Blech v. Blech ( 2019 )

Filed 8/15/19
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION THREE
RAYMOND BLECH et al., B288074
Plaintiffs and Respondents, Los Angeles County
Super. Ct. No. BP135753
v.
RICHARD BLECH,
Defendant and Appellant.
APPEAL from an order of the Superior Court of Los
Angeles County, Lesley C. Green, Judge. Affirmed.
Law Office of Adam L. Streltzer, Adam L. Streltzer and
Darius Anthony Vosylius for Defendant and Appellant.
Keystone Law Group, Shawn S. Kerendian and Lindsey F.
Munyer for Plaintiff and Respondent Raymond Blech.
Wolf, Rifkin, Shapiro, Schulman & Rabkin and
Christopher J. Heck for Plaintiffs and Respondents Robert Bleck
and Linda Sue Grear.
Tantalo & Adler and Michael S. Adler for Plaintiff and
Respondent WGC Sports, LLC.
_______________________________________
INTRODUCTION
Although a judgment creditor may generally attempt to
enforce a money judgment against most assets of a debtor, such a
creditor may not reach a debtor’s interest in a trust if the trust
includes a spendthrift provision. In that event, the creditor must
obtain an order under Probate Code1 section 15301, subdivision
(b) (section 15301(b)), instructing the trustee to pay the creditor
once a trust disbursement is due and payable to the debtor.
Related sections of the Probate Code provide additional creditor
remedies and protections for trust beneficiaries.
Richard Blech2 is the beneficiary of a spendthrift trust
created by his father. The trust provides, among other things, for
annual distributions of trust principal over the course of 10 years.
Four of Richard’s judgment creditors (three of his siblings and an
unrelated company) obtained an order from the probate court
under section 15301(b), directing the trustee to pay a portion of
Richard’s 2018 principal disbursement to the creditors in partial
satisfaction of their money judgments. Richard appeals.
Richard asserts four arguments in this appeal. First, he
contends the court should not have considered the creditors’
petitions because they were filed before his principal
disbursement was due and payable. We conclude section 15301(b)
permits the procedure used in this case. Second, Richard argues
the court improperly directed the trustee to withhold Richard’s
January 2018 disbursement until after the court issued its final
1 All undesignated statutory references are to the Probate Code.
2 We refer to the family members by their first names in the interest of
clarity.
2
order on the creditors’ petitions. We conclude the court acted
within the broad scope of its equitable authority. Third, Richard
claims the court erred when it declined to rule from the bench
(before his disbursement was due and payable) and instead
issued a written ruling a few days later (after the disbursement
was due and payable). We see no error in the court’s approach.
And fourth, Richard contends the trust required the trustee to
make all payments directly to him, in contravention of section
15301(b). The trust does not so provide. Accordingly, we affirm.
FACTS AND PROCEDURAL BACKGROUND
1. Arthur’s Estate Plan
Arthur Blech died in 2011, leaving behind a substantial
legacy for his four adult children, Raymond Blech, Robert Bleck,3
Richard Blech, and Linda Sue Grear (also known as Jenifer
Rush). Arthur’s estate plan consisted of the Arthur Blech Living
Trust and a will providing that certain of Arthur’s assets would
be poured over into the trust upon his death. The trust became
irrevocable after Arthur died and, pursuant to its terms, was
divided among the children into four unequal shares, to be held
in trust for 10 years.4 The trust provides for quarterly
distributions of income and annual distributions of principal.
Two specific provisions of the trust are of interest here.
First, the trust requires the trustee to distribute trust principal
annually to each of the four children for 10 years. The trustee is
3Robert was born “Robert Blech” but changed his name to “Robert
Bleck.”
4Raymond received 35 percent, Linda received 15 percent, and
Richard and Robert each received 25 percent.
3
given no discretion in this regard, as the trust provides in
paragraph 5.7:
“The following fractional shares of principal after retention
of reasonable reserves shall be distributed to each beneficiary out
of such beneficiary’s share:
“(a) One-tenth (1/10) one (1) year after Grantor’s death.
