IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (San Joaquin)
October 24, 2011
GARY RAUSSER ET AL., PLAINTIFFS AND RESPONDENTS,
GREG J. RAUSSER, DEFENDANT AND APPELLANT.
(Super. Ct. No. PR78732)
The opinion of the court was delivered by: Raye , P. J.
Rausser v. Rausser
NOT TO BE PUBLISHED
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
Once again, death, property, and inheritance strain familial bonds. Bruno and Eleanor Rausser, parents of four children, owned two parcels of land. The couple established the Rausser Family Revocable 1975 Trust (the Trust), which evolved into three separate trusts (Trust A, Trust B, and Trust C) upon the death of the first spouse. Trust A was revocable; Trusts B and C were irrevocable. After Bruno's death, Eleanor signed an amendment to the Trust, removing two of the children as beneficiaries of Trusts A and C. Eleanor later signed an amendment making appellant Greg Rausser sole beneficiary of Trusts A and B.*fn1
Following Eleanor's death, her three other children, respondents Gary Rausser, Ronica Rosa, and Romilda Rausser-Nimmo, filed a petition seeking a declaration that they were equal beneficiaries with Greg as to Trusts B and C and challenging a 2003 transaction by Eleanor that impacted the trusts. Following a trial, the court found the 2003 transaction invalid, removed Greg as trustee of Trusts B and C, and appointed Gary and Romilda successor trustees. Greg appeals, arguing the trial court erred in invalidating the 2003 transaction and in removing him as trustee. In addition, Greg challenges the trial court's surcharge based on the 2003 transaction. We shall reverse those portions of the judgment removing Greg as trustee of Trusts B and C, appointing Gary Rausser and Romilda Nimmo as successor trustees, and surcharging Gary disbursements from Trusts B and C, and remand with directions.
FACTUAL AND PROCEDURAL BACKGROUND The Trust
Bruno and Eleanor created the Trust in 1975. The couple amended the Trust four times prior to Bruno's death in 1996; Eleanor amended the Trust five times prior to her death in 2007. The first four amendments are not at issue.
As trustees of the Trust, Bruno and Eleanor owned two parcels of land. One parcel contained the family home, a dairy, farmland, and pasture. The couple rented out the second parcel as pastureland.
When Bruno died in 1996, the Trust instrument mandated the division of the trust estate into three trusts: Eleanor's share became Trust A, the survivor's trust, and Bruno's share was divided between Trust B, the bypass trust, and Trust C, the "QTIP" trust.*fn2 This division minimized payment of estate taxes. Upon Bruno's death, Trust A remained revocable, while Trusts B and C became irrevocable.
Under the terms of the Trust at that time, all four of the Raussers' children were the equal remainder beneficiaries of the irrevocable subtrusts. Subtrust A remained revocable by Eleanor.
Prior to this division of the Trust, Eleanor executed the fifth amendment to the Trust, changing the successor trustees from Greg and Gary to Greg and Ronica.
In August 2000, after a 1996 appraisal valued the home parcel at $685,000 and the pasture parcel at $345,000, Eleanor assigned a 17 percent interest in the property to Trust A, a 56.3 percent interest to Trust B, and a 26.7 percent interest to Trust C. Eleanor also executed the sixth amendment to the Trust, which directed that Greg and Ronica be equal beneficiaries of Trust A and Trust C, excluding Gary and Romilda as beneficiaries of those trusts. Eleanor's attempt to change the beneficiaries of Trust C was prohibited by the Trust instrument.
The 2003 Transaction
Following Bruno's death, necessary repairs were made to the dairy on the home parcel. Eleanor met with her children and asked for their thoughts on fixing up the property. Gary and Romilda stated that rebuilding the dairy would be too expensive. Greg agreed as to the expense, but stated it needed to be done because it was being leased out and the tenant provided Eleanor with income.
Eleanor decided to make substantial improvements to the dairy. The work, done in 2001 and 2002, cost over $100,000.
In November 2001 Eleanor executed the seventh amendment to the Trust, appointing Greg and Ronica as co-trustees with authority to act independently. However, Eleanor remained in control of the Trust until her death.
In 2003 Eleanor expressed fears to her attorney, James Demera, that her children would not be able to agree on management of the property. Eleanor told Demera that Greg would be better suited to manage and farm the property, that Demera could discuss trust business with Greg, and that Greg knew everything. All amendments after Bruno's death were executed privately by Eleanor with Demera's help.
