Stuart v. Warner CA1/1 ( 2022 )

Filed 9/8/22 Stuart v. Warner CA1/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION ONE
FRANK STUART,
Petitioner and Appellant,
A161192
v.
DARLA WARNER, et al., (Alameda County
Super. Ct. No. RP13-674421)
Respondents.
Petitioner Frank Stuart appeals from an order sustaining the
demurrers without leave to amend of respondents Darla Warner, Jerry
Aguiar and Wendi Greb to Frank’s1 August 12, 2019, petition filed under
Probate Code sections 850 and 859. Frank asserts that the probate court
abused its discretion by denying him an opportunity to amend his petition to
cure the timeliness defects in his claims. He also contends that the court
compounded its error by refusing to shorten time on a post-order motion to
vacate and reissue the order. We conclude the court did not abuse its
discretion in failing to grant leave to amend and affirm.
Because some of the family members referenced in this opinion have
1
the same surname, we use their first names for clarity. No disrespect is
intended.
1
I. FACTUAL AND PROCEDURAL BACKGROUND
A. Factual Background
Frank, Pam Horton, and Cheryl Sarchet are the adult children of
decedent Franklin Gerald Stuart. Franklin and Carolyn Kay Stuart were
married in June 1977. Pam, Frank, and Cheryl are Carolyn’s step-children.
In September 1996, Franklin and Carolyn, acting as settlors and co-
trustees, created a marital trust named the Franklin Gerald and Carolyn
Kay Stuart Family Trust (Stuart Trust). Franklin and Carolyn were to act as
initial co-trustees, with the survivor continuing as the sole trustee after the
first spouse’s death. Frank, Pamela, and Cheryl were named as successor
beneficiaries and first successor trustees. One of the assets held by the
Stuart Trust was a four-unit apartment building located in San Leandro (the
Property).
At the death of the first spouse, the Stuart Trust directed that standard
decedent and survivor (“A-B”) trusts would be created if needed for tax
purposes (i.e., if the trust estate exceeded the federal estate tax exemption).2
The relevant Stuart Trust provision stated that upon the death of either
Franklin or Carolyn, an irrevocable decedent’s trust would be funded “with
the lesser of one half of the [Stuart] Trust estate at the time of the decedent’s
death or an amount equal to the equivalent Federal Estate Tax Exemption
that is in effect in the year of said decedent’s death.” The remaining assets of
the Stuart Trust would fund a trust for the surviving spouse. Following the
death of the surviving spouse, all assets in the decedent’s trust, and any
2 An A-B trust is “[a] trust into which just enough of a decedent’s
estate passes, so that the estate can take advantage of the unified credit
against federal estate taxes.” (Black’s Law Dict. (11th ed. 2019) at p. 1818,
“bypass trust” (also termed “A-B trust”).)
2
assets remaining in the survivor’s trust, were to be poured over into a
successor beneficiaries trust.3
In 2010, Franklin was hospitalized with a serious, but unspecified
ailment. While hospitalized, he executed a will (the 2010 Will). Franklin
died in February 2012.
B. Litigation Commences
The procedural background of this case is both lengthy and confusing,
as it involves several overlapping related proceedings.
In April 2013, Frank initiated the underlying proceeding by filing a
“Petition for Instructions Regarding Interpretation of the Trust . . . [,]
Accounting and Other Alternative Relief.” (Some capitalization omitted.)
Frank alleged that the Stuart Trust’s assets exceeded the applicable federal
estate tax exemption, and asserted that Carolyn had committed multiple
breaches of the Stuart Trust by (1) failing to fund the decedent’s and
survivor’s trusts, (2) designating the Stuart Trust estate as her separate
surviving trust, and (3) transferring the Stuart Trust’s assets to herself.
Carolyn countered that she was not required to fund two separate trusts
because the Stuart Trust’s assets did not exceed the federal estate tax
exemption at the time of Franklin’s death.4 Later that same month, Frank
filed a demand for arbitration pursuant to the terms of the Stuart Trust. All
parties thereafter agreed to submit the dispute to binding arbitration.5 In
3 The Stuart Trust also enumerates specific monetary gifts to various
individuals, including two of the respondents in this appeal.
