Opinion
A148363
05-11-2018
LOUISA V. BINSWANGER, Individually and as Trustee, etc., Plaintiff and Respondent, v. SILVIO A. GARAVENTA, JR. et al., Defendants and Respondents; LINDA ANN GARAVENTA COLVIS, Defendant and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Contra Costa County Super. Ct. No. MSP15-02131)
Respondent Louisa V. Binswanger (Louisa) is the trustee of her mother's trust, the Garaventa Family Marital Trust (Trust). The Trust names as beneficiaries, among others, Louisa and her four siblings. Louisa sought a determination from the trial court regarding the enforceability of Instructions to the Trustee (Instructions) executed by her mother, Mary C. Garaventa (Mary). Among other things, the Instructions sought to require Mary's children to indemnify each other, as well as Louisa in her capacity as trustee, for all trust-related claims. Louisa's sister, appellant Linda Ann Garaventa Colvis (Linda) appeals from the trial court's order invalidating the Instructions on the basis that the document immunized the trustee from claims more broadly than permitted under California law. Linda contends the court erred in failing to sever the portion of the Instructions regarding claims against the trustee from the remainder of the provision. We reject the claim.
BACKGROUND
Mary and Silvio Garaventa, husband and wife, had five children together, including appellant Linda and respondents Louisa, Silvio A. Garaventa, Jr. (Silvio Jr.), Joseph L. Garaventa, and Marie L. Adler.
For convenience, this decision refers to the deceased and the parties by their first names. No disrespect is intended. Joseph and Marie have not filed briefs on appeal.
The present action was initiated by Louisa, as trustee of the Trust, to determine her legal obligations under the Instructions. The relevant instruments are as follows. In November 1978, Mary and Silvio Garaventa executed a Declaration of Trust. Silvio Garaventa died in February 1998, and Mary created the Trust through an April 2013 restatement of the original trust. The Trust named Mary as the initial trustee and Louisa as successor trustee. In August 2013, Mary executed the Instructions. Finally, Mary further amended the Trust in March 2015 in a First Amendment to the Restatement of the Trust (First Amendment). Mary died in June 2015.
The Trust specifies certain distributions and directs that the residue shall be distributed to trusts for each of Mary's children. The Trust reflects Mary's intent to discourage her children from fighting. To that end, it includes a "Hostile Acts" provision that defines such acts as "any intentional act by an issue of the Trustor that materially and adversely affects the peace and harmony of other lineal descendants of the Trustor," including "initiating legal action against a lineal descendant or the spouse of a lineal descendant without obtaining the prior written consent of the Special Trustee for Hostile Acts." The Trust empowers a named nonfamily member to appoint the "Special Trustee for Hostile Acts" and authorizes the special trustee to "suspend any distributions otherwise payable to an issue of the Trustor for such period as the Special Trustee for Hostile Acts shall Determine" where "any issue of the Trustor engages in a Hostile Act toward another issue or the spouse of an issue of the Trustor."
The Trust also has a severability provision that states, "If any provision of this instrument is unenforceable, the remaining provisions shall nevertheless be carried into effect."
The August 2013 Instructions, which are the subject of the present action, provide as follows: "Prior to making any distribution to a child of the Trustor as a beneficiary of the Garaventa Family Marital Trust, the Trustee shall require each child of the Trustor, on behalf of themselves and their issue, to agree in writing that he or she shall indemnify, protect, defend and hold harmless the Trustor, the Trustee, the Trustor's issue and the spouse and/or any ex-spouse of any such person, and all agents or representatives of the Trustor, from and against any and all obligations, liabilities, losses, claims, suits, demands, actions, damages, costs and expenses, including reasonable attorneys' fees and expenses, of every kind and nature whatsoever (collectively, "Claims"), imposed on, incurred by or asserted by him or her, or their issue, against any one or more of such persons, arising out of or in any way relating to the Trustor's Will, estates [sic], this Trust or the administration of any trust created by the Trustor. The failure of a beneficiary to execute this agreement within 6 months of the Trustor's death shall be a conclusive presumption that the beneficiary renounces any interest in the Trust, and shall be treated as if they had predeceased the Trustor without issue surviving." The Instructions also provide, "To the extent required, this Instruction to Trustee shall be deemed an amendment to the Trust as restated on April 26, 2013."
