Ukkestad v. RBS Asset Finance, Inc. , 185 Cal. Rptr. 3d 145 ( 2015 )


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  • Filed 3/16/15
    CERTIFIED FOR PUBLICATION
    COURT OF APPEAL, FOURTH APPELLATE DISTRICT
    DIVISION ONE
    STATE OF CALIFORNIA
    DANIEL UKKESTAD, as Co-trustee etc.,               D065630
    Plaintiff and Appellant,
    v.                                         (Super. Ct. No. 37-2013-00062564-
    PR-TR-CTL)
    RBS ASSET FINANCE, INC.,
    Defendant and Respondent.
    APPEAL from an order of the Superior Court of San Diego County, Julia C.
    Kelety, Judge. Reversed and remanded with directions.
    Niddrie Fish & Addams, David A. Niddrie and John S. Addams for Plaintiff and
    Appellant.
    No appearance for Defendant and Respondent.
    Daniel Ukkestad, who is a co-trustee of the Larry Gene Mabee Revocable Trust
    (the Trust), appeals from the probate court's order denying his petition to confirm that
    two parcels of real property are part of the Trust's assets. We conclude that the probate
    court erred in denying the petition, and we accordingly reverse the probate court's order
    and remand with directions that the probate court enter an order granting the petition.
    I
    FACTUAL AND PROCEDURAL BACKGROUND
    Larry Gene Mabee, who died on December 16, 2012, executed a First Amendment
    and Complete Restatement of the Trust on December 7, 2012 (the Trust Instrument),
    appointing himself as the trustee. On that same date, Mabee also executed a will, which
    contains a pour-over provision giving the residue of the estate to the trustees of the Trust.
    Mabee owned two parcels of real estate that are the subject of this appeal: (1) a
    parcel at 1025 East Bobier Drive, in Vista, California; and (2) a parcel known as 80501
    Avenue 48, Space 114, in Indio, California (collectively, the Two Parcels). According to
    the grant deeds, title to the Two Parcels was held by Mabee as an individual.
    The Trust Instrument does not describe the Two Parcels by reference to any
    specific identifying information unique to those properties, such as the address or legal
    description of the Two Parcels. Although not specifically identifying the Two Parcels,
    the Trust Instrument generally states that Mabee assigns the ownership of all of his real
    property to the trustees of the Trust effective immediately. The Trust Instrument states:
    "The Grantor [i.e., Mabee], by the execution of this instrument, hereby
    assigns, grants and conveys to the Trustees of this instrument all of the
    Grantor's right, title and interest in and to all of his real and personal
    property, including all Tangible Personal Property, stocks, bonds, cash,
    mutual funds and promissory notes, all amounts on deposit from time to
    time at any bank, savings and loan association or investment institution,
    real property, leases on real property, interests in business entities and all
    other property owned by the Grantor, wherever situated. . . . The Grantor
    intends this assignment to be effective as of the date of this instrument even
    2
    though other documents may be necessary to perfect title to such property
    in the name of the Trustees."
    Ukkestad, with the express agreement of the two other trustees of the Trust
    (Mabee's wife and one adult child), filed a petition under Probate Code section 850,