Demera advised Eleanor that, as trustee of Trust A, she could acquire Trust B's 56.3 percent interest in the property as long as the purchase was for fair market value and the terms were consistent with a business and commercial transaction. In May 2003 Demera had the property reappraised by the same appraiser who had performed the earlier appraisal. The home property was now valued at $800,000 and the pasture parcel at $400,000, an increase of $170,000 over the earlier appraisal.
Eleanor, with Demera's assistance, drafted documents through which Eleanor as trustee of Trust A acquired the 56.3 percent interest in the real property assigned to Trust B for exactly 56.3 percent of the total appraisal of $1.2 million. The documents were executed on July 30 and August 1, 2003, and a grant deed and deed of trust were recorded. Respondents had no notice of the transaction. Eleanor made the down payment and the subsequent quarterly payments.
In November 2005 Eleanor executed the eighth amendment to the Trust, removing Ronica as cotrustee. Eleanor executed the ninth amendment, making Greg sole beneficiary of Trusts A and B in July 2006. This amendment was invalid, as Demera acknowledged, as to Trust B because the third amendment made Trust B irrevocable upon Bruno's death.
Eleanor died in August 2007. Greg began to act as trustee of the Trust. After Eleanor's death, Demera, representing Greg as trustee, provided Greg's siblings with formal notice of the Trust, the nine amendments, and the 2003 transaction.
Respondents Gary, Ronica, and Romilda filed an amended petition under the Probate Code in August 2008. Respondents sought a declaration that they were equal beneficiaries with Greg under Trust B and Trust C. They also argued the 2003 transaction was the product of self-dealing and should be set aside. Respondents argued Greg breached his duty as trustee in ratifying the 2003 transaction and should be removed as trustee, and requested an accounting.
A court trial followed. Prior to trial, the parties entered a stipulation, filed with the court on April 9, 2009, in which the parties agreed that respondents' claims and legal theories "concern and are limited to the actions of the original Trustee, Eleanor Rausser" and that "there are no claims currently pending against Greg Rausser in his individual capacity, either as beneficiary or trustee"; respondents agreed "that in the trial of this matter, they will not seek to surcharge" Greg; and Greg "agree[d] that in light of the foregoing, his personal counsel will not appear, present evidence or argue in the trial of the matter." At trial, counsel represented Greg in his capacity as trustee.
The court issued an order and judgment finding breach of trust, determining ownership, removing trustee, and denying leave to amend. The trial court found Eleanor breached her fiduciary duty to respondents. First, as trustee, Eleanor "gave effect to her improper amendments purporting to disinherit Petitioners." Second, Eleanor engaged in self-dealing in the 2003 sale of the real property of Trust B to Trust A.
The court noted the breach "went beyond that of merely acting as both buyer and seller as trustee for both subtrusts." Eleanor held the sole enforceable interest in Trust A, which contained her property and which she could revoke. Thus, the court found "she acted for herself as an individual in the transaction." Since Eleanor acted for her own interest and failed to notify respondents, Greg was not entitled to relief under the safe harbor provisions of Probate Code section 16002, subdivision (b).
The court concluded Eleanor did not act reasonably and in good faith in transferring the property. The court observed: "Her invalid attempt to disinherit Petitioners [here respondents], and her intentional failure to inform and report to the Petitioners establish the transfer was consistent with her efforts to deny Petitioners their inheritance and to favor Respondent."
Accordingly, the court found respondents and Greg are the beneficiaries of Trusts B and C. The court also found appropriate the remedy of rescission, calling for the setting aside of the transaction, reconveyance of the property, and an accounting for income received. The court noted: "The property is the childhood home of Petitioners and the family da[i]ry [in which] they labored. It is particularly unique to them."
Because the court found Greg knew the terms of the Trust and all amendments thereto, he also knew amendments 6 and 9 were invalid. Therefore, Greg knew the 2003 transfer was self-dealing and understood Eleanor's acts were designed to personally benefit him. When Greg became trustee, he ratified Eleanor's sale of the property and gave effect to the improper amendments. The court concluded Greg's actions in the matter were self-serving and were a breach of his fiduciary duty to all beneficiaries.
