Court Opinion

ID: 4710304
Source: CourtListenerOpinion
Date Created: 2021-08-10 18:02:58.365073+00
Date Added: 2024-06-11T09:15:01.948870
License: Public Domain

Filed 8/10/21 Pfanner v. Moorhouse 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                                           NOT TO BE PUBLISHED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 This opinion has not been certified for publication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
                                                     (Sacramento)
                                                            ----

DENNIS R. PFANNER, as Trustee, etc.,                                                         C087631

                   Plaintiff and Appellant,                                          (Super. Ct. No.
                                                                               34201700211467PRTRFRC)
         v.

JENNIFER MOORHOUSE, as Trustee, etc.,

                   Defendant and Respondent.

         Plaintiff Dennis R. Pfanner was a beneficiary of a trust created by his father. He
was a beneficiary individually and as trustee of a trust for the benefit of his sister, Debora
J. Pfanner-House. The trial court found that Dennis, both individually and as trustee,
contractually released his interests in a trust asset in favor of Debora. Dennis contends
that the trial court as a matter of law misinterpreted the release agreement and that he
released only his individual interest in the asset.

                                                             1
       Debora is deceased, and defendant Jennifer Moorhouse, as trustee of Debora’s
trust, contends that we should affirm the trial court’s decision. She also argues, as an
alternate basis for affirming, that Debora was entitled to, or had a vested interest in, the
trust asset following her death despite her predeceasing a survival clause contained in the
trust document.
       We reverse the judgment.

                      FACTS AND HISTORY OF THE PROCEEDINGS
       Oscar Pfanner, Jr., and his wife, Margaret Pfanner, executed a Community
Property Trust Agreement and Declaration of Trust in 1983. They transferred four
primary assets to the trust: a family residence in Sacramento, a house and ranch property
on Cruzon Grade Road in Nevada City (the “Nevada City” or “Cruzon Grade” house or
property), a 9.5 percent interest in a partnership, and farm equipment. They named
themselves as co-trustees. Two of Oscar and Margaret’s children, plaintiff Dennis R.
Pfanner and his sister Debora J. Pfanner-House, were beneficiaries.
       Upon the death of the first trustor, the Community Property Trust would be
divided into two sub-trusts: The Decedent’s Trust and the Survivor’s Trust. The first
deceased trustor’s interest in the Community Property Trust would be apportioned to the
Decedent’s Trust, and the surviving trustor’s interest would be apportioned to the
Survivor’s Trust.
       The Decedent’s Trust would be further divided into two additional sub-trusts: The
Marital Trust and the Bypass Trust. A portion of the Decedent’s Trust would be
allocated to the Marital Trust in an amount sufficient to eliminate or reduce estate taxes.
The remainder of the Decedent’s Trust would be allocated to the Bypass Trust for the
surviving trustor’s benefit. After the first trustor’s death, the Marital and Bypass Trusts
became irrevocable.

                                              2
       Margaret died in September 1983. Afterward, Oscar allocated various trust assets
to the Bypass Trust, but did not allocate any assets to the Marital Trust.
       In 1999, Oscar gave Dennis and Debora each an 11.6 percent outright interest in
the Nevada City property. The Community Property Trust retained a 76.8 percent
interest in the property.
       In 2002, Oscar executed a third amendment to the Community Property Trust.
This amendment named Debora as the first successor trustee, and Dennis as second, of all
of the trusts created under the declaration. It also named the two siblings as contingent
remainder beneficiaries of the Survivor’s Trust.
       Oscar also executed a will. He directed that all remaining assets in the Bypass
Trust upon his death would be divided equally between Dennis and Debora free of trust.
       Oscar executed a fourth amendment to the Community Property Trust on
December 21, 2005. This amended the Survivor’s Trust. The Survivor’s Trust would
still be divided in two equal shares between Dennis and Debora. Dennis would take his
share free of trust. However, the share allocated to Debora would be held in trust with
Dennis acting as trustee (the support trust). As trustee, Dennis had the authority to pay to
Debora “as much of the trust income or principal or both (up to the whole thereof) as the
Trustee, in the Trustee’s sole and absolute discretion, deems necessary or desirable for
her support, health, education and maintenance . . . .” When Debora reached 80 years of
age, the undistributed balance of the support trust would be distributed to her unless
Dennis deemed it necessary or appropriate to withhold all or any part of the distribution.
If Debora died without leaving surviving issue, the undistributed balance would be
distributed to Dennis or his issue.
       Oscar died five days after executing the fourth amendment. Debora assumed her
role as successor trustee of the Community Property Trust. Dennis served as personal
representative in the probate action over the will.

