Court Opinion

ID: 9959497
Source: CourtListenerOpinion
Date Created: 2024-04-11 19:03:58.69934+00
Date Added: 2024-06-11T08:18:30.074709
License: Public Domain

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

                                             Electronically Filed
                                             Intermediate Court of Appeals
                                             CAAP-XX-XXXXXXX
                                             11-APR-2024
                                             08:04 AM
                                             Dkt. 94 SO

                        NO. CAAP-XX-XXXXXXX

               IN THE INTERMEDIATE COURT OF APPEALS
                      OF THE STATE OF HAWAI#I

                         IN THE MATTER OF
                      THE GENARO LOUIS PEREZ
                   TRUST DATED OCTOBER 19, 2015

       APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
                      (TRUST NO. 17-1-0109)

                    SUMMARY DISPOSITION ORDER
  (By: Leonard, Acting Chief Judge, Hiraoka and Nakasone, JJ.)

          Petitioners-Appellants Carlos G.K. Perez and Jacob G.K.

Perez (the Perez Sons) appeal from the June 14, 2019 Judgment on

Order Granting in Part and Denying in Part Petition for (1)

Declaratory Order; (2) Removal and Substitution of Successor

Trustee; (3) Appointment of New Successor Trustee; (4) Surcharge

of Gloria M.S. Crawford (Crawford); (5) Sanctions Against

[Crawford]; (6) Accounting; and (7) Referral to the Civil Trial

Calendar as a Contested Case Pursuant to Rule 20, [Hawai#i

Probate Rules (HPR)] [the Petition] entered by the Probate Court
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of the First Circuit (Probate Court),1 in favor of Crawford and

Evangeline M. Dias (Dias) (together, the Sisters) (Judgment).

          The Perez Sons also challenge the Probate Court's (1)

June 14, 2019 Order Granting in Part and Denying in Part [the

Petition] and the (2) August 6, 2019 Findings of Fact [(FOFs)],

Conclusions of Law [(COLs)], and Decision and Order Granting in

Part and Denying in Part [the Petition] (Order on Petition).

          The Perez Sons raise six points of error on appeal,

contending that the Probate Court erred in:          (1) failing to
include in its FOFs and/or COLs that the provisions of the

Genaro Louis Perez Trust (the Trust) were inconsistent, and that

ambiguity existed; (2) concluding in COL 7, that based upon a

reading of the whole and entire Trust, Genaro Louis Perez's

(Settlor's) intent was to name Settlor's Sisters as the Trust's

sole beneficiaries; (3) concluding in COL 8 that Article A-5.2 of

the Trust is controlling; (4) concluding in COL 9 that the sole

remaining beneficiaries of the Trust are Settlor's Sisters; (5)

failing to permit a contested hearing through referral to the

Civil Trials Calendar; and (6) failing to permit the inclusion of

extrinsic evidence.

          Upon careful review of the record and the briefs

submitted by the parties, and having given due consideration to

the arguments advanced and the issues raised by the parties, we

resolve the Perez Sons' points of error as follows:

          (1)   The Perez Sons argue that the Probate Court erred

in failing to include a FOF/COL that the Trust was ambiguous as

     1
          The Honorable R. Mark Browning presided.

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to its intended beneficiaries even though the court orally ruled

that "there are ambiguities" in the Trust.        Read as a whole, the

Trust is indeed ambiguous.     In one provision, the Trust states:
                If all of my living Children, have reached twenty-one
          years of age or none of my Children is alive, then this
          trust will terminate and . . . Trustee will distribute the
          Trust Estate to my Descendants, Per Stirpes[.]

          However, in another provision, the Trust states:
                My sisters GLORIA M.S CRAWFORD and EVANGELINE M. DIAS,
          will be the beneficiaries of the Family Trust.

          These provisions, even when read in the context of the
entirety of the Trust, are in direct conflict.         Under the former,

the Perez Sons, as the Settlor's Descendants, would appear to be

entitled to the distribution of the Trust's assets; and the

Sisters, who are plainly not the Settlor's Descendants, would not

receive any distribution.     Under the latter provision, the

Sisters are named as "beneficiaries" of the Trust, apparently

entitling them to receive the Trust's assets.

