Probate Code Section 1310, Subdivision (b): Its Uses and Potential Abuses

• Publication year: 2019
• Author: By Ciarán O'Sullivan

PROBATE CODE SECTION 1310, SUBDIVISION (B): ITS USES AND POTENTIAL ABUSES

By Ciarán O'Sullivan^*

I. INTRODUCTION

There is nothing quite like the scandal-laced sale of an NBA franchise to shed light into a hitherto little-known corner of the Probate Code. In Sterling v. Sterling¹ , a case notorious for non-probate reasons, the Los Angeles probate court directed the co-trustee of the Sterling Trust, Shelly Sterling, to sell the Los Angeles Clippers to Microsoft co-founder Steve Ballmer over the vigorous objections of erstwhile co-trustee Donald Sterling, notwithstanding his pending appeal of the court's order removing him as co-trustee. The court invoked Probate Code section 1310, subdivision (b) ("Subdivision (b)"), in instructing Shelly to sell the team while the appeal was pending because it found the potential loss of the sale to Ballmer during the inevitable delay resulting from the appeal amounted to the sort of significant "injury" to the Sterling Trust contemplated by the statute. This article discusses the Sterling case, as well as similar cases decided before and since that illustrate when courts are likely to apply Subdivision (b), an extraordinary statute that in certain situations deprives the Court of Appeal of any meaningful ability to review orders of the lower court.

A general rule of appellate practice provides that the appeal of any order or judgment stays its effect pending resolution of the appeal.² There are numerous exceptions,³ most notably where an order or judgment requires the payment of money. In the probate context, Subdivision (b)⁴ provides an additional exception to the general rule that is unique to probate practice in that it allows for the enforcement of an order appointing an interim fiduciary or authorizing certain actions by the fiduciary notwithstanding the pendency of an appeal of that order, where the court deems it necessary to prevent harm to a "person or property." The essential prerequisite for an order under Subdivision (b) is the existence of a qualifying injury that justifies enforcing an order during appeal and therefore before a reviewing court can address the merits.

This article first reviews the statutory framework providing for automatic stays of enforcement of orders and judgments on appeal, both generally and under the Probate Code. It then discusses the unique stay rules applicable under the Probate Code, and the exception provided by Subdivision (b). By reference to the legislative history of the exception and its predecessor statutes, as well as the case law interpreting those statutes, the article discusses the intended limits on the application of Subdivision (b), which establish that invocation of Subdivision (b) should be the exception rather than the rule. This article closes with analysis of both published and unpublished cases and discusses the propriety of applying Subdivision (b) in those circumstances.

II. THE AUTOMATIC STAY IN THE CIVIL CONTEXT

A. In the Non-Probate Context an Appeal Generally Stays Enforcement of an Order or Judgment, but Certain Important Exceptions Apply.

In proceedings governed by the Code of Civil Procedure ("CCP"), section 916, subdivision (a), provides that perfecting⁵an appeal of a judgment or order imposes what is known as an "automatic stay" on many further trial court proceedings:

(a) Except as provided in Sections 917.1 to 917.9, inclusive, and in Section 116.810, the perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or order, but the trial court may proceed upon any other matter embraced in the action and not affected by the judgment or order.⁶

The rationale underlying the automatic stay is to protect the appellate court's jurisdiction by preserving the status quo until the appeal is decided.⁷ The quoted subdivision in essence prevents the trial court from rendering an appeal futile or undermining the appellate court's ability to afford complete relief.⁸ The automatic stay effectively divests the trial court of subject matter jurisdiction over matters embraced by the notice of appeal. Because jurisdiction has been transferred to the Court of Appeal, the trial court is powerless to determine the appealed issues.⁹

There are important explicit statutory exceptions to the general rule, chiefly, typical money judgments; when the judgment or order requires the payment of money by one party to another enforcement is not stayed pending appeal.¹⁰ With motives ranging from the nefarious secretion of assets to commercial practicalities, judgment debtors often wish to delay enforcement. This exception discourages a judgment debtor from filing an appeal, no matter how frivolous, solely to delay paying the judgment by providing that there is no stay of enforcement of a money judgment unless a bond or undertaking is posted to protect the judgment creditor.¹¹ But with certain other orders and judgments, such as those that adjudicate the rights or status of litigants, there is usually no similar danger of abuse and therefore the judgment or order is generally stayed pending appeal without the need to post a bond.

