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Estate of Bonzi

California Court of Appeals, Fifth District

May 30, 2013

Estate of RUDY BONZI, Deceased.
v.
THE PEOPLE ex rel. CALIFORNIA REGIONAL WATER QUALITY CONTROL BOARD, CENTRAL VALLEY REGION, et al., Objectors and Respondents. JAMES BONZI, as Executor, etc., et al., Petitioners and Appellants,

APPEAL from an order of the Superior Court of Stanislaus County No. 33869. Hurl W. Johnson, Judge.

Thomas J. O’Keefe and Everett L. Skillman for Petitioners and Appellants.

Kamala D. Harris, Attorney General, and Randy L. Barrow, Deputy Attorney General, for Objectors and Respondents.

OPINION

Gomes, J.

James Bonzi, executor of the estate of Rudy Bonzi, filed a petition for an order confirming the sale of real property that was part of the estate, which has been in probate since Rudy Bonzi’s death in 1991. The People of the State of California ex rel. California Regional Water Quality Control Board, Central Valley Region (RWB), and ex rel. California Department of Resources Recycling and Recovery (CalRecycle) (collectively respondents), filed an objection to that petition. Respondents contended the net proceeds of the sale of the property were subject to a stipulated court order that required real property jointly owned by Rudy and Mary Bonzi be sold to satisfy the Bonzis’ statutory obligation to remediate and close a solid waste landfill they owned and operated. The trial court agreed with respondents and found the sale proceeds subject to payment under that court order.

James Bonzi, as executor for the estate of Rudy Bonzi, and Thad Bettencourt, as executor of the estate of Mary Bonzi and trustee of the 2007 Mary Bonzi Novation General Trust (collectively appellants), appeal, contending (1) respondents did not have standing to enforce the stipulated court order, (2) respondents are barred from enforcing the order because they failed to file a creditor’s claim as required by Probate Code section 9100, [1] and (3) there is insufficient evidence to support the trial court’s finding of estoppel. Finding no merit in appellants’ assertions of error, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Rudy and Mary Bonzi were married in 1940.[2] Beginning in 1967, they jointly owned and operated a 128-acre licensed solid waste disposal facility, the Bonzi Sanitation Landfill, in Modesto (the Bonzi Landfill). The Bonzi Landfill was operated by Bonzi Sanitation Landfill, a general partnership (Bonzi Sanitation), on property owned by Ma-Ru Holding Company, Inc., a California corporation (Ma-Ru). Rudy and Mary were the sole shareholders of Ma-Ru and the sole partners of Bonzi Sanitation.

The Bonzi Landfill is subject to regulation by the RWB, a state agency that is (1) authorized and responsible for ensuring the prevention and abatement of water pollution and nuisance within the Central Valley Region, including Stanislaus County, and (2) authorized to issue orders and request the filing of civil actions to carry out this responsibility. (Wat. Code, §§ 175, 13200, 13201, 13225, 13240 et seq., 13300 et seq.) As early as 1984, groundwater pollution was discovered at the Bonzi Landfill; the RWB began issuing a series of administrative orders which required the evaluation and remediation of the contamination, including Cease and Desist Order No. 84-153, Cleanup and Abatement Order No. 89-185, and Waste Discharge Requirements Order No. 98-093. The Bonzi Landfill was also subject to regulation by CalRecycle and its predecessor, the California Integrated Waste Management Board (CIWMB). CalRecycle is a state agency that administers programs formerly managed by CIWMB, including regulatory oversight of solid waste landfills. (Pub. Resources Code, § 40000 et seq.)