4In his petition, Frank represented that the federal estate tax
exemption was $5,125,000 when Franklin died.
5 American Arbitration Association Case No. 74-101-192-13.
3
March 2014, Frank filed a first amended demand for arbitration in the
arbitration proceeding.
In August 2014, Carolyn, Frank, Pamela, and Cheryl settled the
arbitration proceeding by entering into a written settlement agreement
(Settlement Agreement). The Settlement Agreement provided that Frank,
Pam, and Cheryl would be paid $1.34 million. In exchange they released
“each and every past claim and cause of action, . . . which the Parties have,
had or claim to have against any other of the Parties under the [Stuart
Trust], or any trust created thereunder, or any will including the 2010 Will
(The ‘Will’).” Pursuant to the Settlement Agreement, the parties expressly
released any claims that had been made or could have been made during the
probate court and arbitration proceedings with respect to both the Stuart
Trust and the 2010 Will. They also waived their rights under Civil Code
section 1542.6 Frank and his sisters also waived their rights to any further
Stuart Trust accounting and relinquished any interest in the Property. The
terms of the Agreement were incorporated into an arbitration award issued
on September 29, 2014.
In October 2014, Carolyn created her own separate trust (Carolyn
Trust) which she funded with the remaining Stuart Trust assets, including
the Property. Respondents are beneficiaries of the Carolyn Trust. Warner
was designated as the successor trustee of the Carolyn Trust.
6 At the time the Settlement Agreement was executed, former Civil
Code section 1542, as amended (Stats. 2018, ch. 157, § 2) provided: “A
general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which,
if known by him or her must have materially affected his or her settlement
with the debtor.”
4
In January 2016, Carolyn executed a will in which she made several
small bequests to friends and family. She specifically bequeathed to Frank,
Pamela, and Carolyn exactly one dollar each, and bequeathed the residue of
her estate, including the Property, her jewelry, and bank accounts to Warner,
her longtime friend.
In connection with a separate arbitration proceeding relating to
administration of the Stuart Trust that had been brought by other Stuart
Trust beneficiaries, in February 2016, Carolyn submitted a first accounting of
the Stuart Trust for the period February 8, 2012, to December 31, 2015.7 The
accounting disclosed that the Stuart Trust’s assets had totaled approximately
$3.8 million when Franklin died in 2012 and currently stood at
approximately $2 million. The accounting also shows payments to
beneficiaries Frank, Pam, Cheryl and others of $1.5 million. Carolyn died
two months later, in April 2016. Thereafter, in a separate action (The Estate
of Carolyn K. Stuart, Alameda County Superior Court No. RP16817293),
Frank and his sisters brought a will contest alleging that Carolyn’s 2016 will
was executed under the undue influence of Warner and/or Aguiar.
While the will contest was pending, Michael Major filed a petition
against respondents (Major’s Petition). Major asserted that he was a
beneficiary under Franklin’s 2010 Will, which he claimed had amended the
Stuart Trust’s dispositive provisions. Major was represented by the same
attorney who represented Frank and his sisters below.
In October 2018, the judge in the will contest action rejected Frank’s
challenge to Carolyn’s will and admitted the will into probate.
7 American Arbitration Association Case No. 01-14-0001-5247 Gayle
Nicholson, et al. v. Carolyn Kay Stuart, Trustee of the Stuart Family Trust.
5
In February 2019, Warner filed a petition in this action seeking to be
appointed as the Stuart Trust’s successor trustee.
In April 2019, Frank filed a petition seeking instructions and
confirmation pursuant to Probate Code section 9611. In his petition, he
alleged that he was “the duly appointed, qualified, and acting Trustee of [the
Stuart Trust].” Among other things, he sought approval of the 2010 Will “as
Franklin Stuart’s amendment to the 1996 Trust.”
