Opinion
D073145
07-20-2018
JANE LINDSEY, Petitioner and Appellant, v. BEVERLY BRITO, as Successor Trustee, etc., Defendant and Respondent, CHARLES LINDSEY et al., Objectors and Respondents.
The Stone Law Group, Kenneth H. Stone, Scott G. Braden, and Phillip J. Szachowicz for Petitioner and Appellant. Black & McGhee and Courtney Bolin Nash for Defendant and Respondent. Hughes & Pizzuto, Laurie E. Barber, and Anne M. Rudolph for Objectors and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2012-00151045-PR-TR-CTL) APPEAL from an order of the Superior Court of San Diego County, Julia C. Kelety, Judge. Reversed and remanded with directions. The Stone Law Group, Kenneth H. Stone, Scott G. Braden, and Phillip J. Szachowicz for Petitioner and Appellant. Black & McGhee and Courtney Bolin Nash for Defendant and Respondent. Hughes & Pizzuto, Laurie E. Barber, and Anne M. Rudolph for Objectors and Respondents.
This appeal involves a recurring fact pattern: an oral agreement to make a will or create a trust, and a subsequent action against the estate or trust to enforce the terms of the agreement. Petitioner Jane Lindsey alleges her mother, Edna Lindsey, made such an agreement to leave all of her assets to Jane. After Edna died, Jane discovered that her mother's revocable trust, which held the vast bulk of her mother's assets, named her siblings as beneficiaries with her. Jane filed a petition challenging the trust under Probate Code section 17200.
Further statutory references are to the Probate Code unless otherwise stated. As we will explain, Jane later sought to amend her petition to add a prayer for relief under section 850. In addition, because a number of the parties and other individuals share the same last name, we will refer to them by their first names for clarity.
The probate court denied the petition. It reasoned that Jane was required to file a claim against her mother's estate under section 9000 et seq. before taking action against the trust. Where, as here, a probate estate has not been opened and the trustee has not utilized the optional trust claims procedure (§ 19000 et seq.), the probate court believed it was incumbent upon the claimant to commence estate administration proceedings herself, file a claim against the estate, obtain a judgment, and then proceed against the trust.
Jane appeals. She contends the probate court erred by finding that her petition challenging the trust was a "claim" within the meaning of section 9000. In the alternative, even if her petition were a claim under that section, Jane contends the court erred by finding that she was required to follow the estate or trust administration claims procedures because a probate estate was not opened and the trustee of her mother's trust had not utilized the optional trust administration claims procedure.
For reasons we will explain, we agree the probate court erred by finding that Jane's petition constituted a "claim" under section 9000. Because Jane's petition seeks the remedy of quasi-specific performance (i.e., ownership of the trust assets themselves), and not the payment of money damages, it was not a claim under section 9000. We further agree that, even if Jane's petition were a claim under that section, it would not be barred by Jane's failure to file a claim against her mother's probate estate. The estate was not probated, and the trustee had not used the optional trust administration claims procedure. Under these circumstances, Jane could file the instant petition making a claim against the trust assets. We therefore reverse the probate court's order denying Jane's petition and remand for further proceedings.
FACTUAL AND PROCEDURAL BACKGROUND
Jane's mother Edna created a revocable trust in 1986 and amended it several times thereafter. At the time of Edna's death in September 2011, the trust had three living named beneficiaries: Jane, her sister Jan Lindsey, and her brother Charles Lindsey. A fourth named beneficiary, Jane's sister Gweneth Lindsey, had predeceased Edna. Under the trust, Jan was to receive Edna's personal property, furniture, furnishings, family mementos, and other personal items upon Edna's death. The remainder of the trust assets was to be distributed equally to Jane, Charles, Jan, and Gweneth, or their survivors. The trust assets included Edna's personal property, her investment accounts, and her home in San Diego, California. Edna was the trustee of her trust until she nominated Beverly Brito, a licensed professional fiduciary, to be trustee in 2002.
Brito remains the trustee. By stipulation of the parties, in order to conserve the trust assets, she has taken no position on the merits of this appeal.
