Opinion
NOT TO BE PUBLISHED
Appeal from a judgment of the Superior Court of Orange County No. 05CC13452, W. Michael Hayes, Judge.
Thomas N. Jacobson for Cross complainants and Appellants.
Rebecca A. Price, in pro. per., for Cross defendant and Respondent.
OPINION
O’LEARY, J.
Joan Price Lehman, Thomas Price, William Price, and Peter Price appeal from a judgment on their cross complaint against Rebecca A. Price (formerly Rebecca A. Scales) who was married to Lehman’s father, Richard M. Price. Prior to his death, Price filed a petition for dissolution of his marriage to Scales. After having received a $411,000 settlement payment from Price’s trust, Scales sued Lehman claiming she had a further interest in the trust’s remaining assets. Lehman’s cross complaint alleged Scales’ suit constituted a breach of contract and a violation of the trust’s no contest clause. The trial court entered judgment ruling against Scales on her complaint and against Lehman on the cross complaint.
For clarity, we will refer to the appellants collectively and in the singular as “Lehman” (unless the context indicates otherwise), to respondent Rebecca A. Price as “Scales,” and to the decedent as “Price.”
Both Scales and Lehman appealed the judgment. Scales’ appeal was dismissed after she failed to file an appellant’s opening brief, despite having been granted numerous extensions, and remittitur was issued as to her appeal. On her appeal, Lehman contends Scales should have been ordered to forfeit all payments she received from the trust and damages should have been awarded due to Scales’ breach of contract. We find no grounds on which to disturb the trial court’s judgment and affirm.
FACTS
The Premarital Agreement
Price, a widower, and Scales, a divorcee, were married March 31, 2001. Price was about 80 years old; Scales was 54 years old. Price had assets valued at over $3 million; Scales had assets worth around $300,000. A premarital agreement was signed by them on March 29, 2001 (the Premarital Agreement). Scales was represented by independent counsel in negotiating and executing the Premarital Agreement. The Premarital Agreement recited that Price and Scales both had adult children from their prior marriages. The Premarital Agreement contained each party’s disclosure of their assets and liabilities at the time of marriage, which they agreed would remain separate property.
The Premarital Agreement recited that Price and his first wife’s assets had been placed into two trusts: a family trust for the benefit of Price’s children (i.e., Lehman and her brothers), that became irrevocable upon his first wife’s death; and a spousal trust over which Price had control. Scales waived any interest in the family trust. Price and Scales agreed that after their marriage, Price would transfer all the assets in the spousal trust into a new revocable living trust to be called the Richard M. Price and Rebecca A. Price Trust (hereafter the Trust).
The Premarital Agreement provided if Price and Scales were still married at the time of Price’s death, Scales would be the sole beneficiary of the Trust. If, however, prior to Price’s death a petition for dissolution of marriage, legal separation, or annulment was filed by either, Scales would receive a lump sum payment of $211,000 as settlement of her property rights, plus upon Price’s death, she would receive a distribution from the Trust of $100,000 for each year they had been married.
The Trust
On October 10, 2001, Price as trustor established the Trust, and transferred the assets from the spousal trust—approximately $1.1 million in value—to the Trust. The Trust contained distribution provisions consistent with the Premarital Agreement—i.e., if still married, Scales got it all, but if a petition for dissolution of their marriage had been filed before Price’s death, Scales would receive $211,000, plus $100,000 for each year they were married, and the rest of the Trust was to be distributed to Price’s children (i.e., Lehman).
The Trust contained a no contest provision that stated as follows: “If any beneficiary under this Declaration of Trust, either alone or with other persons or entities, shall in any manner directly or indirectly contest, attack, thwart or otherwise seek to impair or invalidate any part or provision of the ‘Trustor’s estate plan’, then any share or interest under this trust instrument set aside for that beneficiary is revoked and shall be disposed of in the same manner as if the contesting beneficiary, as provided in this instrument, had predeceased Trustor without issue. [¶] For the purpose of construing this no contest clause, the term ‘Trustor’s estate plan’ shall include: [¶] (a) Trustor’s current Will and all codicils thereto. [¶] (b) This Declaration of Trust and any amendments thereto. [¶] (c) Trustor’s Premarital Agreement with Rebecca A. Scales.”
