Opinion
A146853
05-02-2017
MICHAEL WHELAN, Individually and as Trustee, etc., Plaintiff and Appellant, v. KAREN SANFORD et al., Defendants 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (San Mateo County Super. Ct. No. PRO124191)
Michael Whelan was both a named beneficiary and the successor trustee of his deceased parents' trust. Purporting to act in his capacity as trustee, Michael petitioned the probate court for approval of a proposed sale of real property held by the trust, as well as payment to himself of a $130,000 broker's commission, as the licensed real estate broker for that sale. Michael's sisters, Karen Sanford, Betty Jo Paroli, and Susan Killian (respondents), successfully opposed Michael's petition with respect to the commission, and then filed their own petition asserting Michael had triggered the trust's no contest clause. The probate court granted respondents' petition, concluding the no contest clause was triggered by Michael's demand for the commission payment under an alleged oral agreement with his father. Michael appeals, contending his petition was not a contest because it was not filed in his capacity as beneficiary, no "pleading" gave rise to a contest, and he did not seek payment on a creditor's claim—he was merely seeking increased trustee compensation. He also contends the no contest clause does not apply because his was only a "routine" creditor's claim. We affirm.
We use first names as necessary for clarity and ease of reference when referring to individual members of the Whelan family.
I. FACTUAL AND PROCEDURAL BACKGROUND
In 1996, Betty Jean and Joseph Whelan, a married couple, created the Whelan 1996 Revocable Trust (Trust). The Trust was amended and restated on March 11, 2009. The Trust named Michael to act as successor trustee after the settlors' deaths and provided for payment of debts, administrative expenses, and taxes and, after allocating and dividing the residual into five equal shares, distribution of the shares to Betty Jean and Joseph's five children—Michael, John Whelan, Betty Jo, Karen, and Susan.
As trustee, Michael had the power to sell Trust property and "to incur and pay the ordinary and necessary expenses of administration, including . . . reasonable attorney's fees, reasonable Trustee's fees, reasonable accountant's fees, reasonable investment counsel fees and the like." The trustee was also empowered to "delegate investment and management functions as prudent under the circumstances." Pursuant to section 7.05 of the Trust, the trustee was entitled to receive "reasonable compensation," capped at "no more than the lesser of one-half of one percent (0.5%) of the average net value of the principal of the Trust Estate or [$20,000]" per year.
The Trust contained the following no contest clause: "9.04. Non-Contest Clause. If any Beneficiary of this Declaration of Trust or any of our legal heirs or person claiming under a Beneficiary or heir seeks to obtain an adjudication, or contests, or attacks this Declaration of Trust, any of its provisions or any amendments thereto, or in any manner, directly or indirectly, attempts to have it or any of the Trusts or beneficial interests created by it declared invalid, we specifically disinherit such person or persons, and such person or persons shall receive no benefits from or interests under this Declaration of Trust, and the Trusts herein established shall be administered and distributed as if such person or persons had died before either of us, provided, however, that nothing in this Paragraph shall apply to us or the Surviving Settlor. The Trustee is hereby authorized to defend, at the expense of the Trust Estate, any action or matter that would interfere with the disposition of assets of the Trust Estate pursuant to the Settlors' estate plan as provided in this Trust Instrument and any other documents created by the Settlors that are testamentary in nature.
"a. Claims Asserted. For purposes of this paragraph, the words 'contest,' 'attack,' or 'seek to obtain an adjudication' shall include, without limitation, any claims asserted against any trust hereunder, a Settlor's Will, a Settlor's estate, assets passing pursuant to a beneficiary designation, or any other assets encompassed by the Settlor's estate plan based on: (i) a 'quantum meruit' theory (including a creditor's claim based upon such theory); (ii) a constructive trust theory; (iii) any alleged oral agreement (or an alleged written agreement that is to be proved by parol evidence) claiming that the Settlor agreed to give or bequeath anything to such person, whether or not such alleged agreement is also alleged to be made in consideration for the provision of personal or other services to a Settlor; or (iv) any action to characterize property scheduled in the name of the Trustee or designated in the name of the Trustee, in this trust instrument or by any subsequent designation, as belonging in whole or in part to such claimant under any other theory, including, but not limited to community property, joint tenancy or payable on death designation. For purposes of this Paragraph, the term 'contestant' shall include any person encompassed by the above-described forms of legal actions or claims. A routine creditor's claim (such as for funeral costs or a written promissory note) shall not be considered a contest." (Italics added.)
Betty Jean died in January 2010, and Joseph died in November 2013. The Trust's most valuable asset was real property located in the Portola Valley Ranch Development (Property), which Joseph and Michael developed. Because the beneficiaries did not wish to hold title to the Property as tenants in common, Michael, acting as successor trustee, decided to sell it.
Before his death, Joseph sold the family business, Portola Realtors, to Michael.
Michael believed his company, Portola Realtors, was best suited to sell the Property on behalf of the Trust. On November 21, 2013, Michael, acting as trustee, signed a listing agreement awarding himself, as principal of Portola Realtors, the exclusive right to market the Property for one year. The listing agreement provided a commission, equaling up to four and a half percent of the total sales price, would be paid to Portola Realtors if the Property was sold during the term of the listing agreement. It did not initially require Michael to make any marketing efforts, such as listing the Property on the Multiple Listing Services. Around the same time that Michael executed the listing agreement, John expressed interest in buying the Property.
On January 4, 2014, John wrote each of his sisters, expressing his desire to purchase the Property for $2,880,000 and requesting their "Consent & Waiver." Also included was a copy of a letter from the Trust's attorney, William Garrett, which provided: "[Michael's company], Portola Realtors, is the listing broker for the Property and will receive a sales commission pursuant to a separate listing agreement for the Property upon any sale. [¶] . . . [¶] In the case of a potential sale of the Property to one of the beneficiaries without first listing it on the Multiple Listing Services . . . or taking or hearing other offers, I recommend that you obtain from each beneficiary the waiver and consent set forth below so that if you, as Trustee, do decide to sell the Property to a beneficiary or for a beneficiary's direct benefit, each other beneficiary consents to the transaction after being advised of the purchase price and the significant terms and conditions of the transaction and waives any claims against you, as Trustee, arising from such a transaction."
In February 2014, John and his wife, Lisa, signed a purchase contract, agreeing to purchase the Property from the Trust for $2,880,000. The proposed sale to John was expressly conditioned on approval by the probate court of both the purchase contract and Michael's commission. On February 14, 2014, Michael, acting as trustee, filed a verified "Petition For Order Authorizing Trustee to Serve as Broker for Sale of Real Property and Authorizing Sale of Real Property to Family Member" (petition to sell). Michael's petition to sell cited Probate Code section 17200, subdivisions (b)(6) and (b)(9), and sought probate court approval of both the terms of the proposed sale and the broker's commission Michael had agreed to pay himself under the listing agreement.
