Judge David J. Cowan, Case Number: 20STPB09955, Date: 2024-08-23 Tentative Ruling

TENTATIVE RULING ON MOTIONS OF RONALD REAGAN PRESIDENTIAL FOUNDATION & INSTITUTE TO TRY PETITIONS IN ORDER

In the Matter of the David Martin Finkelstein Trust dated September 18, 2020, Case No. 20STPB09955 (related to the Matter of the Teresa A. Yui Life Estate Trust, Case No. 21STPB07420 and the Estate of David Martin Finkelstein, Case No. 20STPB08825)

On October 15, 2020, David Martin Finkelstein (“Finkelstein”), settlor of the David Martin Finkelstein Trust dated September 18, 2020 (“the Trust”), died.

On December 1, 2020, Jeffrey L. Condon (“Condon”), as executor of Finkelstein’s estate filed a petition for appointment of Dawn Mills (“Mills”) as successor trustee of the Trust and its Sub-Trusts (including the Teresa A. Yui Life Estate Trust (“Yui Trust”)). As executor, Condon asserts that he is an “interested person” for purposes of filing this petition to assure that Finkelstein’s estate is protected by the Trust. Residuary beneficiary National Park Foundation (“NPF”) joined in the petition.

On December 17, 2020, the court appointed Mills as interim trustee of the Trust (and of the Yui Trust.) Mills continues to act in that capacity. No person has been appointed successor trustee of the Trust or of the Yui Trust.

On July 6, 2021, beneficiary Ronald Reagan Presidential Foundation and Institute (“RRPFI”) filed objection to the appointment of Mills as successor trustee of the Yui Trust. Mills is not seeking appointment as trustee of the Yui Trust.

On February 24, 2022, Mills filed her petition for approval of her first account current.

On November 16, 2022, Yui filed objections to Mills’ first account current and related petitions.

On August 9, 2023, Yui filed a joinder in RRPFI’s objection to Mills’ second account.

On May 24, 2024, Judge Gus May transferred to a long-cause trial court six contested pending petitions in this case. By reason of a peremptory challenge to the judge in that long-cause court, the case was reassigned to this courtroom.

On June 24, 2024, this Court held an initial status conference to discuss the state of this case and heard competing views as to how to best try the issues involved. The Court ordered the parties to meet and confer on this issue and file a motion if there was no agreement. The Court also ordered that any further petitions for appointment be filed by July 8, 2024 and any objections thereto be filed by August 8, 2024.

On July 8, 2024, RRPFI filed this motion to try the petitions for appointment of a successor trustee in advance of the petitions for approval of the first through third petitions for approval of the first, second and third accounts of interim trustee Mills.[1] RRPFI contends the appointment petitions will take a short amount of time to try whereas trial of the accounting petitions will be prolonged. RRPFI asserts trial on the appointment will be short as Condon is not an interested party (since he is not a beneficiary) and therefore lacks standing to have filed a petition for appointment.

On July 8, 2024, beneficiaries City of Hope (“C of H”) and Dollywood Foundation filed a petition to appoint Aileen Federizo successor trustee of the Trust. Yui and RRPFI filed joinder in petition on same date. The Trust provides if Finkelstein was unable to serve as trustee, then Union Bank shall act as trustee and if Union Bank is not able to act then U.S. Bank shall act as trustee. Both banks have declined to act as trustees. As beneficiaries of the Trust, Petitioners nominate Federizo, a professional private fiduciary, in lieu of a trust company, under Probate Code sec. 15660(d), where the Trust holds only cash and real property to be distributed that it would be uneconomical for a trust company to serve as successor trustee.

On July 8, 2024, C of H also filed a joinder in Yui’s objection to Mills’ third account.

On July 29, 2024, RRPFI filed objection to Mills’ Account Current. The objection raises a number of issues, including the alleged failure by Mills to make distributions to the Yui Trust. Certain of the matters raised pertain to earlier account periods.

On August 8, 2024, Mills filed opposition to this motion. Mills asserts that the first accounting petition can be disposed of summarily as there were not any timely objections filed within the permitted 90 days.

On August 8, 2024, Mills also filed an objection to the petition to appoint Federizo. Mills objects to the petition on the basis that NPF nominated her as trustee. She also contends that beneficiaries have waived their right to appoint a successor trustee by not objecting to her continuing to serve as interim trustee since 2020, including her making a partial distribution. Further, Mills argues there is no vacancy that would allow for an appointment, and that even if there were a vacancy, the consent of all beneficiaries would be required. Further, she argues she needs to remain interim trustee to complete the partial distribution the Court recently authorized. Mills concludes that a petition for removal would be required for her trusteeship to be terminated.

As of August 8, 2024, no beneficiary (nor Condon) had filed any objection to the petition to appoint Federizo as successor trustee.

On August 15, 2024, C OF H filed joinders in Yui’s objection to Mills’ first account and related petitions, filed November 16, 2022, as well as in RRPFI’s objection to the first account.

On August 16, 2024, C of H and Dollywood Found. filed a Supplement to their petition attaching a withdrawal by NPF of its nomination of Mills as successor trustee and instead nominating Federizo as successor trustee.

It is apparent through a preliminary review of the court file that this case has been beset by considerable litigation for the last several years and that certain beneficiaries contend the interim trustee has done little in that time to further Finkelstein’s intent as settlor -- to their detriment. In turn, it appears substantial attorneys’ fees have likely been incurred.

Interim trustee’s term expires on the date of this hearing. There may then be a vacancy in the office of trustee (even if there was not one before when Mills was acting as interim trustee as Mills asserts and Movants dispute.)

The interests of beneficiaries prevail over the interests of an interim trustee. Given the turmoil to date, a successor trustee needs to be appointed to take charge forthwith – whether that be Mills or Federizo – to move beyond the litigation. Hence, the appointment and removal petitions should be heard first.

The Court also concurs that the objections to the accountings will likely take more trial time than the appointment / removal petitions. The surcharge requests will likely require evaluating why Mills took the actions she did (or failed to take necessary actions) – which is necessarily more complex than who is entitled to be appointed. While Mills argues beneficiaries have waived their right to object to the first account, it may be that the Court still needs to consider actions taken during the first account to decide the second and third accounts. Moreover, the second and third accounts are seemingly contested even if the first may not be. RRPFI indicates also that resolution of who is to be successor trustee may help resolve the accounting issues.

It may also be that the appointment petitions are effectively without controversy: RRPFI argues Condon has no standing to nominate a successor trustee where Finkelstein’s estate is not a beneficiary of the Trust and that therefore the Court should sustain their objection to the consideration of Condon’s competing petition to appoint Mills as successor trustee. In addition, Condon has filed a petition for approval of his final account in the estate case – seemingly thereby indicating he has no further interest in the Trusts. In turn, no beneficiary now supports Mills serving as successor trustee given the change in position of NPF. Conversely, Mills argues there is no vacancy and that Federizo cannot be appointed without the agreement of all beneficiaries.

Finally, as concerns the Yui Trust, where it appears Mills is not going to serve as successor trustee, it is not clear why Alex Borden should not now be appointed successor trustee of that trust.[2]

For these reasons, the Court grants the motions. The petitions for appointment and for removal (if necessary) will be heard together and the Court sets a trial date of September 3, 2024. Mills will continue to serve as interim trustee through a decision after trial.

[1] RRPFI also filed an identical motion in the related Yui Trust case.

[2] On October 26, 2021, Mills filed a petition for approval of a settlement among certain parties. Among other provisions, Mills would resign as interim trustee of the Yui Trust and Alex Borden would serve as trustee. It appears this petition also remains pending and should be decided also.