Judge Daniel S Belsky, Case 37-2023-00020484-PR-TR-CTL 2024-02-01 Tentative Ruling

Judge: Daniel S Belsky, Case: 37-2023-00020484-PR-TR-CTL, Date: 2024-02-01 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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CENTRAL COURTHOUSE TENTATIVE RULINGS - January 31, 2024

02/01/2024 02:00:00 PM 504 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Daniel S. Belsky

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Probate Trust Proceedings Demurrer / Motion to Strike (Probate) 37-2023-00020484-PR-TR-CTL IN THE MATTER OF THE MIGUEL M. AZUCENA AND MIGUELINA S. AZUCENA REVOCABLE TRUST DATED JUNE 19, 2009 [IMAGED] CAUSAL DOCUMENT/DATE FILED: Demurrer, 11/22/2023

Pursuant to Superior Court of San Diego County Local Rules, rule 4.23.7, the Court's tentative ruling is as follows: The Demurrer filed by Laura Azucena (ROA 22) is SUSTAINED without leave to amend.

The Request for Judicial Notice filed by Laura Azucena (ROA 24) and the Request for Judicial Notice filed by Alfredo Azucena and Michael Azucena (ROA 33) are GRANTED pursuant to EC § 452(d) as court records. The Court takes judicial notice to the extent permitted. (Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1564-1565 ['The truth of matters asserted in court records and official acts are not subject to judicial notice.'].) I. BACKGROUND The case concerns the Miguel M. Azucena and Miguelina S. Azucena Revocable Trust dated June 19, 2009 ('Trust').

On May 12, 2023, Alfredo Azucena and Michael Azucena ('Petitioners'), who are Miguel's children and the stepchildren of Miguelina, filed a Petition for Order: (1) For Reformation of Trust Based on Fraud, Mistake, or Unconscionable Conduct; (2) For Return of Wrongfully Taken Trust Assets, Double Damages; and (3) Compelling Respondent to Account ('Petition'). (ROA 1, Amendment at ROA 5, Supp. Pet. at ROA 11.) The Petition alleges that: on information and belief, in or about June 2009, Trustee prepared or caused to be prepared a Declaration of Trust, which provided for Trustee to receive one half of the Trust assets upon the death of the settlors, Miguel M. Azucena and Miguelina S. Azucena, and made no provision for a distribution to Petitioners; Miguel predeceased Miguelina, having died in February 2018; Miguelina died on September 27, 2021; at all times mentioned, the settlors intended that the Trust provide that one half of their assets be distributed to Petitioners and Trustee in equal shares, 'so that each of Miguel's children would receive a one sixth (1/6) interest in the Trust Assets upon the death of both' settlors; Trustee, or someone acting at her direction, misled settlors with respect to the terms of the Trust so that neither of them realized that by executing the Trust they would be effectively disinheriting Petitioners; the Trust was prepared and executed at a time when neither settlor was capable of reading and/or understanding the terms of the Trust; at the time the Trust was executed, Trustee and her son, Alejandro, were living with settlors and assisting them with their activities of daily living, including financial transactions, 'giving rise to a confidential relationship with [settlors] so that [Trustee], or Calendar No.: Event ID: TENTATIVE RULINGS

3060550 CASE NUMBER: CASE TITLE: IN THE MATTER OF THE MIGUEL M.

AZUCENA AND MIGUELINA S. 37-2023-00020484-PR-TR-CTL someone acting at her direction, was able to utilize affection, persuasion, isolation, coercion, or similar tactics in order to improperly influence [settlors] to execute the Trust with a distribution scheme that was contrary to their intent'; and at the time settlors executed the Trust, they lacked testamentary capacity to do so. (ROA 1, Pet. at ¶¶ 1-5.) Attached to the Petition is copy of the Trust. (Exh. A.) On November 22, 2023, Laura Azucena ('Trustee') filed the instant demurrer to the Petition. (ROA 22.) Trustee demurs to the entire Petition pursuant to CCP § 430.10(e) on the ground the entire Petition fails to state facts sufficient to constitute a cause of action against Trustee, both individually and in her capacity as the trustee of the Trust.

Specifically, as to the first cause of action for reformation, Trustee demurs on the grounds that the first cause of action fails to state facts sufficient to constitute a cause of action against Trustee, both individually and in her capacity as the trustee, and it is uncertain in that it cannot be determined from the Petition how the beneficial interests of the present beneficiaries will be modified to achieve the requested distribution of 1/6 of the trust estate to each of the Petitioners, nor can it be determined from the Petition how the 'other' one-half of the trust estate should be distributed. (CCP § 430.10(e), (f).) As to the second cause of action for return of trust property, Trustee demurs on the grounds that the second cause of action fails to state facts sufficient to constitute a cause of action against Respondent, both individually and in her capacity as Trustee, and it is uncertain in that it cannot be determined from the Petition what property was wrongfully taken or what conduct by Trustee was wrongful. (CCP § 430.10(e), (f).) As to the third cause of action for accounting, it fails to state facts sufficient to constitute a cause of action against Trustee, both individually and in her capacity as the trustee. (CCP § 430.10(e).) On January 19, 2024, Petitioners filed an opposition. (ROA 32.) On January 25, 2024, Trustee filed a reply. (ROA 35.) II. DISCUSSION A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) A demurrer is treated 'as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.

