Plumleigh v. Ferber

Opinion

Richard E. Ferber, executor of the James M. Ferber estate, appeals from two orders finding Sandra Plumleigh would not violate the no contest clause in James’s estate by pursuing certain actions against Richard and the estate. We reverse with directions.

James M. Ferber was the personal representative for the estate of his father, Oscar. Due to numerous family disputes, including at least one suit against James, the estate was open for 17 years.^[1] Due to his angst over this state of affairs and its negative impact on his health and quality of life, when James had his own will prepared, he directed his attorneys to prepare the strongest possible no contest clause. He wanted to protect his executor, Richard, who was his brother and business partner, from the hardships and attacks he had endured.

The no contest clause was the most detailed in James’s will, and he gave his attorney strong direction: “[I]nclude . . . a no contest clause that went as

The clause reads in relevant part: “If any devisee, legatee or beneficiary under this Will, or any legal heir of mine or person claiming under any of them (a) contests this Will or, in any manner, attacks or seeks to impair or invalidate any of its provisions [,] (b) claims entitlement by way of any written or oral contract, (c) challenges the appointment of any person named as an executor, (d) objects in any manner to any action taken or proposed to be taken by my Executor, whether my Executor is acting under court order, advice of proposed action or otherwise, (e) objects to any construction or interpretation of my Will, or any provision of it, that is adopted or proposed by my Executor, (f) unsuccessfully requests the removal of any person acting as an executor, (g) conspires with or voluntarily assists anyone attempting to do any of these things, or (h) refuses a request of my Executor to assist in the defense of any such proceeding, then in that event I specifically disinherit each such person, and all legacies, bequests, devises, and interests given under this Will to that person shall be forfeited as though he or she had predeceased me without issue, and shall augment proportionately the shares of my estate going under this will to, or in trust for, such of my devisees, legatees and beneficiaries who have not participated in such acts or proceedings. . . .”

James executed his will in March 1987 and died in July. The will was probated in September and Richard was appointed the executor with full authority to administer the estate under the Independent Administration of Estates Act. (Prob. Code, § 10400 et seq.) The estate was valued at about $4.6 million.

Sandra, who was a friend of James’s, is to receive a $250,000 bequest from the will. She is the only nonrelative named in the will. In May 1995,^[3] Sandra, acutely aware of the no contest clause, filed a petition under Probate Code section 21320 for a determination of whether certain actions she contemplated would be in violation of the clause and cause her to be disinherited.^[4] The proposed action relevant to this appeal is Sandra’s contemplated petition to have Richard removed as executor. The trial court ruled

In March 1996, Sandra brought another petition under section 21320 for a determination whether two proposed declaratory relief actions would violate the no contest clause, one dealing with which portions of the no contest clause are against public policy, and the other concerning the meaning of “co-owners” in the will. In July she filed a similar petition regarding filing of objections to Richard’s accounting. The petitions were heard together, and the trial court ruled none of the proposed actions would violate the no contest clause. The court reasoned the objections to the accounting would not violate the no contest clause because the clause violated public policy insofar as it sought to prevent such actions. The court found an action to determine what portions of a no contest clause are enforceable is not, in and of itself, a will contest, concluding the determination would benefit both parties and facilitate judicial economy.^[5]

“No contest clauses are valid in California and are favored by the public policies of discouraging litigation and giving effect to the purposes expressed by the testator. [Citations.] Because a no contest clause results in a forfeiture, however, a court is required to strictly construe it and may not extend it beyond what was plainly the testator’s intent. [Citations.] [ft] ‘Whether there has been a “contest” within the meaning of a particular no-contest clause depends upon the circumstances of the particular case and the language used.’ [Citations.] ‘[T]he answer cannot be sought in a vacuum, but must be gleaned from a consideration of the purposes that the [testator] sought to attain by the provisions of [his] will.’ [Citation.] Therefore, even though a no contest clause is strictly construed to avoid forfeiture, it is the

Richard asserts “the Legislature has mandated that no contest clauses be enforced according to their terms unless a statutory exception applies, and no statutory exception is applicable.” He errs in his premise. To the contrary, section 21301 provides: “This part is not intended as a complete codification of the law governing enforcement of a no contest clause. The common law governs enforcement of a no contest clause to the extent this part does not apply.” The Law Revision Commission cites this section when it notes the exceptions contained in sections 23106 and 23107 are not intended to be exhaustive. (Cal. Law Revision Com. com., 54A West’s Ann. Prob. Code (1991 ed.) §§ 21306, 21307, pp. 314-315, 316; and see Brian W. v. Superior Court (1978) 20 Cal.3d 618 , 623 [ 143 Cal.Rptr. 717 , 574 P.2d 788 ] [Law Revision Commission explanatory comments are persuasive evidence of legislative intent].)

With this background, we examine the trial court’s rulings as to Sandra’s proposed actions to determine whether, as a matter of law, the no contest clause was valid and enforceable. The trial court ruled the no contest provision regarding removal of the executor violated public policy. Richard argues the ruling conflicts with long-standing California Supreme Court authority. In In re Kitchen (1923) 192 Cal. 384 [ 220 P. 301 , 30 A.L.R. 1008 ], the court upheld a provision that provided for the disinheritance of anyone who “ ‘shall commence any suit [against] ... or cause [the executor] to be sued and disturbed,’ ” concluding the testatrix “intended to penalize the commencement of any suit whatever.” (Id. at pp. 387, 389.) Richard points out the clause in this case, involving only unsuccessful attempts to oust the executor, is not as expansive as the one upheld in Kitchen, which prohibited any action against the executor.

