Opinion
C083166
12-14-2017
ROBBIN HEWITT, Plaintiff and Appellant, v. ADRIANNE PARKS et al., Defendants and Respondents.
NOT TO BE PUBLISHED California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 34-2015-00173493-PR-TR-FRC)
In this probate dispute, the primary issue is whether certain properties should be treated as part of the Mixed Doubles Trust (Doubles Trust), established by Robert and Shirley Hewitt. Their son Robbin Hewitt--who stood to gain from the Doubles Trust--sued his siblings (Adrianne Parks, Blythe Hewitt, and Robert R. Hewitt) and his brother-in-law (Tom Parks, Adrianne's husband). Robbin claimed Shirley, who survived Robert for a time, improperly moved certain real properties into her own trust, the Test Family Trust (Test Trust), as to which Robbin has only a minor personalty interest (as he was to receive a ceramic plate and a Lladro figurine). The trial court took judicial notice of relevant recorded deeds and then sustained (without leave to amend) a demurrer filed by defendants Adrianne and Tom--a demurrer in effect joined by Blythe and Robert R.--on the ground that those real properties were never held by the Doubles Trust.
To avoid confusion, after identifying a party we will refer to that party by first name.
Although we agree with the trial court that the bulk of the pleaded claims lack merit, we reverse the judgment because Robbin has pleaded a vague but plausible claim of mismanagement of real property as to which he does have a legal interest. Thus Robbin should be given leave to amend to clarify the nature of this claim.
BACKGROUND
Although this case arises on demurrer, because Robbin in part seeks leave to amend on appeal, we include not only facts well-pleaded in the complaint, but also various other facts that are not disputed or that Robbin offers to allege if given leave to amend.
Robert and Shirley created the Doubles Trust in 1978, and transferred specified real and personal property into the trust by schedules listing their community property, respective separate property, and quasi-community property. Around 1980 the couple separated, but they never divorced. In 1985 they amended the Doubles Trust for reasons not germane to this dispute, but the amendment shows they continued to act together on property matters.
Before separation, the couple lived on what we will refer to as the 46th Street property, bought with a Cal-Vet loan. They evidently paid the last installment in 1990, and took title as joint tenants, although they had listed the 46th Street property in the schedule of community property transferred to the Doubles Trust.
We will refer to all properties by reference to their general location. We discuss the Cal-Vet loan and its distinctive features as relevant here in Part III, post.
In 1987 the couple bought the 24th Street property, as joint tenants to a 50 percent interest. The other 50 percent was held by their two sons, Robbin and Robert R., as tenants in common, with each holding an undivided 25 percent interest. This was acquired by a Starker exchange in place of the Franklin property, which had formerly been in the Doubles Trust.
See Starker v. United States (9th Cir. 1979) 602 F.2d 1341. This common way to defer capital gains tax is also known as a "1031 exchange." (See 26 U.S.C.A. § 1031.)
In 1989, again via a Starker exchange for a different Doubles Trust property (Deeble Street), the couple bought the Attawa Avenue properties as joint tenants, with the remainder owned by Robbin and Robert R. as tenants in common. The briefing and record are in conflict about whether the latter owned a 50 percent interest or a 30 percent interest, but either way, Robbin concededly has an undivided interest in the Attawa Avenue properties.
The parties collectively refer to the 24th Street and Attawa Avenue properties--those in which Robbin concededly owns undivided interests--as the "Shop Properties" or sometimes as the "Industrial Properties." We shall call them the Shop Properties.
Robert died in 1994. On his death, Shirley became the sole trustee of the Doubles Trust. She was to divide the trust immediately into a Survivor's Trust (Trust A) and a Decedent's (or Residuary) Trust (Trust B). Trust A was to hold her separate property and her interest in any community or quasi-community property. Trust B would hold the rest. Shirley was to receive income from both trusts and as much of the Trust A principal as she wanted, but she could tap into the principal from the Trust B only for health emergencies. When she died, the remainder of Trust A property not otherwise disposed of by Shirley would pour into Trust B, and be distributed among the children, except for a possible charitable gift.
The possible gift was $50,000 to the University of the Pacific (UOP), which eventually learned about this action and filed a response in the trial court supportive of Robbin's view. Although UOP filed an appellate settlement conference statement in this court, it has not filed a brief on appeal.
Because at the time of Robert's death the 46th Street house was held in joint tenancy, Shirley took title as the surviving joint tenant. She later placed that and all other realty she owned into her own trust, the 1995 Test Trust, including her interests in the Shop Properties. In 2002, Shirley sold the 46th Street house to third parties for $800,000.
