Opinion
B223419
11-03-2011
JILLIENE FLORENCE TAPER MARRERO, Plaintiff and Appellant, v. ANDREW MARK TAPER, as Cotrustee, etc., et al., Defendants and Respondents.
Oldman, Cooley, Sallus, Gold, Birnberg & Coleman, Marshal A. Oldman and Susan R. Izenstark for Plaintiff and Appellant. Freeman, Freeman & Smiley, Gregory M. Bordo and Thomas C. Aikin for Defendants and Respondents.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. LP014322)
APPEAL from an order of the Superior Court of Los Angeles County. James A. Steele, Judge. Affirmed.
Oldman, Cooley, Sallus, Gold, Birnberg & Coleman, Marshal A. Oldman and Susan R. Izenstark for Plaintiff and Appellant.
Freeman, Freeman & Smiley, Gregory M. Bordo and Thomas C. Aikin for Defendants and Respondents.
Jilliene Florence Taper Marrero (appellant) appeals from an order of the trial court denying her petition for declaratory relief under former Probate Code section 21320 (section 21320). Appellant sought a declaratory judgment that her proposed petition for modification of trust, removal of cotrustees, and to compel cotrustees to act would not violate the no contest clause of the Mark Taper 1985 Jilliene Florence Taper Marrero Trust (Marrero Trust). The trial court determined that the filing of appellant's proposed petition would violate the no-contest clause. For the reasons set forth below, we affirm.
Effective January 1, 2010, the Legislature repealed section 21320 and related sections of the Probate Code and enacted new statutes governing no contest clauses. However, pursuant to Probate Code section 21315, the new statutes apply only to an instrument that became irrevocable on or after January 1, 2001. Because the trust that is the subject of this matter was irrevocable on December 31, 1985, former section 21320 and the other repealed statutes govern this action. All further statutory references are to the former Probate Code sections, unless otherwise indicated.
CONTENTIONS
Appellant contends that: (1) the trial court erred in interpreting the no contest clause of the Marrero trust; (2) the same or essentially the same modification was sought and obtained without objection in six other identical trusts benefitting six of the settlor's other grandchildren; (3) the doctrine of collateral estoppel bars the cotrustees of the Marrero trust from objecting to her petition; (4) the doctrine of judicial estoppel bars the cotrustees from objecting to her petition; (5) the doctrine of judicial admission bars the cotrustees from objecting to her petition; (6) a 1993 document bars the cotrustees from objecting to her petition; and (7) the trial court's error in misconstruing the power of appointment provisions of the trust mandates reversal.
FACTUAL BACKGROUND
Mark Taper (settlor) created the Mark Taper 1985 Grandchildren Trust (MTGT) on December 31, 1985. The trust estate was divided into eight separate and equal trusts. Each trust was named for a grandchild who would be the primary beneficiary of that trust (the grandchildren trusts). The Marrero trust is one of the grandchildren trusts. Each of the eight grandchildren trusts is administered as a separate trust. Each trust is irrevocable, and is governed by the terms of the MTGT. Appellant is the sole beneficiary of the Marrero trust.
Each of the grandchildren trusts is governed by the same no contest clause, which reads:
"6.14 Disinheritance of Contestants. If any beneficiary under this Trust instrument, or person claiming under any of them, shall contest this Trust instrument or attack or seek to impair or invalidate any of its provisions, or shall contest the Trustees' exercise of the their discretions and powers, or conspire with or voluntarily assist anyone attempting to do any of these things, in that event Trustor specifically disinherits such person, and all interest given under this Trust instrument to that person shall be forfeited as if such person predeceased Trustor without surviving issue and shall augment proportionately the shares of the trust estate going under this instrument to or in trust for such beneficiaries as shall not have participated in such acts or proceedings."
The trustee provisions state that "the trusts shall always be administered by three (3) co-trustees, two of whom shall be Family Trustees and the other of whom shall be an Outside Trustee." The initial trustees of the Marrero trust, and of the seven other trusts created under the MTGT, were appellant and her first cousin, Andrew Mark Taper (Taper), who consented to act as the family trustees, and Morris Pynoos (Pynoos) who consented to act as the nonfamily member and outside cotrustee. Pynoos was later succeeded by Jeanette Terry (Terry). The current cotrustees of the Marrero trust are appellant, Taper, and Terry.
Taper and Terry are collectively referred to as "respondents."
Consent of the outside trustee is required before any distribution or loan is made to a beneficiary. Specifically, a trustee who is also a beneficiary has no power to exercise any discretion involving distribution. All such discretion "shall be exercisable only by the other Family Trustee acting with the consent and agreement of the Outside Trustee."
PROCEDURAL HISTORY
On March 16, 2009, appellant filed a petition pursuant to section 21320 (the 21320 petition) to determine whether her proposed action would violate the no contest provision of the Marrero trust. The proposed action was the filing of an attached petition for (a) modification of trust; (b) in the alternative for removal of cotrustees; and (c) for instructions and to compel cotrustees to act (proposed petition). The 21320 petition sought only a determination that the proposed petition would not violate the no-contest clause of the Marrero trust, not a determination of the merits of the proposed petition.
