FLIER, J.—
In this appeal, Donald T. Sterling (Donald) seeks to regain ownership of the Los Angeles Clippers (Clippers), a professional basketball team Steven Ballmer purchased on August 12, 2014. The evidence credited by the probate court overwhelmingly showed that Donald was properly removed as trustee of the Sterling Family Trust, which owned the Clippers.
The National Basketball Association's (NBA) April 2014 charge against Donald triggered Donald's lifetime ban from the Clippers and prompted the sale of the team. Although Donald initially authorized the sale and actively encouraged his wife Rochelle H. Sterling (Rochelle)
The Sterling Family Trust is relevant because the trust owned the Clippers and because the trust identified the circumstances justifying removal of a trustee. Donald and Rochelle established the Sterling Family Trust in 1998, identifying Donald and Rochelle as both settlors and trustees. As later amended and restated, the trust provided for removal of a trustee due to incapacity. Specifically, the trust provided: "Any individual who is deemed
In addition to owning the Clippers, the trust owned real property worth approximately $2.5 billion and subject to approximately $480 million in debt. The assets included 150 apartment buildings, 15 residential properties, land, and a hotel. The apartment buildings housed approximately 20,000 tenants.
Under the terms of the trust, the trustee was empowered to (among other things) employ professionals, pay expenses, and purchase and sell property. The trustee also was empowered to operate a business, borrow and encumber trust property, lend money and secure the debt of a beneficiary, deposit and withdraw funds, distribute assets, and litigate claims.
A charge before the NBA's board of governors indicated that on April 26, 2014, a tape recording of Donald's "deeply offensive, demeaning, and discriminatory views toward African Americans, Latinos, and `minorities' in general" was made public. The NBA imposed a $2.5 million fine on Donald on April 29, 2014. It also imposed a lifetime ban against Donald from participating in the league. Subsequently, the NBA sought to terminate the Sterlings' ownership of the Clippers.
On May 9, 2014, NBA commissioner Adam Silver appointed Richard Parsons as interim chief executive officer of the Clippers. Parsons testified that if the Sterlings did not sell the Clippers, the NBA intended to remove Donald as an owner of the team. The NBA further planned to auction the team.
When Parsons was appointed chief executive officer, the team was in turmoil. Numerous sponsors warned they would terminate their sponsorship if Donald continued to own the team. Season ticket holders threatened to stop purchasing tickets if Donald continued to own the team. In addition to losing revenue, the team was likely to lose its head coach and several players. Parsons worried that a "death spiral" would ensue. As he explained: "If none of your sponsors want to sponsor you . . .; the coach doesn't want to coach
Following the NBA's actions against Donald and its plan to auction the team, both Donald and Rochelle wanted to sell the team. On May 22, 2014, Donald's attorney wrote commissioner Silver that "Mr. Sterling agrees to the sale of his interest in the Los Angeles Clippers." "This letter confirms that Donald T. Sterling authorizes Rochelle Sterling to negotiate with the National Basketball Association regarding all issues in connection with a sale of the Los Angeles Clippers team, owned by LAC Basketball Club, Inc." In addition to his attorney, Donald signed the letter, indicating his approval.
Donald instructed Rochelle to sell the team before an NBA hearing set for June 3, 2014. Rochelle obtained offers for the team and reported daily to Donald. On May 28, 2014, Donald agreed to Ballmer's offer. Donald told Rochelle he was proud of her for obtaining such a good offer, exclaiming "Wow, you really did a good job."
Rochelle entered a "Binding Term Sheet" with Ballmer on May 29, 2014. On May 30, 2014, the NBA withdrew its May 19, 2014 charge and canceled the board of governors meeting set for June 3, 2014, based on the understanding that Rochelle planned to sell the Clippers to Ballmer.
Ballmer offered to pay $2 billion to purchase the Clippers. His offer was $400 million more than the next highest offer. Parsons described Ballmer's offer as a "knock-out price." Parsons testified that it would be difficult to match this price if the sale to Ballmer did not occur.
