Court Opinion

ID: 3198064
Source: CourtListenerOpinion
Date Created: 2016-04-27 00:01:52.716565+00
Date Added: 2024-06-11T12:19:50.674505
License: Public Domain

Filed 4/26/16 Romasanta v. Harcourt CA2/6
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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 This opinion has not been certified for publication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

                                     SECOND APPELLATE DISTRICT

                                                   DIVISION SIX

ANTONIO R. ROMASANTA, as General                                              2d Civil No. B260248
Partner, etc.,                                                               (Super. Ct. No. 225061)
                                                                             (Santa Barbara County)
     Plaintiff and Appellant,

v.

PERRI V. HARCOURT,

     Defendant and Respondent.

                   A beneficiary of two trusts petitioned to amend the trusts and to have
herself appointed as trustee. The corpus of the trusts consists almost entirely of limited
partnership interests. The general partner petitioned to have himself declared an
interested person pursuant to Probate Code section 48.1 He sought to oppose the
beneficiary's petition on the ground that the trustor made a contract with him that the
trusts would have an institution appointed as successor trustee. The trial court denied the
general partner's petition. He appeals. We affirm.
                                                        FACTS
                   Antonio Romasanta and Donald Harcourt were general partners in Islay
Investments and Tomado Investments, both of which are limited partnerships (hereafter

1
    All statutory references are to the Probate Code.
collectively the "Partnership"). The Partnership owns residential, commercial and self-
storage real properties worth in excess of $100 million.
                The Partnership agreement provides in part: "No Partner, without the prior
written consent of the other Partners, may sell or assign his interest or any portion of his
interest in this partnership to any other person."
                Harcourt's wife, Perri Harcourt, agreed to be bound by the provisions of the
Partnership agreement.2
                In 1979, paragraph 19 of the Partnership agreement was amended to
provide that in the event of the death of a general partner, "he shall then occupy the status
of a limited partner," and the surviving general partner shall continue as the general
partner. Perri gave her written consent to the amendment.
                In July of 1995, Harcourt was diagnosed with cancer. A little over a month
later, in August 1995, the partners again amended paragraph 19 of the Partnership
agreement to provide that the surviving spouse may obtain a loan from the Partnership on
such terms as the estate or trustee and the surviving partner shall agree. The loan would
be for the payment of death taxes.
                On August 25, 1995, Harcourt created two trusts naming Perri, their
children and his children from a prior marriage as beneficiaries. Almost the entire corpus
of the trusts was composed of Harcourt's Partnership assets.
                The trusts provided, in part:
                "If DONALD H HARCOURT shall fail or cease to act as Trustee, then
R. BRUCE MACKENZIE and PETER W. NEWMAN are hereby appointed as Successor
Co-Trustees in his place. If either R. BRUCE MACKENZIE or PETER W. NEWMAN
shall fail or cease to act as a Successor Co-Trustee, then RICHARD A. GANT is hereby
appointed as Successor Co-Trustee in the place of the one who steps down.
                "1. In the event that only one or none of the above named individuals are
available to serve, then DONALD H. HARCOURT appoints SANTA BARBARA

2
    We hereafter use Perri Harcourt's first name for clarity and intend no disrespect.

                                                2.
BANK & TRUST as Successor Trustee to serve with the one remaining individual or, if
neither are able, to serve alone as the Successor Institutional Trustee. If SBB&T no
longer exists, then a court of competent jurisdiction shall appoint a bank or trust company
or other similar corporate entity qualified to act in the capacity of a trustee under the laws
of the State of California as Successor Institutional Trustee. However, if there exists a
successor institution to SBB&T, the Settlor requests that the court give serious
consideration to the appointment of such successor institution, provided it otherwise
qualifies to serve.
              "3. PERRI V. HARCOURT is given the power to remove, from time to
time, any acting Successor Co-Trustee, upon sixty (60) days written notice to such acting
fiduciary and, if no successor is named herein, upon appropriate application to a court of
competent jurisdiction to select a Successor Co-Trustee. In removing an individual
Successor Co-Trustee, she shall only have the power to act with cause; in removing a
corporate Successor Co-Trustees, she shall have the power to act without cause. Thus,
PERRI V. HARCOURT shall have the power to remove an acting individual or corporate
fiduciary but not the power to appoint his or its successor. However, in the appointment
of any such successor or successors, it is DONALD H. HARCOURT's request that the
court will hear and be guided by PERRI V. HARCOURT's suggestions as to the
appointment."
              Harcourt died in January 1997. He and Perri were married for 19 years.
His will dated January 4, 1996, left his estate to the trusts. The trusts are limited partners
of the Partnership. Romasanta is the sole general partner.
                                  Petition for Modification
              In July 2014, Perri filed a petition to approve a modification of the trust and
to have herself appointed as successor trustee. Perri alleged that the trustee's fees were
averaging $235,525 per year. Because the assets of the trust are composed of limited
partnership shares, there is nothing for the trustees to do that justifies such fees. She
alleges she has the consent of all trust beneficiaries for the modifications.

