2012-00132099-CU-BC

Richard S. Arno vs. The Robert B. Arno Trust

Nature of Proceeding: Motion for Summary Judgment and/or Adjudication

Filed By: Foster, Phil

Defendants James F. Arno and Kenneth C. Arno’ as co-trustees of the Robert B. Arno
Trust’s Motion for Summary Judgment and/or Summary Adjudication is denied as to
causes of action one through five. The motion for summary adjudication as to punitive
damages is granted, as conceded by plaintiff in the opposition.

Defendants’ Request for Judicial is granted.

Plaintiff alleges that a partnership was formed in 1983 between plaintiff, his wife, his
father, and his father’s wife, the purpose of which was to purchase a single family
home rental property at 3565 Scorpio Drive in Sacramento. In 1987 a second rental
property was acquired at 3573 Scorpio Drive. Plaintiff alleges that from 1983 to 1996
he managed the properties. In 1996 he turned over the account and deposits to his
father. Plaintiff alleges that in 1997 or 1998 the partnership agreement was orally
amended to provide that his father would give plaintiff the two properties upon his
death in lieu of reimbursing plaintiff for plaintiff’s recent repair work at the rental
properties. (TAC ¶ 13)

Plaintiff filed his Complaint on September 20, 2012, approximately nine months after
his father’s death. Plaintiff’s father executed a Trust in May of 2005 that contained a
bequest that left plaintiff 100% of real properties at 3565 and 3573 Scorpio Drive. In
2009 plaintiff’s father executed the First Amendment to the trust in which plaintiff was
to receive nothing from the Trust. The Trust contains a “no contest” clause. Plaintiff’s
father died on January 24, 2012. The defendants, co-trustees of the Trust, served
plaintiff with the Notice of Trust Administration required by Probate Code section 16061.7 on April 18, 2012. Plaintiff filed this lawsuit on September 20, 2012, more
than 120 days from service of the Notice but within one year of his father’s death. .

Plaintiff’s Third Amended Complaint filed on January 31, 2014 alleges a 1st cause of
action for Breach of Partnership Agreement, 2nd cause of action for Fraud, 3rd cause
of action for Breach of Fiduciary Duty, 4th cause of action Quiet Title/Declaratory
Relief, and 5th cause of action Constructive Trust/Equitable Lien.

Defendants move for summary judgment/summary adjudication on the ground that all
causes of action are barred by the statute of limitations.

Defendants rely on many facts in the points and authorities that are not set forth in the
separate statement. The Court is only considering facts set forth in the separate
statement, as only these facts are material. See, e.g. San Diego Watercrafts, Inc. v.
Wells Fargo Bank (2002) 102 Cal.App.4th 308, 313-314. Therefore, the facts
concerning the refinance of the property and plaintiff’s purported receipt of $128,000
from the refinance, which allegedly led to a dispute with his father and the deterioration
of their relationship (See pages and as pages 3 and 4) are not being considered as
they were not set forth in the separate statement.

The parties disagree as to which statute of limitations applies. Defendants contend the
Complaint is barred by Probate Code section 16061.8. Defendants further contend
that the oral breach of contract claim is barred by CCP 339(2) (breach of oral contract
two years), that the fraud, quiet title and constructive trust claims are barred by CCP
338(d), (three years), and that quiet title and constructive trust claims are barred by
339(1) (quiet title and constructive trust, two years).

Probate Code section 16010.8, governing the time in which to file a claim to contest a
trust, requires that: “No person upon whom the notification by the trustee is served
pursuant to this chapter, whether the notice is served on him or her within or after the
time period set forth in subdivision (f) of Section 16061.7, may bring an action to
contest the trust more than 120 days from the date the notification by the trustee is
served upon him or her, or 60 days from the day on which a copy of the terms of the
trust is mailed or personally delivered to him or her during that 120-day period,
whichever is later.” This requirement requires a plaintiff to file a claim in probate
within 120 days.

