Opinion
NOT TO BE PUBLISHED
Appeal from an order of the Superior Court of Orange County No. A228299, Marjorie Laird Carter, Judge.
Brenda Martin, in pro. per., for Defendant and Appellant.
Law Offices of Dean E. Daggett, Dean E. Daggett, Parilla, Garber & Ettinger, and Paul H. Parilla for Plaintiffs and Respondents.
OPINION
SILLS, P. J.
Brenda Martin is the successor trustee of her mother’s revocable living trust. Her mother, Rosalie Givens, is still living and is housed in a residential care facility. Dennis Givens, who is Brenda’s brother and Rosalie’s son, filed a petition together with his wife, Betty Givens, asking the probate court to instruct Brenda to sell them Rosalie’s home, which is the sole asset of the trust. The court granted the petition, and Brenda appeals.
To avoid confusion, the parties are identified by their first names.
FACTS
Rosalie established her revocable living trust in 2000 (the Trust), designated herself as trustee, and funded it with residential real property located in Orange, which was her home (the Property). She designated Brenda as the successor trustee. At that time, Rosalie was living in the guest house on the Property, attended by round-the-clock caregivers, and Dennis and Betty lived in the main house. This living arrangement had existed for more than ten years when the trust was executed.
The original Trust granted Dennis a life estate in the Property upon Rosalie’s death. Upon Dennis’s death, “or in the event that he should cease to occupy said real property as his principal residence for a continuous period in excess of six (6) months, or fail to maintain insurance, association dues, taxes, assessments, necessary improvements or repairs thereon,” the Property was to be distributed outright in equal thirds to Rosalie’s grandchildren: Christine Shelton, Jonna Allison, and Cara Bender. Any remainder of the trust estate existing upon Rosalie’s death was to be distributed outright in equal shares to Dennis and Brenda. In April 2003, Rosalie amended the Trust to provide that Betty would have the right to reside in the residence on the Property for 12 months after Dennis’s death if they are living there at the time.
In May 2003, Brenda obtained letters from two doctors stating that Rosalie was incapable of handling her own affairs. Brenda than assumed the position of successor trustee as provided in the Trust.
For reasons not fully explained in the record, bad blood exists between Brenda and Dennis. In September 2004, Brenda, as trustee, filed an unlawful detainer action against Dennis and Betty, seeking to have them removed from the Property. That action has apparently not yet been resolved. A few weeks later, Brenda on her own behalf and as trustee, filed two separate domestic violence petitions against Dennis, seeking to have him evicted from the Property and to prohibit him from having any contact with Rosalie. The requested relief was denied. Dennis and Betty began paying rent of $3000 per month to the trust in October 2004, and in November, they filed a petition to remove Brenda as successor trustee and to require an accounting. That petition is still pending.
In December 2004, Brenda petitioned to have herself appointed as conservator of Rosalie’s person and estate. Dennis filed a competing petition in March 2005, seeking to have himself appointed. The court appointed a professional conservator, Karen Dwyer, as temporary conservator of the person only in August 2005. It appointed attorney Ernest L. Hayward as counsel for Rosalie as conservatee. In November 2005, Dwyer was appointed temporary conservator of the estate. Rosalie fell and broke her hip in December 2005, resulting in her admission to Carehouse, a private skilled nursing facility, in January 2006. Dwyer was appointed as permanent conservator of the person, without medical powers, in August 2006; she continued as temporary conservator of the estate. Apparently, Dennis remained the healthcare agent under a durable power of attorney.
Dennis and Betty filed their petition to compel Brenda to sell them the Property in August 2006 (the Petition). The Petition alleges that Rosalie has insufficient income to cover the costs of her medical care. Shortly after she assumed the position of successor trustee, Brenda obtained a line of credit in the amount of $250,000, secured by the property. Dennis claims the entire amount has been used, some for Rosalie’s expenses and some to fund Brenda’s litigation against him. Dennis obtained an order restraining Brenda from further encumbering the property until the Petition could be heard. Although the property was appraised at $1,440.000 in July 2006, Dennis proposed buying the property for $965,958. Using methodology suggested by a certified public accountant, Dennis reduced the appraised value by $474,042, which is the result of subtracting the present value of Rosalie’s life estate in the property from the present value of Dennis’s life estate in the property. Dennis offered to allow Rosalie to reside rent-free in the guesthouse for as long as she lives, and he pointed out the sale would not involve a real estate broker’s commission. But “[t]he main benefit of the enclosed offer to the Trust estate and to Rosalie is that an immediate sale of the Property provides a large amount of cash proceeds (over [$]700,000 after the payment of the line of credit Loan), which can then earn interest to insure that there are sufficient liquid assets available to pay for any needed medical expenses and/or round-the-clock caregiver services which Rosalie may require.”
