United States District Court, E.D. California
MEMORANDUM DECISION AND ORDER GRANTING DEFEDANTS'
MOTIONS TO DISMISS (Docs. 40, 42, 43, 44, 45, 46) MEMORANDUM
DECISION AND ORDER DENYING BEVERLY PELLEGRINI'S REQUEST
FOR INTERVENTION (Doc. 15)
Lawrence J. O'Neill, UNITED STATES CHIEF DISTRICT JUDGE
before the Court are six motions to dismiss the complaint
filed by Defendants Fresno County Superior Court
("FCSC") (Docs. 40, 42); Fresno County (erroneously
sued as Fresno County Counsel representing Joshua Cochron and
Fresno County Public Guardian (Doc. 43); UBS Financial
Services ("UBS") and The Bank of New York Mellon
("BNY") (Doc. 44); Weintraub Genshlea Chediak Tobin
& Tobin (erroneously sued as and herein referred to as
"Weintraub Tobin") (Doc. 45); and Comerica, Inc.
("Comerica") (Doc. 46). Also pending is Beverly
Pellegrini's ("Beverly") request to intervene.
reviewed the parties' briefs and all supporting
documents, the Court found these motions suitable for
decision without oral argument, and the hearing set for April
10, 2017, was vacated. For the reasons set forth below,
Defendants' motions to dismiss are GRANTED, and Beverly
Pellegrini's motion for intervention is DENIED.
FACTUAL AND PROCEDURAL BACKGROUND
case stems from a trust administration dispute between
Lillian Pellegrini ("Lillian") and her daughter,
Marleen Merchant ("Marleen"), which was decided in
a probate proceeding conducted by the FCSC, Case No.
10CEPR00683. Lillian appealed the FCSC judgment, and the
Fifth District Court of Appeal (the "Fifth DCA")
affirmed the FCSC judgment on October 31, 2016. Lillian filed
a petition for review in the California Supreme Court, which
was summarily denied on January 11, 2017. The FCSC judgment
is now final.
The 1999 Trust
John Pellegrini (Angelo) and Lillian, as husband and wife,
executed what the Fifth DCA termed a "fairly standard
revocable living trust" on June 18, 1999. As described
by the Fifth DCA,
[t]he Trust states that Angelo and Lillian (also referred to
as the trustors) have two children - namely, their daughters
Beverly Jean Pellegrini (Beverly) and Marleen - who would
receive the remainder of the Trust estate in equal shares
after Angelo and Lillian died. Angelo and Lillian, during
their joint lifetimes, were the co-trustees of the Trust.
The Trust provides that on the death of the first spouse, the
surviving spouse would continue to act as trustee. However,
at that time, the Trust assets were supposed to be divided
into separate trusts. As the Trust clearly states: "On
the death of the Deceased Spouse, the Trustee shall divide
the Trust Estate . . . into three separate trusts, designated
as the 'Survivor's Trust, ' the 'Marital
Trust, ' and the 'Family Trust.'" Here,
Angelo died on March 27, 2008, at which time Lillian became
the sole trustee and, according to the above language, was
obligated to divide the Trust estate into separate trusts as
provided in the Trust. . . .
On the Subject of amendment or revocation, the Trust provides
that during their joint lifetimes, Angelo and Lillian were
free to revoke or amend the trust. However, "[o]n the
death of the Deceased Spouse, the Surviving Spouse shall have
the power to amend, revoke or terminate the Survivor's
Trust, but the Marital Trust or the Family Trust may not be
amended, revoked, or terminated on the death of the Deceased
Merchant v. Pellegrini, No. F072656, 2016 WL
6426389, at * 1-2 (Oct. 31, 2016)
complaint before this Court, Lillian alleges a different
operation of the 1999 Trust. After inheriting money from
Lillian's siblings Mike and Gladyce, Lillian and her
husband Angelo created the Angelo Pellegrini and Lillian
Dorothy Pellegrini Revocable Living Trust on June 18, 1999
(the "1999 Trust"). (Cmplt., p. 62.) In creating this
Trust and "tax subtrusts, " if either spouse
continued to live while the federal estate tax exemption was
being increased, the tax subtrusts would not be necessary and
would not be funded. (Cmplt., p. 12:17-20.) By the
Trust's terms, all assets contributed to the trust would
retain their same character and ownership interests and the
settlor contributing the property would retain control of
that property during his/her lifetime. Moreover, the Trust
would remain subject to revocation during the survivorship
period by the settlor contributing the property. (Cmplt., p.
