Breslin v. Breslin ( 2021 )

Filed 4/5/21 (opinion following rehearing)
See dissenting opinion
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
DAVID BRESLIN, as Trustee, 2d Civ. No. B301382
etc., (Super. Ct. No. 56-2018-
00521839-PR-TR-OXN)
Plaintiff and Respondent, (Ventura County)
v. OPINION FOLLOWING
REHEARING
PAUL G. BRESLIN et al.,
Defendants and
Respondents;
PACIFIC LEGAL
FOUNDATION et al.,
Defendants and Appellants.
The legal historian Frederic William Maitland is reputed to
have said, “The law is a seamless web.” He didn’t. 1
“Such is the unity of all history that anyone who
1
endeavors to tell a piece of it must feel that his first sentence
tears a seamless web.” (Maitland, A Prologue to a History of
English Law (1898) 14 L.Q.Rev. 13.)
The phrase, however, applicable to the law in general, is
particularly apt here. This case began and ended in probate
court. But the law concerning mediation also applies. The
proceeding here is made from the seamless fabric of probate and
mediation law.
The trustee of a decedent’s trust petitioned the probate
court to determine the trust beneficiaries. The potential trust
beneficiaries received notice of the petition. The probate court
ordered the matter to mediation. The same potential
beneficiaries received notice of the mediation, but some did not
participate. The participating parties reached a settlement that
excluded the nonparticipating parties as beneficiaries. The
probate court approved the settlement. The nonparticipating
parties Pacific Legal Foundation et al. 2 (collectively “the Pacific
parties”) appeal. We affirm. A party receiving notice under the
circumstances here, who fails to participate in court-ordered
mediation, is bound by the result.
FACTS
Don Kirchner died in 2018 leaving an estate valued at
between $3 and $4 million. Kirchner had no surviving wife or
children, but he was survived nieces and nephews.
Kirchner’s estate was held in a living trust dated July 27,
2017. 3 The trust was amended and restated on November 1,
2 The nonparticipating parties are: Pacific Legal
Foundation, Judicial Watch, Save the Redwoods League,
Concerned Women of America, Catholics United for Life, Catholic
League, Sacred Heart Auto League, National Prolife Action
Center, doing business as Liberty Counsel, and Orbis
International.
3
The parties take issue with case title, often referred to as
the caption. They believe it should be “In the matter of the Don
2.
2017 (restated trust). David Breslin (Breslin) was named the
successor trustee in the restated trust.
Breslin found the restated trust, but initially could not find
the original trust. The restated trust makes three $10,000
specific gifts and directs that the remainder be distributed to the
persons and charitable organizations listed on exhibit A in the
percentages set forth.
The restated trust did not have an exhibit A attached to it,
and no such exhibit A has ever been found. But in a pocket of the
estate planning binder containing the restated trust, Breslin
found a document titled “Estates Charities (6/30/2017).” The
document listed 24 charities with handwritten notations that
appear to be percentages.
Breslin filed a petition in the probate court to confirm him
as successor trustee and to determine the beneficiaries of the
Kirshner Living Trust.” Apparently, the parties did not consult
the California Style Manual. This is what they would have
learned: “Similar to estates . . . , trusts are not recognized as
legal entities and cannot sue or be sued. Only trustees can be
named as parties, thus it is improper to name ‘The ABC Trust’ as
a party. (See Prob. Code, §§ 17200, subd. (a), 17200.1; see also
Code Civ. Proc., § 369, subd. (a)(l).) Additionally, the description
‘Trustee of the ABC Trust’ is not properly listed as a party name;
the trustee's name is listed followed by ‘as Trustee, etc.’ ‘Trustees
of the California State University’ is an official board name, not a
description, so it is properly used in titles (see Ed. Code, § 66600).
Trust administration cases do not use a nonadversary title, such
as ‘In re the Matter of the Charles G Adams Trust,’ to identify
the trust. In addition, the lower court designations of ‘Petitioner’
and ‘Respondent’ are changed to ‘Plaintiff’ and ‘Defendant’ in
accordance with [California Style Manual] section 6:42.” (Cal.
Style Manual (4th ed. 2000) § 6:47.)
3.
trust in the absence of an attached exhibit A. Breslin served each
of the listed charities, including the Pacific parties. Only three of
the listed charities filed formal responses. The Pacific parties did
not.
The probate court confirmed Breslin as successor trustee
and ordered mediation among interested parties, including
Kirchner’s intestate heirs and the listed charities. The
mediator’s fees were to be paid from the trust. One of the listed
charities, the Thomas More Law Center (TMLC), sent notices of
the mediation to all the interested parties, including the Pacific
parties. Approximately four notices of continuances were sent to
all the parties, including the Pacific parties, before the mediation
took place.