                                              3
       In 2006, Debora petitioned the Nevada County Superior Court to ascertain
beneficiaries and determine property allocation. The trial court found that Oscar had not
allocated assets to the Marital Trust as required by the Community Property Trust
declaration but had retained them in the Survivor’s Trust. The court declared that 37.318
percent of the Survivor’s Trust assets were to be allocated to the Marital Trust. Dennis
and Debora were to receive 50 percent each of these assets free of trust. The court
ordered that the remaining assets of the Survivor’s Trust (62.682 percent of the total
assets) were to be distributed in accordance with the fourth amendment: 50 percent to
Dennis free of trust and 50 percent to Dennis as trustee of the support trust for Debora.
       By 2007, the probate of Oscar’s estate had not closed and none of the assets held
in the trusts had been distributed. That year, Dennis and Debora entered into an
agreement to allow Dennis to receive “his distribution of the trust estate as soon as
possible.” We will describe the distribution agreement in more detail below, but in short,
the parties agreed that at the conclusion of the probate estate, the Sacramento house
would be distributed to Dennis “as an individual.” The partnership interest would also be
distributed to Dennis. An additional statement in the agreement forms the crux of this
case: “Dennis R. Pfanner, as an individual, hereby releases any interest in the remaining
assets of the Trust[.]” Debora signed the agreement as trustee of the Community
Property Trust and as a beneficiary of that trust. Dennis signed the agreement as a
beneficiary of the Community Property Trust and also as trustee of the support trust.
       Dennis contends that at no time after the parties executed the 2007 distribution
agreement did Debora transfer the Community Property Trust’s interest in the Nevada
City property as required by the fourth amendment, the Nevada County Superior Court’s
order, and the distribution agreement. Nonetheless, in December 2016, Debora executed
two grant deeds that purported to transfer her interest in the Nevada City property to the
trustees of her revocable trust, who were herself and defendant Jennifer Moorhouse.

                                             4
       Debora died on March 1, 2017, at the age of 62 years. Upon her death, Dennis
assumed the role of successor trustee of the Community Property Trust in accordance
with the third amendment.
       On April 25, 2017, Dennis petitioned the Sacramento County Superior Court to
ascertain beneficiaries and for the distribution of the Nevada City property. That
property was the sole remaining asset of the Community Property Trust. Dennis asked
the court to:
       (a) Declare that the Community Property Trust holds a 76.8 percent interest in the
Nevada City property, 37.318 percent of which is held in the Marital Trust and 62.682
percent of which is held in the Survivor’s Trust; and
       (b) Order Dennis as trustee of the Community Property Trust to distribute that
trust’s interest in the Nevada City property as follows:
                (1) The Marital Trust’s interest be distributed one-half to Dennis and one-
half to Moorhouse as trustee of Debora’s trust.
                (2) The Survivor’s Trust’s interest be distributed to Dennis.
       The trial court denied Dennis’s petition. It ruled that the 2007 distribution
agreement controlled, and that the agreement “clearly and unambiguously provided” that
Dennis “released his interest, any interest he claims as a trustee, and the interest of any
contingent beneficiaries” in the Nevada City property. As a result, the parties transferred
the Community Property Trust’s interest in the Nevada City property (the interests of
both the Marital Trust and the Survivor’s Trust) to Debora. The court interpreted the
agreement without reference to extrinsic evidence.

