contest to the will was reversed. The appellate court found that the no contest clause of the will was narrowly drawn. It prohibited contests of any provision of the will or a failure to defend against any such contests. (Id. at p. 1107.) The court concluded that Varney’s claim did not attack any provision of the will. In addition, the proposed action sought to enforce a contract independent of the will. Varney was not attempting to impose a constructive trust on specific bequests left to other beneficiaries or attempting to achieve a result contrary to the decedent’s will. (Ibid.)

The validity of Varney in light of the Supreme Court’s subsequent decision in Burch is also questionable. (Nairne v. Jessop-Humblet (2002) 101 Cal.App.4th 1124, 1130-1131.) In Burch, the court noted that there is no “categorical proposition that any proceeding based upon a claim of right independent of a will or trust” is not a contest. (7 Cal.4th at p. 261.)

The facts in Nairne, supra, more closely resemble those here. In Nairne, the no contest clause, almost identical to the one here, was written broadly to include any direct or indirect action to void, nullify, or set aside any provision of the instrument. (101 Cal.App.4th at p. 1131.) The Nairne petition sought rights to property from the trust estate on the basis that the decedent had orally promised the petitioner that property. (Id. at p. 1127.) The petition was found to constitute a contest in violation of the trust agreement, as it directly attacked a provision of the trust which included and disposed of the property at issue. (Id. at pp. 1130-1131.)

The facts in Zwirn v. Schweizer, supra, 134 Cal.App.4th 1153, 1160, are also similar to those presented here. The petitioner claimed that the decedents, his aunt and uncle, promised him that upon their death he would receive one-half of their assets. Prior to her death, his aunt changed the estate plan to give the majority of the estate to others. The petitioner attempted to cast his claim as a “creditor’s claim“ stemming from an oral contract, but the Zwirn court found that the claim constituted a contest, as it directly attacked a provision of the aunt’s will and trust and would thus frustrate her intent. (Id. at p. 1160.) Here, respondent is seeking to nullify actions that Ronald took with respect to the Family Trust funds, something that the Trust Agreement specifically empowered him to do. We conclude that the filing of the petition would therefore constitute a contest, as defined by the Trust Agreement.

D. Interested Party

Respondent argues that appellants have no standing to challenge any finding with regard to the Family Trust because they are not interested parties, as defined by section 48. That section defines an “interested person“ as: “(1) An heir, devisee, child, spouse, creditor, beneficiary, and any other person having a property right in or claim against a trust estate . . . . (2) Any person having priority for appointment as personal representative. (3) A fiduciary representing an interested person.” Subdivision (b) of that section also provides that “The meaning of ‘interested person’ as it relates to particular persons may vary from time to time and shall be determined according to the particular purposes of, and matter involved in, any proceeding.”

“[S]ection 48, subdivision (b) broadly permits the court to determine the sufficiency of a party’s interest for the purposes of each proceeding conducted. [Fn. omitted.] ‘Thus, a party may qualify as an interested person entitled to participate for purposes of one proceeding but not for another.’ [Citation.] Thus, section 48 is designed to provide the probate court with flexibility to control its proceedings to both further the best interests of the estate and to protect the rights of interested persons to those proceedings.” (Estate of Maniscalco (1992) 9 Cal.App.4th 520, 523-524.)

Since appellants have a right in the property which respondent is attempting to recover, they are interested persons for the purposes of this application. (Estate of Davis (1990) 219 Cal.App.3d 663, 668-669.)

E. Costs and Fees

Respondent claims he should be awarded costs and fees for a frivolous appeal pursuant to Code of Civil Procedure section 907. Since we have determined that the appeal has merit, we need not decide this issue.

DISPOSITION

The judgment (order granting the section 21320 application) is reversed and the matter is remanded to the probate division to enter an order denying the application. Costs on appeal are awarded to appellants.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

SUZUKAWA, J.

We concur:

WILLHITE, Acting P.J.

MANELLA, J.

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[1] All further statutory references shall be to the Probate Code unless otherwise indicated.

[2] As some of the family members have the same surname, we will refer to them by their first names to avoid confusion. We intend no disrespect.

[3] The application alleged that appellants were Bernice’s caregivers. Appellants dispute this, stating that they were Bernice’s long-time personal friends.

[4] In 2002, this section was amended. (Stats. 2002, ch. 150, § 1 (S.B. 1878).) Section 21305, which excludes specific actions from the definition of a “contest,” was also amended to apply to wills and other instruments executed after January 1, 2001. Since the Bernice Trust agreement was executed in 1990, section 21305 does not apply.