Opinion
A149850
09-15-2017
SUSAN MEYERS, Plaintiff and Appellant, v. THOMAS DRAIN, et al., Defendants and Respondents; LAURIE MEYERS, Defendant and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Sonoma County Super. Ct. No. SCV-257264)
In this quiet title action, plaintiff Susan Meyers appeals following the trial court's order granting judgment on the pleadings to defendants Thomas Drain and Roy Loessin. Defendant Laurie Meyers cross-appeals, contending the trial court should have also granted her judgment on the pleadings. We affirm the judgment in Susan's appeal, and dismiss Laurie's cross-appeal for lack of standing.
For convenience, we refer to Susan and Laurie by their first names. No disrespect is intended.
FACTUAL BACKGROUND
Much of the relevant background was set forth in an opinion by a different panel of this court in a previous appeal, which we quote at length here.
"The 1999 Trust
"Susan and Laurie are sisters. In 1991, their parents (hereafter, Mother and Father) established a trust, which they amended and replaced in its entirety in 1999. The parties refer to the 1999 amendment as the 'First Amendment'; for clarity and because the 1991 trust is not at issue in this case, we will refer to the 1999 amendment as the '1999 Trust.' The 1999 Trust provided Mother and Father were co-trustees until the death or incapacity of one of them, at which point the other would serve as the sole trustee and 'shall have the absolute right to amend or revoke [the 1999 Trust], in whole or in part, at any time except as to any part which is made [i]rrevocable.' Upon the death or incapacity of the surviving trustor, Laurie and Susan would serve as successor co-trustees.
"The 1999 Trust provided that upon the death of the first trustor to die, the trust shall be divided into two trusts, Trust A and Trust B, each for the benefit of the surviving trustor. Trust A shall contain the surviving trustor's separate property and community property interest. The surviving trustor was to allocate to Trust B 'property not less than that in value which will be needed to increase the Deceased Trustor's taxable estate to the largest amount that will not result in a federal estate tax being imposed on the Deceased Trustor's estate . . . , with the actual value and asset selection at the election of the Surviving Trustor . . . .' The 1999 Trust provided that Trust B 'shall become [i]rrevocable.'
"The Trust B provisions in the 1999 Trust included a limited power of appointment: 'The Surviving Trustor shall have a limited power of appointment during his or her life or on his or her death to appoint to such persons, . . . in the manner in which the Surviving Trustor shall exclusively select the Trust Estate of Trust "B". The Surviving Trustor shall make the appointment by either a gift during his or her life or a valid living trust or will, either of which specifically refers to this limited power of appointment. The Surviving Trustor shall not exercise this power in favor of his or her creditors, his or her estate, or the creditors of his or her estate.' When the surviving trustor dies, Trust B shall terminate and the balance of the Trust B estate shall be split evenly between Laurie and Susan. [¶] . . . [¶]
As noted in the prior opinion, a "power of appointment" is "the power to dispose of property" in a trust. (Giammarrusco v. Simon (2009) 171 Cal.App.4th 1586, 1595.) "A power of appointment is 'general' if it is exercisable 'in favor of anyone at all, including oneself or one's own estate.' [Citations.] If a power of appointment is not 'general,' it is 'limited.' [Citation.] A limited power of appointment is exercisable only in favor of 'the person or class specified in the instrument creating the power.' " (Ibid.)
"Events Following the 1999 Trust
"Father died in 2000. Pursuant to the terms of the 1999 Trust, the trust was divided into Trust A and Trust B. Mother transferred certain real property (the Property), in addition to other property, to Trust B.
"Subsequently, Susan's relationship with Mother and Laurie deteriorated and they became estranged.
"The 2003 Amendment
"In 2003, Mother executed an amendment to the 1999 Trust, revoking all of its provisions except the irrevocable Trust B provisions. The parties refer to this as the 'Third Amendment'; for clarity and because the second amendment is not relevant to this appeal, we will refer to this amendment as the '2003 Amendment.' The 2003 Amendment expressly invoked the 1999 Trust's limited power of appointment provision regarding the Trust B estate and provided that, upon Mother's death, the Property will be appointed to Laurie. The 2003 Amendment provided that the remaining balance of property in Trust B shall be distributed evenly between Laurie and Susan.