Anwar Zakkour, an investment banker, assisted Rochelle in obtaining bids for the Clippers. He valued the Clippers at $1 billion to $1.3 billion. He concluded that a deal in the $1.5 to $1.8 billion range would be "nirvana." Zakkour recommended Rochelle accept Ballmer's bid, describing it as a "home-run deal." Zakkour was aware the Forbes magazine had valued the Clippers at $575 million. Like Parsons, Zakkour concluded there was a
Although Donald initially wanted to sell the Clippers and congratulated Rochelle on obtaining a high bid for the team, Donald refused to sign the binding term sheet setting the terms for the sale to Ballmer. When Rochelle asked Donald to sign, Donald promised to sue.
Rochelle subsequently removed Donald as trustee in accordance with the provisions of the trust, which as noted, required certification by two physicians who regularly determine capacity.
Dr. Meril Sue Platzer, a board-certified neurologist who specialized in the detection of Alzheimer's disease, evaluated Donald. It was a regular part of her practice to determine her patients' mental capacity. After evaluating Donald, Dr. Platzer concluded: "Based upon my evaluation performed on May 19, 2014, it is my opinion that Mr. Donald T. Sterling is suffering from cognitive impairment secondary to primary dementia Alzheimer's disease." She continued: "It is my opinion that Mr. Donald T. Sterling is unable to reasonably carry out the duties as Trustee of The Sterling Family Trust as a result of, among other factors, an impairment of his level of attention, information processing, short term memory impairment and ability to modulate mood, emotional lability, and is at risk of making potentially serious errors of judgment."
Dr. Platzer testified Donald was unable to spell the word "world" backwards. When asked to subtract seven from 100, he could not perform the calculation past 93 (100-7=93); he could not subtract seven from 93 (93-7=86). Dr. Platzer testified that Donald's PET (positron-emission tomography) scan indicated he suffered from Alzheimer's disease. She concluded he suffered from Alzheimer's disease for at least three years and more likely five years. She further testified that she considered Probate Code section 811 in reaching her conclusion that Donald was unable to serve as trustee.
Dr. Spar testified that based upon his examination he believed Donald was no longer able to serve as trustee of the Sterling Family Trust. He testified that he considered sections 810 and 811 in reaching this conclusion. (Dr. Spar further testified that he assisted in writing those sections of the Prob. Code.)
On June 11, 2014, Rochelle brought an ex parte petition seeking a court order to confirm the sale of the Clippers and to direct the trustee under section 1310, subdivision (b) (section 1310(b)). Rochelle argued that she was the sole trustee because two physicians found that Donald lacked capacity to act as trustee.
The probate court held an eight-day hearing beginning July 7 and ending July 28, 2014. After the hearing, the probate court issued an exhaustive statement of decision making numerous credibility determinations and detailing the court's rationale for rejecting Donald's arguments. The probate court concluded that Ballmer "paid an amazing price that cannot be explained by a market analysis and was so far in excess of the comprehensive . . . valuations . . . that were done by Mr. Zakkour; that he used terms like knock-out, slam dunk, home run, and nirvana."
The probate court found that the trust was likely to lose money on the sale of the Clippers if the sale to Ballmer did not proceed. The next best offer was $400 million less than Ballmer's offer. Second, if the sale was not made to Ballmer, the NBA was likely to auction the team. Such an action would not likely produce a high bid because the NBA was embroiled in litigation with Donald. Additionally, if Donald remained owner, the Clippers were likely to lose massive value because the sponsors, coach, and players did not want to be associated with Donald.
