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Date: 10-25-2017

Case Style: Jose Francisco Aviles v. Tracy J. Swearingen

Case Number: B281420

Judge: Yegan

Court: California Court of Appeals Second Appellate District Division Six on appeal from the Superior Court, Ventura County

Plaintiff's Attorney: Cristian Raul Arrieta

Defendant's Attorney: Brandon Paul Johnson, Don E. Lanson and Amber Ann Rodriguez

Description: In this case of first impression, we apply newly
enacted Probate Code section 21310. If, in theory, this could lead
to a debatable result, so be it. There is no “play in the joints” in
probate law, as Chief Justice Rehnquist would say. We “strictly”
follow probate law as given to us by the Legislature. (Estate of
Shellenbarger (2008) 169 Cal.App.4th 894, 896.)
Tracy J. Swearingen appeals from an order denying
her petition to enforce a no contest clause and disinherit Jose
Francisco Aviles as a trust beneficiary of the Margaret B.
Chappell Living Trust. The trial court found that the trust Third
Amendment and Restatement (hereafter Third Amendment),
which contains general language of incorporation of a prior trust
amendment, did not specifically refer to a no contest clause. It
also found that the Third Amendment was not a “protected
instrument” within the meaning of Probate Code section 21310.1
Finally, it ordered appellant’s removal as trustee, pendente lite,
without prejudice to her reinstatement should she prevail at trial
on Aviles’ petition to invalidate the Third Amendment.
We affirm the order denying the petition to disinherit
respondent. The purported appeal from the order removing
appellant as trustee pending trial is dismissed because it is not a
final appealable order. (§§ 1304, subd. (a); 17200, subd. (b)(1);
Estate of Keuthan (1968) 268 Cal.App.2d 177, 180.)2
Facts and Procedural History
Margaret B. Chappell (Peggy) created the Margaret
B. Chappell Living Trust in 2010 and amended the trust three
times before succumbing to cancer on January 12, 2016. The
original trust instrument was a comprehensive 34-page document
drafted by counsel. It provided that Peggy’s boyfriend,
respondent Jose Francisco Aviles, would receive all the trust
assets on Peggy’s death. The First Amendment provided that
Aviles would receive Peggy’s real property and directed that the
remaining trust assets be distributed as follows: 50 percent to
Peggy’s brother and 50 percent to be divided equally between the
children of Peggy’s nieces and nephews. The Second Amendment
provided that Aviles would receive Peggy’s real property and 50
1
All statutory references are to the Probate Code.
2
At the eleventh hour, the parties declare that they have
settled the underlying case. They ask for dismissal of the appeal.
The request is denied. It is untimely. In addition, we elect to
reach the merits of the first impression issue which has statewide
importance to the probate bar.
2

percent of the remaining trust assets would be distributed to her
brother and 50 percent to Peggy’s godchildren.
In 2015, Peggy suffered a relapse of cancer and
entrusted appellant with her estate planning documents. Peggy
complained to others that appellant had read the trust
documents. Appellant confronted Peggy about the disposition of
trust assets. In the months that followed, Peggy executed the
Third Amendment without the advice of counsel.3
The Third
Amendment changed the trust remainder beneficiary provision to
make appellant the sole remainder beneficiary and successor
trustee. It incorporated by reference the unchanged provisions of
the Second Amendment and provided: “These Articles once
included, and along with any Articles not amended, shall result
in the Third Amendment and Restatement of the Trust
Agreement for the Living Trust of Margaret B. Chappell.”
After Peggy died, Aviles filed a petition to invalidate
the Third Amendment on the ground that it was the product of
undue influence and financial abuse. The petition alleged that
appellant and her husband owned and operated a marijuana
dispensary, that they supplied Peggy marijuana without a
medical approval, that Peggy became addicted to marijuana, and
was a dependent adult within the meaning of section 21366. It
also alleged that appellant was Peggy’s “care custodian” (§21362),
and coerced Peggy to disinherit her brother and godchildren and
name appellant remainder beneficiary of the trust. While Peggy
3
Where, as here, the settler has substantial assets, he or
she should not attempt to dispose of them without the guiding
hand of counsel. As Rankeillor, the lawyer, said, “I often think
the happiest consequences seem to flow when a gentleman
consults his lawyer, and takes all the law allows him.”
(Stevenson, Kidnapped (1913) p. 268.)
3