"The 2003 Amendment also named Laurie the sole successor trustee of Trusts A and B in the event of Mother's death or incapacity. . . . [¶]
"Events Following the 2003 Amendment
I"n the years following the 2003 Amendment, Mother lost the capacity to serve as a trustee. In 2010, Laurie, acting as the successor trustee of Trust B, sold the Property. Mother died in 2012." (Meyers v. Meyers (May 22, 2017, A149403) [nonpub. opn.], fn. omitted.)
Laurie transferred the Property to the 2010 purchaser (the First Purchaser) by grant deed. In 2014, the First Purchaser executed a grant deed transferring the Property to respondents Drain and Loessin (hereafter, the Second Purchasers). The Second Purchasers are currently in possession of the Property.
PROCEDURAL BACKGROUND
Susan's Trust Petition
"In June 2015, Susan filed a trust petition asserting various causes of action relating to Trust B and seeking money damages from Laurie. One cause of action is to determine the construction of a trust instrument (Prob. Code, § 17200, subd. (b)(1)). This cause of action alleges that the 1999 Trust's limited power of appointment provision is inconsistent with another provision, such that '[r]ead as a whole, the [1999 Trust] evidences [Father's] intent that [Trust B] be distributed according to terms that both he and [Mother] agreed to during their joint lifetimes; [Mother's] invocation of [the limited power of appointment provision] cannot be allowed to overcome [Father's] testamentary intent after his passing.'
"The trust petition also challenges the 2003 Amendment's designation of Laurie as sole successor trustee of Trust B. The petition alleges that because Trust B was irrevocable, Mother lacked the authority to change the successor trustee provisions relating to that trust. Thus, the successor trustee provisions in the 1999 Trust, naming Laurie and Susan as successor co-trustees, were in effect upon Mother's incapacity, and Laurie impermissibly acted unilaterally in selling the Property." (Meyers v. Meyers, supra, A149403.)
In the same month, Susan also filed the quiet title action at issue in this appeal, naming the Second Purchasers as the defendants. The operative first amended complaint alleges title was transferred to Mother as trustee of Trust B; no deed records the transfer of the Property from Mother to Laurie; and the subsequent deeds are thus outside the chain of title. The trial court consolidated the trust petition and the quiet title action and granted Laurie's motion to intervene as a defendant in the quiet title action.
Laurie subsequently moved for judgment on the pleadings in the quiet title action and the trust petition, arguing, among other grounds, that she was the sole successor co-trustee of Trust B and that Mother appointed the Property to Laurie. The Second Purchasers joined in Laurie's motion as to the quiet title action. The trial court granted Laurie and the Second Purchasers' motion for judgment on the pleadings, finding "the trust instruments are unambiguous" in granting Mother the authority to both appoint the Property to Laurie and to name Laurie the sole successor trustee. The court concluded the deeds transferring the Property to the First and Second Purchasers were therefore valid. The court subsequently entered judgment for the Second Purchasers in the quiet title action.
DISCUSSION
I. Susan's Appeal
" 'The standard for granting a motion for judgment on the pleadings is essentially the same as that applicable to a general demurrer, that is, under the state of the pleadings, together with matters that may be judicially noticed, it appears that a party is entitled to judgment as a matter of law.' " (Southern California Edison Co. v. City of Victorville (2013) 217 Cal.App.4th 218, 227.) A motion for judgment on the pleadings may be granted "where judicially noticeable facts render the pleading defective [citation], and allegations in the pleading may be disregarded if they are contrary to facts judicially noticed." (Scott v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 743, 751 [discussing demurrer standards].) Our review is de novo. (Southern California Edison Co., supra, at p. 227.)
In support of her motion for judgment on the pleadings, Laurie requested the trial court take judicial notice of Susan's trust petition, which attached as exhibits the 1999 Trust and the 2003 Amendment. In its order, the trial court granted this request and noted, "there appears to be no dispute as to the content, only the interpretation of these [trust] instruments." Susan does not contend on appeal that judicial notice was improperly granted or that we may not consider the unambiguous language of these documents on this appeal.
As explained below, we conclude: (1) Mother validly appointed the Property to Laurie effective upon Mother's death in 2012; (2) grant deeds transfer any title or claim of title that is acquired after the deed is executed; and, therefore, (3) even assuming Laurie lacked the authority to transfer title to the First Purchaser in 2010, her claim of title upon Mother's death in 2012 passed to the First Purchaser, who transferred this clear title to the Second Purchasers in 2014.
