India Blatt Tang v. Blatt

• Decision Date: 06 February 2023
• Docket Number: A163147
• Parties: INDIA BLATT TANG et al., Plaintiffs and Appellants, v. MICHAEL BLATT et al., as Trustees, etc., Defendants and Respondents.
• Court: California Court of Appeals Court of Appeals

INDIA BLATT TANG et al., Plaintiffs and Appellants,
v.
MICHAEL BLATT et al., as Trustees, etc., Defendants and Respondents.

A163147

California Court of Appeals, First District, Fourth Division

February 6, 2023

NOT TO BE PUBLISHED

(Marin County Super. Ct. No. PRO1702513)

GOLDMAN, J.

Plaintiffs India Blatt Tang and Ashley Blatt are trust beneficiaries who alleged, as relevant here, that the trustees, defendants Michael Blatt and Valerie Wall, breached their fiduciary duties by failing to properly notify them of the existence of the trust following the death of the settlors, as required by former Probate Code section 16061.7,^[1] because the notice was mailed to them "c/o" their father at an address at which they did not live. After a bench trial, the court found for plaintiffs in part on their claim that defendants improperly administered the trust, but found that plaintiffs' failure-to-notify claim was "inconsequential" and that they had not established that defendants' defective notification under former section 16061.7 caused them damage.

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Plaintiffs argue that the evidence at trial established that the ineffective notice did cause them damage in the form of attorney's fees they otherwise would not have incurred, and that to the extent the evidence was insufficient, any uncertainty about whether the lack of notice caused harm should be charged to defendants. We find no basis to reverse the trial court's decision that an award of attorney's fees was not warranted, and accordingly we affirm the judgment.

BACKGROUND

A. Creation and Division of the Trusts

Plaintiffs are sisters, and India is Ashley's conservator. Defendants are plaintiffs' paternal uncle and aunt.

Plaintiffs' grandparents, Raymond and Barbara Blatt, created the Raymond C. Blatt and Barbara R. Blatt 1988 Trusts in 1988. The trust agreement provided that when the last surviving grandparent died, and after debts were paid and specified items of personal property distributed, the trustee was to divide the trust estate into equal shares, one for each of the grandparents' living children, defendants, and Steven Blatt, plaintiffs' father. The share allocated to Steven was to be retained and administered by the trustee in a separate trust. Under the terms of the trust, Steven would be entitled to annual distributions of $12,000 from the net income of his trust during his lifetime.

The trust agreement further provided that upon Steven's death, the trustee was to divide his trust into equal shares, one for each plaintiff, and those shares were to be retained and administered in separate trusts. A 1995 amendment to the trust provided that when India reached the age of 30, the trustee was to distribute outright to India the balance of her trust.

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B. The Section 16061.7 Notice

Raymond died in 1991, and Barbara died in 1998, at which point defendants became trustees. Michael retained an attorney, who sent a notification to the trust beneficiaries under former code section 16061.7 that all the trusts and sub-trusts of the Raymond C. Blatt and Barbara R. Blatt 1988 Trusts became irrevocable in November 1998, the month Barbara died. As required by former section 16061.7, the notification advised the recipients that they were entitled to receive a copy of the trust. (Former § 16061.7, subd. (a), added by Stats. 1997, ch. 724, § 23.^[2]) Defendants mailed the notification to plaintiffs "c/o" Steven at an address in Healdsburg, California.

The evidence adduced at trial in this action indicates that India never received the notification and did not learn about her and her sister's interests in the trust until after their father died in December 2014, more than sixteen years after Barbara's death.

C. The Sonoma County Action and Defendants' Petition for First Account

In 2017, a couple of years after Steven died, plaintiffs filed a petition in Sonoma County Superior Court for, among other things, relief under sections 16420 and 17200 and for an accounting of the trust. According to the petition, defendants did not inform plaintiffs of their vested rights under the trust until 2014, and they thereafter failed to respond to plaintiffs' requests for information about the trust. The petition further alleged that since 1998, defendants had not provided any accounting or report of trust assets, expenses, and distributions, and after Steven's death, they provided India with only one financial document, which showed the amount of funds in a

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trust investment account in March 2015. The court dismissed the petition for improper venue a few months later.

