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Pizarro v. Reynoso

California Court of Appeals, Third District, Sacramento

March 28, 2017

ANTHONY PIZARRO, Plaintiff and Appellant,
MELISSA P. REYNOSO, as Trustee, etc., Defendant and Respondent KAREN BARTHOLOMEW, Defendant and Appellant; MIGUEL REYNOSO, Real Party in Interest and Respondent.

          Prior 1/18/17 opinion vacated

         APPEAL from a judgment of the Superior Court of Sacramento County, No. 34-2012-00116836-PR-TR-FRC Matthew J. Gary, Judge. Affirmed in part and reversed in part with directions.

          William P. Roscoe, III for Plaintiff and Appellant Anthony Pizarro.

          D.B. Hill and Dennis B. Hill for Defendant and Appellant Karen Bartholomew.

          Law Offices of Jerilyn Paik, Jerilyn Paik, and Stephanie R. Poston for Defendant and Respondent.

          Miguel Reynoso, in pro. per., for Real Party in Interest and Respondent.

          NICHOLSON, Acting P. J.

         This acrimonious family squabble erupted over the property of the deceased patriarch and spilled over into the courts. The patriarch-settlor appointed defendant Melissa P. Reynoso (a granddaughter of the settlor) as trustee. In this proceeding, the trial court determined Reynoso was the most reliable and credible of the family members. The trial court found that other family members were not credible.

         Reynoso sold real property of the trust to Karen Bartholomew (a daughter of the settlor). Plaintiff Anthony Pizarro (a grandson of the settlor) filed a petition for relief against Reynoso concerning the sale of the real property. The court denied the petition and ordered Pizarro and others to pay the trust's attorney fees and costs.

         On appeal, Pizarro contends the trial court erred in finding that Reynoso acted properly as trustee. However, he fails to make a focused, organized, and coherent argument for why we must reverse the order. We therefore conclude he forfeited the argument.

         Also on appeal, Pizarro and Bartholomew contend that the award of attorney fees and costs against them was improper. We conclude that the attorney fees and costs were properly and lawfully imposed under the trial court's equitable power over the trust, except to the extent the trial court made Pizarro and Bartholomew personally liable for attorney fees and costs, rather than liable solely from their shares of the trust assets.

         We therefore reverse the award of attorney fees and costs to the extent it imposed personal liability. In all other respects, we affirm.


         Facts and Procedure

         Willis Earl Jensen died in 2011, leaving his property, including real property, in a trust. His children included plaintiff Keith Jensen (who is not a party to this appeal) and defendant and appellant Karen Bartholomew. Bartholomew has two children: plaintiff and appellant Pizarro and defendant and respondent Reynoso. Reynoso was named trustee.

         The real property at issue in this proceeding is located on El Verano Avenue in Elverta. Reynoso sold the property to Bartholomew, as permitted by the trust.

         Pizarro and Jensen filed petitions under Probate Code section 17200 against defendants Reynoso (as trustee) and Bartholomew. Principally, the petitions alleged that Reynoso breached her duties as trustee and that the sale of the property to Bartholomew must be set aside. After trial, the court denied the petitions and awarded attorney fees and costs, which award we discuss in more detail later.

         Statement of Decision

         Because there remains on appeal a degree of dispute concerning the facts, we relate the statement of decision, which is the fact finder's conclusion concerning the facts. We quote (without quotation marks) the main body of the statement of decision:

         1. The principal controverted issue presented herein is whether the sale of the property located at 9021 El Verano Avenue, Elverta, CA, by the Trustee MELISSA REYNOSO, to KAREN BARTHOLOMEW, was a “sham sale” as alleged by Petitioners ANTHONY PIZARRO and KEITH JENSEN. It was not. The court finds that the sale was a valid sale and made in good faith by the Trustee REYNOSO to the beneficiary KAREN BARTHOLOMEW.

         2. The two primary witnesses to the transactions involved in the sale were MELISSA REYNOSO and KAREN BARTHOLOMEW. The court finds MELISSA REYNOSO'S testimony to be credible and convincing. The court finds KAREN BARTHOLOMEW'S testimony to be, in large part, incredible and unconvincing.