“(b) One-ninth (1/9) two (2) years after Grantor’s death.
“(c) One-eighth (1/8) three (3) years after Grantor’s death.
“(d) One-seventh (1/7) four (4) years after Grantor’s death.
“(e) One-sixth (1/6) five (5) years after Grantor’s death.
“(f) One-fifth (1/5) six (6) years after Grantor’s death.
“(g) One-fourth (1/4) seven (7) years after Grantor’s death.
“(h) One-third (1/3) eight (8) years after Grantor’s death.
“(i) One-half (1/2) nine (9) years after Grantor’s death.
“(j) The balance ten (10) years after Grantor’s death.”
Second, the trust contains a spendthrift provision designed
to protect trust assets from the reach of the beneficiaries’
creditors. Specifically, paragraph 10.1 of the trust provides:
“No interest of any Beneficiary of any Trust created in this
Trust Agreement shall be subject to sale, assignment,
hypothecation or transfer nor shall the principal of any Trust or
the income arising therefrom, be liable for any debt of any
Beneficiary or be subject to attachment by or the interference by
or control of any creditor of any Beneficiary or be taken or
reached by any legal or equitable process in satisfaction of any
debt or liability of any Beneficiary, including, without limitation,
the process of any court in aid of execution of judgment so
rendered. All of the income and principal under any Trust shall
be transferable, payable and deliverable only to the designated
Beneficiary at the time the Beneficiary is entitled to take under
4
the terms of this Trust. The personal receipt of the Beneficiary
may be made a condition precedent to the payment or delivery by
the Trustee to that Beneficiary. The Trustee may, however,
deposit in any bank designated in writing by a Beneficiary, to his
or her credit, income or principal payable to that Beneficiary.
This Article shall not restrict any authority of the Trustee to use
and disburse funds for the support, maintenance, health and
education of a Beneficiary, or to disburse funds to a guardian or
conservator as herein provided.”
Comerica Bank is the current trustee.
2. Money Judgments Against Richard
After their father died, the siblings had several disputes
amongst themselves that eventually resulted in litigation. As
pertinent here, Raymond, Robert, and Linda entered into a
settlement agreement with Richard in 2014, in which Richard
agreed to pay from his share of the trust $139,950 to Linda,
$93,405 to Robert, and $617,000 to Raymond. The payments were
to be made no later than November 15, 2015.
In 2016, after Richard failed to comply with the settlement
agreement, the three sibling creditors moved to enforce the
settlement agreement and obtained judgments in their favor for
the amounts owed under the settlement agreement as well as
interest, attorney’s fees, and costs relating to the enforcement
proceeding.
In January 2017, an unrelated entity, WGC Sports, LLC,
obtained a money judgment against Richard in the amount of
$560,311.
5
3. Petitions to Enforce the Judgments
After entry of their respective judgments against Richard,
the sibling creditors filed petitions to enforce their money
judgments under Code of Civil Procedure section 709.010. In
December 2016, the court ordered the trustee (under section
15306.5) to pay 25 percent of Richard’s future trust distributions
to the sibling creditors until their judgments were satisfied.
In March 2017, the California Supreme Court decided
Carmack v. Reynolds (2017) 2 Cal.5th 844 (Carmack), a case
clarifying a creditor’s ability to reach amounts due and payable to
a trust beneficiary while those funds are still in the hands of a
trustee. Seeking to take advantage of that decision, in late 2017,
Raymond, Robert, Linda, and WGC Sports, LLC (collectively,
creditors) filed petitions to enforce their money judgments under
section 15301(b). The creditors sought an order directing the
trustee to use the unencumbered portion of Richard’s mandatory
January 2018 principal distribution (i.e., the 75 percent
unaffected by the court’s 2016 order) to pay down their money
judgments.