    subdivision (a)(3) for an order confirming that the Two Parcels are part of the Trust's
    assets, premised on the above-quoted language from the Trust Instrument. Real estate
    title documents lodged by Ukkestad in the probate court, along with a declaration by
    counsel, established that Mabee was the owner of the Two Parcels.1
    A potential creditor of the estate, RBS Asset Finance, Inc. (RBS), filed a creditor's
    claim against the estate and also filed a response and opposition to the petition for an
    order confirming trust assets.2 RBS argued that the language in the Trust Instrument
    conveying all of Mabee's real property to the trustee was not legally sufficient to make
    the Two Parcels part of the Trust's assets.3
    On January 14, 2014, the probate court denied with prejudice Ukkestad's petition
    for an order confirming trust assets. The hearing on the petition was not reported, but a
    settled statement approved by the probate court explained that the court had ruled that the
    1      The documents lodged by Ukkestad consist of recorded grant deeds for the Two
    Parcels and chain of title guarantees for the Two Parcels issued by a title company.
    2      Mabee had personally guaranteed a $4.3 million promissory note payable to RBS
    related to the financing of an aircraft, and RBS was apparently interested in having the
    Two Parcels available as part of Mabee's estate in the event RBS had to collect on the
    personal guarantee.
    3    RBS did not dispute that, as shown by the documents submitted by Ukkestad,
    Mabee held title to the Two Parcels.
    3
    Trust was valid and had become irrevocable, but that the Two Parcels were not assets of
    the Trust, as the Trust Agreement did not satisfy the statute of frauds with respect to the
    Two Parcels.
    Ukkestad appeals from the order denying the petition. RBS and Ukkestad have
    resolved the dispute giving rise to RBS's potential creditor's claim, and RBS has therefore
    withdrawn its opposition to the petition and has not filed a respondent's brief.4
    II
    DISCUSSION
    It is well established that if two specific requirements are met, real property may
    be made part of a trust's assets without a separate deed transferring property to the trust.
    (Estate of Heggstad (1993) 
    16 Cal. App. 4th 943
    , 947-950 (Heggstad).)
    The first requirement is that the owner of real property is the settlor creating the
    trust with himself or herself as the trustee. 
    (Heggstad, supra
    , 16 Cal.App.4th at pp. 947-
    950; see also Prob. Code, § 15200, subd. (a) [stating that one way of creating a trust is
    "[a] declaration by the owner of property that the owner holds the property as trustee"].)
    That requirement is unquestionably satisfied here with respect to the Two Parcels because
    — as shown by the undisputed documents lodged by Ukkestad in the probate court in
    support of his petition — Mabee was the owner of the Two Parcels, and the Trust
    Instrument states that Mabee will hold all of his real property as trustee of the Trust.
    4       The issue of whether the Two Parcels are outside of the Trust is not moot because
    it has tax consequences and is relevant to any future creditor claims against the estate.
    4
    Second, because a conveyance of real property is at issue, the other requirement
    for transferring real property to a trust is compliance with the statute of frauds.
    
