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COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF
BETHANY LUTHERAN COLLEGE, INC., et al., Plaintiffs and Respondents, v. SHARON GENTRY et al., Defendants and Appellants. | D047926 (Super. |
APPEAL from an order of the Superior Court of San Diego County, William H. Kronberger, Jr., Judge. Affirmed in part; reversed in part.
Sharon Gentry and James Gentry (the Gentrys) appeal from a ruling on an application by Bethany Lutheran College, Inc., and Bethany Lutheran Theological Seminary (collectively the Bethany entities) under Probate Code[1] section 21320 to determine whether a proposed probate court petition would constitute a contest to testamentary instruments under which they are beneficiaries. The proposed probate court petition sought to invalidate (1) certain pre‑ death transfers made by Charlotte Becker several months before her death and (2) an amendment that Becker made to her trust shortly before her death. Upon the Bethany entities' application under section 21320, the probate court ruled that neither aspect of the proposed petition would constitute a contest in violation of the no contest clauses in the applicable instruments.
We determine (1) that the relief sought by the Bethany entities regarding the pre-death transfers does not constitute a contest, but (2) that the relief concerning Becker's amendment to her trust does constitute a contest. Accordingly, we reverse the probate court's ruling in part, and affirm it in part.
I
FACTUAL AND PROCEDURAL BACKGROUND
In 1993, Becker created the Charlotte F. Becker Revocable Trust (the Trust) by executing a revocable trust declaration (the Trust Declaration). Upon Becker's death, the Trust was to become irrevocable and distributions of specific cash amounts were to be made to certain named individuals. Upon death, the balance of the assets in the Trust was to be distributed to Bethany Lutheran College, Inc. (the College) and
On the same date in 1993, Becker executed a last will and testament (the Will), in which she bequeathed all of her tangible personal property and the residue of her estate to the Trust.
The Trust Declaration contained a no contest clause, which provided in relevant part: " If any beneficiary under this trust, singly or in conjunction with any other person or persons, contests in any court the validity of this trust or of a deceased settlor's last will or seeks to obtain an adjudication in any proceeding in any court that this trust or any of its provisions or that such will or any of its provisions is void, or seeks otherwise to void, nullify, or set aside this trust or any of its provisions, then that person's right to take any interest given to him or her by this trust shall be determined as it would have been determined if the person had predeceased the execution of this declaration of trust without surviving issue."
The Will also contained a no contest clause, which provided in relevant part: " If any devisee under this Will shall directly or indirectly, by legal proceedings or otherwise, challenge or contest this Will or any of its provisions, or shall attempt in any way to oppose or set aside the probate of this Will or impair or invalidate any of the provisions I have made in it, any devise or other provision I have made to or for that person under this Will is revoked and shall be disposed of in the same manner as if that contesting devisee had predeceased me without issue."
In 1996, Becker executed an amendment to the Trust Declaration. That amendment made modifications concerning the cash distributions under the Trust upon Becker's death. It also added Bethany Lutheran Theological Seminary (the Seminary) to the list of recipients of the balance of the Trust assets, with the Seminary and the College (i.e., the Bethany entities) each receiving 45 percent of the balance of the Trust assets and the Church receiving the remaining 10 percent.
On
The Bethany entities allege that between
Becker died on
After receiving notice that the Trust had become irrevocable, the Bethany entities proposed to file a petition to invalidate the 2003 Amendment and the pre‑ death transfers. However, to determine if, by requesting such relief, they would be in violation of the no contest clauses of the Will and the Trust Declaration, the Bethany entities first filed an application under section 21320 to determine whether their proposed petition would be a contest to the Trust or Will within the meaning of those instruments (the first section 21320 application).
Attached to the first section 21320 application was a proposed petition containing four causes of action. The first cause of action alleged that the 2003 Amendment and the pre‑ death transfers were invalid under section 21350, subdivision (a)(6) because they were in favor of Sharon Gentry, who was allegedly acting as a care custodian to Becker, and because Becker was allegedly a dependent adult.[4] The second cause of action alleged that the 2003 Amendment and the pre‑ death transfers were invalid because Becker lacked capacity to execute them. The third cause of action alleged that the 2003 Amendment and the pre‑ death transfers were invalid because Sharon Gentry exercised undue influence over Becker. The fourth cause of action alleged that the pre‑ death transfers were the result of financial abuse of an elder in violation of Welfare and Institutions Code section 15610.30.[5]
The probate court denied the first section 21320 application as to the proposed petition's first cause of action, but granted it as to the second through fourth causes of action, ruling that those causes of action would not constitute a contest.