In the proposed petition, appellant argued that circumstances have changed since the settlor created the trusts in 1985. When he created the trusts, the settlor wished to relieve his grandchildren of the tasks of investing and managing the trust property. In addition, at that time, most of the settlor's grandchildren were teenagers or in their twenties. The settlor was concerned with giving a grandchild access to substantial wealth at an early age. However, appellant argued, the cotrustee arrangement has impaired administration of the trust and greatly increased administrative costs. Appellant, who was 57 years old at the time she filed the 21320 petition, argued that no benefit was gained by having either a second family trustee or an outside trustee. In fact, she argued, the costs and expenses associated with having three cotrustees has unnecessarily depleted the assets of the Marrero trust.
Appellant's proposed petition sought to modify the trust by deleting sections 4.1, 4.2, 4.3, and 4.7, and inserting a new section 4.1 stating:
Section 4.1, entitled "Appointment of Trustees," among other things, sets forth the requirement that each trust "shall always be administered by three (3) co-trustees." Section 4.2, entitled "Agreement Required for Actions by Trustees," permits distributions to the beneficiary "only upon the agreement of the Outside Trustee and at least one Family Trustee." Section 4.3, entitled "Discretions Involving Trustee as a Beneficiary," dictates that "No Trustee shall have the right or power to exercise any discretions involving distributions to the Trustee as a beneficiary of a trust hereunder, and all such discretions shall be exercisable only by the other Family Trustee acting with the consent and agreement of the Outside Trustee." Section 4.7 governs the resignation of trustees.
"4.1 Jilliene Florence Taper Marrero is hereby appointed sole trustee of the Jilliene Florence Taper Marrero Trust to serve without bond. Jilliene Florence Taper Marrero shall have the right to appoint a successor trustee, to serve with or without bond upon the death, resignation, refusal or inability of Jilliene Florence Taper Marrero to serve as sole trustee. Such successor trustee shall have the right to appoint his or her own successor
upon the successor trustee's death, resignation, refusal or inability to serve."
In the alternative, appellant requested that respondents be removed as trustees. Appellant argued that she did far more work on the trust than the other trustees, and that because the three trustees now had separate counsel, legal fees had risen. In addition, appellant argued that administration of the trust had come to a halt due to disharmony between the trustees.
Finally, if the court determined that respondents should not be removed, appellant requested that they be compelled to cooperate with appellant, and that she be authorized to act as if she were sole trustee in determining and paying certain obligations and fees of the trust.
Respondents filed a response to appellant's 21320 petition, asserting their position that the proposed petition would violate the no contest clause of the Marrero Trust by modifying the number of trustees. In addition, respondents felt that the proposed modification of the trust would impair the interest left to appellant's issue.
Appellant filed a reply and a request for judicial notice. Appellant noted that six of the eight grandchildren trusts had already been modified to replace the requirement of three trustees. Appellant's request for judicial notice attached pleadings filed and approved by the courts in which six of the eight other grandchildren trusts were so modified. In response to respondents' argument that the modifications might adversely affect appellant's issue, appellant pointed out that she had a testamentary general power of appointment over 16/17ths of the Marrero trust and a limited power over the remaining 1/17th. Therefore, she claimed, the costly and cumbersome cotrustee arrangement provides no protection to appellant or her family. Finally, appellant argued that both collateral estoppel and issue preclusion barred respondents from raising the no contest clause as a defense, as they failed to raise it in other proceedings involving the other grandchildren trusts.
The trial court heard oral argument on November 3, 2009, and took the matter under submission. On November 10, 2009, the court issued a minute order ruling that the filing of the proposed petition would violate the no contest clause. After reviewing the provisions of the trust, the court determined that:
"[R]eplacing the Trustee structure with a single Trustee who is also the beneficiary would frustrate what seems to be the purposes of the Trustor. Restructuring the Trust as prayed would also potentially adversely affect [appellant's] children, the Settlor's great grandchildren. This is because elimination of the outside Trustees would include trust assets within [appellant's] estate for inheritance tax purposes thereby reducing the amount available to [appellant's] children (Settlor's great grandchildren)."
The court was troubled by the possibility of inconsistent results with the various pleadings of which appellant had requested the court take judicial notice. However, the court indicated that it could not "properly conclude from those Orders, . . . that this court would be compelled by such Orders to find the proposed Petition in this instance would not violate the no contest provision of the instrument at issue in this case." In addition, it was not clear to the court that the prior petitions were ever litigated. "In other words, just because a court signed off on an unopposed request, or a settlement, it cannot be said that the court necessarily 'determined' anything." The court noted that if appellant only sought to remove an errant trustee that would not, in all likelihood, violate the no-contest clause. However, because that was proposed only as an alternative, the filing of the proposed petition in its current form would violate the no contest clause.