    (Heggstad, supra
    , 16 Cal.App.4th at p. 948 ["Where the trust property is real estate, the
    statute of frauds requires that the declaration of trust must be in writing signed by the
    trustee."].) Specifically, the statute of frauds in Probate Code section 15206 states: "A
    trust in relation to real property is not valid unless evidenced . . . : [¶] (a) By a written
    instrument signed by the trustee . . . . [¶] (b) By a written instrument conveying the trust
    property signed by the settlor . . . . [¶] (c) By operation of law." Accordingly, under the
    statute of frauds, "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." (Heggstad, at p.
    950, italics added.) The issue in dispute here is whether Mabee's statement in the Trust
    Instrument that he is conveying "all of his real and personal property" to the trustee,
    including "real property . . . wherever situated," is sufficient to comply with the statute of
    frauds and therefore legally convey the Two Parcels to the Trust.
    We apply a de novo standard of review in determining whether the statute of
    frauds has been satisfied to make the Two Parcels as part of the Trust's assets. (See
    Kucker v. Kucker (2011) 
    192 Cal. App. 4th 90
    , 93 (Kucker) [applying de novo standard of
    review on undisputed facts to the issue of whether the Civil Code's statute of frauds was
    satisfied in conveying certain personal property to a trust]; Sterling v. Taylor (2007) 
    40 Cal. 4th 757
    , 772 (Sterling) ["it is a question of law whether a memorandum, considered
    in light of the circumstances surrounding its making, complies with the statute of
    frauds"].)
    5
    Most of the case law on the issue of whether a description of real property is
    specific enough to satisfy the statute of frauds has developed in contexts other than
    probate actions involving trusts or wills. The case by our Supreme Court that sets forth
    the applicable rule is Beverage v. Canton Pacer Mining Co. (1955) 
    43 Cal. 2d 769
    (Beverage). Beverage arose in the context of a contract of sale in which the real property
    at issue could not be identified based solely on information in the contract. As Beverage
    explained, "[t]o satisfy the statute of frauds, the memorandum affecting the sale of real
    property must so describe the land that it can be identified with reasonable certainty. . . .
    Preferably, the writing should disclose a description which is itself definite and certain.
    Alternatively, however, a description fulfills the test of reasonable certainty if it furnishes
    the 'means or key' by which the description may be made certain and identified with its
    location on the ground." (Id. at p. 774, citations omitted and italics added.) 5
    In the context of a case arising from a dispute over the certainty of the terms of
    sale of real property, our Supreme Court recently endorsed a "flexible, pragmatic view,"
    under which uncertain written contractual terms comply with the statute of frauds as long
    as they can be made certain by reference to extrinsic evidence, and as long as that
    evidence is not used to contradict the written terms. 
    (Sterling, supra
    , 40 Cal.4th at p.
    5      The description read "seven and one-half (7 1/2) acres, more or less, to south of
    State Highway at Chambers Creek, (between highway Engineer Stations 561 + 58.51 +/-
    to 577 +/-) being part of Canton Placer Claim." 
    (Beverage, supra
    , 43 Cal.2d at p. 773.)
    Beverage held that the description provided a " 'means or key' " which, together with
    extrinsic evidence, might sufficiently identify the real property to satisfy the statute of
    frauds. (Id. at pp. 774, 775.)
    6
    771, fn. 13.) Under the operative law, as recently clarified in Sterling, "[t]he governing
    principle is: 'That is certain which can be made certain.' . . . [I]f a memorandum
    includes the essential terms of the parties' agreement, but the meaning of those terms is
    unclear, the memorandum is sufficient under the statute of frauds if extrinsic evidence
    clarifies the terms with reasonable certainty and the evidence as a whole demonstrates
    that the parties intended to be bound." (Ibid., citations omitted.)6
    An instructive case that demonstrates the applicable rule is Alameda Belt Line v.
    City of Alameda (2003) 
    113 Cal. App. 4th 15
    (Alameda). In Alameda, the court decided
    that language in a 1924 option to repurchase railroad property complied with the statute
    of frauds despite uncertain language describing the applicable real property. Although
    the option agreement vaguely referred to the real property as the "belt line railroad
    including all extensions thereof" (id. at p. 19), the court held that the language was
    6      The rule expressed in Sterling and in Beverage is consistent with our Supreme
    Court's long-standing view that a general assignment of a party's real and personal
    property in a written instrument is sufficiently certain to be legally effective. For
    example, our Supreme Court concluded in Brusseau v. Hill (1927) 
    201 Cal. 225
    (Brusseau) that the written statement " 'This is my gift of deed all is in my possession to
    Mr. G. W. Brusseau . . .' " adequately described the real property at issue. (Id. at p. 230.)
    As Brusseau explained, " '[u]sually general descriptions, such as "all the estate both real
    and personal of the grantor," "all my land" in a certain town, county or state, "and my
    land wherever situated," "all my right, title and interest in and to my father's estate at
    law," and the like, are held good. And a deed is not void merely because it conveys all
    one's property in general terms.' " (Id. at p. 231; see also Pettigrew v. Dobbelaar (1883)
    
