Carne v. Worthington ( 2016 )

Filed 4/13/16
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
MELANIE CARNE, as Trustee, etc., D067756
Plaintiff and Appellant,
v. (Super. Ct. No. 37-2013-00061011-
PR-TR-CTL)
NANCY A. WORTHINGTON et al.,
Defendants and Respondents.
APPEAL from an order of the Superior Court of San Diego County,
Jeffrey S. Bostwick, Judge. Reversed and remanded for further proceedings.
HainesLaw, Laurence F. Haines and Will M. Smith for Plaintiff and Appellant.
Law Offices of Harvey M. Payne III and Harvey M. Payne III for Defendant and
Respondent Dillon Hasting.
DiPaolo Law and Thomas F. DiPaolo for Defendant and Respondent Nancy A.
Worthington.
I.
INTRODUCTION
This case involves a dispute over the ownership of property formerly owned by
decedent Kenneth Liebler. Liebler's daughter, appellant Melanie Carne, as putative
successor trustee to the Kenneth Liebler Irrevocable Trust dated December 21, 2009 (the
"2009 Trust"), filed a second amended petition (the "petition") to confirm the validity of
the 2009 Trust, Carne's status as successor trustee of the 2009 Trust, and the assets of the
2009 Trust. In her petition, Carne sought to confirm that certain real property previously
owned by Liebler, located on Via Regla (the "Via Regla Property"), had been properly
transferred to the 2009 Trust. The 2009 Trust states, "I transfer to my Trustee the
property listed in Schedule A, attached to this agreement," and lists the Via Regla
Property in Schedule A. The 2009 Trust is signed by Liebler as grantor and by defendant
and respondent, Nancy Worthington, and Craig Castle as cotrustees.1
Liebler's grandson, defendant and respondent Dillon Hasting, filed an opposition
to the petition. Hasting was a beneficiary of the Liebler Revocable Declaration of Trust
dated February 27, 1985 (the "1985 Trust"). In his opposition, Hasting contended that
the 2009 Trust was not a valid trust because Liebler had not properly transferred title to
the only asset allegedly in the 2009 Trust, the Via Regla Property. Specifically, Hasting
argued that Liebler had not effectively transferred the Via Regla Property into the 2009
Trust because Liebler had failed to execute a deed transferring the property to the trust.
1 Worthington was Liebler's former live-in companion. Castle is not a party to this
action.
2
Hasting also argued that Liebler had not properly transferred the Via Regla Property to
the 2009 Trust because Liebler was not the legal owner of the property at the time of the
purported transfer to the 2009 Trust. In support of this contention, Hasting noted that
Liebler held legal title to the Via Regla Property as trustee of the 1985 Trust, and the
2009 Trust contained no language indicating that Liebler was acting as the trustee of the
1985 Trust at the time of the purported transfer to the 2009 Trust. The trial court entered
an order denying Carne's petition for the two reasons set out in Hasting's opposition.
On appeal, Carne contends that the trial court erred in denying her petition. We
conclude that the language in the 2009 Trust quoted above is sufficient to convey the Via
Regla Property to the 2009 Trust and that Liebler was not required to execute a separate
deed in order to effectuate such conveyance. We further conclude that, because at the
time the 2009 Trust was created, the 1985 Trust was a revocable inter vivos trust, and
Liebler was the sole trustee who owned no interest in the Via Regla Property as an
individual, Liebler's signature on the 2009 Trust was sufficient to "to convey good title"
to the Via Regla Property from the 1985 Trust to the 2009 Trust. (Galdjie v. Darwish
(2003) 113 Cal. App. 4th 1331, 1350 (Galdjie).) Accordingly, we reverse the order and
remand for further proceedings.2
2 In its order denying the petition on the grounds stated in the text, the trial court
stated that its ruling "moots the issue of the validity of the 2009 [T]rust based on undue
influence and lack of capacity," which had been raised by way of separate pleadings that
are not contained in the record in this appeal. The trial court may consider these issues
on remand.
3
II.
FACTUAL AND PROCEDURAL BACKGROUND
A. The 1985 Trust
Liebler executed the 1985 Trust on February 27, 1985. The 1985 Trust provides
that Liebler is the trustor and the trustee and states that, during his lifetime, the trust is
revocable in whole or in part. The 1985 Trust appoints Donald Ballman and Dee
Ballman (or their survivor) as successor trustees. In May 1985, John W.F. Neim and
Christine C. Neim transferred the Via Regla Property to the 1985 Trust by way of
recorded deed.
