Opinion ID: 466517
Heading Depth: 3
Heading Rank: 2

Heading: Failure to Join the Trustee of the Family Trusts

Text: 17 During the bankruptcy trial, Linda Allustiarte appeared as trustee of the family trusts. The Allustiartes argued before the district court for the first time that Linda Allustiarte did not have the capacity to appear as trustee for the family trusts because she had filed for bankruptcy. They asserted that her appearance before the bankruptcy court as trustee was ineffective to protect the interests of the family trusts. They seek to invalidate the order of the bankruptcy court quieting title to portions of the Muzzy Ranch in the debtors on the ground that the trustee in bankruptcy failed to join a person who could lawfully act as trustee of the family trusts. 18 The district court held that Linda Allustiarte could not serve as trustee at the trial because, under Cal.Civ.Code Sec. 2281 (West 1985), persons filing for bankruptcy are barred from serving as trustees. The court also concluded, however, that the Allustiartes were barred from asserting this claim due to (1) equitable estoppel, (2) the fact that Linda Allustiarte was the de facto (if not de jure ) trustee, and (3) waiver. 19 We agree with the district court's holding that because the Allustiartes remained silent on this issue before the bankruptcy court, the doctrine of equitable estoppel prevents them from now asserting that defense. The doctrine of equitable estoppel precludes a person with a duty to speak from taking advantage of another by remaining silent. Jablon v. United States, 657 F.2d 1064, 1068 (9th Cir.1981). The Allustiartes' failure to inform the court that their trustee was disqualified from representing their interests estops them from asserting that defense now. 20 The district court was also correct in holding that, even if Linda Allustiarte could not serve as trustee de jure, she was a trustee de facto. A person who voluntarily acts as if he or she is a trustee is a de facto trustee. Eisenmann v. Eisenmann, 52 Ohio Misc. 119, 370 N.E.2d 788, 793 (1976); accord In re Dakin's Will, 58 Misc.2d 736, 296 N.Y.S.2d 742, 743 (1968). The acts of a de facto trustee are valid as against third parties. Dakin, 296 N.Y.S.2d at 743. 21 It is also clear from the record that the Allustiartes waived their right to assert this defense. Under Fed.R.Civ.P. 9(a), a party must make a specific negative averment in order to assert a defect in capacity. Failure to do so in a timely manner is a waiver of that defense. Summers v. Interstate Tractor & Equipment Co., 466 F.2d 42, 49-50 (9th Cir.1972). The Allustiartes made no such averment before trial. They waived their right to this defense.