Judge David J. Cowan, Case Number: 17STPB03682, Date: 2023-10-26 Tentative Ruling

TENTATIVE RULING ON MOTION OF RECEIVER FOR APPROVAL OF FINAL ACCOUNT AND RELATED PROVISIONS

In re: Ruth Williamson 2011 Trust dated August 11, 2011, Case No. 17STPB03682 (related to Case Nos. 17STPB02381, YC071970 and YC071983)

By this motion, Receiver seeks to close the extended litigation in the courts of this state, as well as in Utah, requiring him to manage numerous entities owning assets here and in Utah. He files this motion at the request of the beneficiaries - though litigation continues between them - to lower costs where the underlying assets have now been liquidated and facilitate potential distribution of the remaining amounts he continues to hold.

On July 26, 2018, R. Todd Neilson was appointed trustee of the so-called 101 Trusts, as well as Receiver of various entities owned by those Trusts (“Receiver”). The appointment was clarified by order filed October 29, 2018 -- that included for Receiver to conduct an audit of the underlying businesses respondent Thomas Williamson (“Thomas”) had been managing and filing a report.

On August 13, 2020, by stipulation, the Court approved Receiver making a distribution to beneficiaries.

On November 5, 2020, the Court approved Receiver making a further distribution to beneficiaries.

On March 2, 2022, the Court approved Receiver making another distribution to beneficiaries.

On September 28, 2023, the Court filed its seven-page ruling on motion of Respondents for approval of the audit report and on objections thereto, overruling each of Respondents’ four objections, including relevant to this motion Respondents’ contentions as to actions Receiver took in Utah, as well as conclusions Receiver reached as to Thomas’ management of the businesses following his audit.

On November 17, 2023, all interested parties and Receiver filed a stipulation for notice of termination of receivership, for submission of a final report and for Receiver to remain involved in a limited capacity pending final determination of the underlying and related disputes between the parties.

On November 30, 2023, Receiver filed his final account, providing a detailed chronology of events and attaching relevant transactions, as well as filing the required notice of termination of receivership.

On December 8, 2023, Receiver filed a motion for approval of his final account, termination of the receivership and discharge, reservation of rights to request a reserve and indemnification.

On December 20, 2023, Thomas filed a Response and Objections to the motion. In summary, he argues as follows:

First, that there has not been an evidentiary hearing concerning the audit report. Relatedly, that the Court’s rulings on the motions for distributions were “without prejudice.” In turn, he is not opposed to approval of the report if it does not prejudice a hearing on the merits of his objections. If approval would prejudice such hearing, he requests an evidentiary hearing on this motion.

Second, he disputes Receiver’s conclusions that he did not “cooperate” with Receiver. He also contends Receiver’s actions in Utah were unlawful and hence Receiver should not be awarded fees he and his attorneys incurred in connection therewith. In particular, he disagrees with Receiver’s argument that his actions in Utah were due to “antagonism” on his part.

Third, notwithstanding the foregoing, he is also requesting termination of the receivership – consistent with his contention that one should never have been started in the first place.

On December 27, 2023, Petitioners filed a Response to Respondents’ response and Objections to the motion. They argue that the Court has already overruled the objections Thomas again raises in the opposition, including by way of its order filed September 28, 2023. As a result, they assert that Thomas is not entitled to an evidentiary hearing concerning those objections or the earlier orders for distribution.

On December 27, 2023, Receiver filed a Reply. He reiterates Petitioners’ above-referenced response, as well as clarifies that he is not now seeking a reserve; only reserving his right to request one, should the need arise, consistent with the stipulation of the parties, including Thomas, filed November 17, 2023.

This Court’s ruling filed September 28, 2023 explained at length why the Court could not then either approve the audit report – as there was no basis or reason to do so - nor address the Court’s earlier orders approving distributions of significant sums by the Receiver. Further, the Court overruled Thomas’s objections to a conclusion the Receiver reached concerning Thomas’ management of the businesses, as well as his contentions about the Receiver’s actions in Utah.[1] Thomas provides no grounds why the Court could or should change those rulings now. They apply equally to Thomas’ objections in the context of this motion.

