1

Filed 12/4/23 Newcomb v. Bates CA3 NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(San Joaquin)

----

GISELA NEWCOMB,

Plaintiff and Appellant ,

v. ROBERT BATES, as T rustee , etc. ,

Defendant and Respondent

. C097357 (Super. Ct. No. STK

- PR

- TR

2022

- 0000269)

Maria Aguiar and respondent Robert Bates, husband and wife, created an intervivos trust meant to administer and eventually transfer their property upon their
deaths. 1 Maria passed away in 2021

. Robert thereafter became the sole trustee with
control over the trust estate , which in his view include d Maria’s separate property interest
in a Santa Clara , California rental property (the Santa Clara property or the property)

.

1 We will refer to all parties by their first names. No disrespect is intended.2

Maria’s daughter, appellant Gisela Newcomb, filed a petition to compel redress, alleging Robert breached the trust by refusing to distribute the Santa Clara property upon Maria’s
death in accordance wit h the trust’s requirements. The trial court denied the petition, finding distribution of the Santa Clara property as described in the trust could only occur after the death of both Maria and Robert. We disagree , and reverse.

FACTUAL AND PROCEDURAL BACKGR OUND The facts in this case are not in dispute. In November 2004, Robert and Maria
created The Robert Bates and Maria Aguiar Trust (the trust), as settlors and trustees. The trust was formed as a revocable trust and provided for the administration and tr ansfer (upon death) of Robert and Maria’s community property and separate property. In November 2016, Robert and Maria amended section 9.4 of the trust, entitled

“ Distribution of Gifts. ” The amendment changed the allocation, upon Maria’s death, of Maria’s separate property interest in real property located in Santa Clara, California

. Specifically, the amendment granted a 25 percent interest in the Santa Clara property to Robert, 25 percent to Gisela, 25 percent to Maria’s grandson, and 25 percent to Maria ’s granddaughter and great

- granddaughters. The amendment did not amend section 9.4’s language, beyond updating the named beneficiaries and their allotted shares

. The Santa Clara property is the only gift mentioned in the trust, and the only subject of se ction 9.4. The relevant provisions of the trust are as follows : Article 2 explains that all the property subject to the trust is the t rust e state. It
further states that community property and separate property shall each retain their original character

. Article 3 states that the trust is revocable by both spouses during the settlors’ joint lifetimes. With respect to separate property, only the settlor who con tributed that property to the trust may revoke separate property assets from the trust.
Article 7 , entitled “ Power to Divide Trus t” (some capitalization omitted) , addresses the administration of the trust following the death of the first settlor, the3

d ecea sed s pouse (here, Maria)

. Article 7 permits the s urviving s pouse (Robert) to create a bypass trust, through which the s urviving s pouse can disclaim property for tax
purposes. If the s urviving s pouse does not elect to create a bypass trust, the trust asse ts are defined as the s urvivor’s t rust. Upon the death of the d eceased s pouse, the s urviving

s pouse may amend, revoke, or terminate the s urvivor’s t rust, which “shall contain the Surviving Spouse’s separate property that is part of the T rust E state” and the s urviving

s pouse’ s interest in the community estate. The record in this case does not reflect that
Robert ever created a bypass trust.
Article 9 provides for the “ D istribution of the Trust Estate ” (some capitalization omitted), following the death of the second settlor, the s urviving s pouse. Section 9.1 grants the power of appointment to the s urviving s pouse, such that if the s urviving s pouse exercises this power in his or her lifetime, upon the s urviving s pouse’s death, the t rustee must distribute the remaining balance of the t rust in any proportion and on the terms and
conditions the s urviving s pouse shall appoint

. 2 Section 9.1 goes on to state: “In the
event th e Surviving Spouse does not exercise [its] power of appointment over the Survivor’s Trust, then on the death of the Surviving Spouse the Trustee shall distribute the Trust assets as further provided in this document.” Section 9.2 then provides for
termina tion of the s urvivor’s t rust after the s urviving s pouse’s death, while section 9.3 provides for payment of the s urviving s pouse’s debts outstanding at the time of death.
Section 9.4 contains the language in dispute here . As amended, it states: “Distribution of Gifts. Prior to the division of the Trust Estate into shares for the beneficiaries named below, the Trustee shall distribute the following gifts of Trust