Before Robert died, Shirley had bought the 56th Street house, and she had taken title as a "married woman as her sole and separate property."
By 2004 Shirley and Robert R. sued Robbin to partition their respective interests in the Shop Properties. That action was settled in 2006 with a provision to appraise the property to allow a buy-out, or else to sell the property and divide the proceeds. That settlement was never implemented.
By a 2012 amendment to her Test Trust, Shirley named her daughters, Adrianne and Blythe, as beneficiaries of a gift of the 56th Street house and Shirley's interests in the Shop Properties. But later, in 2013, she directly gifted all of those legal interests to her daughters. Shirley died in 2014.
The Present Litigation
In 2015 Robbin filed a petition to rescind Shirley's 2013 gift of the 56th Street house to his sisters, and to have the 46th Street house (or the proceeds therefrom) and the Shop Properties be treated as part of the Doubles Trust. He also alleged mismanagement of the Shop Properties by Adrianne and Tom.
Adrianne and Tom demurred on various grounds, and although Robbin filed an opposition to the demurrer, he then mooted the issue by filing a first amended petition after an adverse tentative ruling had been posted. The parties generally agree the first amended petition reiterates the claims made in the original petition, but adds as attachments certain pertinent documents omitted from the original petition.
Adrianne and Tom again demurred, and in part sought judicial notice of grant deeds respecting the properties, and the partition settlement. In part the demurrer acknowledged Robbin's interests in the Shop Properties, but argued that because he had not complained about the management of the properties--a fact neither pleaded in the amended petition nor subject to judicial notice--he could not sue Shirley for any breaches of trust. Adrianne and Tom also argued they could not "be liable for participating in a breach of trust by Shirley."
Robbin filed a lengthy motion to compel discovery responses.
Blythe then filed what amounted to a joinder to the demurrer, although Robbin later contended it improperly raised some new grounds, and also claimed Blythe had already filed an answer (a document not in the record on appeal).
Blythe was then self-represented, like Tom and Adrianne. We use "respondents" to refer to the defendant-siblings; Tom is unrepresented on appeal. Even if Blythe could not demur after having answered, as Robbin claims in passing, she could have moved for judgment on the pleadings with the same effect. Robbin heads no claim about Blythe's or Robert R.'s status as respondents on appeal.
Robbin's opposition in part argued Tom and Adrianne's defense to his claim of mismanagement hinged on facts not pleaded. Robbin alleged Shirley hired Adrianne and Tom at above-market rates to manage the property despite their lack of experience, they failed to collect rents, they failed to maintain the property, and they defaulted on a secured note, exposing the Shop Properties to liability.
Robert R. filed a purported "limited reply" to Robbin's opposition to the demurrer, to protect rights under the partition settlement; he had only been named in his capacity as a beneficiary and successor cotrustee of the Doubles Trust.
Without objection by Robbin, the trial court (DeAlba, J.) took judicial notice of the various deeds and the uneffectuated settlement in the partition case. The matter was continued to give time for the parties to try to settle this dispute. After settlement negotiations failed, the trial court (Gevercer, J.) sustained the demurrer without leave to amend.
A key portion of the trial court's ruling was as follows:
"[T]he Court takes judicial notice of grant deeds establishing the following:
"- Attawa Avenue Industrial property was acquired after creation of the Doubles Trust and held in joint tenancy;
"- 24th Street property was acquired after creation of the Doubles Trust and was held in joint tenancy;
"- 46th Street property was acquired after creation of the Doubles Trust and was held in joint tenancy;
"and
"- 56th Street property was acquired after creation of the Doubles Trust and was held in Shirley A. Hewitt's name as her sole and separate property.
"Based upon the grant deeds, the properties [Robbin] alleged to be held in the Doubles Trust . . . were actually held by [Robert and Shirley], husband and wife, as joint tenants, with the exception of the 56th Street property, which was [Shirley's] sole and separate property. [She] was entitled to transfer her interest in the properties to herself as trustee of the Test Trust. Accordingly, none of the properties were titled in the Doubles Trust.
"In addition, [Robbin] is named beneficiary of the Test Trust, but only as to two pieces of personal property, and the Test Trust . . . waives the requirement of an account. The Amended Petition fails to allege facts to establish [he] is entitled to an accounting, or that Respondents breached a duty owed to [him].
"[¶] . . . [¶]
"Because of the joint tenancy nature of the parcels of real property, [Robbin] has no standing to allege causes of action for wrongful disposition of the property. Based upon an examination of the judicially noticed documents, and the allegations of the Amended Petition, it does not appear there is a reasonable likelihood that an amendment could cure the Amended Petition's defects. [The] demurrer . . . is sustained without leave to amend."