(1) In the previous appeal in this case involving a cross-petition filed by Laurie against Susan, this court concluded the 1999 Trust's power of appointment provision—relied on by Mother in the 2003 Amendment to provide the Property will be appointed to Laurie upon Mother's death—was "unambiguous" and not in conflict with any other provision: "The 1999 Trust's power of appointment provision states: 'The Surviving Trustor shall have a limited power of appointment during his or her life or on his or her death to appoint to such persons, . . . in the manner in which the Surviving Trustor shall exclusively select the Trust Estate of Trust "B". The Surviving Trustor shall make the appointment by either a gift during his or her life or a valid living trust or will, either of which specifically refers to this limited power of appointment. The Surviving Trustor shall not exercise this power in favor of his or her creditors, his or her estate, or the creditors of his or her estate.' On its face, there is no ambiguity in this provision and Susan does not contend otherwise.
"Instead, Susan points to the immediately following provision: 'Upon the death of the Surviving Trustor, Trust "B" shall terminate and the undistributed net income and principal of Trust "B" shall thereafter be held, administered and distributed as provided in the paragraphs which follow that existed at the time of the first Trustor's death.' Susan points to the parallel provision regarding Trust A, which states: 'The unappointed balance or remainder of the Trust shall be administered as provided in the paragraphs that follow.' She argues the Trust A provision refers to 'the paragraphs that follow,' while the Trust B provision refers to 'the paragraphs which follow that existed at the time of the first Trustor's death.' We see no significance in this distinction. Unlike Trust A, Trust B became irrevocable upon the first trustor's death and therefore the beneficiary designations would not be changed. Indeed, the 2003 Amendment did not alter the Trust B beneficiaries: they remained Susan and Laurie, in equal share; because Mother had appointed the Property to Laurie, it was no longer part of the Trust B estate.
"Susan also argues the Trust A provision refers to the 'unappointed balance' while the Trust B provision refers to the 'undistributed net income and principal.' (Emphases added.) The power of appointment provision is detailed and specific. The subsequent provision clearly governs the administration of the remaining trust property. That it refers to the 'undistributed' estate but not the 'unappointed' estate does not render the power of appointment provision ambiguous. Susan provides no authority for her implied contention that property transferred pursuant to a power of appointment cannot be characterized as 'distributed' property. (Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 956 [' "The absence of cogent legal argument or citation to authority allows this court to treat the contention as waived." '].) Moreover, we are able to discern no relevant distinction between 'appointed' and 'distributed' property from the provisions of the 1999 Trust. For example, while the Trust A provision highlighted by Susan does not refer to the 'undistributed' balance, it cannot seriously be contended that such an omission renders ambiguous provisions authorizing distributions from Trust A to the surviving trustor during her lifetime.
"Moreover, the 1999 Trust's Trust B provisions as a whole demonstrate that Trust B was established for tax purposes and the transfer of property into the Trust B estate was left to the surviving trustor's discretion. (See Donkin [v. Donkin (2013)] 58 Cal.4th [412,] 418, fn. 3 [trust provisions 'demonstrat[e] the [trustors'] clear intent to establish an estate plan that minimizes estate taxes'].) The surviving trustor was to allocate to Trust B 'property not less than that in value which will be needed to increase the Deceased Trustor's taxable estate to the largest amount that will not result in a federal estate tax being imposed on the Deceased Trustor's estate . . . , with the actual value and asset selection at the election of the Surviving Trustor . . . .' Given that the 1999 Trust imposed no limitations on the surviving trustor's selection of Trust B property—other than that it be in a value relevant to estate tax purposes—we see no basis to infer an intent to limit the surviving trustor's ability to appoint Trust B property, other than the express limitation set forth in the power of appointment provision itself." (Meyers v. Meyers, supra, A149403.)
This analysis is not changed by Susan's briefs filed in the instant appeal, and we adopt it here. Accordingly, the 2003 Amendment validly appointed the Property to Laurie alone upon Mother's death.
