In re Ferara

1

In the Matter of the Estate of AMALIA P. FERARA, the FERARA LIVING TRUST, the IVAN FERARA FAMILY TRUST, and the AMALIA FERARA TRUST.

DIANA M. FERARA, as the Personal Representative of the Estate of Amalia Ferara, and as Trustee of the Ivan Ferara Living Trust, the Ferara Family Trust, and the Amalia Ferara Trust, Respondent, v. ALICIA K. FERARA, ALBERT E. FERARA, KRISTY L. FERARA, NANCY S. FERARA, and JOHNNY T. FERARA, Appellants.

No. 83404-5-I

Court of Appeals of Washington, Division 1

January 16, 2024

ORDER AMENDING OPINION

The panel having determined that the opinion should be amended it is hereby ORDERED that the opinion of this court filed on December 26, 2023 be amended as follows: On Page 29, in the last line of the last paragraph of the opinion, the word "four" shall be deleted.

The remainder of this opinion shall remain the same.

Chung J.

When two of her siblings would not accept the distribution of a property as directed by a family trust, trustee Diana Ferara petitioned under TEDRA^[1] to compel the distribution. Her siblings filed a counterclaim for breach of fiduciary duty, in part based on alleged mismanagement of the trust property. After determining that the siblings failed to proffer admissible evidence under CR 56(e), the trial court granted Diana's motion for summary judgment and dismissed the counterclaim. The court also ordered the two siblings to accept their distribution or be deemed to have constructively disclaimed their interest in the property and awarded costs and fees to Diana. Diana's siblings appeal.

Statements that are not based on personal knowledge do not satisfy CR 56(e). Nor are documents automatically rendered admissible if the party moving for summary judgment submits them with its motion without proper supporting affidavits. Finally, the court's order of constructive disclaimer by two of the beneficiaries of their interests in a trust asset was within its broad authority under TEDRA "to proceed with such administration and settlement in any manner and way that to the court seems right and proper," RCW 11.96A.020(2), as it did not supersede the disclaimer statute, RCW 11.86.031 and it was consistent with the trustors' intent. Therefore, the trial court did not err in granting Diana's motion for summary judgment on her TEDRA petition. We affirm.

FACTS

Ivan and Amalia Ferara created the Ferara Living Trust. The Living Trust was funded with four properties: one in Bellevue, one in Duvall, and two in San Pedro, California, at 729 and 735 West 22nd Street (the 729 Property and 735 Property, or the Properties). The Living Trust provided that, on the death of either parent, its assets were to be apportioned between a trust bearing the surviving parent's name and the Ivan Ferara Family Trust. The Living Trust nominated Ivan and Amalia's daughter Diana as successor trustee for these two trusts and for the Living Trust, with their daughter Kristy as the next in line.^[2] The Living Trust specified that, upon the death of the surviving parent, the Bellevue property "shall be distributed" to Albert, the Duvall property to Nancy and Johnny, the 729 Property to Diana and Nancy, and the 735 Property to Alicia and Kristy.

When Ivan died in 2016, per the terms of the Living Trust, Amalia became its trustee. Amalia resigned her role as trustee of the Living Trust and declined to serve as trustee of the Family Trust and the Amalia P. Ferara Trust. Diana accepted the role of trustee of the three trusts. As trustee, in 2016, Diana had the two trust properties in California inspected by a local realtor and hired a property management company to manage them.

When Amalia died in February 2020, Diana distributed the properties to the trust's beneficiaries. Kristy and Alicia, however, refused to accept distribution of the 735 Property until it was returned to "a good and reasonable condition." They commissioned an inspection report of the 735 Property in August 2020 by Frank Overbeek (the Overbeek Report).

Diana filed a TEDRA petition in December 2020 to require Kristy and Alicia to either accept transfer of title to the 735 Property or be deemed to have disclaimed their interest in it. She also requested costs and fees.

Four of Diana's five siblings counterclaimed against her, including a claim that Diana breached her fiduciary duty to keep the property in good condition.^[3]The Siblings' response to Diana's TEDRA petition attached a 2017 inspection report Diana requested from the property management company of both the upper and lower rental units at the 735 Property (the 2017 Inspections), and the Overbeek Report. However, there was no declaration or affidavit attesting to either the 2017 Inspections or the Overbeek Report. Instead, each sibling signed a "verification statement," stating each had personal knowledge of the contents of the response "as they pertain to myself and the matters discussed" and verifying that the response's factual statements "concerning myself, my activities, my knowledge and my intentions are true" under penalty of perjury.