The court heard the petitions together on January 10, 2018,
shortly before the trustee was required to make the annual
distributions of principal from the trust.5 At that time, the
creditors advised the court that they had stipulated to the
relative priority of their money judgments and to the division of
any funds the court ordered the trustee to use to pay Richard’s
5Under the terms of the trust, principal distributions are due and
payable on the anniversary of Arthur’s death: January 13. Because
that date fell on a weekend in 2018, the trustee planned to make the
distribution the day after the hearing, on January 11.
6
debts. Richard opposed the petitions, arguing that because no
amount was “due and payable” on January 10, the creditors’
petitions were premature and, in any event, the court lacked the
authority to make any order regarding a future distribution of
principal. Richard also claimed the trust was a “support trust”
within the meaning of the Probate Code and that the court would
need to conduct a future hearing to determine what percentage of
Richard’s future distributions were needed for the support,
maintenance, and health of Richard and his dependents.
Although Richard insisted that the court issue a ruling
from the bench, the court did not do so. Instead, the court
authorized the trustee to disburse, as scheduled, the 25 percent of
Richard’s annual principal distribution subject to the court’s 2016
order but ordered the trustee to retain the remaining 75 percent
of the distribution until the court issued its final ruling.
4. The Court’s Order and the Appeal
The court issued its final written ruling granting the
creditors’ petitions on January 19, 2018. Richard timely appeals.
DISCUSSION
1. A judgment creditor may file a petition under section
15301(b) before a debtor/trust beneficiary’s trust
distribution is “due and payable.”
Richard’s primary assertion is that the court erred in
entertaining the petitions brought by the creditors because those
petitions were premature. Specifically, Richard claims that a
creditor may not file a petition to enforce a money judgment
under section 15301(b) until after a disbursement is due and
payable to a trust beneficiary. We reject this interpretation of the
statute.
7
1.1. Standard of Review
Because our analysis turns on our interpretation of section
15301(b), our review is de novo and governed by well-established
principles of statutory construction.
“We seek to ‘ascertain the intent of the lawmakers so as to
effectuate the purpose of the statute.’ [Citation.] ‘[W]e begin by
looking to the statutory language. [Citation.] We must give “the
language its usual, ordinary import and accord[ ] significance, if
possible, to every word, phrase and sentence in pursuance of the
legislative purpose. A construction making some words
surplusage is to be avoided. The words of the statute must be
construed in context, keeping in mind the statutory purpose, and
statutes or statutory sections relating to the same subject must
be harmonized, both internally and with each other, to the extent
possible.” [Citation.] If the statutory language is susceptible of
more than one reasonable interpretation, we must look to
additional canons of statutory construction to determine the
Legislature’s purpose. [Citation.] “Both the legislative history of
the statute and the wider historical circumstances of its
enactment may be considered in ascertaining the legislative
intent.” ’ [Citation.]” (Carmack, supra, 2 Cal.5th at pp. 849–850.)
1.2. Analysis
It has long been recognized that where, as here, a trust
instrument provides that a beneficiary’s interest is not subject to
voluntary or involuntary transfer (i.e., is a spendthrift trust), the
interest is not generally subject to enforcement of a money
judgment until payment is made to the beneficiary. (§§ 15300
[interest in trust income “not subject to enforcement of a money
judgment until paid to the beneficiary”]; 15301 [same, as to
8
beneficiary’s interest in trust principal]; see Kelly v. Kelly (1938)
11 Cal. 2d 356, 363–364 [although spendthrift trust beneficiary
could not assign trust interest to judgment creditor, creditor
could obtain judgment against beneficiary and levy upon his
property, including property received from the trust].) Under the
Probate Code, only a few categories of creditors may reach a
beneficiary’s interest in trust principal before it is paid,
notwithstanding a spendthrift provision. “Such creditors include
those with claims for spousal or child support (§ 15305) and those
with restitution judgments (§ 15305.5). In addition, a state or
local public entity can reach trust assets when the beneficiary
owes money for public support (§ 15306, subd. (a)) unless
distributions from the trust are required to care for a disabled
beneficiary (§ 15306, subd. (b)).” (Carmack, supra, 2 Cal.5th at
p. 849.)