Robbin timely appealed from the ensuing judgment.
DISCUSSION
Robbin's briefing is confusing, but he makes some coherent arguments, references legal authority, and provides enough record citations to satisfy his duty as the appellant to support at least some of his claims. We address his claims in the order he raises them. We will not discuss claims not embraced by the argument headings (see Loranger v. Jones (2010) 184 Cal.App.4th 847, 858, fn. 9), nor stray assertions or contentions. (See Claypool v. Wilson (1992) 4 Cal.App.4th 646, 659.)
I
Standard of Review
On demurrer, "We accept the well-pleaded facts alleged in the complaint and matters judicially noticeable, but not rhetoric or conclusions of law. We consider de novo whether the complaint states a viable claim for relief." (People ex rel Brown v. Powerex (2007) 153 Cal.App.4th 93, 97.) A pleader's legal conclusions or inconsistent allegations of meaning of incorporated attachments are disregarded. (See California Assn. of Highway Patrolmen v. Department of Personnel Admin. (1986) 185 Cal.App.3d 352, 361.)
A party may propose new amendments on appeal, to show leave to amend should be granted. (See Connerly v. State of California (2014) 229 Cal.App.4th 457, 460.) "The plaintiff must clearly and specifically set forth the 'applicable substantive law' [citation] and the legal basis for amendment, i.e., the elements of the cause of action and authority for it. Further, the plaintiff must set forth factual allegations that sufficiently state all required elements of that cause of action. [Citations.] Allegations must be factual and specific, not vague or conclusionary." (Rakestraw v. California Physicians' Service (2000) 81 Cal.App.4th 39, 43-44 (Rakestraw).)
II
Judicial Notice of Deeds
The trial court hinged its ruling on the status and date of title as reflected by judicially noticed recorded deeds, and found those documents showed that the relevant properties were not held by the Doubles Trust, regardless of Robbin's allegations.
In his first two connected arguments, Robbin contends that the trial court could not, on demurrer, assume the truth of the matters stated in judicially noticed deeds in derogation of the factual allegations of the petition. We disagree.
As we said in Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106 (Poseidon):
" ' "Judicial notice is the recognition and acceptance by the court, for use by the trier of fact or by the court, of the existence of a matter of law or fact that is relevant to an issue in the action without requiring formal proof of the matter." ' [Citation.] 'In determining the sufficiency of a complaint against demurrer a court will consider matters that may be judicially noticed.' [Citation.] A court may take judicial notice of something that cannot reasonably be controverted, even if it negates an express allegation of the pleading. [Citation.] This includes recorded deeds. [Citation.]" (Poseidon, at p. 1117, italics added.)
Although we conceded in Poseidon that "the fact a court may take judicial notice of a recorded deed, or similar document, does not mean it may take judicial notice of factual matters stated therein," we explained that it did mean the court could take judicial notice of the undisputed legal effect of the documents. (Poseidon, supra, 152 Cal.App.4th at pp. 1117-1118.)
Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256 (Fontenot), expounded upon our reasoning in Poseidon, as follows:
"[C]ourts have taken judicial notice not only of the existence and recordation of recorded documents but also of a variety of matters that can be deduced from the documents. In Poseidon, for example, the court affirmed the trial court's taking judicial notice, in sustaining a demurrer, of the parties, dates, and legal consequences of a series of recorded documents relating to a real estate transaction. [Citation.] Although the court recognized that it would have been improper to take judicial notice of the truth of statements of fact recited within the documents, the trial court was permitted to take judicial notice of the legal effect of the documents' language when that effect was clear. [Citation.] Similarly, in McElroy v. Chase Manhattan Mortgage Corp. (2005) 134 Cal.App.4th 388, the court took judicial notice of the recordation of a notice of default under a deed of trust, the date of the notice's recording, and the amount stated as owing in the notice for the purpose of demonstrating the plaintiffs had notice of the amount claimed to be owing and the opportunity to cure a defective tender. [Citation.] Judicial notice of the boundaries of a parcel of land on the basis of the property description in a recorded grant deed has also been approved. [Citation.]