The Siblings moved for partial summary judgment on their TEDRA defenses, counterclaims, and request for costs and fees. Diana moved for summary judgment dismissing the Siblings' counterclaims and ordering Kristy and Alicia to accept the 735 Property or disclaim their interest in it, and for costs and fees. In support of her motion, Diana submitted an expert declaration stating that she had satisfied her fiduciary duties, a declaration from a real estate agent who inspected the 729 and 735 Properties in 2016 and again in 2021, and a declaration from the property management company she hired to manage the Properties. Also filed as exhibits to her attorney's declaration were her Siblings' answers to her interrogatories, which stated they "incorporated" the Siblings' TEDRA response and verified counterclaims and "attach[ed]" copies of both the 2017 Inspections and the Overbeek Report. The Siblings' response to Diana's summary judgment motion, in turn, also purported to "incorporate and attach" their verified TEDRA counterclaims, the 2017 Inspections, the Overbeek Report, and their attorney's letter to Diana.

At an October 2021 hearing on both Diana's and her Siblings' summary judgment motions, the trial court rejected the Siblings' claim that it lacked jurisdiction over the California property and lacked the authority to order constructive disclaimer of Kristy's and Alicia's interest in the 735 Property. Further, the court denied the Siblings' breach of fiduciary duty counterclaim and granted Diana's motion to dismiss all the Siblings' counterclaims. Finally, the court ordered Kristy and Alicia to accept transfer of title to the 735 Property within 30 days or be deemed to have disclaimed their interest in it.

Diana later moved for fees and costs, which the court awarded to her, to be paid by the Siblings. The Siblings timely appeal.

DISCUSSION

The Siblings assign error to the trial court's ruling that the Overbeek Report and other evidence was inadmissible, its dismissal of their claim that Diana breached her fiduciary duties, its order of the constructive disclaimer of Kristy and Alicia's interest in the 735 Property, and its award of attorney fees to Diana.^[4] On appeal of an order granting summary judgment, we review de novo whether "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." CR 56(c); see Ranger Ins. Co. v. Pierce County, 164 Wn.2d 545, 552, 192 P.3d 886 (2008). We view all facts and reasonable inferences in the light most favorable to the nonmoving party. Elcon Constr., Inc. v. E. Wash. Univ., 174 Wn.2d 157, 164, 273 P.3d 965 (2012)." '[B]are assertions that a genuine material issue exists' do not constitute facts sufficient to defeat a motion for summary judgment." SentinelC3, Inc. v. Hunt, 181 Wn.2d 127, 140, 331 P.3d 40 (2014) (quoting Trimble v. Wash. State Univ., 140 Wn.2d 88, 92-93, 993 P.2d 259 (2000)). "Instead, an affidavit opposing summary judgment must (1) be made on the affiant's personal knowledge, (2) be supported by facts admissible in evidence, and (3) show that the affiant is competent to testify to the matters therein." Id. (citing CR 56(e)).

I. Admissibility of Evidence Supporting Summary Judgment Motions

The Siblings argue that the evidence they submitted to establish a question of material fact regarding a breach of fiduciary duty-i.e., evidence of the poor condition of the 735 Property-was admissible on two grounds. They argue it was admissible, first, because it was based on their personal knowledge and sworn under penalty of perjury and, second, because Diana attached it to her motion for summary judgment. We disagree with both arguments.

A. Personal knowledge and authentication requirements

The Siblings argue that the evidence they rely on to support their motion for partial summary judgment and to oppose Diana's motion for summary judgment was admissible because it was based on personal knowledge and sworn under penalty of perjury. Specifically, they claim because their counterclaim complaint was "verified" through accompanying verification statements, the statements of facts in the counterclaim, as well as exhibits attached to their complaint, were admissible.^[5]

CR 56(e) specifies the acceptable methods for presenting facts for consideration at the summary judgment stage:

(e) Form of Affidavits; Further Testimony; Defense Required. Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that

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