In Re: Jaskolka Family Trust, 16PR-0354

Hearing: Demurrer

Date: March 28, 2018

Settlors Norbert and Elaine Jaskolka created the Jaskolka Family Trust on September 20, 1995 (“Trust”). Elaine died in August 2005. Norbert died in March 2006. At the time of Norbert’s death, any remaining trust assets were to be distributed to an Irrevocable Remainder Trust. The beneficiaries of the Trust are the settlors’ children, Joy Jaskolka (who predeceased the settlors) and Melodie McCoy (“McCoy”). The Trust was to be distributed “as soon as reasonably possible” free of trust as soon as the beneficiaries had reached 25 years of age. Since Joy predeceased the Settlors, pursuant to the terms of the Trust, her son Justin Lloyd (“Lloyd”) became entitled to her share.

McCoy served as the initial successor trustee upon Norbert’s death. McCoy did not distribute the Trust. McCoy died in March 2012, leaving a vacancy in the office of Trustee. McCoy was survived by Dawn Knighton (“Knighton”), her daughter. On March 14, 2017, the Court appointed Lloyd as successor trustee.

On October 31, 2017, Lloyd filed a Petition for Relief from Breach of Trust (“Petition”) as successor trustee against Knighton as Administrator of the Estate of McCoy (“Estate”), and individually, seeking payment of money damages for alleged breaches by McCoy during her tenure as trustee. Lloyd also alleges breaches by Knighton individually on a third-party basis, and as trustee de son tort. Lloyd alleges that McCoy breached the Trust and her fiduciary duties by, amongst other allegations: 1) failing to make distributions required under the Trust in a timely manner; 2) selling Trust property and keeping the proceeds for her own benefit; 3) allowing Knighton and her family to occupy Trust real property without paying rent; and 4) failing to account or keep the beneficiaries reasonably informed. Lloyd alleges that Knighton actively participated in McCoy’s breach of Trust for her own financial advantage, and committed her own breaches after McCoy’s death by continuing the same practices as McCoy, and attempting to act as a successor trustee without authority, representing to the Court that she had been “taking care of things.”

On February 13, 2018, Knighton filed a demurrer to the Petition. Lloyd opposes the demurrer.1
1 Knighton submitted a declaration along with her demurrer regarding the parties’ meet and confer efforts in which her counsel declared he had reached out to counsel for Lloyd on March 2, 2018, weeks after the demurrer was filed, and offered to dismiss and re-file as no meet and confer had been conducted. The parties agreed to waive the meet and confer to preserve the current hearing date. The Court strongly encourages the parties to comply with their meet and confer requirements in the future as the parties risk having their hearing continued by the Court if they fail to properly meet and confer.
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Knighton demurs to the (1) entire Petition on the grounds it fails to constitute any cause of action against any defendant pursuant to Code of Civil Procedure section 430.10(e), and is barred by the statute of limitations and the doctrine of laches; (2) allegations against her as Administrator of the Estate on the grounds that the Petition fails to state facts sufficient to constitute any cause of action, and is uncertain and ambiguous, pursuant to Code of Civil Procedure section 430.10(e), and that it is barred by the oneyear statute of limitations in Code of Civil Procedure section 366.2 and three-year statute of limitations in Probate Code section 16460(a)(2), and the doctrine of laches; and (3) allegations against her individually on the grounds that the Petition fails to state facts sufficient to constitute any cause of action, and is uncertain and ambiguous, pursuant to Code of Civil Procedure section 430.10(e), and that it is barred by the three-year statute of limitations in Probate Code section 16460(a)(2), and the doctrine of laches.

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack; or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 C3d 311, 318.)2 The court must draw all reasonable inferences in favor of the plaintiff, not the defendant. (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1239.) A demurrer on the ground that the complaint is timebarred lies only where the running of the statute appears clearly and affirmatively from the face of the complaint; it is not enough that the complaint might be time-barred. (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2017) ¶ 7.50.)

