Paluda v. Young CA3 ( 2013 )

Filed 9/16/13 Paluda v. Young CA3
NOT TO BE PUBLISHED
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 This opinion has not been certified for publication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.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
LINDA M. PALUDA et al.,
Plaintiffs and Appellants, C068882
v. (Super. Ct. No. 05PR01793)
CAROLYN M. YOUNG, as Trustee, etc.,
Defendant and Appellant.
Plaintiffs Linda Paluda and Terry Peterson are sisters and beneficiaries of a family
trust. Their father, Bob Hamblen, was the trustee until it was alleged that he had wasted
or transferred substantial trust assets. A stipulated judgment provided for Hamblen to
encumber his house in favor of the trust and for the appointment of defendant Carolyn M.
Young as successor trustee.
Despite the terms of the stipulated judgment, Hamblin did not assign an interest in
the house to the trust. Instead, he took out a mortgage against the house. Young
1
subsequently perfected the trust’s interest in the house, but that interest was subordinate
to the mortgage lender’s interest. When the house was sold, the lender was fully repaid
and the trust was not.
The sisters sued Young for breach of trust in late 2010, alleging that she should
have prevented the mortgage lender from taking an interest in the house. Young moved
for summary judgment, asserting that the action is time-barred and that she is protected
from liability by an exculpatory clause in the trust instrument. The trial court granted
summary judgment, agreeing with Young that she is protected from liability by the
exculpatory clause.
The sisters now appeal the judgment of dismissal, arguing that the exculpatory
clause is not applicable because Young was grossly negligent or recklessly indifferent.
Young cross-appeals, claiming the trial court should have applied a record notice
standard rather than an actual notice standard in analyzing the statute of limitations.
We conclude the trial court did not err in granting summary judgment. The sisters
did not offer any evidence to refute the undisputed material facts set forth in Young’s
moving papers. Accordingly, we need not address the contentions in Young’s cross-
appeal.
We will affirm the judgment of dismissal.
BACKGROUND
Bob and Evangeline Hamblen established a revocable family trust in 1982. They
named as beneficiaries their three children, Paluda, Peterson and a now-deceased son.
After Evangeline’s death in 1996, Hamblen divided the trust into subtrusts, including
Trust B, which is at issue.1
1 Trust A was designed to hold the surviving spouse’s interest in the trust (Hamblen’s, as
it turned out); Trust B was to hold an amount equivalent to the maximum federal estate
2
In November 2005, Peterson petitioned the trial court to remove Hamblen as
trustee, to suspend his powers, to appoint a successor trustee, and for an accounting. The
petition alleged that Hamblen had transferred assets valued at more than one million
dollars from Trust B to a woman named Wagma Safi and had given Safi a joint tenancy
interest in his home. In May 2006, Hamblen and the trust beneficiaries entered into a
stipulated judgment. The stipulated judgment defined Trust B to include, among other
things, a “promissory note . . . secured by a first deed of trust as to an undivided one-half
interest [in]” the house he shared with Safi. By stipulation, the parties also agreed that
Hamblen had resigned as trustee and that Young would be appointed as successor trustee.
It is undisputed that Young was not a party to the stipulation and was not involved with
its drafting or execution.
In the months between execution of the stipulated judgment and Young’s
appointment, Hamblen failed to prepare or execute the promissory note mentioned in the
stipulated judgment or to file a deed of trust encumbering his home in favor of the trust.
None of Hamblen’s children took any action to enforce the judgment against their father
or to file it at the county recorder’s office as a claim against the house.
Among the undisputed material facts presented by Young in support of her motion
for summary judgment were these: Peterson notified Young on January 16, 2007, that
Hamblen was attempting to obtain a loan and to use his home as security. Before
January 16, 2007, Peterson did not inform Young about the existence or terms of the
stipulated judgment or of Hamblen’s failure to comply with it. Young believed Trust B
owned the house outright and that Hamblen could not borrow against it without her
consent. On or about January 18, 2007, Young attempted to hinder Hamblen’s effort to
borrow against the house by sending an affidavit to the Placer County Recorder declaring
tax exemption ($600,000); and Trust C was to hold the interest, if any, of the first of the
spouses to die.
3
her role as successor trustee of Trust B, which she asserted had an interest in the property.
On January 19, 2007, Young had her attorney send a letter to Hamblen warning him that
he could not encumber the property without Young’s consent. On January 26, 2007,
Countrywide Home Loans, Inc., recorded its secured interest in the house as collateral for
a $200,000 loan to Hamblen and Safi.
There was an exculpatory clause in the trust instrument defining the duties and
obligations of trustees. On page 15 at paragraph F, the trust instrument provided: “A
Trustee, except a Trustee who is also a beneficiary, shall be responsible only for such
Trustee’s own acts and omissions in bad faith.” It continued: “Moreover, a successor
Trustee shall not be liable for any action taken by a Trustee prior to the time such
successor Trustee becomes a Trustee.”