    63 Cal. 396
    (Pettigrew) [a deed identifying " 'all lands and real estate belonging to the
    said party of the first part, wherever the same may be situated' " sufficiently described the
    properties at issue]; Bumb v. Bennett (1958) 
    51 Cal. 2d 294
    , 302 (Bumb) [a deed of
    assignment transferring " 'all of the property of the Assignor of every kind and nature and
    wheresoever situated, both real and personal or mixed, and any interest or equity therein
    not exempt from execution' " was legally sufficient to convey real property].)
    7
    sufficiently certain to satisfy the statute of frauds because the parties could consult
    extrinsic evidence, in the form of legal documentation of the original railroad property
    and of all of the subsequently acquired property for the extensions, to make the
    description of the real property more certain. (Id. at pp. 22-23.) Relying on the approach
    established in 
    Beverage, supra
    , 43 Cal.2d at page 774, Alameda explained that the
    contractual language was a "sufficient 'means or key' by which extrinsic or parol
    evidence could be used to define the property which is the subject of the option." (Id. at
    p. 22.)
    In contrast, the type of case in which a description of real property was not
    sufficient to satisfy the statute of frauds is illustrated in Osswald v. Anderson (1996) 
    49 Cal. App. 4th 812
    , 818 (Osswald). In Osswald, the trustors signed a declaration of trust,
    apparently intending to make their home an asset of the trust. The trust document failed
    to adequately describe the home or any other real property as being part of the trust
    assets, as the trust document purported to identify the trust property by referring to an
    attached schedule A, but then neglected to attach any schedule A. Under those
    circumstances, as no property whatsoever was described in the trust document, there was
    no writing identifying the trustors' real property that could be made more certain by
    reference to extrinsic evidence. (Ibid.)
    In this case, unlike in Osswald, the Trust Instrument contains language that
    identifies which of Mabee's real property is being conveyed to the trust. Specifically, in
    the Trust Instrument, Mabee refers to "all of his real and personal property, including . . .
    real property . . . , wherever situated." (Italics added.) Further, as in Beverage and
    8
    Alameda, the language of the Trust Instrument provides a "sufficient 'means or key' by
    which extrinsic or parol evidence could be used to define the property" that is part of the
    Trust's assets. 
    (Alameda, supra
    , 113 Cal.App.4th at p. 22.) As is shown by the
    declaration of Ukkestad's counsel in the probate court and the real estate title documents
    lodged by Ukkestad in support of the petition, it is a simple matter of referring to publicly
    available records to determine Mabee's real estate holdings. Referring to publicly
    available documents to establish a parties' real estate holdings is the same method that
    Alameda used to make an otherwise incomplete description of real property certain
    enough that it could be reliably identified and to conclude that the description complied
    with the statute of frauds.7
    7       We note that the probate court cited 
    Kucker, supra
    , 
    192 Cal. App. 4th 90
    , to support
    its conclusion that the Trust Instrument did not describe the Two Parcels with sufficient
    certainty to satisfy the statute of frauds contained in Civil Code section 1624. The issue
    in Kucker was whether a settlor's general assignment of "all of my right, title and interest
    in all property owned by me, both real and personal and wherever located" was sufficient
    under the statute of frauds to convey specific shares of stock. (Kucker, at p. 92.) After
    concluding that the statute of frauds did not apply because personal property was at issue,
    the court stated in dicta that, had real property been at issue, "[t]he General Assignment
    was ineffective to transfer the [settlor's] real property to the Trust" because "the General
    Assignment was required to describe the real property so that it could be identified." (Id.
    at p. 95.) As Kucker's statements about the real property issue are dicta, we do not follow
    them as precedential. (Areso v. CarMax, Inc. (2011) 
    195 Cal. App. 4th 996
    , 1006 ["Mere
    observations by an appellate court are dicta and not precedent, unless a statement of law
    was 'necessary to the decision, and therefore binding precedent.' "].) Further, Kucker's
    analysis is not persuasive on the issue of the type of writing necessary to convey a
    settlor's interest in real property to the trust. For its conclusion, Kucker relies on a string
    cite to 
    Sterling, supra
    , 
    40 Cal. 4th 757
    , and 
    Osswald, supra
    , 
    49 Cal. App. 4th 812
    .
    However, we have discussed both of those cases in detail above, and they do not support
    the proposition that a settlor is barred by the statute of frauds from conveying all of his or
    her real property to a trust by making a broad statement referring to all real property.
    Moreover, Kucker did not consider 
    Brusseau, supra
    , 
    201 Cal. 225
    , Pettigrew, supra, 63
    9
    We therefore conclude that because the Trust Instrument states that all of Mabee's
    "right, title and interest" to "all of his real . . . property" is included in the Trust's assets,
    and it is possible by resorting to extrinsic evidence to determine that Mabee held title to
    the Two Parcels, the statute of frauds creates no bar to Ukkestad's petition for an order
    confirming that the Two Parcels are part of the Trust's assets. The probate court
    accordingly erred by concluding that the statute of frauds was not satisfied and by
    denying the petition on that ground.
    DISPOSITION
    We reverse the probate court's order denying the petition for an order confirming
    trust assets, and we remand with directions that the probate court enter an order granting
    the petition.
    IRION, J.
    WE CONCUR:
    BENKE, Acting P. J.
    MCDONALD, J.
    Cal. 396, or 
    Bumb, supra
    , 
    51 Cal. 2d 294
    , each of which approve the conveyance of real
    property made by a general reference to all of a party's real property.
    10
    

Document Info

Docket Number: D065630

Citation Numbers: 235 Cal. App. 4th 156, 185 Cal. Rptr. 3d 145, 2015 Cal. App. LEXIS 237

Judges: Irion, Benke, McDonald

Filed Date: 3/16/2015

Precedential Status: Precedential

Modified Date: 11/3/2024