Geyer v. Bartlett

1

PAUL GEYER et al., Plaintiffs and Respondents, v. DIANE BARTLETT, Defendant and Appellant.

No. F084659

California Court of Appeals, Fifth District

January 23, 2024

NOT TO BE PUBLISHED

APPEAL from a judgment of the Superior Court of Merced County, No 17PR-00108 Harry Jacobs, Judge.

Cyril Lawrence, Inc. and Cyril L. Lawrence for Defendant and Appellant.

Law Office of Nini Lee, Inc. and Nini Lee for Plaintiffs and Respondents Paul Geyer and Robert Geyer.

Fores Macko Johnston &Chartrand and Anthony D. Johnston for Plaintiff and Respondent Karen Werth.

OPINION

LEVY Acting P. J.

INTRODUCTION

Respondent/defendant Diane Bartlett (Diane), appeals from a judgment rendered against her and others following a court trial.^[1] The case involved allegations that Diane and her husband at the time respondent/defendant Leon Bartlett (Leon), wrongfully converted assets from a trust created by Leon and his prior spouse, Alice Bartlett (Alice), deceased, and wrongfully used those assets for Leon and/or Diane's own benefit and to the detriment of the trust's rightful beneficiaries.^[2]

The lawsuit was initiated by the petition of Alice's only children from a prior marriage, petitioners/plaintiffs Paul Geyer (Paul) and Robert Geyer (Robert) (sometimes collectively, the "Geyers"). A separate petition consolidated herein, was filed by Leon's only child from his first marriage, petitioner/plaintiff Karen Bartlett Werth (Karen). Paul, Robert and Karen (collectively "plaintiffs") were the only named remainder beneficiaries of the trust created by Leon and Alice.

The trial court found in favor of the Geyers, and against Diane, Leon, and others on numerous causes of action, and found in favor of Karen, and against Diane and Leon, on the causes of action in Karen's petition.^[3] We modify the judgment and affirm it as modified.

FACTUAL AND PROCEDURAL BACKGROUND

I. Brief Family Histories

Leon and Alice married in 1981. Among other things, the couple owned a petroleum distribution business known as Leon H. Bartlett, Inc. ("LHBI") and ran a cattle ranch. Together, they had no children but Alice had two children, Paul and Robert, from a prior marriage and Leon had one child, Karen, from a prior marriage. Karen is married to respondent/defendant Mervin E. Werth, Jr. (Mervin).

Leon and Alice remained married until Alice passed away on April 25, 1993. Approximately eight months later, Leon married Diane. Leon and Diane had no children from their marriage.

Diane had three children from a prior marriage including respondent/defendant Tina D. DeLeon (nee Morrow) (Tina). According to the Geyers' petition, Tina is married to respondent/defendant Jaime DeLeon (Jaime).

II. The Trust Created By Leon and Alice, and As Amended By Leon

On September 28, 1992, Leon and Alice, as settlors, executed a Declaration of Trust and Trust Agreement for the Leon and Alice Bartlett Revocable Trust (unnecessary capitalization omitted) ("Leon/Alice trust"). Following Alice's death in 1993, Leon was the sole trustee of the Leon/Alice trust.

A. Select Provisions of the Original Leon/Alice Trust

1. Creation of Separate Trusts Upon the First Death of a Settlor

The Leon/Alice trust provided that upon the first death of either settlor, the trustee "shall apportion the trust estate, including any additions made to the trust by reason of the Deceased Settlor's death ... into three (3) separate trusts, herein designated as follows: [¶] Trust A, (... 'The Survivor's Trust'); [¶] Trust B, (... 'The ByPass Trust'); and [¶] Trust C, (... 'The Marital Trust')."

Trust A property: Trust A was to be funded with "all of the Surviving Settlor's separate property that [was] a part of the trust estate and the Surviving Settlor's interest in any of Settlors' community property . . . included in or added to the trust estate . . .."

Trust B property: Subject to considerations not relevant here, Trust B was to be funded with "that portion of the Deceased Settlor's interest in the community and jointly owned assets . . . then included in the trust estate, and that portion of the Deceased Settlor's separate property ... then included in the trust estate" up to the amount of the federal estate tax exemption.^[4]

Trust C property: The beginning trust estate of Trust C was to "consist of the balance of the trust estate."

Upon Alice's passing, Leon was entitled to pay from Trust B and/or Trust C Alice's outstanding debts, estate and inheritance taxes, last-illness and funeral expenses, attorney fees, and other costs of administering Alice's probate estate.