                                        DISCUSSION
       Dennis contends the trial court erred. He claims that under the unambiguous terms
of the distribution agreement, he did not release his interest in the Nevada City property
as trustee of the support trust established for Debora.

                                              5
                                              I

                                     Standard of Review

       Our interpretation and construction of a written instrument is de novo where, as
here, the trial court’s interpretation of the instrument was based solely upon the
instrument’s terms without the aid of extrinsic evidence. (Parsons v. Bristol
Development Co. (1965) 62 Cal.2d 861, 865.)
       Dennis appeals on the judgment roll. On a judgment roll appeal, “ ‘[t]he question
of the sufficiency of the evidence to support the findings is not open. Unless reversible
error appears on the face of the record, an appellate court is confined to a determination
as to whether the complaint states a cause of action, whether the findings are within the
issues, and whether the judgment is supported by the findings.’ [Citations.]” (Allen v.
Toten (1985) 172 Cal.App.3d 1079, 1082-1083.) As the latter matters are not raised, this
appeal is confined to determining whether reversible error appears on the face of the
record.

                                              II

                     Construction of the 2007 Distribution Agreement

       Our rules of contractual interpretation are familiar. We interpret the distribution
agreement so “as to give effect to the mutual intention of the parties as it existed at the
time of contracting, so far as the same is ascertainable and lawful.” (Civ. Code, § 1636.)
The parties’ mutual intent must be interpreted solely from the writing if possible. (Civ.
Code, § 1639.) Dennis and Debora agree that the agreement is not ambiguous, and the
correct interpretation is apparent on the agreement’s face.
       We interpret the agreement’s words “in their ordinary and popular sense[.]” (Civ.
Code, § 1644.) “However broad may be the terms of a contract, it extends only to those
things concerning which it appears that the parties intended to contract.” (Civ. Code,
§ 1648.)

                                              6
       “The whole of a contract is to be taken together, so as to give effect to every part,
if reasonably practicable, each clause helping to interpret the other.” (Civ. Code,
§ 1641.) “[W]here there are several provisions or particulars, such a construction is, if
possible, to be adopted as will give effect to all.” (Code Civ. Proc., § 1858.)
       Our interpretation of the agreement must “make it lawful, operative, definite,
reasonable, and capable of being carried into effect, if it can be done without violating the
intention of the parties.” (Civ. Code, § 1643.) “[A]n interpretation which gives a
reasonable, lawful, and effective meaning to all the terms is preferred to an interpretation
which leaves a part unreasonable, unlawful, or of no effect.” (Rest.2d, Contracts,
§ 203(a).)
       Applying the rules of interpretation here, we conclude the trial court’s
interpretation of the distribution agreement was in error. The agreement unambiguously
distinguishes between Dennis in his individual capacity as a beneficiary of the
Community Property Trust and as trustee of the support trust created for Debora. He
released only his individual beneficial interest in the Nevada City property, not his
interest as trustee of the support trust.
       When the agreement addresses the parties, it does so in the specific capacities in
which they are to act or will be affected. The agreement was made between Dennis and
Debora in their different capacities. Debora made the agreement as trustee of the
Community Property Trust and as an individual beneficiary of that trust. Dennis made
the agreement as an individual beneficiary of the Community Property Trust and as
trustee of the support trust.
       The agreement distinguished between Dennis acting as an individual and as a
trustee. At the time of the agreement, the Community Property Trust held the following
assets: the Sacramento residence (which was still in probate), a 9.5 percent interest in a
general partnership, a 76.8 percent interest in the Nevada City property, and cash. The
agreement stated that combining the parties’ interests in the Marital Trust and the

