Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Kern County No. S-1500-PB-57433. Louie E. Vega, Judge.
Albertson Davidson, Keith A. Davidson and Stewart R. Albertson for Petitioner and Appellant.
Clifford & Brown, John R. Szewczyk and Stephen H. Boyle for Objector and Respondent.
OPINION
Cornell, J.
Marion V. Kerr appeals from an order determining that a petition she proposed to file would violate the no contest clause contained in the Vernon P. Mullin and Florence E. Mullin trust (the 1996 trust) and the two amendments thereto. Kerr argues the no contest clause contained in the 1996 trust does not apply to the two amendments to the 1996 trust executed by Florence after Vernon’s death. The amendments do not contain similar clauses. Since Kerr seeks in her proposed petition to challenge only the two amendments, she contends the trial court erred in denying her petition.
We will refer to Florence and Vernon Mullin by their first names, not out of disrespect but to avoid any confusion to the reader.
Resolution of this issue requires us to determine whether, from all of the circumstances, Florence intended the no contest clause to apply to the amendments. We conclude that the language used in the amendments conclusively demonstrates that Florence did so intend. Since the trial court reached the same conclusion, we will affirm its order.
FACTUAL AND PROCEDURAL SUMMARY
The 1996 trust left the bulk of Vernon and Florence’s estate to Florence’s sisters, Marion V. Kerr and Ethel M. Bartlett. The remainder of the estate was to be divided between Vernon’s sister and his nieces and nephews. The 1996 trust contained the following no contest clause:
“Except as otherwise provided in this instrument, the Settlors have intentionally and with full knowledge omitted to provide for their heirs. If any person, whether a beneficiary under this trust or not mentioned herein, singly or in conjunction with any other person or persons, contests in any court the validity of this trust or of the last Will of a deceased Settlor, 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 the right of that person to take, which is given to that person by this trust, shall be determined as it would have been determined if the person had predeceased the execution of the declaration of trust without surviving descendants. The provisions of this paragraph shall not apply to a surviving Settlor, nor to any disclaimer by any person of any benefit under this trust or under any Will. The Trustee is hereby authorized to defend, at the expense of the trust estate, any contest or other attack of any nature on this trust or any of its provisions.”
Florence executed a will concurrent with the execution of the 1996 trust. The will left all personal items to Florence’s two sisters, Kerr and Bartlett, and the remainder of the estate poured over into the 1996 trust to be disposed of according to the trust documents. The will also contained a no contest clause consistent with the clause contained in the 1996 trust documents.
Vernon predeceased Florence, leaving Florence as the remaining settlor and trustee of the 1996 trust. After Vernon’s death, Florence executed two documents purporting to amend the 1996 trust. The first amendment revised the beneficiaries of the 1996 trust somewhat, but still designated Kerr and Bartlett as the primary beneficiaries. The first amendment, however, added a gift of 20 percent of the estate to Cynthia Wade (Bartlett’s daughter), and set up a trust for the gift to Kerr. This provision provided for payment of income and interest to Kerr at the trustee’s discretion and limited distribution of the principal to the health, education, support and maintenance of Kerr. Such distributions were left to the discretion of the trustee. Upon Kerr’s death, the balance of Kerr’s trust was to be distributed to Bartlett, or, if Bartlett did not survive Kerr, then to Bartlett’s heirs. Florence remained the trustee, with Bartlett and Wade being successor cotrustees.
The second amendment specifically superseded the first amendment, again changing the disbursement of the 1996 trust assets upon Florence’s death. The amendment began by addressing certain mineral rights that apparently produce income. Consistent with the 1996 trust, these rights were gifted to Kerr and Bartlett. This provision now provided, however, that if either or both women did not survive Florence, their shares were to be gifted to Wade, rather than to Kerr’s and Bartlett’s heirs. Wade also received a gift of 20 percent of the remaining trust estate. Bartlett received a gift of 40 percent of the remaining estate, and to her heirs if Bartlett did not survive Florence. The remaining 40 percent of the estate was gifted to Kerr to be held in trust, with the gift going to Wade or Wade’s heirs if Kerr did not survive Florence. The amendment named Wade the trustee. She was given discretion to distribute this trust’s assets, but only for documented health care expenses. Any residual left in this trust would pass to Wade upon Kerr’s death. Wade also was named the successor trustee of the 1996 trust. In all other respects, this amendment “confirm[ed] and ratifie[d] the terms of the” 1996 trust. Florence also included a statement that she had “designated the distribution of my trust estate, independently and without persuasion. I am of sound mind and I want my estate to be executed in the manner in which the trust states. My decisions are to be final.”