"Strictly speaking, a court takes judicial notice of facts, not documents. (Evid. Code, § 452, subds. (g), (h).) When a court is asked to take judicial notice of a document, the propriety of the court's action depends upon the nature of the facts of which the court takes notice from the document. As noted in Poseidon, for example, it was proper for the trial court to take judicial notice of the dates, parties, and legally operative language of a series of recorded documents, but it would have been improper to take judicial notice of the truth of various factual representations made in the documents. [Citations.] Taken together, the decisions discussed above establish that a court may take judicial notice of the fact of a document's recordation, the date the document was recorded and executed, the parties to the transaction reflected in a recorded document, and the document's legally operative language, assuming there is no genuine dispute regarding the document's authenticity. From this, the court may deduce and rely upon the legal effect of the recorded document, when that effect is clear from its face." (Fontenot, supra, 198 Cal.App.4th at pp. 264-265, cited with approval on this point by Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 924, fn. 1, but disapproved on a different point by id. at p. 939, fn. 13.)
Here, the recorded deeds recited the date and manner in which title to the respective properties was taken, and Robbin does not dispute their authenticity. Under Poseidon and Fontenot, the trial court properly found that they carried the legal force they purported to carry; i.e., that each deed accurately described the nature of the legal title of each property as of the respective recordation dates.
Robbin contends the operative petition alleged "two or more trust properties were traded up for two other properties according to the parties [sic] agreement to hold the new properties in trust." Robbin's evident view is that because the Shop Properties were acquired via Starker exchanges for property that used to be in the Doubles Trust, they, too, should be deemed to be in the Doubles Trust.
Robbin also contends part of the Doubles Trust 1994 tax return shows Shirley ratified what he refers to as the parties' agreement; we discuss the tax return in Part V, post.
But Robbin fails to explain the details of the alleged agreement, or how such an agreement supports an enforceable right, and he fails to provide authority supporting liability on a constructive trust or similar theory; therefore, he has forfeited these claims. (See Ewald v. Nationstar Mortgage, LLC (2017) 13 Cal.App.5th 947, 949 [summary judgment; appellant failed to provide "a statement of the elements of a cause of action, supported by authority"]; In re Marriage of Nichols (1994) 27 Cal.App.4th 661, 672-673, fn. 3.)
The fact properties were once in a revocable trust has no bearing on the nature of any properties acquired in exchange therefor. Until Robert died, he and Shirley had the power to move property into and out of the Doubles Trust. When they engaged in the two Starker exchanges, they did not place the replacement properties in the Doubles Trust, but took title as joint tenants. Absent a coherent claim of a constructive trust, which Robbin has not provided, Robbin cannot oppugn the deeds in an effort to transfer what he views as "replacement" properties into the Doubles Trust.
III
Personalty Allegations
Robbin contends the trial court overlooked the fact that the amended petition referenced a live controversy between the parties about his interest in certain personalty held by either trust. We find no basis for reversal here.
The amended complaint in part sought declaratory relief to resolve a purported controversy "concerning the administration of the Doubles and Test Trusts as well as to what real and personal property are subject to the provisions of either or both trusts." But it did not explain what personalty was in dispute, nor explain what the dispute about the personalty was. Robbin does not elaborate on appeal, and therefore we have no idea what his claim is. He had not satisfied his duty, as the appellant on demurrer, to set forth what facts on this subject he would plead if given leave. (See Rakestraw, supra, 81 Cal.App.4th at pp. 43-44.)
IV
Cal-Vet Loan
Robert and Shirley acquired the 46th Street property with a Cal-Vet loan. They listed that property in the Doubles Trust community property schedule (Schedule A). However, when they obtained legal title (presumably after paying the last installment) in 1990, they took title as joint tenants. Robbin contends that the property did not lose its status as part of the Doubles Trust corpus upon conveyance of legal title, or alternatively that he can amend to allege that the (unrecorded) intention of the couple was to keep that property in the Doubles Trust. We disagree.
A Cal-Vet loan is not a standard residential real estate purchase where the buyer obtains legal title at close of escrow, with the lender retaining a security interest. Under a Cal-Vet loan the government retains legal title under an installment sale contract, although it acts somewhat like a lender in a traditional financed land sale. (See Fountain Valley Chateau Blanc Homeowner's Assn. v. Department of Veterans Affairs (1998) 67 Cal.App.4th 743, 756-758.) Robbin concedes the government buys the property, and holds it until the veteran has paid the full purchase price. "The veteran retains control and actual possession of the property; he or she has all the indicia of ownership except legal title." (Id. at p. 757, italics added.)
Title makes a difference. When Robert and Shirley listed the 46th Street property on the Doubles Trust schedule, such listing was permissible by statute, that is, such action did not breach the Cal-Vet loan agreement. (See Mil. & Vet. Code, § 987.73, subd. (b) ["The consent of the department shall not be required where a veteran, alone or jointly with his spouse, transfers his interest in property which is the subject of a loan agreement with the department into a revocable trust established for the benefit of the veteran or of the veteran and his spouse"].) But the effect of that listing was conditional, because at that time they were in effect no more than renters with an expectancy of ownership.