On January 7, 2010, appellant timely filed her notice of appeal.
DISCUSSION
I. Standard of review and applicable legal principles
A. Contests and no-contest clauses
A contest is "any action identified in a 'no contest clause' as a violation of the clause." (§ 21300, subd. (a).) The term includes both direct and indirect contests. (Ibid.) "[U]nder the statute and the applicable common law, an indirect contest is one that attacks the validity of an instrument by seeking relief inconsistent with its terms." (Johnson v. Greenelsh (2009) 47 Cal.4th 598, 605 (Johnson), fn. omitted.)
A 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." (§ 21300, subd. (d).) The purpose of a no contest clause is to discourage contests by imposing a penalty of forfeiture against beneficiaries who challenge the will or trust. (Estate of Kaila (2001) 94 Cal.App.4th 1122, 1128 (Kaila).)
When a court interprets a no contest clause, conflicting policies apply. "On the one hand, they are favored since they discourage litigation and give effect to the testator's intent. [Citations.] On the other hand, no-contest clauses are disfavored because they work [as] a forfeiture. [Citation.] Resolution of these competing policies requires no-contest clauses be strictly construed and not extended beyond 'what was plainly the testator's intent.' [Citation.] However, a court may not rewrite a will so as to exempt contests or legal proceedings from the scope of the no-contest clause which would frustrate the testator's purpose as expressed in his or her will. [Citation.] [¶] Whether 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. [Citation.]" (Estate of Watson (1986) 177 Cal.App.3d 569, 572.)
B. The safe harbor provision of section 21320
A beneficiary seeking to institute legal proceedings concerning a will or trust containing a no contest clause may seek a judicial determination as to whether the beneficiary's proposed legal challenge would be a contest. Section 21320 provides a procedure for obtaining such declaratory relief. The statute provides, in relevant part: "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." (§ 21320, subd. (a).)
"'[S]ection 21320 provides . . . a "safe harbor" for beneficiaries who seek an advance judicial determination of whether a proposed legal challenge would be a contest [under a particular no contest clause].' [Citation.] If a court determines that a particular proposed action would constitute a contest, the beneficiary will then be able to make an informed decision whether to pursue the contest and forfeit his or her rights under a will or to forego that contest and accede to the will's provisions. [Citation.]" (Kaila, supra, 94 Cal.App.4th at p. 1130.)
A trial court ruling on whether a proposed action is entitled to the safe harbor protection afforded by section 21320 may not consider the merits of the proposed action itself. (§ 21320, subd. (c).)
C. Standard of review
In reviewing the trial court's ruling on appellant's application for a safe harbor determination under section 21320, we apply a de novo standard of review. (Betts v. City National Bank (2007) 156 Cal.App.4th 222, 231 (Betts).)
II. Appellant's petition is a contest under the no contest clause
Our task is to interpret the relevant no contest clause and determine if appellant's proposed petition would constitute a contest under that clause. When interpreting a no contest clause, the intent of the settlor controls. (Betts, supra, 156 Cal.App.4th at p. 232.) In determining whether the proposed action is a contest within the meaning of the no contest clause, "'[T]he answer cannot be sought in a vacuum, but must be gleaned from a consideration of the purposes that the [settlor] sought to attain by the provisions'" of the trust. (Burch v. George (1994) 7 Cal.4th 246, 255 (Burch).)
The no contest clause in the Marrero trust indicates that if any beneficiary "shall contest this Trust instrument or attack or seek to impair or invalidate any of its provisions," the beneficiary is disinherited. Appellant's petition seeks to delete four sections of the trust in their entirety, replacing them with a new section. Substantively, the modifications would eliminate the three cotrustee arrangement envisioned by the settlor, and make appellant the sole trustee of the trust, with sole control over the distribution of trust assets.
In determining whether this modification would violate the no contest provision, we must ascertain the settlor's intentions. In Burch, supra, 7 Cal.4th at page 256, the high court first looked to the terms of the trust instrument. The court determined that the pertinent terms included the preliminary recitals, which described the trust estate; the article describing the division of the trust estate and directing its distribution; and the paragraph containing the no contest clause.
In the matter before us, the settlor clearly stated his intentions in the first two paragraphs of the MTGT. The first paragraph sets forth the "General Purpose" of the trusts. In creating the trusts, the settlor "hope[d] to provide for the security and well-bring of his grandchildren, . . . and their issue, and to relieve them of the tasks of investing and managing the proceeds arising from the trust property." As to the "Specific Purpose," the settlor stated:
"1.2 Specific Purpose. It is Trustor's intent in establishing these trusts and in providing the limits on distributions hereinafter set forth that the Primary Beneficiaries and successor beneficiaries not be dissuaded from achieving their maximum potential by having unearned income made available to them in excess of their reasonable needs. It is Trustor's wish and desire that his grandchildren and their issue be well-educated and that they learn the value of and responsibilities associated with earning income through their own efforts rather than their being tempted to become mere consumers of inherited wealth. . . ."
