Opinion
NOT TO BE PUBLISHED
Superior Court County of Santa Barbara No. 1242953, Thomas Anderle, Judge
Lascher & Lascher, Wendy C. Lascher, Aris E. Karakalos, Eric R. Reed for Plaintiff and Appellant, Linda Scott Laughlin.
Fell, Marking, Abkin, Montgomery, Granet & Raney, Philip W. Marking, Frederick W. Montgomery for Respondent Bradley S. Scott.
COFFEE, JUDGE
A testator executes a trust amendment dividing his estate equally between his son and daughter. Nine months later he executes another amendment leaving the bulk of his estate to his son. Both amendments contain a no contest clause. Daughter files a civil action and probate petition challenging the validity of the most recent amendment, arguing that son exercised undue influence to induce father to amend the trust. The trial court found that the daughter's filing of the petition violated the no contest clause and ruled that she had forfeited her interest in the trust. She appeals the trial court's order of forfeiture. We affirm.
FACTS
Fourth Restated Declaration of Trust
We omit discussion of the original trust instrument because the relevant testamentary documents are the fourth and fifth amendments to the 1997 Milton Bradley Scott Trust. The decedent, Milton Bradley, executed the Fourth Restated Declaration of Trust on October 11, 2004 (fourth amendment), naming his children, Linda Scott Laughlin (appellant) and Bradley S. Scott (respondent), as beneficiaries. Bradley was appointed to serve as trustee.
Under the terms of the fourth amendment, Linda and Bradley were given specific gifts of real property and equal shares in the residue of the estate. Linda received real property located in Santa Barbara and Bradley received real property in West Hollywood. The amendment contained a no contest clause. John Ambrecht, decedent's long time estate planning attorney, prepared this amendment as well as previous testamentary documents for the decedent.
We refer to the beneficiaries by first name to be consistent with the trial court's references to them.
Fifth Amendment and Restatement of Trust
On July 1, 2005, the decedent executed a Fifth Amendment and Restatement of the Declaration of Trust for the M.B. Scott Trust (fifth amendment). This document was drafted by attorney James E. Cote. In this amendment, the decedent again appointed Bradley to serve as trustee. The decedent made the same specific gifts of real property, but this time gave the remainder of the estate entirely to Bradley.
As to the specific gifts, the decedent gave Bradley an office building located at 8721 Sunset Boulevard in West Hollywood (Sunset Boulevard property). The decedent gave Linda his residence in Hope Ranch, located at 3907 and 3911 Via Laguna in Santa Barbara (Santa Barbara property). He included a provision specifying that this property was to be used for the payment of estate taxes, stating:
"[I]t is my intention that [the Santa Barbara property] may need to be used as a source of funds to pay any estate taxes which may become due as a result of my death. Specifically, the Trustees may, in their absolute discretion, sell or encumber the 3907 Via Laguna parcel or the 3911 Via Laguna parcel and residence on the parcel, in order to provide funds to pay such estate taxes. If this occurs, then this specific gift shall be so reduced. That is, if either parcel is sold or encumbered, then this gift shall be reduced accordingly."
"I recognize that these provisions may result in the gift of the Sunset Boulevard Property and gift of the Santa Barbara Property being unequal in value, but it is my intention that the Santa Barbara Property, and my gift of the Santa Barbara Property, bear the burden of being used [] as a source of funds to help pay such estate taxes, if necessary."
The fifth amendment also included a no contest clause providing that, if any beneficiary contested in court the validity of the trust, "then the right of such beneficiary to take any interest given to him or her under this Declaration of Trust, . . . shall be determined as [if] . . . such beneficiary predeceased me without surviving issue. The Trustees are hereby authorized to defend, at the expense of the trust estate, any contest or other attack of any nature on this Declaration of Trust." The decedent died on August 15, 2006, at age 86 leaving an estate valued at approximately $18 million. Linda subsequently moved into the Santa Barbara property.
Civil Action
In January of 2007, Linda filed a civil action against Bradley, seeking damages for fraud, elder abuse, financial elder abuse, conversion, and money had and received. (Laughlin v. Scott, (Super. Ct. Santa Barbara, 2007, No. 1243022).) The complaint alleged that the fifth amendment to the trust was invalid because Bradley had exerted undue influence upon the decedent. Linda also sought a constructive trust and an accounting.
Linda claimed that Bradley had induced the decedent to change his estate planning attorney and execute a fifth amendment that increased the gift to Bradley and decreased the gift to her. Linda also objected that her property was to be charged with the payment of the estate taxes.