We have previously explained that, by statute (Mil. & Vet. Code, § 987.77), all Cal-Vet installment payments are deemed to be no more than rent until the loan is paid, and the government can both take the property and forfeit all prior payments in the event of default. (Department of Veterans Affairs v. Duerksen (1982) 138 Cal.App.3d 149, 156-158 (Duerksen).) Therefore, despite their act of listing the property on the community property schedule of the Doubles Trust, Robert and Shirley lacked the legal title necessary to fully effectuate that transfer. When they did obtain legal title, they instead chose to take title as joint tenants, and the couple (using documents prepared by counsel) took no documented steps to place the property in the Doubles Trust.
Robbin relies on the following passage of MacFadden v. Walker (1971) 5 Cal.3d 809:
"Finally, we note again, as we also did in [a prior] case, Professor Hetland's persuasive arguments that installment land sale contracts should be treated as security devices substantially on a par with mortgages and deeds of trust, and that therefore 'the law governing those security devices should be adopted with appropriate modifications in determining the remedies for breaches of installment contracts.' [Citations.] That law affords even the willfully defaulting debtor an opportunity to cure his default before losing his interest in the security." (Id. at p. 816, italics added.)
This passage does not help Robbin. First, this part of MacFadden merely calls on the Legislature to adopt remedies to avoid forfeiture, which the law disfavors. Second, the passage is dicta, because the aggrieved party in MacFadden was held to have an adequate remedy of specific performance. (MacFadden v. Walker, supra, 5 Cal.3d at p. 816.) Third, MacFadden involved an ordinary installment contract. (Id. at pp. 811-812.) In a case involving the Cal-Vet program, we distinguished MacFadden, noting that in the case of Cal-Vet loans the Legislature has made an explicit policy choice favoring forfeiture, which "is vital to the Cal-Vet program since it encourages veterans to comply with the terms of their contracts and, when they do not, gives the Department quick access to the property in order to favor the next veteran with its use." (Duerksen, supra, 138 Cal.App.3d at pp. 157-158.)
As we have noted, before Robert's death, the couple had the right and power to move property into and out of the trust. They chose to take title to the 46th Street property as joint tenants, and they never moved it into the Doubles Trust. At best Robbin alleges they had a silent understanding (or perhaps an erroneous belief) that that property should be or already was in the Doubles Trust. This seems to be an effort to impose a constructive trust on the proceeds of the property, but as we have observed in Part I, ante, nowhere does Robbin explain the elements of a constructive trust claim, which forfeits any such claim.
Later, Robbin contends the 56th Street property should be in a constructive trust, or its gift by Shirley to his sisters should be rescinded. But this argument suffers the same flaws. Instead of setting forth the elements of a constructive trust and making a reasoned argument, Robbin discusses conveyances designed to defraud creditors. As respondents explain, this analysis would only be relevant if the various parcels of realty were ever in the Doubles Trust.
V
Shop Properties Tax Form
The amended petition attached a letter from an accountant describing a "1994 Schedule K-1 Form 1041" tax form for the Doubles Trust, allegedly sent to Shirley in August 1995, the month before she created the Test Trust. The only page included with the cover letter is a form 1040 Schedule E, which describes the income, expenses, etc., for Shirley's interests in the Shop Properties.
Robert died in 1994. Nothing in the record explains how the couple treated the income from the Shop Properties before or after tax year 1994.
Respondents claim significance in the fact that Robbin has only a cover letter from the accountant referencing a Schedule K-1 and a one-page Schedule E, which respondents claim are two separate documents. But, reasonably read, the amended petition alleges Schedule E was a subpart of the tax form the accountant prepared.
Robbin contends this tax form shows the Shop Properties were in the Doubles Trust. He alleges Shirley directed the accountant to treat those properties as part of the Doubles Trust as a " 'ratification and confirmation' of the agreement to hold the [Shop Properties] in the [Doubles] Trust." He also contends the form amounts to "an admission or declaration of trust on [Shirley's] behalf regarding the Shop [Properties], sufficient to withstand a demurrer." We do not agree.
Respondents emphasize that the couple's interests in the Shop Properties were never listed in the Doubles Trust, having been acquired in joint tenancy many years after the Doubles Trust was created, albeit pursuant to Starker exchanges for two properties that had been listed in the Doubles Trust (the Deeble and Franklin properties). We have already explained that the deeds refute Robbin's view that because of the Starker exchanges those properties must be deemed to be in the Doubles Trust. (See Part I, ante.) We decline to hold one stray tax form can change the nature of the title thereto.