                                              7
Survivor’s Trust, “Dennis R. Pfanner” held a 50 percent interest in the trust assets,
“Deborah J. Pfanner-House” an 18.659 percent interest, and “Dennis R. Pfanner, Trustee”
of the support trust a 31.341 percent interest.
       The agreement’s purpose was to distribute Dennis’s individual share of the
Community Property Trust’s assets to him. It stated, “Dennis R. Pfanner desires to
receive his distribution of the trust estate as soon as possible. By this Agreement, the
parties desire to identify the assets identified above to be distributed to Dennis R. Pfanner
individually and provide for the distribution of such assets as soon as possible.” By
referring to the share of assets Dennis would receive “individually,” the agreement made
a distinction between Dennis’s individual interest in the assets and his interest in the
assets as a trustee. The agreement continued this distinction throughout.
       The parties agreed that two of the trust’s assets would be given to Dennis in his
individual capacity. They agreed that the Sacramento residence would be distributed to
Dennis “as an individual.” Debora, as trustee of the trust, was required to execute all
documents necessary to effectuate the transfer to “Dennis R. Pfanner,” including
documents necessary to allow the distribution of the residence from the probate estate
“directly to Dennis R. Pfanner.” “Dennis R. Pfanner” agreed to pay all costs associated
with the probate estate and the Sacramento property.
       The parties also agreed that the partnership interest would be distributed to
“Dennis R. Pfanner.” Debora agreed that as trustee of the trust, she would assign the
partnership interest to “Dennis R. Pfanner.”
       Dennis then released his interest in the trust’s remaining assets. Due to the
agreement’s consistent distinction between Dennis operating in his individual capacity
and in his capacity as a trustee, the meaning of Dennis’s release of his interest in the
remaining assets is clear. The release states, “Dennis R. Pfanner, as an individual, hereby
releases any interest in the remaining assets of the [Community Property] Trust identified
in [the distribution agreement].” The remaining assets were the trust’s interest in the

                                               8
Nevada City property and some cash. Dennis released only his individual interest in the
Nevada City property, not any interest he held as trustee of the support trust.
       The trial court relied on Dennis’s authority as trustee of the support trust to
distribute her share of that trust at any time to Debora as the basis for concluding Dennis
had also released his interest as trustee in the Nevada City property. We agree with the
trial court that given the fourth amendment’s “grant of ‘absolute and binding’ discretion,
Dennis had the authority to release his interest, his interest as trustee and the interest of
any contingent beneficiaries in the Nevada [City property].”
       However, having the authority to release his interest as trustee is one thing;
actually releasing that interest is another. Nothing in the distribution agreement states
that Dennis actually released his interest as trustee of the support trust in the Nevada City
property. Under the structure of the agreement, had Dennis done so, the agreement
would have stated he released his interest as Dennis R. Pfanner as an individual and as
trustee of the support trust. The agreement said nothing even similar to this.
       Moorhouse claims that by “seiz[ing]” on the words “as an individual,” Dennis has
violated a rule of contractual interpretation that prohibits us from interpreting a contract
“ ‘by isolating any single clause or group of clauses . . . .’ ” (Iqbal v. Ziadeh (2017)
10 Cal.App.5th 1, 10, quoting Transportation Guarantee Co. v. Jellins (1946) 29 Cal.2d
242, 247.) Moorhouse misuses that rule in this instance.
       “ ‘ “[A] contract is to be construed as a whole, ‘so as to give effect to every part, if
reasonably practicable, each clause helping to interpret the other.’ ” (McCaskey v.
California State Automobile Assn. (2010) 189 Cal.App.4th 947, 970, quoting Civ. Code,
§ 1641; see Zalkind v. Ceradyne, Inc. (2011) 194 Cal.App.4th 1010, 1027, 1029; Lemm v.
Stillwater Land & Cattle Co. (1933) 217 Cal. 474, 480 [“Although the language of the
contract must govern its interpretation (Civ. Code, [§§] 1638, 1639), nevertheless the
meaning is to be obtained from the entire contract, and not from any one or more isolated

