In re Marriage of Hart

1

BETH MAE HART, Plaintiff and Respondent, v. ROBERT HART, Individually and as Trustee, etc., Defendant and Appellant.

F086566

California Court of Appeals, Fifth District

October 22, 2024

NOT TO BE PUBLISHED

APPEAL from a judgment of the Superior Court of Tulare County No VCU286706. Bret D. Hillman, Judge.

Robert Hart, in pro. per., for Defendant and Appellant.

Williams, Brodersen, Pritchett &Ruiz and Steven R Williams for Plaintiff and Respondent.

OPINION

POOCHIGIAN, J.

This is an appeal from an order granting a motion to amend a judgment that added a new judgment debtor. Appellant and defendant Robert Hart (appellant) contends that the trial court erred by granting respondent and plaintiff Beth Mae Hart's (respondent) motion to add "Robert Hart as trustee" of two trusts to the judgment. Specifically, Appellant avers the court erred by: (1) relying on rulings and findings from a separate unrelated divorce proceeding to apply the alter ego doctrine; and (2) violated trust law to find a unity of interests between Appellant and Robert Hart as trustee. We affirm.

PROCEDURAL BACKGROUND

On April 15, 2021, respondent filed suit against appellant and his now former wife Elizabeth "Lilly" Hart (Lilly) (collectively "the Harts"). Respondent alleged that appellant and Lilly had unlawfully provided her with a usurious loan.

In June 2022, a trial was conducted, and the jury found in favor of respondent on her claim of a usurious loan. In part, the jury found that respondent paid approximately $27,000 in interest on the usurious loan, which was credited against the principal. The court subsequently awarded respondent approximately $70,000 in attorney fees.

On March 3, 2023, respondent filed a motion to amend the judgment to add codebtors. The motion sought to add appellant in his capacity as a trustee of the Old Oak Holdings (OOH) trust and in his capacity as a trustee for the North Fork Assets (NFA) trust. Respondent argued that "Robert Hart as trustee" for the two trusts was the alter ego of appellant.

On March 27, 2023, appellant filed a verified opposition to the motion to amend judgment. In connection with appellant's opposition, a declaration by appellant's son Jason Hart (Jason) was filed on April 4, 2023. Jason declared that he was a beneficiary of the NFA, OOH, and Cedar Grove Holdings (CGH) trusts, which were established by his grandmother, and that appellant was not the alter ego of the trusts.

On May 12, 2023, respondent filed an amended motion to amend the judgment to add codebtors. The motion sought to add appellant in his capacity as a trustee for the OOH trust and in his capacity as a trustee for the CGH trust. Respondent argued that "Robert Hart as trustee" of these two trusts was the alter ego of appellant.

On May 29, 2023, appellant filed a verified opposition to respondent's amended motion.

On June 27, 2023, the trial court held a hearing on the motion to amend judgment. The court granted respondent's motion.

On June 30, 2023, the clerk issued a new abstract of judgment. Two additional defendants were added to the judgment: the NFA trust and the CGH trust.

On July 18, 2023, appellant appealed the trial court's order amending the judgment.

FACTUAL BACKGROUND

The Ketter Trusts

Sometime prior to the events of this appeal, Appellant's mother Beverley Jean Ketter created the CGH, OOH, and NFA trusts. Jason is the beneficiary, and the Harts are cotrustees, of each of the three trusts. The three trusts each have a single parcel of real property as an asset. The CGH trust has a parcel known as the "Dry Creek Property," which was acquired in November 2019; the OOH trust has a parcel known as the "Three Rivers Property," which was acquired in January 2007; and the NFA trust has a parcel known as the "Dahlem Property," which was acquired in December 2007.

Loan to Respondent &Corresponding Lawsuit

In March 2016, the Harts loaned respondent $29,000 to stop a foreclosure. The interest rate charged was 1.5 percent per month, or 18 percent annually, for a period of five years.

In March 2018, respondent's attorney informed appellant that the loan violated the California Constitution's provision against usurious loans. The Harts responded by demanding that respondent's lawyer prove that the private loan was subject to the California Constitution. Respondent's lawyer did not reply.

In February 2021, respondent sent appellant a series of checks related to the loan. Appellant did not cash the checks, but subsequently did offer to retroactively reduce the interest from 18 percent per year to 10 percent per year.