2 “ ‘A power of appointment is a power conferred by the owner of property (the “donor”) upon another person (the “donee”) to designate the persons (“appointees”) who will receive the property [ (“appointive property”) ] at some time in the future.’ ” ( Sefton v. Sefton (2012) 206 Cal.App.4th 875, 882 .)4

assets

. . . .” The first gift is to Robert , describe d as “Twenty

- Five Percent (25% ) of Wife’s interest in the real property located at [] Santa Clara, California [],

. . . outright, free of trust. This gift will be made at the Wife’s death. If this beneficiary is not then living, this gift shall pass to her living issue, if any, by rig ht of representation.” Section
9.4 goes on to gift 25 percent of the real property to Gisela, 25 percent to Maria’s grandson, and 25 percent to Maria’s granddaughter and great

- granddaughters, using the same language for each beneficiary as it used for Rob ert. Section 9.5 describes the division of the residue of the t rust e state, and sections 9.6 through 9.12 address the distribution of the t rust a ssets. Maria died on March 7, 2021, which made Robert the s urviving s pouse and s ole

t rustee of the t rust. Unde r the authority of Article 7, Robert transferred the t rust e state, in
which he included the Santa Clara property , from the t rust to the revocable s urvivor’s

t rus t

. Thereafter, Gisela filed a petition to compel redress for breach of trust against Robert. It alleged that section 9.4 required distribution of the Santa Clara property upon Maria’s death, and that Robert breached his duties as trustee by refusing to trans fer the Santa Clara property to the intended beneficiaries following Maria’s death. Accordingly, Gisela sought an order directing Robert to distribute the property in accordance with section 9.4, provide an accounting, and pay the beneficiaries their prop ortional share of rental income received. Robert opposed the petition . He argued that the t rust remained fully revocable, and that he was not required to distribute the Santa Clara property under section 9.4, because section 9.4 is found in a rticle 9 , wh ich addresse s distribution of the
T rust Estate after the death of both Maria and Robert

. The trial court denied the petition. It found that the t rust was fully revocable after Maria’s death because Robert transferred all the t rust assets to the revocable s urvivor’s

t rust. It further found that “[t]he Trust provisions governing the distribution of the real5

property are contained in Article 9, governing distributions after the death of the Surviving Spouse, so any distribution now would be premature. ” Gise la timely appeal ed

. DISCUSSION
Gisela contends that the express and unambiguous intent of section 9. 4 is to bequeath the Santa Clara property to the stated beneficiaries upon Maria’s death, and because Maria has died, Robert as trustee is now obligated to distribute the property

. She asserts that the placement of section 9.4’s language in a rticle 9 was a drafting error , as Maria’s clear intent was for the distribution of her gift to occur upon her death , regardless as to whether she predecease d Robert . Gisela asks that the t rust be reformed by moving
section 9.4 into a rticle 7, which governs the administration of the estate after the d eceased

s pouse’s death, to accurately express Maria’s intent. In response, Robert argues that section 9.4 must be strictly read within the testamentary framework of the t rust, which divides administration into three phases : (1) the s ettlors’ joint lifetimes ( a rticles 2

- 6) , (2) after the d eceased s pouse’s death ( a rticles
7

- 8) , and (3) after the s urviving s pouse’s death ( a rticle 9) . He argues that because the Santa Clara property provision is found in a rticle 9, which relates to the period after the
death of the s urviving s pouse , distribution of the property is only required after the

s urviving s pouse’s death. In the meantime , Robert contends , the Santa Clara property
remains part of the revocable s urvivor’s t rust, over which the s urviving s pouse has sole
discretion under a rticle 7.
I Applicable Legal Principles

“ ‘The basic rule in the interpretation and construction of any will is that the intention of the testator must be carried out as nearly as possible. [Citations.] In ascertaining the testator ’ s intent, courts employ an objective test: the intention to be
determined is that which is actually expressed in the language of the will. [Citations.]

“ ‘The intention which an interpretation of a will seeks to ascertain is the testator ’ s6

intention as expressed in the words of the will, not some undeclared intention which may have been in his [or her] mind.’ [Citation.]” [Citation.]’ ” ( Schwan v. Permann (2018)
28 Cal. App.5 th 678, 685 , [interpreting a testamentary trust] ).)