Pursuant to these provisions, the settlor expressed an intent to provide for his grandchildren. However, he did not intend to burden them with management. More importantly for the purposes of this discussion, he did not intend to provide them unfettered access to the funds. For this reason, the settlor placed certain limits on distributions.
The limits on distributions are accomplished through the use of three trustees. Section 4.1 states, in pertinent part: "the trusts shall always be administered by three (3) co-trustees, two of whom shall be Family Trustees and the other of whom shall be an Outside Trustee." As set forth in paragraph 4.2, no distributions may be made to the beneficiary without the consent of the outside trustee:
"4.2 Agreement Required for Actions by Trustees. Any action involving the exercise of any right, power or discretion hereunder, except
the exercise of discretion to make distributions or loans to beneficiaries, may be determined by a majority of the Trustees and shall be binding on the trust estates and may be relied upon by third parties dealing with the Trustees. Any distributions or loans permitted to be made to a beneficiary shall be made only upon the agreement of the Outside Trustee and at least one Family Trustee. To the extent practicable, all decisions shall be made only after consultation, personally or by telephone conference, of all of the Trustees."
This limitation on distributions appears to be set up to ensure that the beneficiary does not unnecessarily gain unlimited access to all of her funds. Instead, reasonable distributions and loans can be made to the beneficiary in accordance with the settlor's intentions only after the non-family member trustee consents.
Section 4.3 clearly indicates that the settlor's intent was that the beneficiary be unable to control distributions to herself:
"4.3 Discretions involving Trustee as a Beneficiary. No Trustee shall have the right or power to exercise any discretions involving distributions to the Trustee as a beneficiary of a trust hereunder, and all such discretions shall be exercisable only by the other Family Trustee acting with the consent and agreement of the Outside Trustee."
Read together, these provisions convey the settlor's intent to limit the beneficiary's access to the trust property. Specifically, the settlor set up the trust so that the beneficiary would have no right or power to exercise discretion involving distributions to herself. Such discretion may only be exercised by the other family trustee with the consent of the outside trustee.
Having determined that the settlor intended to limit the beneficiary's control of the trust property, we now look back at appellant's proposed modifications. Those modifications would entirely eliminate the three cotrustee set up, making appellant the sole trustee and beneficiary. The outside trustee -- who was put in place by the settlor to provide checks on the distributions to the beneficiary -- would be eliminated. Under the circumstances, we conclude that, through the proposed petition, appellant would be seeking to "impair or invalidate" certain key provisions of the trust. Thus, the filing of the proposed petition would constitute a violation of the no contest clause and subject appellant to disinheritance.
III. Appellant's arguments do not change the result
Appellant presents numerous arguments in support of her position that the proposed petition should not be considered a contest. For the reasons set forth below, we reject these arguments.
A. Changed circumstances
Appellant asserts that the trust should be modified on the basis of changed circumstances. In particular, appellant claims, the arrangement of three cotrustees has greatly impaired trust administration, has increased administrative costs causing unnecessary expenses, and has resulted in extreme discord and litigation among the settlor's grandchildren. Appellant insists that the settlor would have sought to avoid the complexities of the current three cotrustee arrangement if he had known of, or anticipated the current circumstances. In particular, the three cotrustees no longer share a single law firm as they once did, resulting in duplicative legal advice not warranted by the relatively small size of the trust corpus.
Appellant's proposed petition for modification indicates that the size of the trust corpus is approximately $1,400,000.00.
Appellant points out that in making these trusts, the settlor expressed a desire for his grandchildren to remain close. As initially drafted, the provisions of the grandchildren trusts required family gatherings to be organized at least annually. However, the trust arrangement has had the opposite effect, creating friction between the cousins. As a result, in 1995, the provisions that required the grandchildren to meet and interact with each other were removed pursuant to an order of the court. Appellant emphasizes, as she does throughout her briefing, that six of the other grandchildren trusts have been modified to simplify the three cotrustee arrangement, without objection.
Appellant argues that rather than contesting the trust, she seeks to enforce the trust and its provisions in a manner consistent with the wishes of her grandfather, as those wishes would have been expressed in view of current circumstances. Instead of questioning the validity of the trust, appellant insists she is only seeking modification of the trust's administrative terms to better facilitate its purpose.
In connection with this argument, appellant insists that Johnson is controlling. She argues that here, as in Johnson, her proposed petition does not thwart the distributive scheme created nor does it challenge the validity of any trust provision. We find that Johnson does not support appellant's position. Johnson involved a safe harbor petition where the proposed action was a challenge to a surviving spouse's mental capacity to transfer trust assets and appoint a successor trustee. (Johnson, supra, 47 Cal.4th at p. 599.) The Supreme Court analyzed the proposed action, as well as the trust document, and determined that "Nothing in the no contest clause indicates it was intended to apply to proceedings to determine a settlor's mental capacity to exercise rights conferred by the trust document." (Id. at p. 604.) Here, we have concluded the opposite -- that appellant's proposed action would seek to impair or invalidate certain key provisions of the trust, in violation of the no contest clause. Because Johnson involved a challenge to a trustee's mental capacity, under a different no contest clause, it is not helpful to our analysis.