          In the Order on Petition, the Probate Court concluded

that the latter provision indicated the Settlor's intent,

without recognizing the ambiguities in the Trust document in

light of the conflict between the above-referenced provisions as
well as the other operative provisions in the Trust.          Absent,

inter alia, findings recognizing the ambiguities in the Trust –

and either harmonizing them, allowing extrinsic evidence as to

the Settlor's intent, and/or otherwise addressing and resolving

them – or stating that no ambiguity exists, the Probate Court's

findings are not sufficient to form a basis for the Probate

Court's conclusion that the provision favoring the Sisters is

controlling.   See In re Elaine Emma Short Revocable Living Tr.,

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147 Hawai#i 456, 465-66, 465 P.3d 903, 912-13 (2020); In re

Raymond K. Tanaka Tr., CAAP-XX-XXXXXXX, 2021 WL 1200698, *4 (Haw.

App. Mar. 30, 2021) (SDO); Ventura v. Grace, 3 Haw. App. 371,

375, 650 P.2d 620, 623-24 (1982).       We conclude that the Probate

Court erred in failing to make sufficient findings.

          (2-4)   In their second, third, and fourth points of

error, the Perez Sons argue that the Probate Court erred in

concluding in COLs 7, 8, and 9 that it was Settlor's intent to

name the Sisters as sole beneficiaries of the Trust.           COLs 7, 8,
and 9, state:
                7 - Upon a whole reading of the Trust, the Court
          concludes that the Settlor's intent was to name his two
          sisters as his sole beneficiaries. In 2015, when the
          Settlor created the Trust, his children were alive, and the
          Settlor chose to omit them as beneficiaries and did not
          reference them by name in the instrument. Conversely, the
          Settlor consistently named his two sisters in the Trust as
          beneficiaries.
                8 - Article A-5.2 of the Trust controls, for the
          benefit of Gloria M.S. Crawford and Evangeline M. Dias as
          the sole beneficiaries.
                9 - The Court grants declaratory relief and concludes
          that the sole remainder beneficiaries of this Trust are
          Gloria M.S. Crawford and Evangeline M. Dias.

          "A fundamental rule when construing trusts is that the
intention of the settlor as expressed in a trust instrument shall

prevail unless inconsistent with some positive rule of law."            Tr.

Created Under Will of Damon, 76 Hawai#i 120, 124, 869 P.2d 1339,

1343 (1994) (citation and brackets omitted).         When construing a

document to determine the settlor's intent, the instrument must

be read as a whole, not in fragments.       Id.   When evaluating

whether a trust contains an ambiguity,
          the test lies not necessarily in the presence of particular
          ambiguous words or phrases but rather in the purport of the
          document itself, whether or not particular words or phrases
          in themselves be uncertain or doubtful in meaning. In other

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           words, a document may still be ambiguous although it
           contains no words or phrases ambiguous in themselves. The
           ambiguity in the document may arise solely from the unusual
           use therein of otherwise unambiguous words or phrases. An
           ambiguity may arise from words plain in themselves but
           uncertain when applied to the subject matter of the
           instrument. In short, such an ambiguity arises from the use
           of words of doubtful or uncertain meaning or application .

In re Lock Revocable Living Tr., 109 Hawai#i 146, 152, 123 P.3d

1241, 1247 (2005) (citation omitted).

           Here, Article D-1 of the Trust states that "'Child' and

'Children' means a person's first generation Descendant(s)."

Article D-3 states that "'Descendant' means any person descended

from the ancestor referred to, either by blood relationship to

the ancestor or by legal adoption by either the ancestor or by

any person descended from the ancestor by blood relationship or

by legal adoption."      Article D-6 states that "[t]he 'Family

Trust' means the trust for my Descendants as established in Part

A."   (Emphasis added).      Article D-12 of the Trust defines the

Trust Estate to include all property held under the Trust, all

property payable to or accruing to the Trustee as a result of the

Settlor's death, and the income from and the proceeds,

investments and reinvestments of that property.
           Article A-5.1 clearly provides for the distribution of

the Settlor's tangible personal property to the Sisters.            The

provisions that follow, although not necessarily ambiguous in

singular isolation, create ambiguity in the Trust document as a

whole:
                 A-5.2   REMAINDER - IF DESCENDANTS ARE ALIVE
                 If at my death, my descendants, are alive, then after
           payment of amount under Article C-1.3 [which addresses
           taxes, expenses, and legacies upon Settlor's death], Trustee
           will hold and administer the Trust Estate, which will then
           be called the Family Trust Estate, as the Family Trust.