Liebler amended the 1985 Trust in 1992. Among other changes, the 1992
amendment revised provisions of the 1985 Trust related to the distribution of the trust
estate upon Liebler's death by removing Carne as a beneficiary and listing several of
Liebler's grandchildren, including Hasting, as beneficiaries. In addition, the 1992
amendment provided that, upon the death of Liebler, the "Trustor's last legal residence,
which is part of the trust estate,[3] shall be reserved for the use of [Worthington]," under
certain circumstances.
In 2003, Liebler amended the 1985 Trust for a second and final time. Among
other changes, this amendment removed one of Liebler's grandchildren, Mark Curtis
Hasting, as a beneficiary.
3 The Via Regla Property appears to satisfy this definition.
4
B. The 2009 Trust
In 2009, Liebler executed the 2009 Trust. As noted in part I., ante, among other
provisions, the 2009 Trust expressly transfers the property listed in Schedule A to the
trust, and lists the Via Regla Property in Schedule A. The 2009 Trust also provides that,
upon Liebler's death, "My Trustee shall distribute the remaining trust property to my
descendants, per stirpes outright, free of trust."4 The 2009 Trust is signed by Liebler as
grantor and Worthington and Castle as cotrustees. In addition, the 2009 Trust provides
that if Worthington and Castle cease to serve as trustees, "I name Melanie Carne to serve
as successor Trustee."
C. Liebler's death and the naming of successor trustees to the 1985 Trust and the
2009 Trust
Liebler died on October 3, 2012.5
Shortly after Liebler's death, Dee Ballman executed a document accepting the
position of successor trustee to the 1985 Trust. Dee Ballman then executed a document
resigning as successor trustee to the 1985 Trust and appointing Worthington as successor
trustee to the 1985 Trust.6
4 It appears to be undisputed that Carne would be entitled to a distribution under this
provision.
5 Although this fact, and the facts related to the naming of the successor trustee with
respect to the 2009 Trust discussed in this section, are not supported by any evidence in
the record, they appear to be undisputed. It appears that such facts were supported by
exhibits attached to Carne's pleadings in the trial court. However, those exhibits are not
contained in the record on appeal.
6 In her resignation document, Dee Ballman stated that the other successor trustee
named in the 1985 Trust, Don Ballman, had died.
5
With respect to the 2009 Trust, shortly after Liebler's death, Castle executed a
document refusing to serve as trustee to the 2009 Trust. Worthington resigned as trustee
to the 2009 Trust in April 2013. Shortly thereafter, Carne executed a document
indicating her acceptance of the position of successor trustee to the 2009 Trust.
D. The second amended petition
In September 2014, Carne filed a second amended petition to confirm the validity
of the 2009 Trust, Carne's status as successor trustee of the 2009 Trust, and the assets of
the 2009 Trust. In the petition, Carne described the 1985 Trust and the 2009 Trust as
summarized above.
Carne contended that Liebler had intended to transfer legal ownership and title to
the Via Regla Property to the trustee of the 2009 Trust and that he had "only failed to
execute a deed of transfer through ignorance, oversight or negligence." Carne supported
this contention by stating that, shortly after executing the 2009 Trust, Liebler moved to
an assisted living facility where he remained until his death. In addition, Carne
contended that deposition testimony from both Worthington and the attorney Liebler
hired to prepare the 2009 Trust, Richard Stewart, supported a finding that Liebler
intended to transfer the Via Regla Property into the 2009 Trust in order to avoid
MediCal liens being placed on the property after his death.
Carne filed a brief in support of her petition in which she argued that Liebler
"during [his] life, as trustee of the 1985 Trust created the 2009 Trust[,] included the [Via
Regla Property] as the sole asset on Schedule A and therefore transferred possession of
the [Via Regla Property] to the 2009 Trust . . . ."
6
E. The objections
Hasting filed an objection to the petition. In his objection, Hasting contended that
the 2009 Trust was not a valid trust because there "was never a transfer of property
during the owner's lifetime to another person as trustee." In support of this contention,
Hasting argued:
"No deed whatsoever was signed by [Liebler] which would have
irrevocably transferred the [Via Regla Property] to the third party
trustees of his 2009 Trust. Without the deed, there is no trust created
over the real property in question and the trust fails in its entirety
because there is no other res in the [2009 Trust]."