The Bethany entities then filed a petition to invalidate the pre‑ death transfers and the 2003 Amendment (the first petition). So as not to run afoul of the no contest clauses in the Will and the Trust Declaration, the first petition did not contain the cause of action arising under section 21350, subdivision (a)(6), which had been the first cause of action in the proposed petition. The first petition, however, did reassert the causes of action for lack of capacity and undue influence (both which challenged the 2003 Amendment and the pre‑ death transfers) and the cause of action for financial elder abuse as defined in Welfare and Institutions Code section 15610.30 (which challenged only the pre‑ death transfers).[6]
The first petition did not name any parties as respondents. Nevertheless, Sharon Gentry, acting as trustee of the Trust, demurred to the first petition on the basis, among others, that it failed to name any parties as respondents. The probate court sustained the demurrer with leave to amend.
Desiring to file an amended petition to invalidate the pre‑ death transfers and the 2003 Amendment, but wanting to ensure that the amended petition would not constitute a contest, the Bethany entities then filed another application under section 21320 to determine whether the amended petition they proposed to file would constitute a contest to the Trust or Will within the meaning of those instruments (the second section 21320 application).
Attached to the second section 21320 application was a proposed amended petition to invalidate the 2003 Amendment and the pre‑ death transfers (the proposed amended petition). The proposed amended petition contained the same causes of action as the first petition (lack of capacity, undue influence and financial elder abuse), but differed primarily in that it expressly named Sharon and James Gentry as respondents and added additional factual allegations concerning the specific roles of Sharon and James Gentry.
Citing the reasoning employed in its earlier ruling, the probate court decided that none of the causes of action in the proposed amended petition constituted a contest as defined in section 21300, subdivision (a). The probate court decided that the challenges to the 2003 Amendment did not constitute a contest because " the no-contest clause in the [Trust Declaration] shows that it does not expressly refer to amendments" and " the [2003 Amendment] itself does not include a no-contest clause." Although the probate court did not expressly address the challenges to the pre‑ death transfers in its tentative ruling, it stated that " [t]he rationale of the Court's first section 21320 ruling . . . still stands." In that ruling, made orally during the hearing on the first section 21320 application, the probate court explained that the challenges to the pre‑ death transfers would not constitute a violation of the no contest clause, explaining, " I don't think the clause itself envisioned predeath transfers," and " I don't think we have an integrated plan here."
The Gentrys filed a notice of appeal of the ruling on the second section 21320 application. (See §§ 1303, subd. (j), 1304, subd. (d) [providing for the appeal of orders that determine whether proposed actions regarding trusts or wills are contests].)
II
DISCUSSION
A. Overview of the Law Concerning No Contest Clauses
We first provide an overview of the law pertaining to no contest clauses. A no contest clause " essentially acts as a disinheritance device, i.e., if a beneficiary contests or seeks to impair or invalidate the trust instrument or its provisions, the beneficiary will be disinherited and thus may not take the gift or devise provided under the instrument." (Burch v. George (1994) 7 Cal.4th 246, 265 (Burch).) " The purpose of no contest clauses 'is to discourage will contests by imposing a penalty of forfeiture against beneficiaries who challenge the will.' " (Estate of Kaila (2001) 94 Cal.App.4th 1122, 1128 (Kaila).) " In essence, a no contest clause conditions a beneficiary's right to take the share provided to that beneficiary under such an instrument upon the beneficiary's agreement to acquiesce to the terms of the instrument. . . . [¶] No contest clauses are valid in
Under section 21320, which the Bethany entities employed here, " a beneficiary may, without violating a no contest clause, apply to the court for a determination whether a particular act would be a contest provided that no determination of the merits of the petition is required." (McIndoe v. Olivos (2005) 132 Cal.App.4th 483, 487 (McIndoe).)[8] " '[S]ection 21320 provides . . . a " safe harbor" for beneficiaries who seek an advance judicial determination of whether a proposed legal challenge would be a contest [under a particular no contest clause].' [Citation.] If a court determines that a particular proposed action would constitute a contest, the beneficiary will then be able to make an informed decision whether to pursue the contest and forfeit his or her rights under a will or to forgo that contest and accede to the will's provisions." (Kaila, supra, 94 Cal.App.4th at p. 1130.)