The mediation notice included the following:
“Mediation may result in a settlement of the matter that is
the subject of the above-referenced cases and of any and all
interested·persons' and parties' interests therein. Settlement of
the matter may result in an agreement for the distribution of
assets of the above-referenced Trust and of the estate of Don F.
Kirchner, Deceased, however those assets may be held.
Settlement of the matter may also result in an award of
attorneys' fees to one or more parties under Smith v. Szeyller
(2019) 31 Cal.App.5th 450. Interested persons or parties who do
not have counsel may attend the mediation and participate.
“Non-participating persons or parties who receive notice of
the date, time and place of the mediation may be bound by the
terms of any agreement reached at mediation without further
action by the Court or further hearing. Smith v. Szeyller (2019)
31 Cal.App.5th 450. Rights of trust beneficiaries or prospective
4.
beneficiaries may be lost by the failure to participate in
mediation.
“All represented parties (or his, her or their counsel) and all
unrepresented parties that intend to participate in the mediation
are requested to advise the undersigned of his, her or their
intention to be present and participate by making contact via
either email . . . or U.S. Mail. Notice to participate in mediation
will not be accepted via telephone.”
Only five of the listed charities appeared at the mediation,
including TMLC. The intestate heirs also appeared. The Pacific
parties did not appear. The appearing parties reached a
settlement. The settlement agreement awarded specific amounts
to various parties, including the appearing charities, and
attorney fees with the residue to the intestate heirs. The
agreement did not include the Pacific parties.
TMLC filed a petition to approve the settlement. When the
Pacific parties received notice of this petition, they filed
objections.
Prior to the hearing on the petition, Breslin filed a
supplemental declaration stating that he found the original trust
document. The restated trust had no exhibit A attached, but he
found attached to the original trust an exhibit A listing the same
charities as were found on the document in the binder with the
restated trust.
The probate court granted Breslin’s petition to approve the
settlement. The court denied the Pacific parties’ objections on the
grounds that they did not file a response to Breslin’s petition to
determine the beneficiaries and did not appear at the mediation.
The Pacific parties appeal.
5.
DISCUSSION
I
Standard of Review
The Pacific parties contend that because the issues here do
not involve findings of fact, the standard of review is de novo.
The standard of review for the probate court’s approval of a
settlement is abuse of discretion. (Estate of Green (1956) 145
Cal.App.2d 25, 28.) The dispute is academic, however. The
result is the same under either standard.
II
Forfeiture of Rights
The probate court has the power to order the parties into
mediation. (See Prob. Code, 4 § 17206 [“The court in its discretion
may make any orders and take any other action necessary or
proper to dispose of the matters presented by the petition”].) The
court did so here. The Pacific parties received notice of the
mediation, but chose not to participate.
In Smith v. Szeyller, supra, 31 Cal.App.5th 450, 458, we
held that a party who chooses not to participate in the trial of a
probate matter cannot thereafter complain about a settlement
reached by the participating parties. The Pacific parties point
out that there was no trial here. True, but the mediation ordered
by the probate court, like the trial in Smith, was an essential part
of the probate proceedings. The Pacific parties may not ignore
the probate court’s order to participate in the proceedings and
then challenge the result. The probate court’s mediation order
would be useless if a party could skip mediation and challenge
the resulting settlement agreement.
4 All statutory references are to the Probate Code.
6.
The Pacific parties complain they were denied an
evidentiary hearing. But the probate court has the power to
establish the procedure. (§ 17206.) It made participation in
mediation a prerequisite to an evidentiary hearing. By failing to
participate in the mediation, the Pacific parties waived their
right to an evidentiary hearing. It follows that the Pacific parties
were not entitled to a determination of factual issues, such as
Kirchner’s intent, and cannot raise such issues for the first time
on appeal. (Ehrlich v. City of Culver City (1996) 12 Cal.4th 854,
865, fn. 4 [court will not address issues raised for the first time on
appeal].)
Estate of Bennett (2008) 163 Cal.App.4th 1303, 1310, is of
no help to the Pacific parties. There the Court of Appeal held
that estate beneficiaries who petitioned to set aside a settlement
agreement were entitled to an evidentiary hearing. But Bennett
did not involve a party’s failure to respond to a mediation order.
The Pacific parties argue the only way they can forfeit their
interest is by filing a written disclaimer. They rely on section
275. That section provides, “A beneficiary may disclaim any
interest, in whole or in part, by filing a disclaimer as provided in
this part.” (Ibid.) The disclaimer must be in writing signed by
the disclaimant. (§ 278.) We agree the Pacific parties did not
disclaim their interest. Instead, they forfeited their interest
when they failed to participate in mediation as ordered by the
court.
