Mcle Article: How Could I Dance With Another, When I Saw No Standing There?

• Publication year: 2019
• Author: By Julie R. Woods, Esq.

MCLE ARTICLE: HOW COULD I DANCE WITH ANOTHER, WHEN I SAW NO STANDING THERE?

By Julie R. Woods, Esq.^*

I. INTRODUCTION

Trust litigators have been operating under an assumption that any party with a pecuniary interest in the outcome of a probate proceeding in rem has standing to bring a claim pursuant to Probate Code section 48. However, there is language lurking in the Probate Code that limits standing and supersedes the section 48 "interested person" principle.

Barefoot v. Jennings¹ demonstrated the limitation on standing provided in Probate Code section 17200, the primary statute that is the starting point for most trust litigation. The Court of Appeal, Fifth Appellate District, held that the literal language of Probate Code section 17200 provides that "a trustee or beneficiary of a trust may petition the court under this chapter."² Thus, by the court's analysis, only a trustee or a beneficiary, as defined by the Probate Code, may bring a claim concerning the operative version of a trust.³ Therefore, a former beneficiary who is disinherited by an amended trust lacks standing to file a petition under Probate Code section 17200 as that person is neither a trustee nor a beneficiary in accordance with a literal reading of Section 17200.⁴

The probate community responded to the opinion, endeavoring to confute its holding or otherwise circumvent its precedential value. Four bar associations and an attorney requested depublication of the opinion.⁵ The implications of the decision have been a hot topic of discussion among trusts and estates practitioners. If upheld, state courts must follow the appellate opinion pursuant to the doctrine of stare decisis;⁶ nevertheless, some judges offered think-pieces regarding the possible effects of the decisional authority.⁷ On December 12, 2018, the California Supreme Court granted review.

While the pending Supreme Court ruling and any proposed legislative amendment may respond to Barefoot's holding regarding those individuals who have standing under section 17200, it is not the only Probate Code section practitioners ought to consider when faced with a standing issue. Other Probate Code sections also limit standing in trust proceedings, analogously and literally. Barefoot thus triggers a concern greater than section 17200 in highlighting the limiting language regarding standing that can be found throughout the Probate Code.

Thus shifts the method by which trust and estates attorneys should approach claims. First, is my client precluded from bringing certain claims because the statute limits standing to petition? Second, if my client lacks standing for certain claims, but is nonetheless an "interested person" in the proceeding, what other claims may he or she bring? This article draws attention to the systemic limitations on standing and, per footnote 2 of the Barefoot opinion, suggests workarounds and "other vehicles" by which to proceed.⁸

II. THE FALLACIOUS ASSUMPTION THAT ALL INTERESTED PERSONS HAVE STANDING IN ALL PROBATE PROCEEDINGS

A. In Rem Jurisdiction of the Probate Court

In the depths of every lawyer's memory is the case of Pennoyer v. Neff,⁹ wherein the United States Supreme Court defined jurisdiction in rem and in personam. Jurisdiction in rem is generally an action "where the direct object is to reach and dispose of property owned by [parties], or of some interest therein."¹⁰ Strictly, the object of an action in rem is to dispose of property.¹¹ In other words, a court exerting jurisdiction in rem decides the disposition of "the thing" or the "res."

Subject matter jurisdiction of the superior court is vested as a whole.¹² Thus, the superior court sitting in probate, generally referred to as the probate department or probate court, has general subject matter jurisdiction over proceedings, including jurisdiction in rem.

The probate court has jurisdiction in rem to decide the disposition of the assets of an estate and successive pleadings in probate.¹³ The court thus decides the disposition of the res "against 'the whole world' and not just the parties to the litigation."¹⁴

Accordingly, parties with an interest in the outcome of the proceeding must be provided notice and an opportunity to participate. A person cannot be deprived of a property right or interest without notice and a hearing appropriate to the nature of a case.¹⁵ The Fourteenth Amendment of the United States Constitution provides that "No State shall . . . deprive any person of life, liberty, or property, without due process of law . . ."¹⁶

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B. "Interested Persons" Have Protected Property Rights