In her complaint, Linda alleged that Bradley had become estranged from the decedent in May of 1998. In 2003, the decedent separated from his wife and Bradley began visiting him. Linda claimed that, between 2003 and 2006, Bradley provided care for and stood in a position of trust with the decedent.
Linda alleged that Bradley induced the decedent to give him a power of attorney enabling him to exercise control over all the decedent's real and personal property and cash and business assets. Bradley allegedly misappropriated the decedent's funds for his own use and as well as over $250,000 in jewelry and other personal property.
Linda also claimed that Bradley failed to provide 24-hour care for the decedent, despite the recommendations of his caregivers. She alleged that Bradley caused the decedent to terminate his relationships with his friends, business adviser and family members. She also made allegations of physical neglect.
Petition Challenging Validity of Trust (Probate Proceeding)
Simultaneously with the filing of the civil action, Linda filed a petition in probate court, which is the basis for the instant appeal. She requested a determination that the fifth amendment was invalid, sought removal of the trustee, recovery of trust assets, appointment of a temporary trustee, and an accounting. Linda alleged that the fifth amendment created a division "that is grossly disproportionate to the benefit of Bradley Scott, and results in Bradley Scott receiving an undue profit at the expense of [Linda]. The Fifth Restated Trust is therefore presumed as a matter of law to have been procured through the undue influence of Bradley Scott."
Bradley filed a petition for an order declaring Linda's interest in the trust forfeited for violating the no contest clause. Linda filed opposition, arguing that Bradley's petition was premature and an attempt to preclude a trial on the merits. She claimed that granting the petition on the basis of the no contest clause would permit any wrongdoing in the drafting of the fifth amendment to be "ratified by the court."
Consolidation of Civil and Probate Matters Petition Seeking Order of Forfeiture of Linda's Interest
On May 2, 2007, Judge Anderle entered an order granting Bradley's motion to consolidate for trial Linda's civil action (Case No. 1243022) and her probate petition (Case No. 1242953) concerning the validity of the fifth amendment. Judge Anderle ruled that Linda had forfeited her interest in the fifth amendment by contesting its validity. In his written order he stated that, "[a]ny right of Linda Scott Laughlin to take any interest under the M.B. Scott Trust dated March 7, 1997 and as amended and restated by the Fifth Amendment and Restatement thereof dated July 1, 2005 is forfeited and shall be determined as if she had predeceased the Trustor, Milton Bradley Scott, without surviving issue." Linda appeals from this order.
On June 15, 2007, Linda sought a petition for a writ of mandate and emergency stay challenging an order that she vacate the Santa Barbara property. We summarily denied her writ petition on June 21, 2007.
DISCUSSION
Probate Code Section 21307Linda argues on appeal that Bradley exerted undue influence upon the decedent causing him to execute a fifth amendment. She contends that this invalidated the no contest clause pursuant to Probate Code section 21307. That statute provides, "A no contest clause is not enforceable against a beneficiary to the extent the beneficiary, with probable cause, contests a provision that benefits any of the follow persons:
All further statutory references are to the Probate Code, unless otherwise stated.
"(a) A person who drafted or transcribed the instrument.
"(b) A person who gave directions to the drafter of the instrument concerning dispositive or other substantive contents of the provision or who directed the drafter to include the no contest clause in the instrument, but this subdivision does not apply if the transferor affirmatively instructed the drafter to include the contents of the provision of the no contest clause.
"(c) A person who acted as a witness to the instrument." (Italics added.)
Linda argues that the no contest clause is unenforceable against her because she has probable cause to contest the provision pursuant to section 21307. She claims that Bradley falls within subdivision (b) because he directed attorney Cote concerning dispositive provisions of the testamentary document or because he directed Cote to include the no contest clause in the fifth amendment.
We observe, however, that section 21307, subdivision (b) also expressly states that the subdivision is inapplicable if the transferor "affirmatively instructed the drafter" to include a no contest clause. We reject Linda's argument because the fourth amendment also contained a no contest clause and was drafted at a time when the decedent had not consulted with Bradley and had used his own counsel to prepare the amendment.
In an argument raised for the first time on appeal, Linda claims that, pursuant to section 21307, she has probable cause to believe Bradley exercised undue influence. She contends that Bradley was a witness or an advisor to the drafting of the fifth amendment, thus it has been rendered invalid, reviving the fourth amendment. Linda requests that we reverse the trial court's ruling declaring that she has forfeited her interest under the fifth amendment.