Florence died on July 1, 2007. After Florence’s death, Kerr filed an application with the trial court under the Probate Code’s safe harbor provision seeking a determination of whether a proposed action challenging the two amendments would be a contest within the meaning of a no contest clause. (Prob. Code, § 21320, subd. (a).) The trial court denied the petition.
All further statutory references are to the Probate Code unless otherwise stated.
An order denying a petition that seeks a determination of whether a proposed action would violate a no contest clause is an appealable order. (§ 1303, subd. (j).)
DISCUSSION
Kerr contends the two amendments are independent instruments not subject to the no contest clause contained in the 1996 trust. Wade argues that the 1996 trust and the two amendments are a single instrument, thus causing any challenge to the amendments to invoke the provisions of the no contest clause. Kerr’s proposed action challenged the validity of the two amendments.
Safe Harbor Provision
Kerr filed her petition under section 21320, commonly referred to as a safe harbor provision. This section permits a beneficiary under an instrument that contains a no contest clause to apply to the court for a determination of whether a particular action the beneficiary is contemplating would be a contest within the terms of the no contest clause. (§ 21320, subd. (a).) When deciding a section 21320 petition, the trial court is limited to determining whether the proposed motion would invoke the no contest clause and may not consider the merits of the proposed petition. (Perrin v. Lee (2008) 164 Cal.App.4th 1239, 1244 (Perrin).)
A no contest clause imposes a condition on gifts and dispositions included in the instrument. (Burch v. George (1994) 7 Cal.4th 246, 254 (Burch).) “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. [Citation.]” (Ibid.) No contest clauses require consideration of competing public policies. While such clauses are valid in California because they discourage litigation, they are strictly construed, since they result in a forfeiture. (Ibid.; § 21303.)
Whether a proposed action results in a contest under the instrument in question ““depends upon the circumstances of the particular case and the language used.’ [Citations.] ‘[T]he 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.’ [Citation.]” (Burch, supra, 7 Cal.4th at pp. 254-255.)
The interpretation of a trust instrument is a question of law where, as here, there was no conflicting extrinsic evidence presented to the trial court. (Burch, supra, 7 Cal.4th at p. 254.)
Applicability of Section 21305
We begin by addressing section 21305. It lists three types of actions that will not violate a no contest clause unless they are expressly identified in the clause (id., subd. (a)), and 12 types of actions that will not violate a no contest clause as a matter of public policy (id., subd. (b)). Subdivision (a)(3) of section 21305 provides that a challenge to an instrument that does not contain a no contest clause is not a contest unless the instrument containing the clause specifically describes such an action as a contest.
While this section, if applicable, would be dispositive in this matter, it is not applicable. Subdivision (c) of section 21305 provides that subdivision (a) of section 21305 does not apply to an amendment to an instrument executed after January 1, 2001, unless the amendment adds or amends a no contest clause contained in an instrument executed before January 1, 2001. Since the 1996 trust was executed in 1996, and the amendments were executed after January 1, 2001, subdivision (c) precludes reliance on section 21305. Therefore, any reliance by the parties on cases interpreting section 21305 is misplaced.
Kerr relies extensively on Perrin, supra, 164 Cal.App.4th 1239 because it is factually very similar to the instant case. In Perrin, the trustor executed three amendments to her trust within weeks of her death. The trust contained a no contest clause, while the amendments did not. Like this case, the amendments confirmed and ratified the original trust agreement.
The amendments significantly reduced the estate that would be left to the trustor’s two minor children. The guardian for the children filed a petition under the safe harbor provision of the Probate Code (§ 21320) to determine whether an action to challenge the validity of the amendments would violate the no contest clause in the trust. The guardian alleged in the proposed pleading that the amendments were the result of undue influence.
