Filed 1/21/20 Hogan v. Hogan CA3

NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(San Joaquin)

—-

MARK A. HOGAN et al.,

Plaintiffs and Respondents,

v.

DALE R. HOGAN et al.,

Defendants and Appellants.

C085432

(Super. Ct. No. STKPRTR20140000471, 39201400314049PRTRSTK)

This appeal concerns a sibling dispute regarding the delineation of powers between two trustee classes — the family administrative trustee and the co-investment trustees — in The Hogan Family Trust (the trust) relating to the right to vote the trust’s voting shares in Hogan Manufacturing, Inc. (Hogan Manufacturing). The trust was established by Bernice Hogan, the trustmaker of the trust. Each of her four children holds at least one trustee position: Mark Hogan is the family administrative trustee and a co-investment trustee, and his siblings Dale Hogan, Teri Hogan Lucas, and Jeff Hogan are each a co-investment trustee.

Mark and Teri (collectively respondents) filed a petition for determination of the existence of a trustee’s power (the determination petition) seeking a determination that Mark, as the family administrative trustee, has the authority to vote the Hogan Manufacturing shares without direction from the co-investment trustees. Dale and Jeff (collectively appellants) filed a response, opposing the determination petition. Following a lengthy bench trial, and after reconsidering its tentative ruling, the trial court ruled in favor of respondents.

The sole question before us is which trustee class has the authority to vote the voting shares in Hogan Manufacturing. We conclude section 7.04, subdivision (c) of the trust agreement vests this authority in the co-investment trustees and, accordingly, reverse the judgment on the determination petition.

FACTUAL AND PROCEDURAL BACKGROUND

The parties do not challenge or dispute the trial court’s recitation of facts in its statement of decision. We, accordingly, borrow liberally therefrom.

I

General Background

In 2006, Bernice sought to update her estate plan and retained Terry Wheeler with Strategic Wealth Legal Advisors, P.C. to do so. Mark assisted Bernice with this task from the initial consultation with Wheeler to the finalization of the estate planning documents and creation of the trust on April 19, 2007. Mark participated in all of the meetings with Wheeler, while other family members attended only some of them.

The trial court explained, “Bernice created the Trust for the purpose of transferring the financial benefits associated with her [Hogan Manufacturing] shares to her children, grandchildren and future generations.”

Hogan Manufacturing was initially established by the siblings’ grandfather and four individuals in 1944 under the name California Blowpipe and Steel Company. The company changed its name to Hogan Manufacturing in the 1970’s. The trial court noted Hogan Manufacturing employs more than a hundred people and generates in excess of $40 million in annual sales.

Hogan Manufacturing was historically managed by the Hogan family with a tradition of Hogan family members serving on the board of directors and working for the company. Mark has served as the president since 1988. Teri currently works for the company, and Dale and Jeff previously worked for the company.

Hogan Manufacturing has two types of stock — voting and nonvoting — with the voting stock comprising of 2,000 shares. Participation in elections for Hogan Manufacturing’s board of directors is limited to shareholders who own and control the voting stock.

Before the siblings’ father (Walter F. Hogan, Jr.) passed away in 1989, he and Bernice each owned 1,000 shares of the voting stock and an unspecified number of nonvoting shares. Following Walter’s passing, his 1,000 voting shares were divided among the siblings with Mark and Jeff each receiving 416.5 voting shares and Dale and Teri each receiving 83.5 voting shares to be voted by Mark and Jeff by proxy. Walter’s voting shares were distributed in this manner because “Walter’s will directed that his stock be distributed in a manner assuring that only those of his children who were actively involved in the day-to-day operations of [Hogan Manufacturing] received his voting shares” and “[a]t the time Walter’s estate was distributed in or around 1998, Mark and Jeff were the only Hogan children working at [Hogan Manufacturing].”

Shortly after the trust agreement was finalized and executed, Bernice sold 980 voting shares of Hogan Manufacturing and some nonvoting shares to the trust for $29,832,024. The trust thus owns 49 percent of the voting stock in Hogan Manufacturing. The shares are held in the name “Mark A. Hogan, as Family Administrative Trustee.” The Hogan Manufacturing shares are the primary asset of the trust and generate a significant income stream for the trust in the form of shareholder dividends.