12:21-23, p. 62, Exh. 3.) Lillian contributed her inherited
separate property which comprised nearly all assets held in
the Trust account. Other financial assets contributed to the
Trust had been titled in joint tenancy and were transferred.
The only other asset that was transferred to the Trust was
residential property held by Angelo and Lillian as joint
2004, Angelo and Lillian amended the distribution clause of
the Family Trust on the surviving spouse's death
permitting a life estate to Beverly in the Trust's
residential property, if then unsold. (Cmplt., p. 63, Exh.
3.) Two amendments "left the Family Trust void of any
beneficiary designation, rendering the Family Trust a nullity
and an invalid trust." (Id.)
March 2008, Angelo died. Pursuant to the Trust terms, Lillian
maintained unrestrained power of sale, and she sold the San
Francisco real property within six months of Angelo's
death, distributing the proceedings to her Survivor's
Trust. Shortly after this sale in 2008, Lillian revoked the
Trust. (Cmplt., p. 63, Exh. 3.) Lillian also claims that in
2008, a Marital and Survivor's trust were funded, which
she claims implied that the Family Trust was not intended to
be funded on the first spouse's death. (Cmplt., p.
14:5-11.) Lillian asserts subsequent amendments to the 1999
Trust were made in 2010, which rendered the Family Trust
"void and a nullity for lack of any beneficiary
designation on the Surviving Settlor's eventual
death." (Cmplt., p. 16:17-20.)
2010, Marleen successfully petitioned the FCSC for an order
compelling Lillian to provide an accounting of assets as of
the time of Angelo's death and to provide information on
how the assets were allocated between the Survivor's
Trust, the Marital Trust, and the Family Trust. Lillian filed
a statement of trust assets as of March 27, 2008. Among the
assets purportedly allocated to the Family Trust was one-half
of the $800, 000 value of a San Francisco residence. The
total value of assets that Lillian, through her attorney,
represented to have been allocated to the Family Trust was
$544, 386.91. In 2011, these representations regarding the
Family Trust were repudiated by Lillian in a letter written
by her in response to a request by Marleen's attorney for
further information and accounting concerning the Family
Trust. Lillian stated that there were no assets in the Family
Trust and no assets were ever allocated or distributed to a
based on this letter, in July 2012, Marleen filed a petition
to remove Lillian as trustee, appoint a successor trustee,
and obtain other relief. On January 13, 2014, Marleen filed
an additional petition seeking the recovery of property
belonging to the Family Trust, for an award of double damages
under Probate Code § 859, and for an award of
17, 2014, the FCSC granted a motion to bifurcate the trial
and determined two issues would be tried first: (1) whether
the Family Trust was required to be funded after Angelo's
death, and (2) whether the title to real property in San
Francisco maintained its joint tenancy characterization after
being transferred into the 1999 Trust. (See Doc.
44-2, pp. 170-72, Exh. 16.) On January 14, 2015, a trial was
conducted on these two issues, and the FCSC determined by
clear and convincing evidence that the Family Trust was
required to be funded following the death of Angelo with a
minimum of $544, 386.91. (Id.) The FCSC also found
the San Francisco real property did not maintain its joint
tenancy characterization after being transferred to the 1999
2015, after holding a hearing, the trial court ordered the
removal of Lillian as trustee of the Family Trust for failing
to fund it after Angelo's death, and it appointed the
Fresno County Public Guardian as the successor trustee. (Doc.
44-2, pp. 42-43, Exh. 2.) The May 2015 order also directed
Lillian to fund the Family Trust in the amount of $544,
386.91, and to pay this amount to the Public Guardian.