Appellant has cited no law suggesting that the changed circumstances she alleges are relevant to our analysis of this no contest clause. Section 15409, operative July 1, 1991 through the present, permits a court to modify provisions of a trust, or terminate a trust, if, "owing to circumstances not known to the settlor and not anticipated by the settlor, the continuation of the trust under its terms would defeat or substantially impair the accomplishment of the purposes of the trust." However, section 15409 may not be relied upon to avoid the Marrero trust's no contest provision.
Former section 21305, subdivision (b)(1), effective January 1, 2003 through December 31, 2009, allowed petitions to modify trusts under section 15409 to be brought without violation of a no contest clause. The statute is not applicable to this proceeding. (Former section 21305, subd. (d) ["Subdivision (b) shall apply only to instruments of decedents dying on or after January 1, 2001, and to documents that become irrevocable on or after January 1, 2001"].) Appellant acknowledges that former section 21305 is inapplicable, but argues that the statute "largely reflected the common law that had developed over the years." Appellant cites no examples of this "common law," therefore we decline to address this argument.
Even assuming that the principles underlying section 15409 may be considered in the current analysis, the changed circumstances alleged are not significant enough to warrant judicial intervention. Courts may only take such action where "exceptional situations" demand modification in order to carry out the primary purpose of the trust instrument. (Moxley v. Title Ins. & Trust Co. (1946) 27 Cal.2d 457, 468.) For example, courts may modify where compliance with the trust becomes impossible (Estate of Butin (1947) 81 Cal.App.2d 76, 85 [discussing doctrine of cy pres]). Here, where appellant's "pleading of 'changed conditions' amounts to no more than the pleading of mere considerations of convenience to herself as ground for frustration of the testamentary design for administration of the trust, . . . she cannot prevail." (Moxley, supra, at p. 465.)
The changed circumstances that appellant alleges are not the sort of exceptional, unpredictable circumstances warranting modification. The settlor himself set up the three cotrustee system, with the specific purpose of ensuring that an outside trustee consented before any distributions were made. He must have anticipated that this three-trustee system would be more burdensome, and more costly, than simply putting the beneficiary in charge. However, as set forth above, his stated intention was to prevent the beneficiary's unfettered access to the funds, and to provide checks on the propriety of the distributions. Appellant's proposed modifications -- which seek to place her in complete, unchecked control of the trust property -- undermine this stated intention of the settlor.
Friction, and even litigation, between the cousins, is also not the type of exceptional circumstance warranting modification. While the trustor expressed a "hope and desire" that his grandchildren retain "strong family bonds of affection to each other," the nonattainment of this hope does not fundamentally interfere with the trustor's main intent, which was to provide for his grandchild without providing her sole control over the distributions.
Finally, uncontested modifications of other grandchildren trusts are not relevant to this analysis. There is no indication that the no contest provision was raised or considered in connection with any of the orders attached to appellant's request for judicial notice. In addition, of the six orders submitted with appellant's request for judicial notice, we note that five of them order a system of administration which retains the outside trustee -- thus keeping intact the settlor's mandate that an outside trustee must approve each distribution. The only order which appears to permit the beneficiary to become the sole trustee is that of Deborah Lynn Taper Ringer (Ringer), filed on February 27, 1996. There is no indication that Ringer's petition for modification of trust was contested. The court had received the resignations of the existing trustees, including the appellant herein. The sole question before this court -- whether such a system of administration would violate the no contest clause -- is not mentioned in the order. Therefore, it does not assist our analysis.
We limit our consideration of the question before us to the settlor's intent and the language of the trust document. Despite appellant's arguments to the contrary, orders for modification involving other beneficiaries, and decided under different circumstances, are not relevant.
In sum, the changed circumstances described by appellant do not alter our conclusion that her proposed petition, if filed, would violate the no contest provision of the trust.
B. Estoppel
Appellant sets forth three estoppel arguments. She argues that the doctrines of collateral estoppel, judicial estoppel, and equitable estoppel bar respondents from objecting to her section 21320 petition.
Section 21320 requires a court to analyze a petition to determine whether the action proposed by the beneficiary would be a contest within the terms of the relevant no contest clause. The court must carry out this analysis regardless of whether an objection is filed. Thus, even if respondents were estopped from objecting, the court would still be required to determine the settlor's intent and determine whether the proposed action would violate the no contest clause. Appellant fails to explain how her estoppel arguments alter the outcome of the safe harbor analysis.
Further, as set forth below, appellant's estoppel arguments fail.
