Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
APPEAL from an order of the Superior Court of Tulare County No. VPR043543. Melinda Myrle Reed, Judge.
Baker Manock & Jensen, Jeffrey A. Jaech and Mark S. Poochigian for Defendant and Appellant.
Damrell, Nelson, Schrimp, Pallios, Pacher & Silva, Roger M. Schrimp, Kathy L. Monday and James A. Oliveira for Plaintiffs and Respondents.
OPINION
Levy, J.
Respondents, Robert S. Bennett, William M. Bennett, Matthew Bennett, Adam Bennett, Robert W. Crosby Bennett, Kiley Marie Corrigan Bennett, Casey Michael Bennett, and Lindsay Brooke Bennett, are beneficiaries of the Bennett Family Trust - 1989 (Trust). Respondents applied to the trial court for an advance ruling under Probate Code section 21320 on whether a proposed petition would be a contest of the Trust. This petition seeks a determination that two amendments to the Trust executed by appellant, Richard W. Bennett, in his capacity as attorney in fact, were void by law. The trial court ruled the proposed petition did not violate the Trust’s no contest clause.
All further statutory references are to the Probate Code.
Appellant contends the trial court erred. According to appellant, respondents’ petition attacks the Trust by seeking to void the second and third amendments to the Trust and, because such amendments are integral parts of the Trust, the petition violates the Trust’s no contest clause. Appellant further argues that section 21305, subdivision (b), does not protect the petition because this public policy exception to enforceability of no contest clauses does not apply to this case.
As discussed below, the trial’s ruling was correct. Contrary to appellant’s position, respondents’ proposed petition does not violate the no contest clause as a matter of public policy under section 21305, subdivision (b)(1).
BACKGROUND
The Trust was amended and restated by Robert W. Bennett and Margaret Bennett, the trustors, by a declaration of trust dated January 25, 2000. This declaration of trust provides that Robert W. Bennett and Margaret Bennett are to act as original co-trustees but that if neither of them is able to act or continue to act as trustee, then Richard W. Bennett, Robert S. Bennett, William M. Bennett and Jane Bennett Fortune are to act as successor co-trustees. The declaration of trust also includes a no contest provision that reads:
“If any beneficiary of the trusts established by this instrument attacks or contests this trust instrument in any manner, directly or indirectly, any interest in the trust estate given to such beneficiary under this trust instrument is revoked and shall be disposed of in the same manner provided by this instrument as if such contesting beneficiary had predeceased the trustors.”
In July 2003, Robert W. Bennett executed a durable power of attorney whereby he appointed Margaret Bennett as his attorney in fact and appellant as his successor attorney in fact. In March 2005, Margaret Bennett resigned as attorney in fact for Robert W. Bennett and appellant assumed that role.
Thereafter, Margaret Bennett, as trustor, and appellant, as attorney in fact for Robert W. Bennett, executed two amendments to the Trust. The Second Amendment to Bennett Family Trust - 1989 (Second Amendment), dated July 12, 2006, modifies the trustee provision to designate Margaret Bennett as trustee and first appellant and then Wells Fargo Bank as successor trustees. The Second Amendment also expands the definition of a contest to include legal action against the trustors and against the family owned entities. The Third Amendment to Bennett Family Trust - 1989 (Third Amendment) dated February 21, 2007, modifies the no contest provision for a second time.
Robert W. Bennett died on July 20, 2007. Upon his death, portions of the Trust became irrevocable.
In September 2007, respondents filed a section 21320 application requesting the trial court to determine whether a proposed petition would violate the no contest clause in the Trust. In this proposed petition, respondents assert that, because section 15401, subdivision (c), prohibits an attorney in fact under a power of attorney from modifying or revoking a trust unless expressly permitted by the trust instrument, the Second and Third Amendments are void.
The trial court ruled that the proposed petition did not violate the no contest clause. The court relied on section 21305, subdivisions (b)(1), (b)(6), and (b)(9). Under these subdivisions, certain pleadings do not violate a no contest clause as a matter of public policy.
DISCUSSION
A “contest” is defined as “any action identified in a ‘no contest clause’ as a violation of the clause.” (§ 21300, subd. (a).) A “no contest clause” is “a provision in an otherwise valid instrument that, if enforced, would penalize a beneficiary if the beneficiary files a contest with the court.” (§ 21300, subd. (d).) Such clauses are valid in California and are favored by the public policies of discouraging litigation and giving effect to the testator’s expressed purposes. (Burch v. George (1994) 7 Cal.4th 246, 254.) Nevertheless, competing public policies also exist. Not only must the court strictly construe a no contest clause because it works a forfeiture (ibid), certain proceedings do not violate a no contest clause by statute as a matter of public policy, notwithstanding anything contrary contained in the pertinent instruments. (§ 21305, subd. (b).)