The appellate court held the no contest clause in the trust did not apply to the three amendments, and thus the proposed pleading would not constitute a contest under the code. (Perrin, supra, 164 Cal.App.4th at pp. 1249-1250.) This is the same result Kerr urges us to reach in this case. Although we agree with the reasoning and result in Perrin, it is inapposite. The result in Perrin was based on an analysis of section 21305, subdivision (a)(3). This section states that a challenge to the validity of an instrument other than the instrument that contains the no contest clause is not a contest within the meaning of a no contest clause unless the no contest clause expressly identifies the action as a violation. The proposed action was a challenge to the three amendments, which did not contain no contest clauses. The no contest clause in the trust did not expressly state that it applied to all amendments to the trust. Accordingly, the appellate court concluded that section 21305, subdivision (a)(3) compelled the conclusion that the proposed action was not a contest. (Perrin, at pp. 1247-1249.)
“The broad language of the no contest clause notwithstanding, it remains the fact that the Guardian’s proposed petition constitutes ‘[a] challenge to the validity of an instrument … other than the instrument containing the no contest clause,’ within the meaning of section 21305 subdivision (a)(3). It also remains the fact that the Trustor failed to address whether a challenge to an amendment would constitute a violation of the no contest clause of the Trust. Section 21305, subdivision (a)(3) cannot be ignored.
“Perhaps the trial court in [Estate of Rossi (2006) 138 Cal.App.4th 1325] explained it best by stating that ‘“[a]t the end of it all, Section 21305[, subdivision] (a)(3) must be read for itself, without the preconceptions of a probate lawyer steeped in traditional practice. It requires an explicit mention of the amendment, or codicil, in the original no-contest clause or the amendment/codicil must contain a no-contest clause. As the Senate Judiciary Committee analysis proclaimed: ‘generic no contest clauses [are] obsolete.’”’ [Citation.] Estate planning practitioners must draft each no contest clause with particularity, considering in each case which instruments are intended to be subject to the no contest clause, and specifically identifying each such instrument.” (Perrin, supra, 164 Cal.App.4th at p. 1249.)
The only portion of Perrin that arguably is applicable to this case relates to the question of whether Florence successfully incorporated by reference the no contest clause into the amendments. The trustor in Perrin stated in each amendment that the remaining terms of the trust were “confirm[ed] and ratif[ied].” (Perrin, supra, 164 Cal.App.4th at p. 1243.) The appellate court concluded that this term was insufficient to accomplish the incorporation by reference asserted by the trustee. (Id. at p. 1248.) This result was reached, of course, within the context of the statutory scheme that applied at the time the trust was executed.
Perrin does not compel the result urged by Kerr for two reasons. First, as explained above, the statutory scheme that compelled the result in Perrin is not applicable to this case. Second, as we shall explain, Florence not only ratified the trust when she executed the second amendment, she also added additional language that clarified her intent. Therefore, Kerr’s reliance on the Perrin is misplaced.
Analysis
Our task is to ascertain from the trust instrument and the amendments whether it was Florence’s intent to make the amendments subject to the no contest clause. If that intent appears “unequivocally,” then we must enforce that intent. (Burch, supra, 7 Cal.4th at p. 256.)
It is clear that if Kerr filed the proposed challenge directly against the 1996 trust, the action would be a contest resulting in Kerr forfeiting any gift under the 1996 trust. Kerr is a beneficiary under the 1996 trust, and she is seeking to invalidate one of its provisions, the provision dividing Florence’s estate, therefore falling squarely within the terms of the no contest clause.
The first amendment does not specifically incorporate the 1996 trust’s no contest clause. It provides, however, that section 7.2 of the 1996 trust be deleted and replaced with the section 7.2 included in the amendment. Section 7.2 is the provision that distributes the trust estate after Florence’s death. The amendment also added a new section, section 7.6, to the 1996 trust, which established a trust for the gift Kerr was to receive pursuant to section 7.2, and which provided for Kerr to receive the income from this trust. Upon her death, the principle balance in this trust was to be distributed to Bartlett, or Bartlett’s heirs, if Bartlett predeceased Kerr.