In her operative petition under section 17200, Jane alleged the existence of the trust and her status as a beneficiary. She further alleged the following facts: Sometime after 2002, Edna asked Jane to come live with her and provide care for her for the remainder of Edna's life. In exchange, Edna promised Jane that she would leave her "entire trust/estate" to Jane when she died. Jane moved in with Edna and provided daily care to Edna for almost 10 years. Edna repeatedly told Jane that she would inherit the entirety of Edna's trust and estate when she died. However, when Jane reviewed the trust documents after Edna's death, she discovered that Edna had not changed the trust distribution provisions. Jane also believed that the identification of trust property in the governing documents was incomplete. Jane asked the probate court to find that her oral agreement with Edna was valid, to identify the property subject to distribution, to "ascertain the true beneficiary(ies) and determine to whom property shall be distributed to, in light of the valid agreement between Edna and [Jane]," and to instruct the trustee to act accordingly.
Jan and Charles objected to the petition. They argued that the trust could only be modified in writing, and there was no written instrument modifying the trust in the manner Jane alleged. They also argued, among other things, that Jane had no evidence that Edna orally agreed to leave her estate and trust to Jane. They asked the court to deny Jane's petition and instruct the trustee to distribute the trust assets according to the written governing documents of the trust.
After several years of litigation, at an unrelated hearing, the probate court noted that Jane had not filed a creditor's claim against Edna's probate estate. It invited briefing on the issue of whether Jane's failure to file a creditor's claim against Edna's estate barred her petition. In response, Jan and Charles filed a motion to dismiss Jane's petition. They argued that Jane's prayer for recovery (an order entitling her to all trust assets) fell within the Probate Code definition of a claim under section 9000, so she was required to file a creditor's claim against Edna's estate in order to pursue an action against the trust. They also argued that Jane's petition was filed under the wrong section of the Probate Code. They claimed that Jane should have proceeded under section 850, rather than section 17200, and her petition should be dismissed for that reason as well. In opposition, Jane argued that a creditor's claim was not required because the trustee had not utilized the optional trust administration claims procedure under section 19003. She also argued that her petition stated a claim under section 850, even if it did not specifically mention that statute. To clarify her petition, Jane filed a motion to amend the petition to add a prayer for relief under section 850, as well as an ex parte application to shorten time to hear her motion.
At the hearing on the motion to dismiss, the probate court noted that the issue appeared to be the subject of some confusion in the case law. But, under the circumstances of this case, the court believed Jane was required to file a creditor's claim against Edna's estate. It reasoned as follows: The wrong Jane alleged was committed, if at all, by Edna, who did not amend the trust documents as she allegedly promised Jane. Jane was therefore required to file a creditor's claim against Edna's estate alleging breach of contract, obtain a money judgment, and then assert that judgment against the trustee. If no one else had opened probate on Edna's estate, Jane was required to do so. In the court's view, Jane could not allege that the trustee did anything wrong, since the trust documents themselves were clear. Jane therefore could not substitute a petition under section 850 for the creditor's claim procedure against Edna's probate estate. The court distinguished the situation where a petitioner sought recovery of trust property that the petitioner claimed as her own because it was fraudulently placed in the decedent's name. The court believed that Jane's petition involved unfulfilled promises, rather than a claim to title, so the situation regarding fraudulently obtained property did not apply.
The court denied Jane's petition. In its minute order, the court wrote, "Petitioner failed to file a timely creditor's claim, and therefore her claims are barred." Jane appeals.
DISCUSSION
I
Overview of Claim Procedures Under the Probate Code
The Probate Code generally requires a person with a "claim" against a decedent to file the claim against the decedent's estate before filing suit: "An action may not be commenced against a decedent's personal representative on a cause of action against the decedent unless a claim is first filed as provided in this part and the claim is rejected in whole or in part." (§ 9351.) A "claim" under the Probate Code is "a demand for payment" for, among other things, "[l]iability of the decedent, whether arising in contract, tort, or otherwise." (§ 9000, subd. (a)(1).) " 'Claim' does not include a dispute regarding title of a decedent to specific property alleged to be included in the decedent's estate." (§ 9000, subd. (b).) A "creditor" under the Probate Code is "a person who may have a claim against estate property." (§ 9000, subd. (c).)
A claim against the decedent's estate must be filed within the later of two time periods: "Four months after the date letters are first issued to a general personal representative" or "Sixty days after the date notice of administration is mailed or personally delivered to the creditor." (§ 9100, subd. (a)(1)-(2).) Any claim not filed within the applicable period is barred. (§ 9002, subd. (b).)
