Opinion
2d Civil No. B202191
6-19-2008
In re the Matter of the MANUEL L. and SOFIA S. RODRIGUES Revocable Living Trust Agreement dated October 29, 1996 SANTIAGO LUEVANOS, Respondent, v. RACHEL FLORES, Appellant
Law Offices of Richard L. Francis, Richard L. Francis, for Appellant. Cunningham & Associates, H. Miles Lang, for Respondent.
Not to be Published
This case concerns a trust instrument containing a no contest clause. Pursuant to the trust instrument, the trust estate should have been divided into a decedents trust and a survivors trust. Rachel Flores appeals from an order determining that a challenge by Santiago Luevanos, respondent, to an amendment of the survivors trust will not trigger the no contest clause as to the decedents trust. We affirm.
The order is appealable. (Scharlin v. Superior Court (1992) 9 Cal.App.4th 162, 167.)
Factual and Procedural Background
In 1996 Manuel Rodriguez (Manuel) and Sofia Rodriguez (Sofia), as husband and wife, executed a declaration of trust (Declaration) creating a revocable inter vivos trust. The Declaration provides that, upon the death of the first of the trustors, the trustee shall divide the trust estate into two shares designated as the "Survivors Trust" and the "Decedents Trust." The surviving trustor has the power to amend or revoke the Survivors Trust. However, "the Decedents Trust . . . may not be amended or revoked by any person." The net income of the Decedents Trust is to be paid to the surviving trustor during his or her lifetime.
Upon the death of the surviving trustor, the Survivors Trust becomes irrevocable. The trustee is directed to distribute the property of both trusts pursuant to the plan of distribution set forth in the Declaration. The plan allocates to respondent a house in Oxnard (the House). Sofia was respondents mother, and Manuel was his stepfather.
The Declaration contains a no contest clause providing that if any beneficiary "asserts any claim . . . or other right or interest against or in a [trustors] estate, . . . or any properties of this Trust, other than pursuant to the express terms hereof . . ., or directly or indirectly contests, disputes, or calls into question, before any court, the validity of this instrument . . ., then: [¶] . . . Such beneficiary shall thereby absolutely forfeit any and all beneficial interests of whatsoever kind and nature which such beneficiary might otherwise have under this instrument . . . ."
Manuel died in 2002, and Sofia became sole trustee of the trust. Pursuant to the Declaration, she should have allocated one-half of the trustors community property interest in the House to the Decedents Trust and the other half to the Survivors Trust. But she did not allocate any property to either trust.
In 2004 Sofia amended the Declaration to provide that, upon her death, her 50 percent community property interest in the House shall be distributed in equal shares to the five surviving children of her marriage to Manuel: appellant, Albert Rodriguez, Yolanda Aguilera, Manuel Rodriguez, and Edward Rodriguez. This amendment altered the original plan of distribution, which gave respondent the trustors entire interest in the House.
In January 2007 Sofia died at the age of 90. Her death certificate shows that she had been suffering from "dementia of Alzheimers type." Following Sofias death, respondent sought to challenge her 2004 amendment of the Declaration. In May 2007 he filed a petition under Probate Code section 23120 requesting a determination that his challenge would not trigger the no contest clause of the Declaration. Respondent alleged that appellant had wrongly procured the amendment" by mistake, fraud, duress, menace, and/or undue influence."
A petition under Probate Code section 23120 (hereafter section 23120) has been characterized as a "safe harbor" petition allowing a beneficiary to obtain a determination whether his or her action will trigger a no contest clause in an irrevocable instrument. (See Zwirn v. Schweizer (2005) 134 Cal.App.4th 1153, 1155, fn. 4.) Section 23120 provides in relevant part: "(a) 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. [¶] (b) A no contest clause is not enforceable against a beneficiary to the extent an application under subdivision (a) is limited to the procedure and purpose described in subdivision (a)."
The trial court found that Sofias 2004 amendment had "adopted the no-contest clause" of the Declaration. It ruled that an unsuccessful challenge by respondent to the 2004 amendment would trigger the no contest clause as to the Survivors Trust but not as to the Decedents Trust. The court relied on Scharlin v. Superior Court, supra, 9 Cal.App.4th 162.
Appellant appealed and filed an opening brief. Respondent failed to file a brief.
"`[S]ince the appellant has the affirmative burden to show error whether or not the respondents brief has been filed, the respondents failure to file does not require an automatic reversal. [Citations.] [Citation.]" (Miles v. Speidel (1989) 211 Cal.App.3d 879, 881.)
Standard of Review
"The interpretation of a will or trust instrument presents a question of law unless interpretation turns on the credibility of extrinsic evidence or a conflict therein. [Citations.]" ( Burch v. George (1994) 7 Cal.4th 246, 254.) Here no extrinsic evidence was presented. Thus, "it is our duty to independently construe the trust instrument." ( Ibid. )
Discussion
"An in terrorem or no contest clause in a will or trust instrument creates a condition upon gifts and dispositions provided therein. [Citation.] In essence, a no contest clause conditions a beneficiarys right to take the share provided to that beneficiary under such an instrument upon the beneficiarys agreement to acquiesce to the terms of the instrument. [Citation.] [¶]. . . 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 testators intent. [Citations.]" ( Burch v. George, supra, 7 Cal.4th at p. 254.)