         3. On or about February 14, 2010, decedent and Settlor, Willis Earl Jensen, executed his Will. On or about February 16, 2010, he executed his Living Trust. For reasons that became obvious at trial, Mr. Jensen appointed his granddaughter, Trustee MELISSA REYNOSO, as Successor Trustee to succeed him at his death, rather than appointing any of his children or other grandchildren.

         4. The Living Trust, by reference to the Last Will and Testament of Willis Earl Jensen executed February 14, 2010, states, “Property located at 9021 El Verano Avenue, Elverta, Ca. 95626 (parcel #202-0020-012-0000) to be sold to (My Daughter) Karen Bartholomew or any of her children at 100k below appraised value. If Karen or her children are unable to purchase property then property to be sold for fair market value. After all debts and fees have been satisfied monies are to be equally divided to my children, except as noted; If any of my children are deceased then their share gets equally divided among their children and Marilyn Kimbrell's share gets equally divided among her children.”

         5. The El Verano property appraised for $365, 000. Therefore, the property could be sold to either BARTHOLOMEW, REYNOSO, or PIZARRO for $265, 000. The decision of who to sell the property to was left to Trustee REYNOSO.

         6. Settlor's intent was for either BARTHOLOMEW, or REYNOSO, or PIZARRO, to buy the property. The decision of who to sell it to was left to Trustee REYNOSO.

         7. Pursuant to the terms of the Trust, Trustee REYNOSO could have sold the El Verano property directly from the Trust to herself. (Estate of Carrie Hazeltine Thompson (1958) 50 Cal.2d 613, 616.) For reasons stated in her testimony, she did not. Instead, she sold the property to her mother, BARTHOLOMEW, for $265, 000.

         8. Prior to sale, Trustee REYNOSO gave proper Notice(s)[1] as required by law.

         9. Prior to the sale, BARTHOLOMEW represented orally, and by confirming letter from her counsel, that she expected a personal injury settlement to come in that would be in excess of the $265, 000 purchase price. Trustee REYNOSO agreed to help her mother BARTHOLOMEW purchase the property. Trustee REYNOSO and her husband, Miguel, applied for a loan from Wells Fargo Bank, which loan was approved. BARTHOLOMEW would repay REYNOSO when her personal injury settlement monies came in. The sale transactions included the following:

         a. On October 23, 2012, Trustee REYNOSO executed a Grant Deed(s) transferring El Verano from the Trust to herself and her husband Miguel. Concurrently, she executed the corresponding Note and Deed(s) of Trust to WFB [Wells Fargo Bank]. This was done because the Wells Fargo Loan was not a Trust obligation; it was an individual loan to REYNOSO and her husband.

         b. The WFB loan closed on or about October 23, 2012, and the loan funds of approximately $262, 000[2] were immediately deposited into Trust on behalf of BARTHOLOMEW. The Trust was whole.

         c. On October 25, 2012, BARTHOLOMEW executed her Promissory Note for $265, 000 to REYNOSO and her husband Miguel. This was consistent with the agreement REYNOSO and BARTHOLOMEW had by which REYNOSO would help BARTHOLOMEW purchase the property by obtaining a loan in REYNOSO's name (because BARTHOLOMEW could not qualify for a loan on her own) and then BARTHOLOMEW would pay REYNOSO back when BARTHOLOMEW'S personal injury settlement monies came in.

         d. On October 26, 2012, after the WFB loan proceeds were secured and placed in the Trust, REYNOSO and her husband Miguel executed Trust Transfer Deed(s) transferring the property from themselves back to Trustee REYNOSO.

         e. On October 26, 2012, concurrent with the Trust Transfer Deed(s) identified in d. above, Trustee REYNOSO executed a Trust Transfer Deed(s) transferring the property from the Trust to BARTHOLOMEW.

         10. These transactions occurring, for all practical purposes, concurrently, constitute a valid sale of the El Verano property from the Trustee to BARTHOLOMEW, all in accordance with the provisions of the Trust. There is nothing “sham” about this transaction as Petitioners PIZARRO and JENSEN allege. The Trust received the net proceeds of sale of approximately $262, 000 and title to the property passed from the Trust to BARTHOLOMEW. That is a “sale”. The proceeds of the sale remain in the Trust today.

         11. From the point of sale to BARTHOLOMEW, the El Verano property was no long[er] Trust property. The cash from the sale now sitting in the Trust is Trust property. What occurred between BARTHOLOMEW and REYNOSO thereafter is “outside” of the ...

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