[Citation.] [Courts] also consider matters which may be judicially noticed.' (Serrano v. Priest (1971) 5 Cal.3d 584, 591.) No other extrinsic evidence can be considered (i.e., no 'speaking demurrers'). (Ion Equip. Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881.) The complaint must be liberally construed and given a reasonable interpretation, with a view to substantial justice between the parties. (Amarel v. Connell (1988) 202 Cal.App.3d 137, 140–141; see also, Poseidon Development, Inc. v. Woodland Lane Estates, LLC, supra, 152 Cal.App.4th 1106, 1111-12 [in ruling on demurrers, courts treat as being true 'not only the complaint's material factual allegations, but also facts that may be implied or inferred from those expressly alleged'].) A complaint should provide defendants sufficient notice of the cause of action stated against them so that they are able to prepare their defense. (People ex rel. Dept. of Transportation v. Superior Court (1992) 5 Cal.App.4th 1480, 1486.) A. Demurrer Here, Trustee argues the Petition alleges that Miguel and Miguelina lacked testamentary capacity at the time the Trust was executed, that they also lacked contractual capacity to understand the terms of the Calendar No.: Event ID: TENTATIVE RULINGS

3060550 CASE NUMBER: CASE TITLE: IN THE MATTER OF THE MIGUEL M.

AZUCENA AND MIGUELINA S. 37-2023-00020484-PR-TR-CTL Trust, and that Respondent took advantage of these conditions to fraudulently procure the execution of the Trust. However, where there is fraud in the execution, such as due to the settlor's blindness and illiteracy, or the instrument is obtained through undue influence, the instrument is void.

In opposition, Petitioners argue that the Petition states a cause of action for reformation and the proposition that a void Trust instrument cannot be reformed as a matter of law is incorrect. Thus, the ultimate issue under the first cause of action is whether the Trust is valid, or void based on the various allegations of undue influence and misconduct by Trustee.

Petitioners do not address the argument that a void instrument cannot be reformed. Instead, Petitioners cite to Ike v. Doolittle (1998) 61 Cal.App.4th 51, 85 ('Ike'), arguing that reformation is an available remedy. However, the issue in Ike was ambiguity in the trust terms, and the Court considered extrinsic evidence of the settlor's intent to resolve the ambiguity. By contrast, Petitioners' allegations are not based on any ambiguity of the Trust terms but based on the lack of mental capacity of the settlors and attendant fraud/undue influence committed by Trustee.

Petitioners further argue that 'reformation is appropriate when through mistake or fraud, a trust fails to express the true intentions of the Parties [sic],' citing to Carman v. Athearn (1947) 77 Cal.App.2d 585, 594 ('Carman'). However, Carman did not address reformation of a contract, and instead dealt with amending the pleadings to conform to proof. (Ibid. ['Defendant strenuously objects to the ruling of the trial court made after submission of the cause permitting the filing of the two amendments to conform to the proof by which reformation was sought'].) Thus, the authority on which Petitioners rely do not establish that reformation is an available remedy under the circumstances pleaded in the Petition.

Petitioners also contend that Trustee conceded in a prior civil lawsuit (in Case No. 22-6717) that Petitioners' remedy was to seek rescission or reformation of the Trust in Probate, but now inconsistently contends that Petitioners have not stated a cause of action for reformation.

Whether Trustee conceded or not that the proper remedy was reformation in a prior lawsuit, there is no argument as to how this concession affects the demurrer, which tests the sufficiency of the pleadings and not the merits of the cause of action. Petitioners may have a claim for reformation, however, as pleaded, the allegations in the Petition are legally insufficient to sustain a cause of action for reformation.

Thus, Petitioners' argument is unavailing.

Leave to amend should be granted where there is reasonable possibility the defect(s) in the complaint may be cured by amendment. (Blank v. Kirwan, supra, 39 Cal.3d 311, 318.) A plaintiff bears the burden to show the pleadings may be cured. (Ibid.) Petitioners do not show how the Petition may be amended to cure the defect noted. Petitioners simply state that 'for instance, if the Court is troubled by the allegation on information and belief ...' regarding the settlors' mental capacity, 'this can be remedied by way of an amended pleading ...' (ROA 32, Oppo.

at p. 6.) The issue is not that the allegations are made on information and belief, since for purposes of ruling on a demurrer, the allegations in the Petition are taken as true. The issue is that the Petition essentially alleges that the Trust is void because its execution was induced by fraud and/or undue influence. If the Court finds fraud/undue influence, or some misconduct through which the Trust was executed, then the entire trust document would be invalidated. The issue is not one of contract interpretation based on an alleged ambiguity. Thus, Petitioners fail to establish how this defect may be cured by amendment.

Therefore, the demurrer to the first cause of action for reformation is SUSTAINED without leave to amend.

Based on the sustaining of the demurrer to the first cause of action, the demurrer to the remaining causes of action must be sustained without leave to amend because Petitioners effectively lack standing Calendar No.: Event ID: TENTATIVE RULINGS

3060550 CASE NUMBER: CASE TITLE: IN THE MATTER OF THE MIGUEL M.

AZUCENA AND MIGUELINA S. 37-2023-00020484-PR-TR-CTL to bring those claims: (1) a claim under Probate Code §§ 850 and 859 for return of property and double damages, for which the Petition does not allege standing apart from the one they would obtain if the Trust was reformed, and (2) a claim for accounting.

Petitioners' opposition does not show how the Petition may be amended to allege standing to bring the second and third causes of action. Indeed, the Petition itself is devoid of any allegations regarding a section 850 petition, which is necessary to sustain double damages pursuant to Probate Code § 859, and no properties are identified for return. If the Trust is deemed valid, then there would be no property to return to the Trust and no accounting to provide to Petitioners, who are not beneficiaries under the existing trust.

Therefore, the demurrer to the second cause of action for return of property and third cause of action for accounting is SUSTAINED without leave to amend.

Counsel for Trustee is directed to serve written notice of this ruling on all parties in accordance with the provisions of CCP § 1019.5(a).

IT IS SO ORDERED.

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