                                              3.
                                   Romasanta's Petition
              Romasanta filed a request to file objections to Perri's petition and to petition
for appointment of an institutional successor trustee. Romasanta claimed that his
standing as an interested party is based on a contract between himself and Harcourt. The
alleged contract provided that the trusts would always have an institutional trustee.
              Romasanta filed an affidavit in support of his motion. Romasanta declared
that he met Harcourt in 1962. They were close personal friends and business partners
until his death in January 1997. Harcourt had a Bachelor of Science in Electrical
Engineering from Stanford. Romasanta described Harcourt as "a particularly detail-
oriented and methodical individual," and that "he paid particular attention to detail and
minutia in everything he did. . . ." Romasanta said Harcourt had "considerable
familiarity" with trusts. Harcourt served as trustee of family trusts and as co-trustee of
his mother's trust valued at $10,000,000.
              Romasanta described himself as having been licensed to practice law in
California since 1961. He has an LLM degree in tax from New York University. During
the course of his career, he has drafted numerous partnership agreements and has been
involved in a number of sophisticated transactions involving partnerships and trusts.
              Romasanta declared that after Harcourt was diagnosed with cancer, they
had numerous discussions about his estate plan and how it would affect the Partnership.
During those discussions, Romasanta received continuing assurances from Harcourt that
"as General Partner[,] [Romasanta] would have an institutional trustee to work with . . . .
[Harcourt] kept his part of the agreement as reflected in the Trusts and [Romasanta]
agreed to the partnership modification regarding loans." To implement the agreement,
the parties executed the August 1995 amendment to paragraph 19 of the Partnership
agreement. Harcourt specifically agreed that he would appoint an institution as successor
trustee and would not appoint Perri or his children. Romasanta stated, "I believe that by
discussing with me and agreeing upon his successor trustee plan, [Harcourt], in essence,
granted me standing to participate in any proceeding to dispense with the institutional
trustee position."

                                             4.
              Romasanta presented documents in addition to the trusts themselves and the
1995 Partnership agreement amendment. He claims the documents evidence the
existence of a contract to appoint an institutional trustee.
              Romasanta submitted a copy of Harcourt's will where Harcourt exercised a
power to appoint the trustees of his mother's trust. The will states:
              "I hereby appoint PERRI V. HARCOURT and PETER W. NEWMAN as
the successor co-trustees of the Frances M. Harcourt 1983 Trust. Further, upon the death
or resignation of PETER W. NEWMAN, I appoint RICHARD A. GANT as his successor
co-trustee. Upon the death or resignation of PERRI V. HARCOURT or PETER W.
INEWMAN and/or RICHARD A. GANT, I appoint SANTA BARBARA BANK &
TRUST to serve with the remaining individual co-trustee as the institutional successor
co-trustee to my mother's said trust. At no time will an individual co-trustee serve alone.
Upon the death or resignation of the last individual co-trustee, then SANTA BARBARA
BANK & TRUST will continue to serve as the sole trustee of the Frances M. Harcourt
1983 Trust.
              Perri wrote a letter to Romasanta dated February 24, 2014. The letter
stated, in part: "Don [Harcourt] agreed not to dissolve the partnership prior to his death
because it was in the best interest of both parties to have the partnership continue to
benefit both families and the employees of Islay Investments. During that time, you
agreed to be the managing partner of the company to insure proper and necessary income
to your and Don's families. Your severe reduction of distributions while building huge
and disproportionate cash reserves has created undue hardship to me and my family and
thus you are not fulfilling the promise you made to my husband and your partner.
Clearly you have a rationale for your actions but there is no rationale for breaking your
agreement with Don and in turn, with me."
              Finally, Romasanta submitted portions of Perri's deposition in which she
testified:

