Laub v. Dudley

Filed 11/7/08 Laub v. Dudley CA6

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

SIXTH APPELLATE DISTRICT

This is an appeal from a probate order entered in April 2007, which concerns an irrevocable trust that was established following a marital dissolution. The appellant is Constance Anne Dudley, who is one of the settlors of the trust, a former co-trustee, and a trust beneficiary. The respondents on appeal are the three current co-trustees of the trust: Paul Laub, Dudleys ex-husband; Breck Tostevin, an accountant; and Andrew Swartz, an attorney.

Dudley challenges several aspects of the April 2007 order. First, she takes issue with the trial courts determination that she relinquished the power to control trust assets when she resigned as a co-trustee. She maintains that she enjoyed that power in her capacity as a trust beneficiary. Next, Dudley challenges the orders directive to turn over trust property, including rents. In her view, that directive contravenes her life estate in the property. Finally, Dudley asserts that the trial court erred in allowing respondents to borrow against the trusts real property.

In connection with her bid for reversal of the April 2007 order, Dudley also asks this court to nullify two subsequent orders: a May 2007 order expunging certain documents that she recorded, and a June 2007 order finding her in contempt of court for refusing to turn over trust property.

Respondents defend the April 2007 order. They assert that Dudley relinquished her special power to control assets when she resigned as a co-trustee in 2005, while she was in bankruptcy. Moreover, respondents argue, Dudley is estopped from claiming a life estate in the trust property, as distinct from her interest as an income beneficiary for life. Respondents also defend the challenged provisions of the April 2007 order that authorize them to borrow against the trust property.

Concerning the subsequent orders, respondents assert that Dudley is not entitled to challenge either of them here. As for the May 2007 expungement order, respondents argue that finality prevents review: it was separately appealable but no timely appeal was brought. Regarding the June 2007 contempt order, respondents contend that it is not appealable and may be challenged only by writ.

For reasons explained below, we consider only the April 2007 order here, which we affirm.

BACKGROUND

At issue in this appeal is an irrevocable trust, called the Lincoln Trust, which was created following dissolution of the marriage of Laub and Dudley. In November 1996, Laub and Dudley entered into a written marital settlement agreement. The marital settlement agreement was merged into the dissolution judgment. In February 1997, the Lincoln Trust was created. The trust was simultaneously amended to incorporate an intervening family court order, which restricts borrowing against the trust property.

Trust Provisions

Article One of the Lincoln Trust relates to its creation. The parties to the trust are (1) the settlors, Laub and Dudley, and (2) the three original trustees, Tostevin, Swartz, and Dudley (then known as Constance Anne Laub). Under the heading Trust Purpose, the instrument recites that the settlors have two sons: Avram Laub, born in 1983, and Barak Laub, born in 1986. It further recites that the trust is established pursuant to the marital settlement agreement, by which the settlors agreed, among other things, to place certain improved real property in Carmel, California into an irrevocable trust for the benefit of Avram and Barak, under which Constance Laub (Constance) shall be the sole income beneficiary for her lifetime, with Paul Laub (Paul) succeeding to such income interest for his lifetime, if he survives her.

The improved real property of the trust is a commercial building in Carmel, located on the corner of Ocean and Lincoln, which is known as the Lincoln Building or Linoc. The building generates income from tenants. According to her appellate brief, Dudley maintains both a business and a residence there, though the pre-hearing evidentiary record is silent as to those facts.

In Article Three, the trust provides for payments and distributions. As relevant here, it directs the distribution of income as follows: The trustees shall distribute to or apply for the benefit of Constance, so long as Constance lives, the entire net income of the trust .

Article Four of the Lincoln Trust is entitled Trustee. That article begins with section 4.1, a provision for successor trustees, which sets forth one rule to apply during Dudleys lifetime and another to govern upon her death. Section 4.2 defines trustees. Next among the articles provisions is section 4.3, entitled Number of Trustees Required to Act. As with section 4.1, that provision establishes one rule that governs during Dudleys lifetime and another that applies following her death.