Although the Trust originally designated Price as trustee and Scales as successor trustee, an amendment dated June 2003, named Lehman as successor trustee. At trial, Scales contended the amendment was a forgery. Price also executed a pour-over will bequeathing the residue of his estate to the Trust and naming Lehman as executor.
The Petition for Dissolution & Marital Settlement Agreement
Price and Scales separated in January 2004. On March 15, 2004, Price filed a petition for dissolution of his and Scales’ marriage. At trial, Scales contended Price’s signature on the petition was a forgery.
On October 30, 2004, Price and Scales executed a marital settlement agreement (the Marital Settlement Agreement), which stated it was intended as a complete settlement of their rights and obligations arising out of the marriage. The Marital Settlement Agreement stated there was no community property acquired during the marriage, and all property listed in the Premarital Agreement as separate property remained separate property. They acknowledged that of the $211,000 Price owed Scales pursuant to the Premarital Agreement, he had already paid her $100,000. Price reaffirmed the Trust provision that upon his death, Scales was entitled to receive from the Trust $100,000 for each year they were married. The parties waived all rights to spousal support and released each other from all further claims. At trial, Scales asserted she only signed the Marital Settlement Agreement with the understanding she and Price would be reconciling.
Distribution of the Trust
Price died on December 25, 2004. On May 11, 2005, Scales signed a document called “Receipt on Distribution and Release of Trustee” (the Release of Trustee Agreement). She acknowledged having received from Lehman, as trustee of the Trust, $311,000 (the remaining $111,000 divorce payment, plus $200,000 for two years of marriage to Price). Scales acknowledged the amount paid constituted payment in full of all sums due to her pursuant to the provisions of the Premarital Agreement and the Trust. Scales released Lehman personally and as trustee of the Trust, and Price’s estate from all claims. She specifically waived all rights under Civil Code section 1542.
The Pleadings
On December 23, 2005, Scales, in propria persona, filed an unintelligible breach of contract complaint against Lehman. By May 12, 2006, Scales had retained counsel and a first amended complaint was filed. The first amended complaint named Lehman (and her brothers), as individuals (i.e., the action was not against Price’s estate and did not name Lehman in any representative capacity). Scales alleged she had a legal and/or equitable interest in the assets of the Trust beyond the payment she had already received, and following Price’s death, Lehman and her brothers had improperly taken control of and disposed of the Trust’s assets. Scales’ complaint contained causes of action for fraud, unjust enrichment, constructive trust, accounting, and declaratory relief. At trial, Scales contended she was entitled to all the assets in the Trust because she was still married to Price and was still the rightful successor trustee of the Trust.
Lehman filed a cross complaint against Scales containing two causes of action. The first was for breach of contract alleging Scales’ action constituted a breach of the Marital Settlement Agreement between Price and Scales. The second was for breach of the no contest clause contained in the Trust. Lehman alleged Scales’ action constituted a challenge to Price’s estate plan, and thus, she must forfeit the entire $411,000 that was paid to her.
Trial/Judgment/Appeals
A three day court trial took place at which Scales represented herself. After Scales rested her case, Lehman made a motion for judgment under Code of Civil Procedure section 631.8, which was denied. Counsel for Lehman then indicated he would need about one day to present evidence on Lehman’s cross complaint, but when the court commented, “could I send you a clearer message about what I’m about to do?” counsel stated Lehman would rest too. The court then asked, “You want a trial, I’ll give you a trial. [¶]... [¶] I will not pressure anybody. I will not have that on my conscience.” Counsel replied he did not feel pressured and emphasized to the court that, “On my... own free will and volition, [I am] telling you that we will rest and I’m prepared to do a closing argument.” The court asked counsel if he wanted a few moments to discuss the matter with his clients, and a short recess was taken. Counsel returned and informed the court Lehman understood there had been no promises as to how the court intended to rule, and of her and counsel’s “own free will[,]” they wanted to rest without presenting further evidence.