A month before the court dismissed plaintiffs' Sonoma County action, defendants provided plaintiffs a copy of an accounting for the period of December 2014 to March 2017, and asked plaintiffs to consent to the accounting. After receiving no response from plaintiffs, defendants initiated this action by filing a petition to settle first account under section 17200.

Plaintiffs filed objections to the petition to settle first account, asserting that defendants, in their capacity as trustees, failed to provide timely accountings to plaintiffs until they filed their Sonoma County petition. The objections also contained allegations like those in the Sonoma County petition regarding defendants' failure to notify plaintiffs of their interests in the trust. Plaintiffs later filed a petition to compel defendants to allow inspection of trust records showing how defendants had administered the trust since 1998. Over defendants' objections, the court granted plaintiffs' petition to compel.

D. Plaintiffs' Petitions for Surcharge and for Accounting

In February 2019, plaintiffs filed a petition for surcharge, for relief for breach of trust, to recover trust property, and to redress financial elder abuse. They amended the petition in September 2019. The amended petition alleged in part that defendants breached their duties as trustees by failing to maintain records, making it difficult to determine how defendants managed Steven's trust from 1998 to 2014, and by imprudently investing trust assets and using the trust's money to pay for their expenses.

In October 2020, plaintiffs filed a petition to compel defendants to account for the period of November 1998 to December 2014. Plaintiffs alleged in the petition that defendants' production in response to the court's order

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granting plaintiffs' petition to compel did not include any check registers, fiduciary income tax returns, financial statements, or bank statements dated before January 2012. According to the petition, India was unable to obtain records from other sources, and many records no longer existed, and therefore it was impossible to tell whether defendants fulfilled their fiduciary duties by, for example, distributing only the net income from Steven's trust during his lifetime.

E. The Trial

In January 2021, plaintiffs filed an issue conference statement detailing the facts and law pertinent to defendants' alleged failure to fulfill "any" of the fiduciary duties they owed to plaintiffs. Those duties included the duty to administer the trust according to its terms (§ 16000), the duty to keep beneficiaries reasonably informed of the trust and its administration (§ 16060), and the duty to serve notification on each beneficiary when a revocable trust or any portion of it becomes irrevocable because of the death of one of the settlors (§ 16061.7).

Trial took place later that month. India testified in support of plaintiffs' breach of fiduciary duty claims. As to defendants' alleged failure to notify plaintiffs under former section 16061.7, India testified that she did not learn about her and her sister's beneficiary status until Michael told her about the trust after her father died in December 2014, more than sixteen years after Barbara's death. She further testified that she never authorized anyone to send her mail in the care of her father, and that neither she nor her sister lived at the address to which defendants sent the section 16061.7 notification.

Regarding defendants' alleged failure to keep plaintiffs reasonably informed of the trust administration, India testified that after Michael

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mentioned the trust in December 2014, she requested a copy of the trust instrument around April 2015, and she also inquired about the terms of the trust and the trust assets. Shortly thereafter, Michael sent India copies of the trust instrument, an amendment to the trust, and one page of a statement for a Schwab account. India testified that she called Michael several times in the following months and sent him an email in September 2015 in an effort to obtain additional information about the trust. She further testified that after the September email, all communication stopped until December 2015, when she received a $100,000 check, which she believed was a distribution from the Schwab account. India's attorney also sent letters to Michael in 2016 asking for trust records and for an accounting.

Michael testified that when Barbara died in 1998, he engaged an attorney who helped him with the initial steps of administering the trust until 2000, and he did not have any understanding in the first year of what his duties were as co-trustee independent of what his attorney told him. He further testified that he distributed $12,000 a year to Steven from Steven's trust for four or five years and paid expenses for a house defendants owned using trust assets without considering the trust's net income.

F. The Statement of Decision

The trial court issued a tentative decision in April 2021 addressing plaintiffs' causes of...