As respondents concede, Robbin cites cases--albeit predating modern rules about transmutation--holding that on given facts tax documents may constitute evidence of whether property is community or separate property. That is, tax documents can be used to prove the characterization of property held by a couple. (See Lawatch v. Lawatch (1958) 161 Cal.App.2d 780, 789-790, 791 [parties filed joint returns treating husband's income as community property, even after legal separation; "It is well recognized that income tax returns may be indicative of an agreement concerning the character of the income reported"]; Handley v. Handley (1952) 113 Cal.App.2d 280, 283-284 [similar holding]; Estate of Raphael (1949) 91 Cal.App.2d 931, 938-939 [similar holding]; Heck v. Heck (1944) 63 Cal.App.2d 470, 475 [similar holding].)
But as respondents point out, the issue in this case is different. The tax form was allegedly prepared at Shirley's direction to her accountant after Robert died, when the Shop Properties were already her separate property. Even if she explicitly directed her accountant to treat the income therefrom as the Doubles Trust's income, rather than her own income, that does not amount to a binding "admission" or a "ratification" of the allegation that the Shop Properties actually were in the Doubles Trust.
Moreover, respondents correctly point out that that would not mean her interests in those properties were not still Shirley's separate interests. The Doubles Trust provided that after Robert's death, a Survivor's Trust (Trust A) would arise (as would a Decedent's or Residuary Trust, or Trust B). Because Robert died before the tax document was prepared, Shirley owned the Shop Properties by virtue of the right of survivorship of a joint tenant. If she thereafter moved the Shop Property into the Doubles Trust, it would have been to the Survivor's Trust, as to which Shirley held the power to add "before or after the death of either of the trustors (i.e., Robert or Shirley)" or to remove any principal. She then had the power to move it into her own Test Trust, assuming she ever intended to move it into the Doubles Trust.
Further, the Doubles Trust itself provides that "additional property shall be described in Schedules attached hereto and [identified] as [community] or quasi-community property of the husband and the wife, or the separate property of either." No such schedule is alleged, and this further undermines Robbin's view that the tax document establishes a valid transfer into the Doubles Trust.
In short, Robbin has not demonstrated that a person changes title to property by characterizing it (or mischaracterizing) it a certain way on a tax form. He has not provided authority showing this is a lawful way to change title to realty in California, or a legally effective way to declare property is held in a trust, nor, absent Shirley's signature, would it avoid the statute of frauds for trusts. (Cf. Prob. Code, §§ 15200, 15206.)
Although Robbin claims equitable estoppel precludes reliance on the statute of frauds, he fails to explain how he detrimentally relied on anything Robert or Shirley did. (Cf. Juran v. Epstein (1994) 23 Cal.App.4th 882, 891-897.) They were free to leave him all, some, or none, of the property in the Doubles Trust before Robert died, and at the time he died, that trust did not hold title to any realty, as we have explained.
Robbin does argue Shirley's typewritten name on the cover letter (typed by the accountant) is sufficient, or that she directed the accountant to prepare the form. But he does not seek leave to amend to allege either that Shirley actually signed the letter or that the accountant was empowered to sign it and did sign it at her direction. After discussing authorities pertaining to what constitutes a signature, Robbin vaguely alleges "the Petition is amendable by adding allegations consisting with the principles outlined above." Later he suggests: "Possible areas of amendment might entail" various conclusory allegations. These vague assertions do not satisfy an appellant's duty on demurrer to spell out with particularity exactly how the pleading would be amended, were leave to amend granted. (See Rakestraw, supra, 81 Cal.App.4th at pp. 43-44.) Robbin "has never advanced, either in the trial court or before us, any effective allegation which he could now make if further amendment to the complaint were to be permitted. Although he insinuates multiple wrongs by respondents, he never points out in what manner those insinuations could be combined to state a cause of action." (Cooper v. Leslie Salt Co. (1969) 70 Cal.2d 627, 636-637.)
In his reply brief, Robbin seeks to amend to allege a detailed oral agreement between Robert and Shirley that encompasses virtually every form of relief he seeks (and that is largely inconsistent with what they actually did with the properties). But this imaginative effort comes too late. (See Kahn v. Wilson (1898) 120 Cal. 643, 644.)
In short, by moving the Shop Properties into her own trust, Shirley designated where she wanted it, regardless of Robbin's many subclaims about the stray tax form.
Robbin's references to Estate of Heggstad (1993) 16 Cal.App.4th 943 are puzzling. Heggstad held, as against a statute of frauds claim, that it was permissible for a trustor to move properties into a trust by means of a schedule of assets, rather than having to formally convey property into the trust. (Id. at pp. 946-950.) That is what Robert and Shirley did, but the schedules they prepared did not include any of the after-acquired properties now in contention by Robbin.