                                               9
portions thereof.”].)’ (Epic Communications, Inc. v. Richwave Technology, Inc. (2015)
237 Cal.App.4th 1342, 1349.)” (Iqbal v. Ziadeh, supra, 10 Cal.App.5th at pp. 10-11.)
       Our interpretation gives effect to the entire agreement. Our interpretation of “as
an individual” in the release clause relies on how the parties used that term throughout
the agreement and on the agreement’s practice of distinguishing whether the parties were
acting in their capacities as trustees or as individuals. We have given each use of the
phrase a consistent meaning.
       Moorhouse contends we should focus instead on the word “any” in the phrase
“Dennis R. Pfanner, as an individual, hereby releases any interest in the remaining
assets . . . .” Moorhouse asserts that “any” interest would include Dennis’s interest as a
trustee. This interpretation, however, would violate the very rule Moorhouse accuses
Dennis of violating. It isolates a single word as the basis for interpreting the agreement,
and it ignores the clause that modifies it as well as the use of that clause throughout the
agreement.
       Moorhouse asserts that by signing the agreement in his individual capacity as well
as his capacity as trustee of the support trust, Dennis “gave his imprimatur as trustee to
the entire agreement, including the release of any interest in the Nevada City house to
Debora.” Not so. Dennis gave his “imprimatur” to the agreement as it was expressly
written. His signatures in both capacities did not reform the agreement’s express
limitation that Dennis released only his individual interest in the property.
       Moorhouse’s reliance on JPMorgan Chase Bank, N.A. v. Ward (2019)
33 Cal.App.5th 678, 685, does not establish her point. In that case, the court of appeal
held that a lender could bring a cause of action to restore a lost deed of trust where the
encumbered property was owned by a trustee of a trust who was also the trust’s sole
beneficiary and who did not indicate on the deed whether he signed it as a trustee. “[A]
signature by the sole trustee and beneficiary of an inter vivos revocable trust is sufficient

                                             10
to convey good title to trust property” where the trustee signs without referencing his
representative status. (Ibid.)
       Unlike in that case, here there is no question of Dennis’s and Debora’s interests.
Dennis signed the agreement indicating both of his capacities, but the agreement
expressly limited the release to his individual interest. There was no uncertainty to cure
to allow the agreement to be implemented or enforced in accordance with the parties’
mutual intent.
       The parties in the alternative raise arguments based on extrinsic evidence. The
trial court did not rely on extrinsic evidence, and neither do we. Because the distribution
agreement’s terms are not ambiguous and the parties agree that the agreement’s correct
interpretation is apparent on its face, we do not address these additional arguments. The
clear language of the agreement indicates Dennis released only his individual interest in
the Nevada City property, not his interest as trustee of Debora’s support trust. The trial
court erred in concluding otherwise.

                                             III

                                 Vesting of Debora’s Interest

       Moorhouse seeks to affirm the trial court’s judgment on a different ground. She
asserts that under the terms of the fourth amendment, because Debora was “entitled” to
distributions from the support trust during her lifetime, she was not a contingent
beneficiary and her estate had a vested interest in any assets that remained in the support
trust after her death even though she did not live to the age of 80.
       The fourth amendment allocated the assets of the Survivor’s Trust into two equal
shares for Dennis and Debora. Dennis would take his share free of trust. However,
Dennis would hold Debora’s share in the support trust for Debora’s benefit. Dennis in
his sole discretion could make payments to Debora from time to time for her support up
to the entire amount held in the support trust. When Debora reached 80 years of age, the