Both time periods contemplate the prior commencement of probate proceedings concerning the decedent's estate. Any interested person, including a creditor, may commence such proceedings and petition the court for appointment of a personal representative. (§ 8000, subd. (a); Dawes v. Rich (1997) 60 Cal.App.4th 24, 36, fn. 6.) As our Supreme Court has explained, "A creditor is in no sense interested in upholding a will. He is interested only in securing payment of his debt out of the assets of the estate. Yet he may petition for the probate of a will[;] his object in so petitioning being nothing more than to advance the administration of the estate to the end that he may be paid." (Estate of Edwards (1908) 154 Cal. 91, 95.)
An analogous claims procedure exists in trust administration. Property held in a revocable trust is, upon the death of the settlor, "subject to the claims of creditors of the deceased settlor's probate estate and to the expenses of administration of the probate estate to the extent that the deceased settlor's probate estate is inadequate to satisfy those claims and expenses." (§ 19001, subd. (a).) A "claim" in this context is defined in similar terms to a "claim" in the context of a decedent's probate estate. Here, it is "a demand for payment" for, among other things, "[l]iability of the deceased settlor, whether arising in contract, tort, or otherwise." (§ 19000, subd. (a)(1).) " 'Claim' does not include a dispute regarding title to specific property alleged to be included in the trust estate." (§ 19000, subd. (b).) A "creditor" here is "a person who may have a claim against the trust property." (§ 19000, subd. (c).)
Importantly, unlike the estate administration claims procedure, the trust administration claims procedure is optional, and it may only be utilized by the trustee if a proceeding to administer the decedent's estate has not been filed. (§ 19003, subd. (a).) But, if the trustee utilizes the optional trust administration claims procedure, it provides a measure of protection for the trust assets and its beneficiaries. A person may not maintain an action against the trust based on a claim unless a claim is first filed in the trust administration claims proceeding (§ 19004, subd. (c)) and any claims not filed within the time periods allotted are barred (§ 19004, subd. (b)).
If there is no proceeding to administer the probate estate of the deceased settlor, and the trustee does not utilize the optional trust administration claims procedure, then "the liability of the trust to any creditor of the deceased settlor shall be as otherwise provided by law." (§ 19008.) Similarly, if there is no proceeding to administer the probate estate of the deceased settlor, and the trustee does not utilize the optional trust administration claims procedure, a beneficiary of the trust who receives a distribution may be proportionally liable "for the unsecured claims of the creditors of the deceased settlor's probate estate." (§ 19400.)
II
The Scope of a "Claim" Under the Probate Code
Jane contends the probate court erred by finding that her petition constituted a "claim" under section 9000. The parties agree that we independently review the probate court's finding because it presents an issue of statutory construction based on undisputed facts. (Dacey v. Taraday (2011) 196 Cal.App.4th 962, 979.)
As noted, a claim under the Probate Code is "a demand for payment" for, among other things, "[l]iability of the decedent, whether arising in contract, tort, or otherwise." (§ 9000, subd. (a)(1); see § 19000, subd. (a)(1).) " 'Claim' does not include a dispute regarding title of a decedent to specific property alleged to be included in the decedent's estate." (§ 9000, subd. (b); see 19000, subd. (b).)
Because the language of section 9000 is nearly identical to its predecessor statute (former § 707), "decisions under the former statute remain relevant." (15 Witkin, Summary of Cal. Law (11th ed. 2017) Wills, § 665.) Section 9000, subdivision (b) represents a codification of these prior decisions. (15 Witkin, supra, Wills, § 675.)