                                              5.
              "[Perri:] He [Harcourt] told me that Bruce MacKenzie and Peter Newman
were going to be the trustees and that Dick Gant would be a successor trustee, . . . later
the bank would be the trustee, and . . . we discussed that.
              "[Q:] All right. And what was your response?
              "[Perri:] My response was . . . [¶] . . . I thought it was great."
              Perri testified in another deposition: "[I]f Don had wanted me to be the
trustee, he would have made me one. Well, I never wanted to be one, ever."
              The trial court denied Romasanta's petition and granted Perri's petition.
                                       DISCUSSION
                                               I
              Perri contends the appeal is moot because a reversal would not grant
Romasanta any relief.
              Perri points out that Romasanta did not appeal the trial court's order
granting her petition, and the order has long since become final. But the trial court's
denial of Romasanta's petition to be designated an interested party means he had no
standing to appeal the order granting Perri's petition to be named trustee. One must be a
party to appeal. (See Code Civ. Proc., § 902 [an "aggrieved party" may appeal]; County
of Alameda v. Carlson (1971) 5 Cal. 3d 730, 736.) The only order Romasanta can appeal
is the denial of his petition to be named an interested person in the instant appeal. If he
would prevail, he would have a remedy to file his own petition to appoint an institutional
trustee.
              Perri also argues this appeal is moot because Romasanta has filed a parallel
action in superior court for declaratory relief and specific performance.3 Romasanta asks
the court for an order to specifically enforce a contract requiring an institutional trustee
for the trusts. But Perri points to no final judgment or order in that case. There is

3
 We grant Perri's motion to take judicial notice of Romasanta's first, second and third
amended complaints in Romasanta v. Harcourt, Santa Barbara Superior Court, Case No.
1469167, filed August 5, 2015. We deny Perri's second motion for judicial notice filed
February 29, 2016. We deny Romasanta's request to take judicial notice, filed October
19, 2015, as irrelevant.

                                              6.
nothing to prevent us from giving any relief that may be warranted in this case. The
appeal is not moot.
                                              II
              Romasanta contends the trial court erred in not designating him an
interested person.
              Section 15660, subdivision (d) provides that an "interested person" may
petition the court to appoint a successor trustee.
              Section 48 provides: "(a) Subject to subdivision (b), 'interested person'
includes any of the following: [¶] (1) An heir, devisee, child, spouse, creditor,
beneficiary, and any other person having a property right in or claim against a trust estate
or the estate of a decedent which may be affected by the proceeding. [¶] (2) Any person
having priority for appointment as personal representative. [¶] (3) A fiduciary
representing an interested person. [¶] (b) The meaning of 'interested person' as it relates
to particular persons may vary from time to time and shall be determined according to the
particular purposes of, and matter involved in, any proceeding."
              Romasanta claims the standard of review is de novo. He relies on Bilafer v.
Bilafer (2008) 161 Cal. App. 4th 363, 366, where the court concluded that the trustor of an
irrevocable trust has standing to reform the trust to cure a drafting error. But Bilafer did
not concern section 48. Instead, the court stated it decided standing under the common
law. (Bilafer, at p. 371, fn. 7.)
              Cases decided under section 48 apply the abuse of discretion standard of
review. (See Estate of Sobol (2014) 225 Cal. App. 4th 771, 782, and cases cited therein.)
Indeed, the broad power given to the court in subdivision (b) of the section convinces us
the abuse of discretion standard is correct. In this case, however, it does not matter.
Under either standard of review, the result is the same.
              After receiving numerous filings in this matter, including Romasanta's
evidence in support of his claim to standing, the trial court found that Romasanta lacked
standing. Implicit in that order was a finding that Romasanta's evidence did not support
his claim.