This purchase price was above the value of several appraisals.
Specifically, an addendum to the purchase contract provided: "Seller intends to have this Contract and their broker's commission related to the sale of the Property approved through a court order ('Order'). If Seller is unable to obtain the Order, Seller shall have the right to cancel this Contract. Buyer shall have the option to cancel the Contract if the Order is not obtained within 60 days of the date of the Contract."
Undesignated statutory references are to the Probate Code. Section 17200 provides, in relevant part: "(a) Except as provided in Section 15800, a trustee or beneficiary of a trust may petition the court under this chapter concerning the internal affairs of the trust or to determine the existence of the trust. [¶] (b) Proceedings concerning the internal affairs of a trust include, but are not limited to, proceedings for any of the following purposes: [¶] . . . [¶] (6) Instructing the trustee. [¶] . . . [¶] (9) Fixing or allowing payment of the trustee's compensation or reviewing the reasonableness of the trustee's compensation."
Although Betty Jo, Karen, and Susan did not oppose the sale, they objected to Michael receiving a commission greater than $20,000—the maximum annual trustee's compensation allowed under section 7.05 of the Trust—or "standing in the dual position of a trustee of this trust, with all the fiduciary obligations that that entails, and as a broker . . . ."
In response to his sisters' objections, Michael filed a reply brief and declaration, in which he described a compensation arrangement he had with Joseph during Joseph's lifetime. In the reply brief, Michael "request[ed] that the [probate court] consider three important points in determining whether to grant his request to be paid a commission: 1) The commission is part of a larger compensation agreement implemented by [Joseph]; 2) [Michael] is entitled to that compensation due to his work as superintendent of construction [of the Property] . . . ; and 3) the cap on Trustee compensation stated in the Trust is unrelated to either the fees of a real estate broker or [Michael's] compensation agreement with [Joseph]." In support, Michael's declaration attested: "[O]ver the last forty years, I was employed by [Joseph] . . . . [¶] My compensation agreement with [Joseph] was that I would receive $48,000 per year, plus a real estate broker's commission on the sale of properties that [Joseph] developed at Portola Valley Ranch. One such property was [the Property]. [¶] . . . [¶] There was never any indication from [Joseph] that my compensation plan with him would be altered by my service as Trustee . . . . The commission I am seeking for the sale of [the Property] is part of a larger compensation agreement for my work in developing properties, supervising construction, and selling properties for [Joseph's] company. [¶] The 4.5% commission I am to earn under the Listing Agreement is not, as my sisters have alleged, part of the compensation I am to earn for my work as Trustee." (Italics added.) In short, "[Michael] is wearing two hats—that of Trustee, and that of broker/employee of [Joseph's] company. The compensation cap in the Trust is a limitation only when wearing the first hat. The commission was earned wearing the second hat. [¶] . . . [Michael] was promised the commission, he earned the commission, and the commission should be paid."
After argument, the probate court initially expressed its inclination to deny Michael's petition to sell without prejudice to Michael filing a contractual claim against the Trust. However, the court was later convinced, at Michael's insistence that "he does have a claim" and that his attorney "[did not] want to have to re-file," to hold an evidentiary hearing. In advance of the evidentiary hearing, Michael filed a trial brief, which once again explained he was entitled to payment of a commission under the oral agreement. Michael's direct testimony at the evidentiary hearing was, for the most part, consistent with facts asserted in his trial brief and declaration. However, at one point during cross-examination, Michael testified that his request to receive a commission on the sale of the Property was justified solely by his work pursuant to the listing agreement, and was not compensation for construction work he performed before Joseph died.
At argument, the following colloquy occurred:
"[BETTY JO'S COUNSEL]: . . . This is just not the appropriate forum for this. "THE COURT: I agree.
"[BETTY JO'S COUNSEL]: If they have a contractual claim, let them bring it. We haven't had any discovery. We haven't had a chance to depose him. [¶] You know, he could say anything he wants about what kind of agreement he had. . . . [T]his is just certainly not the time for him to start raising this as a claim. Let him do it in a hearing where everybody can have a full hearing and hear all the evidence on it.
"THE COURT: I tend to agree. Absolutely. . . . [T]here clearly is no agreement amongst the beneficiaries. The petition is denied without prejudice.
"[MICHAEL'S COUNSEL]: . . . [¶] . . . [¶] Your Honor, I have requested an evidentiary hearing on this petition. So, I'm not sure that the Court can override my request for an evidentiary hearing. I don't want to have to refile. I would rather have—
"THE COURT: Well, . . . we are talking about $130,000. We are talking about money, . . . aren't we?
"[MICHAEL'S COUNSEL]: We are indeed, yes.
"THE COURT: Can't that just be filed as a claim?
"[MICHAEL'S COUNSEL]: Well, no. Because we have to figure out, first of all, . . . [¶] . . . [¶] how that sale is going to be conducted. Because [Michael's] real estate brokerage is on the hook. [¶] . . . [¶] [Michael]'s brokerage . . . is either going to have liability for the sale or it is not."
During cross-examination, Michael testified as follows:
"[BETTY JO'S COUNSEL]: Your four and a half percent [commission] is what you claim that you are entitled to under the broker's listing agreement; is that correct? "[MICHAEL]: That's correct. [¶] . . . [¶]
"[BETTY JO'S COUNSEL]: . . . Isn't it true that the listing agreement says nothing about you being compensated for any work you did constructing or supervising the house; isn't that correct?
"[MICHAEL]: That's correct. [¶] . . . [¶]
"[BETTY JO'S COUNSEL]: So are you testifying then that you were entirely, 100 percent compensated for all the work you did as superintendent on [the Property]?
"[MICHAEL]: Yes. . . . [¶] . . . [¶] The project is finished. The $48,000 is for all the work I did.
"THE COURT: That's not the question being asked. [¶] . . . [¶] . . . The question that's been asked, twice, [Michael], is, your testimony is that you have been compensated for all the work you did supervising construction, overseeing construction; is that correct.
"[MICHAEL]: Yes. [¶] . . . [¶]
"[BETTY JO'S COUNSEL]: . . . Your claim for $130,000 is solely for the work you did as the broker on [the Property]; is that correct?
"[MICHAEL]: It was the listing agreement, yes."
At the conclusion of the evidentiary hearing on May 12, 2014, the probate court granted Michael's petition to sell in part. The court authorized sale of the Property to John and Lisa. However, the court denied the request for payment of the proposed broker's commission because Michael's duty, as trustee, to refrain from taking an adverse interest with regard to the beneficiaries would be violated, "if the [listing agreement] was consummated and completed." The court also explained, "The proof that's been submitted with regard to the contract between [Joseph] or his related entities and [Michael], the current trustee, is both vague, and ultimately unenforceable . . . . I find insufficient evidence to support its existence . . . ."