Between 1989 and 2007, Bernice and the siblings served on Hogan Manufacturing’s board of directors. During this time, there were only a few board meetings and shareholder meetings and no such meetings took place in the years immediately preceding the creation of the trust. The trial court explained that, “[d]uring these years, the siblings acquiesced to Mark’s management and control of [Hogan Manufacturing] and the evidence shows that [Hogan Manufacturing] prospered.”

From the trust’s creation in April 2007 until April 2013, Mark continued to run and operate Hogan Manufacturing and the company held no shareholder or board of directors meetings. Mark also managed the trust and investments, and Jeff, Dale, and Teri took no actions to determine what assets were held by the trust, what the trust was doing with those assets, or how much money might be invested. The trial court found that “Jeff, Dale, and Teri’s involvement in the Trust was limited, usually consisting of putting their signatures to documents when asked to do so by Wheeler.”

The family dynamics changed when Jeff left Hogan Manufacturing in January 2013. At Jeff’s request, a board of directors meeting was held in May 2013. At Jeff’s and Dale’s request, the co-investment trustees held their first formal meeting since the inception of the trust in August 2013. Hogan Manufacturing also held annual shareholder meetings on June 26, 2013, May 15, 2014, and May 14, 2015, during each of which Mark, as family administrative trustee, voted the trust’s Hogan Manufacturing shares to elect the board of directors. The trial court explained: “Before Mark voted, the Co-Investment Trustees did not reach a consensus such that they could attempt to instruct Mark regarding how to vote these shares.” The authority-to-vote dispute arose out of Mark’s voting of the shares during these shareholder meetings and this litigation followed.

II

The Trust Generally

The trust is an irrevocable trust dated April 19, 2007. The trust agreement provides the trust “may be referred to as ‘MARK ALAN HOGAN, Family Administrative Trustee of the HOGAN FAMILY TRUST dated April 19, 2007.’ All trust property shall be held in the name of the Family Administrative Trustee.”

The parties to the trust agreement are identified as: (1) Bernice Rae Hogan as trustmaker; (2) Mark Alan Hogan as family administrative trustee; (3) Walt Norgol as jurisdictional administrative trustee; (4) Douglas A. Laugero as distribution trustee; and (5) Dale Ray Hogan, Jeff Warren Hogan, Mark Alan Hogan, and Teri Hogan Lucas as co-investment trustees. The “Statement of My Intent” section provides, in pertinent part: “I am creating this trust with the intent that assets transferred to the trust be held for the benefit of my trust beneficiaries on the terms and conditions set forth in this agreement. In order to maximize the benefit to my trust beneficiaries, I give my Trustees broad discretion with respect to management (in the case of the Family Administrative Trustee), distribution (in the case of the Distribution Trustee) and investment (in the case of the Investment Trustee) of assets in my trust.”

The trust delineates the trustees’ specific powers in two ways: by grant and by reservation. The co-investment trustees’ powers arise by grant only, whereas the family administrative trustee’s powers arise by both grant and reservation. The family administrative trustee’s express powers are specifically delineated in section 7.06 and are also scattered throughout the trust. Such powers include banking powers, nominee powers, and powers regarding subchapter S corporation stock provisions. Section 7.06 provides the family administrative trustee “shall have the sole and absolute authority to exercise those powers set forth in this Section, in addition to the powers expressly reserved unto the Family Administrative Trustee under the terms of the trust agreement or otherwise generally exercisable by any Trustee.” The family administrative trustee’s reserved powers are set forth as follows: “Any power or authority not expressly reserved in this agreement to the Jurisdictional Administrative Trustee, to the Distribution Trustee, or to the Investment Trustee shall be exercisable by the Family Administrative Trustee.” We discuss the provisions pertinent to the co-investment trustees’ powers in the discussion section below.

III

The Trial Court’s Statement Of Decision

The trial court found “the power to vote the [Hogan Manufacturing] shares is not ‘expressly reserved’ [citation] to the Investment Trustee in the Trust agreement, is not sufficiently tethered to the Investment Trustee’s authority ‘to make, or to refrain from making, any investment of trust property’ [citation], and is inconsistent with Bernice’s directive that the Investment Trustee ‘shall maintain all voting shares of Hogan Manufacturing, Inc., until January 1, 2057, . . . .’ ” The court found this interpretation to be “consistent with Bernice’s statement of intent, which says in pertinent part, ‘I am creating this trust with the intent that assets transferred to the trust be held for the benefit of my trust beneficiaries on the terms and conditions set forth in this agreement.”

