Court Opinion

ID: 3168334
Source: CourtListenerOpinion
Date Created: 2016-01-09 01:01:54.646061+00
Date Added: 2024-06-11T12:02:58.376178
License: Public Domain

Filed 1/8/16 Estate of Gilliland CA2/5
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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
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              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     SECOND APPELLATE DISTRICT

                                                  DIVISION FIVE

Estate of ELSINORE MACHRIS                                           B262482
GILLILAND, Deceased.
                                                                     (Los Angeles County
                                                                     Super. Ct. No. P517929)

HI-DESERT MEMORIAL HOSPITAL,
INC. et al.,

         Plaintiffs and Appellants,

         v.

UNION BANK OF CALIFORNIA N.A.,
as Trustee, etc.,

         Defendant and Respondent.

         APPEAL from a judgment of the Superior Court of Los Angeles County, Michael
I. Levanas, Judge. Affirmed.
         Gordon & Rees, Douglas P. Smith and Stephanie Alexander; Young & Young and
George W. Young for Plaintiffs and Appellants.
         Quinn Emanuel Urquhart & Sullivan, Christopher Tayback and Michael Lifrak for
Defendant and Respondent.
                                   I. INTRODUCTION

       Plaintiffs, Hi-Desert Memorial Hospital, Incorporated and The Salvation Army,
appeal from a judgment following a bench trial. Plaintiffs are charitable institutions who
were beneficiaries of the Elsinore Machris Gilliland Trust (the trust). Defendant, Union
Bank of California, N.A., is the sole trustee. The trust was modified on October 1, 2007,
following a settlement agreement between the beneficiaries and defendant. The
modification order provided for distribution of trust assets to six charities, including
plaintiffs. The modification order was conditioned on obtaining a favorable Internal
Revenue Service private letter ruling from the Internal Revenue Service.
       On September 24, 2008, defendant received the Internal Revenue Service private
letter ruling. On October 2, 2008, defendant faxed a letter to the charities requesting they
submit an authorization to distribute and wire instructions. Plaintiffs eventually
submitted their authorizations on November 12 and 14, 2008. Between the time
defendant received the Internal Revenue Service private letter ruling and when
distribution occurred in December 2008, the trust assets had declined over $11 million.
       Plaintiffs filed a petition to surcharge defendant for their losses. Following trial,
the probate court found in favor of defendant. Plaintiffs assert the probate court erred by
not finding defendant committed a per se breach of fiduciary duty. Plaintiffs rely on the
October 1, 2007 modification order’s language that defendant “shall distribute . . . upon
receipt” of the Internal Revenue Service private letter ruling. Plaintiffs contend the
“upon receipt” language required defendant to distribute the funds immediately. Based
upon the factual scenario before us, we disagree and affirm the judgment.

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                                    II. BACKGROUND

               A. The Trust, Settlement Agreement and Surcharge Petition

       Elsinore Machris Gilliland created the trust upon distribution of her probate estate
in 1967. Several prior appellate decisions have discussed the trust or its beneficiaries.
(See Estate of Gilliland (1971) 5 Cal.3d 56; Union Bank of California v. Braille Inst. of
America, Inc. (2001) 92 Cal.App.4th 1324; Estate of Gilliland (1977) 73 Cal.App.3d 515;
Estate of Gilliland (1974) 44 Cal.App.3d 32.) The trust document describes the trustee’s
powers of distribution as follows: “Upon any division or partial or final distribution of
the Trust Estate, to partition, allot and distribute the Trust Estate in undivided interests, or
in kind, or partly in money and partly in kind, at valuations determined by the Trustees,
and to sell such property as the Trustees may deem necessary to make such division or
distribution.” The trust grants the trustees broad discretion in the exercise of their
distribution powers. Paragraph 20 of the trust states: “Unless specifically limited, all
discretions conferred upon the Trustees shall be absolute and their exercise conclusive on
all persons interested in this Trust. The enumeration of certain powers of the Trustees
shall not limit their general powers, the Trustees being vested with and having all the
rights, powers and privileges which an absolute owner of the same property would have.”
       Defendant has been the sole trustee of the trust since March 2, 2001. The trust
directs the trustee to pay $25,000 per year from the trust’s net income to each of Ms.
Gilliland’s five nieces and nephews. Upon the nieces and nephews’ death, the $25,000
distribution goes to their issue, if any, until the trust terminates upon the death of the last
life in being. There are now three remaining family “lines” (the life annuitants) each of
which receives $25,000 per year from the trust, for a total of $75,000 per year. The
balance of the annual net income is distributed to six charities: the two plaintiffs; the
American Heart Association; the Braille Institute of America, Incorporated; the Cancer
Research Fund of The Damon Runyon-Walter Winchell Foundation; and The Midnight