The March 2015 First Amendment named Mary and Louisa as initial trustees. It also added a clause entitled "Exculpation of Trustee" to the Trust. The clause states, "A Trustee designated by the Trustor, or designated as authorized in this document, shall not be liable to any beneficiary for the Trustee's acts or omissions, except in cases of willful misconduct, bad faith, or gross negligence. The previous sentence does not relieve a Trustee of any obligation to restore to the trust any benefits received by the Trustee as a result of a breach of the trust."
In December 2015, following Mary's death in June, Louisa filed the Petition for Instructions Regarding Enforcement of Instructions to Trustee pursuant to Probate Code sections 17200, subdivisions (a) & (b)(6) (Petition). The Petition stated that Louisa had "been advised by her attorney that the Instructions may not be enforceable under California law and that she should not enforce the Instructions without first obtaining instructions from the court." Louisa stated that the Instructions "appear to be" an unenforceable "no contest clause." She prayed for an order that the Instructions were unenforceable and that she should "administer the Trust without regard to the Instructions."
All undesignated statutory references are to the Probate Code. Section 17200, subdivision (a), authorizes "a trustee or beneficiary of a trust" to "petition the court under this chapter concerning the internal affairs of the trust or to determine the existence of the trust." Section 17200, subdivision (b)(6) identifies a trustee's request for instructions as an authorized proceeding "concerning the internal affairs of a trust."
In response to the Petition, Linda argued that the Instructions were not a "no contest" clause under section 21310 because the Instructions "would not penalize a beneficiary for filing a pleading." (Underlining omitted.) Instead, Linda argued, the Instructions created an "election" where beneficiaries could either "sign the Indemnification Agreement and accept the beneficial interest of the Marital Trust; or . . . refuse to sign it, forfeit that beneficial interest, and keep the ability to file claims subject to normal litigation rules."
In response to the Petition, Silvio Jr. argued that the Instructions were an unenforceable no contest clause, that the Instructions created "an unenforceable contract of adhesion," that the Instructions "violate the Probate Code's prohibition on conditional releases" (capitalization omitted), and that the Instructions "neither change the standard of care for the trustee nor act as a valid indemnification agreement" (capitalization omitted).
The trial court issued a written order finding the Instructions unenforceable. The court declined to decide whether the Instructions constituted an unenforceable no contest clause. Instead, the court held the Instructions unenforceable because "permitting a settlor to relieve the trustee of all accountability is against public policy." Among other things, the court pointed out that the Instructions were "much broader in scope" than the trustee exculpatory clauses authorized under section 16461. The trial court instructed Louisa "to administer the trust without regard to the [I]nstructions."
Linda appealed.
DISCUSSION
As Linda points out on appeal, the trial court ruled the Instructions were unenforceable in their entirety, but the court's analysis addressed only claims against the trustee and not claims between beneficiaries. Linda contends the trial court erred in failing to sever the invalid portion of the Instructions relating to indemnification of the trustee and enforce the Instructions as to claims between the beneficiaries.
At the outset, it is necessary to address the scope of the issues on appeal. Linda states in her opening brief that she "disagrees with the Superior Court's trustee exculpation analysis, but Linda is not the trustee and does not represent the trustee, and thus, does not challenge that aspect of the decision. This appeal requests a reversal of the Order only as it applies to the relationship between beneficiaries." Louisa, the trustee, purports to challenge the trial court's ruling as to claims against the trustee in her brief on appeal. However, as a respondent, Louisa may not assert a claim of error not asserted by the appellant. (Phillips v. Phillips (1953) 41 Cal.2d 869, 875 ["it is the general rule that a party who has not appealed may not complain of errors"]; Kardly v. State Farm Mut. Auto. Ins. Co. (1995) 31 Cal.App.4th 1746, 1749, fn. 1 ["A respondent who fails to file a cross-appeal cannot urge error on appeal."]; see also Conservatorship of Levitt (2001) 93 Cal.App.4th 544, 551, fn. 3.) Accordingly, the propriety of the trial court's ruling regarding enforceability of the Instructions as to claims against the trustee is not at issue on appeal.
