Autonomous Region of Narcotics Anonymous v. Narcotics Anonymous World Servs., Inc.
| Decision Date | 25 April 2022 |
| Docket Number | B309376 |
| Parties | AUTONOMOUS REGION OF NARCOTICS ANONYMOUS, Plaintiff and Appellant, v. NARCOTICS ANONYMOUS WORLD SERVICES, INC., as Trustee, etc., Defendant and Respondent. |
| Court | California Court of Appeals Court of Appeals |
Rutan & Tucker, Michael D. Adams, Proud Usahacharoenporn and Sarah Gilmartin, Irvine, for Plaintiff and Appellant.
Holland & Knight, Theresa W. Middlebrook, Glendale, Roger B. Coven, Jonathan H. Park and Lydia L. Lockett, Los Angeles, for Defendant and Respondent.
A charitable trust controls the intellectual property of Narcotics Anonymous. This trust is revocable. A group called the Autonomous Region of Narcotics Anonymous alleged the trustee breached its fiduciary duties. The probate court sustained a demurrer without leave to amend because Autonomous Region lacked standing. We affirm.
Autonomous Region offers two infirm theories for standing.
First, Autonomous Region invokes a Probate Code section conferring standing on entities with the power to revoke a trust. Autonomous Region contends it is a settlor with that power. The trust document says otherwise: it defines the settlor as an amorphous group—the Fellowship of Narcotics Anonymous—that acts through delegates who represent groups within the Fellowship. Because Autonomous Region is not the settlor, its first theory fails.
Second, Autonomous Region claims special interest standing. This doctrine of standing is for those with a "special interest" in a charitable trust. The doctrine, however, does not extend to revocable trusts because the settlors of those trusts have elected to retain the power of revocation and hence the oversight this doctrine aims to supply.
The probate court properly concluded leave to amend would have been futile.
Undesignated statutory citations are to the Probate Code.
We take the facts from the petition and the other record materials.
In 1953, recovering drug addicts created the Fellowship of Narcotics Anonymous (the Fellowship). The organization uses a variation of the Alcoholics Anonymous 12-step model. Today, the Fellowship has hundreds of thousands of members who meet in groups worldwide.
Membership is permissive. "The only requirement for membership is a desire to stop using."
Members meet in local groups. In the United States, these cluster in about 70 geographic regions. For instance, the "Sierra Sage Region" has an address in Reno, while the "Free State Region" address is in Baltimore.
Each region has a regional delegate. Delegates meet every two years at a gathering called the World Service Conference. The record sometimes refers to the Conference as an event and sometimes refers to it as the people attending the event.
The Fellowship has its own literature, which is vital to its mission. One example is the "Basic Text," described as members’ bible. Over time, hundreds of anonymous members participated in writing and revising this book. The Fellowship's literature includes other books as well as booklets and pamphlets.
In 1993, the Fellowship established a trust called "The NA Fellowship Intellectual Property Trust" to manage its literature and other intellectual property assets.
The trust document is the heart of this probate case. This printed document is highly formalized and manifests authorial deliberation. The title page, which features stylized fonts, announces in bold and centered text: "Approved by the Fellowship of Narcotics Anonymous as given voice by its groups through their regional service representatives at the World Service Conference on 27 April 1993." It continues in centered text: "Operational Rules revised by the regional service representatives at the World Service Conference on 30 April 1997, 27 April 1998, and 1 May 2012."
The table of contents is three pages in length. This table announces the document has four parts: a five-page Instrument, 17 pages of Operational Rules, 20 pages of "Reader's" Notes, and 11 pages of Intellectual Property Bulletins. The Instrument instructs that the Operational Rules are to control unless they conflict with the Instrument. The Reader's Notes explain more about the Instrument and Operational Rules. Appended to the Operational Rules are the Fellowship's "Twelve Steps and Twelve Traditions." The Reader's Notes end with a glossary. The Bulletins give comprehensive applications of the trust. For example, Bulletin number three explains how commercial vendors may use the Fellowship's trademarks.
The trust identifies itself as a "charitable trust." The parties to the trust are as follows.
The trustee is Narcotics Anonymous World Services, Inc., the respondent in this case. We abbreviate this name to "World Services."
The beneficiary is the Fellowship "as a whole."
The Instrument identifies the "Settlor and the Trustor."