Hasting also argued that Liebler had not effectively transferred the Via Regla
Property to the 2009 Trust because Liebler "did not own the [Via Regla Property] at the
time the 2009 [T]rust was formed." Hasting contended that "the owner of the [Via Regla
Property] is the trustee of the 1985 [T]rust," and argued that Liebler "had no ability, as
an individual, to transfer trust property he did not own from himself to third party
trustees, as the language of the 2009 [T]rust purports to do."
Hasting also maintained that Liebler had not intended for Carne to inherit the Via
Regla Property, and supported this contention with various factual allegations pertaining
to the circumstances surrounding the execution of the 2009 Trust.7 Hasting supported
his objection with his own declaration as well as Stewart's deposition testimony and
documents from Stewart's file related to the 2009 Trust, among other documents.
7 Hasting noted that "[a] separate Petition was recently filed on the issues of undue
influence and capacity out of an abundance of caution. The undue influence / capacity
Petition would become moot should this court deny the instant Petition . . . ."
7
Worthington also filed an objection to the petition and joined in Hasting's
objection.8 Along with her objection, Worthington filed a declaration in which she
described Liebler's relationship with Carne in a manner that suggested that Liebler had
not intended for Carne to gain ownership of the Via Regla Property.
F. The trial court's ruling
After further briefing and a hearing, the trial court entered an order on January 29,
2015 denying Carne's petition on two grounds. First, the court ruled that Liebler had not
properly transferred any property into the 2009 Trust. The court reasoned in part:
"In the present case, the [Via Regla Property] was not transferred to
the [2009 Trust] by a deed, will, or inter vivos transfer. Instead,
Liebler only created the 2009 [T]rust and attempted to transfer the
property into the 2009 [T]rust by a unilateral declaration, which was
ineffective because Liebler was not the trustee."
Second, the court ruled that Liebler could not have transferred the Via Regla
Property to the 2009 Trust because at the time of the execution of the 2009 Trust, Liebler
did not own the Via Regla Property as an individual, and there was no evidence that he
had transferred the Via Regla Property in his capacity as trustee of the 1985 Trust. The
court reasoned in part:
"[Carne] argues Liebler transferred the [Via Regla Property] to the
[2009 Trust] by creating the trust, listing the [Via Regla Property] as
a trust asset and stating the property was transferred to the [2009
Trust]. [Citation.] Even if these actions constituted an inter vivos
transfer of the property, Liebler cannot transfer property he does not
own. [Citation.] Liebler did not personally own the [Via Regla
Property]. Rather, he owned the property as the trustee of the 1985
[T]rust. There is no evidence Liebler created the 2009 [T]rust as the
8 Worthington's separate objection pertained to matters not relevant to this appeal.
8
trustee of the 1985 [T]rust or was acting as the trustee of the 1985
[T]rust when he attempted to transfer the property to the 2009
[Trust]."9
G. Carne's appeal
Carne timely appeals the trial court's January 29 order denying her petition. The
order is appealable. (See Prob. Code, § 1300, subdivision (k).)10
III.
DISCUSSION
A. The trial court erred in concluding that Liebler was required to execute a separate
deed in order to transfer the Via Regla Property to the 2009 Trust
Carne claims that the trial court erred in concluding that Liebler was required to
execute a separate deed in order to transfer the Via Regla Property to the 2009 Trust.
Carne's claim raises a question of law, which we review de novo. (See Ukkestad v. RBS
Asset Finance, Inc. (2015) 235 Cal. App. 4th 156, 161 [applying de novo standard of
review in determining whether certain real property had been properly transferred to a
trust under undisputed facts].)11
9 The court also stated that it had "considered Attorney Stewart's deposition
testimony," but that "Stewart's testimony does not reveal Liebler's understanding of how
to effectively transfer the property to the [2009 Trust]."
10 On appeal, Hasting filed a respondent's brief and Worthington joined in that brief.
11 In their briefs, Carne and Hasting refer to arguably conflicting extrinsic evidence
concerning Liebler's purported intent with respect to the 2009 Trust. While Carne refers
to such evidence in her statement of facts in her opening brief, the argument portion of
her opening brief is confined to the undisputed evidence addressed in the text. In
addition, both parties agree that the de novo standard of review applies to Carne's claim.
Under these circumstances, we need not, and do not, discuss any conflicting extrinsic
evidence in this opinion.
9
1. Governing law
a. Applicable statutory provisions
i. Probate Code provisions
Probate Code section 1520012 defines the methods by which a trust may be
created and provides in relevant part:
"Subject to other provisions of this chapter, a trust may be created by
any of the following methods:
"[¶] . . . [¶]
"(b) A transfer of property by the owner during the owner's lifetime
to another person as trustee."