The court ordered: (1) respondents are the beneficiaries of an undivided 25 percent each of both Trusts B and C; (2) the 2003 purchase agreement is set aside and a constructive trust imposed on the property; (3) Greg, as trustee of Trust A, is to reconvey the property and is enjoined from impairing the real property interest; (4) Greg, as trustee of Trust A, is to account for all rents and profits from the property and to hold them in a constructive trust for the benefit of the trustees of Trust B; (5) Greg is removed as trustee of Trust B and Trust C and ordered to deliver all records and assets to the successor trustees; (6) Gary and Romilda are appointed successor trustees and ordered to transfer the consideration paid for the property to Trust A; (7) Greg, as trustee of Trusts B and C, is to account for his entire tenure as trustee and cotrustee of Trusts B and C; and (8) Greg, as trustee of Trusts B and C, is surcharged all disbursements from Trusts B and C relating to his defense of the invalid amendments and the rescinded sale.
Greg filed a timely notice of appeal.
Greg argues the trial court erred in invalidating the 2003 transaction. According to Greg, respondents failed to meet their burden of showing Eleanor committed a breach of trust.
Greg begins by asserting that we review de novo the trial court's determination that the 2003 transaction was invalid. Under Greg's reasoning, "since there was no evidentiary conflict regarding the 2003 Transaction, this Court can and should independently consider" whether Eleanor committed a breach of trust.
In the absence of a conflict in the relevant extrinsic evidence, we interpret a trust instrument de novo. (Estate of Powell (2000) 83 Cal.App.4th 1434, 1439-1440.) However, the trial court, in invalidating the 2003 transaction, was not merely "interpreting" the terms of the Trust, but instead made a factual determination as to the appropriateness of Eleanor's actions.
The trial court considered the trial testimony and concluded: "Eleanor did not act reasonably and in good faith in transferring the property. Her invalid attempt to disinherit Petitioners, and her intentional failure to inform and report to the Petitioners establish the transfer was consistent with her efforts to deny Petitioners their inheritance and to favor Respondent." We review the trial court's factual findings to determine whether they are supported by substantial evidence in light of the whole record. (Pasternak v. Boutris (2002) 99 Cal.App.4th 907, 921.)
Greg challenges the court's setting aside of the 2003 transaction, arguing the transaction was not the product of Eleanor's self-dealing. Greg contends the trust instrument "conferred a very high degree of discretion on the survivor [Eleanor] with respect to the assets of the Trust, both in terms of initially allocating them between Trusts A, B and C, and subsequently handling the assets of each of those trusts." This heightened discretion, Greg claims, gave Eleanor "sweeping powers to manage those assets," and she had the authority to engage in the 2003 transaction as long as she could reasonably conclude she was not altering the value of the assets in Trust B.
The Trust outlined the powers of the trustee: "Upon any division of the Trust Estate into separate shares or trusts and upon any distribution, the Trustee may apportion and allocate the assets of the Trust Estate in cash or in kind, or partly in cash and partly in kind, or in undivided interests, in such manner as the Trustee in the Trustee's discretion deems advisable. The Trustee may sell such property as the Trustee deems necessary to make such division or distribution. After any division of the Trust Estate, the Trustee may make joint investments with funds from some or all of the several shares or trusts. Provided, however, that nothing herein contained shall give the Trustee any authority to change or alter as between beneficiaries the total value of such beneficiary's Trust Estate."
Greg argues Bruno and Eleanor elected, through the Trust, "to give the survivor broad flexibility to manage all the of [sic] trust assets." In effect, Greg argues the language of the Trust trumps the statutory requirements. According to Greg, the Trust instrument "did not rigidly lock in the asset allocation amongst the trusts that Eleanor made in 2000. Respondents gloss over, but do not dispute, that the trust instrument permitted Eleanor as trustee to initially allocate the community property, including real estate, however she chose, as long as half the total value of the community property was in Trust A and the other half was in Trusts B/C."
The trust grants Eleanor as trustee discretion in the handling of trust assets. However, the Probate Code also establishes the trustee's duties toward the beneficiaries, including the duty of loyalty, the duty to avoid conflicts of interest, and the duty to preserve trust property and make it productive. (Prob. Code, §§ 16000-16014; all further statutory references are to this code unless otherwise indicated.)
In addition, section 16060 provides: "The trustee has a duty to keep the beneficiaries of the trust reasonably informed of the trust and its administration." The Law Revision Commission comments to section 16060 explain, in part: "The trustee is under a duty to communicate to the beneficiary information that is reasonably necessary to enable the beneficiary to enforce the beneficiary's rights under the trust or to prevent or redress a breach of trust." This duty is "consistent with the duty stated in prior California case law to give beneficiaries complete and accurate information relative to the administration of a trust when requested at reasonable times." (Ibid.) Sections 16061 and 16062 outline specific reporting requirements to beneficiaries.
