Public Guardian of L.A. County v. Talbot CA2/2 ( 2024 )

Filed 5/29/24 Public Guardian of L.A. County v. Talbot CA2/2
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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has not been certified for publication or ordered published for purposes of rule 8.1115.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
SECOND APPELLATE DISTRICT
DIVISION TWO
PUBLIC GUARDIAN OF LOS B325728
ANGELES COUNTY, as
Trustee, etc., (Los Angeles County
Super. Ct. No.
Plaintiff and Respondent, BP125677)
v.
SUSAN TALBOT,
Defendant and Appellant.
APPEAL from an order of the Superior Court of Los
Angeles County, Michael C. Small, Judge. Affirmed.
Robert L. Kern and Russell A. Dalton, Jr., for Defendant
and Appellant.
Dawyn R. Harrison, County Counsel, Laura Quiñonez,
Assistant County Counsel, and Selina Thomasian, Deputy
County Counsel, for Plaintiff and Respondent.
* * *
Susan Talbot (Susan)1 challenges the probate court’s order
granting the Los Angeles County Office of the Public Guardian
(the Public Guardian) permission to sell a single-family home as
part of wrapping up a special needs trust after the beneficiary of
that trust died with outstanding debts. Because the court did not
abuse its discretion in granting the Public Guardian’s petition,
we affirm.
FACTS AND PROCEDURAL BACKGROUND
I. Facts2
In 2010, Arthur Talbot (Arthur) had two adult children—
Richard and Susan. At that time, Richard had a mild
developmental disability and was receiving public assistance.
Arthur and Richard were living together in Arthur’s three-
bedroom home in Hacienda Heights, California (the house).
Arthur executed a will that left all of his property to
Richard.
To ensure that Richard’s future receipt of his inheritance
from Arthur did not render Richard ineligible for public
assistance, the probate court on May 11, 2011 created a “Special
1 Because several individuals involved in this case share the
same last name, we use first names for clarity. We mean no
disrespect.
2 The facts herein are based on the uncontested facts set
forth in various affidavits and other documentation in the record.
2
Needs Trust” with Richard as its beneficiary (the Trust). A
special needs trust is a trust into which proceeds from an
inheritance or from litigation are placed, so that minors or adults
who would otherwise receive those proceeds and who also have “a
disability that substantially impairs [their] ability to provide” for
themselves can remain eligible for public benefits; such a trust is
managed by an independent trustee. (Prob. Code, §§ 3604, subd.
(b)(1), 3602-3605;3 Balian v. Balian (2009) 179 Cal.App.4th 1505,
1512; Gonzalez v. City National Bank (2019) 36 Cal.App.5th 734,
743-746.)
In pertinent part, the Trust:
● Named the Public Guardian as the trustee;
● Granted the trustee “all of the powers [explicitly]
enumerated in th[e Trust] and all powers . . . conferred on
trustees under California law”;
● Obligated the trustee to pay its own fees and the fees
of its counsel “in a just and reasonable amount” “fixed and
allowed” by the probate court; and
● Provided that, upon “Richard’s death,” and after
payment of all debts of the Trust, the trustee must “distribute[]
outright” “undisposed-of” property “to Richard’s heirs at law,
determined at the time of Richard’s death.”
Arthur died on July 4, 2012, leaving all of his property to
Richard. Consistent with the terms of the Trust, title to the
house that would have otherwise passed to Richard instead
passed to the Trust.
In 2014, Susan moved into the house.
3 All further statutory references are to the Probate Code
unless otherwise indicated.
3
By April 2016, Richard’s condition had worsened to the
point where the probate court granted a conservatorship over
Richard.
On December 19, 2018, Richard died without a will.
At the time pertinent to this litigation, the Trust had
$66,056.32 in outstanding debts to the Public Guardian (for its
fees as trustee), to County Counsel (for its services as the
trustee’s counsel), and related court fees. At the time pertinent
to this litigation, the Trust’s sole assets were $29,887.95 in cash
and the house, eventually valued at $720,000 to $760,000.
Susan was the sole heir to Richard’s estate.
II. Procedural Background
On July 14, 2021, the Public Guardian filed a petition with
the probate court for authorization to sell the house, pay off the
Trust’s outstanding debts, and disburse the remainder to Susan
as Richard’s sole heir.4
Susan opposed the petition, filing no fewer than seven
different papers in opposition.