It appears the Property was sold to John and Lisa and the proceeds of sale were distributed among the five beneficiaries.
On March 18, 2015, Betty Jo, Karen, and Susan filed a petition to enforce the Trust's no contest clause and to remove Michael as trustee. In relevant part, respondents' petition asserted that Michael's petition to sell was, in fact, a creditor's claim based on an oral contract and that, by filing his petition, Michael had triggered the no contest clause. Respondents claimed: "The allegations in [Michael's] Reply Memo marked a pivot in [his] alleged basis for payment of the commission from that of Trustee compensation, as alleged in the original [petition to sell], to a creditor's claim brought against the trust by [Michael], in his individual capacity as a realtor, based upon the alleged oral agreement purportedly made with [Joseph]. [¶] . . . [¶] The arguments raised and the relief requested in [Michael's] Reply Brief, sworn declaration, and testimony under oath, fit . . . the definition provided for a contest under Section 9.04 a., subsection (iii) of the Trust in that (1) it is a claim raised in a pleading by [Michael], in his individual capacity, that he was to be given the exclusive right to list and sell the property and receive the commission therefrom, based on an oral agreement with [Joseph] and (2) that he was entitled to the court granting that specific relief by agreeing that the commission to be paid was based on that oral agreement."
Michael objected to respondent's petition, arguing it should be denied because his petition to sell did not seek to invalidate the Trust, or any of its provisions, and because he never filed a creditor's claim on a Judicial Council Forms, form DE-172. Argument was heard and the trial court took the matter under submission. On September 14, 2015, the probate court entered its "Order Granting Petition for Declaration That Trust Beneficiary Michael Whelan's Claim Violated the 1996 Whelan Trust Non-Contest Clause" (order enforcing the no contest clause).
The court rejected the notion that Michael's petition to sell did not seek to invalidate any portion of the Trust. The court explained: "(1) Paragraph 9.04 does not limit the scope of actions that qualify as contests to petitions that seek to invalidate some portion of the trust, and (2) even if it did, [Michael's petition to sell] contested the provisions in Section 7.05 of the [Trust] that limited the trustee compensation to $20,000 'for all services rendered by him or her,' essentially seeking to invalidate the 'for all services' language. [¶] . . . [¶] [Michael's] claim clearly qualifies as a creditor claim as it seeks compensation under an alleged oral agreement for services provided prior to [Joseph's] death. ( . . . § 21311(a)(3); Dacey v. Taraday (2011) 196 Cal.App.4th 962, 984.) The claim meets the definition of [a contest under the 'seek to obtain an adjudication' prong of] Trust Paragraph 9.04(a) as it is based on an oral agreement." The probate court recognized that "section 21311, subdivision (a)(3) provides that a no contest clause can only be enforced against the filing of a creditor's claim if the no contest clause expressly provides for that application." (Italics added.) Because the no contest clause expressly "includes an action that 'seeks to obtain an adjudication'. . . and then defines a claim that 'seeks to obtain an adjudication' as including an alleged oral agreement," the no contest clause was triggered. Michael's petition to sell "sought to enforce an alleged oral agreement for services Michael . . . performed prior to [Joseph's] death." Michael filed a timely notice of appeal.
It is not clear the order enforcing the no contest clause is appealable. Code of Civil Procedure section 904.1, subdivision (a)(10), provides that an appeal may be taken "[f]rom an order made appealable by the provisions of the Probate Code." Section 1304, subdivision (d), in turn, provides: "With respect to a trust, the grant or denial of the following orders is appealable . . . [¶] . . . [¶] Determining whether an action constitutes a contest under former Chapter 2 (commencing with Section 21320 ) of Part 3 of Division 11 . . . ." (Italics added.) However, Michael did not obtain an order in a safe harbor proceeding under former section 21320. Under former section 21320, "motions are filed by persons contemplating actions which potentially constitute will contests before taking such action." (Jacobs-Zorne v. Superior Court (1996) 46 Cal.App.4th 1064, 1072.) Jacobs-Zorne determined an order summarily adjudicating a claim that a petition already filed violated a no contest clause was not an appealable order. The Court of Appeal reviewed the order nonetheless, treating the appeal as a petition for writ of mandate. (Ibid.) We need not resolve the appealability issue because, even if the order enforcing the no contest clause is not appealable, we would exercise our discretion to treat the purported appeal as a petition for writ of mandate. The matter already has been fully briefed and, like in Jacobs-Zorne, "[i]f we deny review, then a determination of the parties' rights would be delayed until such time as a final judgment is entered, an appeal sought, and briefing by the parties completed. Clearly, this is not a speedy remedy for the parties and judicial economy would not be served by deferring resolution of the issue in dispute." (Ibid.)
II. DISCUSSION
Michael maintains the probate court erred in concluding his petition to sell violated the no contest clause. He attempts to shift the focus from the trial court's relatively clear-cut analysis by raising a variety of arguments that focus on the form, rather than the substance, of his claim. Specifically, Michael contends his petition was not a contest because he did not file it in his capacity as beneficiary and because he did not file a "pleading" in which he sought payment on a creditor's claim. Michael's position is that he was merely seeking increased trustee compensation. He also contends the no contest clause does not apply because his was only a "routine" creditor's claim. Michael's appeal rests, primarily, on his assertion that the probate court misconstrued the Trust's no contest clause, as well as the governing statutory language. As such, it presents a pure question of law, which we review de novo. (Johnson v. Greenelsh (2009) 47 Cal.4th 598, 604; Funsten v. Wells Fargo Bank, N.A. (2016) 2 Cal.App.5th 959, 973; Scharlin v. Superior Court (1992) 9 Cal.App.4th 162, 168.) After independent review, we reject Michael's various arguments and conclude the probate court's ruling was correct.
Respondents argue, in their brief, the trial court's order should be reviewed for substantial evidence, asserting Michael challenges only the probate court's purported factual findings—its characterization of the petition to sell. Respondents also insist we must imply findings in their favor because Michael did not request a statement of decision. (See Code Civ. Proc., § 632.) However, "Code of Civil Procedure section 632 statements of decision apply upon the trial of a question of fact by the court. . . . The general rule is that a trial court need not issue a statement of decision after a ruling on a motion." (Fair v. Bakhtiari (2011) 195 Cal.App.4th 1135, 1148, italics added.) "[A]lthough the doctrine of implied findings related to statements of decision does not apply to the court's [ruling on] the motion here, the usual standard of review—that we will imply findings in favor of the court's [ruling on] the motion—does." (Ibid.) Here, after receiving legal argument but holding no evidentiary hearing, the trial court's order clearly expressed the legal conclusion the Trust's no contest clause was triggered by Michael's petition to sell. It is this conclusion Michael challenges, and we are unpersuaded the trial court made findings of fact in characterizing Michael's pleadings. The trial court took judicial notice of Michael's declaration and the transcript from the earlier evidentiary hearing because "the facts and argument offered by Michael . . . constitute the grounds on which he sought court action and the nature of those grounds are determinative . . . ." At oral argument before this court, respondents conceded this appeal presents a matter of law.