In reviewing the probate court's ruling on the section 21320 application, we apply a de novo standard of review. (Burch, supra,7 Cal.4th at p. 254 [an appeal from a probate court ruling on a section 21320 application presents a question of law requiring the appellate court to independently construe the trust language].) Where, as here, " [t]he parties presented no extrinsic evidence to the trial court to aid in the interpretation of the trust document . . . we must deduce the intent of the trustor[] from the face of the document." (McIndoe, supra,132 Cal.App.4th at p. 487.)
According to statute, we must apply a rule of strict construction in interpreting a no contest clause. (§ 21304 [" In determining the intent of the transferor, a no contest clause shall be strictly construed" ].) " Because a no contest clause results in a forfeiture, . . . a court is required to strictly construe it and may not extend it beyond what was plainly the testator's intent." (Burch, supra,7 Cal.4th at p. 254.) " Although no contest clauses are valid and favored by the public policies of discouraging litigation and giving effect to the testator's intent, they are also disfavored by the policy against forfeitures and therefore are strictly construed and may not extend beyond what plainly was the testator's intent." (Kaila, supra, 94 Cal.App.4th at p. 1128.) " 'Only where an act comes strictly within the express terms of the forfeiture clause may a breach thereof be declared. . . .' " (Graham v. Lenzi (1995) 37 Cal.App.4th 248, 255, italics added.)
When interpreting a no contest clause, " 'the 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.] Therefore, even though a no contest clause is strictly construed to avoid forfeiture, it is the testator's intentions that control, and a court 'must not rewrite the [testator's] will in such a way as to immunize legal proceedings plainly intended to frustrate [the testator's] unequivocally expressed intent from the reach of the no-contest clause.' " (Burch, supra, 7 Cal.4th at p. 255.) " 'In construing a trust instrument, the intent of the trustor prevails and it must be ascertained from the whole of the trust instrument, not just separate parts of it.' " (McIndoe, supra,132 Cal.App.4th at p. 487.)
Moreover, " [d]etermination of whether a prohibited contest has occurred must be made on a case-by-case basis . . ." (Estate of Lindstrom (1987) 191 Cal.App.3d 375, 381), and " '[w]hether 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.' " (Burch, supra, 7 Cal.4th at pp. 254-255.) " Each case depends upon its own peculiar facts and thus case precedents have little value when interpreting a trust." (McIndoe, supra,132 Cal.App.4th at p. 487.)
B. The 2003 Amendment
We first consider whether the proposed amended petition's challenges to the validity of the 2003 Amendment implicate the Trust Declaration's no contest clause.[9]
1. Section 21305 Does Not Apply
Initially, we note that " [i]n 2000, the Legislature amended the law governing no contest clauses, adding section 21305. (Stats. 2000, ch. 17, §§ 5, 6, 7.)" (Estate of Rossi (2006) 138 Cal.App.4th 1325, 1331-1332 (Rossi).) Section 21305, subdivision (a) provides that certain actions do not constitute a contest unless the no contest clause expressly so states. Relevant here, among the actions identified in section 21305, subdivision (a) as not constituting a contest, are " [a] challenge to the validity of an instrument, contract, agreement, beneficiary designation, or other document, other than the instrument containing the no contest clause." (§ 21305, subd. (a)(3), italics added.)
Because section 21305, subdivision (a)(3) pertains to whether a no contest clause in one instrument is implicated by the challenge to a separate instrument, the statute is potentially relevant. Accordingly, we must determine whether section 21305, subdivision (a)(3) applies here. As we will explain, we conclude that it does not.