VI
Mismanagement of Shop Properties
Robbin contends he has pleaded a good claim of mismanagement of the Shop Properties, or at least that he should be given leave to amend to clarify the nature of the defalcations he alleges. We agree a viable claim might be stated if leave to amend had been granted, and therefore we are compelled to find that the trial court abused its discretion in finding otherwise.
The statute dictates that we must characterize the reasons for reversal as such; the characterization in this context does not mean the trial court made any mistake but rather that Robbin was able to flesh out his mismanagement theory on appeal. (See Connerly v. State of California, supra, 229 Cal.App.4th at p. 460, fn. 2.)
The operative petition alleged (under the rubric of "breach of trust") that although Shirley herself had managed the Shop Properties, around 2011 she hired Adrianne and Tom to manage the property, a fact Robbin did not discover until 2014. Adrianne's discovery responses include an April 7, 2010 "Management Agreement" signed by Shirley and Tom, and her interrogatory responses purport to authenticate that document. Robbin alleges that neither Adrianne nor Tom had experience managing commercial property, yet Shirley paid them above-market compensation. All three failed to properly manage the property. Specifically, "at all times," impliedly meaning even after Shirley's death, they failed to maintain the property, and failed to collect rents, the latter point reducing Robbin's income from his undivided interest in the Shop Properties. He also alleged that in 2013, Shirley, Adrianne, and Tom stopped making payments on a note secured by the property in the amount of $45,000, subjecting the property to legal claims, including for legal expenses incurred by the holder.
The trial court ruled that to the extent Robbin is a beneficiary of the Test Trust, that trust "waives the requirement of an account. The Amended Petition fails to allege facts to establish Petitioner is entitled to an accounting, or that Respondents breached a duty owed to Petitioner." It is true that the Test Trust waives "all statutory requirements, including the requirement under Probate Code § 16062(a), that the Trustees render a report or account to the beneficiaries of the trust." But the Test Trust cannot deprive Robbin of his partial undivided interest in the Shop Properties. Although Robbin also sought an accounting, his mismanagement (breach of trust) claim, reasonably interpreted or reasonably to be amended, is that Tom and Adrianne have reduced his income by paying themselves excessive management fees and by failing to collect appropriate rents. This mismanagement has caused direct harm to him, as the owner of an undivided partial interest in the Shop Properties. Allegedly they have also caused indirect harm, both due to lack of proper maintenance on the properties, and because the properties now may be subjected to liens for an unpaid note and attendant legal fees. Those matters do not necessarily fall within the scope of the accounting waiver.
Respondents contend "the trial court dismissed all of the claims arising under the [Doubles Trust], leaving only Robbin's vague claim of harm to his individual interest in the [Shop] Properties. The trial court was not required to entertain the sole issue of alleged harm to Robbin's individual interest in the [Shop] Properties when the trial court dismissed all of his claims related to a trust or trustee." This argument does not answer Robbin's point. The fact he may not have any interest in properties he incorrectly claims are or should be treated as part of the Doubles Trust, and is not entitled to an accounting as such, has no necessary impact on his right to enforce the duty he claims he is owed as the owner of undivided interests in the Shop Properties.
The demurrer to the original petition, drafted by present counsel for respondents, then acting as counsel for Adrianne and Tom only, made a different argument. The defense then was that Robbin was not an income beneficiary of the Test Trust, "and is not a beneficiary of the real properties held" by that trust, but that demurrer acknowledged his partial interest in the Shop Properties. The point now appears to be that Robbin's claim is not a probate claim. Even Robbin suggests the trial court may have thought his mismanagement claims were not an appropriate subject for the probate court, and the court could have dismissed his suit "without prejudice to refile" it, that is, we surmise, as an ordinary civil suit. These are matters best resolved in the first instance on remand.
We acknowledge the Test Trust contains a typical "discretionary" clause stating: "The decision of the Trustees as to all discretionary actions and decisions shall be conclusive and binding on all persons." Another clause provides no trustee shall be liable while "acting in good faith, in the administration of the trust." But such clauses do not necessarily preclude Robbin's claims. As a learned treatise explains:
"Many trust decisions are committed to the sound discretion of the trustee. When discretion is conferred on the trustee, the court will not substitute its judgment for the trustee's and must find some abuse of discretion or bad faith before it will interfere. [Citing Prob. Code, § 16080; Estate of Genung (1958) 161 Cal.App.2d 507, 512.] When the trustee is granted 'absolute,' 'sole,' or 'uncontrolled' discretion, the court will review an exercise of discretion for bad faith or disregard of the purposes of the trust. [Citing Prob. Code, § 16081.] The beneficiary bears the burden of establishing abuse of discretion. [Citing Estate of Marre (1941) 18 Cal.2d 184, 190; Estate of Ferrall (1949) 92 Cal.App.2d 712, 716.]" (Cal. Trust & Probate Litigation (Cont.Ed.Bar 2017) No-Contest Clauses and Other Obstacles to Litigation, § 5.50, italics added.)