"An in terrorem or no contest clause in a trust instrument 'essentially acts as a disinheritance device, i.e., if a beneficiary contests or seeks to impair or invalidate the trust instrument or its provisions, the beneficiary will be disinherited and thus may not take the gift or devise provided under the instrument.' (Burch v. George (1994) 7 Cal.4th 246, 265 (Burch).) No contest clauses, whether in wills or trusts, have long been held valid in California. [Citations.] Such clauses promote the public policies of honoring the intent of the donor and discouraging litigation by persons whose expectations are frustrated by the donative scheme of the instrument. ([Id.] at p. 254.) [¶] In tension with these public policy interests are the policy interests of avoiding forfeitures and promoting full access of the courts to all relevant information concerning the validity and effect of a will, trust, or other instrument. [Citation.] In light of these opposing interests, the common law in California recognized the enforceability of no contest clauses, albeit strictly construed, 'so long as the condition was not prohibited by some law or opposed to public policy.' " (Donkin v. Donkin (2013) 58 Cal.4th 412, 422, italics added (Donkin).)
"In 2005, the Legislature asked the [California Law Revision] Commission to once again study the advantages and disadvantages of enforcing a no contest clause in a will, trust, or other estate planning instrument. (Sen. Conc. Res. No. 42, Stats. 2005 (2005-2006 Reg. Sess.) res. ch. 122, p. 6159.) [¶] In 2008, the Commission issued a report recommending retention, but with significant revision, of the no contest clause statutes. [Citation.] According to the Commission, no contest clauses are still supported by a number of important public policy interests, including respecting a transferor's ability to control the use and disposition of his or her own property and to avoid the cost, delay, public exposure, and additional discord between beneficiaries involved in litigation over the transferor's estate plan. [Citation.] When the proper disposition of a transferor's property is complicated by difficult property characterization issues, a no contest clause may also appropriately operate as a 'forced election' in order to avoid ownership disputes." (Donkin, supra, 58 Cal.4th at pp. 424-425, fns. omitted.)
"The Commission acknowledged, however, that other public policy concerns 'can trump a transferor's intention to create a no contest clause.' [Citation.] It noted that as a matter of general public policy, 'a person should have access to the courts to remedy a wrong or protect important rights.' [Citation.] The Commission stated that a no contest clause should be applied conservatively to avoid a forfeiture that is not intended by the transferor. [Citation.] The Commission agreed that judicial proceedings may be necessary to determine a transferor's intentions. [Citation.] And it emphasized that important public policy interests support judicial supervision of an executor, trustee, or other fiduciary. [Citation.] [¶] . . . [¶] To address the 'most common and serious problem' of uncertainty in application of the existing law [citation], the Commission recommended a simplification of the statutes [citation]. As pertinent here, the Commission proposed to narrowly define the types of contest subject to a no contest clause, in place of the existing 'open-ended definition of "contest," combined with a complex and lengthy set of exceptions.' [Citation.] Under such a statutory scheme, 'any pleading that is not one of the expressly covered types would not be governed by a no contest clause' without the need for any further analysis." (Donkin, supra, 58 Cal.4th at pp. 425-426.)
"Accordingly, the Commission recommended that a no contest clause should be enforceable only in response to three types of contests: (1) a direct contest, as specifically defined, brought without probable cause; (2) a creditor claim; and (3) a challenge to a transfer of property amounting to a forced election. [Citation.] [¶] In response to the Commission's report, the Legislature repealed the existing statutes and replaced them with a new set of statutes governing no contest clauses, essentially as recommended by the Commission. (Stats. 2008, ch. 174, §§ 1, 2, p. 567 [repealing former § 21300 et seq., and adding § 21310 et seq.]; Sen. Rules Com., Off. of Sen. Floor Analyses, Unfinished Business Analysis of Sen. Bill No. 1264 (2007-2008 Reg. Sess.) as amended June 18, 2008.) Effective on January 1, 2009, operative on January 1, 2010, and applying to instruments that became irrevocable on or after January 1, 2001, the new statutory provisions generally limit enforceability of the no contest clause to (1) direct contests brought without probable cause; (2) challenges to the transferor's ownership of property at the time of the transfer, if expressly included in the no contest clause; and (3) creditor's claims and actions based on them, if expressly included in the no contest clause. (§§ 21311, subd. (a)(1)-(3), 21315; Stats. 2008, ch. 174, §§ 2, 3, pp. 567-568.) The new law also discontinued the safe harbor declaratory relief procedure of former section 21320." (Donkin, supra, 58 Cal.4th at pp. 426-427, italics added.)
The current law applies to the Trust because it is an "instrument . . . that became irrevocable on or after January 1, 2001." (§ 21315, subd. (a).)
Under the law as amended in 2010, a no contest clause is statutorily defined as "a provision in an otherwise valid instrument that, if enforced, would penalize a beneficiary for filing a pleading in any court." (§ 21310, subd. (c), italics added.) A "contest" is defined as "a pleading filed with the court by a beneficiary that would result in a penalty under a no contest clause, if the no contest clause is enforced." (§ 21310, subd. (a), italics added.) " 'Pleading' means a petition, complaint, cross-complaint, objection, answer, response, or claim." (§ 21310, subd. (d).) Section 21311, subdivision (a), provides: "A no contest clause shall only be enforced against the following types of contests: (1) A direct contest that is brought without probable cause. [¶] (2) A pleading to challenge a transfer of property on the grounds that it was not the transferor's property at the time of the transfer. A no contest clause shall only be enforced under this paragraph if the no contest clause expressly provides for that application. [¶] (3) The filing of a creditor's claim or prosecution of an action based on it. A no contest clause shall only be enforced under this paragraph if the no contest clause expressly provides for that application." (Italics added.) "The effect of [section 21311] is to make the trust's no contest clauses unenforceable unless the beneficiaries' proposed action is covered by one of the three specified categories of contest." (Donkin, supra, 58 Cal.4th at p. 430, italics added.)