The trial court then explained to the parties it tentatively intended to rule in favor of Lehman on the complaint and in favor of Scales on the cross complaint. The court then inquired of Lehman’s counsel if he felt “sandbagged,” and if, in view of the court’s tentative ruling, Lehman wanted to go ahead and put on a case on the cross complaint. Counsel said Lehman did not and would proceed directly to closing argument. In closing argument, Lehman’s counsel argued Scales’ action was an attempt to undo Price’s estate plan and thus violated the no contest clause of the Trust. When asked what relief Lehman sought, counsel replied, “We are seeking to have the $411,000 returned to [the Lehman beneficiaries] and then distributed in accordance with the Trust.” Counsel made no argument concerning the breach of contract cause of action in the cross complaint.
The court took the matter under submission. A written statement of decision was not requested. A judgment was entered on June 20, 2007. The court ruled against Scales on her complaint and against Lehman on the cross complaint. The court declared Lehman to be the prevailing party for purposes of costs.
Scales and Lehman filed notices of appeal from the judgment. After being relieved several times from her various defaults on appeal (for her failure to deposit fees, file a case information statement, designate a record, properly serve documents), and having received numerous extensions of time to file her appellant’s opening brief, Scales’ appeal was dismissed because she failed to file an opening brief (Cal. Rules of Court, rule 8.220(a)(1)), and remittitur was issued as to her appeal. Lehman filed an appellant’s appendix and an opening brief, and requested oral argument. Scales did not file a respondent’s brief, but requested oral argument. Although Scales forfeited the right to oral argument, we permitted her to present oral argument. The court received handwritten correspondence from Scales on January 14, 2009, January 16, 2009, January 23, 2009, February 5, 2009, and February 19, 2009, which are unintelligible, do not comply with the California Rules of Court, and have not been considered.
DISCUSSION
Lehman contends the trial court erred by entering judgment in Scales’ favor on the cross complaint. She argues Scales’ action constituted a contest of the Trust, violating the Trust’s no contest clause and requiring that Scales forfeit the entire $411,000 paid to her. Lehman also argues she was entitled to judgment on her breach of contract cause of action.
1. No Contest Clause
Whether Scales’ action against Lehman constituted a contest within the meaning of the no contest clause in the Trust is a question of law we review de novo. (Meyer v. Meyer (2008) 162 Cal.App.4th 983, 990.) We agree with the trial court, it was not.
A no contest clause “essentially acts as a disinheritance device, i.e., if a beneficiary contests or seeks to impair or invalidate the trust instrument or its provisions, the beneficiary will be disinherited and thus may not take the gift or devise provided under the instrument.” (Burch v. George (1994) 7 Cal.4th 246, 265 (Burch).) “The purpose of no contest clauses ‘is to discourage will contests by imposing a penalty of forfeiture against beneficiaries who challenge the will.’” (Estate of Kaila (2001) 94 Cal.App.4th 1122, 1128 (Kaila).) “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. [¶] No contest clauses are valid in California and are favored by the public policies of discouraging litigation and giving effect to the purposes expressed by the testator.” (Burch, supra, 7 Cal.4th at p. 254, citation omitted; see also Prob. Code, § 21300, subd. (d) [no contest clause is “a provision in an otherwise valid instrument that, if enforced, would penalize a beneficiary if the beneficiary files a contest with the court”].)
“Determination of whether a prohibited contest has occurred must be made on a case by case basis. [Citation.]” (Estate of Lindstrom (1987) 191 Cal.App.3d375, 381) And “‘[w]hether there has been a “contest” within the meaning of a particular no contest clause depends upon the circumstances of the particular case and the language used.’” (Burch, supra, 7 Cal.4th at pp. 254 255.) “Each case depends upon its own peculiar facts and thus case precedents have little value when interpreting a trust.” (McIndoe v. Olivos (2005) 132 Cal.App.4th 483, 487.)