Where a trust contains real property, section 15206, the applicable statute of
frauds, requires a writing demonstrating that the real property is held in trust. Section
15206 provides in relevant part, "[a] trust in relation to real property is not valid unless
evidenced by one of the following methods: [¶] . . . [¶] (b) By a written instrument
conveying the trust property signed by the settlor . . . ."
ii. Evidence Code section 662
According to the " 'form of title' presumption, the description in a deed as to how
title is held is presumed to reflect the actual ownership interests in the property." In re
Marriage of Brooks & Robinson (2008) 169 Cal. App. 4th 176, 184-185. Evidence Code
section 662 codifies this presumption and provides, "The owner of the legal title to
12 Unless otherwise specified, all subsequent statutory references are to the Probate
Code.
10
property is presumed to be the owner of the full beneficial title. This presumption may
be rebutted only by clear and convincing proof."
b. The Restatement Third of Trusts13
"California trust law is essentially derived from the Restatement Second of Trusts.
Over a number of years, the Restatement Second of Trusts has been superseded by the
Restatement Third of Trusts. [Citation.] As a result, we may look to the Restatement
Third of Trusts for guidance." (Lonely Maiden Productions, LLC v. GoldenTree Asset
Management, LP (2011) 201 Cal. App. 4th 368, 379.)
Comment b to section 16 of the Restatement Third of Trusts is entitled, "Intended
inter vivos transfer to another as trustee: effective or ineffective?" The comment
discusses the circumstances under which property is effectively transferred from a trustor
to a third party trustee by way of the trust agreement itself, without the execution of a
separate deed:
"Good practice certainly calls for the use of additional formalities
and the taking of appropriate further steps, such as changes of
registration, or the execution and recordation of deeds to land.
Nevertheless, a writing signed by the settlor, or a trust agreement
signed by the settlor and trustee, manifesting the settlor's present
intention thereby to transfer specified property (such as all property
listed on an attached schedule) is sufficient to create a trust. See
Illustration 5." (Ibid.)
13 Because neither party cited the provisions of the Restatement Third of Trusts
discussed in this section, we permitted the parties to submit supplemental letter briefs
concerning what effect, if any, such provisions should have on this court's consideration
of whether the trial court properly concluded that there was not an effective transfer of
real property to the 2009 Trust.
11
Illustration 5 of Section 16 of the Restatement Third of Trusts provides an
example of such a transfer.
"5. The owner of certain property executes and signs a writing
stating that he thereby transfers that property to T in trust for B for
life, with remainder thereafter to B's issue, and delivers the writing
to T. In the absence of applicable statutory provisions requiring
additional formalities, a trust is created."14
2. Application
It is undisputed that record title to the Via Regla Property is held by the trustee to
the 1985 Trust. Thus, we must consider whether Carne satisfied her burden to
demonstrate by clear and convincing evidence that Carne is the actual owner of the Via
Regla Property as trustee to the 2009 Trust.15 (See Evid. Code, § 662; In re Marriage of
Brooks & Robinson, supra, 169 Cal.App.4th at pp. 184-185 ["description in a deed as to
how title is held is presumed to reflect the actual ownership interests in the property"].)
The 2009 Trust is signed by Liebler as grantor and Worthington and Castle as
trustees. The 2009 Trust states, "I transfer to my Trustee the property listed in Schedule
A, attached to this agreement." Schedule A lists the Via Regla Property by its legal
14 Consistent with the Restatement Third of Trusts, a California practice guide states,
"As long as the trust document contains a list of trust property and language satisfying
the requirement for a . . . conveyance, the property listed becomes trust property as soon
as the document is executed." (1 Drafting Cal. Irrevocable Trusts (Cont.Ed.Bar 3d ed.
2015) § 10.140, p. 10-108, italics added.)
15 Carne acknowledges this burden in her reply brief in stating, "[Carne] has satisfied
the requisite burden of proof through clear and convincing evidence in compliance with
Evidence Code section . . . 662."
12
address.16 Thus, the 2009 Trust is "a trust agreement signed by the settlor and trustee,
manifesting the settlor's present intention thereby to transfer specified property," and as
such is sufficient to transfer the Via Regla Property to the 2009 Trust. (Rest.3d Trusts,
§ 16, com. b.) Respondents do not cite, and our own research has not uncovered, any
statutory provisions requiring additional formalities in order to convey real property in
California.17
While Hasting asserts that "because Liebler did not sign a deed over to the third
party trustees, there was no trust created in the Via Regla [P]roperty," he fails to identify
any element of a deed that is missing in the 2009 Trust, or any provision of California
law requiring that a conveyance of real property occur only by way of a formal deed.