On May 30, 2019, the probate court issued its statement of decision
following the trial on Major’s Petition. The court found that after Franklin
returned home from his 2010 hospitalization, he personally made gifts
generally consistent with his 2010 Will. Franklin thereafter decided that the
2010 Will was no longer relevant and destroyed it with the intention to
revoke it. On that basis, the court concluded that the 2010 Will had not
amended or revoked the Stuart Trust, and also found that the copy of the will
proffered by Major was inauthentic. The court also held that all of the assets
held in the Stuart Trust had been commuted to community property. The
court further found that Warner did not owe any duty to Major or to any of
the other Stuart Trust beneficiaries because she was not the trustee of the
Trust.
Subsequently, Warner filed an opposition to Frank’s April 2019
petition, urging the probate court to reject Frank’s allegations concerning the
effect of the 2010 Will in light of the court’s findings in Major’s case. She also
asserted that, under the Settlement Agreement, Frank had waived any right
to serve as a trustee of the Stuart Trust.
In June 2019, Frank filed an ex parte application to stay or continue
the proceedings in order to allow him to seek orders under the Settlement
Agreement. Frank argued that Warner, in her February 2019 petition, had
6
alleged for the first time that she was Carolyn’s successor, entitling him to
pursue further arbitration proceedings against her. During a hearing held
the following day in which the probate court refused to issue a stay and
indicated that it was inclined to deny both Warner’s and Frank’s pending
petitions, the parties agreed to dismiss their respective petitions without
prejudice.
C. The Operative Petition is Filed
On August 12, 2019, Frank filed the operative petition for return of
trust property under Probate Code sections 850, subdivision (a)(3)(B) and 859
(Section 850 Petition). He claimed he was seeking “relief to garner all assets
of the [Stuart Trust] and distribute the [Stuart] Trust to the [Stuart Trust’s]
beneficiaries.” Contrary to the probate court’s findings on Major’s Petition,
Frank again invoked the 2010 Will and asserted that his father “never
intended to transmute his separate property to community property.” Frank
further alleged that “[i]t is apparent from Carolyn’s first accounting . . . that
in 48 months from date of death of Franklin . . . with the help of or at the
direction of certain persons, including but not limited to [respondents] jointly,
severally and collectively ‘Conspirators’ helped make and carry out a plan to
remove at least $1,400,000 of principal assets for their own financial
benefit. . . .” Frank sought a court order compelling Warner to transfer the
Property to him and his sisters and to turn over “all Trust assets, income
from said assets, and records relating to said assets” as set forth in Carolyn’s
first accounting. He also sought an accounting, a finding that respondents
had breached fiduciary duties owed to him, and the imposition of a
constructive trust and a preliminary injunction. Finally, he asserted a claim
for financial elder abuse on behalf of Carolyn.
7
On August 26, 2019, Frank filed a renewed petition for instructions and
confirmation under Probate Code section 9611. In this petition, he again
identified himself as the Stuart Trust’s trustee and requested instructions to
distribute the Stuart Trust’s assets based on the alleged 2010 Will
amendment.
D. Respondents’ Demurrers Are Sustained
Warner demurred to both of Frank’s petitions. As to the Section 850
Petition, she argued that it failed to state a claim against her because it was
filed after the relevant statutes of limitations had expired and was barred
under the Settlement Agreement. She also asserted that Frank’s claims were
barred by the doctrines of collateral estoppel and res judicata because the
insufficiency of the 2010 Will to amend the Stuart Trust was conclusively
determined in the May 2019 statement of decision on Major’s Petition.
Aguiar and Greb also filed a demurrer as to the Section 850 Petition. They
argued that they did not owe any duty to Frank and asserted that his claims
were untimely because he had alleged the same claims against them in 2013
when he filed his original petition.
On July 31, 2020, the probate court issued a statement of decision and
an order in both the August 12, 2019, Section 850 Petition and in the August
26, 2019, Petition for Instructions sustaining the demurrers without leave to
amend. On its own motion, the court suspended the Stuart Trust’s current
trustees and appointed an independent temporary successor trustee under
Probate Code section 17206.