Although Lehman correctly notes the intent of Scales’ action was to obtain more than the $411,000 she received from the Trust, she was not challenging the validity of the Trust or seeking to inherit sums outside the Trust. The gravamen of her complaint (and her case at trial) was the Trust was not properly applied and distributed due to alleged fraud by Lehman. The Premarital Agreement and the Trust provided that if Price and Scales were still married at the time of Price’s death, Scales was the sole beneficiary of the Trust. Scales contended that various documents were not signed by Price. The Trust originally named Scales as successor trustee. She claimed the amendment naming Lehman successor was a forgery and the petition for dissolution of marriage was a forgery. (See Prob. Code, § 21305, subd. (a)(3) [challenge to validity of instrument other than the instrument containing the no contest clause is not a contest].) Had she been successful in establishing Price had not filed a petition for dissolution of their marriage, she arguably would have been entitled to receive the entire Trust corpus, in accordance with the terms of the Trust.
Furthermore, even if Scales’ action was construed to be a contest of the Trust, we would nonetheless conclude forfeiture of the $411,000 Scales had already received was not an available remedy. There was an independent basis for the payment of $411,000 to Scales—namely, the Marital Settlement Agreement. (See Genger v. Delsol (1997) 56 Cal.App.4th 1410, 1424, fn. 10.) The Trust did not mention the Marital Settlement Agreement as one of the documents covered by the no contest clause, and there was arguably separate consideration for that agreement—Scales’ waiver of any marital property and/or support rights against Price.
2. Breach of Contract
Lehman also contends the trial court erred by ruling in Scales’ favor on the breach of contract cause of action. Lehman contends by filing her complaint, Scales breached the Marital Settlement Agreement and the Release of Trustee Agreement. Lehman argues she and her brothers are third party beneficiaries of both agreements and should be compensated for the attorney fees expended in defending against Scales’ complaint.
Lehman did not raise these arguments below and cannot raise them now on appeal. (Holmes v. California Nat. Guard (2001) 90 Cal.App.4th 297, 314; In re Marriage of Eben King & King (2000) 80 Cal.App.4th 92, 117, fn. 17; see also Prouty v. Gores Technology Group (2004) 121 Cal.App.4th 1225, 1233 [“question of fact whether a particular third person is an intended beneficiary of a contract”].) Although the cross complaint contained a cause of action for breach of the Marital Settlement Agreement and the Release of Trustee Agreement, Lehman presented no evidence on that cause of action—and in particular no evidence of damages, a necessary element of the cause of action. (See Navellier v. Sletten (2003) 106 Cal.App.4th 763, 769, 775.)
On appeal, Lehman states evidence as to damages was not introduced because the trial court decided to “‘split the baby’ and was in a hurry to complete the trial,” and we should remand for a limited trial on damages. But the record indicates the court repeatedly asked counsel if Lehman wanted to present evidence to support the cross complaint, and counsel stated he did not and would make his case through closing argument alone. In closing argument, counsel argued only as to Lehman’s claim Scales violated the no contest clause of the Trust and should be ordered to forfeit the $411,000 she had received from Price and his estate. Counsel never mentioned the separate breach of contract claim based on the Marital Settlement Agreement or Release of Trustee Agreement, the third party beneficiary theory, or discussed any damages suffered as a result of Scales’ alleged breach of the Marital Settlement Agreement or Release of Trustee Agreement. Accordingly, we decline to consider this contention further.
DISPOSITION
The judgment is affirmed. In the interests of justice, the parties shall bear their own costs on this appeal. (Cal. Rules of Court, rule 8.278(a)(5).)
WE CONCUR: SILLS, P. J., RYLAARSDAM, J.