In her reply brief, Linda states she "agrees with the Trustee that this Court should determine that the Instructions constitute an enforceable trustee exculpation clause." However, assuming Linda could have asserted a claim on appeal regarding the enforceability of the Instructions as to claims against the trustee, Linda cannot assert a new appellate issue in her reply brief. (Loranger v. Jones (2010) 184 Cal.App.4th 847, 858, fn. 9; Neighbours v. Buzz Oates Enterprises (1990) 217 Cal.App.3d 325, 335, fn. 8.)
On the issue of severability, Linda relies on In re Gump's Estate (1940) 16 Cal.2d 535 (Gump's Estate), at page 547, which states, "The rule that illegal portions of a trust will be severed from otherwise valid portions of the trust when to do so will be in accordance with the trustor's intent is well settled in California. In this regard, it is the general rule that" valid provisions are separable from invalid provisions "where the trust instrument shows the trustor would have preferred separation to total invalidation, or where the invalid provisions only incidentally affect the main scheme." Linda argues, "The Instructions show that Mary intended to discourage her children, their spouses, and her grandchildren from fighting, and that she intended to condition the right of these beneficiaries to take from the Marital Trust on execution of an indemnification agreement that removed the incentive for Mary's children to sue each other on issues concerning the Marital Trust." From that intent, Linda reasons that Mary would have intended for the Instructions to be implemented even if it were unenforceable vis-à-vis claims against the trustee.
We reject Linda's claim, because she has not shown "the trustor would have preferred separation to total invalidation." (Gump's Estate, supra, 16 Cal.2d at p. 547.) There is no dispute Mary sought to discourage fighting among her children, but invalidation of the Instructions would not frustrate that intent. That is because the "Hostile Acts" provision in the Trust remains in effect, authorizing the Hostile Acts Special Trustee to "suspend the distributions" of beneficiaries who initiate unauthorized litigation or take other hostile acts. The Instructions go further, by requiring indemnification of the trustee and other beneficiaries against all trust-related claims. Nothing on the face of the Trust or Instructions provides a basis for this court to conclude Mary would have wanted her children as beneficiaries to have indemnification from all claims, while leaving Louisa vulnerable to claims for some actions as trustee. Neither does Linda point to any extrinsic evidence she presented to the trial court that supports her interpretation of Mary's intent. (Cf. Davenport v. Davenport Foundation (1950) 36 Cal.2d 67, 74 (Davenport) ["The record contains relevant extrinsic evidence bearing on the question of interpretation . . . ."].) The most reasonable conclusion from the text is that Mary viewed the provision as an "inseparably blended" whole (ibid.), and "a single plan or scheme" (In re Van Wyck's Estate (1921) 185 Cal. 49, 62), given that she provided indemnification for the trustee and her children in the same sentence.
The parties dispute whether we review the trial court's determination regarding severability de novo or for an abuse of discretion. (Compare Brown v. Labow (2007) 157 Cal.App.4th 795, 812 ["The interpretation of a trust instrument, like any written document, is a question of law."] with Fair v. Bakhtiari (2011) 195 Cal.App.4th 1135, 1157 [" 'If a contract is capable of severance, the decision whether to sever the illegal portions and enforce the remainder is a discretionary decision for the trial court to make based on equitable considerations.' "].) We need not resolve this question, because we affirm even under a de novo standard of review.
As Linda points out, the March 2015 Exculpation of Trustee clause provides Louisa some protection against claims for her actions as trustee, but not the complete and broad indemnification provided in the Instructions. --------
Linda's contention is that the trial court was obligated to sever the language from the Instructions referring to claims against the trustee, instead of invalidating the provision as a whole. Almost all the cases the parties cite, and other cases from the trust context this court has reviewed, are of limited assistance because they do not present an analogous severability issue. Typical of the cases, in Gump's Estate the question was whether the inclusion of a provision invalid under the rule against perpetuities "necessarily invalidates the entire trust agreement." (Gump's Estate, supra, 16 Cal.2d at p. 547; see also Nellis v. Rickard (1901) 133 Cal. 617, 618-622 [same]; In re Sewall's Estate (1936) 14 Cal.App.2d 554, 554-556 [same]; In re Van Wyck's Estate, supra, 185 Cal. at pp. 61-62 [determining validity of entire trust where one provision violates statute regarding suspension of the power of alienation]; Gump's Estate, at p. 547 [citing other similar cases].) Invalidation of the Trust itself is not at issue in this case.