For over 100 years, our Supreme Court has interpreted this language or its predecessors to mean that causes of action premised on the recovery of specific property from a decedent's probate estate or a deceased settlor's revocable trust are not claims within the meaning of these statutes. "It is well settled that one who claims as his own, adversely to an estate, specific property held and claimed by the estate, cannot be called a creditor of the estate within the meaning of the property law. The decisions are clear and conclusive upon the proposition that, where one seeks to recover from the representatives of an estate specific property alleged to have been held in trust by the decedent at the time of his death, he is not seeking payment of a claim from the assets of the estate, is not required to present a claim as a creditor, and is not a 'creditor of the estate.' His action is not founded upon a claim or demand against the estate." (Estate of Dutard (1905) 147 Cal. 253, 256; accord, Sprague v. Walton (1904) 145 Cal. 228, 235 ["The right to sue an executor or administrator in cases like this without presentation of a claim against his decedent's estate arises from the fact that the specific thing sued for is not a part of such decedent's estate, and the action will lie whenever the thing demanded can be identified in specie as the property of another."]; 15 Witkin, supra, Wills, § 675.) "There is a clear distinction between the cause of action of one who claims specific property held and claimed by the estate adversely to the claimant and a cause of action founded upon a claim against the estate. In the one case the claimant is in no sense a creditor of the estate, and in the other he occupies the position of a creditor." (Mix v. Yoakum (1927) 200 Cal. 681, 685; accord, Jones v. Clark (1941) 19 Cal.2d 156, 161; Porter v. Van Denburgh (1940) 15 Cal.2d 173, 176-177.)
This principle flows from the difference in remedies available to a person who seeks recovery of specific property versus a person who seeks damages for breach of contract. In the former situation, equitable remedies are available to compel the transfer of ownership of the disputed property (e.g., quasi-specific performance and a constructive trust). (See, e.g., Ludwicki v. Guerin (1961) 57 Cal.2d 127, 130; Wolf v. Donahue (1929) 206 Cal. 213, 220.) In the latter situation, legal remedies in the form of a payment of money are available. (See, e.g., Brown v. Superior Court (1949) 34 Cal.2d 559, 563-564.)
The general principle applies where, as here, the demand is premised on an agreement to make a will or trust. For example, in Walker v. Calloway (1950) 99 Cal.App.2d 675 (Walker), plaintiff agreed to provide companionship to her former husband in his later years. (Id. at p. 677.) The former husband agreed, in exchange, that he would "leave his entire estate to her by will upon his death," and he executed a will to that effect. (Ibid.) Later, the former husband changed the will to leave almost all of his estate to a son, allegedly as a result of the son's fraud. (Ibid.) The former husband died, and his will was admitted to probate. (Id. at p. 676.) Plaintiff did not file a claim against the estate. (Ibid.) Instead, plaintiff filed a complaint against the son, individually and as executor of the former husband's estate, "for specific performance of an oral agreement to will decedent's entire estate to plaintiff in consideration of services rendered decedent, and to establish a trust therein." (Ibid.) The son successfully demurred to the complaint on the ground it did not state a claim for relief. (Ibid.) The reviewing court reversed. (Id. at p. 683.) Among other issues, it considered whether plaintiff's action was barred because she did not file a claim against her former husband's probate estate. (Ibid.) Walker held it was not: "It was not necessary that the complaint show that, before its filing, the plaintiff presented a demand or claim for the property to the executor. Plaintiff is not asserting a claim against the estate. The relief sought is equitable. The law does not require the presentation of a claim as a condition precedent to the maintenance of an action in quasi-specific performance." (Ibid.)
The same reasoning applies to Jane's petition. The petition sought recovery of the specific property held in Edna's trust. It identified a specific piece of real property (Edna's former home) and a number of specific accounts. The objections filed by Jan and Charles acknowledge that Jane was seeking the trust assets themselves. Under these circumstances, Jane's petition was not a "demand for payment" under section 9000 but was instead a demand for specific property. Just as in Walker, it was not a claim under the Probate Code's definition of the term. (See Walker, supra, 99 Cal.App.2d at p. 683; see also Tanner v. Estate of Best (1940) 40 Cal.App.2d 442, 445-446 [demand for "all of the assets" of an estate was not a claim].)
Resisting this conclusion, Jan and Charles argue that Jane's petition must constitute a claim because it is based on a contract. But numerous courts have held that an action seeking equitable relief is not a claim, even though it is based on a contract. (See, e.g., Ludwicki v. Guerin, supra, 57 Cal.2d at p. 130; Jones v. Clark, supra, 19 Cal.2d at p. 159; Wolf v. Donahue, supra, 206 Cal. at p. 217; Walker, supra, 99 Cal.App.2d at p. 683.) As Witkin explains, "The controlling word is not 'contract' but 'claims.' Thus, some courts have pointed out that, as used in the statute, the word is similar in meaning to 'debt,' and that only money demands, i.e., claims as result from the relationship of debtor and creditor, are included." (15 Witkin, supra, Wills, § 665.)