                                             11
fourth amendment required Dennis to distribute the undistributed balance of the support
trust to her unless in his discretion he deemed it necessary or appropriate not to distribute
it.
       The fourth amendment addressed Debora’s interest in the support trust upon her
death as follows:
       “(3) If DEBORA should predecease Trustor [Oscar] or die before becoming
entitled to receive distribution of this Trust, the undistributed balance of this Trust shall
thereupon be distributed to the then living issue of DEBORA as determined by right of
representation.
       “(4) If DEBORA should die without leaving surviving issue, the undistributed
balance of this Trust shall be distributed to DENNIS, or to the issue of DENNIS by right
of representation.” (Italics added.) Debora had no living issue.
       Moorhouse claims that Debora became “entitled” or vested to receive distributions
from the support trust when Oscar died because the fourth amendment required Dennis at
that time to make distributions to her for her support. Under this reading, the argument
goes, because Debora was entitled to receive distributions of the support trust before she
died, the requirement to distribute the support trust’s remaining assets to Dennis if
Debora died before reaching the age of 80 was not triggered.
       Neither the law nor the terms of the fourth amendment support Moorhouse’s
argument.
       The support trust was a discretionary support trust. A discretionary support trust is
one “in which the trust’s purpose is to provide for a beneficiary’s needs but the trustee
has discretion in determining those needs.” (Young v. McCoy (2007) 147 Cal.App.4th
1078, 1087.)
       Here, Dennis had “sole and absolute” discretion to determine whether Debora
needed payments from the support trust. Within that discretion, Dennis was authorized
not to make any support payments when considering any absence of need by Debora and

                                              12
the earnings, independent resources, and other means of support available to her. No
doubt the support trust was intended to protect its assets from Debora’s creditors.
       In a discretionary support trust where the trustee has absolute discretion in paying
trust income and principal, the beneficiary does not have an entitlement or vested interest
in the trust assets. Rather, the beneficiary “has at most a mere expectancy. (Bogert,
Trusts, § 226.) Consequently, neither the beneficiaries nor their creditors can directly
compel any allocation . . . .” (Estate of Canfield (1947) 80 Cal.App.2d 443, 451-452.)
Because Debora could not compel Dennis to make distributions from the support trust
while she was alive, the fourth amendment’s reference to her “becoming entitled to
distribution” does not convert her expectancy in support payments into a vested interest
which supersedes the amendment’s survival clause.
       The case authorities on which Moorhouse relies to argue that Debora’s interest in
the support trust effectively vested when Oscar died are distinguishable. She cites Estate
of Taylor (1967) 66 Cal.2d 855, as an example of a court holding that a trust beneficiary
was entitled to distribution even though the beneficiary died before the actual
distribution. There, the will stated the beneficiary would vest if she survived distribution.
The beneficiary died approximately two weeks before the distribution hearing. The
California Supreme Court affirmed the trial court’s ruling that the beneficiary’s interest
vested at a time when distribution should have been made before she died. The executor
had unreasonably delayed preparing the estate for distribution. (Id. at pp. 857-858.)
Unlike in the case before us, the Taylor beneficiary became vested before she died
according to the terms of the trust. The case does not stand for the proposition that an
expectancy in a discretionary trust by itself constitutes a vested interest in the trust’s
ultimate distribution or that Debora’s interest in distribution vested before she died.
       Moorhouse cites Estate of Newman (1956) 146 Cal.App.2d 780 (Newman), to
support her claim that Debora was not a contingent beneficiary. The Newman court held
that a beneficiary’s interest in a trust vested upon the allocation of the interest at the