Somewhat more analogous are the circumstances in Davenport, supra, 36 Cal.2d 67. There, one of the purposes of the trust was to provide for descendants for a period longer than that permitted by the rule against perpetuities. (Id. at pp. 74-75.) At issue was a particular paragraph that effectively gave the trustees the discretion to use the residue of the trust for both distributions prohibited by the rule against perpetuities, as well as permissible charitable distributions. (Id. at p. 74.) The court held the paragraph had to be invalidated in its entirety because "the valid and invalid powers under paragraph six are inseparably blended." (Id.) Linda argues Davenport rejected severance because it was not linguistically possible to cure the invalidity by striking particular words from the paragraph. But the decision does not state its reasoning so narrowly; instead, the court emphasized a "primary purpose of the trustor was to provide for descendants," so severing only that power would not have been consistent with the trustor's intent. (Id. at pp. 73-74.) Similarly, we have concluded Mary's apparent intent was to fashion an all-encompassing indemnity provision regarding Trust-related claims brought by beneficiaries, whether against each other or against Louisa in her capacity as trustee.
Outside the trust context, we do find some guidance supportive of our conclusion in Metromedia, Inc. v. City of San Diego (1982) 32 Cal.3d 180 (Metromedia), related to severability of unconstitutional portions of a city ordinance. There, the City of San Diego "intended a comprehensive ban on off-site advertising signs," but the United States Supreme Court held the ordinance was facially unconstitutional as applied to noncommercial signs. (Id. at p. 191.) The California Supreme Court declined to sever the offending provisions and confine it to commercial signs because, among other things, it would "leave the city with an ordinance different than it intended, one less effective in achieving the city's goals." (Ibid.; cf. City & County of San Francisco v. Eller Outdoor Advertising (1987) 192 Cal.App.3d 643, 664-665 [reforming San Francisco sign ordinance where it was clear board of supervisors would have chosen construction given by court to avoid unconstitutionality].) Similarly, Mary apparently "intended a comprehensive ban on" claims by beneficiaries and to sever claims against the trustee from the Instructions would leave an indemnification provision "different than [Mary] intended, one less effective in achieving [her] goals." (Ibid.) Further, severance would not only render the provision less effective, but it would leave one of the siblings—Louisa acting in her role as trustee—outside the protection of the indemnification scheme. There is no basis to conclude Mary would have preferred that to the "Hostile Acts" scheme in the Trust, which also discourages litigation.
Neither does the existence of the severability clause in the Trust resolve the question of Mary's intent. It provides, "If any provision of this instrument is unenforceable, the remaining provisions shall nevertheless be carried into effect." However, there is no basis to conclude Mary intended the indemnification of the trustee and the indemnification of the beneficiaries—set forth in a single paragraph— to be treated as separate provisions for the purposes of the severability clause. Linda cites no case applying a severability clause in circumstances like the present case. In any event, the existence of a severability clause does not relieve this court from the necessity of analyzing Mary's apparent intent with respect to the particular provision at issue. (See Metromedia, supra, 32 Cal.3d at p. 190 [determination based on legislative intent, despite severability clause].)
In conclusion, the trial court did not err in failing to sever the portion of the Instructions involving claims against the trustee from the portion involving claims against beneficiaries. Because we conclude the trial court properly invalidated the Instructions in their entirety, we need not determine whether the Instructions were enforceable with respect to claims against beneficiaries. Neither need we remand for a determination of whether the Trust should be reformed to include the Instructions without indemnification of claims against the trustee, because there is no basis to conclude that " 'due to a mistake, the trust does not contain the terms that were intended by the settlor.' " (Giammarrusco v. Simon (2009) 171 Cal.App.4th 1586, 1603.) That is, Linda points to no evidence suggesting the language of the Instructions was not as intended by Mary. (Cf. In re Estate of Duke (2015) 61 Cal.4th 871, 890 ["In cases in which clear and convincing evidence establishes both a mistake in the drafting of the will and the testator's actual and specific intent at the time the will was drafted, it is plain that denying reformation would defeat the testator's intent . . . ."].)
DISPOSITION
The judgment is affirmed.
/s/_________
SIMONS, J. We concur. /s/_________
JONES, P.J. /s/_________
BRUINIERS, J.