Opinion
D074120
11-20-2019
ELIZABETH DEL POZO, as Trustee, etc., Plaintiff and Respondent, v. RICHARD G. LEMKE, Defendant and Appellant.
Richard G. Lemke, in pro. per., for Defendant and Appellant. Brierton, Jones & Jones, Gary D. Jander and Ricsie M. Hernandez for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2017-00000227-PR-TR-CTL) APPEAL from an order of the Superior Court of San Diego County, Jeffrey S. Bostwick, Judge. Dismissed. Richard G. Lemke, in pro. per., for Defendant and Appellant. Brierton, Jones & Jones, Gary D. Jander and Ricsie M. Hernandez for Plaintiff and Respondent.
I
INTRODUCTION
Richard G. Lemke appeals an order authorizing Elizabeth del Pozo, the temporary successor trustee to the Moore Family Trust (temporary trustee), to secure and control real and tangible personal property of the trust and to sell designated trust property to generate income to pay liabilities and expenses necessary for trust administration. The order is appealable pursuant to Probate Code section 1300. However, because the court relied upon section 1310, subdivision (b) in directing the successor trustee to exercise powers to prevent injury or loss to the estate while Lemke's prior appeal was pending, the acts of the successor trustee are valid regardless of the result of either the former or current appeal. Thus, there is no relief we can provide. (East Bay Regional Park Dist. v. Griffin (2016) 2 Cal.App.5th 734, 745-746 (East Bay).) Even if we could provide relief, we would not do so because Lemke has not shown the court abused its discretion.
Further statutory references are to the Probate Code unless otherwise stated.
Therefore, we dismiss the appeal as moot.
Lemke's August 12, 2019 motion to augment the record with probate notes is denied.
II
BACKGROUND
A
Marvin G. Moore and Lorraine L. Moore executed the Moore Family Trust in March 2004 as cotrustees. Lorraine had four living children including Chas Moore Rundberg and Diane Marie Ferguson Bosio. Marvin had one living child.
After the death of the first to die, the trustee was to divide the trust into three separate trusts designated as Trust A, Trust B, and Trust C. Trust A was to consist of the survivor's interest in the community property and any of the survivor's separate property within the trust. Trust B was to consist of the decedent's community and separate property interests in the trust. Trust C was to consist of the balance of the estate. Upon the resignation, death, or incompetency of either trustee, the survivor could serve as the sole trustee or appoint one or more additional trustee. If a vacancy occurred in the office of trustee, Bosio was to be appointed successor trustee.
Lorraine's will nominated Marvin as the executor with Bosio as the first successor executor and Rundberg as the second successor executor. Unless otherwise specifically provided, Lorraine's will directed her estate be added to the Moore Family Trust. She expressly omitted to provide for her two children other than Bosio and Rundberg. The will stated, "Except as otherwise provided herein, I have intentionally omitted to provide for any of my heirs."
Lorraine and Marvin restated and amended the trust in March 2015 (first amendment). Bosio was named the successor trustee after the death of the last surviving trustor and Rundberg was named as second successor trustee. After the death of the first trustor and after the payment of debts, taxes, and funeral expenses, the first amendment required the trustee to divide the trust property into two separate and distinct trusts, Trust A (the survivor's trust) and Trust B (the deceased trust). Upon the death of the surviving spouse, the first amendment stated the principal and undistributed net income of Trust B should be distributed equally to Bosio and Rundberg. The first amendment specifically omitted to provide for Lorraine's other two children and for Marvin's child.
Lorraine died in August 2015. Thereafter, in November 2015, Marvin executed a second amendment to the trust naming Lemke as the successor trustee and providing the entire survivor's trust should be distributed to Lemke. One year later, on November 29, 2016, Bosio found Marvin dead in his home.
B
Bosio and Rundberg filed a petition in January 2017 to remove Lemke as trustee and to appoint Bosio as the successor trustee. The petition asserted they were beneficiaries under Trust B in accordance with the first amendment. It further alleged Lemke, who was a stranger to them, was the beneficiary of Trust A and a conflict existed for trust distribution. They also alleged Lemke's expressed hostility to them would impair administration of the trust.
Lemke asked the court to deny the petition. He contended Bosio and Rundberg were not beneficiaries of the trust and had no standing to petition. He contended he was the trustee and sole beneficiary under the trust executed by Marvin. He also alleged Bosio had unclean hands.
Based on Lemke's response, Bosio and Rundberg sought an ex parte order to restrain Lemke from treating the trust assets as his own. The court ordered Lemke not to sell, convey, encumber, obtain any loan, rent, or take any other action pertaining to the trust assets without order of the court. The court also ordered him not to permit any person to live in or use the trust assets without a court order.