Brenda opposed the Petition, claiming she, as trustee, has the sole discretion to retain or sell trust property and that she has determined the proposed sale is not in the best interests of Rosalie or the Trust. She claimed the value of Dennis’s life estate should be zero because it is contingent on (1) whether the trustee decides to sell the property during Rosalie’s lifetime, and (2) whether Dennis fails to live there for more than six months or fails to pay property expenses. Brenda argued Rosalie appointed her, not Dennis, as trustee to manage the Property in the event of her incapacity and that Dennis’s actions “in direct contravention of Rosalie’s wishes,” violate the no-contest clause of the Trust. Brenda claimed the better plan would be to refinance the Property and pay off the existing loan, which would leave $100,000 in cash for Rosalie’s care. She also claimed the Property should be rented at its fair rental value, which the parties stipulated was $5440, and Rosalie should be moved to a more economical care facility. The granddaughters joined in Brenda’s opposition to the Petition.
A few days after she filed her opposition to the Petition, Brenda filed a motion to remove Hayward, alleging he had a conflict of interest because he previously represented Dwyer and he commissioned the appraisal report used by Dennis and Betty to support the Petition. Martin claimed Hayward “has now taken a position contrary to the best interests of his client, Rosalie. . . .” On the same day, Rosalie’s granddaughter Jonna filed a petition to remove Dwyer as temporary conservator and an objection to her appointment as permanent conservator. Jonna alleged Dwyer had neglected Rosalie’s health and mismanaged her money. Both Brenda’s motion and Jonna’s petition were extensively briefed by all parties.
Dennis and Betty later “clarified” their offer to buy the property. They proposed to buy the property for its full appraised value of $1,440,000, payable in cash in the amount of $965,958 and a promissory note, secured by a deed of trust, in the amount of $474,042 (the value of Dennis’s life estate). The promissory note “would become due and payable only upon the depletion of Rosalie Givens’ funds (from all other sources) and only in increments necessary to pay on-going monthly expenses necessary to provide for the proper care and support of Rosalie in the discretion of Rosalie’s Conservator and/or the Court. If Rosalie dies prior to the depletion of her other funds, the Note and Deed of Trust would be forgiven.”
The trial court held a hearing on the Petition in January 2007. Hayward argued in favor of granting the Petition based on the clarified offer: “There’s so many things that are going to be tapping into the loan availability that the several hundred thousand dollars that was obtained on a line of credit is going to be undoubtedly inadequate to cover all those expenses and also give my client prospective care. [¶] The only amounts coming in besides the meager amount of retirement money from the social security is the rent money, and [those] combined at present are not going to pay a care bill . . ., so we just keep borrowing and borrowing until we run out of a line of credit and we don’t have a final solution.” Hayward explained Rosalie did not qualify for a reverse mortgage because she was not living in her home, and she could not get conventional refinancing because there was no money to repay a loan. “We don’t have any money. It’s all being consumed for her monthly care and cost of administration, so I don’t see how this is a lose situation to sell the property to the person that my client intended to be vested with the property for the remainder of his natural life and to carve out the value of his life estate and save that amount.”
Jonna argued the better course would be to increase the rent and reduce Rosalie’s monthly costs. “In my response to your last request for our papers, I’ve presented two other facilities which are capable of addressing both my grandmother’s dementia and her health care needs with the feeding tube, . . . and they, because of their staff-to-client ratio, would not require any additional bedside attendants, which, according to this last bill, were $6,900 a month . . . . [¶] [T]he common sense approach is one of getting the income that she deserves out of her property. [The appraiser] had indicated that that would be $5,400 a month.”
The court granted the Petition, finding Property is the “major asset of the Trust,” Dennis was given a life estate upon Rosalie’s death, Rosalie needed funds for her care, and “it is in the best interests of conservatee, Ms. Rosalie Givens, that the real property be sold. The court ordered Brenda to sell the Property on the terms set forth in the Petition.
DISCUSSION
Brenda first argues the order granting the petition must be reversed because Dennis and Betty did not have the statutory authority to file the petition. She contends that Dwyer, Rosalie’s conservator, holds the power to revoke the trust, thus precluding any one of the beneficiaries from having fully vested rights. We disagree.
Dennis filed the petition under Probate Code section 17200, which authorizes the beneficiary of a trust to petition the court to instruct the trustee. (§ 17200, subds. (a) & (b)(6).) In the case of a revocable trust, however, the beneficiary’s rights are limited by section 15800: “Except to the extent that the trust instrument otherwise provides . . ., during the time that a trust is revocable and the person holding the power to revoke the trust is competent: [¶] (a) The person holding the power to revoke, and not the beneficiary, has the rights afforded beneficiaries under this division.”
All statutory references are to the Probate Code unless otherwise specified.
Brenda cites Johnson v. Kotyck (1999) 76 Cal.App.4th 83 to support her argument that Dennis and Betty could not file a petition under section 17200. The facts in Johnson are similar to the case before us: The beneficiary of a revocable living trust petitioned the court under section 17200 to order the trustee to prepare an accounting. The trustor, mother of both the petitioning beneficiary and the trustee, was alive but unable to care for herself. The court had appointed a professional conservator to manage her affairs and legal counsel to represent her in all conservatorship proceedings.