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Mission. The residue of the trust estate is distributable to the six charities after the death
of the last life annuitant.
       Between 1967 and 2006, the trust’s corpus grew from around $16 million to
approximately $72 million. As currently written, the trust’s corpus would not have been
distributed for approximately another 40 years. In 2006, the life annuitants and the
charities entered into discussions to modify the trust to permit a substantial distribution of
the unused corpus. The life annuitants and the charities ultimately reached an agreement.
The agreement included augmentation of the life annuitants’ annual income. This would
be accomplished by the charities purchasing commercial annuities for the life annuitants’
benefit. The agreement was subject to the Internal Revenue Service issuing a private
letter ruling that the commercial annuities’ value would not be presently taxable to the
life annuitants. The Internal Revenue Service requested a court order modifying the trust
before it would issue a private letter ruling. A petition to modify the trust was filed on
April 6, 2007. The probate court ordered mediation.
       On August 9, 2007, the charities, the life annuitants and defendant executed a
settlement agreement. The settlement agreement provides for the distribution of all but
$4 million of the trust corpus to the charities. Also, the August 9, 2007 settlement
agreement requires the charities to purchase commercial annuities for the life annuitants.
The charities will remain income beneficiaries to the extent the trust income exceeds
$75,000 per year. The charities are remainder beneficiaries upon the trust’s termination.
The settlement is conditioned upon receipt of an Internal Revenue Service ruling that the
commercial annuities would not be presently taxed as income and the generation skipping
tax exemption remains. The probate court’s October 1, 2007 trust modification order
states in paragraph 10, “The Trustee shall distribute principal assets . . . upon receipt of
such favorable Internal Revenue Service Private Letter Ruling.” At the time of
settlement, the trust’s assets were invested in stocks and bonds and worth approximately
$80 million. On October 1, 2007, the probate court approved the settlement and issued
the modification order pursuant to Probate Code sections 15403 and 17200, subdivision

                                               4
(b)(13). In November 2007, the second private letter ruling request was submitted to the
Internal Revenue Service.
       On September 17, 2008, the Internal Revenue Service delivered its favorable letter
ruling, dated September 15, 2008. On September 24, 2008, the private letter ruling was
delivered to defendant. As of September 30, 2008, the fair market value of the trust was
$71,869,837.97, with over 95 percent of the trust’s corpus invested in stocks and bonds.
From November 12 to 18, 2008, the charities made an express written demand for
liquidation and distribution pursuant to the probate court’s order. Defendant proceeded
to liquidate and distribute the trust’s assets between November 19 and December 3, 2008.
The value of the trust corpus had declined to $60,731,566.80 by this time. From the date
of the Internal Revenue Service ruling until distribution to the charities, the trust corpus’s
fair market value declined by over $11 million.
       On September 2, 2009, all of the charities except for The Midnight Mission filed a
petition to surcharge defendant as trustee for the loss of the trust’s corpus value.
Plaintiffs allege defendant failed to follow the prudent investor rule and breached its
fiduciary duties by its delay in distribution of the trust corpus after receiving the private
letter ruling. In March and April of 2013, defendant settled with The American Heart
Association, the Braille Institute of America, Incorporated, and the Cancer Research
Fund of the Damon Runyon-Walter Winchell Foundation. The matter proceeded to a
bench trial on May 13, 2013. On appeal, plaintiffs contest only defendant’s alleged
fiduciary duty breach by delaying the trust corpus distribution after receipt of the Internal
Revenue Service private letter ruling.