We need not dwell on the first amendment because it was superseded by the second amendment. We note, however, that the first amendment did not replace the 1996 trust, but instead replaced section 7.2 of the 1996 trust. This amendment also expressly ratified the 1996 trust in every other respect.
The second amendment replaced the first amendment and again deleted section 7.2 of the 1996 trust (as amended). The second amendment, as pertinent here, provided that Kerr and Bartlett would share certain mineral rights, but stated that if either Kerr or Bartlett predeceased Florence, then their share of the mineral rights would pass to Wade instead of Kerr and Bartlett’s heirs. Kerr’s portion of the remainder of the estate again was placed in trust in a new section 7.6. In section 7.6, Wade was named the trustee and, as trustee, was given complete discretion to distribute all funds held in trust for the sole purpose of Kerr’s health care. Upon Kerr’s death, after payment of taxes, medical costs, and funeral expenses, the remaining trust funds would pass to Wade or her heirs. The second amendment also amended section 9.1 of the 1996 trust by naming Wade as the successor trustee.
The second amendment also ratified “[i]n every other respect,” the terms of the 1996 trust. It contains a statement, directly above Florence’s signature, which states, “I Florence E. Mullin have designated the distribution of my trust estate, independently and without persuasion. I am of sound mind and I want my estate to be executed in the manner in which the trust states. My decisions are to be final.” (Italics omitted.)
While there is no explicit reference to the no contest clause in the 1996 trust, the second amendment provides compelling evidence that Florence intended that the no contest clause in the 1996 trust would apply to the second amendment. First, the second amendment specifically ratifies each term of the 1996 trust that was not amended. The no contest clause was not amended, thereby indicating an intent that the second amendment be subject to the no contest clause. Second, Florence’s statement that the estate was to be executed in the manner indicated and her declaration that her decisions were to be final suggest that Florence anticipated there would be unhappiness with the amendment. Nevertheless, these statements made Florence’s intentions clear; it was her estate and her decision on how it should be divided upon her death. These statements also provide strong evidence that Florence did not want her decisions challenged. The most effective method of eliminating any challenges to the amendment was to make the entire trust subject to the no contest clause. Since Florence was familiar with no contest clauses, it seems clear that she intended the second amendment to be subject to the clause contained in the 1996 trust.
In an attempt to overcome this conclusion, Kerr claims the strict construction requirement should prevail. It is true that no contest clauses must be “strictly construed.” (§ 21304.) The cases cited by Kerr, however, do not support her arguments.
Meyer v. Meyer (2008) 162 Cal.App.4th 983 (Meyer) held that a judicial decree of distribution did not incorporate a no contest clause contained in a will. The will distributed the assets of the estate to three individuals to be held in trust, and thereafter gave detailed instructions for operation of the trust. The trust was established under four judicial decrees of distribution. The primary asset of the estate was a ranch. The appellant filed a safe harbor petition to determine if a petition to obtain information about the trust assets would violate the no contest clause in the will. The appellate court reached the unremarkable conclusion that since none of the decrees of distribution contained a no contest clause, and none of them contained language that would permit incorporation of the will’s no contest clause, the petition appellant sought to file would not violate the no contest clause found in the will. (Id. at pp. 993-996.)
The appellate court also found that the terms of the no contest clause, which referred only to the will or any codicil thereto, precluded a finding that the testator intended the no contest clause to apply to the trust or the judicial decrees. (Meyer, supra, 162 Cal.App.4th at pp. 996-997.) “The no contest clause of the Will does not itself refer to contests regarding the Trust. Rather, it refers to ‘any contest of this will, or of any such codicil, or of any provision of this will, or of any such codicil.…’ To constitute a violation of a no contest clause, an act must come strictly within the express terms of that clause [citation] and it must appear ‘from these provisions [that the trustor] unequivocally intended that [the beneficiary] would forfeit the distribution provided for [the beneficiary] under the trust instrument.…’ [Citation.] ‘Applying the rule of strict construction …, a no-contest clause in decedent’s will will not cause a forfeiture of interests in the will following an unsuccessful attack on a related trust instrument, unless the clause is broad enough to specifically disinherit contesting trust beneficiaries. [Citation.]’ [Citations.]” (Id. at p. 996.)
