Estate of Kelly CA2/3 ( 2022 )


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  • Filed 1/20/22 Estate of Kelly CA2/3
    NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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(a). This opinion has
    not been certified for publication or ordered published for purposes of rule 8.1115(a).
    IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
    SECOND APPELLATE DISTRICT
    DIVISION THREE
    Estate of Eugene C. Kelly,                                      B307908
    Deceased.
    KERRY KELLY NOVICK et al.,                                      Los Angeles County
    Super. Ct. No.
    Petitioners and Respondents,                              17STPB10219
    v.
    PATRICIA WARD KELLY, as
    Trustee, etc.,
    Objector and Appellant.
    APPEAL from an order of the Superior Court of Los
    Angeles County, Daniel Juarez, Judge. Affirmed.
    Harder, Henry L. Self III and Dilan A. Esper for Objector
    and Appellant.
    Marshall & Associates, John A. Marshall and Rodger C.
    Jensen for Petitioners and Respondents.
    _______________________________________
    INTRODUCTION
    Patricia Ward Kelly (Mrs. Kelly), as trustee of the Eugene
    C. Kelly Image Trust (Image Trust), appeals from an order
    assessing monetary sanctions against her in connection with her
    unsuccessful motion for a protective order. The probate court
    found the discovery at issue was reasonably calculated to lead to
    the discovery of admissible evidence and did not seek personal
    financial information, denied Mrs. Kelly’s motion for a protective
    order, and assessed $6,300 in sanctions against her. We affirm
    the sanctions order.
    FACTS AND PROCEDURAL BACKGROUND
    Eugene C. Kelly (Kelly) was known for his performances in
    films such as Singin’ in the Rain (Metro-Goldwyn-Mayer 1952)
    and An American in Paris (Metro-Goldwyn-Mayer 1951). In 1992,
    Kelly created the Eugene C. Kelly Family Trust which upon his
    death called for trust property to be divided into three separate
    portions. At issue here is the property held by the Image Trust
    consisting of the following: all rights to Kelly’s name, image, and
    likeness; all rights under collective bargaining agreements
    regarding any artistic, literary, or intellectual work or
    performance created in whole or in part by Kelly; and any other
    rights of publicity recognized or created upon Kelly’s death.
    Kelly died in 1996. Mrs. Kelly is his widow. Kerry Kelly
    Novick, Timothy J. Kelly, and Bridget J. Kelly (collectively, the
    children) are Kelly’s children and beneficiaries of the Image
    Trust. As such, the children are entitled to income generated by
    the Image Trust. In addition to being a beneficiary of the Image
    Trust, Mrs. Kelly has been its trustee since 1996. As trustee,
    Mrs. Kelly has a duty to keep the children reasonably informed of
    2
    her administration of the Image Trust by providing them with
    accountings and a summary of business activities and efforts to
    generate income.
    In 2017, the children petitioned to remove and surcharge
    Mrs. Kelly as trustee of the Image Trust under Probate Code
    sections 17200, 16420, and 15642. They allege Mrs. Kelly
    “breached and continues to breach her duty as Trustee under
    California Probate Code section 16400, as well as her fiduciary
    duty to” the children by failing “to allow [them] access to [Image]
    Trust records or [Image] Trust information as required under the
    Code.” The children also allege that “as a proximate result of
    [her] breach of trust and breach of fiduciary duty, [they] have
    been damaged by a loss or depreciation in value of the trust
    estate in an amount according to proof and have been impaired in
    their ability to evaluate and assert their rights in the estate.”
    According to the children, in 2011 Mrs. Kelly formed a
    corporation—The Gene Kelly Legacy, Inc.—which competes with
    the Image Trust and allows Mrs. Kelly to personally retain
    income which rightfully belongs to the Image Trust.
    In early 2020, the children served Mrs. Kelly with discovery
    requests. Relevant here, they sought documents relating to
    communications between Mrs. Kelly and Warner Bros. about the
    use of film clips or other intellectual property by The Gene Kelly