General creditors, such as the creditors here, have more
limited remedies with respect to a debtor’s interest in a trust
containing a spendthrift provision. For example, section 15306.5
provides, in pertinent part:
“(a) Notwithstanding a restraint on transfer of the
beneficiary’s interest in the trust under Section 15300 or 15301,
and subject to the limitations of this section, upon a judgment
creditor’s petition under Section 709.010 of the Code of Civil
Procedure, the court may make an order directing the trustee to
satisfy all or part of the judgment out of the payments to which
the beneficiary is entitled under the trust instrument or that the
trustee, in the exercise of the trustee’s discretion, has determined
or determines in the future to pay to the beneficiary.
“(b) An order under this section may not require that the
trustee pay in satisfaction of the judgment an amount exceeding
9
25 percent of the payment that otherwise would be made to, or
for the benefit of, the beneficiary.
“(c) An order under this section may not require that the
trustee pay in satisfaction of the judgment any amount that the
court determines is necessary for the support of the beneficiary
and all the persons the beneficiary is required to support.
“(d) An order for satisfaction of a support judgment, as
defined in Section 15305, has priority over an order to satisfy a
judgment under this section. Any amount ordered to be applied to
the satisfaction of a judgment under this section shall be reduced
by the amount of an order for satisfaction of a support judgment
under Section 15305, regardless of whether the order for
satisfaction of the support judgment was made before or after the
order under this section.
[¶] … [¶]
“(f) Subject to subdivision (d), the aggregate of all orders for
satisfaction of money judgments against the beneficiary’s interest
in the trust may not exceed 25 percent of the payment that
otherwise would be made to, or for the benefit of, the beneficiary.”
Under this section, then, a general creditor may obtain a
court order directing the trustee to pay up to 25 percent of a
beneficiary’s future trust distributions directly to the creditor
until that creditor’s money judgment is satisfied. But even that
limited reach is further restricted by subdivision (c), which
protects amounts needed for the support of the beneficiary and
his or her dependents. And under subdivision (f), if multiple
creditors seek to reach the beneficiary’s interest in future
distributions, all the creditors combined may only reach 25
percent of those distributions. Here, as noted, the three sibling
creditors obtained such an order in 2016.
10
In 2017, the California Supreme Court clarified the point at
which a general creditor may reach the remaining portion of a
beneficiary’s trust disbursements, i.e., the 75 percent of future
payments not reachable under section 15306.5. (Carmack, supra,
2 Cal.5th 844.) As relevant here, the court focused on section
15301(b), which provides in pertinent part: “After an amount of
principal has become due and payable to the beneficiary under
the trust instrument, upon petition to the court under Section
709.010 of the Code of Civil Procedure[6] by a judgment creditor,
the court may make an order directing the trustee to satisfy the
money judgment out of that principal amount.” Construing that
provision, the court held that “under this provision, creditors may
reach the principal already set to be distributed and only up to
the extent of that distribution. Such principal has served its trust
purposes … . Section 15301(b) makes these assets, and these
assets only, fair game to creditors.” (Carmack, at p. 851.)
The court elaborated:
“The general rule is that principal held in a spendthrift
trust may not be touched by creditors until it is paid to the
beneficiary. (§ 15301, subd. (a).) Section 15301(b) adds that once
an amount has become due and payable, the court can order the
trustee to pay that amount directly to the beneficiary’s creditors
instead. A distribution of principal is reasonably understood to
signify that the amount distributed has satisfied its trust
purposes. Because the beneficiary’s interest in those assets has
6 Section 709.010 of the Code of Civil Procedure (section 709.010) sets
forth the procedure for a judgment creditor to petition a court to satisfy
the judgment out of the debtor’s trust interests.
11
effectively vested, the law no longer has any interest in
protecting them (except as provided in § 15302 … ).”
(Carmack, supra, 2 Cal.5th at p. 851.)
Here, as already noted, the trustee was required to
disburse Richard’s annual principal payment on or about
January 13, 2018. And the court, citing both Carmack and
section 15301(b), made its order on January 19, 2018, after the
disbursement was due and payable to Richard.