The probate court held four hearings, the last of which took
place on October 12, 2022.
At that final hearing, the court granted the Public
Guardian’s petition. The court ruled that the Public Guardian
had the authority, under California law and the terms of the
Trust, to sell the house to satisfy the Trust’s outstanding debts,
4 The Public Guardian had filed a prior petition to sell the
house in May 2017 when Richard was alive, but subsequently
withdrew that petition after the parties reached a settlement
resolving accusations of unnecessary expenditures for Richard’s
care by the Public Guardian.
4
and that the sale was appropriate because the outstanding debts
exceed the amount of cash held by the Trust.
The court also rejected Susan’s evolving objections to the
sale.
Initially, Susan objected that it would be unfair to sell the
house because she was living there and would become homeless;
she accordingly proposed that a special needs trust be created for
her so she could inherit the house without becoming ineligible for
the public assistance she was receiving. The court rejected that
request, finding that she had not shown that she suffered from a
qualifying disability or met the age requirement for such a trust.
Next, Susan proposed that the Public Guardian transfer
title to the house to her and place a lien on the house for the
Trust’s unpaid debts. The court rejected that option because the
house would almost immediately go into foreclosure because
Susan’s undisputed monthly income of $471 was insufficient to
pay the property taxes, property insurance, and utilities.
Then, Susan proposed allowing the Public Guardian to sell
the property or to have her sell it, but only after the Public
Guardian spent $79,475 to fix plumbing and mold issues with the
house in order to fetch a higher sales price. The court rejected
that option because using County funds to improve property
where the ostensibly increased sales proceeds would go to Susan
effectively amounted to an impermissible gift of public funds.
Lastly, Susan proposed that the Public Guardian pay her
$400,000 outright, which she said was the diminution in the fair
market value of the house due to the issues needing remediation.
The court rejected that option as (1) procedurally inappropriate,
because Susan had never filed a petition for a surcharge; and (2)
5
“premature,” because whether there was a diminution in value
would not be known until an offer had been lined up.
The court thus authorized the Public Guardian to sell the
house subject to “court confirmation” once an offer was received,
and invited Susan to file a petition for a surcharge, at which time
the parties could litigate whether such a surcharge was legally
appropriate and, if so, in what amount.
Susan filed this timely appeal.
DISCUSSION
Susan challenges the probate court’s order granting the
Public Guardian authority to sell the house. We review probate
court orders authorizing trustee actions for an abuse of
discretion. (Manson v. Shepherd (2010) 188 Cal.App.4th 1244,
1258-1259.)
The probate court did not abuse its discretion in granting
the Public Guardian’s petition. It is undisputed that the Trust is
a valid special needs trust. It is undisputed that the Public
Guardian and County Counsel are entitled—both factually and
legally—to recoup fees for their services as trustee and trustee’s
counsel, respectively. (§ 3605, subd. (b).) It is undisputed that
the plain terms of the Trust grant the Public Guardian, as the
trustee, “all powers . . . conferred on trustees under California
law” and that section 16226 confers “the power to . . . dispose of
property . . . at public or private sale” (§ 16226). It is also
undisputed that the Trust’s outstanding debt exceeds the Trust’s
cash on hand. On these uncontested facts, the probate court did
not abuse its discretion in authorizing the Public Guardian, in
wrapping up the Trust’s affairs, to sell the house in order to pay
off the Trust’s outstanding debts, particularly when the court
recognized that it would still have to confirm the propriety of any
6
sale and that Susan would have the opportunity to file a petition
seeking to offset the sale proceeds with a surcharge for alleged
mismanagement of the house by the Public Guardian.
Susan resists this conclusion with what we have grouped
into four buckets of arguments.5
First, Susan argues that the Public Guardian has a duty to
take her personal circumstances into consideration because she is
an unnamed beneficiary of the Trust, and trustees have “a duty
to administer [a] trust solely in the interest of the beneficiaries.”
