Urick v. UrickUrick v. Urick
- Reporters:
- ,
- Before:
- Kriegler, Baker, Dunning
APPEAL from order of the Superior Court of Los Angeles County, Lesley C. Green, Judge. Reversed.
Meserve, Mumper & Hughes, Michael A. Angel and Cliff Melnick, for Plaintiff and Appellant.
Sacks, Glazier, Franklin & Lodise, Robert N. Sacks and Eunice Y. Lim,
A beneficiary filed a petition for instructions as to whether the “no contest” clause of his mother’s trust had been violated
FACTS AND PROCEDURAL HISTORY
Allyne Urick’s Estate Plan
On March 8, 2013, Allyne Urick executed the Allyne L. Urick Trust Agreement.2 On her death, her daughter Dana Urick would be the successor trustee. If Dana should cease to serve, Allyne’s son Willis E. Urick, III would serve as trustee. The trust was structured as a charitable remainder annuity trust, which pays a fixed amount of income to the donor’s beneficiaries and gives the remainder to a charity. At Allyne’s death, after certain payments and distributions from the trust estate, the remaining trust principal would be annuitized and the income distributed in equal shares to Willis, Dana, and Dana’s son Trentyn Urick-Stasa. Upon termination of the annuity, the remaining principal would be distributed to Phillips Academy Andover, “In Memory of Willis E. Urick, Jr., Class of 1934.” Allyne executed a pour-over will as well.
On January 3, 2014, Allyne addressed a handwritten note “[t]o whom it may concern,” which stated, “I hereby delete my son Willis E. Urick III from the assets of my Family Trust, established March 8, 2013. [¶] I have shared
On August 6, 2014, however, Allyne executed an “Amendment and Full Restatement of the Allyne L. Urick Trust Agreement dated March 8, 2013.” It stated that its provisions “shall control over all earlier statement of the Trust provisions.” Dana was appointed as the successor trustee. If she ceased to serve, Wells Fargo Bank was named as successor trustee. The restated trust was also a charitable remainder annuity trust. After certain payments and distributions from the trust estate, the remaining principal was to be annuitized and the income generated would be distributed in equal shares to Willis, Dana, and Urick-Stasa. Payment of the annuity amount was to cease “upon the earliest of [Urick-Stasa] attaining the age of thirty-five (35) years, upon the death of the last surviving named recipient of a share of the annuity amount or upon the latest date allowed by
The trust contained a no contest clause providing, “In the event that any Beneficiary or other individual who is specifically not named as a Beneficiary, including grandchildren or spouses of the Trustor’s children, shall contest any aspect of this Trust or attempt to set aside, nullify, or void the Trust or the distribution thereof in any way, whether successfully or unsuccessfully, then the Trustor directs that such rights of such person shall be ascertained as it would have been determined had that person predeceased the execution of this instrument without living issue.”
Dana was appointed as the successor trustee under the trust. Allyne passed away on August 18, 2015, and Dana assumed the role of trustee.
Petition for Reformation of Trust
On February 16, 2016, Dana filed a petition to reform the trust under
The attorney caption at the top of the petition and the attorney signature block on the final page stated that the attorneys represented Dana, but did not mention her role as trustee. Dana signed a verification of the petition which did not state that she was signing it as trustee.
Dana attached several documents to the reformation petition, including a letter to Allyne from her attorney Mark Boykin dated December 14, 2012. Boykin confirmed that Allyne wanted her son and daughter to receive a fixed percentage of her estate in the form of an annuity for the rest of their lives and wanted her grandson to receive a substantial sum in trust, with the remainder to Phillips Academy. She wanted to reduce potential estate taxes, but was more concerned about providing for her grandson and not having her children receive a large sum of money at her death.
In a letter dated January 7, 2013, Boykin provided Allyne with a draft of the trust. He confirmed that Allyne wanted Willis and Dana to receive an annuity of five percent of her net estate for their lifetimes, with the remainder to Urick-Stasa. Allyne responded that she wanted Urick-Stasa to have an equal annuity share to her children. Boykin explained that he could complete the trust as she asked, but giving Urick-Stasa a present annuity interest in addition to the remainder interest could lead to substantial additional taxes.
In a letter dated February 6, 2013, Boykin enclosed a draft for Allyne. He explained that he used a charitable remainder trust based on their telephone conversation in which she stated that she wanted Phillips Academy to receive the remainder, even though the gift would probably not qualify for charitable treatment.
