ARONSON, J.
Certain trust beneficiaries filed a petition for interpretation of the trust and relief against the trustee for breach of fiduciary duties. Ruling in favor of the trustee, the probate court also concluded the beneficiaries violated the trust's no contest clause, forfeiting their interests under the trust. The beneficiaries appeal only the forfeiture finding.
Because we conclude the trial court erred in finding the petition was a "contest" of the trust, we reverse the judgment in part, restoring the beneficiaries' inheritances.
Ardene Joan Lange (Lange) executed a living trust on January 21, 1997, giving one daughter, Lynda Nusser, a 58 percent residual beneficial interest in the trust, and giving the balance, a 42 percent residual beneficial interest, to two of her other children and a grandchild (collectively, appellants). After Lange died on July 30, 2007, Nusser became the successor trustee. The sole asset owned by the trust was Lange's home, a single family residence in Buena Park. Nusser had lived in the home with Lange since February 2004.
Paragraph 3.3 of the trust directed that the trustee "make the following gifts, free of taxes" at Lange's death: "(1) The trustee is directed to use any or all of the trust estate, as is required, at the sole discretion of the trustee, to care for any cats that are in the possession of the settlor at the time of her demise or incapacity. [¶] (2) All of settlor's Sterling Silver to [Nusser] . . . . [¶] (3) The residue of the trust estate shall be distributed as follows . . . ." This last provision divided the residue among appellants and Nusser, with Nusser receiving a 58 percent share.
Paragraph 8.1 of the trust created a no contest clause. It stated: "If any beneficiary in any manner, directly or indirectly, contests or attacks this instrument or any of its provisions, any share or interest in the trust given to that contesting beneficiary under this instrument is revoked and shall be disposed of in the same manner provided herein as if that contesting beneficiary had predeceased the settlor."
After Lange died, Nusser continued to live in Lange's home. Nusser cared for the cats as provided in paragraph 3.3(1) of the trust ("the cat provision"). Since Lange's death, Nusser has not paid rent, but has paid for all house expenses and the costs of caring for the cats. Nusser also has allowed her children to live in the home rent free, but they have helped her with expenses.
On November 10, 2008, appellants filed a petition for "interpretation" of the trust, an accounting, damages for breach of fiduciary duty, and removal of the trustee and appointment of cotrustees. Not surprisingly, the cause of action for interpretation of the trust concerned the cat provision. In the claim, appellants asserted the cat provision "is unenforceable as there was no identification of any cats at the time of Trustor's death." Though difficult to decipher, the cause of action essentially asked the trial court to make two inquiries.
The other causes of action in the petition accuse Nusser of various wrongs, such as using trust property for her personal benefit, failing to act for the benefit of the beneficiaries, failing to make the trust property productive, and allowing waste of the property. Appellants eventually waived their request for an accounting.
In her opposition to the petition, Nusser defended her actions as trustee and asserted appellants violated the trust's no contest clause by challenging the enforceability of the cat provision.
The one-day trial resulted in a judgment for Nusser on all counts, and a finding that appellants violated the trust's no contest clause, thereby forfeiting their beneficial interests under the trust. Appellants filed an unsuccessful motion for new trial on the sole issue of whether they violated the no contest clause. On November 19, 2009, Nusser gave notice of entry of judgment in her favor, and this appeal followed.
Appellants challenge only one part of the judgment: the finding they violated the trust's no contest clause. Citing Probate Code, section 21305, subdivision (b)(9),
In response, Nusser disputes appellants' characterization of their petition as seeking an "interpretation" of the cat provision. Instead, she argues, the petition sought to invalidate the cat provision and thereby "thwart a very specific and unambiguous provision in the Trust." If Nusser is right, then appellants' petition meets the legal test for a "contest." As the court explained in Giammarrusco v. Simon (2009) 171 Cal.App.4th 1586 (Giammarrusco), "In general, if the beneficiary's proposed action would `effectively nullify or thwart [a] provision[] in the trust instrument' or `result in the nullification of [the trustor's] clearly stated intent,' the proposal `would constitute a contest within the meaning of the no contest clause.'" (Id. at p. 1601, quoting Burch v. George (1994) 7 Cal.4th 246, 261, 263 (Burch).)
As explained more fully below, we find it is Nusser who mischaracterizes the nature of appellants' petition. While appellants certainly advocated an interpretation of the cat provision that would have uprooted the cats from Lange's house, that interpretation is not inconsistent with the terms of the trust. Consequently, the trial court erred in finding appellants' petition was a "contest" that violated the no contest clause and cost them their inheritance.
Our inquiry focuses on a narrow issue: whether appellants' petition sought to nullify Lange's "`clearly stated intent'" as expressed in the cat provision. (Giammarrusco, supra, 171 Cal.App.4th at p. 1601.) In making that determination, we review de novo the relevant provisions of both the trust and appellants' pleadings. (Burch, supra, 7 Cal.4th at p. 254; Cook v. Cook (2009) 177 Cal.App.4th 1436, 1441.)
Whether there has been a "contest" within the meaning of a particular no contest clause depends upon the facts of the case and the language of the clause. (Burch, supra, 7 Cal.4th. at pp. 254-255.) "`[T]he answer cannot be sought in a vacuum, but must be gleaned from a consideration of the purposes that the [trustor] sought to attain by the provisions of [her] [trust].' [Citation.]" (Id. at p. 255.) Although the law favors no contest clauses for serving the public policies of discouraging litigation and giving effect to the testator's intentions, courts strictly construe no contest clauses because they result in forfeiture. (Id. at p. 254.)