The trial court interpreted the trust “as granting to the Investment Trustee specific authority to make (or refrain from) investments of income as well as discretion and authority to manage such investments. However, the Court conclude[d] that the Investment Trustee’s authority does not extend to or embrace the 980 [Hogan Manufacturing] shares. Rather, the Court interpret[ed] the Trust as differentiating between the [Hogan Manufacturing] shares and investments of income.” The trial court was “persuaded that voting of the [Hogan Manufacturing] shares in the context of this particular trust is properly a function of management and therefore within the purview of the Family Administrative Trustee.” The trial court said its interpretation was “largely consistent with the extrinsic evidence presented at trial” and consistent with “Bernice’s grant of broad management discretion to the Family Investment Trustee.”

DISCUSSION

I

Standard Of Review

The parties disagree on the standard of review. Appellants argue the standard of review is de novo because the trial court’s “statement of decision did not identify conflicting extrinsic evidence”; respondents argue the appropriate standard is substantial evidence because “the trial court assessed the credibility of extrinsic evidence and resolved conflicts in that evidence.”

We first review the trust de novo to determine if its terms are ambiguous. (Wells Fargo Bank v. Marshall (1993) 20 Cal.App.4th 447, 453.) In interpreting the trust, our prime consideration is Bernice’s intent. (Brown v. Labow (2007) 157 Cal.App.4th 795, 812 [“The paramount rule in construing such an instrument is to determine intent from the instrument itself and in accordance with applicable law”]; Prob. Code, § 21102, subd. (a) [“The intention of the transferor as expressed in the instrument controls the legal effect of the dispositions made in the instrument”].) We ascertain her intent from the whole of the trust instrument, not its separate parts. (Estate of Cairns (2010) 188 Cal.App.4th 937, 944.) We also “ ‘ “consider the circumstances under which the document was made so that the court may be placed in the position of the . . . trustor whose language it is interpreting, in order to determine whether the terms of the document are clear and definite, or ambiguous in some respect.” ’ ” (Estate of Powell (2000) 83 Cal.App.4th 1434, 1440.) A trust is ambiguous if the language is susceptible to two or more interpretations given the circumstances. (Estate of Russell (1968) 69 Cal.2d 200, 211.)

If we find the language ambiguous and the extrinsic evidence is not in conflict, the interpretation of the trust is a question of law we review de novo. (Ammerman v. Callender (2016) 245 Cal.App.4th 1058, 1072.) Where, however, the interpretation of the document turns on the competence and credibility of extrinsic evidence or a conflict therein, we accept or adhere to the interpretation adopted by the trial court provided the interpretation is supported by substantial evidence. (Estate of Ehrenfels (1966) 241 Cal.App.2d 215, 222, citing Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865-866 & fn. 2.)

II

The Co-Investment Trustees Have The Power To Vote The Hogan Manufacturing Shares

The co-investment trustees’ express powers are delineated in section 7.04 of the trust agreement. That section provides: “The Investment Trustee shall have the sole and absolute authority to exercise those powers set forth in this Section, in addition to the powers expressly reserved unto the Investment Trustee under the terms of this trust agreement.” The provision delineates 16 categories of specific powers, including the manner of investing trust property, investment powers in general, business powers, securities, brokerage, and margin powers, and powers regarding contracting, insurance, loans, and real and personal property. The powers enumerated in the section must be read in light of Bernice’s statement of intent that the co-investment trustees have “broad discretion with respect to . . . investment . . . of assets in [her] trust.”

Appellants argue, among other things, that subdivision (c) of section 7.04, entitled business powers, provides the co-investment trustees with the power and authority to vote the Hogan Manufacturing shares. The introductory paragraphs of section 7.04, subdivision (c) provide in pertinent part: “My Investment Trustee is authorized to serve as an officer, director, manager, or in any other capacity of any proprietorship, partnership, joint venture, corporation, or other enterprise in which the trust has an interest (whether or not such interest is total or controlling). My Investment Trustee may receive compensation for services. [¶] My Investment Trustee shall maintain all voting shares of Hogan Manufacturing, Inc., if any, in the trust until January 1, 2057, or until such time that the voting shares are sold, if any.[ ] [¶] My Investment Trustee may contract with and otherwise deal with any such enterprise in the same manner as they would with any enterprise in which the trust had no interest, and my Investment Trustee may use any voting power it may have to implement its authority (whether as the Investment Trustee or as an officer, director, or other official of the enterprise). [¶] . . . [¶] If the trust owns or acquires an interest in a business as a shareholder, partner, sole proprietor, member, participant in a joint venture or otherwise, my Investment Trustee may exercise the authority and discretion provided for in this Section. The powers granted in this Section are in addition to, and not in limitation of, all other powers granted to my Investment Trustee in this agreement.”