Section 21305, subdivision (a) generally applies to " instruments executed on or after
Thus, by the plain terms of the statutory language, where, as here, " the testator or settlor of a pre‑ January 1, 2001 instrument never revisits the original no contest clause and a codicil or amendment neither adds nor changes it, [the] common law and the rule of strict construction govern the no contest clause of the estate plan as written. If on the other hand, a codicil or amendment 'adds a no contest clause or amends a no contest clause contained in an instrument executed before
Here, the 2003 Amendment does not revisit the Trust Declaration's no contest clause; nor does it include its own no contest clause. Thus, section 21305, subdivision (a) does not apply to a challenge to the validity of the 2003 Amendment.
The Bethany entities point out that Rossi, supra, 138 Cal.App.4th 1325, 1338, applied section 21305, subdivision (a) to hold that a proposed challenge to an amendment of a trust document did not run afoul of the no contest clause in the original trust document. In reaching this conclusion, Rossi focused on the fact that the amendment was a separate instrument from the original trust document. (Rossi, at p. 1338.) The Bethany entities argue that we should employ Rossi's reasoning to conclude that because the 2003 Amendment is a separate instrument from the Trust Declaration, the Trust Declaration's no contest clause does not apply to challenges to the 2003 Amendment.
Our review of Rossi convinces us that its reasoning is not controlling. Importantly, because the original trust document in Rossi was executed after January 2001, the terms of section 21305, subdivision (a) governed the interpretation of the no contest clause at issue there. (Rossi, supra, 138 Cal.App.4th at p. 1338.) Because section 21305, subdivision (a)(3) provides that a no contest clause in one instrument does not apply to a challenge to the validity of an instrument " other than the instrument containing the no contest clause," Rossi was required by section 21305, subdivision (a) to focus on whether the amendment and the original trust document were separate instruments. Under the terms of section 21305, subdivision (a), the fact that the Rossi trust document and the amendment were separate instruments was dispositive.
Here, in contrast, because section 21305 does not apply, we do not narrowly focus on whether the Trust Declaration and the 2003 Amendment are separate instruments. Instead, to determine whether the Trust Declaration's no contest clause applies to challenges to the 2003 Amendment we apply the law as it existed prior to the enactment of section 21305, subdivision (a).
2. The Trust Declaration's No Contest Clause Applies to Challenges to the 2003 Amendment
We begin our analysis of whether the no contest clause in the Trust Declaration applies to challenges to the 2003 Amendment by focusing on the language of the no contest clause, keeping in mind that we must strictly construe the clause in determining Becker's intent. The no contest clause applies to a beneficiary who contests " the validity of this trust or of a deceased settlor's last will or seeks to obtain an adjudication in any proceeding in any court that this trust or any of its provisions or that such will or any of its provisions is void, or seeks otherwise to void, nullify, or set aside this trust or any of its provisions." On its face, the no contest clause does not expressly state that it is applicable to challenges to amendments to the Trust Declaration. Instead it applies to contests to " this trust or any of its provisions." Thus, the question is whether, by referring to a contest of " this trust or any of its provisions," Becker intended the no contest clause to apply to challenges directed at an amendment to the Trust Declaration.[10]
The Gentrys point out that the term " trust" is defined in section 82, subdivision (a)(1) as " [a]n express trust, private or charitable, with additions thereto, wherever and however created." (Italics added.) Based on this statutory definition, the Gentrys argue that the Trust Declaration and the 2003 Amendment are all part of the same trust, and thus a challenge to the 2003 Amendment is a challenge to " this trust or any of its provisions," as stated in the Trust Declaration's no contest clause. Based on case law, discussed below, applying no contest clauses containing language nearly identical to the language in Becker's Trust Declaration, we agree.
We first look to our Supreme Court's view on a very similarly worded no contest clause. In Burch, the relevant no contest clause stated that it would apply when a beneficiary contests " 'the validity of this Trust . . . or seeks to obtain in any proceeding in any court an adjudication that this Trust or any of its provisions . . . is void, or seeks otherwise to void, nullify or set aside this Trust or any of its provisions.' " (Burch, supra, 7 Cal.4th at pp. 256, 275, italics added.) Construing this no contest clause, our Supreme Court held that a surviving wife's proposed state action to litigate her community property rights in life insurance proceeds and stock held by the trust estate and her proposed federal action to litigate her rights to receive pension plan death benefits under federal law would violate the no contest clause in her late husband's trust instrument. (Burch, at pp. 255-263.)