As proof the petition sought to nullify the cat provision, Nusser points to the petition's assertion that the cat provision "is unenforceable" because the trust failed to identify the cat beneficiaries, as well as the petition's demand for the immediate sale of the house and distribution of the proceeds to the beneficiaries. Additionally, Nusser cites the suggestion in appellants' trial brief
In determining whether the petition sought to "nullify" the cat provision, we must look beyond appellants' rhetoric describing the cat provision as "unenforceable" or as inviting illegality, and consider whether the particular interpretations appellants advocated would have defeated the clear intent of the trust. The starting point, of course, is the cat provision itself, the terms of which are quite general and give the trustee broad discretion. They provide only that "[t]he trustee is directed to use any or all of the trust estate, as is required, at the sole discretion of the trustee, to care for any cats that are in the possession of the settlor at the time of her demise or incapacity." (Trust, ¶ 3.3(1).)
In the petition, appellants asked the trial court to interpret two aspects of the cat provision. The first concerns an ambiguity arising from the provision's failure to identify the cat beneficiaries or otherwise establish a procedure for determining when the last of the cat beneficiaries had died, thereby ending the animal trust set up in paragraph 3.3(1) and triggering distribution of the estate to the residual beneficiaries, as required by section 15212.
Appellants' response to this perceived ambiguity or omission in the trust was not to argue the trust's invalidity, but rather to ask the court to "determine whether any [cat beneficiaries] exist and establish them by some form of identification." Given that paragraph 3.3(3) of the trust provides for distribution of "the residue of the trust estate" to appellants and Nusser, and the statute governing animal trusts mandates such distribution upon the death of the last cat beneficiary (see § 15212, subd. (a)), appellants' request for a finding as to whether any cat beneficiary was still living does not thwart the cat provision. Rather, it seeks to ensure its proper implementation.
The other aspect of the cat provision for which appellants sought a particular interpretation concerned the scope of the trustee's discretion to use the trust estate "to care for" the cats. Asserting that the trust "should be interpreted in a way that is beneficial to all the beneficiaries," appellants argued the trustee does not have discretion to maintain the house as a sort of cat shelter where she can live rent-free while caring for the cats on the premises. Instead, the petition asserted, the trustee should find alternative placements for the cats, sell the house, and distribute the proceeds to the residual beneficiaries.
In support of this argument for off-site care of the cats, appellants cite two other provisions in the trust which they contend reflect the trustor's desire that, within a reasonable time, the trust estate should be used to benefit all the beneficiaries, not just the cats and Nusser. (See Trust, ¶ 7.19 [directing that if trust instructions conflict, they should be interpreted "to the benefit of the beneficiaries"]; Trust, ¶ 6.14 [allowing trustee to defer distribution of trust estate "for a period reasonably necessary to wind up properly the affairs of the trust"].) Appellants assert their interpretation of the trust as allowing Nusser to sell the house and care for the cats off-site would serve the overall purposes of the trust, thereby furthering rather than thwarting the trustor's intent.
Nusser contends that by advocating relocation of the cats to off-site placements managed by strangers, the petition flatly thwarts Lange's clear intent. The problem with Nusser's argument is that the trust itself does not require the trustee to care for the cats at any particular location or even to care for the cats herself. While Nusser testified at trial that Lange orally stated, before her death, her desire to have Nusser take care of the cats at the house, Lange did not express that intent in the trust. Consequently, it cannot be said that appellants' advocacy of an interpretation that would move the cats to off-site placements would "`result in the nullification of [the trustor's] clearly stated intent[.]'" (Giammarrusco, supra, 171 Cal.App.4th at p. 1601.)
The only "`clearly stated intent'" we find in the cat provision is that the trustee must care for the cats, using the trust estate, "as is required[.]" Importantly, appellants' argument for off-site care implicitly confirms the trustee's obligation to care for the cats. Appellants do not contest that duty; they only challenge the trustee's decision to perform that duty at the house.
We conclude appellants' petition seeking to compel Nusser to find alternative placements for the cats, sell the house, and use the proceeds according to the terms of the trust (first, to care for the cats, second, to distribute the residue to the beneficiaries) did not thwart the provisions of the trust. Consequently, the petition was not a "contest" within the meaning of the no contest clause, and appellants did not forfeit their beneficial interests under the trust.
The judgment is reversed only as to the finding that appellants violated the no contest clause of the trust. In all other respects, the judgment is affirmed. Appellants are entitled to their costs on appeal.
WE CONCUR:
RYLAARSDAM, ACTING P. J.
MOORE, J.
We note that, effective January 1, 2010, the Legislature repealed section 21305, among other related provisions, and enacted a major revision of the statutory scheme governing no contest clauses. (See §§ 21310-21315; see also Johnson v. Greenelsh (2009) 47 Cal.4th 598, 600-601, fn. 2.) Though section 21315 states the new provisions apply "to any instrument, whenever executed, that became irrevocable on or after January 1, 2001," the Legislature did not expressly declare the new laws should apply retroactively to any purported "contests" filed before January 1, 2010. Absent that express declaration of retroactivity, and given that section 21305 was in effect in 2008, when appellants filed the purported "contest," and in 2009, when the trial court entered judgment, section 21305 applies in this appeal. (See Brenton v. Metabolife Internat., Inc. (2004) 116 Cal.App.4th 679, 688 ["Absent an express declaration of retrospectivity or other clear indication that the Legislature intended retrospective application, a new statute is presumed to operate prospectively"].) We further note that neither side disputes the applicability of section 21305.