(Id.) As to all remaining issues, a one-day court
trial was set for August 25, 2015.
trial of the remaining issues in August 2015, the trial court
found that Lillian wrongfully and in bad faith took assets
belonging to the Family Trust, and double damages were
awarded pursuant to California Probate Code § 859 which
Lillian was ordered to pay to the Public Guardian. (Doc.
44-2, pp. 45-47, Exh. 3.) Lillian was also ordered to pay
Marleen's attorney's fees through the Public
Guardian. In total, Lillian was ordered to pay $1, 528,
271.44 to the Public Guardian. (Id.)
October 14, 2015, Lillian filed a document in the U.S.
District Court for the Eastern District of California
entitled "Request for Transfer to Federal Court 28
U.S.C. § 1441, " which was construed as a notice of
removal of the trial court proceedings over which this Court
determined it had no jurisdiction; the case was remanded to
the FCSC sua sponte less than one week later. (Doc.
44-2, pp. 49-84, Exh. 4; 1:15-cv-01564-LJO-EPG, Doc. 1.)
October 19, 2015, the Public Guardian filed an ex parte
application seeking to enforce FCSC's order requiring
Lillian to fund the Family Trust and pay Marleen's
attorney's fees through the Public Guardian and to freeze
Lillian's UBS accounts. (Doc. 44-2, pp. 159-60, Exh. 13.)
October 20, 2015, FCSC granted the Public Guardian's
motion, froze Lillian's accounts at UBS until further
order, and required UBS to transfer the sum of $1, 528,
271.44 to the Public Guardian. (Doc. 44-2, pp. 156-57, Exh.
12.) Lillian then appealed the trial court's orders to
the Fifth DCA on November 15, 2015. (Doc. 44-2, p. 93,
Exhibit 6). On November 16, 2015, FCSC issued an ex parte
order granting full authority to the Public Guardian to
liquidate assets from Lillian's UBS accounts. (Doc. 44-2,
p. 162 (Exh. 14).)
Proceedings Before the California Fifth District Court of
November 16, 2015, Lilian filed a "Request for Writ of
Supersedeas , " and the Fifth DCA issued a temporary
stay of FCSC's October 20, 2015, and November 16, 2015,
ex parte orders in the underlying case. (Doc. 44-2, p. 93
(Exhibit 6).) On December 4, 2015, the Fifth DCA issued an
order clarifying FCSC's October 20, 2015, ex parte order
"freezing accounts held in the name of Lillian Dorothy
Pellegrini at UBS Financial Services, Inc." remained
enforceable "insofar as it directs that 'no
transfers or withdrawals shall be made from the [specified]
account[s] until further order of the Court.'"
December 19, 2015, Lillian filed a "Request to Respond
to Answer, " and on January 6, 2016, Lillian filed a
"Motion to Decide Writ of Prohibition."
(Id. at pp. 96-97.) On January 19, 2016, the Fifth
DCA issued the following order regarding Lillian's
The "Request to Respond to Answer" filed on
December 10, 2015, and the "Motion to Decide Writ filed
on January 6, 2016, are granted. The "Request for Writ
of Supersedeas or the Alternative Writ of Prohibition . . .,
" filed on November 16, 2015, is denied. This
court's November 18, 2015, stay order, and December 4,
2015, clarifying order are vacated and the temporary stay is
(Doc. 45-2, p. 8.)
October 31, 2016, the Fifth DCA issued an order affirming
FCSC's judgment. (Doc. 45-2, p. 10-45.)
Proceedings Before This Court
to the Fifth DCA's October 2016 decision, Lillian filed
suit in August 2016 in the U.S. District Court for the
Northern District of California naming as defendants Fresno
County, Fresno County Counsel, Fresno County Public Guardian,
FCSC, UBS, BNY, Comerica, and "Weintraub Tobin."