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                A-5.3    REMAINDER - IF NO DESCENDANTS ARE ALIVE

                If at my death, any of my Descendants is alive:
                A-5.3(A)    CHILDREN ALL TWENTY-ONE YEARS OF AGE
                      If all of my living Children, have reached
                twenty-one years of age or none of my Children is
                alive, then this trust will terminate and, after
                payment of amounts under Article C-1.3, Trustee will
                distribute the Trust Estate to my Descendants, Per
                Stirpes[.]
                A-5.3(B)    ANY CHILD UNDER TWENTY-ONE YEARS OF AGE
                      If any of my living Children, has not reached
                twenty-one years of age, then after payment of amounts
                under Article C-1.3, Trustee will hold and administer
                the Trust Estate, which will then be called the Family
                Trust Estate, as the Family Trust.

                A-5.4   IF ANY DESCENDANTS IS NOT ALIVE

                If at my death, none of my Descendants is alive, then
          this trust will terminate, and after payment of amounts
          under Article C-1.3, Trustee will distribute the Trust
          Estate to GLORIA M.S. CRAWFORD and EVANGELINE M. DIAS.
          ARTICLE A-6   DISTRIBUTION OF FAMILY TRUST ESTATE AFTER MY DEATH

                A-6.1 BENEFICIARIES

                My sisters GLORIA M.S. CRAWFORD and EVANGELINE M.
          DIAS, will be the beneficiaries of the Family Trust.

                A-6.2 INCOME AND PRINCIPAL DISTRIBUTIONS

                Trustee may distribute to or for the benefit of my
          Descendants as much of the net income and principal of the
          Family Trust as Trustee deems advisable in accordance with
          their needs for their health, education, maintenance and
          support, as determined by Trustee.

                A-6.3 TERMINATION

                The Family Trust will terminate when my youngest
          living Child has reached twenty-one years of age or none of
          my Children is alive. On termination, Trustee will
          distribute the Family Trust Estate, free of any trust, to
          GLORIA M.S. CRAWFORD and EVANGELINE M. DIAS.

          If one read no further than A-5.4, particularly in

light of the definitions set forth above, arguably, the Trust

unambiguously provides that except for tangible personal

property, the Trust Estate would be distributed to and held for

the benefit of the Settlor's living Descendants, per stirpes, and

to the Sisters if there are no living Descendants.                    It appears to

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be uncontested that in this scenario, the Trust Estate would be

distributed to the Perez Sons.       However, reading on to Article A-

6 creates ambiguity in the document.        A-6.1 uses the term

"beneficiaries," which is undefined in the Trust.          Beneficiaries

can be income, remainder and/or contingent beneficiaries,

depending on the intent of a settlor.        A-6.2 provides the Trustee

great latitude to use income or principal for the needs of the

Settlor's Descendants, presumably Descendants under the age of 21

(although we make no findings as to that).         A-6.3 can be read a
number of different ways, but in all cases must be understood in

conjunction with the Trust's other provisions.           We conclude that

the Trust is ambiguous, and the Probate Court failed to issue

sufficient requisite finding of fact supporting its conclusions

in COLs 7, 8, and 9, as to the Settlor's intent; and therefore,

we necessarily remand the case to the Probate Court for the

identification and findings of facts in support of a conclusion

as to the Settlor's intent.      See In re Elaine Emma Short

Revocable Living Tr., 147 Hawai#i at 465-66, 465 P.3d at 912-13.

          (5)   The Perez Sons argue that the Probate Court erred

in denying their request to refer the case to the civil trials

calendar for a contested hearing pursuant to the Hawai#i Probate

Rules (HPR) Rule 20.

          HPR Rule 20 states, in pertinent part:
          Rule 20.   DISPOSITION OF CONTESTED MATTERS.
                (a) Assignment. The court by written order may
          retain a contested matter on the regular probate calendar or
          may assign the contested matter to the civil trials calendar
          of the circuit court.