Within days, Bosio and Rundberg brought an ex parte request to remove Lemke as trustee or order an immediate accounting because they learned Lemke had transferred trust property to his own name before the last hearing. The court suspended Lemke as trustee and ordered him to reconvey all real property assets to the trust and transfer all bank accounts to the trustee when one was appointed. Thereafter, the court appointed del Pozo as interim temporary successor trustee subject to a $2 million bond.
Lemke then removed the matter to federal court. The district court remanded the matter back to state court in June 2017. The district court stated it did not have subject matter jurisdiction because the matter did not present a federal question.
In August 2017, the court appointed an elisor to execute deeds to transfer the real property from Lemke to the trust estate. The court also set an order to show cause hearing regarding contempt.
The temporary trustee petitioned for instructions regarding the scope of her authority to lease and sell trust property and requested authority to make the real property of the trust productive by lease or sale and to sell personal property as necessary to administer the trust. The petition included an itemization of trust expenses. Lemke objected to the petition primarily contending the temporary trustee had no authority for the request because Bosio and Rundberg are not beneficiaries under the trust.
Bosio and Rundberg separately petitioned the court for instructions to allocate trust assets and to ascertain the beneficiaries of the trust. The court did not make a ruling regarding the beneficiaries of the estate when it ruled on the temporary trustee's petition for instructions. --------
While the temporary trustee's petition was pending, the court denied a petition by Lemke on January 12, 2018, to remove the temporary trustee. Lemke appealed the order.
Lemke advised the court of his appeal on January 17, 2018, at a hearing set for the petition for instructions regarding the temporary trustee's authority to lease or sell trust property. The court and the parties discussed the merits of the petition including whether the expenses of administering the trust required liquidating property, but also noted the pending appeal. The court ordered Lemke to post a bond in the amount of $2.144 million to stay proceedings and continued the hearing on the temporary trustee's petition. The court advised Lemke it would decide the petition unless he posted a bond. Lemke also appealed this order.
At a hearing on January 31, 2018, counsel for the temporary trustee expressed concern Lemke would continue to file appeals to delay court action and to delay trust administration. Counsel asked the court to proceed because Lemke had not posted a bond. Lemke said he would object and appeal until he was told he could no longer do so. He stated he had possession of the bank accounts identified by the trust, but they were comingled with his own funds. The court continued the hearing on the temporary trustee's petition for instructions and asked for briefing regarding the effect of the appeal on the court's order to post an undertaking and whether a stay was in effect.
Before the next hearing, this court dismissed Lemke's two appeals. However, Lemke petitioned for review by the California Supreme Court. The petition for review was pending when the court heard the temporary trustee's petition for instructions.
Lemke did not appear at the scheduled May 2, 2018 hearing on the petition for instructions. The temporary trustee's counsel urged the probate court to proceed under section 1310, subdivision (b) to instruct the fiduciary despite the pending appeals to prevent loss or harm to the trust.
The temporary trustee's counsel requested instructions authorizing her to make the trust's real property productive by lease or sale, to distribute and sell any tangible personal property or business inventory she deemed necessary, and to proceed with an unlawful detainer action to remove someone who was residing on the business property. The temporary trustee requested authority to sell certain vehicles to generate enough income to pay for expenses of the trust including repair of the real property.
Basing its order on section 1310, subdivision (b), the court stated, "the purpose of the Court's order is to preserve, protect, and prevent loss to any of the trust assets which the Court believes is the duty of this Court while any other issues are pending before the Court pertaining to the trust such as the determination of the beneficiaries of the trust." The court noted the temporary trustee had control of some trust assets, but they were not liquid. The court also noted the vacant residential property presented a risk to the trust because it was unattended and was not productive. The commercial property likewise was unproductive because it was not leased, rented, or being used as business property and a third party who resided there represented a risk of loss, theft, or misuse of business inventory.
The court stated it would prefer to make orders without selling trust property because it wanted to preserve as much of the trust assets as possible before determining the correct beneficiaries of the trust. However, Lemke had not allowed the trustee to marshal the liquid portion of the trust estate and had not accounted for those funds. Instead, he liquidated certain accounts, comingled those with his own accounts, and did not provide the temporary trustee with information regarding the location of those assets. The temporary trustee was charged with preserving, protecting, and marshaling the trust assets, but she could only partially do so because Lemke had possession of some of the assets and refused to turn them over. The court also noted it had to appoint an elisor to convey the real property assets from Lemke to the trustee because Lemke refused to do so.
The court noted the purpose of section 1310, subdivision (b) is to allow, "notwithstanding any request of an appellate court, a fiduciary, and specifically a temporary trustee, to take steps to preserve and protect the trust estate from loss." The court granted the temporary trustee's petition. It authorized the temporary trustee to continue to pursue the unlawful detainer action and confirmed she had the right of occupancy and control of the real property. The court instructed the temporary trustee to inventory the personal property in the commercial building, to identify and value the business inventory, and to secure the commercial property. The court authorized the temporary trustee "to sell as much of the car collection and/or other vehicles under her control as necessary to generate enough capital to accomplish the goals" of securing the commercial property, removing any person using the commercial property, securing the residential property, and making necessary repairs to make both properties ready for them to be productive by rental. However, the court instructed the temporary trustee "not to sell any assets that go beyond her need to pay for these types of expenses" and to be "judicious about what assets she sells."
