Fisch, Spiegler, Ginsburg & Ladner v. Appel, D016583

• Decision Date: 20 November 1992
• Docket Number: No. D016583,D016583
• Citation: 10 Cal.App.4th 1810,13 Cal.Rptr.2d 471
• Court: California Court of Appeals Court of Appeals
• Parties: FISCH, SPIEGLER, GINSBURG & LADNER, Plaintiff and Appellant, v. Daniel H. APPEL, as Trustee, etc., et al., Defendants and Respondents.

Page 471

13 Cal.Rptr.2d 471

10 Cal.App.4th 1810

FISCH, SPIEGLER, GINSBURG & LADNER, Plaintiff and Appellant, v. Daniel H. APPEL, as Trustee, etc., et al., Defendants and Respondents.

No. D016583.

Court of Appeal, Fourth District, Division 1, California.

Nov. 20, 1992.

Fisch, Spiegler, Ginsburg & Ladner and Joseph J. Fisch and James H. Cook, San Diego, for plaintiff and appellant.

Buchbinder & Haynes and David L. Buchbinder, San Diego, and Pamela LaBruyere, Solana Beach, for defendants and respondents.

KREMER, Presiding Justice.

Fisch, Spiegler, Ginsburg & Ladner, a professional law corporation, (Fisch) appeals an order declaring valid the homestead exemption of Daniel and Marlene Appel (the Appels). Title to the subject property was in a revocable living trust, an estate planning device whose popularity has increased in recent years. (Drafting Cal. Revocable Living Trusts (Cont.Ed.Bar 2d ed. 1984) p. ix.) We determine the Appels qualify for the homestead exemption even though the trust held title and therefore affirm the trial court's order.

FACTUAL AND PROCEDURAL BACKGROUND

The Appels are trustees of the Appel Revocable Family Trust dated April 19, 1989 (trust). Fisch drafted the trust instrument. In 1989, in reliance on legal advice from Fisch, the Appels quitclaimed the home in which they resided to the trust.

On June 20, 1990, upon Fisch's advice, the Appels as trustees recorded a declaration of homestead on the property. On September 4, 1991, Fisch obtained a judgment against the trust and Daniel Appel. The judgment was entered the next day.

On January 3, 1992, Fisch filed an application for an order for sale of the home. As of the date of the application, the balance due on the judgment was $317,562.66. The property was encumbered by a senior lien in favor of Wells Fargo Bank in the amount of $668,023.92. The Appels were in default on payments to Wells Fargo, facing foreclosure, and in the process of selling the property. The full assessed market value of the home was $802,200.49.

In the court below, Fisch argued the trust, as owner of the property, was not entitled to a homestead exemption because it was not a natural person. The Appels argued they were entitled to a $75,000 homestead exemption inasmuch as they had filed the homestead declaration as trustees, possessed a beneficial interest in the trust, and occupied the property as their principal residence.

On February 14, 1992, the trial court ruled the Appels as trustees held a valid $75,000 homestead exemption and ordered the property sold subject to the exemption. According to the Appels, the property was sold and the net proceeds of $63,608.65 are being held in trust pending this appeal.

DISCUSSION

Fisch contends the Appels do not qualify for a homestead exemption because the owner of the property was the trust, not a natural person, and the statute specifically excludes the interest of a beneficiary of a trust from the definition of dwelling.

CODE OF CIVIL PROCEDURE SECTION 704.910¹ provides in pertinent part "(a) 'Declared homestead' means the dwelling described in a homestead declaration.

"(b) 'Declared homestead owner' includes ...:

"(1) The owner of an interest in the declared homestead who is named as a declared homestead owner in a homestead declaration recorded pursuant to this article.

"....

"(c) 'Dwelling' means any interest in real property (whether present or future, vested or contingent, legal or equitable) that is a 'dwelling' as defined in Section 704.710, but does not include ... the interest of the beneficiary of a trust."

The Appels say they are entitled to revoke the trust, an assertion which Fisch does not dispute. Although the trust instrument is not part of the record, in light of the Appels' uncontradicted statement it appears the Appels are trustors. This gave them a contingent reversionary interest in the subject property (see In re Moffat (C.D.Cal.1989) 107 B.R. 255, 259), an interest in real property within the meaning of section 704.910, subdivision (c). Furthermore, the Appels maintain they have life estates in the trust assets, another claim...