2. Allowable Distributions to Leon, as the Surviving Spouse

As the surviving spouse, Leon was entitled to "as much of the net income" and "any of the principal" as he may demand from Trust A; distributions of net income from Trust B that he, in his discretion, deemed necessary for his "health, education, support, and maintenance, in accordance with [his] accustomed standard of living" at the time of Alice's death; and the entire net income of Trust C to be paid at least annually. Leon also had narrowly limited powers to invade the principal of Trusts B and C.^[5]

3. Disposition of Trusts A, B and C Upon the Death of the Last Settlor

Subject to payment of certain allowed expenses, the Leon/Alice trust provided for the following disposition of trust assets upon the death of the last settlor: All principal and accrued income of Trust A were to be distributed pursuant to a general power of appointment if exercised or, if not exercised, added to Trust B. Personal effects held in Trust B were to be distributed as plaintiffs might agree, or otherwise sold with the proceeds added to the residue of Trust B. The residue of Trust B was to be distributed equally among the plaintiffs. Undistributed income accumulated in Trust C was to be distributed to the last deceased settlor's estate. Personal effects were to be distributed to plaintiffs as they might agree, or, absent agreement, as the trustee might determine, subject to any specific distributions designated by the last deceased settlor. The residue of Trust C was to be added to Trust B.

4. The No Contest Provision

The Leon/Alice trust contained a no contest provision that read: "If any person, whether claiming to be an heir of Settlors or not, should either directly or indirectly, contest the provisions of this [trust instrument] or object to any provisions hereof or attempt to oppose or set aside this [trust instrument] or to impair or invalidate any of the provisions hereof, such person shall receive from the trust the sum of One Dollar ($1.00) only, and no more _."

B. The Leon/Alice Trust Estate Assets as of Alice's Date of Death

The Leon/Alice trust identified the separate and community property holdings Leon and Alice initially added to the trust. In addition, Alice executed a pour-over will by which she contributed additional holdings to the trust. Leon, through his certified public accountant [CPA], Grey Roberts, filed a Form 706 estate tax return for Alice's estate ("706 return").^[6] The 706 return listed assets and liabilities comprising the Leon/Alice trust estate at Alice's date of death and provided net values for those assets and liabilities as of Alice's date of death, as follows:

1. Community Assets and Liabilities

Bulk plant: LHBI's petroleum distribution plant operated on a one-acre parcel located at 1450 G Street, Merced, California ("bulk plant"). The real property was valued at $196,000 and its improvements were valued at $154,000, for a total value of $350,000.^[7]

101 acres: 101.70 acres of vacant land located at 6922 North G Street, Merced, California ("101 acres") valued at $570,735 net of debt.

Homeplace and 67 acres: Leon and Alice's residence along with 67.60 acres of real property ("homeplace and 67 acres") valued at $547,466 net of debt.

Tri-State stock: 20 shares of preferred stock of Tri-State Livestock Credit Corporation ("Tri-State stock") valued at $2,000.

Chevron stock: 94.0845 shares of Chevron Corp. common stock valued at $7,656.13.

Leasehold interest No. 1: A leasehold interest in approximately 9,000 acres of grazing land valued at $20,000.

Leasehold interest No. 2: A leasehold interest in approximately 3,100 acres of grazing land valued at $39,167.

Livestock: Livestock and cattle valued at $1,186,705 net of debt.

Equipment: Equipment valued at $47,500.

Personal effects: Personal effects valued at $9,000.

Old mobile home: An old mobile home valued at $200.

Debt owed to Federal Land Bank: An outstanding loan balance owed to Federal Land Bank in the amount of .

Debt owed to LHBI: An outstanding note payable to LHBI in the amount of .

2. Leon's Separate Property Assets

LHBI shares: 73,500 shares of LHBI stock issued in Leon's name valued at $857,502.

3. Alice's Separate Property Assets

LHBI shares: 76,500 shares of LHBI stock issued in Alice's name valued at $892,503.

Jewelry: Alice's jewelry valued at $8,000.

4. Additions to the Leon/Alice Trust Following Alice's Death^[8]

Chevrolet pickup - a community asset valued at $1,200.

Note receivable from LHBI - a community asset valued at $6,000.

"Open A L" cattle brand - a community asset valued at $100.

Tax refund - Federal income tax refund receivable valued at $25,859.

A.L.B. stock - 500 shares of common stock of A.L.B. Enterprises, Inc., valued at $500.

Funeral expenses - in the amount of .

Attorney fees - in the amount of .

Accountant fees - in the amount of .

III. Amendment to the Leon/Alice Trust After Leon's Marriage to Diane

On January 21, 1994, shortly following his marriage to Diane Leon executed an amendment to the Leon/Alice trust. The amendment reaffirmed the statement in the Leon/Alice trust that...