WILLIAM J. RAGGIO FAMILY TRUST VS. DIST. CT. (RIGHETTI) , 2020 NV 21 ( 2020 )

136 Nev., Advance Opinion 21
IN THE SUPREME COURT OF THE STATE OF NEVADA
IN THE MA1TER OF THE WILLIAM J. No. 76582
RAGGIO FAMILY TRUST.
DALE CHECKET RAGGIO,
INDIVIDUALLY AND AS TRUSTEE OF
THE MARITAL DEDUCTION PORTION FILED
AND CREDIT SHARE OF THE
WILLIAM J. RAGGIO FAMILY TRUST, APR 0 9 2020
Petitioner, EL A. BROW
vs. Er
DEPUTY CLERK
THE SECOND JUDICIAL DISTRICT
COURT OF THE STATE OF NEVADA,
IN AND FOR THE COUNTY OF
WASHOE; AND THE HONORABLE
DAVID A. HARDY, DISTRICT JUDGE,
Respondents,
and
LESLIE RAGGIO RIGHETTI; AND
TRACY RAGGIO CHEW, CO-
TRUSTEES OF THE WILLIAM J.
RAGGIO AND DOROTHY B. RAGGIO
TRUST UNDER AGREEMENT DATED
JANUARY 27, 1998, AS DECANTED
AND VESTED REMAINDERMEN OF
THE MARITAL DEDUCTION TRUST
PORTION OF THE WILLIAM J.
RAGGIO FAMILY TRUST,
Real Parties in Interest.
Original petition for a writ of mandamus or, alternatively,
prohibition, challenging a district court order compelling discovery.
Petition granted.
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Holland & Hart LLP and Frank Z. LaForge, Tamara Reid, and J. Robert
Smith, Reno; Echeverria Law Office and John P. Echeverria, Reno,
for Petitioner.
Maupin, Cox & LeGoy and G. Barton Mowry and Enrique R. Schaerer,
Reno,
for Real Party in Interest Leslie Raggio Righetti.
Michael A. Rosenauer, Ltd., and Michael A. Rosenauer, Reno,
for Real Party in Interest Tracy Raggio Chew.
BEFORE THE COURT EN BANC.1
OPINION
By the Court, HARDESTY, J.:
In this original writ petition, we must determine whether
language in a trust instrument that allows a trustee to pay "as much of the
principal of the Trust as the Trustee, in the Trustee's discretion, shall deem
necessary for the proper support, care, and maintenance" of the beneficiary
imposes an obligation on the trustee to consider the beneficiary's other
assets. We hold that neither the trust instrument nor Nevada trust law
requires the trustee to consider the beneficiary's other assets before making
distributions from the trust. Because discovery relating to those other
assets is irrelevant to the claim that the trustee breached her fiduciary
duties, we grant petitioner Dale Checket Raggio's petition for writ relief.
1The Honorable Ron D. Parraguirre, Justice, voluntarily recused
himself from participation in the decision in this matter.
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FACTS AND PROCEDURAL HISTORY
In 2007, William J. Raggio created the William J. Raggio Trust
(Raggio Trust). It provided that, upon his death, the Raggio Trust would
split into two subtrusts, the Marital Deduction Trust (Marital Trust) and
the Credit Shelter Trust. Both subtrusts would be for the benefit of his
second wife, petitioner Dale Checket Raggio, and detail support for Dale
that allows the trustee to pay as much of the principal of the trust "as the
Trustee, in the Trustee's discretion, shall deem necessary for the proper
support, care, and maintenance" of Dale. The Raggio Trust named Dale
both the trustee and life beneficiary of the subtrusts. William Raggio's two
daughters from a previous marriage, respondents Leslie Righetti and Tracy
Chew (collectively, Righetti), were named as remainder beneficiaries of the
Marital Trust. Dale's grandchildren from her previous marriage are the
remainder beneficiaries of the Credit Shelter Trust.
In 2015, after William Raggio had died, Righetti sued Dale for
breach of trust and breach of fiduciary duties as trustee of the Marital
Trust. Righetti alleged that Dale, as trustee, improperly distributed funds
solely from the Marital Trust, thereby intentionally depleting Righetti's
remainder interest in the Marital Trust. Righetti argued that Dale seeks
to preserve her grandchildren's remainder interest in the Credit Shelter
Trust and that she breached her fiduciary duties, particularly her duties of
good faith, loyalty, and impartiality, by drawing solely from the Marital
Trust. Righetti also alleged that Dale breached the Marital Trust by paying
herself distributions in amounts that were more than necessary and proper
for her support, care, and maintenance. Consequently, Righetti sought
discovery of Dale's accounting and distributions of the Credit Shelter Trust
to prove these claims.