On September 24, 2020, the probate court denied Frank’s ex parte
application to shorten time on his proposed motion to vacate and reissue the
8
July 31, 2020, order. Frank appealed only the order sustaining the
demurrers to the August 12, 2019, Section 850 Petition.8
II. DISCUSSION
A. Standard of Review
In testing the sufficiency of a pleading against a general demurrer, we
ordinarily “ ‘examine the operative complaint de novo to determine whether it
alleges facts sufficient to state a cause of action under any legal theory,’ ”
(Mathews v. Becerra (2019) 8 Cal.5th 756, 768), liberally construing the
complaint’s allegations with a view to attaining substantial justice among the
parties.9 If there is a reasonable possibility that the pleading, liberally
construed, can state a cause of action, a demurrer should not be sustained
without leave to amend. (Concerned Citizens of Costa Mesa, Inc. v. 32nd.
Dist. Agricultural Assn. (1986) 42 Cal.3d 929, 936.)
Because Frank does not appeal the dismissal of the claims his Section
850 Petition as pled or argue that we should review the sufficiency of those
claims, we need not conduct a de novo review of the petition. Frank’s appeal
instead focuses on the contention that the court abused its discretion in
denying him leave to amend. “ ‘While it is the plaintiff’s burden to show “that
the trial court abused its discretion” and “show in what manner he can
8 Frank also purports to appeal from the September 24 order denying
his ex parte application to shorten time. Frank contends that the ex parte
application is an appealable post-judgment order under Code of Civil
Procedure section 904.1, subdivision (a)(1) and (2). We disagree. Nothing in
Code of Civil Procedure section 904.1 authorizes an appeal of an ex parte
application following judgment. In any event, as noted above, a party may
show on appeal for the first time how an amendment would cure a pleading
defect.
9Respondents erroneously assert that the substantial evidence
standard applies to our review.
9
amend his complaint and how that amendment will change the legal effect of
his pleading” [citation], a plaintiff can make “such a showing . . . for the first
time to the reviewing court” [citation].’ ” (Mercury Ins. Co. v. Pearson (2008)
169 Cal.App.4th 1064, 1072.) “To meet this burden, a plaintiff must submit a
proposed amended complaint or, on appeal, enumerate the facts and
demonstrate how those facts establish a cause of action. [Citations.] Absent
such a showing, the appellate court cannot assess whether or not the trial
court abused its discretion by denying leave to amend.” (Cantu v. Resolution
Trust Corp. (1992) 4 Cal.App.4th 857, 890 (Cantu).)
B. Frank’s Proposed Amended Claims Are Not Viable
Frank states that in amending his petition, he “intends to eliminate
allegations regarding any amendment of the 1996 Stuart Trust by Franklin’s
2010 Will and any conspiratorial conduct by respondents before Carolyn’s
death.” (Italics omitted.) With these changes, he asserts that he “can allege
facts in support of at least four timely and otherwise valid claims.” As we
discuss below, Frank’s efforts are unavailing as all of his proposed claims are
time-barred.10
1. Claim To Interpret And Enforce The Trust
Frank first proposes to include a claim asking the probate court “to
interpret and enforce the . . . Stuart Trust’s terms, including with respect to
his rights as successor trustee and named successor beneficiary
notwithstanding Franklin’s 2010 Will” He avers that such a claim is subject
to a four-year statute of limitations for an action “ ‘founded upon an
instrument in writing,’ ” presumably under Code of Civil Procedure section
10 “Generally speaking, the claim underlying a section 850 petition in
probate is subject to the same statute of limitations that would apply had an
ordinary civil suit been brought.” (Estate of Yool (2007) 151 Cal.App.4th 867,
874 fn. 5 (Estate of Yool).)
10
337 (he identifies the relevant provision as Code of Civil Procedure section
443, which is a nonexistent section). Code of Civil Procedure section 337,
subdivision (a) applies a four-year statute of limitation to “[a]n action upon
any contract, obligation or liability founded upon an instrument in writing.”
We first note that it is unclear whether the proposed claim is the
proper subject of a Probate Code section 850 (section 850) petition. Section
850 is found within part 19, division two of the Probate Code, which
addresses the “Conveyance or Transfer of Property Claimed to Belong to
Decedent or Other Person.” Under section 850, a trustee or any interested
person “may file a petition requesting that the court make an order under
this part: [¶] . . . [¶] Where the trustee has a claim to real or personal
property, title to or possession of which is held by another.” (§ 850, subd.