We agree with the trial court that, pursuant to Scharlin v. Superior Court, supra, 9 Cal.App.4th 162, an unsuccessful challenge by respondent to the 2004 amendment will not trigger the no contest clause as to the Decedents Trust. In Scharlin the trustors were also husband and wife. The trust instrument provided that, upon the death of the first of the trustors to die, the trust estate shall be divided into a survivors trust and a decedents trust. The decedents trust would be irrevocable, while the survivors trust would be revocable and amendable during the surviving trustors lifetime.
After husbands death, wife amended the survivors trust to favor her daughter over her son. The original trust instrument provided that, except for the trustors personal property, the trust estate shall be equally divided between the trustors two children. The amendment provided that, following wifes death, all of the assets of the survivors trust shall be distributed to daughter. Both the original trust instrument and the amendment contained a no contest clause.
Son wanted to challenge the amendment on the ground that it had been obtained through daughters exercise of duress or undue influence. Pursuant to section 21320, he sought a determination whether his challenge would trigger the no contest clause as to the decedents trust. He conceded that it would trigger the no contest clause as to the survivors trust.
The appellate court concluded that sons "proposed petition attacking the amendment to [the survivors trust] on the grounds it was obtained by duress or undue influence, even if unsuccessful, does not constitute a contest as to [the decedents trust]." ( Scharlin v. Superior Court, supra, 9 Cal.App.4th at p. 171.) The court reasoned that sons contest of the amendment would not challenge the provisions of the original trust agreement, such as the surviving trustors right to amend the survivors trust. Instead, sons contest would "amount[] to an attack on how the amendment occurred, namely, by the alleged exercise of duress or undue influence upon the [surviving trustor]. . . . [Son] argues the surviving [trustor] did not in fact amend the trust, and the so-called amendment was the result of duress or undue influence, not the free will of the [surviving trustor]." ( Id., at p. 170.)
Daughter argued that the no contest clause in the amendment of the survivors trust would preclude son from receiving any property from the decedents trust if his challenge to the amendment were unsuccessful. The court rejected this argument: "It is clear from the [original trust] agreement that, while [the surviving trustor] had the right to amend the provisions of [the survivors trust], she had no right to amend or revoke or otherwise change any of the provisions, including the no contest clause, of the original trust agreement as to [the decedents trust]. . . . To the extent, therefore, that [daughter] argues the amendments no contest clause controls, she is in error. As to [the decedents trust], the clause in the original trust agreement controls." (Scharlin v. Superior Court, supra, 9 Cal.App.4th at pp. 170-171.)
Appellant contends that Scharlin is distinguishable because Sofia never divided the trust estate into a Survivors Trust and a Decedents Trust. Appellants contention elevates form over substance. Sofias 2004 amendment could have affected only the Survivors Trust. The Declaration makes it clear that, after the death of the first trustor to die, the Survivors Trust shall be the sole amendable trust instrument.
Appellant further contends that Scharlin is distinguishable because here the Declaration provides that, after the death of the surviving trustor, the Decedents Trust and the Survivors Trust shall be "recombined into a single Trust for distribution." Appellant alleges that "Scharlin unlike the factual situation found here, contemplates a situation where the two trusts remained separated through the commencement of litigation."
The heading of section 4.02 of the Declaration implies that, after the surviving trustors death, the Survivors Trust and the Decedents Trust shall be combined for the purpose of distribution. The heading states: "Combination of the Survivors Trust and the Decedents Trust." But this does not constitute a valid distinction between the instant case and Scharlin. Because the 2004 amendment affected only the Survivors Trust, an unsuccessful challenge by respondent to the amendment could trigger the no contest clause only as to that trust.
Appellant argues that the applicable authority here is not Scharlin but Estate of Hite (1909) 155 Cal. 436. But in Scharlin the court found Hite to be inapplicable. The Scharlin court distinguished Hite as follows: "In Hite, the testator made a will containing a no contest clause and later executed two codicils altering certain legacies. While the codicils did not contain no contest clauses, each reaffirmed and republished the original will except as to the legacies modified by it. The Supreme Court rejected a claim the no contest clause applied only to attacks on the will itself and not the codicils because the codicils expressly reaffirmed the will except as modified. [Citation.] But a will and a codicil to it are both revocable and subject to amendment until the testator dies, at which time they simultaneously become effective. Here, a part of the trust became irrevocable upon [husbands] death and a part of it remained revocable and amendable until [wife] died. While [wife] could make changes to [the survivors trust], she could not do the same as to [the decedents trust]." (Scharlin v. Superior Court, supra, 9 Cal.App.4th at p. 171, fn. 3.)
Scharlin is on point and we agree with its holding. The trial court, therefore, did not err.
Disposition
The order of the trial court is affirmed. Costs on appeal, if any, are awarded to respondent.
We concur:
GILBERT, P.J.
COFFEE, J.