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Dale objected to the discovery requests because they were not
reasonably calculated to lead to discovery of admissible evidence and
Righetti was not a beneficiary of the Credit Shelter Trust. Dale also filed a
motion for partial summary judgment. She argued that the probate
commissioner's resolution of a prior petition precluded Righetti's arguments
that Dale is obligated to proportionally spend down the assets of the Credit
Shelter Trust and that Righetti is entitled to an accounting of the Credit
Shelter Trust. Righetti opposed summary judgment and filed a motion to
compel discovery, arguing that issue and claim preclusion did not apply.
Righetti further argued that the terms of the Marital Trust, particularly the
language "necessary for the proper support, care, and maintenance," fell
within the exception of NRS 163.4175, which meant that Dale had an
obligation to consider her other sources of income and resources before
making support distributions to herself. In response, Dale argued that
neither NRS 163.4175 nor the trust itself requires her to consider the Credit
Shelter Trust, or any of her other assets, before making distributions from
the Marital Trust as trustee.
The probate commissioner recommended denying Dale's motion
for partial summary judgment because issue and claim preclusion did not
apply, and the commissioner also recommended that Righetes motion to
compel discovery be held in abeyance, pending affirmance by the district
court. At a hearing on the matter, Dales counsel argued that while Dale
owed Righetti "an accounting and a determination as to whether or not the
spending of the marital trust is appropriate," Righetti was not entitled to
an accounting of a trust to which she was not a beneficiary. The district
court inquired into how an evaluation of Dales "discretionary choice to
support herself from one trust . . . [could] be measured without reference to
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how shes also supported elsewhere." Dale's counsel argued that the
trustee's discretion is measured by the intent of the settlor of the trust, and
that because William Raggio "did not express an intent on that," there is no
requirement under the trust or Nevada trust law to look at other sources of
income. The district court questioned whether "one of [William Raggio's]
implicit intents was to preserve some trust corpus . . . for the benefit of his
two daughters and not exhaust the bypass trust in favor of preserving the
credit shelter trust." Dales counsel denied that there was any such intent
evident in the trust instrument.
The district court focused on the meaning of "necessary for the
proper support, care, and maintenance," asking hypothetically, "[ilf theres
a mountain of gold behind her but we don't get to see that mountain, how
can we understand that her invasion of principal is necessary? It's
necessary only because of something." Dales counsel argued that whether
a distribution is "necessarf depends on Dale's standard of living when her
husband was alive. Righetti's counsel, on the other hand, argued that
"necessary" refers to Dale's other resources and assets and whether she
needs the money.
Following the hearing, the district court denied Dale's partial
summary judgment request, reasoning that
[i]ntegral to the present claims is whether the trustees
discretionary principal distributions from the marital
deduction trust were "necessary" and "proper." The vested
remainder beneficiaries are entitled to examine the need and
propriety of the trustees decision to withdraw principal from
the marital deduction trust by reference to other trust and non-
trust resources available for the trustees necessary and proper
support. It appears possible this [c]ourt cannot determine what
is necessary and proper without a complete understanding of
the trustee's circumstances, to include standard of living and
supportive resources beyond the marital deduction trust.
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Shortly thereafter, the district court granted Righetti's renewed motion to
compel discovery of the accounting and distributions of the Credit Shelter
Trust, finding that the requested discovery was relevant to the subject
matter and reasonably calculated to lead to the discovery of admissible
evidence.
Dale filed the instant petition seeking a writ of prohibition or,
alternatively, mandamus. Dale argues that the district court's discovery
order was improper as a matter of law and asks us to vacate the district
court's order compelling discovery.
DISCUSSION
We exercise our discretion to entertain Dale's petition for a writ of prohibition
Writ relief is an extraordinary remedy that is only available if
a petitioner does not have "a plain, speedy and adequate remedy in the
ordinary course of law." NRS 34.330; see Club Vista Fin. Servs., LLC v.
Eighth Judicial Dist. Court, 128 Nev. 224, 228, 276 P.3d 246, 249 (2012).
"[T] he issuance of a writ of mandamus or prohibition is purely discretionary
with this court." Wynn Resorts, Ltd. v. Eighth Judicial Dist. Court, 133 Nev.
