Opinion
D082819
06-27-2024
Conservatorship of the Estate of RUTH LEAKE. v. GARY LEAKE, Objector and Appellant. CHRISTINE PETERS, Petitioner and Respondent,
Elizabeth Hansen for Objector and Appellant. Anderson Hayes, Ryan S. Anderson, for Petitioner and Respondent.
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of San Diego County, No. 37-2022-00035692-PR-CP-CTL Olga Alvarez, Judge. Affirmed.
Elizabeth Hansen for Objector and Appellant.
Anderson Hayes, Ryan S. Anderson, for Petitioner and Respondent.
HUFFMAN, ACTING P. J.
Christine Peters petitioned the probate court to be appointed the temporary conservator of the person and estate of her mother, Ruth Leake, who had developed severe dementia. On October 6, 2022, the court issued an order designating Christine as the temporary conservator and authorizing Christine to "exercise any powers of appointment held by Ruth Leake" under The Leake Family Trust (the trust). Thereafter, Christine served Gary, as successor trustee of the trust, with two documents exercising Ruth's power of appointment and directing him to transfer the entirety of the trust's income and principal to Ruth. Gary did not comply with the requests.
Because the trustors, Ruth and Donald Leake, share the same last name as appellant Gary Leake, Donald's son, we refer to the parties by their first names for purposes of clarity. No disrespect to the parties is intended.
In response, Christine filed a petition to confirm conservatorship assets and to quiet title in real property pursuant to Probate Code sections 850, 856, 859, and 17200 (the section 850 petition). Gary opposed the petition. By order dated May 16, 2023, the court granted the petition and confirmed that the October 6, 2022 order was "final and will not be revisited by the court." The court ordered Gary to: (1) execute a deed transferring the home he, Ruth, and Donald had lived in to Ruth; (2) transfer the balance of funds held in a trust bank account to the Estate of Ruth Leake; and (3) distribute all personal property owned by the trust to Christine.
Statutory references are to the Probate Code unless otherwise specified.
On appeal, Gary argues that defunding the trust destroys Ruth and Donald's estate plan and that the court erred by not holding an evidentiary hearing on the section 850 petition. He further appears to assert that, although Christine filed her petition under section 850, the court should still have analyzed the factors set forth in section 2580, which governs substituted judgments, in weighing the necessity of changing Ruth's estate plan. Under this standard, he contends the record demonstrates the court abused its discretion. Finally, Gary argues it was an abuse of discretion for the court to arbitrarily ignore article II of the trust, which discusses conservatorships, and instead allow the temporary conservator to improperly defund the trust and destroy the estate plan.
We disagree and affirm the order.
FACTUAL AND PROCEDURAL BACKGROUND
Ruth and Donald entered into the trust agreement at issue in December 1996 and designated Christine as their successor trustee. Both apparently owned homes at the time of their marriage that became part of the trust. The trust left Ruth's house to two of her daughters from a prior relationship and designated Gary as the sole beneficiary for the remainder of the trust estate upon the death of the surviving spouse. Christine and another sister were contingent beneficiaries. Ruth designated Christine as her alternate if she required a health care agent, conservator, or executor, and Donald was unable to serve.
Ruth subsequently sold her house and lived with Donald in his home. In 2018, Donald recorded a transfer on death deed for the property listing Gary as the beneficiary. Gary later conceded this deed was invalid but argued it reflected his father's intent that the marital home go to his son. In September 2020, Donald and Ruth amended their trust and replaced Christine with Gary as the successor trustee. Donald passed away from Alzheimer's dementia in May 2022.
In September 2022, Christine filed a petition for appointment as the temporary conservator of the person and estate of her mother, Ruth, alleging that her then 87-year-old mother was suffering from dementia and could not provide for her physical wellbeing or manage her finances. Christine separately filed a petition to become the permanent conservator. At this point, Ruth lived in a care facility, and Gary remained in the marital home.
The judge who initially presided over the case ordered Gary to file and serve all estate planning documents. After he did so, the court-appointed attorney for Ruth, Catherine Swafford, filed a report in which she questioned the validity of the trust amendment and the transfer on death deed. Swafford opined that the existing contentious circumstances would inevitably lead to more litigation and expenses and, therefore, recommended that the court appoint Christine as the temporary conservator and authorize her to immediately exercise Ruth's power of appointment. In response, Gary's attorney filed a declaration noting inaccuracies in Swafford's report, requesting a continuance of the hearing so that he could engage in discovery, and asking that an evidentiary hearing be set. He concurrently filed evidentiary objections to Swafford's report and an unsigned declaration prepared by Gary. The record does not, however, include any objections to Christine's request for appointment as Ruth's temporary conservator.
The settled statement also states that "[t]he record does not reflect a request for an evidentiary hearing."