The court rejected Donald's theory that Rochelle had a secret plan to remove him as trustee. The court found Donald willingly participated in examinations by Drs. Platzer and Spar and there was no credible evidence
The probate court's overarching conclusions were that (1) Donald was properly removed as a trustee of the Sterling Family Trust and (2) "Rochelle had authority to bind unilaterally the Sterling Family Trust . . . by executing the Binding Term Sheet, dated May 29, 2014" and agreeing to sell the Clippers to Ballmer. Invoking its authority under section 1310(b), the court instructed Rochelle to complete the sale.
Section 1310(b) governs a stay on appeal and provides: "Notwithstanding that an appeal is taken from the judgment or order, for the purpose of preventing injury or loss to a person or property, the trial court may direct the exercise of the powers of the fiduciary, or may appoint a temporary guardian or conservator of the person or estate, or both, or a special administrator or temporary trustee, to exercise the powers, from time to time, as if no appeal were pending. All acts of the fiduciary pursuant to the directions of the court made under this subdivision are valid, irrespective of the result of the appeal. An appeal of the directions made by the court under this subdivision shall not stay these directions."
In addition to concluding the sale was proper under section 1310(b), the probate court further concluded Rochelle had authority under section 15407 to wind up the trust even though Donald had revoked the trust. Over Donald's objection, the court found the windup authority included the sale of the Clippers.
Section 15407 governs a trustee's windup authority when a trust is terminated or revoked and provides: "(a) A trust terminates when any of the following occurs: [¶] (1) The term of the trust expires. [¶] (2) The trust purpose is fulfilled. [¶] (3) The trust purpose becomes unlawful. [¶] (4) The trust purpose becomes impossible to fulfill. [¶] (5) The trust is revoked. [¶] (b) On termination of the trust, the trustee continues to have the powers reasonably necessary under the circumstances to wind up the affairs of the trust."
After the court issued its order approving the Clippers' sale, Donald filed two writ petitions in this court. Donald argued that the probate court's order
On appeal, Donald contends he was improperly removed as trustee of the Sterling Family Trust. He also argues that the trial court abused its discretion in ordering Rochelle to sell the Clippers notwithstanding his revocation of the trust and in invoking section 1310(b), which sanctioned the sale despite a subsequent appeal. Donald seeks the following relief: reversal of the trial court's order with direction "that the sale of the Los Angeles Clippers from [Rochelle] to Ballmer be undone." Rochelle argues that Donald's appeal suffers from numerous deficiencies, which are dispositive. We begin with Rochelle's argument and then discuss Donald's arguments seriatim.
Second, Donald summarizes the evidence in the light favorable to his position and ignores the probate court's credibility determinations. He has devoted most of his briefs to rearguing the facts and relies on evidence expressly rejected by the probate court. As a result Donald has forfeited his arguments on appeal based on the sufficiency of the evidence including his argument that the evidence does not support the probate court's determination he was properly removed as a trustee. (Schmidlin v. City of Palo Alto (2007) 157 Cal.App.4th 728, 738 [69 Cal.Rptr.3d 365].)
Nevertheless, Donald summarizes the evidence as follows: "Dr. Cummings testified as to the unusual circumstances surrounding the doctor's examinations, including the distractions and stress during Donald's examination and opined that there is an accepted standard of care with respect to the physician's disclosure to the patient. . . . Donald should have been told the purpose of the assessment."
Additionally, the court found: "Donald willingly participated in the evaluations by both Dr. Spar and Dr. Platzer. He testified that he agreed to be examined by them. There is no credible or compelling evidence that Donald was distracted or under stress during the evaluations by Dr. Platzer or Dr. Spar as suggested by Dr. Cummings. Dr. Cummings, called by Donald, had no facts that supported his opinion outside of the fact that he was advised the Sterlings were separated."
Nevertheless, Donald summarizes the evidence as follows: "Dr. Spar conceded that Donald was distracted and preoccupied . . . ." "During the same period of time, Donald was preoccupied by the risk of losing ownership of the Clippers as a result of actions by the NBA. Both examining doctors acknowledged that `anxiety' could negatively affect his test performance."