Specifically, Burch held that because the trust instrument evinced an intent to force the surviving wife to elect either to pursue her community property rights or to take under the trust instrument, a court action by the surviving wife to enforce her community property rights would " result in the nullification of the [deceased husband's] clearly stated intent that [the surviving wife] be put to an election of her independent rights to all property transferred to the trust." (Burch, supra, 7 Cal.4th at p. 261.) The trust assets at issue were not specifically mentioned in the trust instrument as forming part of the estate, but were later transferred to the trust.[11] (Burch, at p. 258.) Nevertheless, Burch concluded that a court action to enforce the surviving wife's community property rights in the assets would be an attempt to " 'void, nullify or set aside this Trust or any of its provisions' " within the meaning of the no contest clause. (Burch, at p. 261, italics omitted.)
Burch is applicable here because it demonstrates that a no contest clause, very similar to the clause contained in Becker's Trust Declaration, applies to contests that do not strictly challenge a trust declaration itself, but rather challenge other aspects of a trust, such as the disposition of assets later transferred into a trust through a subsequent instrument. Burch thus lends support to our conclusion that the Trust Declaration's no contest clause, which contains language very similar to the language in Burch, is broad enough to cover not only a challenge to the terms of the Trust Declaration itself but also to a challenge to a subsequent instrument amending the terms of the Trust.
The next applicable authority is Genger v. Delsol (1997) 56 Cal.App.4th 1410 (Genger). In Genger, the husband had executed a trust, a pour-over will and a corporate stock redemption agreement. The corporate stock redemption agreement provided that upon the husband's death, the stock at issue was to be redeemed and the corporation was to transfer a house to the husband's estate. (Genger, at pp. 1416-1417.) The trust instrument contained a no contest clauseidentical to that at issue here. As in Becker's Trust Declaration, the no contest applied when a beneficiary contests " 'the validity of this trust . . . or seeks to obtain an adjudication in any proceeding in any court that this trust or any of its provisions . . . is void, or seeks otherwise to void, nullify, or set aside the trust or any of its provisions.' " (Genger, at pp. 1417-1418.)
Genger concluded that although the corporate stock redemption agreement did not contain a no contest clause, the no contest clause in the trust instrument applied to the surviving wife's proposed action to invalidate the stock redemption agreement. (Genger, supra, 56 Cal.App.4th at pp. 1421-1422.) Genger explained that " [a] 'contest' is not confined to a direct attack on a will or trust instrument. It may include a separate legal proceeding which is designed to thwart the testator's expressed wishes." (Genger, at p. 1420, fn. omitted.) Genger ruled that because the stock redemption agreement was part of the decedent's integrated estate plan, as shown by the terms of the trust, an attack on that agreement would be an attack on the trust, and would thus fall under the no contest clause provision that applied to attempts " 'to void, nullify or set aside this trust or any of its provisions.' " (Genger, at p. 1422.)
Genger is applicable because, like Burch, it demonstrates that a no contest clause applies to challenges to any instrument that would thwart the trustor's intention regarding the content and distribution of his or her estate. Here, the 2003 Amendment expresses part of Becker's intent regarding the distribution of the Trust, and therefore a challenge to the 2003 Amendment is a challenge to " the trust or any of its provisions."
Finally, we find support for our decision in this court's recent opinion in McIndoe, supra, 132 Cal.App.4th 483. McIndoe involved three separate trusts. The original trust instrument provided that upon the trustor's death, the trust would be divided into a survivor's trust and an exempt trust. (Id. at p. 486.) Only the original trust included a no contest clause, stating that its provisions " 'apply to each trust established hereunder.' " (Id. at p. 488.) Interpreting the no contest clause as applying to the " entire trust estate," McIndoe agreed with the appellant's contention that " the no contest clause in the original trust applies to challenges to the original trust, the exempt trust and the survivors trust." (Id. at pp. 488, 487.)[12] McIndoe thus followed the same approach as Genger and Burch in expansively applying a no contest clause rather than limiting it to the document in which the no contest clause applied.