Whether there has been a contest within the meaning of a specific no contest clause depends upon the circumstances of the case and the language of the clause. (Johnson v. Greenelsh, supra, 47 Cal.4th at p. 604.) "[A] no contest clause shall be strictly construed." (§ 21312.) However, " '[t]he answer cannot be sought in a vacuum, but must be gleaned from a consideration of the purposes that the [testator] sought to attain by the provisions of [his] will.' [Citation.] Therefore, even though a no contest clause is strictly construed to avoid forfeiture, it is the testator's intentions that control, and a court 'must not rewrite the [testator's] will in such a way as to immunize legal proceedings plainly intended to frustrate [the testator's] unequivocally expressed intent from the reach of the no-contest clause.' " (Burch, supra, 7 Cal.4th at p. 255.) A. Michael's petition to sell was a contest under section 21311 .
Respondents do not contend Michael filed a direct contest to the Trust or a petition challenging a transfer of property. The main question in this case is whether Michael's petition to sell constituted a creditor's claim, and, if so, whether the Trust's no contest clause "expressly provides" for application to the type of creditor's claim Michael pursued. (See § 21311, subd. (a)(3) [no contest clause shall be enforced against "[t]he filing of a creditor's claim or prosecution of an action based on it," so long as the "no contest clause expressly provides for that application"].)
A direct contest is defined in section 21310, subdivision (b): " 'Direct contest' means a contest that alleges the invalidity of a protected instrument or one or more of its terms, based on one or more of the following grounds: [¶] (1) Forgery. [¶] (2) Lack of due execution. [¶] (3) Lack of capacity. [¶] (4) Menace, duress, fraud, or undue influence. [¶] (5) Revocation of a will pursuant to Section 6120, revocation of a trust pursuant to Section 15401, or revocation of an instrument other than a will or trust pursuant to the procedure for revocation that is provided by statute or by the instrument. [¶] (6) Disqualification of a beneficiary under Section 6112, 21350, or 21380."
Michael's overarching argument seems to be that the probate court's ruling violates the preference for bright line rules embodied by the 2009 amendments. However, Michael overlooks the fact that under both the old and new law, the filing of a creditor's claim (or prosecuting an action based on the claim) is a contest only if that activity is expressly identified as a violation of the no contest clause in the Trust. (Compare § 21311, subd. (a)(3) with former § 21305, subd. (a)(1); Revision of No Contest Clause Statute (Jan. 2008) 37 Cal. Law Revision Com. Rep. (2007) pp. 389-390, 403 [no change in the law recommended with respect to creditor's claims].) Given that section 21311, subdivision (a)(3) merely continues the same rule previously embodied in former section 21305, subdivision (a)(1), we start by addressing some of the pre-2009 case law exploring the concept of a forced election. (See also § 21313 [common law governs enforcement of no contest clause to the extent probate code does not apply].) Michael did not cite Estate of Coplan (2004) 123 Cal.App.4th 1384 (Coplan) in his briefs, but at oral argument he urged us to reach a similar result.
In Coplan, supra, 123 Cal.App.4th 1384, a beneficiary of her deceased father's will appealed from an order denying a motion for enforcement of the will's no contest clause against the personal representative, the appellant's sister. (Id. at p. 1386.) The decedent's will provided no compensation to the executor and included a no contest clause providing for disinheritance of any beneficiary who contested the will, or its provisions, or who " 'shall not if called upon defend or assist in good faith in the defense of any and all such contest.' " (Id. at pp. 1386, 1388-1389.) The no contest clause also included a specific exception: "Positions taken in proceedings relating to instructions or accountings shall not be deemed to be a contest." (Id. at p. 1389, italics added.)
The appellant in Coplan asserted the personal representative violated the will's no contest clause by petitioning for relief of the will's no compensation clause. Specifically, the personal representative had filed, but then withdrew, a request to be paid $45,000, as a percentage of the $3.2 million estate. She did not assert the no compensation clause was invalid, but sought relief, in her capacity as the personal representative, based on an extensive undertaking of services over the course of eight years. (Coplan, supra, 123 Cal.App.4th at pp. 1387, 1389.) In these circumstances, the personal representative did not violate the no contest clause. (Id. at pp. 1386, 1389-1390.) The court highlighted that the personal representative had withdrawn her request for payment and explained: "Although the amount of the residue available for distribution would have been reduced had the petition been granted, that fact does not necessarily make the action a contest. . . . [¶] While the decedent intended that the personal representative not be compensated for services, it is less apparent that he intended to disinherit a personal representative who requested compensation. . . . [S]ection 10802, subdivision (b), specifically allows a personal representative to petition the court to be relieved of a compensation provision. In addition, [the personal representative's] request can be seen as a position taken 'in proceedings relating to instructions or accountings' under the terms of the no-contest clause. The no-contest clause does not require that the excepted action be a request for instructions or an objection to an accounting, but rather states that a position taken in a proceeding relating to either is excepted. Arguably, moreover, the decedent did not anticipate the extent of the services necessary to probate the Will." (Id. at pp. 1389-1390.)
Coplan is obviously distinguishable, as Michael never withdrew his request for payment of a commission, he based his request, in part, on an oral agreement with Joseph, and the no contest clause involved is different (and contains no express exception for instruction requests). Colburn v. Northern Trust Co. (2007) 151 Cal.App.4th 439 (Colburn), involves a no contest clause more similar to the one before us. In that case, the decedent's former wife proposed to file a creditor's claim to enforce a marital settlement agreement providing spousal and child support. (Id. at pp. 442, 445-446, 448-452.) The trust created $3 million trusts for each child and provided an annuity trust to make spousal support payments. (Id. at pp. 443-444.) It also included a detailed no contest clause, providing for disinheritance if any person " 'directly or indirectly, contests or attacks this trust . . . , takes any action that would frustrate the dispositive plan, . . . or takes any of the [following] actions . . . : (a) filing a creditor's claim or prosecution of an action based thereon, (b) commencing any legal action or proceeding to determine the character of property, (c) challenging the validity of any instrument, contract, agreement, beneficiary designation, or other document executed by me and pertaining to the disposition of my assets . . . , and (d) petitioning for settlement or for compromise affecting the terms of this trust or my Will, or for interpretation of this trust or my Will.' " (Id. at p. 444, italics added.) The decedent's former wife filed safe harbor applications asking the court to determine whether creditor's claims for spousal and child support would violate the no contest clause. (Id. at pp. 445-446.) The reviewing court answered in the affirmative. (Id. at p. 446.)