One of the central disputes in this proceeding is the proper construction of the first part of section 4.3, which reads: Prior to the death of Constance, all decisions and actions by the trustees shall be made and taken by the affirmative vote of Constance and at least one (1) other trustee. The parties disagreement centers on whether the decision-making power granted to Dudley in section 4.3 arises from her status as beneficiary, as she claims, or from her status as a trustee, as respondents assert.

Article Five is entitled Concluding Provisions. According to section 5.2: The captions appearing in this instrument are for convenience of reference only, and shall be disregarded in determining the meaning and effect of the provisions of this instrument.

The trust document concludes with Article Six, captioned Signatures and Execution. The document was signed by the settlors and the trustees on February 25, 1997.

On the date that the trust instrument was signed, the parties also executed a first amendment to the trust. The amendment incorporates verbatim a portion of a family court order, entered February 19, 1997, authorizing an encumbrance of $115,000 against the Lincoln Building but curtailing further secured borrowing.

Dudleys Bankruptcy

In April 2003, Dudley filed a voluntary bankruptcy petition under Chapter 11.

In January 2005, with the bankruptcy proceedings still pending, Dudley resigned as trustee of the Lincoln Trust. Laub was appointed as successor trustee. Laub and his co-trustees, Tostevin and Swartz, are the respondents in this appeal.

In June 2005, the Chapter 11 bankruptcy trustee filed a motion for summary judgment, asserting a right to Dudleys income stream from the trust. Dudley filed a cross-motion for summary judgment, on the ground that the income was exempt or excluded from the bankruptcy estate. Being non-parties to the bankruptcy, respondents lacked standing with respect to the summary judgment motions but they nevertheless asserted [their] rights by requesting relief from the automatic bankruptcy stay.

In July 2005, at the hearing on the motions, Judge Weissbrodt directed the parties to engage in mediation. The mediation, held September 1, 2005, included Dudley, respondents, and the Chapter 11 bankruptcy trustee. A settlement was reached. In December 2005, the parties executed a written agreement and mutual release, reflecting their settlement. The Chapter 11 trustee filed a motion for compromise, seeking bankruptcy court approval for the settlement.

At a hearing held in January 2006, Judge Weissbrodt orally approved the parties compromise, over the objection of a creditor, Charles Clapp. A written order reflecting the judges approval was filed the following month. Clapp appealed.

In September 2006, Judge Ware rejected Clapps appeal and affirmed Judge Weissbrodts approval of the settlement agreement. At the same time, Judge Ware also lifted the stay order that had been in place since April 2006, thereby granting respondents earlier request for that relief. At that point, respondents were able to proceed in state court. They did so promptly.

Trial Court Proceedings

On September 12, 2006, respondents brought two petitions for instructions in superior court, under Probate Code section 17200.[1] One (the construction petition) sought interpretation of the trust, together with an order for the return of trust property. The other (the expenditure petition) requested approval of the bankruptcy settlement, plus an order permitting respondents to borrow funds, secured by the trust property, to pay trust expenses.

On October 13, 2006, the date set for the hearing on the petitions, the court granted a continuance, as requested by counsel specially appearing for Dudley. The court also established a schedule for submitting papers. Among other things, the court requested briefing concerning the settlors intent concerning the trust. The parties responded by filing more than 500 pages of additional documentation.

The continued hearing was held on January 18, 2007. At the hearing, the trial court announced its tentative decision to grant both of respondents petitions. It then gave the parties the opportunity to further argue their respective positions orally and to address specific questions by the court. The court then took the matter under submission.

April 2007 Order

On April 13, 2007, the court filed a formal order granting both of respondents petitions. In doing so, the court made several determinations that are relevant to this appeal.