At the October 6, 2022 hearing, the court granted the petition designating Christine as the temporary conservator and authorized Christine to pursue issues with regard to the trust, including litigation issues, and "exercise any powers of appointment held by Ruth Leake." The minute order does not reflect a ruling on Gary's evidentiary objections or reference his attorney's request for an evidentiary hearing. On October 12, 2022, Swafford served the parties with notice of entry of the order.
On October 6 and again on October 12, Christine served Gary with two documents exercising Ruth's power of appointment and directing him to transfer the entirety of the income and principal of the trust, including the deed to the marital home, to Ruth. Gary declined to do so. Therefore, on October 25, Christine filed the section 850 petition requesting that the court order Gary to transfer the deed to the house, the funds contained in the trust bank account, and all personal property to Ruth and Christine.
In November 2022, the court granted the petition appointing Christine as the conservator of Ruth's person and estate, and it appears from the record that the appointment became effective in December 2022 following the clerk's issuance of letters of appointment. (§ 2310, subd. (a).) A few weeks later, Gary filed his "opposition and objections" to the section 850 petition. Therein, Gary argued Christine had failed to meet her burden of proving that: (1) all the trust assets must be turned over to her despite the trustors having removed her as trustee by way of their trust amendment; (2) the assets of the trust were insufficient to provide for Ruth's care and support; and (3) destroying the trust was in Ruth's best interest. He further submitted that the request was procedurally defective because Christine should have filed a petition for a substituted judgment under section 2580. After listing objections and affirmative defenses, Gary requested an evidentiary hearing.
We presume Gary intended to say "income."
Christine filed a reply, asserting that Gary was attempting to distract from the two issues at hand-whether the trust contained a valid power of appointment and whether Christine had validly exercised that power. Thereafter, Gary's attorney filed a declaration identifying the witnesses to the trust amendment as attorneys and alleging that Christine used the trust bank account "as her own piggy bank" during the brief period when the bank afforded her access. Christine filed objections to this declaration.
At a January 2023 hearing, the court continued the hearing on the section 850 petition and scheduled one hour of argument but ordered that Gary must pay rent and post bond in the interim and could not sell, transfer, or encumber the trust's real property without further court order. Thereafter, the parties received notice that the case had been reassigned to a new judge. Following additional briefing, the new judge granted Christine's section 850 petition as noted above, and this appeal followed.
Both parties submitted proposed settled statements to the new judge for her review. Because she had not presided over most of the hearings, she designated the court's minute orders as the settled statement, with some additional notes added. There are no transcripts from any of the proceedings.
DISCUSSION
Although Gary focuses on many issues raised earlier in the proceedings, the only order he actually appealed was the May 16, 2023 order that granted Christine's section 850 petition, confirmed the conservatorship's assets, and ordered Gary to turn them over. The settled statement reveals that after the new judge took over, she reviewed the pleadings and asked the parties for clarification of the issues before her. It then says: "All parties agreed that the issue was a matter of law as the facts were clear and undisputed, and therefore, had been set for a one-hour legal argument. The legal issue was whether the Leake Family Trust contained a power of appointment permitting the temporary conservator to exercise the authority that the Trustee turn over the assets to the sole living settlor. (See, Section 2, para. C of the Leake Family Trust.)"
Gary discusses various additional facts in his briefing that are not part of the settled statement before us. The record of decision included in the clerk's transcript does not reflect that Gary objected that these facts were not included in the trial court's order on the proposed settled statement (see Cal. Rules of Court, rule 8.137(g)(2) [allowing "any party" to file objections where, as here, the trial court has ordered the appellant to prepare a statement incorporating the court's modifications to the settled statement]), nor does our docket indicate he filed a motion to augment the record on appeal. Because the trial court has" 'full and complete power'" to make a final determination of the content of the settled statement (Marks v. Superior Court (2002) 27 Cal.4th 176, 195), we do not consider additional evidence outside the settled statement on appeal.
The interpretation of a trust instrument is a question of law subject to de novo review "unless interpretation turns on the credibility of extrinsic evidence or a conflict therein." (Burch v. George (1994) 7 Cal.4th 246, 254.) Here, the settled statement provides the agreed upon record on appeal and no credibility determinations are required to interpret the trust. Although Gary asked the court to consider evidence relevant to a potential trust contest by Christine and the trustors' capacity and intent in drafting subsequent estate documents, the record does not reflect that he presented extrinsic evidence specifically directed to the trustors' intent when they drafted the articles in dispute (II and IV), or any other provisions relevant to the interpretation of those articles. Accordingly, we independently construe the trust instrument. (Id. at p. 254.)