369, 373, 399 P.3d 334, 340-41 (2017) (alteration in original) (internal
quotation marks omitted). A writ of prohibition is the proper remedy to
prohibit the district court from compelling a party to disclose privileged or
irrelevant discovery. See id. at 374, 399 P.3d at 341; see also NRS 34.320;
Toll v. Wilson, 135 Nev., Adv. Op. 58, 453 P.3d 1215, 1217 n.1 (2019) ("A
writ of prohibition is appropriate when the relief is to arrest the proceedings
and prohibit some exercise of judicial function." (internal quotation marks
omitted)).2
According1y, we deny Dales alternative request for a writ of
2
mandamus.
6
Although we generally decline to review a discovery order
through a petition for extraordinary relief, we may exercise our discretion
to do so if the challenged discovery order is likely to cause irreparable harm
and a later appeal would not effectively remedy an improper disclosure of
information. Club Vista, 128 Nev. at 228, 276 P.3d at 249. Here, the
discovery order implicates Dales privacy interests as the district court
concluded it needed to review her "standard of living and supportive
resources beyond the marital deduction trust" to determine if the
distributions were necessary and proper. If the discovery permitted by the
district court is legally irrelevant, a later appeal would not remedy the
improper disclosure of the information. See Schlatter v. Eighth Judicial
Dist. Court, 93 Nev. 189, 192, 561 P.2d 1342, 1344 (1977) (finding that it
was an irreparable "invasion into a litigant's private affairs to order
discovery of information without regard to relevancy). We thus exercise our
discretion to entertain this petition.
The terms "necessaiy" and "propee do not sufficiently trigger the exception
of NRS 163.4175
Dale argues that neither Nevada trust law nor the terms of the
trust instrument itself impose an obligation on her to consider her other
assets before making trust distributions. She argues that the order
compelling discovery of the Credit Shelter Trust accounting and
distributions is thus contrary to Nevada trust law and we should issue a
writ of prohibition arresting said discovery. Righetti contends that the
district court properly ordered discovery of the Credit Shelter Trust
accounting and distributions because Dales distributions from that trust
are relevant to the claims of breach of trust and breach of fiduciary duties.
Parties may obtain discovery regarding any nonprivileged
matter "which is relevant to the subject matter involved in the pending
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action." NRCP 26(b)(1) (2008).3 Generally, a district court's ruling on
discovery matters is within its sound discretion and will not be disturbed
absent a clear abuse of that discretion. Club Vista, 128 Nev. at 228, 276
P.3d at 249. But the interpretation of NRS 163.4175, which informs
whether the accounting and distribution records of the Credit Shelter Trust
are relevant to Righetti's breach of fiduciary duty claims, is a question of
law that we review de novo. See In re W.N. Connell & Marjorie T. Connell
Living Tr., 133 Nev. 137, 139, 393 P.3d 1090, 1092 (2017) (examining trust
interpretation de novo).
The narrow question before us is whether Dale, as trustee, has
an obligation to consider other assets, including those in the Credit Shelter
Trust, before making distributions to herself, as beneficiary, from the
Marital Trust. We conclude she does not. NRS 163.4175 states, le]xcept
as otherwise provided in the trust instrument, the trustee is not required to
consider a beneficiary's assets or resources in determining whether to make
a distribution of trust assets." Thus, Nevada trust law does not obligate a
trustee to consider other assets or resources before making a distribution
unless the trust instrument itself sets forth such a requirement.
Accordingly, to determine whether Dale has such an obligation, we must
look to the language of the trust instrument.
3The Nevada Rules of Civil Procedure were recently amended, and the
amendments became effective on March 1, 2019. See ADKT 522 (Order
Amending the Rules of Civil Procedure, The Rules of Appellate Procedure,
and the Nevada Electronic Filing and Conversion Rules, Dec. 31, 2018).
Because this case predates the effective date of the amendments to the civil
procedure rules, we cite to the 2008 version of NRCP 26 in effect at the time
of this action.
8
Section 5.1 of the Marital Trust states, in relevant part, that
the trustee "shall pay to or apply for the benefit of [Dale] as much of the
principal of the Trust as the Trustee, in the Trustees discretion, shall deem
necessary for the proper support, care, and maintenance of Dale. Both
Dale and Righetti argue that the term "necessary" is the focal point for our
inquiry, and they offer two conflicting interpretations of it. Dale interprets
"necessary" as referring only to the amount of disbursement needed for her
"proper support, care, and maintenance," without regard to her other assets.
