Kalenian v. Insen

225 Cal.App.4th 569

170 Cal.Rptr.3d 755

Georgette KALENIAN et al., Plaintiffs and Appellants,

v.George Elias INSEN, as Trustee, etc., et al., Defendants and Respondents.

B248228

Court of Appeal, Second District, Division 5, California.

Filed April 14, 2014

Certified for Partial Publication.^*

See 13 Witkin, Summary of Cal. Law (10th ed. 2005) Trusts, § 232.

APPEAL from orders of the Superior Court of Los Angeles County, Roy L. Paul, Judge. Reversed and remanded with directions.(Los Angeles County Super. Ct. No. BP120314)

Osborn Law, Richard G. Osborn, Rancho Cucamonga, and Blair J. Berkley, Claremont, for Plaintiffs and Appellants.

MacLean Chung Law Firm and Graham Thomas MacLean, Jr., Burbank, for Defendants and Respondents.

TURNER, P.J.

I. INTRODUCTION

Plaintiffs, Georgette Kalenian, Ida Reza, Elizabeth Van Item and Alex Tony Insen (Alex),¹ appeal from an order denying their motion to vacate two December 15, 2011 dismissal orders. Plaintiffs filed a Probate Code ²section 17200 petition seeking to replace defendant, George Elias Insen (George),³ as trustee of the Elias George Insen Separate Property Trust and determine the trust's construction. On December 15, 2011, Judge Mitchell L. Beckloff dismissed plaintiffs' section 17200 petition and default prove-up request without prejudice. This dismissal resulted in plaintiffs being barred under the statutes of limitations from securing section 17200 relief. Plaintiffs contend they had no notice of Judge Beckloff's December 15, 2011 dismissal orders until October 29, 2012. On January 15, 2013, plaintiffs filed a Code of Civil Procedure section 473, subdivision (b) motion to vacate the December 15, 2011 dismissal orders. Plaintiffs argued they were entitled to Code of Civil Procedure section 473, subdivision (b) mandatory and discretionary equitable relief. On February 26, 2013, Judge Roy L. Paul denied plaintiffs' motion as untimely filed. In the published portion of the opinion, we hold plaintiffs may appeal the denial of the motion for relief from Judge Paul's order denying their motion to vacate. In the unpublished portion of the opinion we conclude plaintiffs are entitled to equitable relief from the December 15, 2011 orders. Thus, we reverse the orders under review.

II. BACKGROUND

A. The Elias George Insen Trust

Elias George Insen (Elias) had six children—Ms. Kalenian, Ms. Reza, Ms. Van Item, Alex, Juliet Ainian, and George. On June 23, 1999, Elias executed a written declaration of revocable living trust (the trust). The trust property included: property located at 1175 North Edgemont Street in Los Angeles (the Edgemont property); 50 percent of the property and a business, George's Auto Repair, located at 3655 West Pico Boulevard (the Pico property); a Washington Mutual savings account; a Washington Mutual checking account; and a 1984 Lincoln Continental. On July 21, 1999, Elias conveyed his interest in the Edgemont property to the trust.

Trust Article 1.023, concerning distribution of the trust balance, provides: “Upon the death of the Grantor [Elias], the Trustee hereof is directed to make the following specific distributions: [¶] [Alex], [the Edgemont property].... [George] is to continue to pay fifty percent (50%) of the outstanding mortgage payments on these properties. However, if [Alex] refinances these properties, then [George] is no longer obligated to pay fifty (50%) of the mortgages. [¶] [George], business (George's Auto Repair).... [¶] The balance of the Trust Estate shall be distributed to the following individuals, upon the principle of representation ( [i]f one of the beneficiaries of [Elias] dies, then his or her share will go equally to his or her then surviving issue. If no surviving issue exists, then distribute such deceased beneficiary's share equally among the surviving beneficiaries[ ] ), in the following percentages: [¶] [Ms. Kalenian] 25% [¶] [Ms. Ainian] 25% [¶] [Ms. Reza] 25% [¶] [Ms. Van Item] 25%.”

On May 8, 2003, George caused Elias to execute an “Amendment No. 1 to [the trust] dated June 23, 1999....” The trust amendment provided that defendant was to receive the Edgemont property. Defendant also caused Elias to execute a quitclaim deed conveying an undivided one-half interest in the Pico property to defendant.

Elias died on May 23, 2003. Defendant succeeded Elias as trustee of the trust. On December 19, 2003, defendant conveyed the Edgemont and Pico properties to himself. Defendant sold the Edgemont property and retained the sale proceeds.