The court found the beneficiary had no right to petition under section 17200 because, although the trustor was incompetent, her conservator held the power to revoke. “Under the Probate Code, the legal rights of a conservatee – including the right to revoke a trust – pass to the conservator, under the close scrutiny of the superior court. The conservator may petition the court for an order ‘Exercising the right of the conservatee (i) to revoke a revocable trust or (ii) to surrender the right to revoke a revocable trust . . . .’ (§ 2580, subd. (b)((11).)” (Johnson v. Kotyck, supra, 76 Cal.App.4th at p. 87.) The court’s ability to order revocation is limited only if the trust “(A) evidences an intent to reserve the right of revocation or modification exclusively to the conservatee, (B) provides expressly that a conservator may not revoke or modify the trust, or (C) otherwise evidences an intent that would be inconsistent with authorizing or requiring the conservator to exercise the right to revoke or modify the trust.” (§ 2580, subd. (b)(11).)
This is where the Johnson case differs from the one before us. In Johnson, the trust document’s revocation clause read: “‘This declaration of trust, and the trusts evidenced thereby, may be revoked at any time by the Trustor, during the lifetime of the Trustor, by the Trustor delivering written notice of revocation to the Trustee.’” (Id. at pp. 85-86.) The court found there was “nothing in the Trust or its amendments which expressly or impliedly prevents the conservator from revoking the Trust or which reserves the right of revocation exclusively to [the trustor].” (Id. at p. 88.) But Rosalie’s trust provides: “While living and competent the Trustor may, at any time or times, by written notice filed with the Trustee, change Trustees, change any beneficiary, amend any provision hereof to such extent as may be acceptable to the Trustee, revoke this Trust in whole or in part, or withdraw all or any part of the Trust Estate.” (Italics added.) Because the trust document expressly reserves the right to revoke to the living and competent trustor, it implies her intent to preclude a conservator from revoking the trust when she is incompetent. Thus, the person holding the power to revoke, i.e., Rosalie, is incompetent, and Dennis and Betty had standing to file their petition under section 17200.
Brenda next contends there is insufficient evidence to support the conclusion that selling the property would benefit Rosalie. But Brenda merely reargues the facts that were before the trial court, insisting that her position is the superior one. “In a substantial evidence challenge to a judgment, the appellate court will ‘consider all of the evidence in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference, and resolving conflicts in support of the [findings]. [Citations.]’ [Citation.] We may not reweigh the evidence and are bound by the trial court’s credibility determinations. [Citations.]” (In re Estate of Young (2008) 160 Cal.App.4th 62, 76.)
The trial court had substantial evidence on which to base its ruling. Each side of the dispute submitted a report by a certified public accountant advocating its position. Both experts engaged in extensive number crunching of the two scenarios – selling the Property versus refinancing and retaining the Property – with each concluding its result served Rosalie’s interests better than the other. The evidence supported the conclusion that selling the Property and investing the net proceeds would allow the Trust to pay off its debts, retain a home to which Rosalie could return, if possible, maintain her current level of care, and best secure her future expenses. We will not disturb the court’s ruling.
Brenda has moved to introduce additional evidence on appeal pursuant to Code of Civil Procedure section 909. The evidence consists of letters from MediCal approving Rosalie for benefits and a spreadsheet analyzing the effects of those benefits on her financial situation. This evidence postdates the order from which the appeal is taken and does not affect the validity of the trial court’s ruling. (In re Zeth S. (2003) 31 Cal.4th 396, 405.)
Brenda next argues the court should have reviewed and considered the allegations of misfeasance in her motion to remove Hayward and Jonna’s petition to remove Dwyer before ruling on the Petition to compel the sale of the Property. The gist of her argument is that because Hayward supported the sale of the Property and Dwyer did not oppose it, they were both acting on behalf of their own interests and against the best interests of Rosalie.
Brenda’s argument is merely another way of claiming that her position below was the correct one. The motion to remove Hayward and the petition to remove Dwyer were pending at the time of the hearing on the Petition; there is nothing in the record to show why they had not yet been resolved or that their delay was other than legitimate. “‘A judgment . . . of the lower court is presumed correct. All intendments and presumptions are indulged to support it on matters as to which the record is silent, and error must be affirmatively shown.’” (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.)
The trial court denied Brenda’s motion to remove Hayward on February 21, 2007. Brenda sought relief from that order by filing a petition for writ of mandate with this court, which was denied in June 2007. (Martin v. Superior Court (June 7, 2007, G038317).)
DISPOSITION
The order granting the Petition is affirmed. Respondents are entitled to costs on appeal.
WE CONCUR: RYLAARSDAM, J., O’LEARY, J.