Evidentiary Objections:At the outset, the trial court ruled on respondents written objections to expert opinion evidence proffered by Dudley. The challenged evidence consisted of opinions by two attorneys concerning the proper interpretation of section 4.3 of the Lincoln Trust. The trial court sustained respondents objections, concluding that the opinions were both hearsay and improper opinion. However, the court stated, the opinions were read and considered as additional argument in support of Ms. Dudleys position.

Construction Petition: Addressing the construction petition, the court first took up the parties dispute over the interpretation of section 4.3. The court began by summarizing the parties respective positions concerning that provision, saying: Ms. Dudley contends that the first sentence gives her the authority to participate in all decisions of the trust, even when she is no longer acting in the capacity of a co-trustee. Ms. Dudley argues that because she was giving up all right to support, the intent of the Settlors was for her to have control over trust assets, even in an individual capacity, in order for her to retain control over her income. Turning to respondents contrary position, the court noted their assertion that upon her resignation as co-trustee, Ms. Dudley no longer had any power or right to exercise any vote with respect to the actions or decisions of the trustees. Respondents further contended that they should be able to act based on a vote supported by at least two of the three co-trustees.

After describing the parties positions, the court made several findings relevant to its interpretation of section 4.3, including these: Ms. Dudleys bankruptcy clearly was not anticipated by the settlors. Nor, as is evident from the absence of language in the trust document itself, was Ms. Dudleys resignation as a co-trustee anticipated.

In the courts view, the trust appears to provide that Ms. Dudley, as one of the trustees, is to be involved in all decision making and acts of the trusts. The Lincoln Trust does not provide this power to Ms. Dudley, the beneficiary. Thus, by resigning as co-trustee of the Lincoln Trust, Dudley relinquished her power under section 4.3 to participate in decision making and to control the trust. This authority was given to her only in her capacity as a trustee and does not extend to her in any other capacity.

Turning to the other issue raised by the construction petition, the trial court granted respondents request for an order compelling Dudley to return any trust property. The court thus ordered Dudley to turn over title and possession of any assets of the Lincoln Trust, including but not limited to accounts held by Fremont Bank, to respondents. It further ordered her to relinquish control over the collection of all rents, either in her possession or anticipated in the future and any other management of the Lincoln Trust building. Because Dudley was no longer a trustee of the Lincoln Trust, the court observed, she had no authority to act on its behalf.

Expenditure Petition: Having ruled on the construction petition, the court considered the expenditure petition. It quickly dispatched the first issue raised in the petition, approving the bankruptcy settlement as requested.

The court then addressed the more difficult aspect of this petition, the request to borrow money secured by a deed of trust on the Linoc Building. Respondents wanted to borrow money not only to pay the settlement amount to the Bankruptcy Trustee and the attorneys fees associated with the Bankruptcy proceedings, but to borrow additional sums to pay trustees fees, delinquent taxes, deferred maintenance/repairs, plus retain a reserve for other capital repairs and extraordinary costs of administration. As the court noted: Of the $725,000 sought to be borrowed by the trustees, Ms. Dudley does not object to paying the $175,000 settlement amount to her Bankruptcy Trustee, nor does she object to borrowing for payment of her attorneys fees obligations from the bankruptcy proceeding, which amounted to more than $120,000. Dudley did object to the balance of the items however, particularly respondents attorney fees. As of August 2006, respondents owed approximately $150,000 in fees to Grunsky, Ebey, Farrar & Howell (the Grunsky firm), mainly for its work in representing the trust in the bankruptcy proceedings.

The court overruled all of Dudleys objections to the claimed expenses. As for respondents attorney fees, the court found that Dudley had authorized the retention of the Grunsky firm, having expressly waived any conflict. The court concluded that the firms fees should be paid from the trust.

Concerning property taxes, the court instructed the trustees to verify whether there were any outstanding property taxes, and, if so, to borrow the amount necessary to pay them. The court also authorized the payment of trustee fees to Tostevin and Swartz for services provided.