“ ‘California courts have long had the equity power to modify the terms of a trust where such modification is necessary to preserve the trust or serve the original intentions of the trustor

. . . . ’ ” ( Ike v. Doolittle (1998) 61 Cal.App.4th 51, 80 ( Ike ) ; se e also, Prob

. Code , § 15409 , subd. (a); Civ

. Code , § 3399. ) “ In California, the common law equitable power of a trial court to modify or reform a trust extends to situations where

. . . the trust instrument contains some expression of the trustor ’ s intent ion, but a drafting error renders that expression ambiguous .” ( Ike , supra , at p. 82.) A court may modify a trust where

“ (1) a ‘peculiar’ or ‘exceptional’ circumstance made modification necessary to accomplish the purpose of the trustors, and (2) there was some expression in the trust instrument of the purpose of the trustors. ” ( I d

. at p. 83 ) “[A] drafting error in a trust instrument which renders ambiguous an expression contained therein regarding the
administrative or distributive intentions of the trustor(s) constitutes a ‘peculiar’ or ‘exceptional’ circumstance

. . . which may justify an equitable modification of a trust instrument to accomplish the purpose of the trustor(s).” ( I bi d

. ) Interpretation of a trust instrument presents a question o f law for independent review on appeal when its meaning does not depend upon resolving a conflict in extrinsic
evidence. ( Johnson v. Greenelsh (2009) 47 Cal.4th 598, 604.)
II Analysis
T he language of section 9.4, by itself, is clear. However, an ambiguit y arises in light of its placement with in the trust’s administrative framework. The Santa Clara property is to be distributed “ [ p ] rior to the division of the Trust Estate.” Maria’s interest in the property is to pass on to her named beneficiaries “outrigh t, free of trust. This gift will be made at [ her ] death .” (Italics added.) The plain7

text supports the reading that Maria intended the Santa Clara property to be distributed upon her death, whether she died before or after Robert. The event triggering the distribution of the Santa Clara property , therefore, is unambiguously intended to be Maria’s death. This reading is supported by other language in section 9.4 , as well as its structure

. For instance , Maria gifts 25 percent of the Santa Clara property to Robert “at the Wife’s death.” Had Maria and Robert i ntended distribution of the Santa Clara property to occur onl y after both of their deaths , as Robert claims, it would not make sense for Maria to name Robert as a beneficiary upon her death

. But Maria not only gifted 25 percent of the property to Robert u pon her death, she also provide d that “ [i]f this beneficiary [Robert] is not then living, [his] gift shall pass to her living issue, if any, by right of representation.” (Italics added.) T his provision clearly contemplates a scenario in which the property is distributed following Maria’s death , whether that occurred before or after Robert’s death

. Further, section 9.4 requires all distribution s of the Santa Clara property “outright,
free of trust , ” upon Maria’s death. Again, the import of thi s language is clear. The
settlors intended the trustee to transfer the property , upon Maria’s death, directly to the
named beneficiaries

. Maria did not intend for Robert to transfer the property to the

s urvivor’s t rust , as he has done, as such a transfer is not “free of trust

. ” Robert’s
contention that he was free to move the Santa Clara property into the s urvivor’s t rust thus
contradicts the unambiguous direction to bequeath the property outright and free of trust

. We also note the language of section 2 .3 , which provides that all separate property “shall retain its original character as separate property .” It further states that “[e]ither Settlor may withdraw his or her separate property without the consent or concurrence of his or her spouse.” This re flects the settlors’ wishes to preserve separate property as such, and to each maintain independent control over his or her own separate property. By transferring the Santa Clara property

— Maria’s separate property

— into the s urvivor’s8

t rust, thereby gaining unfettered control over it for (at least) the remainder of his lifetime , Robert effectively change s its original character, in conflict with this provision. Despite the foregoing, Robert asserts that we must ignore the plain language of section 9.4 and the above referenced provisions, and instead allow the t rust’s
administrative framework to guide our interpretation. Under this approach, because section 9.4 falls under “Distribution of the Trust Estate” (some capitalization omitted), (rather than a rticle 7, “Power to Divide Trust , ” (some capitalization omitted) ), the Santa Clara property may only be distributed after both s ettlors die. This is not only owing to
the title of a rticle 9, Robert argues , but also because of the language in section 9.1 , which naturally precedes section 9.4