We pause on a point of usage. "Trustor" and "settlor" are synonyms. ( Rest.3d Trusts, § 3, com. a, p. 36.) This trust occasionally uses both terms but more commonly refers to "trustor." For consistency and to reduce confusion, however, we follow the California Probate Code and the Restatement and use "settlor." (E.g., Rest.3d Trusts, § 3, com. a, p. 36.) We often replace "trustor" with "[settlor]" when we quote from the trust.
The trust's definition of settlor is key. We will repeatedly refer to it. Other parts of the trust elaborate it.
The trust defines its settlor as "The Fellowship of Narcotics Anonymous, as given voice by its groups through their regional delegates at the World Service Conference."
The trust's Operational Rules add context to this definition. The Rules explain that the Fellowship is the equitable owner of the property in trust. The basic collective unit of the Fellowship is the local Narcotics Anonymous group. Because decisions about the Fellowship's intellectual properties directly affect the Fellowship as a whole as well as individual groups, the groups’ authorized representatives—the regional delegates—make decisions at the Conference. "By such means, the Fellowship ... acts as the [Settlor]" of the trust.
The Reader's Notes give more information about the trust's definition of settlor. They describe how earlier proposals defined the settlor as the Conference itself, but that drafters changed the language to name the Fellowship and its groups. This change was in part because the Fellowship is the equitable owner of the intellectual property. The Reader's Notes explain the drafters sought to give groups a role in decisions affecting them, but wanted to avoid giving any one group the power to take actions on its own that could seriously affect other groups or the Fellowship as a whole. The Reader's Notes say the final definition of settlor aimed to ensure coordinated action for decisions affecting the entire Fellowship.
The Fellowship "as given voice by its groups through their regional delegates at the World Service Conference" approved the trust. The settlor conveyed all Narcotics Anonymous intellectual property to the trust.
The trust allows the settlor to add, delete, or revise trust properties with a two-thirds vote of regional delegates at the Conference.
The Instrument assigns various duties and powers to the trustee, which, as mentioned, is respondent World Services. World Services manages proceeds from the sale of trust property. It cannot use trust property for its own profit but it can pay the costs of caring for the trust and can compensate employees.
The Instrument addresses revocability in a section titled, "ARTICLE VI: REVOCABILITY," which says, in full, "This Trust is revocable by the [Settlor]."
The Operational Rules deal with a different type of revocation—revocation of the trustee . Typically, this process is called "removal." (See Rest.3d Trusts, § 37, pp. 133–134.) The settlor may remove World Services as trustee and reassign its rights and duties under certain conditions. Removing the trustee requires many steps. The final step is a two-thirds vote of regional delegates at the Conference.
Autonomous Region launched this suit by filing a petition alleging trustee World Services had breached the trust and was violating its fiduciary duties.
Autonomous Region described itself as "an interested party" of the trust and a "regional delegate group of the Fellowship with a voice at the World Service Conference who has a special and definite interest in the charitable Trust."
The petition's prayer sought the right to distribute trust literature, to review payments to World Services, to remove World Services as trustee, to disgorge its profits, and to award attorney fees to Autonomous Region. The petition cited sections 16420, 16440, and 17200 as its bases for relief.
World Services demurred, contending Autonomous Region lacked standing to sue about the trust.
World Services also disclaimed Autonomous Region. It said Autonomous Region is not a recognized region, has no role in the Fellowship, and had never been part of the World Service Conference. World Services charged Autonomous Region was merely the project of "certain dissident individuals." These factual assertions are improper in a demurrer. (See Blank v. Kirwan (1985) 39 Cal.3d 311, 318, 216 Cal.Rptr. 718, 703 P.2d 58 ( Blank ).)
Autonomous Region opposed the demurrer. For the first time, Autonomous Region invoked section 15800, which grants standing to any entity that possesses the power of revocation. Autonomous Region argued the trust has not one but many settlors, Autonomous Region is one of them, and thus it has the power of revocation, which yields standing. As a second and independent basis for standing, Autonomous Region maintained it has special standing as a beneficiary or as a person with a special interest in the enforcement of the trust.
After a hearing on the demurrer, the court permitted Autonomous Region to file supplemental briefing. Autonomous Region attached extrinsic evidence to its supplemental briefing. After considering the supplemental papers, the probate court sustained World...
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...NOT APPLY TO REVOCABLE CHARITABLE TRUSTS Autonomous Region of Narcotics Anonymous v. Narcotics Anonymous World Services, Inc. (2022) 77 Cal.App.5th 950The Second District Court of Appeal held that special standing does not apply to revocable charitable trusts. Further, where the group actin......