On the question of borrowing for deferred maintenance and for a reserve for capital repairs, the court noted the absence of trust provisions for these types of expenses. But as the court further observed, apart from the building itself, there are no assets in the trust from which to pay for capital expenses. The court therefore authorized the trustees to borrow up to $100,000 for deferred maintenance and for a reserve for capital expenditures. The court then acknowledged the existence of a similar problem with regard to other extraordinary costs. It ruled: To the extent that extraordinary costs may be incurred, the trustees are authorized to borrow an additional $50,000.

The court thus authorized respondents to borrow a total of $725,000 for the foregoing expenses, secured by an interest in the real property of the trust, at a commercially reasonable rate of interest not to exceed 7.75%. The court ordered Dudley to maintain a life insurance policy sufficient to cover specified portions of the authorized borrowing, with the trust as the primary beneficiary.

Dudleys Motion for Reconsideration

On April 27, 2007, Dudley moved for reconsideration. Respondents opposed the motion.

At a hearing held May 25, 2007, the court denied Dudleys reconsideration motion, concluding that it lacked jurisdiction given the pendency of this appeal, which Dudley had initiated two weeks before.

Respondents Motion to Expunge

Meanwhile, on May 7, 2007, Dudley recorded certain documents against the Lincoln Building to reflect her claimed life estate in the property as well as the borrowing restrictions established by the family courts February 1997 ruling.

Respondents brought a motion to expunge those documents from the property records, which the court granted on May 29, 2007. As stated in the courts written order, the improper recordation of these documents has created a cloud on the title of the real property of the Lincoln Trust and has interfered with and prevented the Lincoln Trustees from obtaining a loan in compliance with [the April 2007 order] and a separate settlement agreement between the parties hereto and the Trustee in Bankruptcy.

Contempt Proceedings

At the May 29th expungement hearing, Dudley was served with an order to show cause why she should not be held in contempt for disobeying the April 2007 order. The court scheduled the contempt hearing and established a briefing schedule.

Following a three-day evidentiary hearing, the court found Dudley in contempt.

Dudley challenges that finding in this appeal. After appellate briefing was complete, Dudley also brought a petition for writ of habeas corpus in this court (H032660, filed February 29, 2008).

Appeal

Dudley noticed this appeal on May 11, 2007. She submitted her notice designating the appellate record 10 days later. In July 2007, Dudley filed an amended designation, which included proceedings from and after May 2007. Shortly thereafter, respondents filed a counter-designation.

In addition to their respective record designations, both parties have submitted requests for judicial notice in this court, which we have granted. The judicially noticed documents relate to the expungement and contempt proceedings.

As indicated above, Dudley challenges the April 2007 order here on several grounds. She also seeks reversal of two subsequent orders: the expungement order, made in May 2007, and the contempt order, rendered in June 2007.

Respondents defend the April 2007 order. Additionally, they assert that Dudley may not challenge the subsequent orders here.

matters considered in THIS APPEAL

Given the parties dispute over the scope of this appeal, we first consider which matters are now before us. As we now explain, only the April 2007 order is at issue in this appeal, but we shall review that order in its entirety.

A. April 2007 Order

The appealability of probate court orders is governed by the Probate Code.[2] ( 1300; 1304; see Code Civ. Proc., 904.1, subd. (a)(10).)

Dudleys timely notice of appeal specifies that it is taken from the April 2007 order. According to respondents, however, the Order insofar as it accepts Dudleys resignation and requires her to return property of the trust to the control of the current trustees is not subject to appeal.

As provided in the Probate Code, any order granting or denying a petition brought under section 17200 is appealable, except (1) orders compelling a trustee to submit an account or report, and (2) orders accepting the resignation of a trustee. ( 1304, subd. (a)(1), (2); see generally, Eisenberg, et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2007) 2:230 to 231.3, pp. 2-109 to 2-110.) Moreover, even an order compelling the trustee to account is appealable when it expressly or implicitly decides other issues that could be the subject of an appealable probate order. (Esslinger v. Cummins (2006) 144 Cal.App.4th 517, 522.)