                                               13
trustor’s death “even though enjoyment is postponed . . . .” (Id. at p. 784.) In that case,
the trust gave B a life estate, and upon B’s death the trust was to be terminated and the
estate vested in and transferred to R, E, and P. R and E did not survive B. The court held
that each remainder person’s interest vested upon the death of the testatrix and creation of
the trust and were not contingent on termination of the trust and the life tenant’s death.
(Id. at pp. 781-784.)
       The California Supreme Court later explained that Newman does not apply where,
as here, the beneficiary’s interest is expressly contingent on survival. In Estate of
Callnon (1969) 70 Cal.2d 150 (Callnon), the probate court’s decree granted a life estate
to the decedent’s son to be held in trust by the decedent’s sister. Upon the son’s death,
the trust estate would vest in the sister. The decree made no provision for the estate if the
sister did not survive the son, which is what happened. (Id. at pp. 152-154.) The new
trustee contended the son’s interest was subject to intestate succession. The sister’s
representative argued the decree was ambiguous and extrinsic evidence in the form of the
will showed that the sister’s remainder interest was vested. (Id. at pp. 155-156.)
       The Supreme Court agreed with the trustee. Whatever the meaning of the decree’s
language granting the remainder interest, the sister “was required by an express condition
to survive the life beneficiary in order to take anything. Since she predeceased [the life
beneficiary,] any interest she had in the remainder ‘vanished into thin air.’ (Estate of
Haney [(1959)] 174 Cal.App.2d 1, 8.)” (Callnon, supra, 70 Cal.2d at p. 159.)
       The sister’s representative had relied on Newman and other authorities that
involved the resolution of future interests to argue that vesting could have occurred
despite the survival clause. (Callnon, supra, 70 Cal.2d at p. 159, fn. 13.) The Supreme
Court disagreed: “The cases cited by respondent are easily distinguishable. The absence
of an express condition of survival in those cases made it necessary for the courts to
construe the specific language in order to determine if a condition of survivorship was
contained by implication.” (Id. at p. 159.)

                                              14
       Here, the fourth amendment expressly conditioned Debora’s entitlement to
distribution of the support trust on her reaching the age of 80. Indeed, because Dennis
had discretion not to distribute the trust when Debora reached 80, it could be argued that
Debora could never have a vested interest in the trust. We need not decide that issue, as
Debora did not live to the age of 80, and thus her expectancy in the support trust never
vested.
       Moorhouse acknowledges that Dennis had discretion to make distributions to
Debora, but she claims that courts “have routinely held that beneficiaries are entitled to
distributions, even if the trustees have absolute discretion whether to make them.” She
cites Estate of Miller (1964) 230 Cal.App.2d 888, to support her claim, but that case is
limited to its facts. A trustee given sole or absolute discretion may not exercise that
discretion arbitrarily, in bad faith, or without regard to the trust’s purposes. (Id. at
pp. 909-911.) The court of appeal held that the trustee in that case abused his absolute
discretion in bad faith by not making support distributions in conformance with the
trustor’s intent. (Id. at pp. 912-913.) The case did not concern the effect of a survival
clause or whether the injured beneficiary had a vested right in a remainder.
       Moorhouse implies that Dennis acted in bad faith by not distributing any support
trust assets to Debora. This is a factual assertion which the trial court did not adjudicate,
and we take no position on it. We note, however, that Moorhouse provides no authority
for the proposition that a trustee’s bad faith refusal to distribute a support trust’s assets
during the lifetime of the beneficiary renders a survival clause inoperative.
       Moorhouse further claims that “Dennis’s argument that Debora had no right to
distribution of the trust when she died would mean that Dennis could refuse to distribute
any of the trust for her benefit, no matter how great her need.” That argument is without
merit. The existence and the effect of the survival clause did not affect whatever duty
Dennis may have had to distribute the support trust’s assets to Debora for her support
while she lived. As a result of the survival clause, however, whatever interest Debora

                                               15
may have had in the support trust “ ‘vanished into thin air’ ” after her death. (Callnon,
supra, 70 Cal.2d at p. 159.)
                                      DISPOSITION
       The judgment is reversed, and the matter is remanded for further proceedings
consistent with this opinion.
       Costs on appeal are awarded to appellant. (Cal. Rules of Court, rule 8.278(a).)

                                                 HULL, J.

We concur:

RAYE, P. J.

RENNER, J.

                                            16