Law Religion Culture Review

Exploring the intersections of law, religion and culture. Copyright by Richard J. Radcliffe. All rights reserved.

Monday, December 27, 2010

Any Question, Part III.

Here are excerpts from my appellate reply brief. One can see from "Any Question, Part II" (see December 16, 2010 post below), the court of appeal drew from the reasonable intepretation theme and relied on the two major cases which I cited: Scharlin v. Superior Court of Orange County (1992) 9 Cal App.4th 162, and McIndoe v. Olivos (2005) 132 Cal.App.4th 483. Both opinions were handed down by the same appellate court which decided my client's appeal here.


'Interpretation must be reasonable.' (Cal. Civ. Code §3542.)

The Respondent’s Brief ... represents an extended exercise in unreasonable interpretations. It unreasonably interprets (a) the subject trust instrument; (b) the proposed Petition; and (c) California decisional authority, including this District’s own opinions.

First, Respondent’s proffered view that the no contest clause applies only to the original trust (RB, p. 3) as constituted at the time of its creation would render the no contest clause as superfluous and defeat its purpose. That purpose, of course, is to discourage the beneficiaries from challenging the trustors’ plan for administration and distribution of the trust assets in accordance with provisions set forth in the trust instrument. It would be unnecessary to apply the no contest clause only to the original trust when the trustors and trustees are both still alive. They obviously would not be applying it to themselves. Their inclusion of the no contest clause only makes sense when it is applied to the subtrusts, which take effect only after a death of a trustor/trustee, as here. (AA00077-79; AA000161-163.)

Second, Respondent’s Brief misinterprets the Petition, erroneously claiming that it only seeks to remove trustees for cause. (RB, p. 5.) To the contrary, the Petition seeks to invalidate one of the trustors’ most important decisions and provisions—an article designating who will serve as successor trustee—even before the successor trustee has ever so served. (AA000114-16.)

Third, Respondent’s Brief misinterprets several cases undermining its assertions, including those of this Court, to a similarly tortured result.

Because the Respondent’s Brief’s interpretive errors infect its analysis, it leads to the wrong result. Moreover, it does nothing to controvert the arguments of the Opening Brief, namely:

· The no contest clause of the trust explicitly applies to “any of the provisions” of the trust instrument, which necessarily includes the subtrusts established by the very same trust instrument;

· The trust clause designating the appointment of a successor trustee applies to the subtrusts; and

· The Petition constitutes a contest, because, among other things, it preemptively seeks to invalidate the successor trustee provision (Article 7.02 [AA00036, AA 000174]), which has not yet taken effect.

Accordingly, Appellant ... respectfully requests that this Court reasonably interpret the trust to uphold the trustor’s intent (the Appellant here) and binding California law, and rule that [Respondent's] Petition, seeking, among other things, to invalidate the successor trustee provision, violates the trust and subtrusts’ no contest clause."

* * *

"C. Respondent [ ] Misinterprets the Governing Authority

Try as he might, [Respondent] cannot get around this Court’s holding in Scharlin v. Superior Court of Orange County (1992) 9 Cal App.4th 162 [11 Cal.Rptr.2d 448]. The Scharlin Court was asked to determine if a no contest clause in an Amendment was able to modify an existing no contest clause in the general provisions of a trust as it related to an Irrevocable Decedent’s Trust (referred to as Trust B in the opinion). This Court held that because the Decedent’s Trust was irrevocable when the Amendment was executed, the Amendment’s no contest clause had no effect on the Decedent’s Trust [Trust B]. (Id. at 170-71 [11 Cal.Rptr.2d at 448].) In Scharlin, this Court evaluated the no contest clause of that trust which had strikingly similar language to the No Contest Clause in question in these proceedings. This Court held that “As to Trust B, the clause in the original trust agreement controls.” (Id. at 171 [11 Cal.Rptr.2d at 448]; emphasis supplied.)

"[Respondent's] continuing effort to point to a purported absence of language expressly incorporating the general provisions of the Trust into the subtrusts created within the Trust is unsupported by any authority. To the contrary, as was the holding in Scharlin, it is clearly implied by the provisions of the Trust that the subtrusts are to be administered pursuant to the terms of the Trust in which they were created. To say that the election option of Article 4.02 (AA000023-25) is conditional language and only in the event that the surviving Trustor opts to take the election as described in Article 4.02 will the subtrusts be subject to the provisions of the underlying Trust defies logic.

* * *

This Court in Scharlin notes [ ] citing California First Bank v. Townsend (1981) 124 Cal.App.3d 922, 930 [177 Cal.Rptr. 723]: “In construing a trust instrument, the intent of the Trustor prevails and it must be ascertained from the whole of the trust instrument, not just separate parts of it.” (Scharlin, 9 Cal.App.4th at 168 [11 Cal.Rptr.2d 448].) By dissecting the Trust instrument to give it his own meaning, [Respondent] is ignoring the intent of the Trustors, of which Appellant is one. (AA000018.) Respondent has always intended the general provisions of the Trust to control the subtrusts and is certain that Lloyd felt the same way. (AA000143.) [Respondent] cannot trump this [intent] by simply repeating his mantra that “no contest clauses” are to be strictly construed. (See, e.g., RB p. 7.) Even with strict construction, as noted in the Opening Brief, the no contest clause was intended to be, and was in fact, made applicable to the subtrusts. (OB, p. 12; AA000035.)

Finally, [Respondent's] breathless attempts to evade Scharlin fail especially when one considers another Fourth District case, McIndoe v. Olivos (2005) 132 Cal.App.4th 483 [33 Cal.Rptr. 689].

In McIndoe, the appellate court stated: “The no contest clause was located in the ‘general provisions’ section of the trust document, which specified that all general provisions “apply to each trust established hereunder[.]” Thus, the trust document specified that the no contest clause applied to the entire trust estate, including the exempt trust and the survivor's trust. Significantly, the amendments to the survivor's trust ratified all terms and conditions of the original trust or left the original trust unchanged. Because the no contest clause of the original trust applied to all subtrusts, there was no need to add a no contest clause to the exempt trust.” (McIndoe, 132 Cal.App.4th at 488 [33 Cal.Rptr. 689, 692].)

Likewise, here, the no contest clause was contained in the general provisions section of the original trust. The original trust similarly stated that no contest clause of the Trust applies to “any provisions of the instrument” [emphasis added], which necessarily includes the subtrusts created by the same instrument. (AA000035.) Thus, as the McIndoe court observed, there was no need to add a no contest clauses in each of the subtrusts (McIndoe, 132 Cal.App.4th at 488 [33 Cal.Rptr. at 692]), as [Respondent] contrarily urges here."