. Section 9.1 contains two options for distribution of the e state after the s urviving

s pouse dies. The first option is triggered where the s urviving s pouse has exercised his or
her power of appointment. U nder this option, the s urviving s pouse holds the power of appointment over the s urvivor’s t rust estate , and when the s urviving s pouse dies, the

trustee must distribute the remaining property in the s urvivor’s t rust consistent with terms and conditions created through the s urviving s pouse’s power of appointment

. If the

s urviving s pouse chooses to exercise the power of appointment, Robert contends conflicting provisions of the trust providing for distribution ess entially become a nullity,
which would include section 9.4. Instead, the trustee is guided by the distributions created through the power of appointment. However, permitting Robert to transfer the Santa Clara property into the s urvivor ’ s
t rust, thus subje cting it to his powers of revocation, amendment, and appointment, leads to an outcome clearly not contemplated by the settlors. Under this interpretation , Robert could then use, bequeath, or dispose of the Santa Clara property however he desired. He
coul d even disinherit Maria’s family and tak e the Santa Clara property for himself. Such a result would contradict the trust’s express and specific intent to maintain the character9

of separate property and to gift the property in equal shares to Robert and to Maria’s
heirs. Applying t he second option provided for in section 9.1 in the manner urged by
Robert would lead to similarly problematic results. Under this option, if the s urviving

s pouse does not exercise the power of appointment over the s urvivor’s t rust, section 9.1 provides that on the death of the s urviving s pouse , the t rustee “shall distribute the Trust assets as further provided in this document.” This language, Robert argues, means that
distribution un der the provisions that follow (including section 9.4) is only triggered after
the death of the s urviving s pouse, and only if the s urviving s pouse does not use the power of appointment to amend or revoke provisions of the trust before his or her death. Th is again conflict s with the clear instruction of section 9.4 that Maria’s death alone wa s to be the sole triggering event for the distribution of the Santa Clara property

. Although Robert cites to caselaw instructing that particular words in a will are sub ordinated to a will ’s administrative scheme or sequence, those cases are distinguishable. The two primary cases cited contain disputed language that was, by itself, ambiguous, such that reference to the testamentary scheme provided a useful

context in whi ch to interpret the ambiguous terms. (See, e.g., Estate v. Goyette (2004)
123 Cal.App.4 th 67, 73 [using the will’s general scheme to help interpret the meaning of “my money”]; Est

ate of Nathan (1949) 89 Cal.App.2d 789, 793

- 794 [testator’s general intention of the will guided interpretation of the term “during”] .) Here, the language of
section 9.4 is clear. The Santa Clara property was to be distributed into quarters, as described and free of trust, at Maria’s death. There is no ambiguous language to decipher.
For the reasons explained above, we find that the s ettlors’ original intention was
for M aria to gift the Santa Clara property , upon her death, as described in section 9.4.
We further find that the placement of section 9.4 within a rticle 9 and following section
9.1 creates an ambiguity . Given section 9.4’s clear instructions, and in view of other10

language in the trust, the placement of section 9.4 appears to be a drafting error. As we
can discern the s ettlors’ purpose from section 9.4’s plain language, and a drafting error renders section 9.4 ambiguous, we are authorized to exercise our equi table powers to reform the trust. ( Ike , supra , 61 Cal.App.5th at pp. 82

- 83.) Here, we find such a modification is justified to achieve the s ettlors’ purpose. Accordingly, the language in
section 9.4 should be removed from a rticle 9 and placed in a rticle 7, “ Power to Divide the
Trust , ” (some capitalization omitted)

. DISPOSITION The trial court’s denial of the petition is reversed. The trust is modified consistent with this opinion. The matter is remanded to the trial court to order that the trustee
distribute the Santa Clara property outright and free of trust to the named beneficiaries, and to conduct further proceedings, as necessary

. Gisela shall recover her costs on appeal. (Cal. Rules of Court, ru le 8.278(a).)

\ s \ , Krause, J.

We concur:

\ s \ , Robie, Acting P. J.

\ s \ , Renner, J.