Jan and Charles rely on Wilkison v. Wiederkehr (2002) 101 Cal.App.4th 822 (Wilkison), but it is distinguishable. In Wilkison, the plaintiff argued that his grandmother had agreed to bequeath her house to plaintiff's father (and that plaintiff was entitled to the house under his father's will). (Id. at pp. 825-826.) The grandmother instead left the home, and all of her other property, to plaintiff's aunt. (Id. at p. 825.) Shortly after the grandmother's death, the home was sold. (Id. at p. 826.) The grandmother's estate entered probate, but plaintiff did not file a claim for the proceeds of the sale. (Ibid.) Instead, he brought an action against the administrator of his grandmother's estate for quasi-specific performance, i.e., a constructive trust over the proceeds. (Id. at pp. 826-827.) Plaintiff prevailed in the trial court, and the administrator appealed. (Id. at p. 827.)
Wilkison first examined whether plaintiff had an adequate legal remedy, such that imposition of an equitable remedy (a constructive trust) was improper. (Wilkison, supra, 101 Cal.App.4th at p. 833.) It concluded plaintiff's legal remedy was adequate, since he merely sought proceeds from the sale (i.e., money), which can equally be compensated by damages (i.e., money). (Ibid.) Wilkison then examined whether plaintiff's action was a claim under the Probate Code. It concluded it was. "A party with a remedy at law against a decedent for breach of contract must proceed upon the theory that he or she is a creditor of the deceased, having a claim against the estate, and is subject to the provisions of the Probate Code requiring the presentation of claims to the executor or administrator. [Citations.] In the absence of such presentation, an action on the contract is barred." (Wilkison, at pp. 833-834.) Finally, Wilkison rejected plaintiff's argument that quasi-specific performance was available even if he had an adequate remedy at law. (Id. at pp. 835-838.)
Here, unlike Wilkison, we cannot say (and Jan and Charles do not argue) that, as a matter of law, Jane has an adequate remedy at law that would preclude any equitable relief. As such, Wilkison is inapposite. We express no opinion regarding how the probate court should decide this issue, should it be properly presented following further factual development.
In a footnote, Wilkison noted, "In a case involving a bequest of real property—where an action for quasi-specific performance may be proper—it is not clear whether the legatee must file a creditor's claim as a prerequisite to bringing a civil action seeking the imposition of a constructive trust." (Wilkison, supra, 101 Cal.App.4th at p. 834, fn. 1.) Wilkison concluded it need not reach the issue. (Ibid.) We must reach the issue here, and we conclude for the reasons already stated that a plaintiff need not file a creditor's claim in such a situation.
Jan and Charles also rely on Allen v. Stoddard (2013) 212 Cal.App.4th 807 (Allen). In Allen, the plaintiff submitted a creditor's claim against the estate of his domestic partner. (Id. at p. 811.) Plaintiff alleged that his domestic partner had promised he would be "taken care of" after his domestic partner's death. (Ibid.) After the estate administrator rejected his claim, plaintiff filed suit. (Ibid.) The primary issue in Allen was whether Probate Code section 9353 applied to bar plaintiff's suit (because he filed suit more than 90 days after his claim was rejected) or whether Code of Civil Procedure section 366.3 displaced Probate Code section 9353 and allowed plaintiff's suit (because he filed suit within one year after his domestic partner died). (Allen, at pp. 809-810.)
Section 9353, subdivision (a) states, "Regardless of whether the statute of limitations otherwise applicable to a claim will expire before or after the following times, a claim rejected in whole or in part is barred as to the part rejected unless, within the following times, the creditor commences an action on the claim or the matter is referred to a referee or to arbitration: [¶] (1) If the claim is due at the time the notice of rejection is given, 90 days after the notice is given. [¶] (2) If the claim is not due at the time the notice of rejection is given, 90 days after the claim becomes due."
