California Court of Appeal Jul 28, 2009 No. A121525Published
Before: Pollak
Opinion
POLLAK, Acting P. J.
This action involves a dispute between appellant Glenn Lemer and his stepdaughters, respondents Carin Salter and Jennifer Segal, regarding Lemer’s administration of the Glenn and Elsa Lemer Tmst (the trust). Lemer appeals from a determination by the probate court that a petition Segal and Salter propose to file against Lemer seeking information regarding his conduct as trustee of the tmst will not violate the no contest provision of the tmst. Although numerous arguments were made in the trial court, only a relatively narrow issue is raised on appeal: Does the proposed petition seek to do more than enforce Lemer’s nonwaivable fiduciary duty under Probate Code
1
section 16060 to provide reasonable information regarding the administration of the tmst and, thus, violate the no contest clause of the tmst? We agree with the trial court that the answer to this question is negative and that the proposed petition does not violate the no contest provision of the tmst. Accordingly, we shall affirm.
Background
The tmst was created by Glenn and Elsa Lemer in April 2005. Elsa Lemer passed away on February 8, 2006. The tmst agreement provides that upon Elsa’s death Glenn Lemer becomes the sole trustee and the tmst is to be divided into three subtmsts: the Family Tmst, the Marital Tmst, and the Survivor’s Tmst. The income of the subtmsts is to be distributed to Lemer, and Lemer has broad discretion to invade the principal of all of the subtmsts.
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Segal and Salter are contingent remainder beneficiaries and on
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Lemer’s death will receive most of the remaining trust assets. The tmst agreement provides that “any reports or accounts otherwise required by the California Probate Code are hereby waived to the fullest extent of the law.” The agreement also contains a no contest clause prohibiting distribution to “anyone who contests or joins in ... a contest of any provision hereof.”
On December 19, 2007, respondents filed a petition pursuant to section 21320
seeking a determination of whether a further petition they proposed to file would violate the no contest clause contained in the trust.
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After reviewing the proposed petition, which seeks to compel Lemer to provide information regarding the administration of the trust, the court concluded that the petition “does not implicate or ran afoul of the no contest clause of the Glenn and Elsa Lemer Tmst . . . because none of the relief requested constitutes an attack on the tmst.” Lemer filed a timely notice of appeal.
Discussion
Initially, the parties dispute the scope of the information sought by the proposed petition. Segal and Salter contend that the petition seeks only to enforce Lemer’s nonwaivable duty under section 16060 to provide reasonable information about the administration of the tmst. Lemer contends that the scope of the petition is more expansive, seeking reports and an accounting under sections 16061 and 16062, in violation of the express waiver provision in the tmst.
Section 16060 provides: “The trustee has a duty to keep the beneficiaries of the tmst reasonably informed of the tmst and its administration.” The California Law Revision Commission comment to section 16060 explains, “The trustee is under a duty to communicate to the beneficiary information that is reasonably necessary to enable the beneficiary to enforce the beneficiary’s rights under the tmst or to prevent or redress a breach of tmst.” (Cal. Law Revision Com. com., 54A West’s Ann. Prob. Code (1991 ed.)
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foil. § 16060, p. 51.) This duty is “consistent with the duty stated in prior California case law to give beneficiaries complete and accurate information relative to the administration of a trust when requested at reasonable times.”
(Ibid.)
Section 16061 provides: “Except as provided in Section 16064, on reasonable request by a beneficiary, the trustee shall provide the beneficiary with a report of information about the assets, liabilities, receipts, and disbursements of the trust, the acts of the trustee, and the particulars relating to the administration of the trust relevant to the beneficiary’s interest, including the terms of the trust.” Section 16062, subdivision (a) provides: “Except as otherwise provided in this section and in Section 16064, the trustee shall account at least annually, at the termination of the trust, and upon a change of trustee, to each beneficiary to whom income or principal is required or authorized in the trustee’s discretion to be currently distributed.” Under section 16064, “[t]he trustee is not required to report information or account to a beneficiary ...[][] (a) [t]o the extent the trust instrument waives the report or account. . . .” The parties agree that unlike sections 16061 and 16062, the duty imposed under section 16060 is not subject to waiver under section 16064. Likewise, “[t]he availability of information on request under [sections 16061 and 16062] does not negate the affirmative duty of the trustee to provide information under Section 16060.” (Cal. Law Revision Com. com., 54A West’s Ann. Prob. Code,
supra,
foil. § 16061, p. 52; see also Campisi & Latham, Cal. Trust and Probate Litigation (Cont.Ed.Bar 2007) § 13.1, p. 400 [The duty to provide information under § 16060 “is independent of, and potentially broader than, the duty to account under . . . § 16062”].)