    Legacy, Inc., and receipt of income by this corporation for the use
    of Kelly’s name, image, and likeness. In Special Interrogatory No.
    12, Mrs. Kelly was instructed to “[i]dentify each performance for
    which The Gene Kelly Legacy, Inc. received any compensation
    from 2011 to the present, and state the date and amount of such
    compensation.”
    3
    In March 2020, Mrs. Kelly filed a motion for a protective
    order to shield her from responding to the discovery requests.1
    She also sought sanctions against the children in the amount of
    $7,560 for the reasonable costs and attorney fees incurred by her
    for these proceedings. Mrs. Kelly argued disclosure of the
    requested documents and information would violate her and
    Warner Bros.’ rights to privacy. She also argued the propounded
    discovery was not relevant to the case and the children had failed
    to provide Warner Bros. with sufficient notice to allow the studio
    to object to the disclosure.2 Finally, Mrs. Kelly disputed the
    children’s assertion that The Gene Kelly Legacy, Inc. is actively
    promoting and engaging in activities which would have generated
    income for the Image Trust.
    The children opposed the motion and requested sanctions
    against Mrs. Kelly in the amount of $6,300 for attorney fees
    incurred in opposing the motion under Code of Civil Procedure
    sections 2030.090, subdivision (d), and 2031.060, subdivision (h).
    They argued they were not seeking Mrs. Kelly’s private financial
    information such as her tax returns. Instead, the children sought
    information regarding productions related to their father whose
    image is the subject of the Image Trust. They also contended Mrs.
    Kelly’s formation of the competing business of The Gene Kelly
    1Throughout the motion for a protective order, Mrs. Kelly referenced
    the children’s pending motion to compel responses to demand for
    documents. The children’s motion to compel, and Mrs. Kelly’s
    opposition to that motion, are not in the appellate record.
    2 Mrs. Kelly contended, without any supporting evidence or
    documentation, that she was not at liberty to divulge the terms of any
    licenses with Warner Bros. because they are the studio’s confidential
    proprietary information.
    4
    Legacy, Inc. violated her duty of loyalty and her duty to avoid a
    conflict of interest with the Image Trust.
    After hearing argument, and “carefully balanc[ing] the
    right of privacy against the need for disclosure[,]” the court
    denied Mrs. Kelly’s motion. The court indicated that The Gene
    Kelly Legacy, Inc. entity appeared to be competing to some extent
    in terms of the funds that would otherwise be available to the
    Image Trust. The court also explained that the discovery requests
    did not seek Mrs. Kelly’s personal financial information and were
    reasonably calculated to lead to the discovery of admissible
    evidence. Finding no substantial justification for the motion, the
    court assessed monetary sanctions of $6,300 against Mrs. Kelly.
    This appeal followed.
    DISCUSSION
    We do not review the probate court’s order denying the
    protective order on its own merits. The only issue before us is the
    sanctions order, and we consider the merits of the discovery
    dispute only to the extent necessary to resolve the appeal of the
    sanctions ruling.3
    3 The denial of Mrs. Kelly’s motion for a protective order is not
    appealable; review of that order is available solely by way of a petition
    for writ relief. (Dodge, Warren & Peters Ins. Services, Inc. v.
    Riley (2003) 
    105 Cal.App.4th 1414
    , 1421.) Mrs. Kelly filed such a
    petition, and this court summarily denied it on October 22, 2020 (case
    No. B307839). The order is appealable insofar as it imposes a monetary
    sanction exceeding $5,000. (Rail-Transport Employees Assn. v. Union
    Pacific Motor Freight (1996) 
    46 Cal.App.4th 469
    , 475.)
    5
    1.    The court did not abuse its discretion in imposing a
    monetary sanction against Mrs. Kelly.
    Code of Civil Procedure section 2030.090, subdivision (d),
    and section 2031.060, subdivision (h), require a trial court to
    impose a monetary sanction against any party who
    unsuccessfully makes a motion for a protective order “unless it