In so doing, "the duty of the court is to first ascertain and then, if possible, give effect to the intent of the maker." (In re Estate of Gump (1940) 16 Cal.2d 535, 548 (Estate of Gump); Zahnleuter v. Mueller (2023) 88 Cal.App.5th 1294, 1305 (Zahnleuter).) "It is axiomatic that we must look to the instrument creating the trust to determine the nature, extent and object of said trust." (Moxley v. Title Ins. & Trust Co. (1946) 27 Cal.2d 457, 463.) "All parts of an instrument are to be construed in relation to each other and so as, if possible, to form a consistent whole." (§ 21121.) "If the meaning of any part of an instrument is ambiguous or doubtful, it may be explained by any reference to or recital of that part in another part of the instrument." (Ibid.)
Article II, subsection (C) of the trust provides:
"In the event that either Co-Trustor shall be legally declared a Conservatee or a Ward of the court, and the income from the trust shall be insufficient to provide for the proper care, support and maintenance of such Co-Trustor, the Conservator or Guardian of such Co-Trustor shall have the right, with the approval of the appropriate court, to invade the trust for the benefit of such Co-Trustor to the extent that such Co-Trustor could have invaded the trust had such Co-Trustor not been, at that time, subject to a Conservatorship or Guardianship. The powers of the CoTrustors to revoke or amend this trust are personal to them and shall not be exercisable in their behalf by any Conservator or Guardian or other person, except that revocation or amendment may be authorized, after notice to the Trustee, by the court that appointed the Conservator or Guardian."
Further down in the trust document, article IV, subsection (C)(2) provides:
"During the life of the Surviving Spouse, such Surviving Spouse may, by a written instrument filed with the Trustee and signed by the Surviving Spouse, direct the Trustee to distribute any amount of income and/or principal of the trust, up to and including the whole thereof, to himself or herself, or to his or her estate, or to any other individual designated by such Surviving Spouse."
Gary asserts that the trustors intended article II to govern any order regarding the authority of a temporary or permanent conservator. He equates the court's action of allowing the conservator to defund the trust with having effectively authorized revocation of the trust instrument. He then reads article II as prohibiting a judge from granting a conservator any power the trust expressly limited to the conservatee. But, apparently recognizing that article II does allow the court to authorize the conservator to take this action, Gary argues the court still erred because it issued the order despite Christine's failure to show the income from the trust was insufficient to provide for the proper care, support, and maintenance of Ruth.
What Gary does not provide, however, is any legal argument or authority demonstrating that the court could not authorize a temporary conservator to exercise the power of appointment granted to Ruth by article IV of the trust. For example, he did not point to any statutory or case law supporting his assertion that article II of the trust regarding conservatorships trumps article IV regarding the surviving spouse distributing to herself. He also offers no legal basis for concluding a court cannot authorize a conservator to exercise powers reserved for a surviving spouse. Thus, he has not met his burden of showing reversal is warranted on these grounds.
Our review of relevant authority also does not yield support for his position. Although the court could have relied upon article II, we find nothing indicating it was required to do so. Nor was Christine obligated to petition the court for a substituted judgment pursuant to section 2580 as Gary otherwise claims, although this route presented another available option. Rather, as the Probate Code makes clear, the court had authority to appoint a temporary conservator upon a showing of good cause. (§ 2250, subd. (a)(2) & (b).) It further could grant the conservator "additional powers and duties" in the order of appointment. (§ 2252.) Article IV of the trust permitted Ruth as the surviving spouse "to distribute any amount of income and/or principal of the trust, up to and including the whole thereof, to . . . herself, or to . . . her estate," and the court authorized Christine to exercise this power on behalf of Ruth.
Furthermore, allowing Christine to transfer Ruth's property to her own estate by way of the power of appointment did not contravene the apparent intent of the trustors. (Estate of Gump, supra, 16 Cal.2d at p. 548; Zahnleuter, supra, 88 Cal.App.5th at p. 1305.) Articles II, III, and IV of the trust all demonstrate the trustors' intent that the income and principal benefit the trustors or, after the death of one of them, the surviving spouse. Likewise, during both of their lifetimes, article III, subsection (D) directed the trustee to "exercise in a liberal manner the power to invade principal" just as, after the death of one spouse, the power of appointment in article IV, subsection (C)(2) provided the surviving spouse the ability, with no preconditions, to direct the trustee to distribute some or all the principal to himself or herself.
Allowing Christine to exercise Ruth's rights within the guidelines of article IV also did not technically "revoke" the trust, even though it resulted in an unfunded trust. In authorizing Ruth to exercise her power of appointment and withdraw some or all of the trust's assets during her lifetime, the court acted within what was allowed by the trust's terms. For this reason, we are not persuaded by Gary's argument that the court's action went against its duty to preserve and protect the conservatee's estate plan, which is presumed to have been created during a time of lucidity. The power of appointment was one option available to Ruth and the court while still acting within the confines of the estate plan. That the court's order did not authorize a different option that required the marital home to remain within the trust unless and until it was required for Ruth's care does not de facto mean the court failed to preserve the estate plan.