                                           B. Trial

                                1. Clark Byam’s Testimony

       Mr. Byam is an attorney with the law firm of Hahn & Hahn who represented the
life annuitants. Mr. Byam was counsel responsible for seeking the Internal Revenue

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Service private letter ruling. Mr. Byam could not guarantee a favorable Internal Revenue
Service ruling. The requested ruling was complex and it was not clear what the outcome
would be.
       While working on the private letter ruling matter, Mr. Byam corresponded with
William Poindexter. Mr. Poindexter represented three of the charities, the American
Heart Association, the Braille Institute of America, and the Damon Runyon Cancer
Research Fund. Mr. Byam considered Mr. Poindexter to be the “head” spokesperson for
all the charities. Mr. Byam testified: “[Mr. Poindexter] instituted trying to revisit the
issue of a modification of the trust in the 2000’s. And he pretty much was the one that I
dealt with. And he was the one who communicated on behalf of, I believe, not only those
three charities, but I believe he also was the head spokesman for the other charities
through their counsel. [¶] He was the one who seem to be -- I mean, just on the issues
that we were dealing with, he was the one that we were going through, for the most part,
to line up to get these annuities . . . and he was the one I negotiated with in resolving this
when reaching our agreement.” In their discussions, Mr. Poindexter had represented that
he was in communication with counsel for the other charities.

                               2. Craig Braemer’s Testimony

       Mr. Braemer is a chartered financial analyst and certified financial planner. Mr.
Braemer works for defendant. He was responsible for managing the trust’s investments.
He was unaware of the probate court’s October 1, 2007 modification order. Mr. Braemer
was unaware the private letter ruling had been issued in 2008 until after discussing it with
Ronald Chaisson, the trust officer. Mr. Braemer was told on November 19, 2008, to
liquidate the trust corpus of all but $4 million. Mr. Braemer was surprised the charities
would take the distribution in-cash rather than in-kind. He thought the charities would
choose in-kind based on the size of the trust and his prior experience with similar
accounts and institutional beneficiaries. Mr. Braemer was able to liquidate the assets
within a two-week period.

                                              6
                               3. Mr. Chaisson’s Testimony

       Mr. Chaisson testified via his deposition. His testimony was actually read into the
record before the probate court. Mr. Chaisson was employed by defendant from October
2000 to January 2011. He was a certified trust and financial advisor. He was the trust
administrator from 2003 until he left in January 2011. Mr. Chaisson was the point of
contact for defendant with the charities. Mr. Chaisson coordinated with Mr. Braemer
regarding investments for the trust assets. Mr. Chaisson and Mr. Braemer decided the
investment objective of the trust’s portfolio. Mr. Braemer was responsible for the day-to-
day investment decisions. The investment objective of the trust in 2007 was income and
growth. Neither Mr. Chaisson nor anyone working for defendant made an attempt to
assess when the Internal Revenue Service would issue its ruling. Mr. Chaisson became
aware the Internal Revenue Service issued its favorable private letter ruling in September
2008. Mr. Chaisson relied upon Edmond Davis, one of defendants’ attorneys, to monitor
the status of the Internal Revenue Service ruling.
       Mr. Chaisson did not know when the Internal Revenue Service would issue its
private letter ruling. Immediately upon receiving the favorable Internal Revenue Service
private letter ruling, Mr. Chaisson notified Mr. Braemer of its contents. They discussed
whether the distribution should be: in-kind; in-cash; or partially in-kind and in-cash. Mr.
Chaisson testified as to why the issue of how the distribution would proceed was
discussed: “It[]s an industry standard that when individuals request to transfer assets
amongst trustees, is a standard question right on the transfer form: Do you want it in
cash, in kind, part in kind, part in cash? [¶] There was no discussion prior to this
whether or not it was cash or in kind. So I told him -- our discussion was I was not aware
what the charities want, that we -- I would pass that inquiry on to the attorney.” The
attorney representing defendant was Mr. Davis. The issue was passed to Mr. Davis to
inquire with the charities as to how the distribution would proceed.