All landfills in California, including the Bonzi Landfill, are under state mandate to create and fund plans for their ultimate closure and post-closure maintenance. (Pub. Resources Code, §§ 43500, 43501, subd. (a).) To ensure funds will be available to perform these activities and pay for corrective actions, a landfill owner or operator is required to establish a trust fund, or an equivalent financial arrangement acceptable to CalRecycle, commonly referred to as “financial assurances.” (Pub. Resources Code, § 43501, subd. (a)(1)(B); Cal. Code Regs., tit. 27, § 22225, subd. (a)(2).) The Legislature imposed the financial assurances requirement to achieve “the long-term protection of air, water, and land from pollution due to the disposal of solid waste.” (Pub. Resources Code, § 43500.) In accordance with the statutory financial assurance requirements, Rudy and Mary established and began funding a landfill trust account for the Bonzi Landfill (the Landfill Trust). As of 1990, the Landfill Trust was being held by Union Safe Deposit Bank, Stockton, California, as Trustee.

The minimum fund balance is calculated and increased annually; the fund must be fully funded by the time the disposal facility receives its last shipment of waste. (Cal. Code Regs., tit. 27, § 22225, subd. (a).) CalRecycle may obtain injunctive relief to compel the owner or operator to provide the required financial assurances. (Pub. Resources Code, § 45014, subd. (b).) The operator may request CalRecycle release disbursements from the trust fund to pay for closure, postclosure maintenance, or corrective action activities, in advance of those activities or as reimbursement for activities completed. (Cal. Code Regs., tit. 27, § 22234, subd. (a).) The RWB is authorized to use financial assurance funds if the owner or operator has failed to implement the required closure, post-closure, or corrective activities. (Pub. Resources Code, § 43601, subd. (c); Cal. Code Regs., tit. 27, § 22234, subds. (c) & (d).) If the trust fund has excess funds, the operator may request the excess be returned to it. (Cal. Code Regs., tit. 27, § 22240, subd. (c).)

The Dissolution Action

In 1986, Mary filed a petition to dissolve her marriage to Rudy in Stanislaus County Superior Court, case number 212118, which was later renumbered to 83455 (the Dissolution Action). A major concern of both parties in the Dissolution Action was their joint obligation to fund the cleanup and closure of the Bonzi Landfill. To address this issue, Rudy proposed selling their jointly owned real property to fund the Landfill Trust. At that time, estimated closure and post-closure costs that needed to be funded totaled approximately $7.6 million; the Landfill Trust’s reserve, however, was only $220, 000. Mary opposed this plan, asserting that the law did not require the total amount of the closure and post-closure costs be deposited in full, and the funding of these costs should be treated as any other community obligation.

In November 1991, an order was filed in the Dissolution Action entitled “Final Tentative Decision” (the 1991 Order). The 1991 Order incorporated stipulations between the Bonzis that had been entered into the clerk’s minutes during the dissolution trial. Among other things, the Bonzis stipulated that they would each have a 50 percent ownership interest in the Bonzi businesses, including the Bonzi Landfill, and an exhibit attached to the 1991 Order would state how the parties would be required to assure there would be funds available to satisfy the remediation and closure costs. The Bonzis acknowledged in the 1991 Order that ”[g]overnmental regulations have placed husband and wife in the position of having to fund approximately $8, 000, 000 in the ensuing years to remediate ground water contamination and to close the dump. As conceded by both parties, this as a practical matter requires them to continue with joint ownership of those businesses, long past their matrimonial separation. This has further led both parties to further stipulate that they will remain joint owners of the remainder of their businesses.”

The exhibit attached to the 1991 Order, labeled Exhibit A, is entitled “Proposed Order Re: Groundwater Remediation, Closure, & Post-Closure of the Bonzi San[i]tation Landfill” (the Proposed Remediation Order). The Proposed Remediation Order provides that: (1) the Bonzis, including their agents and representatives, “shall comply with any mandates/directives of the appropriate county, state, and federal governmental agencies pertaining to the groundwater remediation, closure, and post-closure” of the Bonzi Landfill; (2) obligations relating to groundwater remediation, closure and post-closure are community in nature; (3) the Bonzis are to fund these obligations first from revenues from their jointly-owned waste disposal business and, if those funds are insufficient, they are to take the steps necessary to encumber or sell real property they own together as tenants in common; (4) to ensure there are sufficient assets to fund these obligations, the Bonzis may not sell or transfer any of their interests in jointly owned real property or the waste disposal business without court approval; (5) the court retained jurisdiction over the subject matter to ensure compliance or make additional orders; and (6) the Bonzis shall record the Proposed Remediation Order with the county recorders in San Joaquin, Stanislaus, Merced and Tuolumne Counties, in order to lien their jointly owned real property interests.