Richard contends, however, that the court erred by
considering the creditors’ petitions on January 10, 2018—before
the principal disbursement was due and payable. In his view,
section 15301(b) bars a creditor from filing a petition to enforce a
judgment before a trust distribution is due and payable. The
plain language of the statute does not support Richard’s
interpretation. Section 15301(b) says: “After an amount of
principal has become due and payable to the beneficiary under
the trust instrument, upon petition to the court under Section
709.010 of the Code of Civil Procedure by a judgment creditor,
the court may make an order directing the trustee to satisfy the
money judgment out of that principal amount. The court in its
discretion may issue an order directing the trustee to satisfy all
or part of the judgment out of that principal amount.” The clause
“after an amount of principal has become due and payable” is an
adverbial phrase that modifies the verb “make,” i.e., it specifies
the time at which the court may act. Similarly, the phrase “upon
petition to the court under Section 709.010 of the Code of Civil
Procedure by a judgment creditor” also modifies “make,” and is
an adverbial phrase defining the manner in which the court may
act, i.e., in response to a petition by a creditor under the specified
code section.
12
Under Richard’s construction, the first phrase (“after an
amount has become due and payable”) would modify both the
second adverbial phrase (“upon petition to the court” etc.) and the
verb “make,” a construction that is both cumbersome and
nonsensical in practical terms. The final sentence of section
15301(b) indicates the court may order the trustee to make a
payment directly to a creditor. But as the court noted in this case,
if a creditor could not even file a petition to enforce a judgment
until after a trust distribution is due and payable, it would be
virtually impossible for the court to take any action before the
trustee would be required by the terms of the trust to disburse
the payment. In other words, Richard’s strained interpretation
would effectively deprive judgment creditors of the relief the
Legislature specifically sought to provide. (Carmack, supra, 2
Cal.5th at p. 852 [noting the drafters of section 15301(b) “sought
to clarify that once principal was due and payable, creditors could
reach it both ‘in the hands of the trustee and after payment to the
beneficiary’ ”].)
Ignoring the plain meaning of the statute, Richard urges
that Carmack supports his view and cites an example provided
by the court which appears, on its face, to support Richard’s
position. At the end of its decision, the court summarized its
opinion:
“In sum, after an amount of principal has become due and
payable (but has not yet been distributed), a creditor can petition
to have the trustee pay directly to the creditor a sum up to the
full amount of that distribution (§ 15301(b)) unless the trust
instrument specifies that the distribution is for the beneficiary’s
support or education and the beneficiary needs the distribution
for those purposes (§ 15302). If no such distribution is pending or
13
if the distribution is not adequate to satisfy a judgment, a general
creditor can petition to levy up to 25 percent of the payments
expected to be made to the beneficiary, reduced by the amount
other creditors have already obtained and subject to the support
needs of the beneficiary and any dependents. (§ 15306.5.)
“As an illustration, suppose a trust instrument specified
that a beneficiary was to receive distributions of principal of
$10,000 on March 1 of each year for 10 years. Suppose further
that a general creditor had a money judgment of $50,000 against
the beneficiary and that the trust distributions are neither
specifically intended nor required for the beneficiary’s support.
On March 1 of the first year, upon the creditor’s petition a court
could order the trustee to remit the full distribution of $10,000
for that year to the creditor directly if it has not already been
paid to the beneficiary, as well as $2,500 from each of the nine
anticipated payments (a total of $22,500) as they are paid out. If
the creditor were not otherwise able to satisfy the remaining
$17,500 balance on the judgment, then on March 1 of the
following years, upon the general creditor’s petition the court
could order the trustee to pay directly to the creditor a sum up to
the remainder of that year’s principal distribution ($7,500), as
the court in its discretion finds appropriate, until the judgment is
satisfied.” (Carmack, supra, 2 Cal.5th at pp. 856–857.)