Here, the proposed petition alleges that Lemer has refused to provide any information about the tmst. “Since his assumption of the sole tmsteeship of the tmst, [Lemer] has engaged in capital intensive projects with tmst assets, including remodeling of a country house, at an estimated cost of between $800,000 and $1,000,000. [He] has apparently paid deposits on a Ferrari and a Bentley. [He] has also taken expensive vacations, staying at the club level of the finest hotels for extended periods of time, all at the expense of the tmst. He refuses to provide any information as to whether he is subsidizing his lifestyle through expenditures of income, invasions of principal, and, if so, from what subtmst.” The petition alleges further that respondents “have asked for confirmation that the tmst has been divided into the three required subtrusts” and “also requested information as to the allocation of assets among the three subtmsts as required by the terms of the tmst” but Lemer “has refused to provide any information” on the ground that the waiver provision of the tmst gives “him the absolute right to administer the tmst and the subtmsts in any way he sees fit, undeterred by the scmtiny of beneficia
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ties and the ability of the court to provide adequate remedies for breaches of trust.” The petition asserts that respondents “are entitled to be provided with sufficient information in order to determine whether [Lemer] is faithfully discharging his fiduciary duties or, alternatively, whether [he] is abusing his position for his own benefit.” The petition prays for “an order from the court requiring that [Lemer] provide them with information regarding the trust and its subtrusts, his acts and transactions with respect to the trust and its subtrusts, and his discretionary exercises of principal invasion as to the corpus of the trust and its subtrusts.” The prayer requests that Lemer be instructed “to provide complete, accurate and sufficient information to [respondents] regarding trust matters and his administration of the trust for the period beginning February 8, 2006 through December 31, 2007.”
Contrary to Lemer’s suggestion, the petition does not expressly request a report or accounting under sections 16061 or 16062 and any implied request for such information was disavowed at the hearing.
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Nor does the petition challenge the trust provision that waives the report and accounting obligations. The proposed petition seeks only information that is reasonably necessary to enable Salter and Segal to enforce their rights under the trust, which Lemer is obligated to provide under section 16060.
The proposed petition is not a contest within the meaning of the no contest provision of the trust. Section 21300 defines a “contest” for purposes of a “no contest clause” as “a pleading in a proceeding in any court alleging the invalidity of an instrument or one or more of its terms.”
(Id.,
subds. (a), (b).) A petition to enforce a trustee’s duty under section 16060 is not a direct or indirect challenge to the validity of the trust or its terms. Moreover, interpreting the no contest clause in a manner that would prevent respondents from filing the proposed petition would violate public policy. Section 21305, subdivision (b) lists 12 categories of pleadings that may not be considered “contests” as a matter of public policy, including “[a] pleading challenging the exercise of a fiduciary power” and “[a] petition to compel an accounting or report of a fiduciary, if that accounting or report is not waived by the instrument.” Although not precisely enumerated, respondents’ petition to compel Lemer to perform his nonwaivable, fiduciary duty under section 16060 falls within scope of the protection included in section 21305, subdivision (b).
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Disposition
The judgment is affirmed. Respondents shall recover their costs on appeal.
Siggins, J., and Jenkins, J., concurred.
On August 19, 2009, the opinion was modified to read as printed above.
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All statutory references are to the Probate Code.
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For example, the Marital Trust allows Lemer to “pay to or apply for the benefit of the surviving spouse as much of the principal of the Marital Trust, up to and including the whole
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of the Marital Trust, as the trustee considers necessary for the surviving spouse’s health, support, education, maintenance, comfort, and enjoyment in accordance with the standard of living that the surviving spouse enjoyed on the date of the deceased spouse’s death.”
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Section 21320, subdivision (a) provides: “If an instrument containing a no contest clause is or has become irrevocable, a beneficiary may apply to the court for a determination of whether a particular motion, petition, or other act by the beneficiary . . . would be a contest within the terms of the no contest clause.”
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The proposed petition also seeks a determination of the validity of a corollary document signed by Elsa and Glenn Lemer after execution of the trust documents. Although Lemer initially challenged the propriety of this part of the petition, he now acknowledges that this request will not invoke the no contest provision of the tmst.
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Should disputes arise concerning whether particular compilations of information constitute a report or accounting within the meaning of section 16061 or 16062, the necessity for which has been waived by the terms of the trust, as distinguished from the underlying information to which the beneficiaries are entitled under section 16060, the court will be in a position to resolve those issues during the course of the litigation commenced by the filing of the proposed petition.
AI Brief
AI-generated · verify before citing
Holding. A petition by trust beneficiaries to compel a trustee to provide information regarding trust administration pursuant to Probate Code section 16060 does not violate a trust's no contest clause, as the duty to provide such information is nonwaivable and independent of formal accounting requirements.
Issues
Does a petition seeking information under Probate Code section 16060 violate a trust's no contest clause?
Is the duty to provide information under Probate Code section 16060 subject to waiver by the trust instrument?
Disposition. affirmed
Quotations verified verbatim against the opinion
“The proposed petition seeks only information that is reasonably necessary to enable Salter and Segal to enforce their rights under the trust, which Lemer is obligated to provide under section 16060.”
“A petition to enforce a trustee’s duty under section 16060 is not a direct or indirect challenge to the validity of the trust or its terms.”