Greg acknowledges the Trust instrument does not specifically waive Eleanor's duty as trustee to deal impartially with beneficiaries or to avoid conflicts of interest, but contends that "requiring an express waiver of particular duties would be inconsistent with the court's fundamental task of seeking the intent of the settlor, as revealed in the document considered as a whole." However, the duty imposed under section 16060 that the trustee keep the beneficiaries reasonably informed of the administration of the Trust is not subject to waiver. Nor do the more specific reporting requirements in sections 16061 and 16062 negate the affirmative duty of the trustee to provide information under section 16060. (Salter v. Lerner (2009) 176 Cal.App.4th 1184, 1188.)
The trial court in its tentative decision specifically found the 2003 sale by Eleanor, trustee of Trust B, to Eleanor, trustee of Trust A, "classic self dealing and a breach of loyalty to trust B." The court further noted Eleanor understood Trust A was revocable during her lifetime and the sale of Trust B assets to Trust A was "one in which she [had] a substantial personal interest, as she could revoke subtrust A entirely, and [was] therefore treated as sale to herself individually."
The court also found that, after Bruno's death, Eleanor became secretive about Trust dealings, confiding in only her counsel and Greg. From the time of Bruno's death to her own, Eleanor never gave her other children, the beneficiaries, "any notice, report or account, neither oral or written, concerning any trust to Petitioners." Eleanor's other children knew only that there was a Trust, the dairy was in it, and all four children were equal beneficiaries. Eleanor kept the existence of the subtrusts, the allocation between them, and the 2003 transfer secret from all of her children, save Greg. Eleanor's secrecy and failure to inform the other beneficiaries runs afoul of section 16060 and supports the court's finding that the 2003 transaction was invalid.
Nor are we persuaded by Greg's claim that, given Eleanor's "sweeping authority as trustee under the trust instrument, she could deal between Trust A and Trust B as long as the value of Trust B's assets remained the same, which is precisely what she did in the 2003 Transaction." The dairy and pastureland appraised for $1.2 million in 2003; Eleanor acquired a 56.3 percent interest in the land for exactly 56.3 percent of $1.2 million. According to Greg, this was a completely even transaction.
However, the value of property fluctuates, at times wildly. In this case, between the original appraisal in 2000 and the subsequent appraisal in 2003, the property had appreciated $170,000. As an asset, the dairy had the potential of a large return in the future; the potential return on the money Eleanor paid in exchange for the property was much less.*fn3 As such, the 2003 transaction was not a simple "even exchange" as Greg suggests. Instead, it presented Eleanor with the opportunity to purchase a potentially very valuable asset in exchange for cash. Again, the substance of the transaction, coupled with Eleanor's secrecy, support the trial court's decision to invalidate the 2003 transaction.
Greg also argues the 2003 transaction is permitted under section 16002, subdivision (b), which states: "It is not a violation of the duty provided in subdivision (a) for a trustee who administers two trusts to sell, exchange, or participate in the sale or exchange of trust property between the trusts, if both of the following requirements are met: [¶] (1) The sale or exchange is fair and reasonable with respect to the beneficiaries of both trusts. [¶] (2) The trustee gives to the beneficiaries of both trusts notice of all material facts related to the sale or exchange that the trustee knows or should know." Section 16002, subdivision (b) protects a trustee from violating section 16002, subdivision (a), the trustee's duty to administer the trust solely for the interests of the beneficiaries.
The trial court found Eleanor never gave the beneficiaries, except for Greg, notice of the 2003 transaction. They learned of the sale after her death in 2007. Therefore, Greg was not entitled to relief under section 16002, subdivision (b).
Greg argues the court erred, since respondents had "ample opportunity to reverse the 2003 Transaction by showing it was substantively unfair or inappropriate [and] the notice given after Eleanor died was timely . . . ." We disagree. Section 16002, subdivision (b) does not state that notice is waived if the transaction is still voidable. Greg's reading of the notice instruction strains credulity; such a reading exempts a trustee from any notice to the affected beneficiaries so long as beneficiaries can sometime in the future undo the transaction when it finally comes to light. The trial court did not err in finding the requirements of section 16002, subdivision (b) were not met.