Protecting the constitutional rights to property and due process, the California Legislature has broadly defined persons who may be interested in probate proceedings. Probate Code section 48, subdivision (a) states that "interested person" includes any ofthe following: "(1) [a]n heir, devisee, child, spouse, creditor, beneficiary, and any other person having a property right in or claim against a trust estate or the estate of a decedent which may be affected by the proceeding"; "(2) [a]ny person having priority for appointment as personal representative"; or "(3) [a] fiduciary representing an interested person."¹⁷ Subdivision (b) states, "[t]he meaning of 'interested person' as it relates to particular persons may vary from time to time and shall be determined according to the particular purposes of, and matter involved in, any proceeding."¹⁸ That definition applies throughout the Probate Code, "[u]nless the provision or context otherwise requires."¹⁹

The Court of Appeal, Third Appellate District, further explained the "interested person" standard for probate court proceedings in Lickter v. Lickter.²⁰ The appellate court defined the "interested person" standard as "whether the person—whether an heir, devisee, beneficiary, or other person—has an interest of some sort that may be impaired, defeated, or benefited by the proceeding at issue."²¹ The appellate court thus expounded upon the Illinois definition of "any person interested" as "those having a direct pecuniary interest affected by the probate [proceeding],"²² whether that proceeding be a will contest, other probate proceeding, or elder abuse action.²³

Since probate courts decide the disposition of property in rem and persons who have an interest in such property have a constitutional right to due process, interested persons should thus have standing generally to appear in probate court proceedings unless otherwise limited by authority.²⁴

C. Not All Interested Persons Have Standing to Petition in All Proceedings Under the Probate Code

An interested person may appear and respond or object orally or in writing at or before a hearing in a probate proceeding.²⁵ But the same is not necessarily true for an interested person who brings a claim. Some provisions in the Probate Code have language that limits who may have standing as a petitioner.

For example, the Court of Appeal, Fifth Appellate District, discussed the limitations on standing to bring a petition under Probate Code section 17200 in its opinion for Barefoot v. Jennings.

1. A Case Study: Barefoot v. Jennings

a. What Happened?

The facts of Barefoot v. Jennings are straightforward and unremarkable. Settlor's daughter filed a trust contest under Probate Code section 17200 to challenge the validity of an amendment on the bases of incapacity, undue influence, and fraud.²⁶ That amendment, executed at the end ofthe settlor's life, eliminated the daughter's share, expressly disinherited her, and removed her as a successor trustee.²⁷ The daughter claimed that, if she could invalidate the last several amendments of the trust, "[s]he will benefit by a judicial determination that the purported amendments are invalid, thereby causing the [t]rust property to be distributed according to the terms of the [t]rust that existed before the invalid purported amendments."²⁸

The disinherited daughter alleged that she had standing to file the trust contest because she was an "interested person," as the settlor's daughter.²⁹ The daughter further alleged that she had standing because, under a prior version of the trust, she was both a beneficiary and a trustee.³⁰

Two of the settlor's other children filed an answer to the daughter's petition, followed by a motion to dismiss the daughter's petition on the ground she did not have standing to proceed under Probate Code section 17200.³¹ They alleged the daughter "lacked standing under section 17200 because she was neither a beneficiary nor a trustee" of the last operative version of the trust, i.e., the trust as lastly amended.³²

The trial court dismissed the daughter's petition without prejudice.³³ The trial court denied the daughter's motion for reconsideration.³⁴ The daughter timely appealed.³⁵

The Court of Appeal determined whether the daughter had standing to bring claims concerning the internal affairs of the trust or to determine the existence of the trust, pursuant to Probate Code section 17200.³⁶

The Court of Appeal interpreted Section 17200 by its plain meaning, as it found no ambiguity in the statutory language.³⁷ Section 17200, subdivision (a) states, "Except as provided in Section 15800, a trustee or beneficiary of a trust may petition the court under this chapter concerning the internal affairs of the trust or to determine the existence of the trust."³⁸ The Court of Appeal stated, "The plain language of section 17200 makes clear that only a beneficiary or trustee of a trust can file a petition under section 17200."³⁹

The Court of Appeal thus held that the daughter lacked standing under section 17200.⁴⁰ "Appellant's petition alleges standing exists because she was a beneficiary and trustee of a prior version of the [t]rust. We conclude this basis is insufficient to support a petition under section 17200."⁴¹

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The Court of Appeal stated that, under Probate Code section 24, "a beneficiary of a trust is 'a person to whom a donative transfer of property is made' and 'who has any present...