The introductory paragraph of subdivision (c)(2) of section 7.04, titled specific management powers, provides the “Investment Trustee shall have all power and authority necessary to manage and operate any business owned by the trust, whether directly or indirectly, including, without limitation, the express powers set forth in this subdivision.” That subdivision describes the co-investment trustees’ express powers relating to, among other things, management, operation, property, loans, and contracts. It further provides the “Investment Trustee may select and vote for directors, partners, associates and officers of the business.” And, the “Investment Trustee may generally exercise any and all powers necessary for the continuation, management, sale or dissolution of the business” and “may sell or liquidate the business or business interest on such price and on such terms as [the] Investment Trustee deems advisable and in the best interests of the trust and the beneficiaries.”

Appellants acknowledge “[s]tock in [Hogan Manufacturing] was not specifically identified as a business asset over which the [c]o-[i]nvestment [t]rustees had authority to vote.” They argue, however, the co-investment trustees’ power to vote the Hogan Manufacturing shares derives from section 7.04, subdivision (c)(2)’s provision that the co-investment trustees “may select and vote for directors, partners, associates and officers of the business” because the introductory paragraph of subdivision (c) provides the co-investment trustees “may exercise the authority and discretion provided for in this Section” if “the trust owns or acquires an interest in a business as a shareholder.” They believe the term business includes Hogan Manufacturing because “[t]here is no evidence in the Trust or otherwise that supports a finding that Bernice intended the distinction between a whole, compared to a fractional, interest owned in a business when the Trust was drafted.”

Respondents argue appellants misinterpret the trust agreement because: (1) the singular, specific reference to Hogan Manufacturing in the second introductory paragraph of section 7.04, subdivision (c) removes the corporation from the ambit of the generic terms business or business interest (which they argue are distinct concepts) used in subdivision (c)(2) and, by specifically delegating only the authority to maintain the Hogan Manufacturing shares in that paragraph, Bernice excluded any other powers that could have been delegated to the co-investment trustees under the doctrine expressio unius est exclusio alterius, as supported by “the extrinsic evidence indicating Bernice intended to differentiate between the [Hogan Manufacturing] shares, on one hand, and investments (including those in a business) from the income generated by those shares”; and (2) even if Hogan Manufacturing is not excluded from a generic term, it is included in the term business interest not business, and thus the provision relied upon does not apply to its shares. In their view, “the [t]rust does not contain a provision specifying that the [i]nvestment [t]rustee, or any trustee for that matter, has authority to vote the [Hogan Manufacturing] shares.” They believe the family administrative trustee thus holds the power to vote the Hogan Manufacturing shares under article one of the trust agreement, which reserves in the family administrative trustee any power not granted to another trustee class.

Appellants respond the paragraph requiring the co-investment trustees to maintain the Hogan Manufacturing shares merely intended to limit the co-investment trustees’ power of sale, it did not limit the co-investment trustees’ remaining powers enumerated in section 7.04, subdivision (c)(2). They further argue Wheeler’s letter shows Bernice understood his references to the business to mean Hogan Manufacturing and “[t]here was no evidence introduced at trial that there was any business other than [Hogan Manufacturing] in which Bernice had an ownership interest,” “necessarily suggest[ing] that references to ‘business’ in the [t]rust, referred to [Hogan Manufacturing].”

We first consider whether the paragraph expressly limiting the sale of the Hogan Manufacturing shares removes the corporation from the ambit of the generic terms business or business interest. We conclude the more reasonable interpretation is that it does not. Subdivision (c) delineates the co-investment trustees’ powers with respect to the trust’s investments in businesses, like Hogan Manufacturing. By placing the paragraph specifically dealing with Hogan Manufacturing in that subdivision, it is reasonable to conclude Bernice intended for the powers enumerated therein to apply to Hogan Manufacturing, except with respect to the power of sale specifically circumscribed in the second introductory paragraph. Thus, we do not read the Hogan Manufacturing paragraph as a delegation of one power to the exclusion of others, such that the expressio unius canon of construction applies as proposed by respondents, but instead read it as a limitation on the broad powers otherwise delegated in section 7.04, subdivision (c). Had Bernice intended to exclude Hogan Manufacturing from all of the powers listed in the subdivision, she could have said so — she did not.