Turning to Gary's argument that the trial court erred by not holding an evidentiary hearing, we first clarify that we consider only whether the court failed to do so during the May 16, 2023 hearing, as the order resulting from that hearing is the one appealed. Gary contends the trial court was required to hold an evidentiary hearing because Christine was contesting the estate plan and the matter was "contested" within the meaning of the Superior Court of San Diego County, Local Rules, rule 4.22.1(A). Under this rule, "[w]hen objections are filed to a petition or other pleading seeking affirmative relief in the Probate Court, the matter becomes a 'contested matter.'" (Super. Ct. San Diego County, Local Rules, rule 4.22.1(A).) Although the record does not make clear that Christine formally contested any portion of the estate plan, Gary did oppose the section 850 petition, and the new judge's modification to the settled statement before the May 1, 2023 hearing leading up to the May 16 hearing indicated that at least Christine addressed in her briefing whether an evidentiary hearing was necessary. Thus, it appears the court considered the issue.
Swafford also noted in her memorandum in support of Christine's exercise of the power of appointment that "because Gary Leake filed objections to the Petition to Confirm Assets, the Court's hands were tied, so the Court ordered the parties to file a memorandum of points and authorities on the power of appointment issue, and scheduled oral argument."
To the extent the May 16, 2023 order then impliedly denied Gary's request for an evidentiary hearing, we likely would review for abuse of discretion. (See, e.g., Conservatorship of Farrant (2021) 67 Cal.App.5th 370, 377.) However, it appears Gary forfeited this challenge on appeal because the record reflects his attorney agreed the facts were undisputed and the only issue was a legal one. As previously noted, the settled statement includes the court's modification noting that "[a]ll parties agreed that the issue was a matter of law as the facts were clear and undisputed."
Even if we assume the trial court was required to conduct an evidentiary hearing once Gary filed his opposition to the section 850 petition and erred as a matter of law by denying the request, Gary has not demonstrated he was prejudiced as a result. (See Cal. Const., art. VI, § 13.) Christine sought by way of her petition to enforce her written exercise of the power of appointment that the trial court's October 6, 2022 order authorized. But Gary does not dispute any factual issues pertinent to the section 850 petition, such as that: (1) the bank account, personal property, and house were part of the trust estate, (2) the court issued an order authorizing Christine to exercise Ruth's power of appointment, (3) Christine sent Gary a valid written exercise of Ruth's power of appointment, or (4) he did not comply with the request. As a result, there is no indication any factual issues were disputed such that the outcome would have been different had the court held an evidentiary hearing at this stage.
Quite to the contrary, Gary admitted the marital house is part of the trust and acknowledged the demands to turn over all trust assets to Christine.
The only factual issues Gary disputes and wants to address by way of an evidentiary hearing are the ones that were or could have been resolved by the October 6, 2022 order. To the extent the trial court failed to address Gary's concerns or to hold an evidentiary hearing prior to that ruling, Gary should have appealed the order. Section 1300, subdivision (c) allows appeal of an order "[a]uthorizing, instructing, or directing a fiduciary . . ." Serving as a conservator is a fiduciary role (see § 2101), and the October 6 order expressly authorized Christine as Ruth's conservator to exercise Ruth's power of appointment. Furthermore, nothing in the record indicates the October 6 order was nonfinal. The order itself did not indicate it was an interim decision; nor did it direct either party to prepare a written order. Subsequent orders also did not treat it as an interim order. Instead, the May 16, 2023 order expressly confirmed that "[t]he Court Order dated October 6, 2022 is final and will not be revisited by the court." Thus, although the portion of the order making Christine the temporary conservator was not appealable (§ 1301, subd. (a)), we conclude the section authorizing Christine to exercise the power of appointment was appealable. Gary did not appeal the October 6 order, and as the time for doing so has passed, he may not challenge it now.
Because we conclude the October 6 order was not an interim order, we disagree with Gary that the portion of Code of Civil Procedure section 906 allowing consideration of interim orders provides jurisdiction for our review. This section expressly provides that, "[t]he provisions of this section do not authorize the reviewing court to review any decision or order from which an appeal might have been taken." (Code Civ. Proc., § 906.)
Because Swafford served the parties with notice of entry of the order on October 12, 2022, Gary had 60 days to appeal. (Cal. Rules of Court, rule 8.104(a)(1)(B).) However, even the default limit of 180 days (Cal. Rules of Court, rule 8.104(a)(1)(C)) expired on April 4, 2023.
DISPOSITION
The order is affirmed. Christine is entitled to her costs on appeal.
WE CONCUR: IRION, J. BUCHANAN, J.