Here, following the approach of Burch, Genger and McIndoe, we do not require that the 2003 Amendment itself contain a no contest clause in order to be covered by the no contest clause found in the document initially creating the Trust. Our reasoning follows two simple steps. First, the no contest clause in the Trust Declaration applies to challenges to " the trust or any of its provisions." Second, under section 82, subdivision (a)(1), which defines a trust as " [a]n express trust, private or charitable, with additions thereto" (italics added), the 2003 Amendment unquestionably sets forth certain provisions of Becker's Trust. Thus, a challenge to the 2003 Amendment violates the no contest clause in the Trust Declaration because such a challenge is an attempt to " void, nullify, or set aside this trust or any of its provisions." (Italics added.)
Accordingly, we reverse the probate court insofar as it ruled that the Bethany entities' proposed challenges to the 2003 Amendment would not violate the no contest clause in the Trust Declaration.
C. The Pre‑ death Transfers
The next issue is whether the Bethany entities' challenges to pre‑ death transfers, which appear in each of the three causes action in the proposed amended petition, are subject to the no contest clause in either the Will or the Trust Declaration.[13]
We first review the nature of those challenges. As indicated in the proposed amended petition, section 850, subdivision (a)(2) is the procedural basis for the challenges to the pre‑ death transfers alleged in the proposed causes of action for undue influence and lack of capacity. Section 850, subdivision (a)(2)(D) allows " [t]he personal representative or any interested person" to bring a petition " [w]here the decedent died having a claim to real or personal property, title to or possession of which is held by another." As the remedy for a successful petition, " if the court is satisfied that a conveyance, transfer, or other order should be made, the court shall make an order authorizing and directing . . . the person having title to or possession of the property, to execute a conveyance or transfer to the person entitled thereto, or granting other appropriate relief." (§ 856.) Based on these provisions, it is clear that the Bethany entities' challenges to the pre‑ death transfers seek to bring into Becker's estate (and consequently into the Trust) the amount of $540,000 that they allege was improperly transferred by Becker to Gentry at a time when Becker lacked capacity and was under undue influence.[14]
Thus, to determine whether the challenges to the pre‑ death transfers constitute a contest within the meaning of the no contest clauses in the Trust Declaration or the Will, we must determine whether an attempt to bring the $540,000 back into Becker's estate is attempt to " void, nullify or set aside" any provision of the Trust Declaration or " impair or invalidate" any provision of the Will.
Although their argument could be more clearly expressed, the Gentrys appear to contend that the challenges to the pre‑ death transfers are an attempt to invalidate provisions of the Trust or the Will because those documents impliedly contained provisions indicating that Becker intended to make cash gifts to individuals during her life. The Gentrys argue that " [u]nless [Becker] intended to completely omit any individual cash gifts in disposing of her substantial estate, she must have contemplated making gifts to such individuals during her lifetime." They argue that the only way a beneficiary of the Trust Declaration " could improve upon the amounts left to them by the trust would be to invalidate one or more of the individual distributions made by [Becker] prior to her death. Thus, such an action challenging [Becker's] plan to distribute money to individuals prior to her death must clearly be covered by the 'no contest' clause." (Italics added.)
This argument fails because the neither the Trust Declaration nor the Will describes any plan to distribute money to individuals prior to Becker's death. Because the Trust Declaration and the Will contain no provisions concerning pre‑ death distributions, a challenge to the pre‑ death transfers does not constitute an attempt to impair, invalidate, void or nullify any provision in the Trust Declaration or the Will. Instead, the challenges to the pre‑ death transfers are merely an attempt to bring property into the estate to increase the property available for distributions to the beneficiaries identified in the Trust Declaration or its amendments. Accordingly, the challenges to the pre‑ death transfers do not constitute contests under either the Trust Declaration or the Will. (See Estate of McCarthy (1970) 5 Cal.App.3d 158, 166-167 [holding that an action by the executors to rescind a deed conveying decedent's real property during her lifetime was not a contest because the rescission action, if successful, would enhance the decedent's estate rather than thwart the estate plan]; see also Genger, supra, 56 Cal.App.4th at p. 1423 [describing the holding in McCarthy as applying to challenges to intervivos transfers].)