The Colburn court explained: "A no contest clause may result in a 'forced election' where a beneficiary is obligated to choose between two inconsistent or alternative rights or claims because the testator or trustor clearly intended that the beneficiary not enjoy both. [Citation.] Put another way, a claimant cannot at the same time take the benefits under a testamentary instrument and repudiate the losses; she must accept the terms in toto, or reject them in toto." (Colburn, supra, 151 Cal.App.4th at p. 447.) Because the no contest clause was "a paradigm of clarity" that provided for disinheritance when a beneficiary filed a creditor's claim, identified the dissolution judgment, and stated the decedent's specific intent to fulfill his spousal and child support obligations through his trust provisions, the no contest clause barred the proposed creditor's claims. (Id. at p. 448.) The court also rejected the former wife's argument that, assuming the no contest clause was triggered, public policy considerations (in favor of enforcement of spousal and child support orders) should bar the clause's enforcement. (Id. at p. 450.) The court observed: "Enforcement of the no contest clause extinguishes [the decedent's] testamentary gifts to [his former wife] and the children but it in no way prevents them from enforcing [his] support obligations under the marital judgment. . . . [T]he no contest clause does not deprive the former spouse or children of their right to support under the marital judgment, nor does it hinder their ability to assert those interests. To the extent [they] believe their claims under the marital judgment are payable by [the decedent's] estate, they are free to pursue those claims at their option." (Id. at pp. 450-451.)
In Zwirn v. Schweizer (2005) 134 Cal.App.4th 1153 (Zwirn), the no contest clause was more narrowly drawn—only applying "[i]f any beneficiary . . . contests in any court the validity of this trust . . . or seeks to obtain an adjudication . . . that this trust or any of its provisions . . . is void." (Id. at p. 1155, italics added.) In Zwirn, a nephew sought to enforce, via creditor claim, an oral agreement with his aunt and uncle, wherein they purportedly agreed to leave him 50 percent of their estate. (Id. at pp. 1154-1155.) The aunt's estate plan left 75 percent of the estate to other relatives and provided the nephew only income from the remaining 25 percent, which was to remain in trust. (Id. at p. 1155.) Despite the no contest clause's inapplicability to creditor's claims, and former section 21305, subdivision (a)(1)'s provision that the filing of a creditor claim did not constitute a contest unless expressly identified in the no contest clause, the Zwirn court determined the nephew nevertheless was subject to disinheritance, under the clause. (Id. at pp. 1156-1158, & fn. 8.) The court explained: "It seems clear to us that if the beneficiary had a contractual claim that did not involve a result which, if successful, would alter the intent of the testator regarding the general disposition plan of the trust . . . containing the no contest provisions, that claim would be a 'creditor's claim' pursuant to [former] section 21305. . . . [¶] The issue in the case at bench is more complex, involving a claim that goes directly to the testator's plan of distribution, not merely the amount of money given to a creditor or the reduced amount given to other beneficiaries because of the creditor's claim." (Id. at p. 1158, italics added.) Because the nephew's "claim" could also be characterized as a "contest" that sought to invalidate the aunt's general plan of disposition, the no contest clause applied. Any other result would make the no contest clause meaningless. (Id. at pp. 1159-1160.)
Unlike the creditor in Zwirn who sought to rewrite his aunt's entire disposition plan, Michael sought only to collect a commission purportedly owed him under an oral agreement with Joseph. Zwirn's reasoning nevertheless remains instructive. The portion of Michael's petition based on an oral compensation contract constituted a "claim for . . . money owing [which] would . . . be appropriate as a 'creditor's claim.' " (Zwirn, supra, 134 Cal.App.4th at p. 1158.)
The dispositive features of these cases are the terms of the no contest clauses themselves. It is irrelevant that Michael's contractual claim would not, if successful, have altered his parents' general disposition plan and, instead, merely reduced the amount of assets available to the other beneficiaries. The plain language of the no contest clause before us contains no limiting requirement, nor is such a limitation required by the probate code. (Compare § 21311, subd. (a)(3) with §§ 21310, subd. (b), 21311, subd. (a)(1) [only a direct contest must seek to invalidate a decedent's trust]; Colburn, supra, 151 Cal.App.4th at p. 449 [reason for prosecuting creditor's claim is irrelevant when "the mere filing of a creditor's claim is a contest within the plain language of the no contest clause"]; Zwirn, supra, 134 Cal.App.4th at pp. 1158, 1160.) Thus, we need not consider whether the probate court was correct that Michael's petition triggered the no contest clause because it sought to invalidate the $20,000 cap on trustee compensation.
The no contest clause at issue, in the case before us, is more analogous to that found in Colburn than that at issue in Zwirn. Like the no contest clause in Colburn, the language of the no contest clause is broad and clear. The Trust's no contest clause provides: "If any Beneficiary of this Declaration of Trust or any of our legal heirs . . . seeks to obtain an adjudication, or contests, or attacks this Declaration of Trust, any of its provisions or any amendments thereto, or in any manner, directly or indirectly, attempts to have it or any of the Trusts or beneficial interests created by it declared invalid, we specifically disinherit such person . . . ." The clause also defines "the words 'contest,' 'attack,' or 'seek to obtain an adjudication' " to include, "without limitation, any claims asserted against any trust hereunder, a Settlor's Will, a Settlor's estate, assets passing pursuant to a beneficiary designation, or any other assets encompassed by the Settlor's estate plan based on: (i) a 'quantum meruit' theory (including a creditor's claim based upon such theory); (ii) a constructive trust theory; (iii) any alleged oral agreement (or an alleged written agreement that is to be proved by parol evidence) claiming that the Settlor agreed to give or bequeath anything to such person, whether or not such alleged agreement is also alleged to be made in consideration for the provision of personal or other services to a Settlor; or (iv) any action to characterize property scheduled in the name of the Trustee or designated in the name of the Trustee, in this trust instrument or by any subsequent designation, as belonging in whole or in part to such claimant under any other theory, including, but not limited to community property, joint tenancy or payable on death designation. For purposes of this Paragraph, the term 'contestant' shall include any person encompassed by the above-described forms of legal actions or claims. A routine creditor's claim (such as for funeral costs or a written promissory note) shall not be considered a contest." (Italics added.)
Michael's parents unequivocally expressed their intent that any beneficiary with a creditor's claim based on an oral agreement must make an election between pursuing such claim or taking under the Trust. The no contest clause clearly distinguishes between "routine" creditor's claims (based on written contracts that would be less likely to be fraudulent or lead to litigation) and those based on oral agreement, as was Michael's. By filing his petition for sale, which sought among other things to enforce a claim for payment on an oral agreement, Michael effectively, and explicitly, pursued such a creditor's claim. Michael did more than make a claim for payment of an expense of administration, as he suggests. Apparently recognizing that he could not justify a $130,000 commission solely on the basis of the listing agreement he had entered with himself (and which was incompatible with his "duty to administer the trust solely in the interest of the beneficiaries" (§ 16002, subd. (a)), Michael changed tack and sought to justify the commission as money owed to him under an oral compensation agreement. Thus, Michael's actions triggered the no contest clause by " 'frustrat[ing] [the settlors'] unequivocally expressed intent.' " (Burch, supra, 7 Cal.4th at p. 255.)