Had the Pacific parties appeared at the initial probate
hearing, for which they received notice, they would have had the
opportunity to object to mediation. Instead, they waited until
after the mediation, for which they also received notice, in
addition to notices of continuances, to finally object to the result.
7.
The dissent expresses concern for the due process rights of
parties who ignored these multiple notices, and apparently no
concern for the parties who responded to the notices and spent
time and effort complying with the probate court's order for
mediation.
III
Trustee’s Duties
(a) Impartiality
The Pacific parties contend the trustee failed in his duty to
deal impartially with all beneficiaries. (§ 16003 [“If a trust has
two or more beneficiaries, the trustee has a duty to deal
impartially with them”].)
But all interested parties received notice of the mediation
and had an opportunity to participate. The Pacific parties’
failure to participate was not the fault of the trustee.
(b) Trustee’s Personal Profit
The Pacific parties contend the trustee breached fiduciary
duties by approving large gifts to Kirchner family members,
including himself, who stood to gain little or nothing under the
trust.
But all parties who participated in the mediation approved
the settlement, not just the trustee. And the probate court
approved the settlement. The Pacific parties may not refuse to
participate and then complain that they received nothing.
Moreover, the Pacific parties’ argument assumes the
beneficiaries of the trust are known. The court did not determine
the identity of the beneficiaries. The Pacific parties may have
requested an evidentiary hearing on the matter had they abided
by the probate court’s order and participated in the mediation.
They chose not to do so.
8.
(c) Notice
The Pacific parties contend that the trustee failed to keep
them reasonably informed about the mediation and his intent to
execute the settlement agreement.
The Pacific parties do not claim they lacked notice of the
mediation. Had they participated, they would have been
informed of all the developments, including the trustee’s
willingness to sign the settlement agreement.
The Pacific parties apparently believe that after the trustee
and participating parties have gone through mediation and
reached a settlement, they should have been notified before the
settlement was signed. Then they could have registered their
objection. But that would defeat the purpose of the court-ordered
mediation.
The Pacific parties cite section 16060 for the proposition
that the trustee has a duty to keep the beneficiaries of the trust
reasonably informed of the trust and its administration. The
information provided pursuant to section 16060 must be the
information reasonably necessary to enable the beneficiary to
enforce the beneficiary’s rights under the trust or prevent or
redress a breach of trust. (Salter v. Lerner (2009) 176
Cal.App.4th 1184, 1187.)
First, the probate court did not determine that the Pacific
parties were beneficiaries of the trust. Second, assuming they
were or could have been beneficiaries, the notice of mediation was
all the information necessary for them to protect their interest.
The Pacific parties argue that the mediation notice failed to
inform them that they could forfeit their interest if they did not
participate. But the notice stated that nonparticipating persons
or parties may be bound by the terms of any agreement reached
9.
at the mediation, and the rights of trust beneficiaries or
prospective beneficiaries may be lost by the failure to participate
in the mediation. Synonym for lost is forfeiture.
The Pacific parties argue that the loss of rights referred to
in the notice may be read as only referring to procedural rights.
But the notice says that nonparticipating parties may be bound
by any agreement reached during mediation. The notice
obviously refers to substantive rights.
IV
Extrinsic Fraud
The Pacific parties contend the probate court’s order
approving the settlement should be set aside for extrinsic fraud.
The Pacific parties’ contention is based on TMLC’s response
to the trustee’s petition to determine trust beneficiaries. TMLC
urged the probate court to find that the charities listed on the
paper found with the restated trust are the beneficiaries. TMLC
also requested attorney fees if successful because all the charities
listed would benefit by its success.
TMLC was not claiming to be the legal representative for
all the charities on the list. It was only claiming that by
representing its own interest other parties will benefit and
should share in the burden of attorney fees under the substantial
benefit doctrine. (See Smith v. Szeyller, supra, 31 Cal.App.5th at
p. 460.) There was no extrinsic fraud.
10.
V
Attorney Fees
The intestate beneficiaries contend they should be awarded
attorney fees under the substantial benefit doctrine. That is a
matter to be decided by the probate court.
DISPOSITION
The judgment (order) is affirmed. Costs are awarded to
respondents.
CERTIFIED FOR PUBLICATION.
GILBERT, P. J.
I concur:
YEGAN, J.
11.
TANGEMAN, J., dissenting:
I respectfully dissent. A trust must be administered
according to the testator’s intent. (Prob. Code, 1 § 21102, subd.