Here, the April 2007 order provides specific instructions regarding interpretation of the trust and management of its internal affairs. Respondents characterize the directive requiring Dudley to turn over trust property as an order compelling her to account as a former trustee. But that provision also determines that Dudley has no right to the trust property. An order determining the existence of a power, duty, or right under a trust is appealable. (Esslinger v. Cummins, supra, 144 Cal.App.4th at p. 523.)

Thus, contrary to respondents assertions, all challenged aspects of the April 2007 order are subject to review in this appeal.

B. May 2007 Expungement Order

Turning to the May 2007 expungement order, respondents argue that we may not review it here, since it was separately appealable and no timely appeal was brought. Dudley offers no real response to that argument, replying only that the expungement order is dependent upon the appealed order, and thus, should be reversed as well. We agree with respondents that this order is beyond appellate review.

We first consider whether the May 2007 expungement order was separately appealable.

Generally speaking, a probate orders appealability is determined not from its form, but from its legal effect. (In re Estate of Miramontes-Najera (2004) 118 Cal.App.4th 750, 755.) Here, the legal effect of the expungement order was a final determination that Dudley was not entitled to record the expunged documents. No further action by the trial court was required or contemplated concerning this particular aspect of the Lincoln Trust litigation. A judgment is final only when it determines all of the rights of the parties and requires no further judicial action to give effect to its provisions. (Gollard v. Bayless (1959) 174 Cal.App.2d 827, 828-829 [judgment was appealable, where court enjoined defendants from dealing with trust property in any manner that would affect its legal or equitable ownership].)

More specifically, as legal authority for granting respondents expungement motion in this case, the trial court cited Civil Code section 3412. Actions brought under sections 3412 and 3413 of the Civil Code relate to situations where there is an outstanding instrument which it is sought to annul. (Hilton v. Reed. (1941) 46 Cal.App.2d 449, 451.) Under these sections, the proceeding is aimed at a particular instrument, or piece of evidence, which is dangerous to the plaintiffs rights in property. (Castro v. Barry (1889) 79 Cal. 443, 446.) In such actions, the resulting judgment appears to be reviewable on appeal. (Ibid. [hearing the appeal on the merits]; cf. Shah v. McMahon (2007) 148 Cal.App.4th 526, 529 [as explicitly provided in Code Civ. Proc.  405.39, an order expunging lis pendens is not appealable; it can be reviewed only by writ of mandate filed within 20 days].)

It thus appears that Dudley could have prosecuted a direct appeal from the expungement order. And she does not contend otherwise.

But no timely appeal was filed. Review of this order thus is foreclosed. (Alioto Fish Co. v. Alioto (1994) 27 Cal.App.4th 1669, 1685 [no appellate review where appellants failed to file timely notices of appeal with respect to these orders and they are now final].)

For these reasons, we shall not consider the merits of the May 2007 expungement order in this appeal.

C. June 2007 Contempt Order

Addressing the June 2007 contempt order, respondents contend that no appeal lies from that order. As before, Dudleys appellate response is a bare statement in her reply brief that the contempt order is dependent on the April 2007 order.

Respondents are correct that appellate review of a contempt order may be had only by extraordinary writ. (Code Civ. Proc., 1222; People v. Gonzalez (1996) 12 Cal.4th 804, 816.) Dudley has petitioned this court for a writ of habeas corpus, which is a proper vehicle for review of the contempt order. We consider and resolve that writ petition separately from this appeal.

DISCUSSION

We begin our analysis of the April 2007 order by describing the general principles of trust law that govern these proceedings. Against that backdrop, we address the parties specific contentions here.