1. Collateral estoppel
Appellant argues that collateral estoppel bars respondents from objecting to her section 21320 petition. Appellant claims that Taper and Terry's predecessor, Pynoos, could have objected to the first six petitions brought by six other beneficiaries of identical grandchildren trusts. Because neither respondent objected on the ground that modifications reducing the number of trustees violated the no contest clause of each respective trust, appellant argues, collateral estoppel prevents them from doing so now.
"Collateral estoppel precludes relitigation of issues argued and decided in prior proceedings. [Citation.]" (Lucido v. Superior Court (1990) 51 Cal.3d 335, 341, fn. omitted.) The doctrine is only applicable if several threshold requirements are fulfilled:
"First, the issue sought to be precluded from relitigation must be identical to that decided in a former proceeding. Second, this issue must have been actually litigated in the former proceeding. Third, it must have been necessarily decided in the former proceeding. Fourth, the decision in the former proceeding must be final and on the merits. Finally, the party against whom preclusion is sought must be the same as, or in privity with, the party to the former proceeding. [Citations.]" (Ibid.)
Appellant has failed to show that the requirements for collateral estoppel are met in this matter. The issue in this proceeding is whether appellant's proposed petition violates the no contest clause in the trust. Appellant admits that this issue was not raised in connection with any of the six other petitions that she references in her request for judicial notice. Therefore, the issue before us is not "identical" to any issue decided in the former proceedings. Further, because it was never raised or mentioned in the prior proceedings, the question of whether appellant's proposed petition violates the no contest clause of the trust was not "actually litigated" in any of the prior proceedings. It follows logically that this issue was also not "necessarily decided" in any of those proceedings.
Appellant's citation to Evans v. Pearson Enterprises, Inc. (6th Cir. 2006) 434 F.3d 839 does not convince us otherwise. In Evans, the plaintiff filed an action in probate court, and later brought similar claims in federal court. (Id. at p. 842.) The Sixth Circuit determined that collateral estoppel prevented her from arguing that her claim for breach of trust satisfied the applicable statute of limitations, as that issue had been decided against her in state court. (Id. at p. 849.) In addition, the plaintiff was collaterally estopped from making a shareholder-oppression claim, because the allegations at issue were identical to those alleged in state court. The Sixth Circuit concluded: "The Michigan Court of Appeals' decision that (1) the Bank disclosed information, (2) the lending relationship was proper, and (3) the transactions were reasonable collaterally estops Evans from alleging the facts upon which she grounds her shareholder-oppression claim." (Id. at p. 852.) Thus, a prior state court judgment had specifically decided the relevant factual allegations against the plaintiff. In contrast, appellant points to no prior decision where the issue of whether appellant's proposed petition violates the trust's no contest clause was decided -- or even raised.
Appellant cites Denio v. Huntington Beach (1946) 74 Cal.App.2d 424 (Denio) for the proposition that prior litigation on the same question is conclusive "'"not only as to matter actually decided in the former controversy but as to all matters belonging to the subject of the controversy which also might have been raised and decided." [Citations.]'" (Id. at p. 432.) The Denio court went on to state: "'"It is not what was actually done but what might have been done that is concluded by a former judgment." [Citation.]'" (Ibid.) Although it was not specifically raised, appellant argues, the no contest clause, as part of the trust at issue in the former proceedings, was necessarily considered in those proceedings.
Denio involved a contract of employment calling for the payment of percentages of certain royalties received by the defendant. The Denio court explained that the action "involve[d] the same contract and the same general facts" as those set forth in a prior published opinion. (Denio, supra, 74 Cal.App.2d at p. 425.) In the prior action, it was held "that the contract of employment was valid and binding upon the defendant city, that the plaintiffs were wrongfully discharged by the defendant, that payment made to the city under a certain other contract are royalty payments within the meaning of the contract of employment, and that the plaintiffs are entitled to recover the compensation specified in the contract of employment." (Ibid.) The action before the Denio court involved "the plaintiffs' claim, under the same contract of employment, to percentages of such royalty payments subsequently received by the city." (Id. at p. 426.) However, the defendant raised new issues, such as "a frustration of the object of the contract of employment; that the contract of employment was ultra vires in certain respects; [and] that there was a failure of consideration," among other things. (Id. at p. 427.)
In concluding that the defendant was estopped from raising some of the new issues, the Denio court explained: "It would be inconsistent in this case to admit evidence and to permit a decision which would have the effect of destroying a contract for compensation, the validity and binding effect of which, and the right to recover compensation under which, was specifically upheld in the former action." The court went on to say, "Nor do we think the cause of action herein is so essentially different, in a sense material here, from that set forth in the former action as to avoid the effect of the usual rule against the splitting of defenses." (Denio, supra, 74 Cal.App.2d at p. 430.)
As this more detailed analysis shows, Denio involved the same "basic issue [decided] in the former action." (Denio, supra, 74 Cal.App.2d at p. 430.) As explained above, the issue of whether appellant's petition -- or any other petition -- violates the no contest clause found in the grandchildren trusts has never been raised or litigated in any prior proceeding. We are not permitted to consider the merits of appellant's proposed action. (§ 21320, subd. (c).) Appellant's collateral estoppel argument fails.
