Key v. Tyler

Decision Date19 April 2019
Docket NumberB283979
Citation246 Cal.Rptr.3d 224,34 Cal.App.5th 505
CourtCalifornia Court of Appeals Court of Appeals
Parties Sarah Plott KEY, Plaintiff and Appellant, v. Elizabeth Plott TYLER et al., Defendants and Respondents.

Grignon Law Firm, Margaret M. Grignon, Long Beach, Anne M. Grignon ; Wershow & Cole and Jonathan A. Wershow, Encino, for Plaintiff and Appellant.

Magee & Adler, Eric R. Adler, Long Beach; Murphy Rosen and Paul D. Murphy for Defendant and Respondent Elizabeth Plott Tyler.

Silas Isadore Harrington, Escondido; Williams Iagmin and Jon R. Williams, San Diego, for Defendant and Respondent Jennifer Plott Potz.

LUI, P. J.

Sarah Plott Key (Key) appeals from orders of the probate court (1) striking her petition to enforce a no contest clause in a trust under the "anti-SLAPP" statute ( Code Civ. Proc., § 425.16 )1 and (2) denying her motion to recover her attorney fees incurred in defending an earlier unsuccessful appeal filed by respondent Elizabeth Plott Tyler (Tyler). Key and Tyler are sisters and, along with the third sister, respondent Jennifer Plott Potz (Potz), are beneficiaries of a family trust (Trust) that their parents first created in 1999. Tyler was the trustee.

The Trust was purportedly amended in 2007 (2007 Amendment), substantially changing the beneficiaries’ rights and effectively disinheriting Key. Key filed a petition in 2011 (Invalidity Petition) seeking a ruling that the 2007 Amendment was a product of undue influence by Tyler. The probate court granted that petition, and this court affirmed that ruling in a nonpublished opinion. ( Key v. Tyler (June 27, 2016, mod. June 29, 2016, B258055 ) ( Key v. Tyler I ).)

Following remand, Key filed a petition to enforce the Trust’s no contest clause against Tyler (No Contest Petition), claiming that Tyler’s judicial defense of the invalid 2007 Amendment implicated that clause. Citing the same section of the Trust that contains the no contest clause, Key also sought an award of her attorney fees on appeal, which she claimed she incurred while resisting Tyler’s attack on the original Trust provisions.

Tyler responded with an anti-SLAPP motion. Tyler argued that Key’s No Contest Petition arose from Tyler’s protected litigation conduct under Code of Civil Procedure section 425.16, subdivision (e)(3), and that Key could not show a likelihood of success on her No Contest Petition for a variety of reasons, including that Key, not Tyler, had initiated the proceedings challenging the validity of the 2007 Amendment. Tyler also opposed Key’s request for attorney fees.

The probate court granted Tyler’s anti-SLAPP motion and denied Key’s motion for attorney fees. The court rejected Key’s argument that the anti-SLAPP statute does not apply to petitions to enforce no contest provisions in probate court. The court also found that Key failed to show a probability of success on her No Contest Petition because Tyler’s defense against the Invalidity Petition that Key filed was not an enforceable "direct contest" of the Trust. ( Prob. Code, § 21311.)2 With respect to the request for attorney fees, the court ruled that Key had failed to identify any statutory or equitable basis for the request.

We reverse both orders. We agree with the probate court (and with a recent decision by Division Five of this district) that the anti-SLAPP statute applies to a petition such as Key’s seeking to enforce a no contest clause. However, we conclude that Key adequately demonstrated a likelihood of success under the second step of the anti-SLAPP procedure. Tyler’s judicial defense of the 2007 Amendment that she procured through undue influence meets the Trust’s definition of a contest that triggered the no contest clause. And, under sections 21310 and 21311, that clause is enforceable against Tyler because the pleadings that Tyler filed defending the 2007 Amendment constituted a "direct contest" of the Trust provisions that the amendment purported to alter. ( § 21310, subd. (b)(5).) Key also provided sufficient evidence that Tyler lacked probable cause to defend the 2007 Amendment. ( § 21311, subd. (a)(1).) The findings of the probate court concerning Tyler’s undue influence, which this court affirmed, provide a sufficient basis to conclude that Key has shown a probability of success on her No Contest Petition.

The same section of the Trust that contains the no contest clause also provides that expenses to resist any "contest" or "attack" on a Trust provision shall be paid from the Trust estate. We conclude that this section provides Key with the contractual right to seek reimbursement of her attorney fees incurred in resisting Tyler’s appeal of the probate court’s ruling invalidating the 2007 Amendment. We therefore reverse the probate court’s rulings and remand for the court to determine Key’s reasonable attorney fees and for further proceedings on Key’s No Contest Petition.