Accordingly, we affirm the probate court's ruling insofar as it ruled that the Bethany entities' proposed challenges to the pre‑ death transfers would not violate the no contest clause in either the Trust Declaration or the Will.[15]
D. The Doctrine of Res Judicata Does Not Require a Different Result
In their respondents brief, the Bethany entities argue that the probate court's ruling should be affirmed based on the doctrine of " res judicata." Specifically, they argue that the probate court's ruling on the first section 21320 application was a final order that was binding on the Gentrys, which the Gentrys could not revisit in the second section 21320 application. Because we have concluded that the probate court's ruling should be reversed in part, we must address the Bethany entities' argument to determine whether the doctrine of res judicata prevents the Gentrys from obtaining a reversal.
As we will explain, we conclude that the doctrine of res judicata does not preclude reversal.
The term " res judicata" is used to describe either the doctrine of collateral estoppel (also known as issue preclusion), or the doctrine of claim preclusion, which prevents relitigation of the same cause of action in a second suit between the same parties or parties in privity with them. (See Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 896 & fn. 7.) The Bethany entities appear to rely on the doctrine of collateral estoppel, which " precludes relitigation of issues argued and decided in prior proceedings." (Lucido v. Superior Court (1990) 51 Cal.3d 335, 341.) " Collateral estoppel . . . applie[s] only if several threshold requirements are fulfilled. First, the issue sought to be precluded from relitigation must be identical to that decided in a former proceeding. Second, this issue must have been actually litigated in the former proceeding. Third, it must have been necessarily decided in the former proceeding. Fourth, the decision in the former proceeding must be final and on the merits. Finally, the party against whom preclusion is sought must be the same as, or in privity with, the party to the former proceeding." (Ibid., citations and footnote omitted.) Here, at least two of these requirements are not present.
First, the issues decided in the rulings on the first and second section 21320 applications were not identical. The first application sought a ruling under section 21320 on the first petition, and the second application sought a ruling under a different petition, which (1) added additional factual allegations to the first petition and, (2) for the first time, expressly named Sharon and James Gentry as respondents. Because the first and second section 21320 applications concerned substantively different proposed petitions, the issues decided were not the same.
Second, the parties to the first section 21320 application are not the same as the parties against whom collateral estoppel is sought. The first proposed petition, which was at issue in the first section 21320 application, did not name any respondents. Nevertheless, Sharon Gentry filed an opposition in her capacity as trustee for the Trust. The second proposed petition (which was at issue in the second section 21320 application), on the other hand, named both Sharon and James Gentry as respondents, and both of the Gentrys were named solely as individuals. Sharon and James Gentry both filed oppositions in their individual capacities.
Accordingly, we conclude that despite the probate court's ruling on the first section 21320 application, the Gentrys are not collaterally estopped from arguing that the 2003 Amendment is within the scope of the Trust Declaration's no contest clause.
DISPOSITION
We reverse the probate court's order insofar as it ruled that the Bethany entities' proposed challenges to the 2003 Amendment would not violate the no contest clause in the Trust Declaration; in all other respects the order is affirmed. The parties are to bear their own costs.
IRION, J.
WE CONCUR:
HALLER, Acting P. J.
AARON, J.
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[1] Unless otherwise indicated, all further statutory references are to the Probate Code.
[2] On the same date, Becker executed a codicil to the Will (the 2003 Codicil), which changed the person designated as the alternate executor. The 2003 Codicil closed with the words " In every other respect, I confirm and republish my Will dated
[3] Specifically, the allegation is that (1) on
[4] Section 21350, subdivision (a)(6) provides that, with certain exceptions, a donative transfer is invalid if made to " [a] care custodian of a dependent adult who is the transferor."
[5] Welfare and Institutions Code section 15610.30 defines financial abuse for the purposes of the Elder Abuse and Dependent Adult Civil Protection Act (Welf. & Inst. Code, § 15600 et seq.) (the Elder Abuse Act). The Elder Abuse Act " represents the Legislature's response to the problem of unreported elder abuse which came to its attention in the early 1980's" and its " statutory scheme . . . follows the statutory model for child abuse by mandating that health care providers report suspected elder abuse and immunizing from civil liability those who are required to make such reports." (Easton v.