According to Richard, then, Carmack stands for the
proposition that his judgment creditors may only file a petition to
enforce a judgment against his annual principal distributions,
and the court may only make an order on those petitions, on or
after January 13 of each year—the date the trustee is required to
make those distributions. And here, the four judgment creditors
filed their petitions in the fall of 2017, well before the
14
January 13, 2018 distribution date. Richard therefore asserts the
court erred by considering the petitions in the first instance.
But even assuming the quoted portion of Carmack supports
Richard’s timing argument—a point we do not resolve—Richard
ignores a critical point and one which the Supreme Court
emphasized at the outset of its decision in Carmack: the case
arose in the context of a Chapter 7 bankruptcy. Specifically, the
court noted that two significant factual circumstances informed
its decision. First, the trust at issue, like the trust in the present
case, “is distinctive in directing all disbursements to be made
from principal.” (Carmack, supra, 2 Cal.5th at p. 850.) Second,
and importantly for our purposes, the court explained:
“We are also mindful that this case arises out of a
bankruptcy proceeding. Ordinarily, a judgment creditor who is
unable to satisfy all of the judgment out of the beneficiary’s trust
interest may continue to attempt to collect on the balance of the
judgment from whatever other assets the beneficiary may have.
Here, however, the amount Reynolds’s creditors will receive
depends on the reach of the bankruptcy trustee. Any remaining
debts after the bankruptcy process will be extinguished, and any
further distributions will be unencumbered. (11 U.S.C.
§ 541(c)(2).) That spendthrift provisions can work to beneficiaries’
advantage in bankruptcy in this way has long been recognized as
a characteristic of such provisions. (See Rest.3d Trusts, § 58,
com. a, p. 367 [‘An important byproduct of the limited spendthrift
protection, however, is the again limited but nevertheless
important insulation that may result from a discharge in
bankruptcy.’].)” (Carmack, supra, 2 Cal.5th at p. 850.)
This point is critical for our analysis. After a Chapter 7
bankruptcy case is initiated, the debtor relinquishes all rights
15
and interest in property that is properly included in the
bankruptcy estate and the bankruptcy court has exclusive
jurisdiction over that property. (See 11 U.S.C. § 541(a); Tennessee
Student A. C. v. Hood (2004) 541 U.S. 440, 447 [“Bankruptcy
courts have exclusive jurisdiction over a debtor’s property,
wherever located, and over the estate”]; and see Fitzgerald et al.,
Rutter Group Prac. Guide Bankruptcy (Nat. Ed.) (The Rutter
Group 2018) ¶ 6:17 [“[D]ebtors relinquish their rights and
interests in estate property upon commencement of a Chapter 7
case, including title and the right to sell or transfer the
property”].) And the automatic stay triggered upon
commencement of a bankruptcy case generally prohibits creditors
from taking any action against estate property (e.g., to enforce a
judgment, obtain possession of estate property, or perfect a lien).
(11 U.S.C. § 362(a); Fitzgerald et al., Rutter Group Prac. Guide
Bankruptcy (Nat. Ed.), supra, ¶ 6:20.) In other words, after a
Chapter 7 bankruptcy case is initiated, a creditor need not worry
that a trustee would make any disbursement directly to the
beneficiary/debtor. The precise timing of the creditor’s
enforcement efforts would then be governed not only by section
15301(b) but also—and more importantly—by the rules and
procedures applicable in bankruptcy court.
In short, the court in Carmack was not asked to address
the specific question presented by Richard here: when a judgment
creditor may file a petition to enforce a judgment under section
15301(b) in a non-bankruptcy setting. And, of course, “ ‘[i]t is
axiomatic that cases are not authority for propositions not
considered.’ [Citation.]” (People v. Avila (2006) 38 Cal. 4th 491,
566.) We therefore conclude that even if Carmack suggests that a
creditor must wait until after a trust disbursement is due and
16
payable before filing a request to enforce a money judgment
against the disbursement, that procedure is applicable in a
Chapter 7 bankruptcy proceeding. But we presume the court did
not intend to address facts not before it—and which are before
us—where creditors are attempting to reach a trust
disbursement while it is in the hands of the trust’s trustee, rather
than as part of a bankruptcy estate.
