Smith v. Myers

323 Cal.Rptr.3d 157

103 Cal.App.5th 586

Kathleen SMITH, et al., Plaintiffs, Cross-defendants and Respondents,

v.Emma MYERS, as Trustee, etc., Defendant, Cross-complainant and Appellant.

C098169

Court of Appeal, Third District.

Filed June 27, 2024

APPEAL from a judgment of the Superior Court of Glenn County, Donald Cole Byrd, J. Affirmed. (Super. Ct. No. 20PR01166)

James P. McKenna, Chance M. Hansen, Peters, Habib, McKenna, Juhl-Rhodes & Cardoza, LLP, 414 Salem Street, P.O. Box 3509, Chico, CA 95927, for Cross-defendant and Respondent.

Mark Johnson, Attorney at Law, 2531 Forest Avenue, Suite 100, Chico, CA

95928, for Cross-complainant and Appellant.

Summary Of The Appeal

HULL, Acting P. J.

More than three years after the death of Ernest Myers, petitioners and appellees Kathleen and Bruce Smith filed a petition to confirm the validity of a 2016 amendment to a trust, which Ernest had established in 1992 and reestablished in 2000. Under the amendment, the Smiths would gain Ernest’s 54.2 percent interest in real property in which they already held a 45.8 percent interest. Without the 2016 amendment, the trust gave Ernest’s interest to trial-court respondent and appellant Emma Myers. Given common last names, in this decision we refer to the parties and the decedent by their first names, except we refer to Kathleen and Bruce together as the Smiths.

Emma filed a motion for summary adjudication in which she argued the Smiths’ petition to have the amendment declared valid was barred by the statute of limitations contained in Code of Civil Procedure section 366.3 (section 366.3). Section 366.3, subdivision (a), states, "[i]f a person has a claim that arises from a promise or agreement with a decedent to distribution from an estate or trust or under another instrument, whether the promise or agreement was made orally or in writing, an action to enforce the claim to distribution may be commenced within one year after the date of death, and the limitations period that would have been applicable does not apply."

The trial court concluded that the statute of limitations contained in section 366.3 does not apply to the Smiths’ petition and denied the motion for summary adjudication. After a bench trial, the trial court entered a judgment in favor of the Smiths.

On appeal, Emma argues the trial court incorrectly interpreted section 366.3 and incorrectly denied her motion for summary adjudication. We find the trial court correctly concluded section 366.3 does not apply. Because our resolution of this issue resolves this appeal in its entirety, we do not consider arguments the parties made regarding whether Emma could bring this appeal and affirm the trial court judgment.

Facts And History Of The Proceedings

Factual Background

Kathleen is Ernest’s daughter. Bruce is Kathleen’s husband. Emma is Ernest’s widow.

Ernest owned an agricultural property that consisted of two parcels (the ranch). In 1992, after the death of his prior wife, Ernest granted Kathleen a 45.8 percent interest in the ranch.

In 1999, Ernest married Emma.

On March 14, 2000, Ernest restated the Ernest Wilbur Myers 1992 Family Trust (trust). In the trust, as restated in 2000, Ernest stated he purposefully made no gifts to Kathleen, and he provided no gift to Bruce. The 2000 trust document states Ernest did not make a gift to Kathleen because he had or would make a gift of real or personal property to her outside of the trust. The trust directed the trustee to distribute Ernest’s remaining 54.2 percent interest in the ranch to Emma upon Ernest’s death. According to the trust, during his life, Ernest was both the settlor and trustee of the trust.

An amendment to the trust dated July 19, 2016, (amendment), which Emma maintained was not valid, identified the Smiths as beneficiaries of the trust. According to the amendment, Ernest’s remaining right, title, and interest in the ranch was to be transferred to the Smiths upon his death.

Emma was to continue to receive income from rental units located on the ranch.

Ernest died on August 22, 2016. Upon Ernest’s death Emma became the trustee of the trust.

Proceedings in the Trial Court

On July 10, 2020, the Smiths filed a petition (1) for an order confirming the validity of the amendment; and (2) to remove Emma as the trustee of the trust. The petition alleged that under the terms of the amendment the Smiths were to receive title and possession of the ranch. Accordingly, in their prayer for relief, the Smiths requested an order that Emma transfer the ranch to them.

The petition alleged it concerned the internal affairs of the trust and, consequently, that the trial court had subject matter jurisdiction in the matter under Probate Code section 17200.

Emma filed a demurrer to the petition. As one of the stated grounds for demurrer, Emma argued that Bruce was not entitled to seek an order confirming the validity of the amendment, because he "failed to file his claim that the decedent left him a testamentary gift through a trust amendment within one year of the decedent’s death," and was, therefore, time barred from seeking the requested order under section 366.3. The trial court overruled the demurrer in its entirety.