Righetti, on the other hand, interprets "necessary" as creating a threshold
of financial need. Under this interpretation, Dale, as trustee, cannot
distribute trust funds unless she can first show that without the trust
distributions, she could not provide for her own "support, care, and
maintenance." Righetti argues that the relevant discovery inquiry in
determining whether a distribution is "necessary" to Dale is to determine
what other financial means she has for her support, care, and maintenance.
The district court appears to have adopted Righetti's
interpretation of "necessary," in that it creates a threshold of financial need.
The district court determined that it "cannot determine what is necessary
and proper without a complete understanding of the trustees
circumstances, to include standard of living and supportive resources
beyond the marital deduction trust." We conclude that this determination
was clearly erroneous for several reasons.
First, evident from the instrument itself, a fair and reasonable
interpretation of the text as a whole shows William Raggio did not restrict
Dale's discretion and require that she consider her other assets before
making distributions. We "construe [] trusts in a manner effecting the
apparent intent of the settlor." Hannam v. Brown, 114 Nev. 350, 356, 956
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P.2d 794, 798 (1998); see Jonathan M. Purver, Annotation, Propriety of
Considering Beneficiary's Other Means Under Trust Provision Authorizing
Invasion of Principal for Beneficiary's Support, 41 A.L.R.3d 255, 262-63
(1972). In determining the settlor's intent, "we employ contract principles,
including determining the intentions of the settlor by considering [the trust]
as a whole, and favoring the most fair and reasonable interpretation of the
trust's language." In re W.N. Connell & Marjorie T. Connell Living Tr., 134
Nev. 613, 616, 426 P.3d 599, 602 (2018) (alteration in original) (internal
quotation marks and citation omitted). Article 8.1(a), which details Dale's
"powers" as trustee, states "[iln the event any of such powers or discretion"
in the agreement are inconsistent with NRS 163.265 to NRS 163.410, "the
most liberal [interpretation] shall control to give the greatest latitude and
discretion to the Trustee." (Emphases added.) Section 5.1, which details
Dale's authority for the administration and distribution from the Marital
Trust, provides that Dale may distribute "as much of the principal of the
Trust as [Dale], in [her] discretion, shall deem necessary for the proper
support, care, and maintenance" of Dale. (Emphasis added.) It is evident
from this language that William Raggio intended Dale to have discretion in
making distributions and did not invoke NRS 163.4175s exception by
requiring Dale first consider her other income or resources. See President,
Dirs. & Co. of Farmers Bank of Del. v. Del. Tr. Co., 95 A.2d 45, 47 (Del. Ch.
1953) (determining that settlor's knowledge of beneficiary's assets
demonstrated that settlor did not intend to employ language of condition
when creating a support provision in a will).
Moreover, the district court's reading is contrary to the other
provisions of the trust instrument itself. In contrast to Section 5.1s
discretionary language, Section 6.4, which covers the administration and
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distribution to the living issue of a grandson, provides that Dale shall pay
such amounts that "[Dale], in [her} discretion, shall deem necessary for
their proper support . . . after taking into consideration . . . any other income
or resources of such issue known to" Dale. This language exhibits that
William Raggio understood how to restrict Dale's authority as trustee in the
manner Righetti asks us to read into Section 5.1, but he deliberately chose
not to limit Dales discretion in that regard with respect to the Marital
Trust. Accordingly, as we consider the trust as a whole to determine the
most fair and reasonable interpretation of Section 5.1, we determine the
trust instrument does not invoke NRS 163.4175s exception, and therefore,
Dale is not required to consider her assets or resources to make
distributions from the trust assets.4
We thus conclude that the district court's interpretation is
contrary to NRS 163.4175, which requires trustees to consider other assets
only if the trust instrument itself invokes the exception. The district court
should have begun its analysis from the position that Dale was not obligated
to consider her other assets or resources before making a distribution unless
the exception was invoked. Instead, the district court disregarded NRS
163.4175 and began evaluating whether one of William Raggio's "implicit
intents was to preserve some trust corpus . . . for the benefit of his two
daughters and not exhaust the bypass trust in favor of preserving the credit
4Righetti relies heavily in her briefs and argument before us on
Restatement (Third) of Trusts § 50 cmt. e (Am. Law Inst. 2003) (detailing
that where the trust instrument does not address the question, there is a
presumption that a trustee must take a beneficiary's other resources into
account in determining whether and in what amounts distributions are to
be made). We conclude that Righetti's argument is without merit. Based
on the plain language of the statute, it is apparent that the Legislature
rejected this presumption when it enacted NRS 163.4175.