At the outset, we note that Linda has waived her probable cause argument by failing to raise it below. No mention was made of the applicability of section 21307, either orally or in the pleadings. "'Points raised for the first time in a reply brief will ordinarily not be considered, because such consideration would deprive the respondent of an opportunity to counter the argument.' [Citation.]" (Reichardt v. Hoffman (1997) 52 Cal.App.4th 754, 764.) Waiver aside, we consider her argument on the merits.
Linda's assertion that she had probable cause to contest the provision consists of her allegations that attorney Cote visited decedent at his home and met with the decedent in his bedroom; Bradley was not present, but the decedent insisted that no changes to the trust be made until Bradley was next in town; Cote later met with both the decedent and Bradley to discuss the terms of the trust; and after that meeting Cote drafted the fifth amendment. These facts do not establish probable cause or undue influence that would render the no contest clause unenforceable against Linda.
Probate Code Sections 21350 and 21351
Linda next argues that the no contest clause is invalid pursuant to sections 21350 and 21351. This argument is also without merit because neither statute is relevant. Section 21350 provides a detailed list of individuals to whom a donative transfer cannot be made. The list includes the person who drafted the instrument and individuals with various types of relationships to the drafter. Bradley did not draft the instrument, attorney Cote was the drafter.
Section 21351 provides an exception to section 21350, allowing a donative transfer to be made to the drafter of the instrument if "[t]he transferor is related by blood or marriage to, is a cohabitant with, or is the registered domestic partner . . . of the transferee or the person who drafted the instrument." Even if we credited Linda's argument—which we do not—that Bradley participated in the drafting of the fifth amendment, the no contest clause would still be valid because Bradley is a blood relative of the decedent.
Requests for Judicial Notice
We granted both Linda's and Bradley's requests for judicial notice of documents in the civil and probate actions, pursuant to our authority to judicially notice records of any court of this state. (Evid. Code, §§ 452, 459.) Bradley requested that we judicially notice the judgment in the civil action, which was decided while the instant appeal was pending.
On November 16, 2007, the trial on the merits of Linda's trust contest petition proceeded before Judge Anderle. The six-week court trial ended on December 31, 2007, and Judge Anderle issued a 30-page statement of decision on February 28, 2008, rendering a judgment in favor of Bradley and against Linda. He concluded that Linda had not established probable cause to suspect undue influence.
In the statement of decision, Judge Anderle presented an extensive analysis of the testimony of each witness. As to Bradley, he stated, "I recognize that a large part of Linda's case rests on the destruction of this witness' testimony and veracity. But in the final analysis I cannot find persuasive evidence based upon his testimony that contradicted his contention that [the decedent] was competent and not under undue influence or fraud before or after he executed his testamentary documents on July 1, 2005." Judge Anderle also noted that the decedent was an individual "who very frequently changed his mind, sometimes dramatically, about his estate plans and did so often . . . ."
Regarding the testimony of attorney Cote, Judge Anderle stated, "[f]rom his testimony it is clear that [the decedent] knew exactly what he was doing at the time the estate documents were being drafted and executed, as well as for significant periods of time before and after. . . . As to undue influence and fraud there was nothing elicited on direct or cross examination that established any convincing evidence that either of these contentions was viable. . . . There was no showing of any conspiracy between Mr. Cote and Bradley."
Judge Anderle concluded that the estate planning documents were not the product of undue influence or fraud. Bradley produced evidence that he was not present at the execution of the documents, nor was he involved in the selection of the attorney who drafted them.
In the statement of decision, Judge Anderle included rulings on ultimate issues submitted by Bradley. He expressly found that Bradley did not direct attorney Cote to include provisions in the fifth amendment allocating the federal estate tax to the trust share for Linda or the no contest provision. He also found that the decedent affirmatively directed Cote to draft those provisions. Further, Linda did not have probable cause under section 21307, subdivision (b) to commence the proceeding.
Linda requested that we judicially notice an order denying a motion for summary judgment and her motion for a new trial. She also included a request by Bradley that the court's tentative decision be supplemented with additional findings regarding Linda's lack of probable cause under section 21307 and her objection to that request.
Linda argues that these documents demonstrate that the judgment in the civil action is "procedurally and substantively flawed," and that Bradley improperly obtained additional rulings, included in the final judgment, after Linda filed her appeal and opening brief. Although we granted both parties' requests for judicial notice in the interests of fairness, we remind Linda that we cannot review any challenges to a proceeding from which an appeal has not been taken. Our review is limited to the trial court's May 2, 2007 order.
The judgment is affirmed. Costs on appeal are awarded to respondent.
We concur: GILBERT, P.J., YEGAN, J.