B. Civil Action

On May 5, 2006, plaintiffs filed a civil action to cancel the trust amendment and quitclaim deed and for misappropriation damages of the trust's real property. ( Kalenian v. Insen (Super.Ct.L.A.County, 2009, No. BC351977).) Plaintiffs argued defendant used undue influence to acquire the trust amendment and quitclaim deed. On December 17, 2008, Judge Richard L. Fruin, Jr., issued the statement of decision. Judge Fruin found defendant obtained the trust amendment and quitclaim deed through undue influence and cancelled them. Judge Fruin also found defendant wrongfully misappropriated and sold the Edgemont property and awarded $743,225.51 in damages to Alex. Judge Fruin did not rule on the ownership of the Pico property, deeming it within the probate court's exclusive jurisdiction. On August 3, 2009, plaintiffs and defendant entered into a written settlement agreement. Under the terms of the settlement agreement: defendant agreed to resign as trustee; ownership of the Pico property would be determined by the probate court in an action filed by plaintiffs no later than December 31, 2009; and for statute of limitations purposes, plaintiffs' claims regarding the Pico property would be deemed filed on January 30, 2009.

C. Probate Action

On December 30, 2009, plaintiffs filed their section 17200 petition. It is this petition that was dismissed without prejudice on December 15, 2011 by Judge Beckloff. Plaintiffs allege defendant should be denied any trust benefits. On March 2, 2011, plaintiffs filed an amended section 17200 petition.

On November 19, 2010, defendant filed a section 850 petition to determine ownership of the Pico property. On May 13, 2011, plaintiffs filed a summary judgment motion regarding defendant's section 850 petition. On August 16, 2011, Judge Beckloff granted plaintiffs' summary judgment motion thereby resolving the section 850 petition. The order granting summary judgment was filed on December 22, 2011. Judge Beckloff also scheduled a default prove-up hearing pursuant to Code of Civil Procedure section 585 for September 27, 2011.

At the August 16, 2011 hearing, Judge Beckloff raised an issue concerning proof of personal service of presumably the section 17200 petition on George. The following transpired: “THE COURT: ... I have two notes with regard to your petition, which is, I don't have personal service on George.... So I don't know if you have that with you. [Plaintiff's counsel, Richard G.] OSBORN: I don't. [¶] THE COURT: And the notice didn't have the right to answer legend on it. [¶] So I think—do you have those items? [¶] MR. OSBORN: No, Your Honor. I just have the conformed first amended petition with me. [¶] Obviously, counsel for [George] has been here on a number of occasions. So to the extent that there's any problem with service, it seems to me that that's been waived by general appearance. [¶] THE COURT: I guess—why don't we do this, Mr. Osborn[?] Why don't I set it for a default prove-up [?] You can submit a new notice, just so that we're clear.” Judge Beckloff also gave Mr. Osborn additional time to file further evidence: “So if you needed to submit anything additional, you can submit it for the default prove-up date.... I'll deem it submitted on the default prove-up that day. [¶] And if [George] shows up, then I'll have to figure out why we don't have a response.”

On August 29, 2011, plaintiffs' counsel, Mr. Osborn, wrote a letter to defendant's attorney, Mr. Emerson, offering to stipulate to set aside default against defendant. On September 9, 2011, Mr. Osborn filed an ex parte application to continue the default prove-up hearing. Judge Beckloff continued the default prove-up hearing to December 15, 2011.

On December 12, 2011, plaintiffs filed their evidence in support of default judgment. Mr. Osborn declared that on December 12, 2011, his paralegal, Heather Schourup, contacted the probate court to advise that a mediation was scheduled. Ms. Schourup requested the default prove-up hearing be taken off calendar pending completion of the mediation. Ms. Schourup's declaration states, “The clerk, who was very cooperative, agreed to take the hearing off calendar.”

On December 15, 2011, Judge Beckloff denied without prejudice plaintiffs' default prove-up and their section 17200 petition. Judge Beckloff's oral pronouncement was, “Both matters denied without prejudice.” Mr. Osborn believed, based on being informed by Ms. Schourup, that the default prove-up hearing had been taken off calendar. The clerk served no notice from December 15, 2011 through 2012 regarding Judge Beckloff's ruling.

On February 29, 2012, the California State Bar suspended Mr. Emerson. In March 2012, Mr. Osborn first learned of Mr. Emerson's suspension. David I. Karp, the mediator, later cancelled the mediation because of Mr. Emerson's suspension. On May 13, 2012, Mr. Osborn filed a motion to recuse Mr. Emerson. On July 10, 2012, Judge Beckloff granted the motion and the order was filed on August 6, 2012.

On July 13, 2012, Mr. Osborn wrote a letter to defendant seeking to reschedule the mediation. Defendant then retained G. Thomas MacLean as counsel. On September 7, 2012, Mr. MacLean wrote to Mr. Osborn, “My office has been retained by George ... in the above matter, and I am also sending with this letter a copy of the substitution of attorney form[.]” On October 4, 2012, Mr. MacLean requested Mr. Osborn cancel the October 9, 2012 mediation. Mr. Osborn first...