I. General Principles of Trust Law

A. Trusts: Nature and Creation

A trust is a fiduciary relationship with respect to property in which the person holding legal title to the propertythe trusteehas an equitable obligation to manage the property for the benefit of anotherthe beneficiary. (Moeller v. Superior Court (1997) 16 Cal.4th 1124, 1133-1134.) The beneficiary is sometimes referred to as the cestui que trust. (13 Witkin, Summary of Cal. Law (10th ed., 2005) Trusts, 39, p. 611.) Depending on the provisions of the trust, a beneficiary may be entitled to principal (corpus), income, or both. (Wogman v. Wells Fargo Bank (1954) 123 Cal.App.2d 657, 664 [there, beneficiary was entitled to income only].) Income beneficiary means a person to whom net income of a trust is or may be payable. ( 16325.)

A spendthrift trust is one particular type of trust. It is of the essence of a spendthrift trust that it is not subject to voluntary alienation by the cestui, nor subject to involuntary alienation through attachment or other process at the suit of his creditors. (Kelly v. Kelly (1938) 11 Cal.2d 356, 362.) It is the intent of the trustor in creating a spendthrift trust that the benefits shall reach the hands of the cestui free from liens and attachments. (Id. at 363.) The critical inquiry in determining whether a spendthrift trust is valid under California law is whether the trusts beneficiaries exercise excessive control over the trust. (In re Moses (1999) 167 F.3d 470, 473.) California law does not allow a participant with excessive control over his or her trust to shield that trust with an anti-alienation provision lacking true substance. (Ibid.; see 15300-15309; Nelson v. California Trust Co. (1949) 33 Cal.2d 501, 501-502.)

The person establishing the trust is called the settlor or trustor. (13 Witkin, Summary of Cal. Law, supra, Trusts, 25, p. 597.) An express trust is generally created in one of two ways: (a) a declaration of trust, by which the owner of property declares that he or she holds the property as trustee for some beneficiary; (b) a transfer in trust, by which the owner transfers the property to another as trustee for some beneficiary, either by deed or other transfer inter vivos, or by will. (Id. at p. 596.) The five elements required to create an express trust are (1) a competent trustor, (2) trust intent, (3) trust property, (4) trust purpose, and (5) a beneficiary. (Keitel v. Heubel (2002) 103 Cal.App.4th 324, 337; see 15200.)

B. The Trustees Obligations and Powers

The Probate Code imposes numerous obligations on trustees administering express trusts such as the Trust at issue in this case. (Saks v. Damon Raike & Co. (1992) 7 Cal.App.4th 419, 428.) On acceptance of the trust, the trustee has a duty to administer the trust according to the trust instrument and, except to the extent the trust instrument provides otherwise, according to this division. ( 16000; see generally Probate Code, Division 9 (Trust Law), 15000 et seq.) A trustees powers include those specified in the trust instrument, those conferred by statute, and those needed to satisfy the reasonable person and prudent investor standards of care in managing the trust. (Moeller v. Superior Court, supra, 16 Cal.4th at p. 1129.)

The Probate Code confers powers on a trustee that enable effective discharge of this duty. (Moeller v. Superior Court, supra, 16 Cal.4th at p. 1132; 16200 et seq.) This express statutory authority includes the power to pay trust expenses ( 16243), the power to borrow ( 16241), and the power to encumber trust property ( 16228).

C. Judicial Proceedings Concerning Trusts

The Probate Code also contains a mechanism for trustees and beneficiaries to petition the probate court for orders concerning the internal affairs of the trust. ( 17200, subd. (a).) Among other things, such petitions may be brought to determine questions of construction of a trust instrument or the existence or nonexistence of any immunity, power, privilege, duty, or right. (Id., subd. (b)(1), (2).) They are also properly employed to instruct the trustee, to grant powers to the trustee and to fix or allow trustee compensation. (Id., subd. (b)(6), (8), (9).) Furthermore, such petitions may be brought to modify or terminate a trust. (Id., subd. (b)(13); 15400-15414.)

In their capacity as trustees, respondents used this mechanism here. The resulting April 2007 order gave rise to this appeal.

