Case Number: BP140257 Hearing Date: June 10, 2014 Dept: 11

In re the Stanley Diller Living Trust
Case No. BP140257

Ruling on Respondent’s Res Judicata Defense

On 6/5/14 City National Bank (“CNB”), Trustee of the Stanley Diller Living Trust, dated 11/14/95, as amended (the “Trust”), filed its Ex Parte Application (the “Application”). The Application seeks instructions pursuant to Probate Code § 17200 or alternatively, an order shortening time for hearing on such petition. On that same date, the court, by Judge Lesley Green, granted the Application shortening time to 6/10/14 for hearing on the matter. The Application seeks Instructions relating to a sale of the Trust real property located at 165 S. Hudson Avenue, Los Angeles in which Miriam Diller currently resides (the “Residence”).

The Trust provides for a marital trust to be established for Miriam Diller upon decedent’s death. The marital trust is to be funded with the Residence, from which Miriam Diller is to receive $8,000 per month for a period of 3 years following decedent’s death. The Residence expenses are also to be paid from the marital trust and upon sale, Miriam Diller is to receive specific distributions.

Issues pertaining to the Residence have been before this court previously. On 5/2/13 CNB filed its Petition for Order Directing Transfer of Possession of Property Belonging to Trustee (the “850 Petition”). The 850 Petition asked the court to direct Miriam Diller to vacate and transfer possession of the Residence to CNB as Trustee for the purpose of enabling the Trustee to prepare the home for sale and to effectuate such a sale. CNB asserted this was necessary due to the Trust’s financial inability to pay the encumbrances and other obligations pertaining to the Residence. Miriam Diller filed her Objections and thereafter, on 1/22/14 the matter proceeded to an evidentiary hearing. On 4/23/14, the court signed a judgment in favor of Miriam Diller on the 850 Petition.

During the prior evidentiary hearings the court focused upon whether granting the 850 Petition would be in Miriam Diller’s best interests. The court explicitly noted therein that the 850 Petition’s prayer merely sought issuance of an Order requiring that “Ms. Diller vacate the Hudson Residence immediately and transfer immediate, unfettered and unobstructed possession of the Hudson residence to the Trustee, pursuant to Probate Code § 856.” In ruling in Miriam Diller’s favor, the court determined that the relief sought, as framed by the pleadings, would not have been in Miriam Diller’s best interests as required by the Trust at ¶ 4.12.6. This was because there was no plan presented for Miriam Diller’s housing requirements during the interim period when the property was to be readied for sale and pending its ultimate sale.

In the instant 17200 Petition, CNB, as Trustee, advises of a change in circumstances brought about by two (2) recent occurrences. Firstly, Stanley Diller’s daughter, Bridgette Reid, who had been voluntarily paying the mortgage until recently, has since ceased doing so. Secondly, and perhaps in whole or in part as a result of the cessation on Ms. Reid’s part in making payments on the Residence, the institutional lender who holds a secured interest in the Residence has commenced a foreclosure process to collect on the sums owing to it. Both of these factors were previously addressed by this court in its prior Statement of Decision. All of this is relevant because, in response to CNB’s 17200 Petition, Miriam Diller’s counsel has raised a res judicata defense.

For the reasons that follow, the court finds the instant 17200 Petition is not barred by res judicata. To begin with, the instant 17200 Petition, that merely seeks instructions, requests relief which is different than what had been sought in the context of the prior 850 Petition. Furthermore, the court finds that even had the two (2) petitions sought the same, or even substantially identical relief, the changed circumstances would serve to defeat the res judicata defense in any event. The pending foreclosure now may threaten the trust with a loss of the Residence in its entirety, including most particularly a loss of its substantial equity which must be preserved if the trust is to satisfy its obligations to, among others, Miriam Diller. Res judicata does not bar a successive petition made after a change in circumstances, even if the petition raises the same issue. In re Case’s Guardianship, 57 Cal.App.2d 844, 846-8.

In Case, the court denied the petitioner’s first petition to terminate the guardianship because, at the time, the petitioner was not fit to be awarded custody. Id. at 846-7. Thereafter, the court approved the petitioner’s successive petition to terminate the guardianship due to a change in circumstances making him fit to be awarded custody. Id. at 846-7. Even though the second petition again raised the issue of the petitioner’s fitness for custody, the court ruled that res judicata did not bar the second petition due to the change in circumstances. Id. at 847-8 (“[t]o apply the doctrine of res judicata… would be a defeat of the court’s duty to consider such circumstances as may have occurred after the first order”). The court stated that it “is not bound by any judgment rendered at a previous hearing except as to the facts which have remained unchanged since the former hearing.” Id. at 847-8. Although Case involved a guardianship, the court is unaware of any reason why a different outcome would apply in a conservatorship setting.

Therefore, in light of the different relief being sought in the instant Probate Code § 17200 Petition as compared to the prior Probate Code § 850 Petition, as well as the substantial and material change in circumstances as noted above, the court finds the doctrine of res judicata inapplicable.

The matter will therefore proceed to hearing.