But because Kitchen did not involve an attempt to oust the trustee, for misfeasance or otherwise, the Supreme Court never considered the public policy implications of such attempts. The court in Estate of Bullock (1968)

Similarly, in the context of a probate in Estate of Miller (1964) 230 Cal.App.2d 888 [ 41 Cal.Rptr. 410 ], the court noted, “It is always proper for a beneficiary of an estate who believes that the executor is not fulfilling his duty to make the objections which the code permits without risk of suffering a penalty provided by an in terrorem clause. It has even been held in this state that an objection to the appointment of a second executrix designated in a will does not of itself give ground to invoke a forfeiture even though the in terrorem clause provides that there should be forfeiture by any beneficiary who does not ‘acquiesce in this . . . will . . . and all provisions thereof.’ [Citations.]” (Id. at pp. 902-903.)

Richard correctly points out both Bullock and Miller concluded the no contest clauses were not broad enough to cover attacks against the trustee and executor involved in those cases so the courts’ comments about public policy may be regarded as dicta. Even if they are, we find them persuasive. The power of the court is invoked in probate matters, at least in substantial measure, to protect the estate and ensure its assets are properly protected for the beneficiaries. No contest clauses that purport to insulate executors completely from vigilant beneficiaries violate the public policy behind court supervision.

True, as Richard notes in his briefing, the court may have the primary responsibility to monitor an executor’s actions. (See Estate of Effron (1981)

Richard points out the no contest clause provides for forfeiture only if the complaining beneficiary is unsuccessful. But even that type of clause casts much too great of a chilling effect on beneficiaries. Determining whether a beneficiary would be successful in ousting an executor involves factual questions, foreclosing an advance ruling under section 21320. (Genger v. Delsol, supra, 56 Cal.App.4th at p. 1429.) Without the protection that section, few, if any, beneficiaries would be bold enough to challenge an executor on penalty of disinheritance.

Nevertheless, we take note of that concern, balancing it with our state’s public policy in favor of the validity of no contest clauses, espoused in section 21303.^[8] In Burch v. George, supra, 7 Cal.4th 246 , the Supreme Court recognized such clauses are “favored by the public policies of discouraging litigation and giving effect to the purposes expressed by the testator.” (Id. at p. 254.)

And, when public policy interests conflict, as they do here, we engage in a balancing process. (See Estate of Goulet (1995) 10 Cal.4th 1074 , 1080-1084 [ 43 Cal.Rptr.2d 111 , 898 P.2d 425 ] [balancing competing interests in determining executor’s right to appeal]; and see generally, Alfredo A. v. Superior Court (1994) 6 Cal.4th 1212 , 1223 [ 26 Cal.Rptr.2d 623 , 865 P.2d 56 ] [pretrial detention]; People v. Johnson (1998) 62 Cal.App.4th 608 , 631-632 [ 72 Cal.Rptr.2d 805 ] [defendant’s potentially perjured testimony]; In re Willon (1996) 47 Cal.App.4th 1080 , 1095 [ 55 Cal.Rptr.2d 245 ] [disclosure of confidential news source].) We strike a balance in this instance by enforcing no contest clauses against beneficiaries who attempt to oust the executor with a frivolous challenge.

This standard allows beneficiaries who believe an executor is engaged in misconduct to bring the potential malfeasance to the court’s attention without fear of being disinherited, furthering the public policy of eliminating errant executors. The beneficiaries would be deterred from bringing frivolous contests, however, which furthers the public policies of discouraging

Based on this analysis, the trial court erred by ruling the no contest clause was invalid because it violated public policy, and Sandra would not violate it by seeking to oust Richard Ferber. The trial court should have found the clause was valid insofar as it prohibited frivolous attempts to oust Richard, but otherwise was invalid. Whether Sandra’s challenge was frivolous involves a factual determination that would be improper for a section 21320 proceeding. (Genger v. Delsol, supra, 56 Cal.App.4th at p. 1431.)

Similary, the trial court should have found the no contest clause was valid insofar as it prohibited frivolous objections to the accounting, but otherwise was invalid. Absent the ability of a beneficiary to point out defects in the accounting, a court cannot properly perform its duty to monitor the administration of the estate. Enforcing the clause against nonfrivolous objections would violate the same public policy that eschews no contest clauses that effectively prohibit any attempt to remove an errant executor.

The trial court also ruled an action determining the meaning of the term “co-owner” as used in the will would not violate the no contest clause, without specifying why it believed this was so. The issue referred to a provision in James’s will giving Richard “[James’s] interest in all real property in which Richard and [James] are co-owners.” Sandra sought a determination that this language excluded property that James owned with Richard and Richard’s wife.^[9] Provision (e) of the no contest clause disinherited any beneficiary who “objects to any construction or interpretation of [the will] or any provision of it, that is adopted by [Richard].”

We do not see how enforcement of this provision under these circumstances violates any public policy. Nothing about the claim implies any misfeasance by the executor. And because the question merely involves an interpretation of the contract as a matter of law, it does not involve factual matters of which only the beneficiaries might be aware. The court erred by failing to find the proposed action implicated the no contest clause.

The trial court erred, however, by finding an action to determine which portions of the no contest clause violated public policy would not constitute a contest. As was the case with the claim involving section 21307 in Genger v. Delsol, supra, 56 Cal.App.4th 1410 , such a blanket determination is not