Michael attempts to avoid this result by maintaining his claim was not a creditor's claim for a variety of reasons. Michael insists he was not a creditor, within the meaning of section 19000, because he could not have enforced his claim for a commission during Joseph's lifetime—it was not an enforceable obligation until the Property was sold by the Trust. Michael's position is that, when a liability arises after the death of the decedent, it cannot constitute a creditor's claim against the estate. (See Newberger v. Rifkind (1972) 28 Cal.App.3d 1070, 1077 (Newberger); Sperry v. Tammany (1951) 106 Cal.App.2d 694, 698 (Sperry).) In its order enforcing the no contest clause, the probate court explicitly rejected Michael's argument: "The fact that Michael . . . did not complete the sale, or for that matter enter into [an exclusive listing agreement]—both condition precedents to payment of a commission—until after [Joseph's] death . . . , does not mean that the claim for the right to earn the commission did not exist as of the date [Joseph] died. Put another way, had [Joseph] repudiated the alleged compensation agreement . . . Michael would have had an immediate right to sue for breach."
Michael raises a related argument that any claim for a commission was not enforceable until approved by the probate court and, accordingly, he asserted no creditor's claim. The evidence Michael cites suggests only that the purchase contract was unenforceable unless approved by the probate court. In any event, this is a factual argument not raised or developed before the trial court that has been forfeited. (Bayside Timber Co. v. Board of Supervisors (1971) 20 Cal.App.3d 1, 5.)
The probate court's ruling is supported by the Legislature's enactment, after Newberger and Sperry, of section 19000, subdivision (a) (added by Stats. 1991, ch. 992, § 3, p. 4617 and amended by Stats. 1996, ch. 862, § 46, p. 4629). That section provides unambiguously: " 'Claim' means a demand for payment for any of the following, whether due, not due, accrued or not accrued, or contingent, and whether liquidated or unliquidated: (1) Liability of the deceased settlor, whether arising in contract, tort, or otherwise. (2) Liability for taxes incurred before the deceased settlor's death, whether assessed before or after the deceased settlor's death, other than property taxes and assessments secured by real property liens. (3) Liability for the funeral expenses of the deceased settlor." (Italics added.) " 'Creditor' means a person who may have a claim against estate property." (§ 19000, subd. (c), italics added.) Michael has shown no error.
We only briefly mention Dacey v. Taraday, supra, 196 Cal.App.4th 962, Wagner v. Wagner (2008) 162 Cal.App.4th 249, and Estate of Yool (2007) 151 Cal.App.4th 867, which are statute of limitations cases and are not particularly helpful in deciding this case. (Dacey, at pp. 966-967, 979-982, 985-986; Wagner, at pp. 256-257; Yool, at p. 870.) However, to the extent Dacey provides any assistance, it appears to be contrary to Michael's understanding of a creditor's claim. (Dacey, at p. 986 ["[w]hen a party has a claim based on a contract with the decedent—no matter whether the obligation has come due or the breach has occurred—Probate Code section 9000 et seq. will operate to ensure that stale creditors' claims will not be presented years later"].)
Michael next asserts it is dispositive that his claim was presented by way of a petition for trustee's instructions (§ 17200, subd. (b)(6), (9)), rather than on form DE-172 adopted by the Judicial Council for creditor's claims. His reliance on section 9153, which governs the filing of claims in probate estates, is misplaced. The sections of the probate code governing filing of claims against the trust of a deceased settlor contain no requirement that the claim be presented by Judicial Council form. (§§ 19011, 19150-19153.) Section 19153 merely provides, "[t]he Judicial Council may adopt a claim form." Section 19151 requires that a claim be supported by the affidavit of the creditor, stating the basis for the claim. This requirement was clearly met.
In any event, "the trustee may waive formal defects and elect to treat the demand as a claim that is filed and established under this part by paying the amount demanded." (§ 19154.) Michael appears to have so waived any defect when the respondents and probate court made clear their belief that Michael's claim was not properly before the court and needed to be refiled as a claim or a petition to approve a claim. Any problem with the procedural form of Michael's claim is attributable to Michael's hesitance to "refile" and his insistence that an evidentiary hearing nevertheless go forward on his claim. Michael cannot profit from this strategy on appeal. (See In re Marriage of Ilas (1993) 12 Cal.App.4th 1630, 1640 [" 'where a party by his conduct induces the commission of an error, under the doctrine of invited error he is estopped from asserting the alleged error as grounds for reversal' "].)
Nor can we agree with Michael that this case is like Coplan, supra, 123 Cal.App.4th at page 1390 because he was merely seeking instructions or asking the court, under section 17200, to allow greater trustee compensation than that provided for under the terms of the Trust. It is true section 17200, subdivision (b)(9), permits a trustee to petition for an order "fixing or allowing payment of the trustee's compensation" and that a probate court, in some circumstances, may order greater compensation to a trustee than allowed under the terms of trust. (§ 15680, subd. (b).) That such procedures exist is not particularly relevant. Even putting aside the terms of the no contest clause, Michael's argument merely begs the question—was Michael's petition, in substance, a petition seeking an order of increased trustee compensation? We think not.
Section 15680 provides: "(a) Subject to subdivision (b), and except as provided in Section 15688, if the trust instrument provides for the trustee's compensation, the trustee is entitled to be compensated in accordance with the trust instrument. [¶] (b) Upon proper showing, the court may fix or allow greater or lesser compensation than could be allowed under the terms of the trust in any of the following circumstances: [¶] (1) Where the duties of the trustee are substantially different from those contemplated when the trust was created. [¶] (2) Where the compensation in accordance with the terms of the trust would be inequitable or unreasonably low or high. [¶] (3) In extraordinary circumstances calling for equitable relief. [¶] (c) An order fixing or allowing greater or lesser compensation under subdivision (b) applies only prospectively to actions taken in administration of the trust after the order is made."
First, such an order "applies only prospectively to actions taken in administration of the trust after the order is made." (§ 15680, subd. (c), italics added.) More importantly, we agree with Michael that "[t]he duties to be performed by a real estate broker are different than those performed by a trustee." This is precisely why the probate court properly looked beyond the form of Michael's petition, to its substance. Had Michael presented only a proposed listing agreement for court approval or sought a more limited increase in his "trustee compensation" to reimburse duties he had undertaken solely on behalf of the Trust, this may have been a different case. (See Coplan, supra, 123 Cal.App.4th at p. 1390; § 16247 [a trustee has the power to hire "accountants, attorneys, auditors, investment advisers, appraisers (including probate referees appointed pursuant to Section 400), or other agents, even if they are associated or affiliated with the trustee, to advise or assist the trustee in the performance of administrative duties."].) Instead, Michael explicitly grounded his claim for payment of the broker's commission, at least in part, on an oral agreement he had with Joseph. B. Michael's additional arguments do not have merit.