(a).) Administration consistent with that intent is the
“paramount rule . . . to which all other rules must yield.”
(Newman v. Wells Fargo Bank (1996) 14 Cal.4th 126, 134.) That
means honoring Don Kirchner’s final wishes above all else.
Here, however, the probate court exalted principles of
forfeiture over Kirchner’s express wishes, concluding that the
Pacific parties forfeited their rights to the gifts Kirchner wanted
them to have because they did not satisfy a requirement Kirchner
did not impose: participation in mediation at their expense. In
effect, the court imposed a terminating sanction against the
nonappearing beneficiaries. The majority countenances this
result. I would not.
Equity abhors a forfeiture. (Hand v. Cleese (1927) 202 Cal.
36, 46.) And forfeiture is an especially harsh result here: It
elevates the probate court’s power to order mediation (§ 17206)
over myriad provisions of the Probate Code, including those
related to notice requirements (§ 17203), hearings and objections
(§ 1040 et seq.), and the approval of settlements (§ 9837), as well
as their constitutional counterparts (Skelly v. State Personnel
Board (1975) 15 Cal.3d 194, 208 [due process requires a notice
and hearing in “every significant deprivation” of an interest in
property]). It forces potential beneficiaries to participate in costly
mediation (legal entities cannot appear except through counsel),
something “antithetical to the entire concept” thereof. (Jeld-Wen,
Inc. v. Superior Court (2007) 146 Cal.App.4th 536, 543.) It
permits a trustee to favor some beneficiaries over others—in
1 Unlabeled statutory references are to the Probate Code.
breach of the duty of impartiality (§ 16003)—simply because the
latter did not participate in mediation. And perhaps most
significantly, by permitting some beneficiaries to cut other
beneficiaries out of trusts altogether, it defeats the express
intentions of testators and negates the expectations testators
hold knowing that their final wishes will be fulfilled without
regard for the wishes of others.
Smith v. Szeyller (2019) 31 Cal.App.5th 450 (Smith) does
not support the result the majority reaches here. In Smith, we
held that a beneficiary who did not participate in trial forfeited
her objections to the settlement reached by the litigants who did
participate because that settlement did not impact her
inheritance (ibid. at p. 458) and “preserved a common fund for
the benefit of [her and] the [other] nonparticipating beneficiaries”
(id. at p. 461). We also concluded that the nonparticipating
beneficiary forfeited her objections because she did not submit
them until after the probate court had approved the settlement.
(Id. at p. 456.)
In contrast, the settlement here disinherited the Pacific
parties and redistributed their gifts to other parties contrary to
the testator’s express directions. And the Pacific parties filed
their objections before the probate court approved the settlement.
Moreover, the “notice” that required the Pacific parties to attend
the mediation at which the settlement was reached came from a
party that unilaterally decreed that it could settle the case on
their behalf. And unlike the situation in Smith, the facts here
changed dramatically after mediation, when Breslin found a
document—Exhibit A—that confirmed the Pacific parties’
unqualified right to inherit funds from Kirchner.
2.
A charitable gift must be carried into effect if it “can
possibly be made good.” (Estate of Tarrant (1951) 38 Cal.2d 42,
46.) The majority’s newfound requirement that a party
participate in mediation before it can inherit ignores this
command. It will reduce the number of gifts that “can possibly be
made good” by encouraging parties to send out mediation notices
whenever they desire to eliminate gifts to beneficiaries that don’t
appear—for whatever reason. That will not advance the interests
of testators, but will instead introduce uncertainty into probate
proceedings, defeat express testamentary wishes, and lead to
inequitable results. I would reverse the judgment of the probate
court.
CERTIFIED FOR PUBLICATION.
TANGEMAN, J.
3.
Robert L. Lund, Judge
Superior Court County of Ventura
______________________________
Ferguson Case Orr Paterson, Joshua S. Hopstone and
David B. Shea for Defendants and Appellants Pacific Legal
Foundation, Judicial Watch, Save the Redwoods League,
Concerned Women of America, Catholics United for Life, Catholic
League, Sacred Heart Auto League, National Prolife Action
Center, doing business as Liberty Counsel, and Orbis
International.
Staker Law Tax and Estate Planning Law Corporation,
Kevin G. Staker and Brandon P. Johnson for Plaintiff and
Respondent David Breslin, Trustee.
Jones, Lester, Schuck, Becker & Dehesa, Mark A. Lester,
Katherine H. Becker and Eric A. Hirschberg, for Defendants and
Respondents Paul G. Breslin and Kathleen Breslin LaForgia.