Defendants contend that the above Probate Code section required plaintiff’s Complaint
to be filed within 120 days of Notice. Defendants do not contend in the moving papers
that plaintiff was required to file a Claim in probate before he could file a civil action.

Plaintiff contends that CCP 366.3 is the correct statute of limitations. That statute
allows an action to be filed within one year of decedent’s death. CCP § 366.3,
governing the statute of limitation on a promise of decedent, provides in pertinent part:
“(a) If a person has a claim that arises from a promise or agreement with a decedent to
distribution from an estate or trust or under another instrument, whether the promise or
agreement was made orally or in writing, an action to enforce the claim to distribution
may be commenced within one year after the date of death, and the limitations period
that would have been applicable does not apply.” CCP 366.3 applies to all causes of
action in the Complaint. The court finds that the Complaint is timely under CCP 366.3.
Pursuant to that section, the other statutes of limitation relied on by defendant in this
motion, CCP 339(2), CCP 338(d), and CCP 339(1), do not apply.
Plaintiff relies on the case of Allen v Stoddard (2013) 212 Cal.App.4th 807, contending
that it supports the argument that CCP 366.3 prevails over a conflicting statute of
limitations in the Probate Code. Allen concerned a direct conflict in the statute of
limitations provided by Probate Code section 9353, requiring that a civil action be filed
within 90 days of denial of the claim made in probate, and 366.3 which gives plaintiffs
up to a year from the death of the decedent to file an action. CCP 366.3 was held to
prevail over the conflicting Probate Code section.

The Court in Allen limited its holding to the conflict between CCP 366.3 and section
9353 and excluded from the scope of its decision all other claim-filing statutes of
limitation in the Probate Code. The Court stated, “For example, we do not deal with
the case where a suit might be timely under section 366.3 but there has been no claim
to the estate, and thus no compliance with section 9351 at all.” (Allen at 816-817.)

Defendants contend Allen is distinguishable because in Allen plaintiff had filed a
probate claim under Probate Code section 9351. Defendants contend that plaintiff
never filed a claim against the Trust, and therefore Probate Code section 16061.8
precludes him from this action which is a challenge to the terms of the trust. However,
the moving papers and separate statement contain no material fact about whether or
not plaintiff filed a claim in probate. The first time this point is raised is in the reply.

Allen sets forth the underlying requirement that: “An action may not be commenced
against a decedent’s personal representative on a cause of action against the
decedent unless a claim is first filed as provided in this part and the claim is rejected in
whole or in part. Probate Code section 9351. Defendants appear to rely on this fact
to distinguish this case from Allen . However, defendants have not met their burden of
proof in the moving papers to establish that plaintiff never filed a claim in probate.

Probate Code 16010.8 is the Trust equivalent of Probate Code 9351(addressed in the
Allen case) that applies to estates. Defendants admit in the Reply that section
16010.8 is a claim filing requirement (See page 3 line 1) A claim filing requirement is
not a statute of limitations. Therefore, because the claim filing requirement does not
conflict with the statute of limitations in CCP 366.3, on the record before the Court
CCP 366.3 applies to plaintiff’s Complaint. The Court makes no ruling however, on
the issue of whether CCP 366.3 would render plaintiff’s Complaint timely if it is proven
at trial that he never filed a claim in probate.

Defendants have not met their burden in this motion to show that plaintiff never filed a
claim in probate, therefore the motion cannot be granted on the basis that plaintiff
never filed a claim in probate.

As to the remaining statute of limitations relied on by defendants, the Court finds
triable issues of fact as to when plaintiff was on notice that his father had written him
out of the trust. The answers to the questionnaire sent by plaintiff’s attorney in March
of 2007 were not unequivocal and a trier of fact could infer that plaintiff was not on
notice that his father was going to renege on the promise to give him the properties.

Punitive Damages:
Defendants also seek summary adjudication of the claim for punitive damages.
Plaintiff does not oppose the motion as to this claim. Therefore the Motion for
Summary Adjudication on the claim for punitive damages is unopposed and is granted.