Code of Civil Procedure section 366.3 provides, in relevant part, as follows: "If a person has a claim that arises from a promise or agreement with a decedent to distribution from an estate or trust or under another instrument, whether the promise or agreement was made orally or in writing, an action to enforce the claim to distribution may be commenced within one year after the date of death, and the limitations period that would have been applicable does not apply." (Code Civ. Proc., § 366.3, subd. (a).) Allen concluded that this statute applied to plaintiff's claim. (Allen, supra, 212 Cal.App.4th at p. 812 ["The text . . . squarely fits claims based on contracts . . . by a decedent to provide for someone after the decedent's death or make some other distribution of an estate."]; accord, Estate of Zeigler (2010) 187 Cal.App.4th 1357, 1365; Ferraro v. Camarlinghi (2008) 161 Cal.App.4th 509, 555 ["[T]he statute applies to all actions predicated on a decedent's promise to make specified distributions upon his death."].)
In the course of determining whether section 9353 also applied, Allen concluded that plaintiff's action was a claim under the Probate Code. (Allen, supra, 212 Cal.App.4th at p. 814.) It explained, "[Plaintiff] suggests that section 9000, subdivision (b) somehow removes such claims [based on a promise to make a will] from the ambit of the word 'claim' as defined in . . . subdivision (a), but that argument is unavailing. The text just does not fit. Subdivision (b) provides: ' "Claim" does not include a dispute regarding title of a decedent to specific property alleged to be included in the decedent's estate.' (Italics added.) There is nothing in a general promise to 'take care' of a domestic partner after one's death which implicates 'title' to 'specific property.' " (Ibid.)
Allen rejected the argument that a claim under Code of Civil Procedure section 366.3 cannot also be a claim under the Probate Code. (Allen, supra, 212 Cal.App.4th at p. 815.) Code of Civil Procedure section 366.3, which was enacted in 2000, "ushered in no change in the language of the Probate Code sections—particularly section 9000 which defines claims and creditors—that plainly apply to claims against estates based on contracts to make a will." (Allen, at p. 815; see Stats. 2000, ch. 17, § 1.) But, in reaching this conclusion, Allen went too far. It broadly concluded that claims under Code of Civil Procedure section 366.3 and claims under the Probate Code were coextensive. (Allen, at p. 815.) Instead, as discussed above, some causes of action based on a contract to make a will are not claims under the Probate Code because they seek recovery of specific property. But, based on the broad language of Code of Civil Procedure section 366.3, they are nonetheless claims under that statute.
Allen comments that "[a] statutory scheme in which 'claims' within the scope of [Code of Civil Procedure] section 366.3 are not held to be 'claims' within section 9000 is inconsistent with all applicable statutes and at least one prior Court of Appeal decision." (Allen, supra, 212 Cal.App.4th at p. 815.) The referenced Court of Appeal decision appears to be Wilkison, supra, 101 Cal.App.4th 822. We agree that if claims within the scope of Code of Civil Procedure section 366.3 were never claims within the scope of the Probate Code (i.e., if the two statutes were mutually exclusive), such a statutory scheme would be inconsistent with Probate Code section 9000 and Wilkison. But a statutory scheme in which some claims under Code of Civil Procedure section 366.3 are not claims under the Probate Code (e.g., those seeking recovery of specific property) is fully consistent with both Probate Code section 9000 and Wilkison, as well as the well-settled principles discussed above.
For a comprehensive examination and critique of existing jurisprudence surrounding "claims" based on contracts to make a will, other actions based on contracts to make a will, and related statutes of limitations, see generally Andre, Understanding California Nonclaim Statutes and Statutes of Limitations (2011) 38 Lincoln L.Rev. 1.
In sum, for the foregoing reasons, Jane's petition was not a claim under section 9000 because she was seeking the recovery of specific property, including the real property and accounts in the trust estate. Jane's petition was not barred by her failure to file a claim against her mother's estate, and the probate court erred by holding otherwise.
III
Procedural Requirements for Claims Under the Probate Code
For the benefit of the parties and the probate court on remand, we will consider Jane's alternative argument that, even if her petition constituted a claim under section 9000, she was not required to file a claim under the circumstances here because her mother's estate was not admitted to probate and the trustee of her mother's revocable trust did not utilize the optional trust administration claims procedure. Some commentators have, in the past, expressed uncertainty about the proper procedure under this circumstance. (See, e.g., Conn, The Need to Clarify Creditors' Rights in Probate (April 2009) 32 L.A. Lawyer 80.) We review this issue de novo as well. (Dacey v. Taraday, supra, 196 Cal.App.4th at p. 979.) For reasons we will explain, we conclude Jane was not required to file a claim under the circumstances here.