Meyer addresses the situation where two separate instruments, one with a no contest clause and the other without such a clause, are interpreted. The court’s conclusion that a no contest clause in a will will not be extended to a related trust is consistent with the requirement of strict construction of such clauses. This is the same conclusion reached by the court in Estate of Lindstrom (1987) 191 Cal.App.3d 375. As in Meyer, the estate included a will and a trust. Only the will had a no contest clause. The language of the clause referred only to the will. The court, applying the strict construction requirement, held the no contest clause could not be used to deprive the trust beneficiaries of their gifts. (Lindstrom, at pp. 382-384.)
Here, however, we must determine whether an amendment to a trust is subject to the no contest clause in the trust. The amendment by itself is meaningless. It is only when the amendment is considered in conjunction with the trust that the amendment becomes significant. And in the amendment, Florence specifically ratified every term of the original trust, including the no contest clause. Because of these factual distinctions, Meyer is inapposite.
Estate of Kaila (2001) 94 Cal.App.4th 1122 involved a claim by the testator’s live in companion, Maria. The testator’s will left Maria 20 percent of his estate, with the remainder being divided between the testator’s surviving siblings. Maria asked the trial court under the safe harbor provisions to determine whether she could file a petition claiming that she had a domestic partnership agreement with the testator and was the owner of one-half of his assets under the agreement. The appellate court merely held that parole evidence was admissible to determine the testator’s intent regarding whether a proposed action would violate the no contest clause. (Id. at p. 1137.) There is nothing in this case that would support the proposition Kerr argues here since extrinsic evidence was not submitted by the parties in this action. The general rules of interpretation do not provide any further assistance.
Similarly, Burch does not assist Kerr. The trust in Burch included a no contest clause. Various assets were transferred by husband into the trust. Husband claimed these assets as his separate property. As a result of his estate plan, wife would receive various assets, while other assets would be transferred to husband’s children from a previous marriage. Wife claimed she had a community property interest in some of the assets transferred into the trust. She asked, under the safe harbor provisions, whether an action to determine the community interest in these assets would violate the trust’s no contest clause. The Supreme Court said yes. This conclusion by the Supreme Court does not provide us with any assistance since the facts, once again, are completely different from those presented here.
The one case that is most analogous to the situation presented in this appeal is Estate of Hite (1909) 155 Cal. 436 (Hite). Hite executed a will and on two later dates executed two codicils. The will contained a no contest clause, while the codicils did not. A challenge to the codicil raised the issue of whether the will’s no contest clause applied to the challenge to the codicil. The Supreme Court recognized that a no contest clause must be strictly construed because it may result in forfeiture. (Id. at p. 446.) The court then stated that the intent of the testator must be discerned when determining whether a will and its codicils should be treated as a single instrument or separate instruments. (Id. at p. 447.) Since the codicils merely modified the original will by adjusting the gifts given to various beneficiaries, and the testator specifically ratified the will in each codicil, the Supreme Court concluded that Hite intended that the no contest clause would apply to any contest to a codicil. (Ibid.)
Kerr urges us to ignore Hite for two reasons. First, she claims the law has changed, thereby rendering the holding in Hite obsolete. While it is true the statutes have changed to some extent, the controlling principles found in Hite, and repeated in Burch, are the same principles that control the result in this case.
Second, Kerr attempts to distinguish Hite. Kerr points out Hite specifically stated in each codicil that he “reread, reconsidered, reordained, and republished, ratified and confirmed his will as of the dates respectively of the codicils.” (Hite, supra, 155 Cal. at p. 447.) Florence, on the other hand, merely stated in the amendments that she confirmed and ratified the remaining terms of the trust. According to Kerr, the difference in language requires a different result. We disagree.
Hite does not set a standard to which all other instruments must be compared. Florence was not required to utilize the same language as in Hite to accomplish the same result. While the language is not identical, Florence’s intent was unequivocally expressed. Accordingly, the trial court reached the correct result when it concluded that Kerr’s proposed action would violate the no contest clause in the 1996 trust if it were filed.
DISPOSITION
The order appealed from is affirmed. Wade, as trustee, is to recover her costs on appeal.
WE CONCUR: ARDAIZ, P.J., VARTABEDIAN, J.