1. Facts Concerning Tyler’s Undue Influence3

Tyler, Key, and Potz are the daughters of Thomas and Elizabeth Plott, who owned a successful family nursing home business. Thomas and Elizabeth created the Trust in 1999 and amended it in 2002 and 2003. Thomas died in 2003. ( Key v. Tyler I , supra , B258055.)

The Trust provided that, upon the death of the first spouse, the estate would be divided into three separate subtrusts: the survivor’s trust; the marital trust; and the exemption trust. The marital trust and the exemption trust became irrevocable upon the first spouse’s death, but the survivor’s trust was revocable. The assets allocated to the three trusts were required to be equivalent. As of January 2006, the Trust’s assets were worth over $ 72 million.4 ( Key v. Tyler I , supra , B258055.)

Article Fourteen (Article 14) of the Trust contains a "Disinheritance and No Contest Clause" (No Contest Clause). That clause provides in pertinent part that, "if any devisee, legatee or beneficiary under this Trust ... directly or indirectly (a) contests either Trustor’s Will, this Trust, any other trust created by a Trustor, or in any manner attacks or seeks to impair or invalidate any of their provisions, ... then in that event Trustors specifically disinherit each such person, and all such legacies, bequests, devises, and interest given under this Trust to that person shall be forfeited as though he or she had predeceased the Trustors without issue, and shall augment proportionately the shares of the Trust Estate passing under this Trust to, or in trust for, such of Trustors’ devisees, legatees, and beneficiaries who have not participated in such acts or proceedings."

Following Thomas’s death, Tyler, a lawyer, "actively sought to have Mrs. Plott amend the survivor’s trust to effectively exclude Key." ( Key v. Tyler I, supra, B258055.) Tyler was vice-president of operations for the nursing home business and was a principle and founding member of Tyler & Wilson, the law firm that provided legal services to the business. Mrs. Plott depended on Tyler for information related to the business and for legal advice. Mrs. Plott also was dependent on Tyler to carry on the family business, which Mrs. Plott considered her legacy. Tyler "exploited her knowledge of the family nursing home business to manipulate Mrs. Plott." ( Ibid. )

Beginning in late 2006, Tyler actively participated in efforts to procure an amendment to the Trust that made significant changes to the distribution of the survivor’s trust. Tyler controlled the communications concerning the amendment between Mrs. Plott and Allan Cutrow, her estate planning lawyer, and with his firm, Mitchell, Silberberg & Knupp (MSK). Tyler was the "gatekeeper between MSK and Mrs. Plott." Cutrow "was told to route all inquiries through Tyler & Wilson and not to contact Mrs. Plott directly." ( Key v. Tyler I, supra, B258055.) Every meeting that Mrs. Plott attended with MSK concerning the 2007 Amendment was also attended by Tyler or by Tyler’s associate. Tyler also "often created time pressure on Mrs. Plott by limiting Ms. Tyler’s availability or intentionally shortening the time in which to have meetings, thus putting pressure on decisions to be made by Mrs. Plott."

During the drafting process, Tyler "actively revised" the 2007 Amendment, "directly instructing Mr. Cutrow to include specific language and percentages in the final document." The probate court found that there was "NO evidence that the [2007 Amendment] represents the desires or choices of Mrs. Plott." The court based that conclusion on the totality of the court’s findings concerning Tyler’s active procurement of the 2007 Amendment, "most importantly the lack of any evidence originating directly from Mrs. Plott without the participation or interference of Ms. Tyler."

The final 2007 Amendment unduly benefited Tyler. As amended in 2003, the Trust provided for an equal division of property between the three daughters. However, the 2007 Amendment replaced the relevant provision of the Trust with a new distribution scheme that gave Tyler 65 percent of the business assets and Potz 35 percent. Key received a lump sum gift of $ 1 million. ( Key v. Tyler I, supra, B258055.)

The 2007 Amendment also gave Tyler all the contents of Mrs. Plott’s residence, replacing a provision that personal property was to be split equally, or in " ‘such manner as [the children] shall agree.’ " And the 2007 Amendment purportedly forgave a $ 2.5 million debt that Tyler owed to the marital trust, effectively giving Tyler a benefit of $ 1,666,666 and imposing a loss on Key of $ 833,333. ( Key v. Tyler I, supra, B258055.) The 2007 Amendment included this loan forgiveness provision although Cutrow had told Mrs. Plott that the note was owned one-third by each daughter through the marital trust (which was irrevocable), and therefore could not be forgiven. The probate court found that there was "no competent evidence that Mrs. Plott wanted this term in the 2007 ... Amendment."

Mrs. Plott signed the 2007 Amendment on ...

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