(a)(3)(B).) “Section 850 et seq. provides a mechanism for court determination
of rights in property claimed to belong to a decedent or another person.”
(Estate of Young (2008) 160 Cal.App.4th 62, 75.) Here, Frank’s proposed
claim, as best we understand it, seeks an order interpreting and enforcing the
Stuart Trust in light of his asserted rights as a successor trustee and
beneficiary. Therefore, the proposed claim appears to fall outside the scope of
section 850.
Regardless, the claim is untimely. “The limitations period, the period
in which a plaintiff must bring suit or be barred, runs from the moment a
claim accrues. [Citations.] Traditionally, at common law, a ‘cause of action
accrues “when [it] is complete with all of its elements”—those elements being
wrongdoing, harm, and causation.’ [Citation.] This is the ‘last element’
accrual rule: ordinarily, the statute of limitations runs from ‘the occurrence of
the last element essential to the cause of action.’ ” (Aryeh v. Canon Business
Solutions, Inc. (2013) 55 Cal.4th 1185, 1191.)
11
Frank argues that his proposed claim is timely because his Section 850
Petition was filed in August 2019, less than four years after Carolyn’s April
2016 death allegedly “left the administration of the 1996 Stuart Trust’s terms
in disarray.” He further asserts that his claim is not precluded by the
doctrines of res judicata or claim preclusion “because the administration of
the . . . Stuart Trust after both settlors’ death has never been raised or
adjudicated.” (Italics omitted.) Even accepting that this amended claim is
not precluded, it is clear that a cause of action seeking to interpret and
enforce the Stuart Trust had already accrued in April 2013, when Frank
initiated this action by filing his petition for instructions.
A demurrer based on a statute of limitations is appropriate if the
ground appears on the face of the complaint or from matters of which the
court may or must take judicial notice. (Black v. Department of Mental
Health (2000) 83 Cal.App.4th 739, 745; Code Civ. Proc., § 430.30, subd. (a).)
The existence and legal effect of documents in a court file are subject to
judicial notice under Evidence Code section 452, subdivision (d). While a
demurrer cannot be turned into an evidentiary hearing through the guise of
having the court take judicial notice of factual matters in dispute (Richtek
USA, Inc. v. uPI Semiconductor Corp. (2015) 242 Cal.App.4th 651, 660),
courts “may properly take judicial notice of a party’s earlier pleadings and
positions as well as established facts from both the same case and other
cases.” (Cantu, supra, 4 Cal.App.4th at p. 877, italics omitted.)
In Frank’s 2013 petition, he sought an interpretation of the Stuart
Trust’s terms while also asserting that Carolyn had interfered with his rights
and interests in the Stuart Trust. For example, he alleged that Carolyn,
“without authority to do so, has transferred to and assumed the role of
trustee of a separate survivor’s trust for herself and has thereby breached the
12
terms of the Trust. . . .” He also requested instructions, stating that “[t]here
are now conflicts between how [Carolyn] has interpreted the Trust and
[Carolyn’s and Franklin’s] previous intentions to provide for [Franklin’s]
children at the time the Trust was executed by them. . . .” (Italics added.)
Frank’s proposed amended claim again seeks the interpretation and
enforcement of the Stuart Trust based on an alleged interference with his
rights and interests. However, it is apparent that this claim had already
accrued by April 2013. Accordingly, the four-year statute of limitations
under Code of Civil Procedure section 337 had expired before August 2019,
when Frank filed his Section 850 petition. Thus, his proposed amended claim
is time-barred. To the extent Frank purports to have new claims since
Carolyn’s death, he fails to specify on appeal any allegations as to how the
Stuart Trust needs to be interpreted or enforced.
2. Claim for Declaratory Relief
Frank avers that he can state a workable amended claim for
declaratory relief to determine the Trust’s assets and their proper
distribution. “A complaint for declaratory relief is legally sufficient if it sets
forth facts showing the existence of an actual controversy relating to the legal
rights and duties of the parties under a written instrument or with respect to
property and requests that the rights and duties of the parties be adjudged by
the court.” (Wellenkamp v. Bank of America (1978) 21 Cal.3d 943, 947.)