And the Test Trust provides, consistent with the above quotation, that a trustee "shall be personally liable for his or her breach of trust by acts or omissions, committed intentionally, with gross negligence, in bad faith, or with reckless indifference to the interest of the beneficiaries." That is what Robbin claims, albeit vaguely. For example, he claims, or reasonably can amend to claim, that Adrianne and Tom are drawing excessive management fees to avoid paying Robbin his just due, not because they determined, in exercising discretion, what a reasonable management fee would be.
Because "it is possible there are facts which would support a judgment in favor of [Robbin]; accordingly, it would not be appropriate to end the lawsuit at this time" (Paterno v. State of California (1999) 74 Cal.App.4th 68, 76 [albeit not a comment on demurrer]), we shall reverse with directions to the trial court to overrule the demurrer in part, and to permit Robbin to file a second amended petition clearly articulating his claim of mismanagement of the Shop Properties, as well as detailing his claim of bad faith, which is a necessary predicate for him to overcome the discretionary clauses of the Test Trust in order to press his mismanagement claims.
The parties do not explain why the 2006 settlement of the partition action remains unenforced. The trial court retained jurisdiction to enforce it. (See Code Civ. Proc., § 664.6.) If Robbin did not like the way the Shop Properties were managed, he could have moved to enforce the settlement--as could the respondents--and either buy the properties, or effect their sale and obtain the value of his still-undivided interest. Either course would have resolved the management issues long ago. Respondents view this as contributing to their statute of limitations claim. We briefly discuss that issue in Part VIII, post.
VII
Discovery
Robbin contends the trial court should have abated the demurrer until it ruled on his pending motion to compel discovery. We find no abuse of discretion.
For purposes of this appeal we accept Robbin's view that a trial court has discretion to continue a demurrer pending discovery. (See Credit Managers Assn. v. Superior Court (1975) 51 Cal.App.3d 352, 361-362; Los Angeles Cemetery Assn. v. Superior Court (1968) 268 Cal.App.2d 492, 493-494.) But he has not shown an abuse of discretion in this case. The trial court was not required to await a fishing expedition.
As respondents reason in part, the point is whether discovery might lead to facts supporting a cause of action, and that is subsumed within the issue of whether leave to amend should be given. The trial record and the appellate briefing support respondents' contention that Robbin has never explained what material facts discovery might reveal.
To survive a demurrer Robbin need only have pleaded "A statement of the facts constituting [a good] cause of action, in ordinary and concise language." (Code Civ. Proc., § 425.10, subd. (a).) He has not explained why he could not plead facts on information and belief to survive a demurrer, and later try to prove them by way of discovery. (See 4 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 398, pp. 537-538.) After all, the point of a demurrer is to enable all parties--and the trial court--to avoid unnecessary litigation when no good cause of action is pleaded. Robbin has not shown that the lack of discovery impaired his ability to propose specific, material, amendments to the operative petition. No abuse of discretion is shown.
VIII
Other Defenses
Respondents contend that we should resolve certain defenses not ruled on by the trial court, specifically, laches and a statute of limitations defense. However, neither of these defenses would appear to entirely bar the mismanagement claims, which we interpret to be an effort by Robbin to allege at least in part that continuing defalcations are occurring (although either defense might limit the temporal scope of liability). Therefore, we need not address those defenses at this time.
Further, it does not appear that the defense of laches was interposed in the trial court, and a laches defense generally raises fact-based issues, such as prejudice. (Cf., e.g., Drake v. Pinkham (2013) 217 Cal.App.4th 400, 406-409 [reaching laches issue briefed and argued in the summary judgment papers based on evidence presented in a probate dispute, although that defense was not ruled on by the trial court].)
DISPOSITION
The judgment is reversed with directions to vacate the order sustaining the demurrer and to enter a new order overruling the demurrer and granting leave to amend consistent with this opinion. The parties shall bear their own costs on appeal. (See Cal. Rules of Court, rule 8.278 (a)(3)-(5).)
/s/_________
Duarte, J. We concur: /s/_________
Hull, Acting P. J. /s/_________
Renner, J.