                                             7
                                  4. Mr. Davis’s Testimony

          Mr. Davis’s deposition testimony was received in evidence. Mr. Davis was an
attorney who specialized in trusts and estates. He represented defendant regarding the
trust since 1983. Mr. Davis had interacted with Mr. Poindexter as to the modification of
the trust. Mr. Davis described Mr. Poindexter as a person who “most of the time was
always in the middle of the activities” relating to the trust. Mr. Davis testified, “[I]f [Mr.
Poindexter] called and said we want to do something, I took that as meaning the charities
wanted to do it.” Mr. Davis believed there was a possibility the Internal Revenue Service
private letter ruling would be unfavorable. He did not monitor the progress of the private
letter ruling. The Internal Revenue Service private letter ruling was issued on September
15, 2008. Mr. Davis, who represents defendant, received the Internal Revenue Service
private letter ruling via e-mail from Mr. Poindexter on September 24, 2008. Mr. Davis
did not know the Internal Revenue Service private letter ruling was coming. Mr.
Poindexter’s e-mail indicated defendant should request from the charities instructions as
to whether the annuities would be paid from the distributed trust assets. Mr. Davis was in
Turkey at the time the email was sent. Mr. Davis did not recall what date he received Mr.
Poindexter’s email. But as soon as he received the e-mail, he began working on the
issue. Mr. Davis prepared a draft letter in compliance with Mr. Poindexter’s request as
soon as possible.
          On October 2, 2008, Mr. Davis’ letter was sent by facsimile transmission to
counsel for each charity. Mr. Davis’ letter requested the charities send an authorization
to defendant to liquidate trust assets and provide wire instructions. It is undisputed the
charities received the October 2, 2008 letter. Mr. Davis did not assume the charities
would opt for the in-cash distribution. Mr. Davis had no discussions with any of the
charities’ attorneys regarding distributions between the October 1, 2007 modification
order and receiving the September 24, 2008 Internal Revenue Service private letter
ruling.

                                               8
       On October 29, 2008, Mr. Poindexter sent a letter to Mr. Davis which stated:
“Enclosed are authorizations from our three clients, American Heart Association, Braille
Institute of America, Inc. and Damon Runyon Cancer Research Fund authorizing the
bank to do two things. [¶] First, authorizing that the bank as trustee of the [trust] to
liquidate distributable assets and distributor shares in cash. It is requested that the bank
hold up on this requests. [sic] The charities are further reviewing whether they want all
the distributable assets sold or some distributed in kind. We should be in a position to
advise you further in regards to whether there would be some distribution in kind or all
distributable assets liquidated. [¶] The second instruction from our clients is to pay the
single premium for the three annuities being purchased . . . .” The attorneys for the other
three charities were provided copies of Mr. Poindexter’s October 29, 2008 letter via e-
mail. Mr. Poindexter’s October 29, 2008 letter is referred to as the “hold up” letter by the
parties to the litigation. Mr. Poindexter’s firm also sent the authorization from The
Midnight Mission’s attorney via facsimile transmission on October 29, 2008.
       Mr. Davis received a letter dated November 12, 2008, from Doug Smith, attorney
for The Salvation Army. Mr. Smith stated in the letter that The Salvation Army wanted
its distribution in cash. Mr. Davis received another letter dated November 14, 2008, from
George Young, an attorney for Hi-Desert Memorial Hospital. Mr. Young stated in his
letter that the hospital also wanted the distribution to be in cash. Mr. Davis did not
believe prior distribution instructions from Mr. Smith or Mr. Young had been sent to
defendant. On November 18, 2008, Mr. Davis sent a facsimile transmission note to all of
the charities’ attorneys. The November 18, 2008 facsimile transmission note states in
part: “Gentlemen: This will confirm that contrary to prior instructions that we may have
received, all six of the charities represented respectively by you desire that the assets in
the Trust be liquidated into cash except for the assets to be retained in the trust in
accordance with the Court Order. You have instructed that the net cash proceeds from
the liquidated assets are to be wire transferred, in equal shares, to the six charities, in
accordance with wire instructions previously provided to us.” Mr. Davis indicated in a
subsequent November 20, 2008 facsimile transmission that liquidation and distribution

                                               9
would not be completed until approximately December 1, 2008. Mr. Davis made no
inquiry regarding the probability of success for the private letter ruling. Mr. Davis was
not sure defendant needed authorization prior to distribution. However, he considered it
good practice to ask the charities.