When the 1991 Order was entered, the jointly owned real property subject to the order included property at 2066 Morgan Road, Ceres, California (Morgan Property) and 2960 Farrar Avenue, Modesto, California (Farrar Property).

The Administration of Rudy’s Estate

Rudy died on December 16, 1991, one month after marrying Lynda Clark Bonzi. The following day, a petition to administer Rudy’s will was filed in Stanislaus County Superior Court; letters of administration were issued on December 18, 1991. In 1996, the court appointed Rudy’s son, James Bonzi, as a co-executor of Rudy’s estate; James was appointed the sole executor in December 2008. Rudy’s estate remains under the administration of the probate division of the Stanislaus County Superior Court in case number 33869 (the Probate Case).[3]

Rudy’s estate continued to fund the Landfill Trust. For example, in February 1994, the co-executor of Rudy’s estate stated in a letter to the financial assurance section of the CIWMB that he was sending additional money for the Landfill Trust and that the court had cleared the way for funding the “needed expenses” for the “Landfill Closure Account.”

The 1997 Remediation Order

In August 1997, James and his co-executor filed their attorney’s declaration in the Dissolution Action. The attorney, Kenneth Mello, stated he did not believe the 1991 Order had been entered as a judgment, and the Proposed Remediation Order attached to the 1991 Order was not recorded in the counties listed therein. Mello asked the court to sign the Proposed Remediation Order so it could be recorded.

In response, on August 19, 1997, the court issued an “Order Re: Groundwater Remediation, Closure, and Post Closure of the Bonzi Sanitation Landfill” (the Remediation Order), which contains the exact same provisions as the Proposed Remediation Order. The court entered the Remediation Order nunc pro tunc as of November 15, 1991. The Remediation Order was recorded with the Stanislaus County Recorder that month.[4]

After this, Mello acknowledged in a letter to an escrow officer that both Mary and Rudy’s estate were obligated to fund the financial assurance requirements under the Remediation Order, and half of the proceeds from the recent sale of property was subject to the Remediation Order and should be paid to the Bonzi Landfill business for funding the Landfill Trust.

The 2004 Disputes Regarding Funding of the Landfill Trust

In 2004, a dispute arose over the funding of the Landfill Trust. In a January 2004 letter, Mary’s attorney asked Mary’s sons, James and Steve Bonzi, for an accounting of property that Mary jointly owned with Rudy’s estate, which had been sold, the proceeds of which she understood had been deposited into the Landfill Trust. Mary’s attorney stated that Mary was requesting exact dollar amounts of her share of these properties and Mary intended to “cooperate with any sale of assets in order to fund the landfill cleanup recovery.”

In February 2004, James filed a petition in the Probate Case, in which he asked that proceeds from the sale of properties owned by Mary and Rudy’s estate be paid into the Landfill Trust to offset the deficiency in that account and to comply with CIWMB requirements. James also asked the court to order the parties to comply with the Remediation Order. In addition, James filed an amendment to a petition for an order confirming the sale of real property, in which he requested that the sellers abide by the terms of the Remediation Order, “thereby ensuring that the proceeds of the sale due to the sellers herein be made payable to the Bonzi Sanitation Landfill Closure Account.”

In June 2004, James stated in his supporting declaration that (1) he believed it was clear from the Remediation Order that the court intended both parties to provide funds and security for the landfill cleanup, (2) in conformity with that order, the court previously had ordered the proceeds from the sales of the interest of Rudy’s estate in jointly held properties be held in a blocked account pending determination of whether the proceeds should be applied to the clean-up, and (3) because Mary’s property interests were subject to the same order, he asked for an order directing Mary to deposit the proceeds of the sale of two properties, and of any future sales of jointly held properties, into a blocked account. In a ...


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