(§ 16002, subd. (a).) Susan is wrong. She was never a beneficiary
of the Trust; only Richard was. Her claim to the proceeds from
the Trust is solely in the capacity of the intestate heir to
Richard’s estate. The only person who might owe Susan a duty
vis-à-vis her role as an heir to Richard’s intestate estate is the
personal representative of that estate (§ 8460; Estate of Wong
(2012) 207 Cal.App.4th 366, 375, fn. 3), but Susan has presented
no evidence that the Public Guardian was ever named as the
personal representative of Richard’s estate. We reject Susan’s
attempt to conflate the Trust with Richard’s intestate estate, and
thereby make the Public Guardian the trustee of both. At oral
5 Before the probate court, Susan seemed to advance a fifth
bucket—namely, that Arthur had been unduly influenced into
removing her from his will in favor of leaving everything to
Richard back in 2011 or 2012. This type of collateral challenge
on the probate of Arthur’s will is untimely by orders of
magnitude. A challenge to the probate of a will must ordinarily
be brought within 120 days (§§ 8270, subd. (a), 8226, subd. (a));
Susan waited nearly 120 months. What is more, Susan has
known about the probating of Arthur’s will for years. Susan has
not renewed this argument on appeal, so it is waived as well as
meritless.
7
argument, Susan argued for the first time that she is a “residual
beneficiary” of the Trust, but that term applies to a person who
takes under a residuary clause of the instrument at issue—not to
a person who may or may not eventually inherit trust property
under intestate law. (Accord, Estate of Mathie (1944) 64
Cal.App.2d 767, 779.)
Second, Susan complains that the probate court took a
“thoughtless, heavy-handed approach” to resolving the case
because the court acted “absurd[ly]” by rushing to authorize the
sale of the house without first figuring out whether the Public
Guardian was neglectful in its maintenance of the house. The
probate court authorized the sale only after explaining why the
various proposals advanced by Susan were either not feasible, not
practical, or not lawful, and after determining that it would be
premature to hold an evidentiary hearing regarding the Public
Guardian’s potential liability for diminishing the value of the
house before determining whether there was any diminution at
all (a fact that would only be known after the house went on the
market and offers came in for its purchase). These are not
unreasonable determinations. At bottom, Susan asks us to
reweigh the considerations and come to a different conclusion.
But that is not our role under abuse of discretion review.
Third, Susan objects that the probate court committed
several procedural missteps. As a threshold matter, Susan is
correct that the probate court’s minute orders repeatedly
indicated that “[t]estimony [wa]s taken” at various hearings
where no testimony was taken, but the court clerk’s likely
overuse of that macro does not by itself transgress Susan’s
procedural rights. Susan’s more meaty contention is that the
court impermissibly relied solely on affidavits and declarations
8
rather than taking live testimony. However, this is permissible
as to uncontested facts. (§ 1022 [“An affidavit or verified petition
shall be received as evidence when offered in an uncontested
proceeding under this code”]; Conservatorship of Farrant (2021)
67 Cal.App.5th 370, 377.) And, as described above, all of the facts
upon which the authorization to sell is predicated were
uncontested. To be sure, and as the probate court noted at the
final hearing, the facts underlying the propriety of a possible
surcharge are contested, but that issue is distinct from the issue
of authorization and—critically—has been reserved for future
litigation. Thus, Susan’s citation to the probate court’s
acknowledgement that it was unsure whether facts relevant to
the surcharge were “true or false” has nothing to do with the
issue in this case.
Fourth and finally, Susan makes a few arguments that are
beyond our power to address. She complains that “probate notes”
should be part of the clerk’s transcript on appeal, but the
California Rules of Court provide otherwise. (Cal. Rules of Court,
rule 8.122.) What is more, although we have the authority to
take judicial notice of the probate notes as records of the probate
court (Evid. Code, §§ 452, subd. (d), 459, subd. (a))—and Susan
has requested that we do so here—we deny that request because
those notes are irrelevant to the issue before us. Susan also
complains that litigants should be allowed to record court
hearings, particularly remote hearings conducted over
videoconference, because limiting transcription of those
proceedings to court reporters is unfair to indigent litigants who
are not computer savvy. As the law stands now, recording of
proceedings is against the law except in misdemeanor and
infraction cases and “limited civil case[s].” (Gov. Code, § 69957,
9
subd. (a); Jameson v. Desta (2018) 5 Cal.5th 594, 608, fn. 10;
California Court Reporters Assn. v. Judicial Council of California
(1995) 39 Cal.App.4th 15, 29-30.) Because we must obey the
statutes our Legislature enacts, Susan’s complaint is better
directed toward the Legislature than the courts.
DISPOSITION
The order is affirmed. The Public Guardian is entitled to
its costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
______________________, J.
HOFFSTADT
We concur:
_________________________, Acting P. J.
ASHMANN-GERST
_________________________, J.
CHAVEZ
10