(See Civ. Code, § 1091 ["An estate in real property . . . can be transferred only by
operation of law, or by an instrument in writing, subscribed by the party disposing of the
same, or by his agent thereunto authorized by writing"]; Miller & Starr, supra, § 8.3
["There is no required form of deed that must be used to effectuate a conveyance"].) We
16 Hasting acknowledges in his brief that he does not dispute that the 2009 Trust
contains a sufficient description of the Via Regla Property.
17 A leading California real estate treatise summarizes the essential requirements to
convey real property under California law as follows: "Essential elements of a valid
deed. To be effective, an instrument conveying real property must be written and must
name a grantor and a grantee. It must be subscribed by the grantor or the grantor's agent,
and it must be delivered to and accepted by, the grantee. These are the minimum
requirements for a valid deed, and if they are all present, the deed is effective to transfer
title to the grantee, but if one of the essential elements is missing, the deed is ineffective
to transfer title." (3 Miller & Starr, Cal. Real Estate (4th ed. 2015) § 8.3 (Miller & Starr)
(footnotes omitted).) It appears to be undisputed that the 2009 Trust is written, names a
grantor and a grantee, is signed by the grantor, and was accepted by the grantees by virtue
of their signatures.
13
therefore conclude that the creation of the 2009 Trust itself constituted a valid
conveyance of the Via Regla Property to the 2009 Trust.18
Estate of Heggstad (1993) 16 Cal. App. 4th 943 (Heggstad), which Carne and
Hasting discuss at length in their briefing, is legally inapposite. Heggstad noted that "two
methods for creating a trust are codified in [Probate Code] section 15200: '(a) A
declaration by the owner of property that the owner holds the property as trustee,' and
'(b) A transfer of property by the owner during the owner's lifetime to another person as
trustee.' " (Id. at p. 948.) Relying on subdivision (a) of section 15200, and related
provisions of the Restatement Second of Trusts and a treatise, the Heggstad court
concluded "that a written declaration of trust by the owner of real property, in which he
names himself trustee, is sufficient to create a trust in that property, and that the law does
not require a separate deed transferring the property to the trust." (Heggstad, supra, at p.
950.)19 The Heggstad court rejected the respondent's argument that "in order to uphold
18 In his supplemental brief, Hasting asserts that California, along with the "vast
majority" of other jurisdictions, requires "that an actual transfer of the property must
occur when there are third party trustees." (Citing Reagh v. Kelly (1970) 10 Cal. App. 3d
1082, 1094, among other cases.) We agree. However, for the reasons stated in the text,
we conclude that the transfer occurred in the 2009 Trust itself.
19 The Heggstad court also noted that "[w]here the trust property is real estate, the
statute of frauds requires that the declaration of trust must be in writing signed by the
trustee." (Heggstad, supra, 16 Cal.App.4th at p. 948, citing § 15206.) Section 15206
provides three different ways that the statute of frauds may be satisfied with respect to a
trust involving real property:
"A trust in relation to real property is not valid unless evidenced by
one of the following methods:
"(a) By a written instrument signed by the trustee, or by the trustee's
agent if authorized in writing to do so.
14
the trust, we must view the trust document as a valid conveyance of the property to the
trust." (Ibid.) The Heggstad court reasoned, "This argument misses the point that a
declaration of trust is sufficient to create a trust, without the need of a conveyance of title
to the settlor as trustee." (Id. at pp. 950-951.)
In this case, section 15200, subdivision (a), upon which Heggstad is based, has no
applicability. Liebler did not execute a declaration stating that he held the Via Regla
Property as trustee in the 2009 Trust. Thus, we reject Carne's argument that the facts of
"the Heggstad ruling are directly applicable." However, because, for the reasons
discussed above, we do "view the trust document as a valid conveyance of the property to
the [2009 Trust]" (Heggstad, supra, 16 Cal.App.4th at p. 950, italics added), we
conclude that there was a transfer of property that complied with section 15200,
subdivision (b).20 Thus, Heggstad is analogous only in that, as in this case, no separate
deed was required in order for real property to become subject to a trust.21
"(b) By a written instrument conveying the trust property signed by
the settlor, or by the settlor's agent if authorized in writing to do so.
"(c) By operation of law."