Frank contends that his amended claim is subject to a four-year
limitations period, asserting that the claim accrued no earlier than February
2016, when Carolyn “disclosed the [Stuart Trust] assets on hand” in the
accounting she filed in the other arbitration proceeding. On that basis, he
argues that such a claim would have been timely when he filed his Section
850 petition in August 2019. Alternatively, he argues that the statute of
13
limitations has not yet accrued “because respondents have not formally
repudiated” the February 2016 accounting.
We agree with Frank that the claim is subject to a four-year statute of
limitations for actions on a written instrument. The limitations period for
declaratory relief claims depends on the right or obligation sought to be
enforced, and the statute of limitations “generally follows its application to
actions for damages or injunction on the same rights and obligations.”
(Howard Jarvis Taxpayers Assn. v. City of La Habra (2001) 25 Cal.4th 809,
821; see Mangini v. Aerojet-General Corp. (1991) 230 Cal.App.3d 1125, 1155
[“the statute of limitations governing a request for declaratory relief is the
one applicable to an ordinary legal or equitable action based on the same
claim”].) As discussed above, Frank’s Section 850 Petition concerned
obligations or liabilities “founded upon an instrument in writing,” namely,
the Stuart Trust, and the applicable limitations period is four years. (Code
Civ. Proc., § 337, subd. (a).)
We disagree with Frank’s contention that the statute of limitations on
the proposed claim accrued no earlier than when Carolyn submitted her first
accounting in the unrelated arbitration proceeding in February 2016.
Frank’s proposed claim seeks declaratory relief under the terms of the Stuart
Trust; not under Carolyn’s February 2016 accounting. While the accounting
may represent evidence of the Stuart Trust’s assets at particular points in
time, the document itself is not the basis of Frank’s claim. Nor could he
properly base a cause of action on the accounting, as the accounting itself is
not a written “instrument.”11 Here, Frank purports to seek declaratory relief
11 An “instrument” is “[a] written legal document that defines rights,
duties, entitlements, or liabilities, such as a statute, contract, will,
promissory note, or share certificate.” (Black’s Law Dictionary (11th ed. 2019
p. 952, col. 1.)
14
as to the proper distribution of the Stuart Trust’s assets. Thus, the actual
controversy that underlies his claim for declaratory relief accrued when
Frank became aware that his interests were adverse to Carolyn’s interest.
This occurred no later than April 2013 when Frank filed his first petition,
which, among other things, included an action against Carolyn for breach of
trust.12 In sum, the proposed claim for declaratory relief is barred by the
four-year statute of limitations under Code of Civil Procedure section 337.
3. Trustee De Son Tort Claim
Frank next contends that he can state a timely amended claim for
breach of fiduciary duty against respondents as trustees de son tort.13 The
term “trustee de son tort” describes a person who is not an appointed trustee,
but who becomes a trustee by effectively acting as one, i.e., a constructive
trustee. (King v. Johnston (2009) 178 Cal.App.4th 1488, 1505‒1506 (King).)
A person may become a constructive trustee “ ‘by intermeddling with and
assuming the management of property without authority,’ ” which makes
them subject to the same rules and remedies as other trustees. (Ibid.) A
court may impose trustee de son tort liability with respect to an individual’s
conduct in relation to all or part of the trust property. (Id. at p. 1506 & fn.
18.)
Frank asserts that his proposed claim accrued after Carolyn’s death in
April 2016, “when respondents first began to purport to have authority to
12 Frank alternatively argues that the four-year limitations period has
not begun to run, relying on cases, such as Estate of Yool, supra,
151 Cal.App.4th 867, that concern voluntary resulting trusts. This case does
not appear to concern voluntary resulting trusts. Accordingly, the argument
is inapt.
A trustee de son tort is “Someone who, without legal authority,
13
administers a living person’s property to the detriment of the property
owner.” (Black’s Law Dictionary (11th ed. 2019) p. 1826, col. 1.)