At the outset, the Court disagrees with Knighton’s claim that the Petition fails to state a cause of action because it is uncertain or ambiguous. A demurrer for uncertainty is disfavored and only appropriate where the complaint is so bad that the defendant cannot reasonably respond. (Khoury v. Maly’s of Calif. Ins. (1993) 14 Cal.App.4th 612, 616.) Here, Knighton can reasonably respond to Lloyd’s Petition.

Lloyd’s Claims Against Knighton as Administrator of the Estate

Knighton demurs to the claims against her as Administrator of the Estate on the grounds that those claims are barred by the one-year statute of limitations under Code of Civil Procedure section 366.2. That section provides that any actions brought on a liability of the person must be commenced within one year after the date of death. Lloyd pleads that McCoy died on March 17, 2012, more than five years before the Petition was filed. (Petition, ¶ 3, 12.)

2 For this reason, the Court declines to consider the declarations submitted by Knighton in support of her Demurrer, or any facts argued by either party that are not stated on the face of the Petition or subject to judicial notice. Further, as to Knighton’s argument that Lloyd did not submit a declaration along with his Petition, the Petition is properly verified, and no declaration was required to be filed along with the initial Petition.
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Lloyd opposes the demurrer on this ground simply by stating that he “believes he filed this action in a timely manner” and citing his Petition at page 3, lines 23-28, and page 4, lines 1-16. Those sections of the Petition set forth that Lloyd filed a verified creditor’s claim in the Estate, which was rejected, and that his Petition was timely filed following rejection of that claim.

While Lloyd fails to further explain his argument or cite any authority, the Court understands his argument as because he filed a creditor’s claim, that his claims in his Petition against the Administrator of the Estate for actions of decedent McCoy are timely. While filing a creditor’s claim within one year of death tolls the statute of limitations pursuant to section 366.2, filing a creditor’s claim after the one-year statute has already run does not revive the claim. This is true even if no probate was open within one year of decedent’s death. (Code Civ. Proc., § 366.2 (b)(2); Law Rev. Comm’n Comment to Code Civ. Proc., § 366.2 [“if the creditor is concerned that the decedent’s beneficiaries may not have a general personal representative appointed during the one-year period, the creditor may petition for appointment during that time”]; Probate Code section 9100(c).)

The statute may not be tolled or extended for any reason except the grounds set forth explicitly in section 366.2. (Code Civ. Proc., § 366.2(b).) Lloyd’s claims are a liability of the decedent as they are based on allegations of wrongdoing by McCoy and seek damages. (See Stoltenberg v. Newman (2009) 179 Cal.App.4th 287, 296-97.) Thus, Lloyd’s claims against Knighton as Administrator of the Estate of McCoy are time-barred pursuant to Code of Civil Procedure section 366.2.

While the statute of limitations under section 366.2 cannot be tolled, where the party using the statute of limitations as a shield has unclean hands, and the facts support a claim for equitable estoppel, a Court may allow a claim to go forward. (See, e.g., Battuello v. Battuello (1998) 64 Cal.App.4th 842 [mother lulled son into inaction by settlement promise].) “Equitable estoppel does not ‘extend’ the statute of limitations but rather comes into play only after the limitations period has run and addresses itself to the circumstances in which a party will be estopped from asserting the statute of limitations as a defense to an admittedly untimely action because his conduct has induced another into forbearing suit within the applicable limitations period…the doctrine of equitable estoppel takes its life from the equitable principle that no man will be permitted to profit from his own wrongdoing in a court of justice.” (Cordova v. 21st Century Ins. Co. (2005) 129 Cal.App.4th 89, 96.). Lloyd does not currently plead facts showing equitable estoppel, however leave to amend shall be granted to plead such facts if they exist.

Because the Court finds Lloyd’s claims barred by section 366.2, it need not address Knighton’s other arguments in regard to the claims against her as Administrator of the Estate.