20 In part III.B., post, we conclude that Liebler's signature on the 2009 Trust was
sufficient "to convey good title" to the Via Regla Property from the 1985 Trust to the
2009 Trust. (Galdjie, supra, 113 Cal.App.4th at p. 1350.)
21 Estate of Powell (2000) 83 Cal. App. 4th 1434 (Powell), which both parties cite in
their supplemental briefs, is analogous (and distinguishable) for the same reason. In
Powell, the court concluded that no separate deed was required in order for the real
property at issue in that case to become subject to a trust; the property became subject to
the trust via declaration (§ 15200, subd. (a)) as in Heggstad, rather than via transfer
(§ 15200, subd. (b)), as in this case. (Powell, supra, at p. 1443.)
15
We are not persuaded by Hasting's arguments in support of his claim that the
language in the 2009 Trust failed to effectuate a conveyance. 22 Hasting argues that
recognizing the legality of the transfer in this case where "no deed conveying the
property exists, would sanction creditor fraud." (Formatting omitted.) In that regard,
Hasting argues:
"To allow the Heggstad rule to be extended to an irrevocable trust
with third parties as trustees would turn the concept of trust law on
its head and otherwise create a method to defraud creditors. A main
reason for establishing an irrevocable trust with separate third party
trustees is creditor protection for the settlor. In order to gain creditor
protection, one must irrevocably relinquish ownership of the asset by
delivering ownership of the asset to the third party trustees. If all
that is needed is an irrevocable trust with a declaration of intent to
transfer without actual delivery, then a settlor can create an
irrevocable trust document and pull the wool over creditors['] eyes
by producing the irrevocable trust only as necessary, yet secretly
maintain the ability to dispose of the property, encumber the
property, or do whatever the settlor wants with the property while
keeping creditors at bay, if there is no actual irrevocable transfer to a
third party trustee."
To begin with, we are not extending the "Heggstad rule," and this case does not
involve "a declaration of intent to transfer." (Italics added.) As discussed above, while
Heggstad involved a "declaration of trust" (Heggstad, supra, 16 Cal.App.4th at p. 950)
under section 15200, subdivision (a), this case involves a transfer of property under
section 15200, subdivision (b). More fundamentally, we emphasize that this opinion says
22 In particular, we are not persuaded by Hasting's reference to a declaration that he
offered in the trial court by Attorney Michael Ditter. In that declaration, Attorney Ditter
relates his experience as an attorney practicing trust law and states his opinion that the
"[2009 Trust] fails and is not valid." Ditter's declaration plainly states a legal conclusion
and does not establish the illegality of the 2009 Trust.
16
nothing about the validity of Liebler's transfer of the property to the 2009 Trust vis. a vis.
third parties. Thus, nothing in this opinion will "sanction creditor fraud," since we do not
conclude that the transfer in this case was effective as to Liebler's creditors. We conclude
only that Liebler was not required to execute a separate deed in order for there to be a
valid transfer between Liebler (as transferor) and the trustees of the 2009 Trust (as
transferees).23 As the Restatement Third of Trusts, section 16 notes, "formalities
prescribed for the creation of a recordable document, or otherwise for protection of or
from third parties, need not be satisfied in order to make a valid donative transfer, that is,
one that is effective as between the transferor and the transferee(s)." (Cf. Heggstad,
supra, at p. 950 and fn.7 [stating that written declaration is sufficient to create a trust in
property but warning, "We hasten to note, however, that to be effective as to strangers,
the declaration of trust must be recorded"].)
Neither of the two cases from other jurisdictions on which Hasting relies in his
brief is contrary to the reasoning of this opinion. In Dahlgren v. First Nat. Bank (1978)
94 Nev. 387, the only issue before the Nevada Supreme Court was whether a certain
handwritten note constituted a holographic will such that the decedent's property could
pass pursuant to the provisions in the note. (See id. at p. 389 ["The sole issue confronting
us is whether the trial court erred in finding the hand-written instrument to be a
holographic will"].) In the course of its opinion, the Dahlgren court did note that, during
her lifetime, the decedent had entered into a trust agreement with a bank that provided
23 In part III.B., post, we explain that Liebler successfully transferred the Via Regla
Property, as trustee of the 1985 Trust, to the trustees of the 2009 Trust.
17
"that upon the death of trustor, her condominium together with a cash sum was to be
distributed to Mamie Gilson." (Id. at p. 388.) The Dahlgren court also stated, "[T]he
record is clear, and the [trial] court so found, that at no time was the condominium ever
deeded to respondent, and it therefore did not become a part of the trust estate." (Id. at p.