Section 21320 authorizes a declaratory relief proceeding whereby the beneficiary of a trust that either is or has become irrevocable may obtain an advance ruling on whether a particular legal challenge would be a contest. (Genger v. Delsol (1997) 56 Cal.App.4th 1410, 1427.) Such an application is not itself a contest. (§ 21320, subd. (b).) However, the application for an advance ruling may not seek a determination of the merits of the legal challenge. (§ 21320, subd. (c); Genger v. Delsol, supra, 56 Cal.App.4th at p. 1427.)
Here, the trial court’s ruling on respondents’ section 21320 application was made without extrinsic evidence. Rather, the determination turned on whether the proposed petition is statutorily exempt from the definition of a contest. Consequently, the appeal presents a question of law and requires this court to make an independent determination. (Estate of Hoffman (2002) 97 Cal.App.4th 1436, 1442, superseded by statute on other grounds, as recognized in Hermanson v. Hermanson (2003) 108 Cal.App.4th 441, 445.)
Under section 21305, subdivision (b)(1), for documents that become irrevocable on or after January 1, 2001, “notwithstanding anything to the contrary in any instrument,” a “pleading seeking relief under Chapter 3 (commencing with Section 15400) of Part 2 of Division 9” does “not violate a no contest clause as a matter of public policy.” “The term ‘pleading’ … includes a petition … filed with the court that expresses the position of a party to the proceedings.” (§ 21305, subd. (f).)
Respondents’ proposed petition expresses their position that the Second and Third Amendments violate section 15401, subdivision (c). That section provides that “[a] trust may not be modified or revoked by an attorney in fact under a power of attorney unless it is expressly permitted by the trust instrument.”
This proposed petition falls squarely under the section 21305, subdivision (b)(1), statutory exemption from the definition of a contest. It expresses respondents’ position that the trust could not be validly modified by appellant in his capacity as attorney in fact under a power of attorney because such modification was not expressly permitted by the trust instrument. In other words, the proposed petition is a “pleading” as defined by section 21305, subdivision (f), that seeks relief based on one of the statutes designated by section 21305, subdivision (b)(1). Accordingly, the trial court properly concluded that the proposed petition did not violate the no contest clause.
Appellant argues that respondents are not seeking relief under section 15401, subdivision (c), because that subdivision does not authorize the filing of a petition. Rather, appellant contends, although respondents are relying on section 15401, subdivision (c), as authority for their position, they are seeking relief under section 17200, subdivision (b)(3) (a trust beneficiary may petition the court to determine the validity of a trust provision.)
However, a qualifying “pleading” under section 21305, subdivision (b), “includes a petition, complaint, response, objection, or other document filed with the court that expresses the position of a party to the proceedings.” (§ 21305, subd. (f).) There is no requirement that such document be specifically authorized by the statute upon which the party’s position is based.
Moreover, analogous case law supports the trial court’s ruling. In Graham v. Lenzi (1995) 37 Cal.App.4th 248, the court held that a trust beneficiary’s act of invoking the protection of section 21350, which invalidates donative transfers to certain disqualified persons, was not a contest. Rather, it was “a means of enforcing a specific statutory mandate.” (Id. at p. 255.) The court noted that public policy favors protecting the security of those who entrust their property to the administration of others and that section 21350 promotes this policy by addressing the risk that transfers to persons who participate in the drafting of donative instruments may be procured by fraud, menace, duress or undue influence. This policy is also “furthered by allowing heirs and beneficiaries to invoke the protection of section 21350 without risking forfeiture under a no contest clause.” (Id. at p. 257.)
The statute under which respondents seek protection is also one that protects the security of those who entrust their property to the administration of others. A durable power of attorney grants the attorney in fact “all the authority to act that a person having the capacity to contract may carry out through an attorney-in-fact specifically authorized to take the action.” (§ 4261.) Section 15401, subdivision (c), protects those who grant an attorney in fact power over the administration of their property by prohibiting that attorney in fact from modifying or revoking a trust. Thus here, as in Graham v. Lenzi, supra, public policy favors allowing respondents to invoke the protection of section 15401, subdivision (c), without risking forfeiture under the no contest clause.
Since the proposed petition is statutorily exempt from the definition of a contest under section 21305, subdivision (b)(1), there is no need to determine whether it is also exempt under subdivision (b)(6) (a no contest clause is not violated by an indirect contest challenging the exercise of a fiduciary power) or subdivision (b)(9) (a no contest clause is not violated by an indirect contest regarding the interpretation of the instrument containing the no contest clause).
DISPOSITION
The order is affirmed. Costs on appeal are awarded to respondents.
WE CONCUR: Wiseman, Acting P.J., Cornell, J.