The court wanted the temporary trustee to liquidate only as much as needed to properly administer the trust. Because Lemke had prevented access to the liquid portion of the trust assets, the court stated it was "left with no other alternative" to protect the trust estate against injury or loss.
The Supreme Court subsequently denied review of Lemke's prior appeals on May 23, 2018. Lemke filed his notice of appeal regarding the May 2, 2018 order the same day.
III
DISCUSSION
Although Lemke's opening brief, which is less than clear, appears to take issue with numerous orders of the probate court, the only order properly before us based on the notice of appeal is from the May 2, 2018 order instructing the temporary trustee to take certain actions to administer the trust and to preserve and protect the trust. Therefore, we confine our discussion to that order.
The order is appealable because it directs and authorizes the sale or lease of property (§ 1300, subd. (a)); it authorizes, instructs, and directs the trustee to perform certain acts (id., subd. (c)); and it directs or allows payment of certain debts and costs of administration (id., subd. (d)).
Generally, an appeal stays the operation and effect of the judgment or appealable order. (§ 1310, subd. (a).) However, section 1310, subdivision (b) permits a court to direct the exercise of a fiduciary's powers as if no appeal were pending to prevent injury or loss to a person or property. (14 Witkin, Summary of Cal. Law (11th ed. 2017) Wills and Probate, § 441, p. 510.) Section 1310, subdivision (b) provides in pertinent part: "Notwithstanding that an appeal is taken from the judgment or order, for the purpose of preventing injury or loss to a person or property, the trial court may direct the exercise of the powers of the fiduciary, ..., from time to time, as if no appeal were pending. All acts of the fiduciary pursuant to the directions of the court made under this subdivision are valid, irrespective of the result of the appeal. An appeal of the directions made by the court under this subdivision shall not stay these directions."
Although the last sentence of section 1310, subdivision (b) appears to contemplate appeals from orders made pursuant to the statute, "the second to last sentence ... indicates the relief that may be sought through such appeals is limited." (East Bay, supra, 2 Cal.App.5th at pp. 743-744.) "Acts taken pursuant to section 1310[, subdivision ](b) are valid regardless of the outcome on appeal." (Sterling v. Sterling (2015) 242 Cal.App.4th 185, 195.) Therefore, we "may not reverse an order made pursuant to section 1310, subdivision (b) to the extent doing so would disturb acts of the trustee taken pursuant to statute." (East Bay, at p. 744.) Even if the probate court erred, there is no relief we can provide regarding the section 1310, subdivision (b) order. (Id. at p. 745.)
"[D]epriving a litigant of his or her right to appeal is an extraordinary measure. But the Legislature appears to have determined that, in certain cases, expeditious resolution of disputes is more important than allowing for a right of review." (East Bay, supra, 2 Cal.App.5th at p. 744; see also Gold v. Superior Court (1970) 3 Cal.3d 275, 281 [statutory exception to a stay on appeal applied to an order directing conservator to exercise powers in conservatorship proceeding to prevent injury or loss].)
If we could provide relief, we would not do so here because we conclude the court did not abuse its discretion in determining it was necessary to issue the instructions to prevent injury or loss to the trust despite the pending appeal. Lemke stated he would continue to appeal until he was told he did not have a right to do so. The court considered the procedural history of the case, the delay in administering the trust along with the risk to the estate from property sitting vacant, and Lemke's refusal to turn over assets of the trust or to cooperate with the temporary trustee. The court issued instructions pursuant to the authority of section 1310, subdivision (b) because it was "left with no other alternative in order to protect against injury or loss to the trust estate."
Lemke's opening brief restated his objections to the standing of Bosio and Rundberg as beneficiaries and asserted the attorney who signed the petition for instructions was not the attorney of record. However, the record shows the attorneys are both with the law firm of record for the temporary trustee. The court did not decide the issue of who the beneficiaries are of the trust.
Lemke's reply brief contended for the first time that the notice of the petition for instructions cited section 17200, subdivision (b)(6) rather than section 1310, subdivision (b). "We decline to consider the issue here in deference to the rule that ' "points raised in the reply brief for the first time will not be considered, unless good reason is shown for failure to present them before...." ' " (Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847, 894, fn. 10.)
DISPOSITION
The appeal is dismissed as moot because "there is no relief we can grant appellant[] in connection with [the] appeal[]." (East Bay, supra, 2 Cal.App.5th at p. 747.)
McCONNELL, P. J. WE CONCUR: BENKE, J. GUERRERO, J.