390.) However, unlike in this case, there is nothing in Dahlgren that suggests that the
trust agreement at issue in that case contained a provision expressly transferring the real
property from the trustor to the trustees. 24 Thus, the Nevada court's dicta in Dahlgren is
not contrary to the reasoning in this opinion.
Hasting's reliance on Tyson v. Henry (1999) 133 N.C.App. 415 (Tyson) is
unpersuasive for the same reason. In Tyson, the trust agreement recited that five dollars
had been provided to the trustee and "further provided that other properties described
therein may later be delivered to the trust." (Id. at p. 416.) The Tyson court concluded
that a trust had not been created, for the following reasons:
"[T]he instant instrument can not qualify as an inter vivos trust
because the decedent never transferred his property interest to the
designated trustee, Taylor. [Citation.] In his unverified answer,
Taylor admitted that he never received any cash or property from
Tyson. Therefore, Tyson never disposed of his property to the
trustee, Taylor. As a result, Taylor was never given full legal title or
equitable ownership of Tyson's real property. Based on the
24 Trott v. Jones (2004) 85 Ark.App. 526 (Trott), cited in Hasting's supplemental
brief, is also distinguishable for this same reason. In Trott, the court rejected the
appellant's contention "that a trust was established which contained the decedent's house
and bank account even though there was no transfer of legal title of these properties to the
trustees." (Id. at p. 530.) However, there is nothing in Trott that suggests that the trust
agreement at issue in that case contained a provision expressly transferring the trust res
from the trustor to the trustees, as is true in this case.
18
aforementioned evidence, we are compelled to hold that an inter
vivos trust was not created." (Id. at pp. 417-418.)
Unlike in Tyson in which the trust agreement provided that other properties "may
later be delivered to the trust" (Tyson, supra, 133 N.C.App. at p. 416), in this case,
Liebler expressly transferred the Via Regla Property to the trustee in the 2009 Trust.
Finally, we acknowledge that in Cate-Schweyen v. Cate (2000) 303 Mont. 232,
241 (Cate),25 the Supreme Court of Montana concluded that the trust document at issue
in that case was "insufficient to serve as an instrument of conveyance" even though,
according to the Cate court, the property was "clearly identified in the handwritten [trust]
document . . . . " (Ibid.)26 The court reasoned, "[W]e concluded under the similar
circumstances described in [McCormick v. Brevig (1999) 294 Mont. 144 (McCormick)]
that in order for a trust document to serve as an instrument of conveyance, the person
executing the trust document must subsequently redeliver, confirm, ratify, or adopt the
transfer." (Cate, supra, at p. 241.)
In McCormick, an exhibit that contained a list of the trust assets "was not attached
to the document at the time the trust was executed." (McCormick, supra, 294 Mont. at p.
159.) The McCormick court stated, "Because there was no proper description of the
property within the document itself, or attached as Exhibit A, the trust failed to convey
the property at its execution." (Ibid., italics added.) The McCormick court further
25 Hasting cited Cate in his supplemental brief.
26 Elsewhere in its opinion, the Cate court noted that the trust document stated in
relevant part, "I Jerome J. Cate . . . do hereby sell, assign and convey all of my oil gas
and mineral interests . . . to my daughter, Shannon Cate, to hold in trust . . . ." (Cate,
supra, 303 Mont. at p. 238.)
19
concluded that even assuming that appellant could present evidence that the trustor had
attached Exhibit A to the trust agreement "sometime after he executed the trust" (id. at p.
160, italics added), the "attachment of such an exhibit could have validated the trust
document as an instrument of conveyance of the real property only if the person
executing the trust document were to have redelivered, confirmed, ratified, or adopted the
transfer." (Id. at pp. 159-160.)
In this case, unlike in McCormick, it is undisputed that the 2009 Trust contains "a
proper description of the property" (McCormick, supra, 294 Mont. at p. 159), within an
attached Schedule A and that Liebler expressly stated in the 2009 Trust, "I transfer to my
Trustee the property listed in Schedule A, attached to this agreement." Thus, there is no
reason to consider whether Liebler could have effectuated a conveyance and "validated
the trust document" (ibid.), by attaching an exhibit to the trust after the trust's execution
listing the Via Regla Property. However, to the extent Cate may be read to stand for the
proposition that, even where the conveyance is clearly stated in the trust document, the
trustor must "redeliver, confirm, ratify, or adopt the transfer" (Cate, supra, 303 Mont at p.
241), we decline to follow such reasoning. We are aware of no California authority that
would support such a proposition, and we decline to adopt a requirement that would, in
effect, mandate that a trustor convey real property twice where the conveyance is in a
trust document in order for it to constitute a valid transfer.