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Lloyd’s Claims Against Knighton as an Individual

Knighton demurs to the claims against her as an individual on the grounds that Lloyd fails to adequately plead his theory that Knighton acted as “Trustee de son tort”. Lloyd opposes, arguing that this theory is adequately pleaded. While both parties argue the facts, neither cites any authority to support their position.3

A trustee de son tort has been defined as a person “who is treated as a trustee because of his wrongdoing with respect to property entrusted to him or over which he exercised authority which he lacked.” (King v. Johnston (2009) 178 Cal.App.4th 1488, 1505.) “It is a well settled rule in the law of trusts that if a person not being in fact a trustee acts as such by mistake or intentionally, he thereby becomes a trustee de son tort… During the possession and management by such constructive trustees they are subject to the same rules and remedies as other trustees.” (Id. at p. 1506 (quoting England v. Winslow (1925) 196 Cal. 260.) Here, the Petition alleges that Knighton continued the same practices as McCoy after McCoy’s death, lived in and managed the Trust property, used Trust property for her benefit, and represented she had been “taking care of things”. The Petition is sufficiently pleaded at this stage to allege liability as a trustee de son tort. (Petition, ¶¶ 41-52.)

Knighton further argues that Knighton cannot be liable on a third-party theory because she did not assist McCoy during McCoy’s administration of the Trust. She again cites no legal authority. “A trust beneficiary can pursue a cause of action against a third party who actively participates in or knowingly benefits from a trustee’s breach of trust. (King v. Johnston, supra, 178 Cal.App.4th at p. 1500, quoting Estate of Bowles (2008) 169 Cal.App.4th 684, 691.) Here, however, the Petition sets forth sufficient allegations at this stage showing that Knighton used and benefited from Trust property for personal advantage while McCoy was Trustee, pursuant to an agreement. (Petition, ¶¶ 36-40.) Knighton also argues that Lloyd’s claims fail because Paragraphs 19.5 & 19.7 of the Trust state that a successor trustee is not personally responsible or liable for the acts or omissions of the prior trustee. Lloyd argues, however, that the claims against Knighton as an individual are all based upon her own acts or omissions. The Court agrees that the Trust does not hold Knighton harmless for any of her own acts of malfeasance and the claims are not subject to demurrer on that ground.

Knighton finally demurs to the allegations against her individually on the grounds that the claims are barred by the three-year statute of limitations set forth in Probate Code section 16460(a)(2), and by the doctrine of laches. Section 16460(a)(2) states that if a beneficiary does not receive any written account or report, the claim is barred as to that beneficiary unless a proceeding to assert the claim is commenced within three years after the beneficiary discovered, or reasonably should have discovered, the subject of the
3 Lloyd does cite Wikipedia for the description of a trustee de son tort, but fails to cite any legal authority on the issue.
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claim. Knighton argues that Lloyd should have reasonably discovered his claims that Knighton was liable as a third-party to the breach by the time of McCoy’s death in 2012, at the latest. He argues Lloyd would have had notice and failed to conduct due diligence. Lloyd argues in opposition that his Petition sufficiently sets forth the reasons for his delayed discovery and the fact that he conducted a diligent investigation once on notice of his claim. (Petition, ¶¶ 43-48.) Whether a plaintiff’s delayed discovery of his claim is reasonable is ordinarily a question of fact; and here, Knighton has failed to show that Lloyd’s claims are time-barred as a matter of law.

Moreover, Knighton’s argument that Lloyd’s claims against her individually are barred by the doctrine of laches also fails. Knighton’s argument is based on prejudice she will allegedly suffer due to the death of the McCoy, who she argues is the most important material witness. However, even if McCoy’s death and the passage of five years would support an argument that Knighton is prejudiced in regard to allegations based on McCoy’s alleged malfeasance (which the Court does not find at this time), the Court certainly cannot at this stage find sufficient prejudice to sustain a demurrer on the ground of laches for claims against Knighton individually.

Knighton’s demurrer to all claims against her as Administrator of the Estate is sustained with leave to amend. Knighton’s demurrer to all claims against her as an individual is overruled. Lloyd has twenty (20) days from service of notice of ruling to file his amended complaint unless notice is waived at the hearing. (Code Civ. Proc., § 472b.)