2. Judicial estoppel
Appellant argues that the doctrine of judicial estoppel similarly bars respondents from objecting to her section 21320 petition because neither of the respondents, nor Terry's predecessor, asserted the position that a request by a grandchild to reduce the number of cotrustees violated the no contest clause of any grandchild's trust.
"'Judicial estoppel prevents a party from asserting a position in a legal proceeding that is contrary to a position previously taken in the same or some earlier proceeding.'" (Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171, 181 (Jackson).) The Jackson court concluded that "the doctrine should apply when: (1) the same party has taken two positions; (2) the positions were taken in judicial or quasi-judicial administrative proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud, or mistake. [Citations.]" (Id. at p. 183.)
Appellant's judicial estoppel argument fails for the same reason her collateral estoppel argument fails. Neither of the respondents, nor Terry's predecessor, have ever taken a position on the question of whether appellant's proposed action -- or that of any other grandchild -- violates the no contest provision of the trust. As appellant admits, the issue has never been raised or litigated in connection with any of the other grandchild petitions. Appellant cites no law suggesting that a party's failure to raise an issue can be considered "totally inconsistent" with its later asserting a position on that issue for the purposes of judicial estoppel. Under the circumstances, we decline to find respondents judicially estopped from objecting to appellant's section 21320 petition.
3. Equitable estoppel
Appellant next asserts that the doctrine of equitable estoppel bars respondents from objecting to her section 21320 petition. In connection with this argument, appellant draws our attention to a "Memo" dated November 19, 1993, attached to appellant's request for judicial notice. The memo is addressed to the eight beneficiaries of the eight grandchildren trusts, from "Andrew Mark Taper, Trustee." In the document, Taper writes:
"As you all know, many of the circumstances have changed which Grandpa may have relied upon in designing the management conditions of the trusts. It seems to be the collective opinion of all the current parties involved that certain modifications to the trusts are now appropriate."Later, the memo states:
"Some of you have previously indicated that you are ready to serve as your own trustees, others have indicated the converse. As a part of the petition, we hope to figure out a mechanism for how some flexibility could be accomplished towards satisfying both groups and to make this amendment/modification to the trust declaration along with all of the others without triggering any adverse tax consequences. Our suggestion is that the trusts be amended to include additional language to allow a family member to act as his/her own trustee as an option to the current set-up not as a complete substitution of terms, if this is possible. Thus, the section on trustees may be rewritten to state that the Beneficiaries may make a written request to substitute themselves for the current Trustees and that the Trustees may consent to this change subject to a unanimous vote of the Trustees and a court hearing to confirm the change or whatever else is necessary or prudent to protect the other beneficiaries and/or the Trustees from surrendering their fiduciary duties to the Beneficiaries/Trustees with respect to the other remaindermen Beneficiaries."
The memo asked for a consensus in writing to avoid unnecessary costs in moving forward with the proposed modifications. All eight grandchildren signed the memo, agreeing that each would "request, authorize and agree to support without contest now and for the future the actions of the Trustees to obtain the above-referenced modifications, amendments and ruling requests . . . ."
Appellant argues that this document bars respondents from objecting to an order that appellant's proposed petition will not constitute a contest. Appellant cites Cedars-Sinai Medical Center v. Shewry (2006) 137 Cal.App.4th 964, 987 for the elements of equitable estoppel, which are: "'"(1) the party to be estopped must be apprised of the facts; (2) he must intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel has a right to believe it was so intended; (3) the other party must be ignorant of the true state of facts; and (4) he must rely upon the conduct to his injury. [Citations.]"' [Citation.]"
Appellant asserts that the four requirements of equitable estoppel are met here. First, appellant argues, as the cotrustee of all eight trusts, and the person who drafted the 1993 agreement, Andrew Mark Taper knew the facts. Second, he knew his conduct would be acted on. Third, appellant was ignorant of the "true fact" that Taper would "ignore" the 1993 agreement and object to her request that she become the sole trustee of her own trust. Finally, appellant argues, she relied on Taper's conduct of drafting, signing, and agreeing to the terms of the 1993 agreement and suffers injury by having a second family trustee and an outside trustee manage her trusts.
We disagree that the 1993 document estops respondents from objecting to appellant's section 21320 petition. At best, it was a proposal to potentially "figure out a mechanism" to satisfy those beneficiaries who wished to become trustees, subject to "a court hearing to confirm the change or whatever else is necessary or prudent . . . ." In fact, the 1993 memo does not specifically propose any modification that includes elimination of the outside trustee. Nor does it signify a promise not to object to a safe harbor petition where the proposed action includes elimination of the outside trustee.