(2) "Under the doctrine of after-acquired title, '[w]here a person purports by proper instrument to grant real property in fee simple, and subsequently acquires any title, or claim of title thereto, the same passes by operation of law to the grantee, or his successors.' (Civ. Code, § 1106.)" (Johnson v. E-Z Ins. Brokerage, Inc. (2009) 175 Cal.App.4th 86, 94.) "The policy behind the doctrine is to protect an unwitting grantee who relies upon the good title of the grantor when the latter does not possess legal or perfect title to the property. [Citations.] [¶] The net effect is the same as if the grantor specifically provided in the deed that he conveyed all of the title and estate which he then possessed or which he might at any time thereafter acquire." (Schwenn v. Kaye (1984) 155 Cal.App.3d 949, 951-952; see also Klamath Land & Cattle Co. v. Roemer (1970) 12 Cal.App.3d 613, 618 ["A grant deed unquestionably transfers an after-acquired title."].) For example, "when a debtor purports to convey bankruptcy estate property, title to the property will vest in the grantee when the bankruptcy proceedings close if the property was nonadministered." (Johnson, supra, at p. 94.)
(3) Therefore, even assuming Laurie was not the sole successor trustee entitled to unilaterally transfer the Property in 2010 (an issue not decided in the prior appeal, and which we need not and do not decide here), Laurie acquired claim of title to the Property in 2012—when Mother died and the 2003 Amendment's provision appointing the Property to Laurie became effective. At that time, pursuant to the doctrine of after-acquired title, Laurie's title passed by operation of law to the First Purchaser. The First Purchaser thus had valid title to the Property in 2012, and the subsequent deed transferring that title to the Second Purchasers was also valid. Susan's sole argument regarding after-acquired title focuses on a trust beneficiary's authority to direct the transfer of trust property. But upon Mother's death in 2012, the Property was appointed to Laurie and no longer remained in Trust B.
Accordingly, we affirm the trial court's judgment in favor of the Second Purchasers on Susan's quiet title action.
We need not and do not decide the parties' other arguments. We deny Laurie's April 3, 2017 request for judicial notice as irrelevant.
II. Laurie's Appeal
Prior to the entry of the appealed-from judgment, the trial court stayed proceedings between Laurie and Susan pending an interlocutory appeal on a cross-petition filed by Laurie, the details of which are not relevant here. Apparently because of this stay, the trial court entered judgment in the quiet title action only in favor of the Second Purchasers. The judgment provides: "This judgment does not apply to Laurie or to Susan's trust petition and Laurie's cross-petition. Further orders on those matters will be entered at the appropriate time." In Laurie's cross-appeal from this judgment, she contends the trial court erred by omitting her from the judgment.
Initially, Laurie also raised a constitutional challenge to a discovery order, however, she subsequently withdrew this challenge.
We requested supplemental briefing from the parties on the question of Laurie's standing to pursue the cross-appeal. "Only a party aggrieved by a judgment or order has standing to appeal the judgment or order. [Citation.] A party who has an interest recognized by law that is adversely affected by the judgment or order is an aggrieved party." (Serrano v. Stefan Merli Plastering Co., Inc. (2008) 162 Cal.App.4th 1014, 1026.) "While appellant can file a notice of appeal as a party, the ability to appeal does not confer standing to assert issues when he is not aggrieved by the order from which the appeal is taken." (In re D.S. (2007) 156 Cal.App.4th 671, 673-674.) Laurie argues she is aggrieved by the judgment "based on her wrongful exclusion from it as the result of the trial court's contemporaneous order staying all proceedings between Susan and Laurie pending [the prior appeal]." She cites no authority for this proposition, which we reject. The appealed-from judgment does not adversely affect Laurie's interests—it makes no determination as to her interests, stating such determinations will be made at a later time. Laurie is not aggrieved by the judgment and lacks standing to pursue the cross-appeal.
In light of this conclusion, we need not decide whether Laurie's cross-appeal is moot, a second issue we requested that the parties supplementally brief. Laurie's supplemental brief also argued that Susan's appeal is moot and should be dismissed—an issue that was not included in our supplemental briefing order. Moreover, Laurie did not file the requisite motion to dismiss pursuant to California Rules of Court, rule 8.54. We therefore decline Laurie's request for dismissal. (Halliburton Energy Services, Inc. v. Department of Transportation (2013) 220 Cal.App.4th 87, 106 ["We decline Halliburton's request for dismissal, because it did not serve and file a separate motion for such relief as required by California Rules of Court, rule 8.54.") We deny as irrelevant Laurie's request for judicial notice filed in connection with her supplemental brief.
DISPOSITION
In Susan's appeal, the judgment is affirmed and respondents Drain and Loessin are awarded their costs on appeal. Laurie's cross-appeal is dismissed.
/s/_________
SIMONS, Acting P.J. We concur. /s/_________
NEEDHAM, J. /s/_________
BRUINIERS, J.