FACTS AND PROCEDURAL HISTORY
Allyne Urick's Estate Plan
On March 8, 2013, Allyne Urick executed the Allyne L. Urick Trust Agreement.
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
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 Probate Code sections 17000, subdivision (b)(1), and 17200, subdivisions (b)(3), (b)(4), and (b)(13)-(14). The petition stated that "Petitioner, Dana Urick, Trustee of The Allyne L. Urick Trust," sought to reform the trust on the grounds that its terms were misrepresented by the drafter, Allyne had mistakenly signed the trust believing it reflected her intent, and the trust did not contain the distribution plan that she requested of the drafting attorney. The petition noted that mistake of law is a ground for reformation under Civil Code sections 1578, and that a written instrument may be reformed on the application of an aggrieved party under Civil Code section 3399. Dana
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
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 Probate Code section 21310, subdivision (b)(4). Willis sought instructions from the court as to whether the reformation petition constituted a direct contest under Probate Code section 21310 et seq., and whether Dana lacked probable cause to file the petition.
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 Probate Code. Even if the statute applied, he had a reasonable probability of prevailing on the merits. The evidence
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
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.
Reply and Trial Court Ruling
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
DISCUSSION
Anti-SLAPP Statute and Standard of Review
"Courts construe the anti-SLAPP statute broadly to protect the constitutional rights of petition and free speech." ( Anderson v. Geist (2015)
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 ,
No Contest Clauses
A "no contest clause" is "a provision in an otherwise valid instrument that, if enforced,
"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)
"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)
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 ,
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." (
Protected Activity
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." ( Code Civ. Proc., § 425.16, subd. (e)(1).) A "contest" is "a pleading filed with the court by a beneficiary that would result in a penalty under a no contest clause, if the no contest clause is enforced." ( Prob. Code, § 21310, subd. (a).) Willis's petition alleging a violation of the no contest clause arises from a pleading filed with the probate court and therefore is subject to the anti-SLAPP statute.
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 Probate Code has been shown to be inconsistent with the anti-SLAPP provisions. The language of the anti-SLAPP statute is clear and unambiguous, and it has been applied to other probate court petitions. ( Greco , supra , 2 Cal.App.5th at pp. 823-826,
Probability of Prevailing on Merits
Willis contends the anti-SLAPP motion should have been denied because he established a reasonable probability of prevailing on the merits. We agree.
A. Filing as a Beneficiary
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 Civil Code section 3399, because she had standing to file it as trustee under Probate Code section 17200. Dana invoked Civil Code section 3399 in her petition, however, which was evidence that she filed the petition as a beneficiary. We also note that both trustees and beneficiaries may petition the probate court under Probate Code section 17200, so the statute does not definitively support one interpretation over the other.
B. Grounds for Direct Contest
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)
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 Probate Code section 21310. Dana's reformation petition sought to invalidate the terms providing distributions to Willis as a result of Boykin's misrepresentations or concealment. The effect of Dana's proposed action-to invalidate certain distributive provisions of the trust on grounds enumerated in section 21310-controls over the label that she gave to the remedy that she sought. (See Civ. Code, § 3528 ["The law respects form less than substance"].)
C. Probable Cause
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.
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
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.
DISPOSITION
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.
We concur:
BAKER, J.
DUNNING, J.
Notes
SLAPP is an acronym for "Strategic Lawsuits Against Public Participation." (Equilon Enterprises v. Consumer Cause, Inc. (2002)
Because the parties and the decedent share the same last name, they will be referred to individually by their first names for clarity.
" 'Pleading' means a petition, complaint, cross-complaint, objection, answer, response, or claim." (Prob. Code, § 21310, subd. (d).)
Probate Code section 21311 provides in full, "(a) A no contest clause shall only be enforced against the following types of contests:
(1) A direct contest that is brought without probable cause.
(2) A pleading to challenge a transfer of property on the grounds that it was not the transferor's property at the time of the transfer. A no contest clause shall only be enforced under this paragraph if the no contest clause expressly provides for that application.
(3) The filing of a creditor's claim or prosecution of an action based on it. A no contest clause shall only be enforced under this paragraph if the no contest clause expressly provides for that application.
(b) For the purposes of this section, probable cause exists if, at the time of filing a contest, the facts known to the contestant would cause a reasonable person to believe that there is a reasonable likelihood that the requested relief will be granted after an opportunity for further investigation or discovery."
The trial court did not reach the issue of probable cause. Because we review of the sufficiency of the showing under the second prong of the anti-SLAPP analysis de novo, we independently resolve the issue.
Judge of the Orange Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.