was on her deathbed, appellant and her agents allegedly took 1. a
valuable collection of vintage wine from Peggy’s home; 2. her
Mercedes; 3. an expensive collection of purses; 4. Peggy’s jewelry
box; and 5. control of Peggy’s bank accounts including a safe
deposit box that held a $100,000 jewelry collection.
Appellant opposed the petition and filed a counter
petition to disinherit Aviles alleging that he violated the no
contest clause in the Second Amendment by challenging the
Third Amendment.
Thereafter, respondent filed a motion to enjoin
appellant from using trust assets to fund her defense of the trust
contest. (See Doolittle v. Exchange Bank (2015) 241 Cal.App.4th
529, 546 [trial court may enjoin trustee’s use of trust funds to
defend a challenge to a trust where there is a likelihood of
prevailing on the contest].) The motion and appellant’s petition
to disinherit respondent were heard at the same time. Denying
the petition, the trial court ruled that the Third Amendment was
not a “protected instrument” as defined by section 21310 because
the instrument did not contain a no contest clause or expressly
reference the no contest clause in the Second Amendment. With
respect to the motion to enjoin appellant’s use of the trust funds
to defend against the petition to invalidate the Third
Amendment, the trial court removed appellant as trustee,
pendente lite, and appointed a professional fiduciary to act as
trustee.
No Contest Clause
Because there is no conflict or question of credibility
in the relevant extrinsic evidence, interpretation of the trust
instrument is a question of law for our independent review.
(Burch v. George (1994) 7 Cal.4th 246, 254.) An in terrorem or no
4
contest clause is a provision in an otherwise valid trust
instrument that, if enforced, penalizes a beneficiary for filing a
pleading in any court. (§ 21310, subd. (c).) The term “pleading”
means a petition, complaint, cross-complaint, objection, answer,
response, or claim. (§ 21310, subd. (d).)
No contest clauses are valid in California and are
favored by the public policies of discouraging litigation and giving
effect to the settlor’s expressed purposes. (Burch v. George,
supra, 7 Cal.4th at p. 254.) Competing public policies, however,
also exist. The court must strictly construe a no contest clause
because it works a forfeiture and may not be extended beyond its
plainly intended function. (Ibid.) Our courts have narrowly
construed no contest clauses even where the trust amendment
expressly confirms and ratifies the provisions of the trust.
(Perrin v. Lee (2008) 164 Cal.App.4th 1239, 1242; Townsend v.
Townsend (2009) 171 Cal.App.4th 389, 392.)
Section 21311, subdivision (a) defines what no contest
clauses can be enforced and provides that a no contest clause may
be enforced against “(1) [a] direct contest that is brought without
probable cause.” A “direct contest” is defined in section 21310,
subdivision (b) to mean: “[A] contest that alleges the invalidity of
a protected instrument or one or more of its terms, based on one or
more of the following grounds: [¶] . . . [¶] (4) Menace, duress,
fraud, or undue influence.” (Italics added.)
Section 21310, subdivision (e)(2) defines a “protected
instrument” to mean an instrument “that contain[s] the no
contest clause” or an instrument that “is in existence on the date
that the instrument containing the no contest clause is executed
and is expressly identified in the no contest clause, either
individually or as part of an identifiable class of instruments, as
5
being governed by the no contest clause.” Pursuant to this
statute, the settlor may “either incorporate by reference or
republish in full a no-contest clause in a . . . trust amendment by
expressly referring to a no-contest clause contained in an
instrument previously executed by the [settlor].” (Ross & Cohen,
Cal. Practice Guide: Probate (The Rutter Group 2016) [¶] 15:85.7,
p. 15-37.)
Appellant concedes the Third Amendment does not
have a no contest clause. At issue is whether the Third
Amendment is a “protected instrument” because it incorporates
by reference the no contest clause in the Second Amendment
without specifically mentioning it. Appellant claims that Peggy
intended to include the no contest clause in the Third
Amendment because the Third Amendment incorporates all of
the terms of the Second Amendment not amended by the Third
Amendment. Article 16 of the Second Amendment, which
contains the no contest clause, states that a “protected
instrument” shall include “any and all amendments” to the Trust
Agreement.
The no contest clause and its application to future
trust amendments is strictly construed. (§ 21312.) Under former
law (§ 21305, subd. (a)) and current law (§ 21310, subd. (e)(2)),