                             5. Stephanie Bezner’s Testimony

       Ms. Bezner is a lawyer representing The Midnight Mission. Her practice involves
estate planning. In an e-mail dated September 19, 2008, Ms. Bezner wrote a letter to Mr.
Adamson, The Midnight Mission’s president. In the September 19, 2008 e-mail, she
wrote: “I have asked Bill Poindexter, who has taken the lead with Union Bank, when we
might expect to have the payments issued to the charities. I will advise you of his
response when I have received it.” Ms. Bezner felt Mr. Poindexter was coordinating
responses from the charities’ lawyers.
       On October 13, 2008, Mr. Poindexter sent a letter to the other charities’ attorneys.
The letter also included as an attachment, a form very similar to the one that Mr. Davis
had sent out on October 2, 2008. The letter stated: “In addition there is another issue to
be resolved. Do you want the distribution in cash or in securities? Our recommendation
would be that we direct the bank to sell the securities so that distribution can be made in
cash; this will greatly expedite the distribution. Upon receiving the cash, it can be
reinvest [sic] in any way desired. [¶] Please let me know if this is satisfactory to you.
As you will note, the enclosed form of instructions does include directions to sell assets
and make distribution in cash (please change if distribution in kind is desired).” Ms.
Bezner sent a letter indicating her client’s desire to opt for an in-cash distribution to Mr.
Poindexter on October 24, 2008. In the past, Mr. Poindexter would collect the responses
for the charities.
       On November 4, 2008, Mr. Poindexter sent a letter to Ms. Bezner, Mr. Young and
Mr. Smith. The letter indicated that if their respective clients desired an in-kind
distribution for the bonds, the instructions to defendant would need to be corrected.

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                                 C. Statement of Decision

       The parties filed closing briefs. On November 24, 2014, the probate court adopted
defendant’s proposed statement of decision as its tentative ruling. On January 7, 2015,
the probate court issued its final statement of decision. As noted, plaintiffs appeal the
probate court’s ruling only as to the period after defendant received the Internal Revenue
Service private letter ruling.
       The probate court ruled, and the parties agreed, that there was no opinion
testimony regarding any potential fiduciary duty breach after defendant received the
Internal Revenue Service private letter ruling. Rather, plaintiffs argued defendant
committed a per se fiduciary duty breach by failing to promptly comply with the
modification order. The probate court found: defendant did not commit a per se breach;
defendant’s October 2, 2008 facsimile transmission to the charities was reasonable; it was
proper for defendant to inquire with the charities as to the form and destination of the
distributions; and defendant had no duty to immediately and automatically distribute
when the assets become distributable. In addition, the probate court found: it was
reasonable for defendant to obey Mr. Poindexter’s October 29, 2008 hold up letter; this
was because Mr. Poindexter had a leadership role among the charities; plaintiffs were
aware defendant was awaiting instructions because of Mr. Poindexter’s September 24,
2008 e-mail and October 29, 2008 letter as well as Mr. Davis’s October 2, 2008 facsimile
transmission; the charities were considering whether to take the trust assets in cash or in
kind; and the only instruction from any of the charities to defendant between October 2
and 29, 2008, was from Mr. Poindexter.
       Even if defendant had breached its fiduciary duty to plaintiffs, the probate court
found defendant’s conduct was not the legal cause of any damage. The probate court
found defendant could not be surcharged for any losses because market forces and
plaintiffs’ decision to liquidate caused the losses to occur. And the probate court found:
defendant presented evidence it had managed the trust portfolio well during this period;
plaintiffs were estopped from suing defendant for a surcharge; plaintiffs were barred from

                                             11
the relief sought because of laches and waiver principles; and defendant had acted
reasonably and in good faith and was excused from liability.
       On March 18, 2015, the probate court entered judgment in defendant’s favor. This
appeal followed.