Allyne signed the trust on March 8, 2013. The trust was funded with her residence, an apartment building, and several investment accounts. She had a number of bank accounts payable on death through beneficiary designations which were not placed in the trust.
After Allyne’s handwritten note on January 3, 2014, expressing her intent to disinherit Willis, Boykin prepared an amendment to the trust that made
Willis and Phillips Academy each objected to the reformation petition.
Petition for Instructions as to Violation of No Contest Clause
On May 31, 2016, Willis filed a petition for instructions as to whether Dana’s petition violated the no contest clause of the trust. He argued that the reformation petition was a direct contest to invalidate the distributive provisions of the trust on the basis of fraud, undue influence, and duress, in violation of
Anti-SLAPP Motion
On August 4, 2016, Dana filed an anti-SLAPP motion in her capacity as trustee. She argued that the anti-SLAPP statute applied because filing a petition to reform the trust was protected litigation activity under the anti-SLAPP statute. Willis could not show a probability of prevailing on the merits, because: (1) she filed the reformation petition in her capacity as trustee; (2) it was not a direct contest, because she sought to reform the trust on the ground of mistake; and (3) she had probable cause for filing the petition.
Opposition to Anti-SLAPP Motion
Willis opposed the anti-SLAPP motion. He argued that the anti-SLAPP statute should not apply to the no contest provisions of the Boykin had videotaped Allyne’s execution of her original estate plan in 2013. Willis submitted a transcript of the discussion and the execution of the Allyne answered, “That’s correct.” Boykin continued, “And it’s not five percent to each of your three children.” Allyne said, “I understand that now.” Boykin responded, “And you understand that it’s five percent of the entire value of the trust every year.” Allyne answered, “Correct.” Boykin added, “Split three ways.” Allyne said, “Right. Got it.” Boykin asked, “And that’s what you want to do?” Allyne said, “Yes, I do.” Boykin said, “Okay.” Allyne added, “That is quite a bit of money from where I am sitting.” Boykin continued, “All right. And then that is going to continue until both of your children have passed away and [Urick-Stasa] attains age 35 years; correct?” Allyne said, “Correct.” Boykin asked, “Then what do you want to have happen to the trust fund? [¶] Where would it be distributed at the point [Urick-Stasa] reached 35?” They had a discussion off the record about the length of time that the annuity would be paid to Urick-Stasa. Allyne thought she might want to extend it. She wanted to confer and ask for Boykin’s advice. Boykin explained that the remainder going to Phillips Academy would not be zero, and would probably be somewhere between three and ten million dollars. Allyne responded, “Oh, that’s a lot of dough right there.” She decided that they would have to give some consideration to the distribution, but at present she would leave it as it was written. Before Allyne signed the documents, Boykin asked if she had an opportunity to review them that morning and previously. She said that she did. Boykin asked, “And we had discussion about [Urick-Stasa’s] distribution at age 35?” Allyne said they had. Boykin asked, “And you are now okay with that; correct?” Allyne answered, “Yes. At the present time. Yes.” Allyne signed the documents. Dana, in her capacity as trustee, filed a reply. She filed a notice of joinder in her individual capacity. Willis opposed the joinder motion. A hearing was held on September 19, 2016. The court denied the joinder motion and took the matter under submission. On September 28, 2016, the trial court issued a minute order granting the anti-SLAPP motion. The court found the disinheritance petition arose out of protected litigation activity. The court further found that Willis had failed to show a probability of prevailing because Dana’s petition was brought in her “Courts construe the anti-SLAPP statute broadly to protect the constitutional rights of petition and free speech.” (Anderson v. Geist (2015) 236 Cal.App.4th 79, 84.) “Resolution of an anti-SLAPP motion involves two steps.” (Baral v. Schnitt (2016) 1 Cal.5th 376, 384 (Baral).) In the first step, the moving party must establish that the claim at issue arises from free speech or petitioning activity protected by section 425.16. (Ibid.) Under section 425.16, an “‘act in furtherance of a person’s right of petition or free speech under the United States or California Constitution in connection with a public issue’ includes: (1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law, (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law, (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest, or (4) any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest.” ( If the moving party establishes that the claim arises from protected activity, the burden shifts to the opposing party to demonstrate a probability of prevailing on the merits. (Baral, supra, 1 Cal.5th at p. 384.) The second step has been compared to a “summary-judgment-like procedure.” (Taus v. Loftus (2007) 40 Cal.4th 683, 714; Baral, supra, 1 Cal.5th at p. 384.) “The court does not weigh evidence or resolve conflicting factual claims. Its inquiry is limited to whether the plaintiff has stated a legally sufficient claim and made a prima facie showing sufficient to sustain a favorable judgment. It accepts the plaintiff’s evidence as true, and evaluates the defendant’s showing only to determine if it defeats the plaintiff’s claim as a matter of law. [Citation.] ‘[C]laims with the requisite minimal merit may proceed.’ [Citation.]” (Baral, supra, at pp.384–385.) A “no contest clause” is “a provision in an otherwise valid instrument that, if enforced, would penalize a beneficiary for filing a pleading in any court.” ( “A no contest clause ‘essentially acts as a disinheritance device, i.e., if a beneficiary contests or seeks to impair or invalidate the trust instrument or its provisions, the beneficiary will be disinherited and thus may not take the gift or devise provided under the instrument.’ [Citation.] ‘The purpose of no contest clauses “is to discourage will contests by imposing a penalty of forfeiture against beneficiaries who challenge the will.“’ [Citation.] ‘In essence, a no contest clause conditions a beneficiary’s right to take the share provided to that beneficiary under such an instrument upon the beneficiary’s agreement to acquiesce to the terms of the instrument. [Citation.]’ . . . [Citation.]” (Betts v. City National Bank (2007) 156 Cal.App.4th 222, 231, fn. omitted.) “No contest clauses, whether in wills or trusts, have long been held valid in California. [Citations.] Such clauses promote the public policies of honoring the intent of the donor and discouraging litigation by persons whose expectations are frustrated by the donative scheme of the instrument. [Citation.] [¶] In tension with these public policy interests are the policy interests of avoiding forfeitures and promoting full access of the courts to all relevant information concerning the validity and effect of a will, trust, or other instrument. [Citation.] In light of these opposing interests, the common law in California recognized the enforceability of no contest clauses, albeit strictly construed, ‘so long as the condition was not prohibited by some law or opposed to public policy.’ [Citation.]” (Donkin v. Donkin (2013) 58 Cal.4th 412, 422 (Donkin).) The California Law Revision Commission, after studying the no contest law, issued a report in 2008 recommending retention of the statute “The Commission acknowledged, however, that other public policy concerns ‘can trump a transferor’s intention to create a no contest clause.’ (Revision Rep., supra, 37 Cal. Law Revision Com. Rep. at p. 369.) It noted that as a matter of general public policy, ‘a person should have access to the courts to remedy a wrong or protect important rights.’ (Ibid.) The Commission stated that a no contest clause should be applied conservatively to avoid a forfeiture that is not intended by the transferor. (Id., at pp. 369–370.) The Commission agreed that judicial proceedings may be necessary to determine a transferor’s intentions. (Id., at pp. 370–372.) And it emphasized that important public policy interests support judicial supervision of an executor, trustee, or other fiduciary. (Id., at p. 372.)” (Donkin, supra, 58 Cal.4th at p. 425.) To resolve uncertainty, the Commission recommended simplifying the statute by defining the types of contests narrowly. (Donkin, supra, 58 Cal.4th at p. 425.) “‘A beneficiary should not be punished for bringing an action to ensure the proper interpretation, reformation, or administration of an estate plan. Such actions serve the public policy of facilitating the fair and efficient administration of estates and help to effectuate the transferor’s intentions . . . . [¶] The proposed law would merely extend that principle to its logical end . . . .’ ([Revision Rep., supra, 37 Cal. Law Revision Com. Rep.] at p. 395.)” (Id. at p. 426.) The Legislature repealed and replaced the statutes governing no contest clauses based on the recommendations of the Commission. (Stats. 2008, ch. 174, §§ 1, 2, p. 567 [repealing former § 21300 et seq., and adding § 21310 et seq.]; Sen. Rules Com., Off. of Sen. Floor Analyses, Unfinished Business Analysis of Sen. Bill No. 1264 (2007–2008 Reg. Sess.) as amended June 18, 2008; Donkin, supra, at pp. 426–427.) Under the current law, a no contest clause will only be enforced against a pleading that challenges certain property transfers, a creditor’s claim, or “a direct contest that is brought without probable cause.” ( Willis contends the anti-SLAPP statute should not be applied to a petition to enforce a no contest clause. His argument is not unreasonable, but it ultimately fails, as we cannot disregard the plain language of the anti-SLAPP statute. A cause of action arises from a protected activity under the anti-SLAPP statute if it arises from “any written or oral statement or writing made before a . . . judicial proceeding.” ( Willis contends applying the anti-SLAPP statute in proceedings to enforce no contest clauses encourages litigation and discord between beneficiaries and increases litigation costs, contrary to the policies behind the no contest provisions and the intent of testators. Willis also notes that specific rules unique to the We conclude that although the policies underlying the no contest provisions have been carefully balanced by the Legislature and the anti-SLAPP procedures may impede some of those goals, including increasing