In her response to the petition, Emma asserted a statute of limitations defense based in part on section 366.3.

Emma filed a cross-petition to, among other things, invalidate the amendment. Emma alleged Ernest’s execution of the amendment was "not his free and voluntary act in that" the Smiths "procured it through undue influence."

Emma filed a motion for summary adjudication related to the Smiths’ request to confirm the validity of the amendment. In her motion, Emma argued the Smiths’ claim was barred by the statute of limitations contained in section 366.3. The trial court denied the motion, concluding the statute of limitations in section 366.3 did not apply because the petition was regarding, "the internal affairs of a trust, not a promise relating to a distribution."

Emma filed a motion for reconsideration of its denial of her motion for summary adjudication. The trial court denied that motion.

On February 6, 2023, following a bench trial, the trial court issued a judgment in favor of the Smiths. It found the amendment valid, ordered Emma to transfer interest in the ranch to the Smiths as set forth in the amendment, denied Emma’s cross-petition, and awarded costs to the Smiths.

Emma filed a notice of appeal on March 14, 2023.

Discussion

I Principles of Review

[1] "The relevant facts are undisputed. The key issue is the interpretation and application of Code of Civil Procedure section 366.3. ‘Questions of statutory interpretation, and the applicability of a statutory standard to undisputed facts, present questions of law, which we review de novo. [Citation.]’ (Jenkins v. County of Riverside (2006) 138 Cal.App.4th 593, 604, 41 Cal. Rptr.3d 686 [ ] [Fourth Dist, Div. Two].)" (Estate of Ziegler (2010) 187 Cal.App.4th 1357, 1363, 114 Cal.Rptr.3d 863 (Ziegler); see also American Alternative Ins. Corp. v. Superior Court (2006) 135 Cal.App.4th 1239, 1245, 37 Cal.Rptr.3d 918 ["The ruling on a motion for summary adjudication presents a question of law, so therefore, our review is de novo"].)

[2, 3] " ‘ "Our fundamental task in interpreting a statute is to determine the Legislature’s intent so as to effectuate the law’s purpose." ’ (Carsori Citizens for Reform v. Kawagoe (2009) 178 Cal.App.4th 357, 366, 100 Cal.Rptr.3d 358 [ ]; see Fluor Corp. v. Superior Court (2015) 61 Cal.4th 1175, 1198, 191 Cal.Rptr.3d 498, 354 P.3d 302 [ ].) ‘ " ‘We begin with the plain language of the statute, affording the words of the provision their ordinary and usual meaning and viewing them in their statutory context, because the language employed in the Legislature’s enactment generally is the most reliable indicator of legislative intent.’ [Citations.] The plain meaning controls if there is no ambiguity in the statutory language. [Citation.] If, however, ‘the statutory language may reasonably be given more than one interpretation, " ‘ "courts may consider various extrinsic aids, including the purpose of the statute, the evils to be remedied, the legislative history, public policy, and the statutory scheme encompassing the statute." "" " ’ (Fluor Corp., supra, at p. 1198, 191 Cal.Rptr.3d 498, 354 P.3d 302.)" (Center for Biological Diversity v. Department of Conservation, etc. (2019) 36 Cal.App.5th 210, 231-232, 248 Cal.Rptr.3d 449.)

II Applicability of Section 366.3

A. Plain Language Interpretation

[4] Section 366.3 does not apply to the Smiths’ petition to validate the trust instrument given the plain language of that provision.

Section 366.3, subdivision (a), starts with words that state it applies "[i]f a person has a claim that arises from a promise or agreement with a decedent to distribution from an estate or trust or under another instrument."

The word "promise" means "a declaration that one will do or refrain from doing something specified," "a legally binding declaration that gives the person to whom it is made a right to expect or to claim the performance or forbearance of a specified act," or "[a] reason to expect something." (Merriam-Webster’s Collegiate Diet. (11th ed. 2003) p. 994, col. 1.) The word "agreement" means, "the act or fact of agreeing," "harmony of opinion, action, or character," "an arrangement as to a course of action," "a contract duly executed and legally binding," or "the language or instrument embodying such a contract." (Merriam-Webster’s Collegiate Dict. (11th ed. 2003) p. 26, col. 1.)

[5] Thus, section 366.3’s statute of limitations applies if a claim is based on "a [decedent’s] declaration that [the decedent would] do or refrain from doing something specified" or "an arrangement" with the decedent, in which the decedent had promised or agreed to arrange for the claimant to receive a distribution from an estate, trust, or other instrument.

Here, the Smiths are not alleging that Ernest made an agreement with...