                                      III. DISCUSSION

       Probate Code section 16000 provides: “On acceptance of the trust, the trustee has
a duty to administer the trust according to the trust instrument . . . .” (See Doolittle v.
Exchange Bank (2015) 241 Cal.App.4th 529, 544.) The Court of Appeal has held:
“Trustees owe all beneficiaries . . . a fiduciary duty. A fiduciary relationship is a
recognized legal relationship such as trustee and beneficiary, principal and agent, or
attorney and client. [Citation.] Where a fiduciary relationship exists, there is a duty ‘“to
act with the utmost good faith for the benefit of the other party.”’ [Citation.]” (Hearst v.
Ganzi (2006) 145 Cal.App.4th 1195, 1208; see Persson v. Smart Inventions, Inc. (2005)
125 Cal.App.4th 1141, 1160.) A trustee’s violation of any duty owed to beneficiaries is a
breach of trust. (Prob. Code, § 16400; Uzyel v. Kadisha (2010) 188 Cal.App.4th 866,
888.) To establish a fiduciary duty breach, a plaintiff must show the existence of a
fiduciary relationship, its breach and resulting legal damage. (Oasis West Realty, LLC v.
Goldman (2011) 51 Cal.4th 811, 820; LaMonte v. Sanwa Bank California (1996) 45
Cal.App.4th 509, 517.)
       Probate Code section 16440, subdivision (a) provides in relevant part, “If the
trustee commits a breach of trust, the trustee is chargeable with . . . . [¶] . . . [a]ny loss or
depreciation in value of the trust estate resulting from the breach of trust, with interest.”
(Estate of Kampen (2011) 201 Cal.App.4th 971, 989.) Plaintiffs assert defendant
committed a per se breach of fiduciary duty by failing to comply with the October 1,
2007 modification order and its trustee duties. This presents a legal question which we
review de novo. (Estate of Powell (2000) 83 Cal.App.4th 1434, 1439-1440 [trust
language reviewed de novo without conflicting extrinsic evidence]; Ike v. Doolittle

                                                12
(1998) 61 Cal.App.4th 51, 73.) The probate court’s resolution of disputed factual issues
is affirmed if supported by substantial evidence. (Winograd v. American Broadcasting
Co. (1998) 68 Cal.App.4th 624, 632; Bowers v. Bernards (1984) 150 Cal.App.3d 870,
873-874.)
       Plaintiffs assert under the plain language of the modification order and the trust,
defendant should not have consulted with the charities about how they wanted their
distribution. Rather, defendant should have distributed immediately upon receiving the
private letter ruling. As noted, the modification order requires the trustee “shall distribute
. . . upon receipt” of the favorable private letter ruling. Probate Code section 21122
provides in relevant part, “The words of an instrument are to be given their ordinary and
grammatical meaning unless the intention to use them in another sense is clear and their
intended meaning can be ascertained.” “Receipt” is defined as the act or process of
receiving. (Merriam-Webster’s 10th Collegiate Dict. (1993) p. 975.) Plaintiffs assert
“upon” means defendant should have distributed “immediately after,” “on the occasion
of,” or “at the time of.” In Merriam-Webster’s Tenth Collegiate Dictionary (1995) at
page 1298, “upon” is defined as “on.” In this context, “on” context is defined as “used as
a function word to indicate a time frame during which something takes place.”
(Merriam-Webster’s 10th Collegiate Dict. (1995) p. 811.) Thus, for purposes of the
modification order, “upon receipt” would refer to when defendant received the private
letter ruling. “Upon receipt” is the triggering condition for when distribution shall occur.
“Upon receipt” does not define how fast defendant “shall distribute.”
       We next address whether defendant breached its fiduciary duty as to how and
when it distributed the trust assets. It is prudent to seek guidance from the Restatement
Third of Trusts. The Court of Appeal has held: “California trust law is essentially
derived from the Restatement Second of Trusts. Over a number of years, the Restatement
Second of Trusts has been superseded by the Restatement Third of Trusts. [Citation.] As
a result, we may look to the Restatement Third of Trusts for guidance.” (Lonely Maiden
Productions, LLC v. GoldenTree Asset Management, LP (2011) 201 Cal.App.4th 368,
379, citing 13 Witkin, Summary of Cal. Law (10th ed. 2005) Trusts, §§ 12, 17, pp. 579-