Accordingly, we conclude that the trial court erred in determining that Liebler was
required to execute a separate deed in order to transfer the Via Regla property to the 2009
Trust.
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B. The trial court erred in concluding that Liebler failed to transfer the Via Regla
Property to the 2009 Trust because he did not "personally own the property" and
he did not transfer the property as trustee of the 1985 Trust
Carne claims that the trial court erred in concluding that Liebler failed to transfer
the Via Regla Property to the 2009 Trust because Liebler did not "personally own the
property" and he did not transfer the Via Regla Property as trustee of the 1985 Trust.
Carne's claim raises a question concerning the proper interpretation of the 2009
Trust. Since our resolution of this claim does not turn on a conflict in the extrinsic
evidence, we apply the de novo standard of review. (See Burch v. George (1994) 7
Cal. 4th 246, 254 ["The interpretation of a will or trust instrument presents a question of
law unless interpretation turns on the credibility of extrinsic evidence or a conflict
therein"].)
1. Governing law
In Galdjie, supra, 113 Cal. App. 4th 1331,27 the Darwishes appealed from a
judgment that awarded Galdjie specific performance of a real estate agreement between
Galdjie and the Barbara Kramer Darwish and David Darwish Revocable Living Trust.
The Galdjie court considered "whether [Galdjie's] failure to name the Trust as defendant
or to specify that [the Darwishes] were being sued in their capacity as trustees means that
the judgment is against the wrong parties and cannot be enforced." (Id. at p. 1337.) In
27 Neither party cited Galdjie in their initial briefing on appeal. We provided the
parties with an opportunity to submit supplemental letter briefs addressing the effect, if
any, of Galdjie with respect to whether the trial court correctly concluded that Liebler's
signature of the 2009 Trust was insufficient to "convey good title" (Galdjie, supra, 113
Cal.App.4th at p. 1350), to the Via Regla Property. We have considered the parties'
supplemental briefing in deciding this issue.
21
considering this issue, the Galdjie court noted, "[I]t is clear that . . . one who wishes to
ensure that trust property will be available to satisfy a judgment, whether for damages for
breach of contract or for specific performance, should sue the trustee in his or her
representative capacity." (Id. at p. 1349.)
However, despite Galdjie's failure to name the Darwishes in their capacity as
trustees, the Galdjie court concluded that this omission did not require reversal of the
judgment. The Galdjie court reasoned:
"Courts have held that where a trustee signs a contract of sale or
deed without reference to his or her representative capacity, the
contract or deed is enforceable against the trust. [Citations.]
"In a similar vein, a California court has held that a contract of sale
signed by a beneficiary of a revocable inter vivos trust who held the
power to direct the trustee to purchase or sell real estate was
enforceable in an action for specific performance against the trust.
[Citation.] The court pointed out that a revocable inter vivos trust is
a probate avoidance device, but does not prevent creditors of the
settlors—who are often also the trustees and the sole beneficiaries
during their lifetimes—from reaching trust property. [Citations.]
"The evidence before us establishes that the Trust is a revocable
inter vivos trust, that appellants are the sole trustees and, that as
beneficiaries, they have the power during their lifetimes to direct the
sale of the real property owned by the trust. In view of the above
authorities, their signatures as individuals on the title deed as
required by the judgment entered herein is sufficient to convey good
title from the Trust." (Galdjie, supra, 113 Cal.App.4th at p. 1349,
italics added.)
2. Application
It is undisputed that, at the time of the execution of the 2009 Trust, the 1985 Trust
was a revocable inter vivos trust, Liebler owned the Via Regla Property as the sole trustee
of the 1985 Trust, and Liebler had the power during his lifetime to transfer the real
22
property owned by the 1985 Trust. Under these circumstances, Liebler's signature on the
2009 Trust was "sufficient to convey good title" from the 1985 Trust to the 2009 Trust.
(Galdjie, supra, 113 Cal.App.4th at p. 1350.)
Accordingly, we conclude that the trial court erred in determining that Liebler
failed to transfer the Via Regla Property to the 2009 Trust because he did not "personally
own the property" and he did not transfer the property as trustee of the 1985 Trust.
IV.
DISPOSITION
The trial court's January 29, 2015 order is reversed and the matter is remanded for
further proceedings consistent with this opinion. Respondents are to bear costs on
appeal.
AARON, J.
WE CONCUR:
McCONNELL, P. J.
HUFFMAN, J.
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