Michael insists the trial court improperly expanded the language of section 21310, and the Trust itself, by applying the no contest clause to a petition brought by a trustee, rather than a beneficiary. We disagree. A no contest clause is statutorily defined as "a provision in an otherwise valid instrument that, if enforced, would penalize a beneficiary for filing a pleading in any court." (§ 21310, subd. (c), italics added.) A "contest" is defined as "a pleading filed with the court by a beneficiary that would result in a penalty under a no contest clause, if the no contest clause is enforced." (§ 21310, subd. (a), italics added.)
Respondents contend Michael forfeited this argument by raising it for the first time on appeal. They also contend we can imply a finding that Michael pursued his petition to sell in his individual capacity. Respondents are correct that Michael did not initially raise this position in his response and objection to their petition, but he did raise it, at least in passing, in a footnote in his reply. Generally, appellate courts will not consider matters raised for the first time on appeal. (Bayside Timber Co. v. Board of Supervisors, supra, 20 Cal.App.3d at p. 5.) However, we will address the issue because the question Michael presents is solely an issue of law. (See Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 24; Estate of Mathie (1944) 64 Cal.App.2d 767, 782-783.) --------
Michael asserts he did not file the petition in his capacity as a beneficiary, but did so only in his capacity as trustee. It is true the caption and body of the petition to sell identified the petitioning party as "Michael J. Whelan, Trustee." However, it was Michael, acting in his individual capacity and not as trustee, who purportedly entered into an oral agreement with Joseph and who performed work relating to construction on the Property. Thus, Michael himself admitted, in his reply brief, that "the cap on Trustee compensation stated in the Trust is unrelated to either the fees of a real estate broker or [Michael's] compensation agreement with [Joseph]" and that "[t]he commission was earned [while Michael was] wearing the [broker/employee] hat," not his trustee hat.
We reject Michael's assertion that he either filed the petition to sell in his capacity as trustee or his capacity as a beneficiary. In reality, the petition taken as a whole, indicates Michael was acting in dual roles—as trustee and as a beneficiary. When it came to seeking approval of the proposed sale to John and Lisa, he was clearly acting as trustee. But when he sought to enforce an oral agreement with Joseph, there can be no other conclusion—he was acting in his individual or beneficiary capacity. The Trust did not stand to gain as a result of this portion of the petition, it was only Michael individually who stood to gain. In filing his petition to sell, Michael was acting not just as trustee, but also as a beneficiary. Nothing in the Trust or the law permits the conclusion Michael seeks—that the settlors intended Michael's dual roles (as trustee and beneficiary) to allow him to litigate the purported oral agreement without triggering the no contest clause. (See Johnson v. Greenelsh, supra, 47 Cal.4th at p. 609 ["a trustee who is also a beneficiary might violate a no contest clause by taking action to reverse a settlor's exercise of rights conferred by the trust, if the action would effectively nullify or alter the estate plan set out in the trust"]; In re Estate of Davies (2005) 127 Cal.App.4th 1164, 1173-1174 [beneficiary's surviving spouse and executrix stands in beneficiary's shoes and "cannot escape the no-contest clause on the ground she personally is not a named beneficiary"]; Genger v. Delsol (1997) 56 Cal.App.4th 1410, 1414, 1423-1424 [widow " 'cannot take off the "beneficiary" hat and put on the "personal representative" hat without running afoul' " of no contest clause's application to any trust beneficiary acting " 'singly or in conjunction with any other person or persons' "]; Graham v. Lenzi (1995) 37 Cal.App.4th 248, 254 [in considering appellate standing, "an appellate court has discretion to disregard an appellant's designation as trustee [and] . . . may consider the representative designation as merely descriptive and treat the appeal as having been taken in the appellant's individual capacity"].)
Michael also insists that, contrary to the probate court's conclusion, his reply brief and declaration cannot trigger the no contest clause because they are not "pleadings" under the terms of section 21310, subdivisions (a) and (d). He relies on a stipulation made by the parties, at the evidentiary hearing, that no claim based on an oral agreement was raised in the petition to sell. We again decline Michael's invitation to recognize form over substance. Michael's reply brief, declaration, trial brief, and testimony at the evidentiary hearing all requested the probate court to enforce the oral agreement he purportedly had with Joseph and approve payment of the commission. The statute defines pleading to mean "a petition, complaint, cross-complaint, objection, answer, response, or claim." (§ 21310, subd. (d).) As Michael ultimately conceded at oral argument, there is no relevant difference (in this context) between a pleading denominated as a reply and one denominated as an answer or response—they are all "pleadings."
We do not share Michael's concern that enforcing the no contest clause in this case will impede judicial supervision of trustees. He suggests any beneficiary also serving as trustee will "be leery of seeking prior approval of many actions related to trust administration for fear that filing a petition for instructions . . . might later be deemed to be a contest." The argument appears disingenuous, given Michael did not seek the court's permission, or make any disclosure to the other beneficiaries, before entering into an exclusive listing agreement with himself. (§ 16004, subd. (a) ["trustee has a duty not to use or deal with trust property for the trustee's own profit or for any other purpose unconnected with the trust, nor to take part in any transaction in which the trustee has an interest adverse to the beneficiary"]; cf. § 10150, subds. (a), (c) [contract between personal representative of estate and licensed real estate broker "may grant an exclusive right to sell property for a period not in excess of 90 days if, prior to execution of the contract granting an exclusive right to sell, the personal representative obtains permission of the court to enter into the contract upon a showing of necessity and advantage to the estate"].)
Regardless of whether Michael's timeline raises any suspicion regarding his motives, we are not overly worried that our ruling may discourage litigation—as that is one of the stated purposes of no contest clauses. Furthermore, it is the substance of Michael's claim for payment of the commission, not the fact he filed a petition purportedly seeking instructions, which triggered the no contest clause. If we were to prioritize form over substance, as Michael asks us to do, we would effectively negate no contest clauses, especially when a beneficiary serves in a dual role and can disguise his claim by intermixing it with legitimate requests on behalf of a trust. (See Zwirn, supra, 134 Cal.App.4th at pp. 1158-1159.) Michael has presented no persuasive reason why his claim for payment under an oral agreement did not trigger the no contest clause. The probate court properly granted respondents' petition to enforce the Trust's no contest clause.
III. DISPOSITION
The order enforcing the no contest clause is affirmed. Respondents are to recover their costs on appeal.
/s/_________
BRUINIERS, J. WE CONCUR: /s/_________
JONES, P. J. /s/_________
SIMONS, J.