Young declared under oath that Peterson first informed Young about the existence
of the stipulated judgment and about Hamblen’s failure to comply with its terms in
February 2007, after the mortgage interest at issue had been perfected. That evidence
was designated undisputed material fact No. 19 in Young’s separate statement. The
sisters disputed fact No. 19, but they did not cite contrary evidence.2 In fact, the trial
court’s tentative order noted that the declarations accompanying the sisters’ opposition to
summary judgment “did not contain any statements contravening material facts relied
upon by Young. Nor did the [sisters’] declarations contain any facts asserted by [the
sisters] to be material. Indeed, [the sisters] did not submit any statement of additional
material facts to support their opposition to the motion.” The sisters made no effort to
supplement the record with evidence.
2 In their opposition brief, the sisters asserted, with no citation to authority or evidence:
“Young had a duty to review all relevant documents and pleadings and to take all
reasonable steps within her power to protect and preserve” the trust assets. In a
supporting declaration, Peterson said she had spoken to her lawyer in January 2007 but
did not know her father had failed to sign the promissory note or record the deed of trust.
4
The sisters also disputed Young’s undisputed material fact No. 20, which asserted
that “Peterson provided a copy of the [stipulated judgment] to Young, for the first time,
in February 2007.” But again the sisters offered no contrary evidence. They did not
dispute any of the evidence Young submitted about her successful effort to force
Hamblen to comply with the requirements of the stipulation and to have documents
encumbering his home in favor of the trust recorded in the official records of Placer
County.
The trial court granted summary judgment in favor of Young and dismissed the
sisters’ petition for breach of trust.
DISCUSSION
Summary judgment is granted when a party establishes that there is no triable
issue of any material fact and that the moving party is entitled to judgment as a matter of
law. (Code Civ. Proc., § 437c, subd. (c).) If the moving party establishes the absence of
a triable fact, the burden shifts to the opposing party. (Aguilar v. Atlantic Richfield Co.
(2001) 25 Cal.4th 826, 861.) The opposing party may not simply rely on the pleadings.
(Committee to Save the Beverly Highlands Homes Assn. v. Beverly Highlands Homes
Assn. (2001) 92 Cal.App.4th 1247, 1260.) An opposition to summary judgment must
include a separate statement that responds to each of the facts declared to be material and
undisputed by the moving party and to set forth any other facts that the opponent asserts
are material and disputed. (Code Civ. Proc., § 437c, subd. (b)(3).)
The California Rules of Court describe the format for the separate statement and
for the required citations to evidence. (Cal. Rules of Court, rule 3.1350(d).) The separate
statement is an indispensable part of the summary judgment process and an opposing
party’s failure to submit one can be a significant factor in the court’s judgment.
(Kojababian v. Genuine Home Loans, Inc. (2009) 174 Cal.App.4th 408, 418;
Whitehead v. Habig (2008) 163 Cal.App.4th 896, 902.)
5
As this court has explained, in the absence of a separate statement with references
to supporting evidence, “it is impossible for the plaintiff to demonstrate the existence of
disputed facts.” (Lewis v. County of Sacramento (2001) 93 Cal.App.4th 107, 116.)
In support of her motion for summary judgment, Young set forth undisputed
material facts establishing that she was a successor trustee to Hamblen, and that while he
was serving as trustee, Hamblen failed to comply with a stipulated judgment requiring
him to encumber his house; she also established that she took appropriate steps to force
his compliance as soon as she discovered it. Given those and the other undisputed
material facts set out above, we agree that the exculpatory clause provided Young with an
affirmative defense to the sisters’ claims. (Prob. Code, § 16461 [except in case of gross
negligence, reckless indifference or self-dealing, exculpatory clause in trust instrument is
effective].)
On appeal, the sisters do not cite evidence in the record that would defeat
summary judgment, and the only law they cite involves general principles. Their
argument is based solely on a paraphrase of Young’s declaration: in January 2007,
Young was unaware of the stipulated judgment, its terms and Hamblen’s failure to
comply with the terms; as of that date, the sisters had not informed Young of the
existence or contents of the stipulated judgment. Thus, the sisters concede that they kept
information about the stipulated judgment from Young until after the date of the alleged
breach of trust. Nonetheless, the sisters contend, without citation to supporting evidence
or authority, that Young was recklessly indifferent or grossly negligent because she did
not find and record a copy of the stipulated judgment.
The sisters did not dispute Young’s evidence that she believed the trust owned the
house and took steps that would have been effective to stop Hamblen from encumbering
the house if her belief had been true. In addition, they did not dispute evidence that
Young made Hamblen comply with his obligation to the trust promptly after Peterson
sent her a copy of the stipulated judgment. The sisters instead assert that there is “at least
6
one, and possibly more, material facts that remain in dispute.” The disputed facts, they
say, are whether Young was grossly negligent or recklessly indifferent, and whether
Young’s breach of trust resulted in a financial loss to the trust. But those assertions,
without facts, do not satisfy their burden to establish that the trial court erred in granting
summary judgment.
DISPOSITION
The judgment of dismissal is affirmed.
MAURO , J.
We concur:
ROBIE , Acting P. J.
HOCH , J.
7