In April 2021, respondent brought suit against the Harts. Respondent prevailed at trial, and a judgment in her favor was entered on June 3, 2022.

Divorce Proceedings^[1]

Appellant and Lilly divorced after the trial on respondent's usury claim. Relative to this appeal, there are several important aspects of the divorce proceedings.

Lilly's Request for Property Control

On February 15, 2022, Lilly filed a request for a court order that would place her in control of the Dry Creek Property. In support of this request, Lilly declared in part that this property was purchased by her and appellant using community property funds from her work as a dance instructor and appellant's contracting and home inspection business. The Dry Creek Property was used as a profitable AirBNB rental since its acquisition in 2019 and was their main source of income. Lilly was concerned about losing the AirBNB income and that appellant was incapable of running the property as an AirBNB rental.

On March 4, 2022, appellant filed an opposing declaration. In part, appellant declared a family trust owned the Dahlem Property and a family trust owned the Dry Creek Property. Appellant also declared that "all real property is owned by family trusts and no real property are marital assets." Appellant further declared that all real estate was purchased by trust assets that were themselves acquired through smart real estate investments by the family trusts. Appellant asserted that "[a]ll real property acquired during our marriage is owned by family trusts," and that the real properties "have never been marital assets." Appellant declared that he played a key role in the property's success as an AirBNB rental and that the income from the rental was a trust asset but did not deny that the rental income was their main source of income.

On March 22, 2022, Lilly filed a reply declaration that in part identified a number of ways in which the CGH trust failed to comply with the California Probate Code. Lilly also declared that Beverly Ketter was destitute and contributed nothing towards the acquisition of any real estate. Lilly declared that the true settlors of the CGH trust were the Harts and all assets held by the CGH trust were community property.

Appellant's Trial Brief

On December 2, 2022, appellant filed a trial brief in preparation for a division of property hearing. In part, the trial brief stated that he and Lilly were cotrustees of multiple family trusts. Under a section entitled "Settled Issues," appellant stated that he would resign as cotrustee of the NFA trust, Lilly would be the sole trustee of the NFA trust, Lily would resign from the CGH trust, and appellant would be the sole trustee of the CGH trust. Under a section entitled "Issues To Be Litigated At Trial," appellant identified the following issues (1) the worth and equal split of a trust asset, the Three Rivers Property owned by the OOH trust, in which the Harts were cotrustees; (2) the equal split of the value of the Dahlem Property owned by the NFA, in which the Harts were cotrustees; and (3) the equal split of the value of the Dry Creek Property owned by the CGH trust, in which the Harts were cotrustees. Finally, under a section entitled "[Appellant's] Proposal of Resolution of Issues," appellant addressed the Dahlem and Dry Creek Properties. With respect to the Dahlem property, appellant proposed that he would resign as cotrustee of the NFA trust, Lilly would be the sole trustee, and Lilly would have the right to "transfer assets into other trusts or name different beneficiaries if desired," and appellant would no longer have any rights to the trust or trust property. With respect to the Dry Creek Property, appellant proposed that Lilly would resign as the cotrustee of the CGH trust, appellant would be the sole trustee, and appellant would have the right to "transfer assets into other trusts or name different beneficiaries if desired," and Lilly would no longer have any rights to the trust or trust property.

Lily's Trial Brief

Lilly filed a trial brief on December 6, 2022. In part, Lilly represented that the parties had placed a stipulation on the record in March 2022 regarding the real properties at issue. The stipulation represented that the Dahlem Property was confirmed to Lilly, the Dry Creek Property was confirmed to appellant, and the Three Rivers Property would be sold with the proceeds divided and equalized per a final division. Under a section entitled "Community Property Assets and Debts," Lilly's brief identified: the Dahlem Property and noted that it was confirmed to her, the Dry Creek Property and noted that it was confirmed to appellant, and the Three Rivers Property and noted that the Harts had agreed to sell the property and divide the proceeds.

Final Division and Distribution of Property Hearing

On December 16, 2022, the divorce court held a recorded hearing regarding the division and distribution of the Harts' marital property. The distribution hearing appears to have been preceded by five days of argument and evidence. At the distribution hearing, the court stated that it would "make findings on the record." The...