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shelter trust." NRS 163.4175 clearly provides that, if a settlor wants
trustees to consider a beneficiary's other assets, the settlor must so state in
the trust instrument. We cannot infer an exception to NRS 163.4175 based
solely on the terms "necessary" and "proper" in the trust instrument, as
those terms appear frequently in trusts but their meanings depend on the
circumstances and text of the instruments. See, e.g., Del. Tr. Co., 95 A.2d
at 47 (holding that "upon a full reading of the will in the light of the
surrounding circumstances . . . [the term "necessary" was] not language of
condition [,] but [rather, was] language fixing the standard by which the
trustee is to exercise its discretion in determining the amount to be spent").
Rather, it must be clear from the trust as a whole that the settlor's intent
is to require the trustee to consider other assets. William Raggio did not
express that intent.
Therefore, we conclude the district court erred as a matter of
law in compelling discovery of the accounting and distributions of the Credit
Shelter Trust. Neither NRS 163.4175 nor the Raggio Trust requires Dale
to consider her other assets in making distributions from the Marital Trust,
and thus, information about those assets is irrelevant.5
CONCLUSION
Because the district court erred when it compelled the
production of irrelevant information, we grant Dales petition for writ relief
and direct the clerk of this court to issue a writ of prohibition directing the
5Because we conclude that neither Nevada law nor the trust
instrument requires a consideration of Dales other assets, Righetti's
argument over the proportionate spend-down between the two trusts is also
without merit. Dale, as a trustee, is not required to consider her other
assets, which necessarily includes the assets of the Credit Shelter Trust and
the distributions made from it.
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district court to vacate its order compelling discovery of the accounting and
distributions of the Credit Shelter Trust.
J.
Hardesty
We concur:
Stiglich
Silver
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CADISH, J., with whom PICKERING, C.J., agrees, dissenting:
I do not believe the instant writ petition meets the standard to
warrant our discretionary review, and I therefore dissent. Dale filed the
instant petition for writ of prohibition or mandamus to challenge a
discovery order entered by the district court. The majority correctly notes
that we generally decline to review discovery orders through such a petition,
but that we may do so "if the challenged discovery order is likely to cause
irreparable harm and a later appeal would not effectively remedy an
improper disclosure of information." Majority op. at 7 (emphasis added)
(citing Club Vista Fin. Servs., LLC v. Eighth Judicial Dist. Court, 128 Nev.
224, 228, 276 P.3d 246, 249 (2012)). The majority then states, in conclusory
fashion, that a later appeal would not remedy the disclosure here if the
discovery were later determined to be inappropriate and chooses to exercise
its discretion to entertain the petition. The majority, however, makes no
determination that the challenged discovery order is likely to cause
irreparable harm, as required by the very standard it states. Indeed, Dale
has made no showing of a likelihood of irreparable injury, having
acknowledged that the requested discovery would not result in the
disclosure of any privileged information, and failed to demonstrate any
particular harm if the records were to be disclosed.
Moreover, the majority identifies the key question before it as
"whether Dale, as trustee, has an obligation to consider other assets,
including those in the Credit Shelter Trust, before making distributions to
herself, as beneficiary, from the Marital Trust." Majority op. at 8. However,
the district court in this case has not yet made a final ruling on this issue,
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and thus it is not proper for this courfs consideration in the context of this
interlocutory writ proceeding.1 See Smith v. Eighth Judicial Dist. Court,
107 Nev. 674, 677, 818 P.2d 849, 851 (1991) (setting forth scope of
prohibition and mandamus and observing that both are "purely
discretionary" with this court). Issuing an opinion on this issue at this point
is contrary to our general practice of ruling on issues only after the district
court has had the opportunity to fully analyze and reach its own conclusion
on them, particularly since the majority's conclusion rests on its factual
determination of the trustor's intent. Archon Corp. v. Eighth Judicial Dist.
Court, 133 Nev. 816, 823, 407 P.3d 702, 708 (2017) (To efficiently and
thoughtfully resolve such an important issue of law demands a well-
developed district court record, including legal positions fully argued by the
parties and a merits-based decision by the district court judge."); see Round
Hill Gen. Improvement Dist. v. Newman, 97 Nev. 601, 604, 637 P.2d 534,
536 (1981) (explaining that "an appellate court is not an appropriate forum
in which to resolve disputed questions of face).
For these reasons, I would decline to consider writ relief in the
instant case, and I therefore respectfully dissent.
I concur:
C.J.
1The district court denied Dale's motion for partial summary
judgment, which left the issue to be finally resolved at the time of trial. The
instant petition challenges only the discovery order entered by the district
court, not the order denying the partial summary judgment motion.
2