For the reasons we have already discussed, we conclude a
creditor may file a petition under section 15301(b) to enforce a
money judgment against a nondiscretionary principal
distribution before the distribution is due and payable.
2. The court did not abuse its discretion by ordering the
trustee to delay the payment of Richard’s 2018
principal disbursement until after it issued its final
ruling on the creditors’ petitions.
Richard also contends the court erred when it refused to
rule on the judgment creditors’ petitions from the bench on
January 10, 2018, and instead directed the trustee to withhold
Richard’s principal distribution until the court issued its final
order on the petitions. We disagree.
Richard first argues that the court committed “reversible
error when it deliberately failed to rule on the petitions/motions
when heard on January 10, 2018 before Richard’s distribution
became ‘due and payable.’ Instead, the probate court ordered
Comerica not to make a distribution to Richard until it issued its
final ruling, which was conveniently after Richard’s distribution
became ‘due and payable’ days later on January 13, 2018.” And
throughout that portion of the brief, Richard casts aspersions on
the court, suggesting it purposefully delayed its ruling, failed to
provide good cause for its decision not to rule from the bench, and
17
sought to “achieve some sort of desired result.” As an initial
matter, we see no evidence of favoritism on the part of the court
in the record before us.
More to the point, Richard provides no citations to any
legal authority supporting his contention that the court was
required to rule from the bench at the hearing, simply because he
asked that the court do so. We could, therefore, consider this
argument forfeited. (See, e.g., Keyes v. Bowen (2010) 189
Cal. App. 4th 647, 655 [“[T]he trial court’s judgment is presumed
to be correct, and the appellant has the burden to prove otherwise
by presenting legal authority on each point made and factual
analysis, supported by appropriate citations to the material facts
in the record; otherwise, the argument may be deemed
forfeited”].) In any event, “ ‘California courts have inherent power
to “... control [their] proceedings.” ’ [Citation.] ‘From their
creation by article VI, section 1 of the California Constitution,
California courts received broad inherent power “not confined by
or dependent on statute.” [Citations.] This inherent power
includes “fundamental inherent equity, supervisory, and
administrative powers, as well as inherent power to control
litigation.” [Citation.]’ [Citation.] … This inherent power of a trial
court is to be exercised to ‘ “achieve justice and prevent misuse of
[its] proces[s] ... .” [Citation.]’ [Citation.]” (Huang v. Hanks (2018)
23 Cal.App.5th 179, 181–182.) The court’s decision to issue a
written ruling a few days after the January 10, 2018 hearing—
rather than issuing a ruling from the bench—plainly falls within
the court’s discretion.
As for the court’s instruction that the trustee withhold
Richard’s annual principal distribution pending the issuance of
its order, that too falls within the bounds of the court’s discretion.
18
It is well settled that a court sitting in probate “has the ‘inherent
power to decide all incidental issues necessary to carry out its
express powers to supervise the administration of the trust.’
[Citation.] This inherent equitable power of the probate court has
long been recognized to encompass the authority to take remedial
action.” (Schwartz v. Labow (2008) 164 Cal. App. 4th 417, 427.)
Such remedial action may include removing a trustee or
suspending a portion of the trustee’s power based on a trustee’s
misconduct. (Id. at pp. 427–428.) Here, that inherent power
included directing the trustee to delay payment to Richard in
order to preserve its jurisdiction to make an appropriate order on
the creditors’ petitions to enforce their money judgments.
3. Richard’s other arguments are unavailing.
3.1. The trust is not a support trust.
Richard contends the trust at issue is a support trust and
that, as a result, the court erred by not conducting a further
hearing to determine what portion of his annual principal
distribution should not be reached by the creditors because it was
necessary for his support and the support of his dependents.