                (b) Guideline for Assignment. The court may use as a
          guideline on whether to assign a contested matter to the

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          civil trials calendar the expected length of the hearing and
          whether it will take more than one-half day. The court may
          also assign other matters to the civil trials calendar, with
          or without the stipulation of the parties, and the court, at
          the request of all parties, may retain on the probate
          calendar a contested matter that would otherwise be assigned
          to the civil trials calendar, if the court determines the
          matter can be handled more efficiently and effectively.
          When the court assigns a contested matter to either
          calendar, the court may set a status conference date, which
          the court clerk will note in the order assigning the
          contested matter, or in a separate status conference order.
                  . . . .
                (d) Procedures in Retained Contested Matters .
          Whenever the court retains jurisdiction of a contested
          matter as a probate proceeding, the court in the order of
          assignment may, at the request of the parties, designate and
          order that any one or more of the Hawai#i Rules of Civil
          Procedure and/or the Rules of the Circuit Courts shall be
          applicable in such matter.

          The commentary to HPR Rule 20(a) states that "[i]t is

anticipated that the court will assign to civil trials the more

complex and time consuming cases[.]"       HPR Rule 20(a) cmt.       The

commentary further states that a written order of assignment is

required to create a clear record and to give the court an

opportunity to decide what procedures will be used, pursuant to

HPR Rule 20(d).     Id.

          Here, the parties and the Probate Court agreed that

this case "come[s] down to the interpretation of the Trust."             The
plain language of HPR Rule 20(a) provides the Probate Court the

discretion to retain a case or refer it to the civil trials

calendar, and we cannot conclude that the Probate Court's

decision to retain this matter "clearly exceeded the bounds of

reason or has disregarded rules or principles of law or practice

to the substantial detriment of a party litigant."          In re Tr.

Agreement Dated June 6, 1974, 145 Hawai#i 300, 309, 452 P.3d 297,

306 (2019) (citation omitted).      However, the Probate Court erred

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by failing to issue a written order retaining the case, in

violation of HPR Rule 20(a).    Such an omission in a contested

matter deprives parties of the opportunity to request that the

probate court adopt any HRCP and/or Rules of the Circuit Court

under HPR Rule 20(d).    See In re Elaine Emma Short Revocable

Living Tr., 147 Hawai#i at 469 n.26, 465 P.3d at 916 n.26.

Accordingly, on remand, the Perez Sons may renew their request,

and the Probate Court may retain or assign the case in accordance

with HPR Rule 20.
          (6)   The Perez Sons argue that the Probate Court erred

in failing to consider extrinsic evidence and that this failure

was prejudicial.    This argument has merit.    Although a settlor's

intent must be gathered if possible from the trust document

itself, where there is controversy or doubt as to the meaning of

the trust document, extrinsic evidence may be considered to

determine the true intent of the settlor.      See In re Lock

Revocable Living Tr. 109 Hawai#i at 153-54, 123 P.3d at 1248-49;

Graham v. Washington Univ., 58 Haw. 370, 375, 569 P.2d 896, 900

(1977) (citing Hokama v. Relinc Corp., 57 Haw. 470, 476, 559 P.2d

279, 283 (1977); In re Trust Estate of Samuel H. Dowsett, 38 Haw.

407, 409-410 (1949)).    In light of the ambiguity in the Trust

document in this case, we conclude that the Probate Court abused

its discretion in declining to consider extrinsic evidence to

determine the Settlor's intent.

          For these reasons, the Probate Court's June 14, 2019

Judgment and Order on Petition are vacated, and this case is

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remanded to the Probate Court for further proceedings consistent

with this Summary Disposition Order.

          DATED: Honolulu, Hawai#i, April 11, 2024.

On the briefs:                         /s/ Katherine G. Leonard
                                       Acting Chief Judge
Mark S. Kawata,
for Petitioners-Appellants.            /s/ Keith K. Hiraoka
                                       Associate Judge
Pablo P. Quiban,
for Respondents-Appellees.             /s/ Karen T. Nakasone
                                       Associate Judge

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