Moreover, it appears to the Court that Thomas is seeking to have it both ways: On the one hand, he agrees the receivership should now be terminated but on the other hand he seeks to preserve his objections and any rights to an evidentiary hearing concerning approval of the report – that might preclude the Court now terminating the receivership.[2] Other than repeating claims this Court has in certain instances more than once rejected, he does not now set forth what precisely requires an evidentiary hearing. The Court does not find Receiver’s comment concerning the level of cooperation offered by Thomas, or whether he was antagonistic to the Receiver, to be material to approval of the final report. These findings are collateral to the principal findings in the audit as to Thomas’ management of the entities. Hence, even assuming for sake of argument the Court were to agree with Thomas in this regard (notwithstanding Thomas having brought an action against the Receiver (which was terminated in favor of the Receiver)), it would not change what the Receiver concluded as to Thomas’ management of the Entities or provide any reason not to approve this final account. There is nothing else Thomas has now stated requiring an evidentiary hearing even assuming he had a right to one on this motion. Thomas cannot save for another day the nature of objections he was under an obligation to submit as part of any opposition to the motion.

Given Thomas’ objections that the costs of this receivership were unjustified and excessive, the Court took special note of Receiver’s summary in Ex. 21 of his fees, as well as the fees of its attorneys. While the totals are obviously high, that is not unexpected given the time spent over a multi-year period and contested circumstances here, as set forth in the final report. That work included the audit of seven years of Thomas’ management, litigation brought by Thomas against the Receiver, as well as complex administration and sale of multiple assets belonging to different entities. Bearing in mind the cost of this type of business litigation, the fees of similar professionals and the value of the assets involved, the Court has no reason to believe these fees are not reasonable.[3] Thomas does not provide any basis for the Court to conclude that the fees are unwarranted or unreasonable, except generalized complaints inconsistent with the documented history here.

Finally, Thomas’ objection concerning a reserve is inconsistent with his own earlier agreement. Receiver’s proposed order is reasonable given the parties’ joint interest in terminating this receivership, and the costs associated therewith, notwithstanding there remains considerable litigation still pending between the parties.

“The right to an evidentiary hearing, however, is not absolute. As in all civil actions, a party is entitled to present evidence only if the evidence is “competent, relevant and material” to a disputed issue. (Estate of Horman (1968) 265 Cal.App.2d 796, 808–809; see § 1000; Evid. Code, §§ 210, 351, 352.) In ruling on these matters, a probate court has flexibility to manage its proceedings to further the Estate’s best interests and reduce unnecessary expenses. (See Estate of Ferber (1998) 66 Cal.App.4th 244, 253.)

Under the principles set forth above, a trial court may require, for example, an offer of proof before permitting oral testimony and may order that the offer be specific in identifying the purpose of the testimony, the name of the proposed witnesses, and the general content of the answers to be elicited. (See In re Grace P. (2017) 8 Cal.App.5th 605, 612; see also In re Mark C. (1992) 7 Cal.App.4th 433, 444.) “An offer of proof should give the trial court an opportunity to change or clarify its ruling and in the event of appeal would provide the reviewing court with the means of determining error and assessing prejudice. [Citation.] To accomplish these purposes an offer of proof must be specific. It must set forth the actual evidence to be produced and not merely the facts or issues to be addressed and argued.” (People v. Schmies (1996) 44 Cal.App.4th 38, 53, italics added.) If the offer does not show that the proposed testimony would be relevant and material, the court has the discretion to deny the request. (See Conservatorship of McElroy (2002) 104 Cal.App.4th 536, 553–555”

Estate of Chamberlin (2018 WL 66955900 (unpublished opinion concerning the hearing on an approval of an accounting)) See also Conservatorship of Farrant (2021) 67 Cal.App.5^th 370, 378 (finding no abuse of discretion denying evidentiary hearing where “[i]nstead of specifying the factual issues he intended to litigate and the relevant evidence (testimony and exhibits he would produce at the hearing, appellant’s counsel made vague representations.”)

This Court follows the foregoing procedure to determine whether an evidentiary hearing is needed in this case.

For these reasons, the Court orders that Thomas file his offer of proof, consistent with the foregoing, by February 20, 2024, to determine the need for an evidentiary hearing. Petitioners may file a reply by February 26, 2024. In this way, the Court can determine whether to schedule an evidentiary hearing or if the Court will instead adopt this tentative ruling on the hearing date.

[1] Significantly, though the Court then admonished Thomas for not disclosing the complete history of what occurred in the Utah courts, Thomas again now repeats that Court’s initial temporary decision without also mentioning its subsequent conclusion after hearing from all parties. The Court concurs with Petitioners that this level of advocacy may be sanctionable.

[2] To the extent Thomas seeks to avoid any consequences resulting from approval of the final report because of the pending litigation, Receiver has indicated he takes no position concerning same. The issues to be decided do not concern Thomas’ management of the 101 Trusts.

[3] Thomas had the opportunity to contest specific fees and costs by way of the Compensation Procedure in the receivership order, whereby the parties were notified through-out this case what the fees were prior to their payment. Thomas did not obtain any order on any objections to those fees. He cannot now do so when he could have done so before.