Section 16460 applies to the claims asserted here by respondents. Subdivision (a)(1) of that section deals with the situation where a claim for breach of trust is disclosed in a final account or other written report provided to the beneficiary. Subdivision (a)(2) of section 16460 prescribes the limitations period when the existence of a claim for breach of trust is not disclosed in a final account or other written report provided a beneficiary. In this event, a claim for breach of trust must be commenced "within three years after the beneficiary discovered, or reasonably should have discovered, the subject of the claim."
A cause of action for breach of trust accrues when the beneficiary has the required knowledge concerning the trusts in which the beneficiary has an interest; knowledge about the assets of other identical trusts benefitting relatives is legally irrelevant. (Noggle v. Bank of America (1999) 70 Cal.App.4th 853, 860.)
Greg argues his sister Ronica's claim is time barred under section 16460 and that the court's findings on this point are ambiguous. There is no ambiguity, only a rejection of the conclusions Greg would wish the court to draw; the trial court's findings are clear and are supported by substantial evidence.
The court observed that Ronica overheard Eleanor saying she was changing the trust so that Ronica and Greg would be the only beneficiaries to the real property, but Ronica had no knowledge of how this would be accomplished. According to the trial court, Ronica "knew generally of her mother's intentions with the real property, and was told her own interest was not affected." The trial court concluded that because Ronica understood her interest was not affected, she did not have knowledge of a claim for breach of trust, and therefore the statute of limitations did not begin to run. We agree.
Greg argues he presented evidence at trial that the 2003 transaction was discussed at Eleanor's house in Ronica's presence on multiple occasions outside the limitations period. Therefore, Greg claims, even though Ronica did not know all the details, her general knowledge was sufficient for the limitations period to begin to run.
We review the trial court's findings of fact pursuant to the sufficiency of evidence standard. Here, the court heard all the testimony at trial and determined that despite having some general knowledge of the transaction, Ronica was under no duty to inquire further. In determining whether sufficient evidence supports the finding, we indulge all inferences in support of the judgment, regardless of conflicting evidence. (McMahon v. Albany Unified School Dist. (2002) 104 Cal.App.4th 1275, 1282.)
Greg argues the trial court erred in denying him leave to amend to allege a statute of limitations defense under Code of Civil Procedure section 366.2. Section 366.2 states: "If a person against whom an action may be brought on a liability of the person, whether arising in contract, tort, or otherwise, and whether accrued or not accrued, dies before the expiration of the applicable limitations period, and the cause of action survives, an action may be commenced within one year after the date of death, and the limitations period that would have been applicable does not apply."
However, Greg attempted to raise the statute of limitations defense only after the close of evidence at trial. He did not raise it in his pleadings or during trial.
The court considered Greg's belated attempt to raise the defense and concluded: "He seeks leave to raise a new defense . . . section 366.2. He argues Eleanor died August 20, 2007 and the claim against her for the transfer of the real property out of subtrust B was not raised until the Petition was amended on August 28, 2008 and therefore exceeds the one year statute of limitations. The Court denies the request to amend the Objection at this late date. The Court finds amendment after close of evidence would work substantial prejudice on Petitioners. The one year plus nine day delay of Petitioners was not in issue at the trial and was not addressed by either side. Permitting the amendment now would foreclose the presentation evidence regarding the delay, including any equitable bar to the statute's enforcement."
As Greg concedes, we review a denial of leave to amend for an abuse of discretion. (Berman v. Bromberg (1997) 56 Cal.App.4th 936, 945.) However, Greg argues section 1043 rendered his request following the close of trial timely. Section 1043, subdivision (a) states that an "interested person may appear and make a response or objection in writing at or before the hearing." Greg contends "at or before the hearing" means prior to entry of judgment, but offers no support for such a construction. Section 1043 does not upend or cancel out the basic rules of pleading; it simply gives the probate court authority to hear and make orders on all matters at issue. Section 1043 does not require a trial court to entertain an untimely pleaded defense.
The trial court found Greg's belated attempt to assert Code of Civil Procedure section 366.2 prejudicial to respondents. We find no abuse of discretion.
There remains the question of whether the court could order the removal of Greg as trustee or surcharge him in light of the parties' written stipulation appearing to remove those matters from consideration.