Richard relies on section 15302, which states: “Except as
provided in Sections 15304 to 15307, inclusive, if the trust
instrument provides that the trustee shall pay income or
principal or both for the education or support of a beneficiary, the
beneficiary’s interest in income or principal or both under the
trust, to the extent the income or principal or both is necessary
for the education or support of the beneficiary, may not be
transferred and is not subject to the enforcement of a money
judgment until paid to the beneficiary.”
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Section 15302 relates to what is generally known as a
support trust, i.e., a trust “under which the trustee is to pay or
apply no more than is necessary to educate or support the
beneficiary.” (13 Witkin, Summary of Cal. Law (11th ed. 2017)
Trusts, § 172, pp. 761–762.) We reject Richard’s argument
because the trust at issue here is not a support trust. Instead, the
distributions of income and principal are mandatory and based
on factors other than Richard’s education and support.
As noted ante, under paragraph 5.7, the trustee is required
to make annual distributions of principal according to a formula
set forth therein. The principal disbursements are mandatory
and not related in any way to Richard’s needs. Paragraph 5.6 also
provides that income from trust assets must be distributed on a
quarterly basis and according to a formula set forth in the trust
documents. Again, these disbursements are mandatory and not
calculated with reference to Richard’s education or support needs.
Richard cites paragraph 10.1, the spendthrift provision,
which is set forth in full ante. That paragraph generally restricts
each beneficiary’s ability to transfer his or her interest in the
trust and instructs the trustee to make payments to the
beneficiaries, or banks specified by them, when due. And as
Richard notes, the final sentence in paragraph 10.1 states: “This
Article shall not restrict any authority of the Trustee to use and
disburse funds for the support, maintenance, health and
education of a Beneficiary, or to disburse funds to a guardian or
conservator as herein provided.”
This sentence, which is found at the end of the spendthrift
trust provision, cannot reasonably be construed to convert the
entire trust into a support trust, as Richard asserts. Rather, the
most reasonable construction is that notwithstanding the trust’s
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spendthrift provision, the trustee may in his or her discretion
make disbursements to persons or entities other than the trust
beneficiary, if and to the extent those disbursements are for the
support, maintenance, health, or education of the beneficiary.
But the fact remains that the primary purpose of the trust is the
nondiscretionary disbursement of income and principal according
to the formulas and schedules set forth in the trust documents in
paragraphs 5.6 and 5.7.
This is not to say that Richard’s financial needs were
irrelevant under section 15301(b). As noted, the final sentence in
that subdivision provides, “The court in its discretion may issue
an order directing the trustee to satisfy all or part of the
judgment out of that principal amount.” The court could properly
have considered whether Richard had sufficient funds at his
disposal—beyond the annual principal distribution—to provide
for his basic needs and the needs of his dependents. And if he did
not, the court could have exercised its discretion to direct some
portion of the principal distribution to Richard. But as Richard
submitted no evidence to the court concerning his financial
circumstances, the court had no basis upon which to exercise its
discretion in that regard.
3.2. The personal receipt clause does not shield
Richard from creditor claims.
Finally, Richard apparently contends the trustee is
prohibited from disbursing funds to his creditors because the
trust contains a personal receipt clause. Again, in paragraph
10.1, the trust provides: “The personal receipt of the Beneficiary
may be made a condition precedent to the payment or delivery by
the Trustee to that Beneficiary. The Trustee may, however,
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deposit in any bank designated in writing by a Beneficiary, to his
or her credit, income or principal payment to that Beneficiary.”
Richard’s precise argument is that the court erred because
it did not address the personal receipt provision, despite the fact
that his counsel raised the issue at the January 10, 2018 hearing.
We conclude any error in this regard is not prejudicial because
the personal receipt provision is plainly discretionary and would
not, in any event, allow Richard to avoid his creditors to the
extent they have rights provided under the statutes we have
discussed. Richard cites no legal authority to the contrary.
DISPOSITION
The order granting the petitions to enforce money
judgments under section 15301(b) is affirmed. Respondents shall
recover their costs on appeal.
CERTIFIED FOR PUBLICATION
LAVIN, J.
WE CONCUR:
EDMON, P. J.
DHANIDINA, J.
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