Whereas the court indicated it "does not find any credible or compelling evidence of a `secret' Plan B," Donald asserts that "Rochelle and her lawyer met with the Commissioner of the NBA, Adam Silver, on or about May 13, 2014, and began to plot with the NBA to wrest control of the team away from Donald knowing he never sells any property. . . . This lead to secret Plan B."
Assuming Donald preserved his argument, he failed to demonstrate error. The testimony of Drs. Platzer and Spar, who regularly determine capacity, amply supported the conclusion that Donald was incapable of managing his affairs under the criteria in section 811, the relevant criteria under the terms of the Sterling Family Trust. Dr. Platzer concluded that Donald had "an impairment of his level of attention, information processing, short term memory impairment and ability to modulate mood, emotional lability, and is at risk of making potentially serious errors of judgment." These were factors under section 811 supporting her determination that Donald lacked capacity. Dr. Spar concluded that "[b]ecause of his cognitive impairment, Mr. Sterling is at risk of making potentially serious errors of judgment, impulse control, and recall in the management of his finances and his trust. Accordingly, in my opinion he is substantially unable to manage his finances and resist fraud and
Donald argues the trial court erred in relying on section 1310(b) because "there was no evidence offered that meets the strict requirement that the risk of injury or loss to person or property be extraordinary or imminent." (Boldface omitted.) Donald relies on the Legislative history of section 1310(b) and Gold v. Superior Court (1970) 3 Cal.3d 275, 281 [90 Cal.Rptr. 161, 475 P.2d 193] (Gold).
Considering a predecessor to section 1310(b) our Supreme Court held that "[b]y specifically conditioning the application of the statute upon the prevention of injury or loss to person or property the Legislature has determined that the exception should be operative only in a limited class of cases. This language, with its emphasis upon preventive action, imports a sense of urgency. While such situations are not inconceivable, the necessity for immediate action to avert such potential injury or loss is not a common circumstance in the usual conservatorship proceeding. Thus, on its face, the language of the statute indicates (1) that the only instances properly falling within the ambit of the exception are those which present a necessity for preventive action against the particular risk contemplated by the statute; and (2) that such instances are probably rare. In sum, the language of this statute strongly suggests that the exception applies only to the exceptional case involving a risk of imminent injury or loss." (Gold, supra, 3 Cal.3d at p. 281.)
The strict standard described in Gold was satisfied in this case. The circumstances here were extraordinary. The trust owned a $2 billion asset facing an imminent "death spiral" absent its sale. Section 1310(b) may be used to prevent a substantial monetary loss (Conservatorship of McElroy, supra, 104 Cal.App.4th at p. 557), and here the evidence showed the potential loss to be at least $400 million. Donald's argument that the standard in section 1310(b) was not established fails to consider the facts as credited by the probate court.
Similarly, the statute does not expressly limit its application to only those "deemed vulnerable by the law." Had the Legislature intended the statute apply to a select category of individuals the language of the statute would reflect such limitation. In any event, Donald ignores the evidence suggesting that, at the time the probate court invoked section 1310(b), he could be described as vulnerable under the law as he was determined to be at risk of making serious lapses in judgment and was found unable to manage his finances or to resist fraud and undue influence. Donald's argument that he was able to manage his own property and make business decisions conflicts
In a letter dated June 9, 2014, Donald informed Rochelle that he elected effective immediately to revoke the Sterling Family Trust. Donald argues the probate court abused its discretion in allowing Rochelle to sell the Clippers pursuant to a trustee's "wind up" powers under section 15407, subdivision (b) because that statute "should not extend to situations . . . involving a sale to increase assets."
