Judge: Jon R. Takasugi, Case: 22STCV28181, Date: 2023-10-27 Tentative Ruling

Case Number: 22STCV28181    Hearing Date: March 1, 2024    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

Chabad of Ojai Valley’s (COV) motion to vacate the judgment and dismiss based on failure to join an indispensable party is DENIED.

            On 8/29/2022, Plaintiff Jeffrey A. Paris (Plaintiff) filed suit against the Estate of Reynold F. Paris, trustee of the Paris Family Trust, alleging: (1) rescission; (2) complaint in equity to set aside; (3) fraud; (4) fraud; (5) common counts; (6) common counts; (7) constructive trust; and (8) negligent infliction of emotional distress.

            Now, Chabad of Ojai Valley (COV) moves to set aside judgment and dismiss this case for lack of jurisdiction over the internal affairs of trusts.

Discussion

            This action arises out of a Stipulated Judgment entered 2/6/2023, which struck, in part, a $75,000 charitable gift to COV by the Third Amendment to the Paris Family Trust.

A person is an indispensable party to litigation if his or her rights must necessarily be affected by the judgment. Stated differently, ‘Where the plaintiff seeks some type of affirmative relief which, if granted, would injure or affect the interest of a third person not joined, that third person is an indispensable party…’[a] judgment in an action not naming an indispensable party ... is subject to later collateral attack by the non-joined indispensable party.” (Washington Mutual Bank v. Blechman (2007) 157 Cal.App.4th 662, 667, at p. 668, quoting Save of Bay, Inc. v. San Diego Unified Port Dist. (1996) 42 Cal.App.4th 686.)

            Here, COV is a beneficiary of the Third Amendment to the Paris Family Trust. (Nemtzov Decl., Exh. 1.)

            In its 10/27/2023 ruling, the Court ordered supplemental briefing, writing the following:

COV argues that the judgment is void. However, by COV’s own citation, “[t]he failure to join an indispensable party invalidates the portions of the judgment that purport to adjudicate that party's rights.” (Carpenters 46 N. Cal. Ctys. Conf. Bd. v. Zweigle (1982) 130 Cal.App.3d 337, emphasis added.) Here, COV’s motion concerns only the $75,000.00 charitable gift, while the judgment concerned the entire third amendment of the Paris Family Trust.  COV has not set forth any basis as to why the Court would or should set aside the entire judgment or dismiss the entire action, when only the $75,000 gift to COV was impacted by the entry of judgment, and only that specific portion of the judgment would be unenforceable for a failure to join COV as an indispensable party. COV is to submit briefing on the question.

…

Both parties are to submit further briefing clarifying whether or not this case can proceed in probate, whether or not COV had notice of the probate claim, and why COV did not file any pleadings or seek any relief if it did. Moreover, Plaintiff is to clarify why it notified COV of its impacted rights as part of the probate process, but did not notify COV that it was filing this action. In other words, Plaintiff is to clarify why he believed COV was an impacted party for probate, but did not consider COV an indispensable party in this civil action. While Plaintiff clarifies that he did not serve COV in this case because he was not seeking specific damages from COV, Plaintiff has not advanced any substantive argument, supported by case law, that COV was not, in fact, an indispensable party because of its interest in property impacted by Plaintiff’s claims.

            Even having reviewed the supplemental briefing, the parties frequently talk past each other citing their own authority without distinguishing the authorities cited by others. Indeed, the parties both set forth different dates for the filing of the Petition—9/26/2019 (COV-claimed date) and 7/11/2022 (Plaintiff claimed date), yet at no point does either party addresses this fact—they just simply assert their own facts.

            Overall, the Court found the quality of the briefing to be underwhelming. Neither party cited any analogous caselaw to support their position, but rely only on statutory language and case citations to recitations of law. Moreover, COV failed to address the very pertinent question as to why the Court would invalidate the entire judgment, rather than only the COV gift.

            In light of the briefing available, after review, the Court finds that COV’s request for relief must be denied. (Henry M. Lee Law Corp. v. Superior Court (2012) 204 Cal.App.4th 1375, 1382; 139 Cal.Rptr.3d 712.) (A motion to vacate is a means by which a non-party can seek to become a party to litigation.)

            There is no dispute that COV was a beneficiary of the Third Amendment to the Paris Family Trust (Third Amendment). (Nemtzov Decl., Exh. 1.) From the supplemental briefing, there also appears to be no dispute that the Third Amendment incorporating the gift of $75,000 to COV was the subject of an irrevocable trust.

            On September 26, 2019, Richard Paris filed a Petition to Invalidate the Third Amendment. Jeffrey Paris received notice of this Petition as did COV. At the time that the petition was filed, Reynold Paris, one of the Settlors of the trust, was still alive.