15
control or transfer the [Stuart Trust’s] assets as agents or representatives for
Carolyn.” He maintains that he can amend his petition to allege that all
respondents “have had wrongful possession and control of assets belonging to
the [Stuart Trust] by virtue of being entrusted with such assets as executors,
administrators, beneficiaries, or trustees of Carolyn’s estate following her
death.” Relying on King, supra, 178 Cal.App.4th at page 1506, he argues
that respondents should not be permitted to set up a statute of limitations
defense at all, due to “their continuing breaches of fiduciary duties as
trustees de son tort.” (Italics added.) Even if a limitations defense is
appropriate, he asserts that the catchall four-year period under Code of Civil
Procedure section 343 should apply, regardless of the remedy he seeks.
In sustaining Warner’s demur to Frank’s Section 850 Petition, the
probate court found that all of the stated causes of action, except the claim for
elder abuse, were time-barred because they fell under the three-year statute
of limitation under Code of Civil Procedure section 338.14 The Section 850
Petition contained a claim against respondents for breach of trust as trustees
son de tort. The court found that all of Frank’s claims accrued in 2014, based
on allegations contained in his March 2014 amended demand for arbitration
which “not only makes clear [Frank’s] knowledge of alleged improprieties
with Carolyn’s trust administration as early as 2014, but it also makes clear
that [he] was aware that there may have been other ‘co-conspirators’ along
with surviving settlor-trustee Carolyn as early as March 2014.”
14 Code of Civil Procedure section 338, subdivision (d) extends the
three-year limitation period to “An action for relief on the ground of fraud or
mistake. The cause of action in that case is not deemed to have accrued until
the discovery, by the aggrieved party, of the facts constituting the fraud or
mistake.”
16
On appeal, the substance of Frank’s proposed amended claim is no
different from the claim that the probate court found to be time-barred.
Regardless of the allegations that Frank might have chosen to include (or not
to include) in a proposed amended claim, the pleadings in this case establish
that Frank’s claim for breach of fiduciary duty against respondents as
trustees de son tort arose before respondents came into Carolyn’s estate
following her death. When Frank submitted his amended demand for
arbitration in 2014, he alleged that Carolyn and her alleged co-conspirators,
including Aguiar, had violated the terms of the Trust by transferring the
Trust’s assets into Carolyn’s estate. That respondents thereafter came to
fully control the contested assets under the terms of Carolyn’s will following
her death did not create a new and distinct cause of action as far as the
Stuart Trust was concerned. Thus, the proposed claim accrued no later than
March 2014. Accordingly, even if the four-year statute of limitations applies,
the claim became time-barred in March 2019, five months before Frank filed
his Section 850 Petition.
Insofar as King, supra, 178 Cal.App.4th 1488 suggests that
respondents are barred from asserting the statute of limitations defense, we
decline to follow that case. In the passage Frank relies on, the King court
was quoting from England v. Winslow (1925) 196 Cal. 260 (England) which,
in turn, was quoting from a treatise on trusts. (See id. at pp. 267-268.) Later
in the England opinion, the high court clarified that “the authorities are
uniform in holding that the statute of limitations does not begin to run in
favor of such a trustee until there has been a repudiation of his trust.” (Id. at
p. 271.) Thus, England does not stand for the proposition that the subject of
a trustee son de tort claim is categorically barred from asserting a defense
based on the statute of limitations.
17
4. Claim for Accounting
Finally, Frank proposes to state an amended claim for an accounting as
to Warner. Frank fails to state any facts upon which a demand for an
accounting could be made against Warner. Warner has never been appointed
as a trustee of the Stuart Trust. Moreover, the deadline to contest an account
or bring a claim for breach of trust based upon the account is three years
under Probate Code section 16460, subdivision (a). Carolyn filed an account
in American Arbitration Proceeding 01-14-0001-5247 on February 19, 2016.
Frank’s Section 850 Petition was not filed until August 12, 2019. Even
assuming that a section 850 petition is a proper vehicle for challenging the
accounting, his petition is time-barred.
III. DISPOSITION
The order sustaining respondents’ demurrers to the petition for return
of trust property under Probate Code section 850 is affirmed. Costs are
awarded to respondents.
18
WISS, J.
WE CONCUR:
MARGULIES, ACTING PJ.
BANKE, J.
A161192
Judge of the San Francisco Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.
19