the no contest clause is not enforceable unless it is set forth
verbatim in the Third Amendment or the Third Amendment
expressly refers to the no contest clause in the Second
Amendment. Section 21310, subdivision (e), which became
operative January 1, 2010, requires that the “protected
instrument” either contain the no contest clause (subd. (e)(1)), or
that the instrument be “in existence on the date that the
instrument containing the no contest is executed and is expressly
6
identified in the no contest clause . . . .” (Subd. (e)(2), italics
added.)
Simply stated, the no contest clause in the Second
Amendment, does not apply to future trust amendments, such as
the Third Amendment, unless the amendment specifically refers
to the no contest clause.
In 2008, the Legislature enacted Section 21310 based
on the recommendation of the Law Revision Commission to
simplify the law, to balance conflicting public policies, and to
limit the enforcement of no contest clauses to direct contests
brought without probable cause, to creditor claims, and to
challenges to the transferor’s (i.e., settlor’s) ownership of property
at time of transfer. (Donkin v. Donkin (2013) 58 Cal.4th 412,
426.) The Law Revision Commission warned “that other public
policy concerns ‘can trump a transferor’s intention to create a no
contest clause.’ [Citation.]” (Id. at p. 425.) It noted that
“’[e]xperienced practitioners are well aware that the no contest
clause is a favorite device of undue influencers and those who use
duress to become the (unnatural) object of a decedent’s bounty.’”
(Recommendation on Revision of No Contest Clause Statute (Jan.
2008) 37 Cal. Law Revision Com. Rep. (2007) p. 388 (Revision
Rep.).)
Appellant claims that the no contest clause in the
Second Amendment trumps section 21310, subdivision (e)(2), but
that would violate section 21314 which provides that “[t]his part
applies notwithstanding a contrary provision in the instrument.”
(See Giammarrusco v. Simon (2009) 171 Cal.App.4th 1586, 1615
[if instrument contains a no contest clause that is inconsistent
with the revised law, the clause will be disregarded].) Although
no contest clauses are favored by the public policies of
7
discouraging litigation and giving effect to the trustor’s intent,
they are also disfavored by the policy against forfeitures and may
not extend beyond what plainly was the settlor’s intent. (Meyer
v. Meyer (2008) 162 Cal.App.4th 983, 991.) “In determining the
intent of the [settlor], a no contest clause shall be strictly
construed.” (§ 21312.)
We cannot say that Peggy unequivocally expressed
her intent to apply the no contest clause to petitions contesting
trust amendments that are the product of fraud or undue
influence. Application of the clause here would defy common
sense. “An instrument that is the product of menace, duress,
fraud, or undue influence is not an expression of the transferor’s
free will and should not be enforced.” (Revision Rep., supra, 37
Cal. Law Revision Com. Rep. at p. 370.) We are guided by the
fundamental truism that - put bluntly - the law is not an ass.
(See Charles Dickens, Oliver Twist 333 (Dover Thrift ed., Dover
Publications 2002) (1983) [“‘If the law supposes that,’ said Mr.
Bumble, squeezing his hat emphatically in both hands, ‘the law is
a ass - a idiot’”].)
4
4
Appellant claims that the Third Amendment is actually a
restatement of the Second Amendment by which all the terms of
the Second Amendment not amended by the Third Amendment
are restated in the Third Amendment. We reject the argument
because the no contest clause applies to “any and all
amendments” of the trust agreement and says nothing about
restatements of the trust. Generic no contests clauses, which is
what we have here, are obsolete. (Perrin v. Lee, supra, 164
Cal.App.4th at p. 1249.) “Estate planning practitioners must
draft each no contest clause with particularity, considering in
each case which instruments are intended to be subject to the no
contest clause, and specifically identifying each such instrument.”
(Ibid.)
8

Pendente Lite Order Removing Appellant as Trustee
Appellant contends that the trial court abused its
discretion in removing her as trustee. This was a pendente lite
order and “without prejudice.” It is not appealable. Section 1304,
subdivision (a) makes appealable any “final order” under section
17200 including an order removing a trustee (§ 17200, subd.
(b)(1)).

Outcome: The judgment (order denying petition to disinherit respondent) is affirmed. The purported appeal from the (order removing appellant as trustee) is dismissed. In light of the settlement of the underlying litigation, we do not award costs.

Plaintiff's Experts:

Defendant's Experts:

Comments:



 
 
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