This interpretation is more consistent with Bernice’s intent. As the trial court explained, Bernice created the trust to encompass the Hogan Manufacturing shares, the primary asset of the trust. It seems anomalous to create the trust for the express and specific purpose to encompass the shares and then only expressly limit the co-investment trustees’ power of sale while delegating substantial rights and authorities like voting of the shares through reservation-by-silence to the administrative trustee, as respondents propose.

Moreover, Bernice intended to maintain the status quo at the time of the trust’s creation. The status quo at that time was that Bernice and all four of her children (who became co-investment trustees) sat on Hogan Manufacturing’s board of directors. Section 7.04, subdivision (c) gives the co-investment trustees authority to serve on the board of directors of a corporation in which the trust has a business interest. Under respondents’ interpretation — that the paragraph authorizing the co-investment trustees to maintain the Hogan Manufacturing shares removes the corporation from the ambit of the generic terms — the co-investment trustees would not have the authority to serve on Hogan Manufacturing’s board of directors because the paragraph dealing with Hogan Manufacturing does not confer that authority on the them; the paragraph authorizes only the co-investment trustees to maintain the Hogan Manufacturing shares. Such an interpretation would be directly contrary to Bernice’s intent given the status quo when the trust was created.

We fail to see how “granting Mark the power to vote the [Hogan Manufacturing] shares in the [t]rust in his discretion was consistent with Bernice’s desire to maintain the status quo,” as respondents argue. While Mark was the president of Hogan Manufacturing and sat on the board of directors when the trust was created, respondents point to nothing in the record indicating he voted Bernice’s shares on her behalf. Mark’s control over the corporation as its president and a member of the board of directors is distinguishable from Bernice’s control over the corporation as a shareholder. The trust must be viewed from the perspective of Bernice’s power over Hogan Manufacturing because it was her power as a shareholder that was transferred to the trust through the sale of her shares. We find nothing in the record indicating Bernice intended to give Mark greater powers than his siblings with regard to her shareholder power in Hogan Manufacturing.

We also fail to see how Jeff’s testimony that the Hogan Manufacturing stock “was the ‘bedrock’ of the [t]rust, a ‘financial engine’ which would generate income that could be used to make investments” demonstrates “Bernice intended to differentiate between the [Hogan Manufacturing] shares, on one hand, and investments (including those in a business) from the income generated by those shares,” as respondents contend. Nothing in section 7.04, subdivision (c) differentiates between the co-investment trustees’ powers relating to the Hogan Manufacturing shares and the income generated by those shares.

The next question is whether Bernice intended to differentiate between the terms business and business interest such that the term business “contemplates ownership of a business in its entirety” whereas a business interest “appears to contemplate ownership of less than the whole business, i.e., a fractional interest,” as respondents propose. Under respondents’ interpretation, Hogan Manufacturing is a business interest because the trust owns 49 percent of the voting shares, rendering the provision allowing the co-investment trustees to “select and vote for directors, partners, associates and officers of the business” inapplicable to its shares.

At first blush, respondents’ proposed distinction between the terms business and business interest appears reasonable. Ordinarily, especially in a complex document like a trust agreement drafted by attorneys, we would expect the use of two different terms like business and business interest in the same subdivision to carry different meanings. Here, however, it does not appear the drafter intended such a result.

A critical problem with respondents’ argument is that the introductory paragraph of section 7.04, subdivision (c) authorizes a co-investment trustee to serve as an officer of a corporation “in which the trust has an interest (whether or not such interest is total or controlling).” This indicates the term business interest may include ownership of a business in its entirety — it does not appear that a business interest is limited to a fractional interest ownership, as respondents contend.

We further note the introductory paragraphs of section 7.04, subdivision (c) following the reference to a business interest as including a “total or controlling” interest expressly grant the powers in section 7.04, including the voting power at issue here, to the co-investment trustees “[i]f the trust owns or acquires an interest in a business as a shareholder, partner, sole proprietor, member, participant in a joint venture or otherwise.”