As we have noted, prior to trial the parties entered into a stipulation in which they agreed that respondents' claims and legal theories "concern and are limited to the actions of the original Trustee, Eleanor Rausser"; "there are no claims currently pending against Greg Rausser in his individual capacity, either as beneficiary or trustee"; "that in the trial of this matter, [respondents] will not seek to surcharge" Greg; and that, in light of the foregoing, [Greg's] personal counsel will not appear, present evidence or argue in the trial of the matter."
The trial court's findings and orders largely fall within the restrictions imposed by the parties' stipulation. As permitted by the stipulation, the trial court received evidence regarding Eleanor's actions and found that she improperly sought to deny respondents their inheritance and to favor Greg, engaged in self-dealing, and did not act reasonably and in good faith in the purchase of property by Trust A from Trust B. Rescission, setting aside the transaction, reconveyance of the property, and an accounting for income received were appropriately ordered.
However, the trial court went further, removing Greg as trustee and surcharging him for all disbursements from the trusts relating to his defense of the invalid amendments and the rescinded sale. This appears to be at odds with the stipulation that "there are no claims currently pending against Greg Rausser in his individual capacity, either as beneficiary or trustee," and respondents' agreement "that in the trial of this matter, they will not seek to surcharge" Greg. And Greg so argues.
Greg's removal as trustee also appears to conflict with the trial court's statements at trial. Here, the following exchange ensued after Greg's counsel, Mr. Galvin, objected to a line of questioning pursued by counsel for respondents:
"MR. GALVIN: Your Honor, if I can state my objection.
"THE COURT: Yes, sure.
"MR. GALVIN: We filed on April 9th a stipulation regarding the issues in dispute here, and so the Court should have that stipulation, and in fact, I believe there's a signature line for the judge. But a stipulation was signed by both myself and Mr. Bader, and I would ask that the Court sign it, as well. The stipulation says that Petitioners' claims and legal theories as framed by the petition on file herein concern and are limited to the actions of the original trustee, Eleanor Rausser.
"THE COURT: All right, yes.
"MR. GALVIN: And it goes on to say that the parties agree that there are no claims currently pending against Greg Rausser in his individual capacity either as beneficiary or as trustee. So on the basis of that stipulation, Mr. Frenznick, who's Mr. Rausser's personal counsel, decided not to appear at trial, and now it sounds to me like Bader is trying to go outside the scope of that stipulation.
"MR. BADER: I'm only asking these questions relative to the -- whether or not Greg should be removed as trustee. I understand what the Court's saying, and I --
"THE COURT: You know what? I'm going to use the Court's heavy hand at this moment and bifurcate that issue.
"MR. BADER: Oh. Very well, Your Honor.
"THE COURT: Okay. So that you don't get to go into it isn't going to prejudice you.
"MR. BADER: Thank you, Your Honor.
"THE COURT: Okay. The Court bifurcates the issue of replacement of the current trustee of Trust B, and we're going to proceed not on that issue."
It is difficult to reconcile the trial court's removal and surcharge orders with the parties' stipulation and with the trial court's "bifurcation" order during trial. Respondents make no effort to assist in resolving this apparent conflict; their brief is silent on the issue. In written objections to the trial court's proposed statement of decision, Greg sought an explanation or a modification of the decision. The trial court did not acknowledge the objection. We are thus left to wonder as to the proper interpretation and application of the stipulation.
It is manifestly unfair to allow trial of a matter to proceed with assurances that certain issues and orders are beyond the scope of the trial, and then enter orders that do what the parties agreed would not be done.
Under the circumstances, we shall strike those portions of the court's order that remove Greg as trustee and surcharge him for all disbursements from the Trusts relating to his defense of the invalid amendments and the rescinded sale. As to replacement of Greg as trustee of Trust B, the court expressly ruled, without objection, that the issue was bifurcated from the issues then before the court. As to both removal of Greg as trustee and surcharge of Greg for improper expenditure of Trust funds, the parties appear to have agreed that neither removal nor surcharge were to be considered. On remand the court must determine whether the stipulation forecloses further consideration of surcharge or removal.
The portions of the judgment removing Greg as trustee of Trusts B and C, appointing Gary Rausser and Romilda Nimmo as successor trustees, and surcharging Gary for disbursements from Trusts B and C are reversed and remanded for new trial, at which time the court shall determine the import of the parties' stipulation filed April 9, 2009. In all other respects, the judgment is affirmed. Each side shall bear its own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(3).)
We concur: BLEASE , J. HULL , J.