Donald's argument that the trustee does not have the power during the winding up period to increase the assets of the trust is not supported by section 15407 or any case interpreting it. Donald purports to rely on comment b to section 89 of the Restatement Third of Trusts, but that comment supports Rochelle's position, not his. Comment b to section 89 indicates that the trustee continues to act as trustee even after the termination date for a trust
Moreover, here the credited evidence overwhelmingly shows that Rochelle acted in the beneficiaries' interest including Donald's interest when she sold the Clippers for $2 billion, an amount higher than Rochelle and her advisors thought possible. The amount caused Donald to congratulate Rochelle. Additionally, the probate court found that the sale to Ballmer was necessary to preserve the unusually high sale price and afforded the trust a $400 million benefit over the next best price and substantially more than the team likely would have received at an NBA auction. Assuming Donald effectively revoked the trust on June 9, 2014, Donald fails to demonstrate such revocation precluded the probate court from authorizing the trustee to sell the Clippers in accordance with the terms of an agreement established prior to Donald's revocation.
The trial court's order is affirmed. Respondent Rochelle Sterling is entitled to costs on appeal.
Bigelow, P. J., and Rubin, J., concurred.
We grant Donald's request to take judicial notice of the legislative history of section 1310. We grant Donald's request to augment the record to include trial exhibit No. 4—a copy of the 1998 Sterling Family Trust.
"The Legislature finds and declares the following:
"(a) For purposes of this part, there shall exist a rebuttable presumption affecting the burden of proof that all persons have the capacity to make decisions and to be responsible for their acts or decisions.
"(b) A person who has a mental or physical disorder may still be capable of contracting, conveying, marrying, making medical decisions, executing wills or trusts, and performing other actions.
"(c) A judicial determination that a person is totally without understanding, or is of unsound mind, or suffers from one or more mental deficits so substantial that, under the circumstances, the person should be deemed to lack the legal capacity to perform a specific act, should be based on evidence of a deficit in one or more of the person's mental functions rather than on a diagnosis of a person's mental or physical disorder."
Section 811 provides:
"(a) A determination that a person is of unsound mind or lacks the capacity to make a decision or do a certain act, including, but not limited to, the incapacity to contract, to make a conveyance, to marry, to make medical decisions, to execute wills, or to execute trusts, shall be supported by evidence of a deficit in at least one of the following mental functions, subject to subdivision (b), and evidence of a correlation between the deficit or deficits and the decision or acts in question:
"(1) Alertness and attention, including, but not limited to, the following:
"(A) Level of arousal or consciousness.
"(B) Orientation to time, place, person, and situation.
"(C) Ability to attend and concentrate.
"(2) Information processing, including, but not limited to, the following:
"(A) Short- and long-term memory, including immediate recall.
"(B) Ability to understand or communicate with others, either verbally or otherwise.
"(C) Recognition of familiar objects and familiar persons.
"(D) Ability to understand and appreciate quantities.
"(E) Ability to reason using abstract concepts.
"(F) Ability to plan, organize, and carry out actions in one's own rational self-interest.
"(G) Ability to reason logically.
"(3) Thought processes. Deficits in these functions may be demonstrated by the presence of the following:
"(A) Severely disorganized thinking.
"(B) Hallucinations.
"(C) Delusions.
"(D) Uncontrollable, repetitive, or intrusive thoughts.
"(4) Ability to modulate mood and affect. Deficits in this ability may be demonstrated by the presence of a pervasive and persistent or recurrent state of euphoria, anger, anxiety, fear, panic, depression, hopelessness or despair, helplessness, apathy or indifference, that is inappropriate in degree to the individual's circumstances.
"(b) A deficit in the mental functions listed above may be considered only if the deficit, by itself or in combination with one or more other mental function deficits, significantly impairs the person's ability to understand and appreciate the consequences of his or her actions with regard to the type of act or decision in question.
"(c) In determining whether a person suffers from a deficit in mental function so substantial that the person lacks the capacity to do a certain act, the court may take into consideration the frequency, severity, and duration of periods of impairment.
"(d) The mere diagnosis of a mental or physical disorder shall not be sufficient in and of itself to support a determination that a person is of unsound mind or lacks the capacity to do a certain act."