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Other explicit exceptions apply where the judgment or order directs sale, conveyance, or delivery of possession of real property, or directs the sale, assignment, or delivery of personal property, including documents.¹² In both instances, an appellant must post a bond or undertaking.

B. If No Explicit Exception to the Automatic Stay Applies, the Existence of the Automatic Stay Depends on Whether Further Trial Court Proceedings Would Affect the Order on Appeal—the "Effect" Test.

By its terms, CCP section 916, subdivision (a), does not operate to stay proceedings on "any other matter embraced in the action and not affected by the judgment or order." As one authority explains, this caveat, combined with the explicit statutory exceptions to the automatic stay, means that an automatic stay is uncommon.¹³ The trial court retains jurisdiction over "collateral" proceedings, such as hearing new trial motions,¹⁴ correction of clerical errors,¹⁵ award and taxation of trial court costs,¹⁶ award of attorney's fees,¹⁷ and any other proceeding unrelated to the order on appeal. Being the corollary of the "effect" test (see below), determination of what constitutes a collateral matter is made on a case-by-case basis. For example, a defendant's appeal of an order awarding attorneys' fees to the plaintiff's attorney did not stay trial court proceedings on that attorney's motion to award the fees to him personally rather than to his client.¹⁸ This was because the defendant's appeal concerned the propriety of the award of attorneys' fees in the first place, and a subsequent order determining that such fees should be paid to the attorney rather than to the plaintiff—assuming affirmance of the attorney fee award—would not in the meantime deprive the appellate court of its ability to reverse or confirm the fee award.¹⁹

Application of the automatic stay therefore turns on a determination whether the further proceedings are "embraced in" or "affected by" the order or judgment, which in turn depends on whether the appellate court's jurisdiction would be "frustrated by" further trial court proceedings on the matter.²⁰ When making this determination, courts frequently utilize the "effect" test: "Essentially, if the trial court proceedings on the particular matter would have any impact on the 'effectiveness' of the appeal, the proceedings are stayed."²¹ Such proceedings would include any proceedings that would enforce an order that is on appeal, proceedings that are irreconcilable with the possible outcome on appeal, and proceedings that the very purpose of the appeal seeks to avoid.²² For example, displaying all three characteristics militating in favor of a stay, where a third party witness appealed from a trial court order overruling its objections to a subpoena duces tecum, the trial court could not conduct a contempt proceeding based on the witness' refusal to comply.²³ Such a contempt proceeding would effectively enforce the order on appeal, would constitute the very proceeding the appeal sought to avoid, and could result in rulings irreconcilable with an outcome on appeal; therefore, the automatic stay applied.²⁴

An example of a proceeding that violates the "effect" test in the probate context would be one in which the court, having authorized or instructed a fiduciary to participate in an heirship dispute pursuant to Probate Code section 11704, subdivision (b), then permits the fiduciary to propound discovery while a disputed heir appeals the validity of the court's order. Permitting the fiduciary to participate in the heirship dispute in this instance would effectively enforce the trial court's order. It would also be irreconcilable with a Court of Appeal decision reversing the order, which is a possible outcome of the appeal. The fiduciary's participation in the heirship dispute is also an example of a proceeding that the appeal is specifically intended to avoid. Therefore, absent other directions by the court, the appeal should automatically stay the operation of the order instructing the fiduciary.

III. AUTOMATIC STAYS IN PROBATE CODE PROCEEDINGS AND THE EXCEPTION TO THE STAY UNDER SUBDIVISION (B).

A. Appealability Under the Probate Code Generally.

As a threshold matter, the question of whether the appeal of an order or judgment issued under the Probate Code stays its enforcement takes on greater importance because so many Probate Code orders are appealable. Whereas, as a general rule, only final judgments are appealable in proceedings governed by the Code of Civil Procedure, in the probate and trust context, sections 1300 to 1304 authorize appeals from a vast array of orders entered in proceedings governed by the Probate Code.²⁵ Since these provisions of appealability are exclusive, with rare...