            As such, at the time that the petition was filed, the trust was revocable, and COV possessed only a contingent interest in the gift. As the beneficiary of a revocable trust, COV only possessed standing to demand an accounting and information from the trustee regarding trust assets and transactions during the time period before the trust became irrevocable. (In re Estate of Giraldin (2012) 55 Cal.4th 1058 (Giraldin).)

            COV explains that it did not respond when it first received notice of the Petition because the trust remained revocable as long as Reynold Paris remained alive, and thus their standing regarding trust assets was limited to a demand for accounting.

            Moreover, COV cites California Probate Code section 8271 (emphasis added) which provides:

In (a) On the filing of the petition, a summons shall be directed to the personal representative and to the heirs and devisees of the decedent, so far as known to the petitioner. The summons shall contain a direction that the persons summoned file with the court a written pleading in response to the petition within 30 days after service of the summons. Failure of a person timely to respond to the summons precludes the person from further participation in the revocation proceeding, but does not otherwise affect the person's interest in the estate.

            COV argues that based on this language, even if they did have standing to intervene, they had no obligation to do so.

            However, “[w]hen the person holding the power to revoke dies, the rights of the contingent beneficiaries are no longer contingent. Those rights, which were postponed while the holder of the power to revoke was alive, mature into present and enforceable rights under division 9, the trust law.” (Giraldin, supra, 55 Cal.4th at 1070.)

            Reynolds Paris, the final living Settlor of the trust, died on January 19, 2022. Given the death of the Trust’s settlors, the trust became irrevocable, and COV had the power to enforce its rights to its $75,000 gift.

             California Probate Code section 16061.7 provides that:

 (a) A trustee shall serve a notification by the trustee as described in this section in the following events:

(1) When a revocable trust or any portion thereof becomes irrevocable because of the death of one or more of the settlors of the trust, or because, by the express terms of the trust, the trust becomes irrevocable within one year of the death of a settlor because of a contingency related to the death of one or more of the settlors of the trust.

On 3/18/2022, Plaintiff notified COV that Reynold Paris had passed, that the trust had become irrevocable, and would be divided among the beneficiaries. (P’s Supp., Exh. B.) In its supplemental materials, COV argues:

After Reynolds Paris passed away, Chabad of Ojai Valley was never served with any lawsuit or petition. Accordingly, at the time that the original Trust Petition was filed by Richard [not Jeffrey] Paris in 2019, Chabad of Ojai Valley did not yet have an irrevocable interest in the Trust and was not a party in interest with the right to respond to the 2019 Probate Petition.

            However, COV entirely ignores the fact that they were clearly on notice that a Petition had been filed, and had been notified that the trust had become irrevocable. As such, even if it was within COV’s right not to respond at the initial filing based on the trust being revocable, COV was notified that the trust had become irrevocable and that it now had standing to participate in proceedings.

            Moreover, Plaintiff submitted evidence that he filed a Probate Petition on 7/11/2022. (See 6/2023 filing, RJN No.3.) As such, at the time this Petition was filed Reynolds Paris had already passed, and the trust was clearly irrevocable.

            Thus, under either scenario, COV received notice that the trust had become irrevocable, and thus was also on notice that it had standing to intervene. While Probate Code section 8271 does not require a party to respond, clearly, section 8271 does not stand for the proposition that the Petition proceedings cannot impact the non-responding parties’ interests if they do not respond. Otherwise, a party would have absolutely no incentive to participate in a Probate Petition, and could wholly protect and preserve their interest by declining to respond. Such a result is not supported by logic or public policy. 

            In sum, COV has not offered any legal basis that could justify its failure to timely assert its interest in the Probate Petition served upon it. Accordingly, COV has not shown that it was denied due process, such that the judgment should be vacated in part or in whole.

            As a final note, the Court notes that this ruling is supported by interests of justice and public policy.

            CCP section 366.2 provides:

(a)   If a person against whom an action may be brought on a liability of the person, whether arising in contract, tort, or otherwise, and whether accrued or not accrued, dies before the expiration of the applicable limitations period, and the cause of action survives, an action may be commenced within one year after the date of death, and the limitations period that would have been applicable does not apply.

Given this provision, Plaintiff’s claims for damages lapsed a year after Reynold Paris’ death on 1/19/2022, and Plaintiff is now time-barred from pursuing these claims. As a result, setting aside the judgment would greatly prejudice Plaintiff, while unjustly rewarding COV for failing to assert its interest during the previously pending Probate, despite having clear notice of the proceeding and the risk it posed to its interest.

            Based on the foregoing, COV’s motion to set aside the judgment is denied.

It is so ordered.

Dated:  March    , 2024

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar.  For more information, please contact the court clerk at (213) 633-0517.