Lillian alleges the probate proceedings before FCSC were void
for lack of jurisdiction, various Defendants committed fraud
on the court because they knew no Family Trust ever existed,
FCSC denied Lillian due process by failing to provide her
notice of hearings and an opportunity to be heard; and the
Public Guardian, Weintraub Tobin, UBS, Comerica, and BNY were
all complicit with and participated in the fraudulent
conveyance and conversion of Lillian's trust assets held
in UBS accounts. Lillian also alleges UBS breached her
privacy in providing information to the Public Guardian
without her consent.
August 30, 2016, the Northern District sua sponte
determined venue was improper there and transferred the case
to the Eastern District where it determined venue was proper,
finding that Lillian's claims arose out of events that
occurred in Fresno, California. (Doc. 9.)
October 31, 2016, Lillian filed a document entitled
"Motion to Notify Court of a Conflict of Interest by
Lillian Pellegrini" - construed as seeking
disqualification of the undersigned - and a second document
was filed by Lillian's daughter, Beverly Pellegrini,
entitled "Notice - Federal Jurisdiction Under Federal
Rule of Civil Procedure 60; Intervenor by Right Under Federal
Rule of Civil Procedure 24; Joinder Under Federal Rules of
Civil Procedure 19." (Docs. 14, 15.)
November 3, 2016, Lillian was ordered to serve the complaint,
and Beverly's motion entitled "Notice - Federal
Jurisdiction Under Federal Rule of Civil Procedure 60;
Intervenor by Right Under Federal Rule of Civil Procedure 24;
Joinder Under Federal Rules of Civil Procedure 19"
("request to intervene") was held in abeyance until
such time as the Defendants were served and the motion was
properly re-noticed. (Doc.16.) Between December 27, 2016, and
January 9, 2017, each Defendant filed a motion to dismiss.
(Docs. 40, 42, 43, 44, 45, 46.)
January 12, 2017, Lillian filed a motion for venue change and
a motion to stay the proceedings. (Docs. 53, 54.) On February
14, 2017, the Court denied Lillian's motions to transfer
venue, stay the proceedings, and to disqualify the
undersigned. (Doc. 76.) The Court did not reach Beverly's
October 2016 request to intervene as it had never been
re-noticed for a hearing and was not properly before the
February 24, 2017, Beverly filed a "notice of
appeal" seeking immediate appeal of the Court's
refusal to reach her request to intervene. (Doc. 80.) As
Beverly's motion was never properly re-noticed or set for
a hearing and no order had therefore been issued regarding
the matter of intervention that could be appealed, the Court
construed Beverly's "notice of appeal" as a
motion for an order on her request to intervene. (Doc. 81.)
The Court set a hearing on this request, supplied the parties
with a briefing schedule, and continued Defendants'
motions to dismiss to be heard concurrently with
Beverly's request to intervene. (Doc. 81.)
UBS, Weintraub, and Fresno County each seek judicial notice
of various court documents. (Docs. 43-2, 44-2, 43-2, 57, 97.)
and Bank of NY Mellon's Request (Doc.
California Supreme Court Records: California Supreme
Court Docket in Case No. S238760 (Doc. 44-2, Exh. 7).
Fifth DCA Records: (1) an October 31, 2016, order in
Merchant v. Pellegrini, Case No. F072656 (Doc. 44-2,
Exh. 1); and (2) the Docket (Register of Actions) in Case No.
F072656 (Doc. 44-2, Exh. 6).
FCSC Records and Filings, Case No. 10CEPR00683:
• March 3, 2014, Memorandum of Points and Authorities in
Support of Motion of Petitioner Marleen Merchant to Enforce
Subpoenas (Doc. 44-2, Exh. 8)
• April 4, 2014, Further Reply of Petitioner Marleen
Merchant to Opposition to Motion to Enforce Subpoenas (Doc.
44-2, Exh. 9)
• June 17, 2014 Order granting the Motion of Petitioner
Marleen Merchant to Enforce Subpoenas (Doc. 44-2, Exh. 10)
• August 8, 2014, FCSC Order Directing Compliance with
Subpoenas (Doc. 44-2, Exh. 11)
• January 21, 2015, Finding and Order After Trial (Doc.