Respondents’ interpretation also results in a very complex reservation-by-silence scheme not supported by Bernice’s intent. Under this scheme, the co-investment trustees would have broad powers and authorities to manage and operate businesses wholly owned by the trust but would share such powers and authorities with the administrative trustee with respect to businesses in which the trust owns less than a 100 percent interest, depending on whether the trust expressly delegates the power or authority to the co-investment trustees. For example, while the co-investment trustees may “generally exercise any and all powers necessary for the continuation, management, sale or dissolution of” a business and “may participate in the sale, reorganization, merger, consolidation, recapitalization, or liquidation” of a business, the same paragraph references only a business interest when discussing the power to sell and liquidate. Reading this provision as respondents contend, the co-investment trustees would hold the powers and authorities necessary for the continuation, management, reorganization, merger, consolidation, or recapitalization with respect to a business in which the trust owns a 100 percent interest, whereas the administrative trustee would hold such powers and authorities with respect to a business in which the trust owns less than a 100 percent interest. The co-investment trustees would, however, have the power to sell and liquidate the trust’s interest in either a business or business interest.

We find no support in the text of the trust agreement or the extrinsic evidence that Bernice intended to create the fractured and complex reservation-by-silence scheme proposed by respondents. Respondents’ interpretation also leads to other issues.

For example, a paragraph in section 7.04, subdivision (c)(2) provides: “My Investment Trustee may take part in the management of the business and delegate duties with respect to management, together with the requisite powers, to any employee, manager, partner or associate of the business, without incurring any liability for the delegation. To the extent that the business interest held by the trust is not one that includes management powers . . . , my Investment Trustee shall have no obligation to supervise the management of the underlying assets, and no liability for the actions of those who do manage the business.” (Italics added.)

If we apply respondents’ interpretation to this provision, the co-investment trustees may take part in only the management of a business wholly owned by the trust and may not do so in a business in which the trust owns less than a 100 percent interest. Reading the provision this way, the last sentence of the paragraph makes no sense. Why would the co-investment trustees have “no liability for the actions of those who manage the business” (i.e., a wholly owned business) when a business interest does not include management powers? It does not appear the drafter intended to ascribe different meanings to the terms business and business interest in that sentence. Further, under respondents’ interpretation, the provision addresses only the management of a wholly owned business or a business interest that does not include management powers; the provision would be silent regarding management powers relating to a business interest that does include management powers. Such an interpretation again seems anomalous.

Reading section 7.04, subdivision (c) as a whole in light of Bernice’s intent, we conclude the co-investment trustees’ business powers and authorities delineated therein, as limited by the power of sale discussed in the second introductory paragraph of subdivision (c)(2), apply to Hogan Manufacturing, including the power to vote its shares. None of respondents’ remaining arguments persuade us Bernice intended otherwise.

It is true Bernice specified that all trust property was to be held in the name of the administrative trustee and the Hogan Manufacturing stock is indeed held in the name “Mark A. Hogan, as Family Administrative Trustee.” It is also true Corporations Code section 702, subdivision (a) provides the trustee in whose name the stock is held is entitled to vote it, as respondents argue. Respondents, however, overlook the fact that article one of the trust provides: “Any power or discretion expressly reserved in this agreement to the Investment Trustee shall be exercised by directing my Family Administrative Trustee, in writing or orally, to take, or to refrain from taking, specific actions or actions.” Under the interpretation adopted here, the trust gives the co-investment trustees the power to decide how to vote the Hogan Manufacturing shares and to then direct the administrative trustee to cast the votes. Thus, the interpretation does not run afoul of Corporations Code section 702, subdivision (a) because the administrative trustee takes the act — i.e., the voting of the shares — following the directive by the co-investment trustees.

Respondents further believe the extrinsic evidence showing appellants “failed to express any desire to vote the [Hogan Manufacturing] shares in their capacity as [co-i]nvestment [t]rustees in the six years following their execution of the [t]rust” “support[s] a determination that the [co-i]nvestment [t]rustees do not have the power to vote the [Hogan Manufacturing] shares.” We note, however, there were no shareholder meetings between 2007 and 2013 and, thus, no opportunity or need to vote the Hogan Manufacturing shares. The co-investment trustees’ actions following the trust’s creation also do not assist us in determining Bernice’s intent.

Because we conclude the co-investment trustees have the express power to vote the Hogan Manufacturing shares under section 7.04, subdivision (c), we do not address the parties’ remaining arguments.

DISPOSITION

The judgment on the determination petition is reversed. Appellants shall recover their costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1) & (2).)

/s/

Robie, J.

We concur:

/s/

Blease, Acting P. J.

/s/

Krause, J.