litigation costs and potential delay, no provision of the Willis contends the anti-SLAPP motion should have been denied because he established a reasonable probability of prevailing on the merits. We agree. A contest is a pleading filed with the court by a beneficiary. Willis contends there is ample evidence to meet his burden to establish that Dana filed the reformation petition as a beneficiary of the trust. We agree. The petition identified Dana as trustee only once in the opening sentence, while every other reference to Dana, and the petition as a whole, was Dana’s evidence, although conflicting, did not defeat Willis’s claim as a matter of law. Dana noted that she was not required to file the reformation petition as an aggrieved party under Willis contends he made a prima facie showing that the reformation petition constituted a direct contest on the ground of fraud. This is correct. There is sufficient evidence to conclude that one of the grounds for the reformation petition was fraud. “‘The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or “scienter“); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.’ [Citations.]” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) The grounds for reformation alleged in the petition included misrepresentation and nondisclosure. On the first page of the petition, Dana alleged that the trust was not drafted in accordance with Allyne’s intent and the terms of the trust were misrepresented by the drafter. Dana later alleged her belief that Dana contends the reformation petition was not a direct contest because she did not seek to invalidate the trust, but merely to reform the trust to reflect the trustor’s intent. This is incorrect. A direct contest is a pleading that alleges one or more terms of a protected instrument are invalid based on a ground set forth in Willis contends that Dana brought the reformation petition without probable cause. We conclude Willis made a prima facie showing that Dana did not have probable cause to file the reformation petition.5 Allyne’s original trust provided after her death for an annual income to her children for life and to her grandchild in trust until age 35. She explained on videotape that she did not want to leave her estate to her children outright. Boykin explained the trust provisions to her on and off camera. She wanted to consider the distribution age for her grandson further, which she did, and she executed the trust documents. Around the holidays in 2014, Allyne disinherited her son by way of a handwritten amendment to her trust. Boykin Willis has demonstrated a reasonable probability of prevailing on the issue of probable cause. Although Allyne handwrote an amendment to remove him as a beneficiary, she did not sign later amendments Boykin prepared to disinherit him. Instead, Allyne chose to restate her trust in full to supersede her handwritten amendment and expressly reinstate Willis as a beneficiary. Dana had no other evidence to support her claim that her mother intended Dana and Urick-Stasa to be the sole beneficiaries of her trust. Willis has sufficiently established at this stage of the proceedings that a reasonable person would not believe, based on the facts known to Dana, that there was a reasonable likelihood that the trust would be reformed to provide solely for Dana and her son. Even if the handwritten amendment could be the basis for a reasonable person to believe that after further discovery the probate court was likely to eliminate Willis’s interest, there were no facts in the record that would cause a reasonable person to believe the probate court would reform Phillips Academy’s interest as the remainder beneficiary. Allyne twice signed trust instruments that provided a substantial remainder to Phillips Academy. There is no evidence that she intended to make an outright gift to Dana and Urick-Stasa in 10 years, with a much smaller contingent gift to Phillips Academy in the event of both their deaths. Allyne wanted her grandson’s share held in trust for him until age 35. Under the proposed reformation, Urick-Stasa’s share would be distributed at age 18. Dana contends that she had probable cause to file the reformation petition because she had reason to believe the relief would be granted after an opportunity for further investigation or discovery. She contends the grounds for reforming the trust will require further inquiry into Allyne’s communications to determine whether the trust reflects Allyne’s testamentary intent. At this stage, Dana has fallen well short of establishing as a matter of law that she had a reasonable basis to believe the relief she requested would be granted based on the information available to her or after further discovery. Willis presented evidence with the minimal merit necessary to overcome the anti-SLAPP motion. The order granting the motion to strike and the order awarding attorney fees are reversed. The probate court is directed to enter a new and different order denying the motion to strike. Appellant Willis E. Urick, III is awarded his costs on appeal. KRIEGLER, Acting P.J. We concur: BAKER, J. DUNNING, J.*Reply and Trial Court Ruling
DISCUSSION
Anti-SLAPP Statute and Standard of Review
No Contest Clauses
Protected Activity
Probability of Prevailing on Merits
A. Filing as a Beneficiary
B. Grounds for Direct Contest
C. Probable Cause
DISPOSITION