44-2, Exh. 16)
• May 15, 2015, Order Removing Lillian D. Pellegrini as
Trustee and Appointing Successor Trustee; Order Directing
Lillian D. Pellegrini to Fund a Family Trust in the Amount of
$544, 386.91 (Doc. 44-2, Exh. 2)
• September 4, 2015, Findings and Order After Trial
(Doc. 44-2, Exh. 3)
• October 20, 2015, Ex Parte Order Freezing Accounts
Held in the Name of Lillian Dorothy Pellegrini at UBS
Financial Services Inc. (Doc. 44-2, Exh. 12)
• October 20, 2015, Ex Parte Order Directing UBS
Financial Services Inc. to Pay $1, 528, 721.44 to the Fresno
County Public Guardian as Successor Trustee of the Family
Trust in Satisfaction of Court Orders (Doc. 44-2, Exh. 13)
• November 16, 2015, Ex Parte Order Granting Full
Authority to the Fresno County Public Guardian, as Successor
Trustee, as to Liquidation of Family Trust Assets (Doc. 44-2,
• A January 22, 2016, Notice to Court and All Parties
filed by UBS (Doc. 44-2, Exh. 15) Eastern District of
California Orders and Filings in Case No.
1:15-cv-01564-LJO-EPG: (1) an October 14, 2015, document
filed by Lillian Pellegrini entitled "Request for
Transfer" (Doc. 44-2, Exh. 4); and (2) an October 20,
2015, Order of Remand (Doc. 44-2, Exh. 5).
Tobin's Request (Doc. 45-2, Doc. 57):
Supreme Court Records: California Supreme Court Order
issued January 11, 2017, denying Lillian's petition for
review of the Fifth DCA's October 31, 2016, order (Doc.
57, Exh. A)
DCA Records: (1) a November 18, 2015, Order (Doc. 45-2,
Exh. A); (2) a December 4, 2015, Clarifying Order (Doc. 45-2,
Exh. B); (3) a January 19, 2016, order denying writ
of supersedaes and dissolving temporary stay (Doc. 45-2, Exh.
C); and (4) an October 31, 2016, order in Merchant v.
Pellegrini, Case No. F072656 (Doc. 45-2, Exh. D).
County's Request (Doc. 43-2, 43-4):
DCA Records: (1) a January 19, 2016, order denying writ
of supersedaes and dissolving temporary stay (Doc. 43-4, Exh.
A); (2) a October 31, 2016, order in Merchant v.
Pellegrini, Case No. F072656 (Doc. 43-4, Exh. B).
District of California Orders and Filings in Case No.
1:15-cv-01564-LJO-EPG: (1) an October 14, 2015, document
filed by Lillian Pellegrini entitled "Request for
Transfer" (Doc. 43-4, Exh. C); (2) an October 14, 2015,
document filed by Lillian Pellegrini entitled "Motion to
Dismiss" (Doc. 43-4, Exh. D); (3) an October 14, 2015,
document filed by Lillian Pellegrini entitled "Motion
for Confidentiality" (Doc. 43-4, Exh. E); and (4) an
October 20, 2015, sua sponte order of the Eastern
District of California, remanding Lillian Pellegrini's
case to the FCSC (Doc. 43-4, Exh. F).
the Federal Rules of Evidence, "[a] judicially noticed
fact must be one not subject to reasonable dispute in that it
is either (1) generally known within the territorial
jurisdiction of the trial court or (2) capable of accurate
and ready determination by resort to sources whose accuracy
cannot reasonably be questioned." Fed.R.Evid. 201(b).
"The court . . . must take judicial notice if a party
requests it and the court is supplied with the necessary
information." Fed.R.Evid. 201(c)(2).
12(d) provides that if "matters outside the pleadings
are presented to and not excluded by the court, the motion
must be treated as one for summary judgment under Rule
56." Fed.R.Civ.P. 12(d). However, there are two
exceptions to this rule: a court may consider material (1)
which is properly submitted as part of the complaint, or (2)
matters of public record ...