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Estate of Bowles

December 22, 2008


APPEALS from a judgment and an order of the Superior Court of Los Angeles County, Terry A. Green, Judge, and Reva Goetz, Temporary Judge. (Pursuant to Cal. Const., art. VI, § 21.) Reversed. (Los Angeles County Super. Ct. No. P696178)(Los Angeles County Super. Ct. No. BC368022).

The opinion of the court was delivered by: Turner, P. J.



In these consolidated appeals, plaintiff, Kevin Cavalli, appeals from a judgment dismissing his civil complaint and an order denying his first amended Probate Code*fn1 section 17200 petition. We reverse the judgment and the order.


These appeals concern two testamentary trusts-a qualified terminable interest property trust (the QTIP Trust), and a Grandchildren's Trust-created under the will of plaintiff's grandfather, Thomas C. Bowles. Plaintiff is a remainder beneficiary of the QTIP Trust and a beneficiary of the Grandchildren's Trust. Plaintiff's father is defendant, Richard Alan Cavalli, who also is a beneficiary of the QTIP Trust. Defendant, Walter Henry Reid, is not a beneficiary of either trust. But Mr. Reid is alleged to have induced the trustee, Mary J. Bowles, to sell QTIP Trust property to him at less than fair market value. Mr. Reid allegedly acted with knowledge the transactions breached the trustee's fiduciary duties.

Mr. Bowles died in 1988. The probate court appointed his surviving spouse, Ms. Bowles, as trustee of the QTIP Trust. The trustee of the QTIP Trust was to pay the net income of the trust to Ms. Bowles during her lifetime. The trustee was also authorized to make payments of principal to Ms. Bowles if necessary for her health, support, and maintenance. In other words, Ms. Bowles, as trustee, controlled payments of trust income and distributions of trust principal to herself.

Upon Ms. Bowles's death, the QTIP Trust estate was to be distributed with a one-quarter share to each of Mr. Bowles's sons, Anthony Herman Cavalli (Anthony) and Richard Alan Cavalli (Richard), or their issue. (When necessary for purposes of clarity and not out of any disrespect, we will refer to certain individuals who share a common surname by their first names.) The remaining one-half of the QTIP Trust estate was to be distributed in equal shares to Ms. Bowles's four grandchildren, including plaintiff. The grandchildren's shares were to be distributed outright or held in trust depending upon their ages at the time of Ms. Bowles's death. In an October 5, 1989 final order in Mr. Bowles's estate proceeding, the probate court directed that $400,000 be distributed: one-quarter ($100,000) to Anthony; one-quarter ($100,000) to Richard; and one-half ($200,000) in trust to Ms. Bowles. Ms. Bowles's share was to be divided in four equal shares ($50,000) for her four grandchildren (the Grandchildren's Trust).

Ms. Bowles continued to act as trustee of both the QTIP Trust and the Grandchildren's Trust until her death in March 2006. Following Ms. Bowles's death, on plaintiff's petition, First Regional Bank (the bank) was appointed successor trustee of the QTIP Trust. No successor trustee of the Grandchildren's Trust has been appointed. There is no probate pending as to Ms. Bowles's estate.

Sometime prior to August 7, 2001, Ms. Bowles created a separate revocable trust-the Mary J. Bowles Trust. The trust remained revocable until Ms. Bowles's death. Richard is the successor trustee of the Mary J. Bowles Trust. Ms. Bowles's estate consists entirely of the Mary J. Bowles Trust.

Plaintiff filed two separate actions concerning the QTIP or Grandchildren's Trusts. Both actions arise out of Ms. Bowles's alleged breaches of trust. First, plaintiff filed his first amended section 17200 petition in the probate department of the superior court (the probate court) seeking to surcharge Ms. Bowles's estate (consisting of the Mary J. Bowles Trust assets) for her alleged fiduciary duty breaches in relation to the QTIP and the Grandchildren's Trusts. Second, plaintiff filed a civil complaint in the superior court seeking damages against Richard and Mr. Reid for allegedly inducing Ms. Bowles to breach the QTIP Trust for their own gain. Both proceedings have been dismissed, giving rise to these appeals.


A. Standard of Review

The appeals in this action are from demurrer dismissals primarily on standing grounds. The Supreme Court has defined our undertaking on appeal from a demurrer dismissal as follows, "'Our only task in reviewing a ruling on a demurrer is to determine whether the complaint states a cause of action.'" (People ex rel. Lungren v. Superior Court (1996) 14 Cal.4th 294, 300; Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125.) The reviewing court assumes the truth of allegations in the complaint that have been properly pleaded and gives the complaint a reasonable interpretation by reading it as a whole and with all its parts in their context. (Stop Youth Addiction, Inc. v. Lucky Stores, Inc. (1998) 17 Cal.4th 553, 558; People ex rel. Lungren v. Superior Court, supra, 14 Cal.4th at p. 300; Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967.)

Code of Civil Procedure section 367 states, "Every action must be prosecuted in the name of the real party in interest, except as otherwise provided by statute." A party who is not the real party in interest lacks standing to sue because the claim belongs to someone else. (Charpentier v. Los Angeles Rams Football Co. (1999) 75 Cal.App.4th 301, 307; Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 1004.) The Court of Appeal has held, "A real party in interest ordinarily is defined as the person possessing the right sued upon by reason of the substantive law. [Citation.]" (Killian v. Millard (1991) 228 Cal.App.3d 1601, 1605; accord, Gantman v. United Pacific Ins. Co. (1991) 232 Cal.App.3d 1560, 1566; Del Mar Beach Club Owners Assn. v. Imperial Contracting Co. (1981) 123 Cal.App.3d 898, 906.) Where someone other than the real party in interest files suit, the complaint is subject to a general demurrer. (Code of Civil Proc., § 430.10; Carsten v. Psychology Examining Com. (1980) 27 Cal.3d 793, 796; Parker v. Bowron (1953) 40 Cal.2d 344, 351; Klopstock v. Superior Court (1941) 17 Cal.2d 13, 19; CashCall, Inc. v. Superior Court (2008) 159 Cal.App.4th 273, 287; O'Flaherty v. Belgum (2004) 115 ...

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