As noted, the Probate Code addresses this situation in section 19008: "If there is no proceeding to administer the probate estate of the deceased settlor, and if the trustee does not [utilize the optional trust administration claims procedure], then the liability of the trust to any creditor of the deceased settlor shall be as otherwise provided by law." The phrase "as otherwise provided by law" is somewhat opaque in this context.
Section 19008's meaning becomes clear, however, when the personal liability of the trust's beneficiaries in the same situation is considered: "[I]f there is no proceeding to administer the probate estate of the deceased settlor, and if the trustee does not [utilize the optional trust administration claims procedure], then a beneficiary of the trust to whom payment, delivery, or transfer of the deceased settlor's property is made pursuant to the terms of the trust is personally liable, to the extent provided in Section 19402, for the unsecured claims of the creditors of the deceased settlor's probate estate." (§ 19400.) Thus, if a trustee has already distributed the trust assets, section 19400 allows creditors of the deceased settlor to proceed directly against the trust's beneficiaries without first pursuing a creditor's claim against the deceased settlor's probate estate. (See, e.g., Valentine v. Read (1996) 50 Cal.App.4th 787, 793-794 (Valentine).) Indeed, section 19400, which authorizes such actions, is premised on the fact that the deceased settlor's estate has not been admitted to probate and the trustee did not utilize the optional trust administration claims procedure.
Because section 19400 explicitly authorizes a creditor to pursue trust assets (or the equivalent proportionate amount of money) after they have been distributed to the trust beneficiaries, it would be incongruous to interpret section 19008 as prohibiting a creditor from pursuing trust assets before they have been distributed. If nothing requires a creditor to comply with the probate estate claims procedure to pursue trust assets after distribution, then it appears nothing would require a creditor to comply with the probate estate claims procedure to pursue trust assets before distribution.
Valentine is instructive in this context. It "consider[ed] some ramifications of the statutes governing creditors' claims against a deceased trust settlor, when neither probate nor trust creditor claims proceedings have been instituted." (Valentine, supra, 50 Cal.App.4th at pp. 789-790.) Plaintiffs filed a lawsuit for breach of contract to make a will against a deceased settlor's trust, the trust administrator, and a trust beneficiary. (Id. at p. 790.) They obtained a judgment against the trust, as well as against the administrator and beneficiary as individuals. (Id. at pp. 791-792.) On appeal, the trust administrator challenged his individual liability and the trust beneficiary challenged her individual liability beyond her proportionate share of the trust distributions. (Id. at p. 790.)
In assessing these arguments, Valentine examined the liability of the trust and trust beneficiaries in the absence of a probated estate or the optional trust administration claims procedure. It explained, "If there is neither a probate proceeding nor a trust creditor claims proceeding, 'the liability of the trust to any creditor of the deceased settlor shall be as otherwise provided by law.' (§ 19008.) Furthermore, trust beneficiaries who have received distributions from the trust under these circumstances are exposed to personal liability. (§ 19400.) Such distributees 'may assert any defenses, cross-complaints, or setoffs that would have been available to the deceased settlor if the settlor had not died.' (§ 19402, subd. (a).) Their liability is limited to amounts that cannot be satisfied out of the trust estate, and to a pro rata portion of the creditor's claim based on the proportion their distribution bears to the total distributions from the trust estate. (§ 19402, subd. (b).)" (Valentine, supra, 50 Cal.App.4th at p. 793.)
It concluded, "When no creditor claims proceeding is filed, the Legislature contemplated satisfaction of creditors' claims first from the trust estate, and then from beneficiaries who receive distributions from the trust." (Valentine, supra, 50 Cal.App.4th at p. 794.) Valentine thus supports the proposition that a plaintiff may bring an action against the trust (and any trust beneficiaries who have received distributions) where the deceased settlor's estate has not been admitted to probate and the trustee has not utilized the optional trust administration claims procedure.