[6] Although the heading of the third cause of action stated that it was " based on the [2003 Amendment] and transfers being obtained by elder financial abuse," the substantive allegations of the cause of action addressed only the pre‑ death transfers. Specifically, the cause of action alleged that " in doing the acts referred to herein with respect to taking and retaining for a wrongful use the sum of $540,000 that belonged to Becker with an intent to permanently deprive her and the Trust of said funds and thus defraud her, [Sharon] Gentry and Does 1-20 committed financial abuse on Becker within the meaning of [the Elder Abuse Act]."
[7] Section 21300, subdivision (d) defines a no contest clause as " a provision in an otherwise valid instrument that, if enforced, would penalize a beneficiary if the beneficiary files a contest with the court." Section 21300, subdivision (a) defines a contest as " any action identified in a 'no contest' clause as a violation of the clause."
[8] Section 21320, subdivision (a) provides: " If an instrument containing a no contest clause is or has become irrevocable, a beneficiary may apply to the court for a determination of whether a particular motion, petition, or other act by the beneficiary . . . would be a contest within the terms of the no contest clause."
[9] We note that all of the parties appear to agree that because the challenge to the 2003 Amendment (as opposed to the challenge to the pre‑ death transfers) does not concern any provision in the Will or any of its codicils, the no contest clause in the Will is not applicable, and the question presented is thus whether the no contest clause in the Trust Declaration applies to the challenges to the 2003 Amendment.
[10] In attempting to determine Becker's intent, we have also examined the language of the 2003 Amendment. The 2003 Amendment provides that " [e]xcept for the specified changes, additions, and deletions set forth herein, all provisions of the trust instrument, including any prior amendments, shall remain in full force and effect." (Italics added.) Reviewing this language, we conclude that it does not address the issue of whether Becker intended the Trust Declaration's no contest clause to apply to challenges to the 2003 Amendment. The 2003 Amendment does not incorporate by reference any of the provisions of the Trust Declaration into its own provisions, and thus does not itself contain a no contest clause. Instead, it merely indicates that except for modifications specified in the 2003 Amendment, the provisions of the Trust Declaration remain in full force and effect. We thus focus instead on the provisions of the Trust Declaration's no contest clause to determine Becker's intent.
[11] Burch made clear that the assets were not transferred to the trust estate by operation of a will. (Burch, supra, 7 Cal.4th at p. 260.) Thus, we infer that the assets were transferred to the trust estate by an instrument executed by the trustor.
[12] We note that although McIndoe decided that a challenge to the survivors trust would violate the no contest clause in the original trust instrument, because the issue was not raised on appeal it expressly did not consider whether a challenge to the amendments to the survivors trust, which lacked a no contest clause, would nevertheless violate the no contest clause in the original trust instrument. (McIndoe, supra, 132 Cal.App.4th at p. 488.) Thus, although McIndoe provides precedent for the principle that a lawsuit may violate a no contest clause even though it is not targeted at the document containing the no contest clause, McIndoe does not directly address the issue presented here, i.e., whether a no contest clause in an original trust instrument applies to amendments to the trust instrument.
[13] Unlike with respect to the challenges to the 2003 Amendment, there does not appear to be a consensus among the parties that the Will's no contest clause is inapplicable to the challenges to the pre‑ death transfers. Thus, we discuss the no contest clauses in both the Will and the Trust Declaration.
[14] Further, as we have discussed, the Bethany entities' cause of action for financial elder abuse, as defined Welfare and Institutions Code section 15610.30, does not constitute a separate substantive ground for relief except that the Bethany entities, if successful in establishing financial elder abuse, could recover reasonable attorney fees and costs under Welfare and Institutions Code section 15657, subdivision (a).
[15] We note the Bethany entities also argue that we should affirm the trial court's ruling as to the challenges to the pre‑ death transfers as set forth in the cause of action for financial elder abuse (Welf. & Inst. Code, §§ 15610.30, 15657, subd. (a)) on public policy grounds. Because we have determined on other grounds that none of the Bethany entities' challenges to the pre‑ death transfers are subject to the no contest clause of either the Will or the Trust Declaration, we need not, and do not, address whether the financial elder abuse cause of action is exempt from the operation of no contest clauses on public policy grounds.