    finds that the one subject to the sanction acted with substantial
    justification or that other circumstances make the imposition of
    the sanction unjust.” Mrs. Kelly, on the losing end of the
    discovery dispute, had the burden to prove she acted with
    substantial justification. (Doe v. United States Swimming,
    Inc. (2011) 
    200 Cal.App.4th 1424
    , 1435.) “Substantial
    justification” has been held to mean a justification that is well-
    grounded in both law and fact. (Diepenbrock v. Brown (2012) 
    208 Cal.App.4th 743
    , 747.) We review the court’s sanctions order
    under the deferential abuse of discretion standard. (Doe, at p.
    1435.)
    On this record, the court did not abuse its discretion in
    finding that Mrs. Kelly acted without substantial justification in
    making her motion for a protective order. First, she provides no
    supporting citations to the record, and offered no such evidence in
    the lower court, to support her contention that she “reasonably
    believed that, by nonetheless demanding an entire decade of data
    and documents relating to her personal project, The Gene Kelly
    Legacy, Inc. … including especially ‘all DOCUMENTS which
    refer, reflect or relate to receipt of income by’ any of them—[the
    children] significantly expanded the scope of their requested
    discovery far beyond the Image Trust at issue and well into Mrs.
    Kelly’s own private life.” In fact, she did not submit a declaration
    in support of her motion for a protective order. As such, there was
    6
    no evidence before the court that explained Mrs. Kelly’s
    relationship with The Gene Kelly Legacy, Inc. entity, her role in
    administering the Image Trust, or that supported her contention
    that The Gene Kelly Legacy, Inc. did not compete with the Image
    Trust. Second, there was no evidence before the court to support
    Mrs. Kelly’s contention that she sought a protective order to
    protect Warner Bros.’ privacy rights or confidential information.
    As noted by the children on appeal, Mrs. Kelly did not support
    this claim with any documentary evidence such as a signed
    confidentiality agreement. Indeed, the only evidence submitted
    by Mrs. Kelly in support of her motion was the declaration of her
    attorney—and that declaration only authenticated the challenged
    discovery requests and meet and confer correspondence, and
    provided the basis for Mrs. Kelly’s $7,560 sanctions request.
    Accordingly, Mrs. Kelly’s argument that “it would still be unjust
    to impose sanctions where a position was taken in discovery to
    protect the rights of [nonparty Warner Bros.]” is meritless. Third,
    and as noted by the court, the discovery requests were relevant
    and within the scope of the pleadings because the petition alleged
    the children were damaged by a loss or depreciation in value of
    the Image Trust as a result of Mrs. Kelly’s breach of trust and
    breach of fiduciary duty.
    2.    Mrs. Kelly did not show that $6,300 is an unreasonable
    amount.
    Finally, we reject Mrs. Kelly’s contention that the amount
    of sanctions awarded to the children, $6,300, was an abuse of
    discretion. Arguably, Mrs. Kelly forfeited this argument by
    failing to object to the amount requested in the lower court. In
    any event, the record amply supports the amount awarded by the
    court: the children’s attorney submitted a declaration explaining
    7
    that she anticipated spending 14 hours at a billing rate of $450
    per hour in preparing the opposition and arguing against Mrs.
    Kelly’s motion for a protective order. In sum, the court did not
    abuse its discretion in assessing a monetary sanction of $6,300
    against Mrs. Kelly.
    8
    DISPOSITION
    The order is affirmed. Kerry Kelly Novick, Timothy J.
    Kelly, and Bridget J. Kelly shall recover their costs on appeal.
    NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
    LAVIN, J.
    WE CONCUR:
    EDMON, P. J.
    LIPNER, J.*
    * Judge of the Los Angeles Superior Court, assigned by the Chief
    Justice pursuant to article VI, section 6 of the California Constitution.
    9
    

Document Info

Docket Number: B307908

Filed Date: 1/20/2022

Precedential Status: Non-Precedential

Modified Date: 1/20/2022