Other appellate courts and treatises have read the Probate Code in a similar fashion. (See Wagner v. Wagner (2008) 162 Cal.App.4th 249, 255 (Wagner) ["[A]bsent a trustee's election to file a formal notice to claimants, the time to assert a claim against a decedent's revocable trust is governed by the more general statute of limitations for all claims against a decedent . . . ."]; Embree v. Embree (2004) 125 Cal.App.4th 487, 494 (Embree); Cal. Trust & Probate Litigation (Cont.Ed.Bar. 1st ed. 2018) Actions by and Against Trustee, § 22.51 ["If there is no probate administration and the trust claims procedure is not initiated, the creditor may file suit against the trustee to enforce a debt, claim, or action against the deceased settlor."]; Gold et al., Cal. Civil Practice Probate & Trust Proceedings (2018) § 24:171; see also County Line Holdings, LLC v. McClanahan (2018) 22 Cal.App.5th 1067, 1073 ["Where, as here, the trustee elects not to use the creditor claims procedure, the trustee has waived the protection of the claims statutes."].) In addition, the Probate Code authorizes a petition for relief where, as here, an "interested person" alleges that "the property of the trust is claimed to be subject to a creditor of the settlor of the trust." (§ 850, subd. (a)(3)(C).)
Jan and Charles advance an alternative interpretation of these authorities. They argue that Wagner and Embree "merely confirm that if the trustee does not initiate the claims filing procedure, then the deadline to file a claim is extended to one year under [Code of Civil Procedure] section 366.3 (or section 366.2), rather than the shorter deadlines in the claims filing statutes." In essence, Jan and Charles claim that these authorities still require Jane to commence estate administration proceedings and file a claim against her mother's estate, but within the time period in Code of Civil Procedure section 366.3. We disagree. Probate Code sections 19008 and 19400 allow recovery against trust assets and beneficiaries even where there has been no opportunity for a prospective claimant to file a claim, because the deceased settlor's estate has not been admitted to probate and the trustee has not utilized the optional trust administration claims procedure. In context, section 19008's reference to "liability . . . as otherwise provided by law" means that the trust's liability is measured against substantive law, not whether the procedural requirements of claim presentation have been satisfied. Jan and Charles cite no authority for the proposition that a person seeking recovery against trust assets must open the estate herself, file a claim, obtain a judgment against the estate, and then proceed against the trust. We note that if the trustee had utilized the optional trust administration claims procedure, Jane could have filed a claim directly against the trust. As we have explained, a "claim" here means a "demand for payment" for "[l]iability of the deceased settlor, whether arising in contract, tort, or otherwise." (§ 19000, subd. (a)(1), italics added.) No prior proceeding against the decedent's estate would have been required.
Based on the foregoing, we conclude that even if Jane's petition were a "claim" within the meaning of the Probate Code, it would not be barred based on her failure to file a claim against her mother's probate estate under the circumstances here.
In a separate argument, Jan and Charles contend the court's order denying Jane's petition should be affirmed because Jane did not have standing to bring a petition under section 17200. But Jane is a beneficiary of the trust, so section 17200 is a procedure available to her. (See § 17200, subd. (a) [authorizing "a trustee or beneficiary of a trust" to file a petition under that statute].) Whether section 17200 authorizes the relief Jane seeks is another matter. We need not decide that issue because, even if section 17200 were inapplicable under the circumstances here, the probate court had before it a motion to amend Jane's petition to add a claim for relief under section 850. Although Jan and Charles contend the court denied the motion to amend, they are incorrect. It is clear the court believed the motion to amend was moot in light of its finding that Jane's petition was barred because she did not file a creditor's claim against her mother's estate. In fact, the court appeared to accept the premise that the petition in effect sought relief under section 850. The probate court should be allowed to decide whether to formally accept that amendment. (See Estate of Heggstad (1993) 16 Cal.App.4th 943, 952 [describing disputes over the proper statutory basis for a request to resolve competing claims to trust property as "a fruitless exercise in semantics"].)
DISPOSITION
The order denying Jane's petition is reversed. The matter is remanded for further proceedings consistent with this opinion. In the interests of justice, the parties shall bear their own costs on appeal.
GUERRERO, J. I CONCUR: NARES, Acting P. J. I CONCUR IN THE RESULT: HALLER, J.