In addition, even if it did estop Taper from objecting -- which it does not -- the 1993 memorandum did not involve Terry. Therefore, she is not estopped from objecting to appellant's section 21320 petition. Appellants have provided no citation to the record indicating that Terry, or any other outside trustee, signed the 1993 memorandum.Appellant's equitable estoppel argument fails.
Appellant notes that the document indicates "cc: Morris S. Pynoos, Trustee," and argues that Terry is bound by the actions and inactions of her predecessor in interest. Appellant has not provided a citation to the record indicting that Pynoos signed the 1993 document. Even if he had signed it, appellant provides no legal authority for the proposition that Terry may be equitably estopped by Pynoos's actions under the circumstances described here.
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C. Judicial admission
Appellant next raises the doctrine of judicial admission. Appellant essentially argues that, because they did not raise the no contest clause as a bar to the six other petitions filed on this issue, respondents admitted that the no contest clause is not a bar to appellant's proposed action. Appellant claims: "Having admitted, by their silence, that the six prior petitions for modification were not barred by the no contest clause, which is the same in each grandchild's trust, [respondents] have judicially admitted that the no contest clause is not a bar to [appellant's] proposed modification."
As noted above in connection with appellant's estoppel arguments, respondents' purported admission does not change the analysis in this case, which focuses on the settlor's intent and the language of the trust document. However, as set forth below, no relevant judicial admission has occurred.
A judicial admission occurs "where . . . a defendant alleges facts in detail in an inconsistent defense in one action and those facts are inconsistent with a position taken by the same party in a subsequent action between such defendant and other parties." (Jones v. Tierney-Sinclair (1945) 71 Cal.App.2d 366, 374.) Under these circumstances, a "verified pleading may be used as evidence against the pleader in the subsequent action as an admission against interest." (Ibid.) Appellant cites In re Estate of McCarthy (1932) 127 Cal.App. 80, 87 (McCarthy) and Bohn v. Watson (1954) 130 Cal.App.2d 24, 33 (Bohn), as authority for the proposition that failure to answer a complaint, indicating a belief in the essential allegations, may be offered in a subsequent civil proceeding as a judicial admission.
The doctrine of judicial admission is patently inapplicable. It pertains to admissions of fact -- and here, our analysis is purely legal. Further, as explained above, respondents have not taken inconsistent positions on the question of whether a proposed petition to reduce the number of trustees from three to one would violate the no contest provision of the grandchildren trusts. This issue has never been raised therefore respondents have never taken a position on it. McCarthy and Bohn are distinguishable, as both cases involved a judgment entered upon default where the essential allegations of the claim upon which the default was entered served as evidence of an admission by silence. (McCarthy, supra, 127 Cal.App. at p. 87; Bohn, supra, 130 Cal.App.2d at p. 33.) No default judgment is at issue in the present matter. The doctrine of judicial admission does not apply.
D. Power of appointment provisions
Appellant's final argument is that, because the probate court misunderstood the power of appointment provisions in the Marrero trust, its order must be reversed.
We have already determined that appellant's proposed petition seeks to impair or invalidate certain provisions of the trust, thus constituting a contest under the trust's no contest clause. As our review is de novo, the probate court's interpretation of the power of appointment provisions is irrelevant. However, we find no error in the probate court's order.
Appellant takes issue with the following statement in the probate court order:
"Restructuring the Trust as prayed would also potentially adversely affect [appellant's] children, the Settlor's great grandchildren. This is because elimination of the outside Trustees would include trust assets within [appellant's] estate for inheritance tax purposes thereby reducing the amount available to [appellant's] children (Settlor's great grandchildren). . . . Furthermore, the desire to preserve the assets for the sake of this class of great grandchildren beneficiaries is manifested in several portions of the trust including, for example, section 5.1.6.1 which
reflects Settlor's intention that principal be preserved by requiring investment in those of a fixed income nature."
Appellant argues that the probate court's analysis is flawed because she holds a general power of appointment over 16/17ths of the trust, such that all except a very small fraction of the trust can be alienated at death by the beneficiary by its exercise. In other words, appellant seems to be arguing that because she has the power to disinherit her own children as to 16/17th of the trust, there is no reason for the court to attempt to protect their interest by preventing implementation of the modifications in her proposed petition.
The court did not err in noting that the settlor's great grandchildren could be adversely affected if any of the principal became includable in appellant's estate because of the modifications sought in the proposed petition. Even if it had, such purported error would not constitute reversible error, as it does not change the critical analysis in this matter. The settlor intended to provide for his grandchildren, but also implemented a system which prevented his grandchildren from having unfettered access to the trust property. Appellant's proposed petition would undermine this thoughtfully established system. As such, it seeks to impair or invalidate key provisions of the trust, in violation of the no contest clause. Appellant's proposed petition, if filed, would constitute a contest under that clause.
DISPOSITION
The order is affirmed. Respondents are entitled to their costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
CHAVEZ, J.
We concur:
DOI TODD, Acting P. J.
ASHMANN-GERST, J.