                                              7.
              Romasanta argues that he qualifies as an interested person by virtue of a
contract Harcourt made with him that the successor trustee of the trusts would be an
institutional trustee. Assuming such a contract would be sufficient to give Romasanta
standing, the trial court did not find evidence of a contract.
              On appeal, Romasanta claims the consideration he gave in exchange for
Harcourt's promise was his consent to the transfer of Harcourt's partnership interest into
the trusts. Romasanta's affidavit in support of his petition appears to state the
consideration was the August 1995 amendment to the Partnership agreement. Because
the trial court did not credit the existence of any contract concerning a successor trustee,
the discrepancy is inconsequential.
              Romasanta attempts to prevail by viewing the evidence in a light most
favorable to himself. In viewing the evidence, we look only to the evidence supporting
the prevailing party. (GHK Associates v. Mayer Group, Inc. (1990) 224 Cal. App. 3d 856,
872.) We discard evidence unfavorable to the prevailing party as not having sufficient
verity to be accepted by the trier of fact. (Ibid.)
              Romasanta's evidence of a contract rests solely in his affidavit. He purports
to recall conversations that took place almost 20 years ago. By Romasanta's own
account, the partners were highly sophisticated and experienced in partnership
agreements and trusts. They must have understood that a trust can be amended and the
trustees replaced. Romasanta's affidavit does not claim otherwise. Romasanta declares
that after Harcourt was diagnosed with cancer, they discussed his estate plan and
amended paragraph 19 of the Partnership agreement. Yet they never expressly stated the
alleged contract anywhere in writing.
              Perri's letter to Romasanta dated February 24, 2014, states Harcourt agreed
not to dissolve the partnership in exchange for Romasanta's agreement to provide
necessary income to Harcourt's family. But the letter does not suggest a contract
providing that a successor trustee would be an institutional trustee.
              The other evidence that Romasanta relies on at best does nothing more than
confirm what Perri does not contest: that Harcourt intended an institutional trustee; that

                                               8.
he did not intend for Perri to be a trustee; and that initially Perri did not want to be a
trustee. That is why Perri petitioned to amend the trust rather than enforce it. All the
evidence shows is Harcourt's unilateral intent. It does not show a contract under which
an institutional trustee must be appointed. Nor, for that matter, does it show that
Harcourt intended to give Romasanta any say over the administration of the trusts.
Instead, the trust gives Perri a say over the appointment of a successor trustee.
               Romasanta argues Perri failed to rebut the evidence that he had a contract
with Harcourt. But the argument confuses uncontradicted evidence with credible
evidence. The trier of fact is entitled to reject even uncontradicted evidence as not having
sufficient credibility. (Sprague v. Equifax, Inc. (1985) 166 Cal. App. 3d 1012, 1028.)
Here the trial court found there was insufficient evidence of a contract.
               Romasanta argues for the first time in his reply brief that the partnership
agreement itself prohibits the appointment of a new trustee without his consent.
Romasanta points to the provision of the partnership agreement that prohibits a partner
from transferring his partnership interest without the other partner's prior written consent.
Romasanta cites Portico Management Group, LLC v. Harrison (2011) 202 Cal. App. 4th
464, 473, for the proposition that a trust is not an entity and that legal title to the trust
property is held by the trustee. Thus he concludes that the substitution of a trustee is a
transfer of an interest in the partnership that requires his consent.
               Points raised for the first time in the reply brief will ordinarily not be
considered. (9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 723, p. 790.) In any
event, even had the issue been properly raised, it would have been unavailing.
               Romasanta conceded at oral augment that a provision prohibiting the
transfer of a partnership interest without the other partner's consent is common in
partnership agreements. (See 7 California Legal Forms: Transaction Guide (2010,
Matthew Bender) ch. 15, § 15.201[2].) Yet Romasanta cites no case that has ever applied
such a provision to the substitution of a trustee. Portico, on which Romasanta relies,
holds nothing more than that a judgment against a trust alone without the trustees is
unenforceable.

                                                9.
               It is true the trustee has legal title to the trust assets. But the legal title
confers no beneficial interest. Instead, the trustee must administer the trust solely in the
interest of the beneficiaries. (§ 16002, subd. (a).) The substitution of a trustee is simply
not the equivalent of a transfer of an interest in the partnership. Romasanta is still the
general partner with all the rights and power of a general partner. The interest in the trust
is still a limited partnership.
               The judgment (order) is affirmed. Costs on appeal are awarded to
respondent.
               NOT TO BE PUBLISHED.

                                              GILBERT, P.J.
We concur:

               PERREN, J.

               TANGEMAN, J.

                                                10.
                               Colleen K. Sterne, Judge
                       Superior Court County of Santa Barbara
                         ______________________________

             Price, Postel & Parma, LLP, Timothy E. Metzinger for Plaintiff and
Appellant.

             Mullen & Henzell, LLP, Jana S. Johnston, Stephen N. Yungling for
Defendant and Respondent.

                                         11.