                                             13
580, 583-585.) Section 89 of the Restatement Third of Trusts discusses the trustee’s
powers and duties on termination of the trust. Though the trust here is not technically
terminated as to all beneficiaries, distribution occurred for plaintiffs. Thus, section 89 of
the Restatement Third of Trusts is persuasive authority here. The Restatement Third of
Trusts, section 89, comment b provides in pertinent part, “[D]elay may result because of
difficulties in establishing and implementing a plan for distributing the trust estate that
both serves the interest of the beneficiaries and is consistent with the trustee’s duty of
impartiality.” The Restatement Third of Trusts, section 89, comment e(2) provides in
pertinent part: “[T]he mode or modes of distribution to be employed depend upon what
the trustee, in the exercise of discretion, determines is in the interest of the beneficiaries
and fair and reasonable under the circumstances. . . . [¶] Among the numerous factors
that may be of significance to a trustee in developing an appropriate plan for the form and
timing of distributions are: the nature of the trust subject matter . . .; the number of
remainder beneficiaries and the size of their various shares; and the preferences,
concerns, and circumstances . . . of the various distributees. . . . [¶] . . . [¶] Normally, a
trustee should inform the distributees of the plan for distribution of the trust estate . . . .
Especially if the plan is complicated, the trustee should consider obtaining the informed
consent of the beneficiaries when it is practical to do so . . . .”
       Based on the probate court’s factual findings, supported by substantial evidence,
defendant did not know when the Internal Revenue Service private letter ruling would
arrive. Defendant received the Internal Revenue Service private letter ruling on
September 24, 2008. Mr. Poindexter in his September 24, 2008 e-mail to defendant
requested it draft instructions for the charities to fill out and return. Mr. Davis’ letter was
sent to plaintiffs on October 2, 2008. The October 2, 2008 letter requested authorization
to distribute and wire instructions from plaintiffs in accordance with Mr. Poindexter’s
request. Mr. Byam, Mr. Davis and Ms. Bezner testified Mr. Poindexter had the
leadership role amongst the charities’ attorneys. Mr. Davis believed it to be good
practice to seek instructions. He did not assume the charities wanted distribution in cash.
As noted, the trustee is granted in paragraph 20 of the trust the absolute discretion to

                                               14
make distributions. And defendant also had discretion to inquire from beneficiaries as to
how to deliver the distribution. The Restatement Third of Trusts supports defendant’s
discretionary action. We cannot rule as a matter of law defendant breached its fiduciary
duties by asking plaintiffs for distribution authorization and wire instructions within eight
days of the triggering condition.
       We also cannot rule as a matter of law that defendant committed a per se fiduciary
duty breach by not distributing the proceeds until November 19, 2008. Substantial
evidence supported the probate court’s findings. Plaintiffs do not dispute receiving Mr.
Davis’s October 2, 2008 letter. Based on Mr. Poindexter’s October 13 and November 4,
2008 letters to the other charities’ counsel, whether to take the distribution in-kind or in-
cash had not yet been resolved. Mr. Poindexter’s October 29, 2008 hold up letter to
defendant indicated that the matter of what kind of distribution to take had not yet been
resolved by all the charities. As stated, Mr. Poindexter was considered to have a
leadership role for all the charities. There is no evidence plaintiffs responded to Mr.
Davis’ October 2, 2008 letter until November 12 and 14. The defendant did not per se
breach its fiduciary duties by commencing the distribution process on November 19,
2008, five days after receiving the last authorization letter. We need not address the
parties’ remaining arguments.

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                                   IV. DISPOSITION

      The March 18, 2015 judgment is affirmed. Defendant, Union Bank of California,
N.A., shall recover its appeal costs from plaintiffs, Hi-Desert Memorial Hospital,
Incorporated and The Salvation Army.
                           NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                           TURNER, P. J.

We concur:

      KRIEGLER, J.

      BAKER, J.

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