California’s anti-SLAPP statute has generated another published case for trust and estate lawyers to ponder. Last week, in Urick v. Urick (2017) ___ Cal.App.5th ___, the California Court of Appeal confirmed that anti-SLAPP motions can be used to attack petitions to enforce no contest clauses.
The opinion reminds California trust and estate counsel to be cautious when using petitions to attack the court filings of other parties. At the same time, the opinion demonstrates that a well-conceived attack on an adversary’s filing ultimately should not fall to an anti-SLAPP motion, even if it takes an appellate court to set things right.
Last year we wrote about the use of anti-SLAPP motions as a defensive tool in trust and estate litigation. We discussed the use of such motions to challenge efforts to enforce no contest clauses, using an unpublished appellate case as an example. With Urick, we now have published authority in California for guidance.
What happened in Urick?
Allyne Urick created a trust that favored her two children, Dana and Willis, as well as Dana’s son Trentyn, with Phillips Academy Andover (the illustrious boarding school her husband attended) as the remainder beneficiary. A few months later, Allyne wrote a note “to whom it may concern,” in which she said she was deleting Willis as a beneficiary of her trust. Yet Allyne later restated the trust to reinstate Willis as an equal beneficiary along with Dana and Trentyn. Phillips Academy continued as the remainder beneficiary.
After Allyne died, Dana became the successor trustee. Dana then filed a petition to reform the restated trust in Los Angeles County Superior Court on the grounds that the drafting attorney misrepresented its terms, Allyne had mistakenly signed it, and the restatement did not set forth the distributive plan Allyne wanted. Under the self-serving interpretation that Allyne offered, only she and her son (not Willis) would benefit from the trust, with the remainder to pass equally to four institutions, one of which was Phillips Academy, but only in the unlikely event that both Dana and Trentyn were to pass within a ten-year period.
Both Willis and Phillips Academy objected to Dana’s petition. This case illustrates the need for charitable beneficiaries to litigate to protect planned gifts and their willingness to do so.
Willis also filed a petition for instructions as to whether Dana’s petition violated the no contest clause in the trust, essentially threatening Dana with possible disinheritance.
Dana retaliated with an anti-SLAPP motion, which the trial court granted. The court walloped Willis with an order to pay Dana’s legal expenses associated with the motion, which rang in at almost $25,000.
Willis successfully appealed.
The appellate court first examined and rejected Willis’ argument that the anti-SLAPP statute should not be applied to a petition to enforce a no contest clause. The court explored California law as to no contest clauses, noting that the policies underlying the no contest provisions in the California Probate Code “have been carefully balanced by the Legislature and the anti-SLAPP procedures may impede some of those goals.” Nonetheless, the clear and unambiguous language of the anti-SLAPP statute required its application in the probate court context like any other, leaving possible exceptions for future legislative action.
Since Dana successfully invoked the anti-SLAPP statute by showing that Willis’ petition arose from her protected activity (i.e., her petition for instructions), Willis had to establish a reasonable probability of prevailing on the merits. In other words, he had to show that he was likely to prevail in enforcing the no contest clause against Dana because she lacked probable cause to prevail in her petition.
The court first determined that Dana’s petition was a contest within the ambit of California’s no contest statute (Probate Code sections 21310 to 21315) because she had filed at least in part in her capacity as a beneficiary, not solely as trustee. The petition was more consistent with Dana’s interests as a beneficiary than with her fiduciary duties to the named beneficiaries, who included Willis and Phillips Academy.
Willis also persuaded the court that Dana had alleged fraud in her reformation petition, thus qualifying her petition as a “direct contest” within the meaning of the no contest statute. Essentially, by claiming that the drafting attorney had misrepresented or concealed the terms of the restated trust to Allyn, Dana made a fraud claim. In contrast, had Dana alleged a scrivener’s error in drafting the restatement, she would not have triggered the no contest clause.
The court then turned to the question of whether Dana had brought her reformation petition with probable cause.
Dana had no evidence that Allyne wanted Dana and Trentyn to be the sole beneficiaries of the trust other than Allyne’s handwritten note. On the other hand, there was strong evidence that the restated trust reflected Allyne’s intent. Thus, there was no reasonable likelihood that Dana would succeed in reforming the trust to provide solely for herself and her son.
The absence of any evidence that Allyn sought to dramatically reduce Phillips Academy’s interest as a remainder beneficiary also showed a lack of probable cause with respect to Dana’s petition.
The court was unimpressed with Dana’s assertion that she reasonably thought she might obtain further evidence to support her petition after further investigation and discovery.
In sum, Willis carried his burden of showing that his no contest petition had merit because Dana could not show probable cause for proceeding with her reformation petition. The appellate court therefore directed that probate court to enter an order denying the anti-SLAPP motion such that Dana would not be entitled to collect the $25,000 fee award against Willis.
Note that the appellate court did not resolve the underlying litigation. The decision left Dana to proceed with her attempt to reform the trust, with Willis remaining able to seek enforcement of the no contest clause against Dana. The decision, however, dramatically will swing momentum in favor of Willis and Phillips Academy, perhaps setting the stage for a settlement that favors them.
Takeaways from Urick
Like a sage instructor at Phillips Academy, Urick offers lessons to California trust and estate litigants–
If you file a petition to enforce a no contest clause, be ready to defend against an anti-SLAPP motion. If there are compelling facts to support the other side’s contest, the motion will be granted and you will have to pay the other side’s legal expenses associated with the motion, unless you can overturn the ruling on appeal. Even if you defeat the anti-SLAPP motion, you will incur many thousands of dollars in expenses defending the motion at the probate court level and perhaps again on appeal.
If you file a petition to reform a trust, be careful how you frame your allegations to avoid the potential characterization of your petition as a “contest” that triggers the no-contest statute.
Anti-SLAPP motions are a trap for the unwary. Trust and estate litigators, like general civil litigators, should be familiar with the anti-SLAPP statute so they can avoid triggering it and know when to deploy it.