II. Analysis

As noted above, Dudley challenges three specific aspects of the April 2007 order. First, Dudley disputes the determination that she had power to control trust assets in her capacity as a trustee only, which is how the trial court interpreted section 4.3 of the trust. Next, Dudley challenges the orders directive to turn over trust property to respondents, asserting that it contravenes her life estate in the Lincoln Building, as recognized in the marital settlement agreement that gave rise to the trust. Finally, Dudley argues that the trial court erred in allowing respondents to borrow against the trusts real property for the purposes specified in the order.

Respondents dispute all three arguments. Concerning Dudleys first contention, respondents agree with the trial courts interpretation of section 4.3 of the trust, and they defend the courts determination that Dudley relinquished her special power to control assets under that provision when she resigned as trustee. Addressing Dudleys second ground of appeal, respondents argue that she is estopped from claiming a life estate in the trust property; they maintain that she is merely a life income beneficiary. Finally, respondents defend the provisions of the April 2007 order authorizing them to borrow against the trust property.

We consider each of Dudleys three appellate contentions in turn, starting with the disputed issue of interpretation of the trust.

A. Interpretation of Section 4.3 of the Lincoln Trust

Our analysis of this first issue will proceed in three steps. First, to provide legal context, we summarize the general principles that govern the interpretation of trusts. Next, to provide factual context, we describe the trial courts application of those principles. Finally, we describe and then employ the proper appellate review standards to resolve the specific issues presented here.

1. Legal Principles Governing Trust Interpretation

a. Ascertaining the trustors intent

In construing trust instruments, as in the construction and interpretation of all documents, the duty of the court is to first ascertain and then, if possible, give effect to the intent of the maker. (Estate of Gump (1940) 16 Cal.2d 535, 548; see 21102, subd. (a) [trustors intent controls].)

It is axiomatic that we must look to the instrument creating the trust to determine the nature, extent and object of said trust. (Moxley v. Title Ins. & Trust Co. (1946) 27 Cal.2d 457, 463.) Accordingly, in ascertaining the intention of the trustor the court is not limited to determining what is meant by any particular phrase but may also consider the necessary implication arising from the language of the instrument as a whole. (Brock v. Hall (1949) 33 Cal.2d 885, 890; see 21121.) The court also examines relevant circumstances surrounding creation of the trust. (Estate of Powell (2000) 83 Cal.App.4th 1434, 1440.) The initial question before the court is whether an interpretation of the written instrument will yield a clear intent on the part of the testator, or must the court resort to certain legal presumptions known as rules of construction. (Estate of Newmark (1977) 67 Cal.App.3d 350, 355-356.) Before resorting to legal presumptions, the court must attempt to ascertain the intent of the [maker] by examining the [instrument] as a whole and the circumstances at the time of its execution. (Newman v. Wells Fargo Bank (1996) 14 Cal.4th 126, 134.)

b. Ambiguity and extrinsic evidence

An ambiguity arises when language may be applied in more than one way. (Estate of Dye (2001) 92 Cal.App.4th 966, 976.) Put another way, a document is ambiguous when, in the light of the circumstances surrounding execution of the instrument, the written language is fairly susceptible of two or more constructions. (Estate of Russell (1968) 69 Cal.2d 200, 211.) Ambiguities may be either latent or patent. A latent ambiguity is one which is not apparent on the face of the [instrument] but is disclosed by some fact collateral to it. (Id. at p. 207.) A patent ambiguity is an uncertainty which appears on the face of the [instrument]. (Ibid.)

Extrinsic evidence always may be introduced initially in order to show that under the circumstances of a particular case the seemingly clear language of [an instrument] actually embodies a latent ambiguity. (Estate of Russell, supra, 69 Cal.2d at p. 207.) Once shown, such ambiguity may be resolved by extrinsic evidence. (Ibid.; 21102, subd. (c) [extrinsic evidence may be admitted to determine trustors intent].) Thus, extrinsic evidence as to the circumstances under which a written instrument was made is admissible to interpret the instrument, though not to give it a meaning to which it is not reasonable susceptible. (Ike v. Doolittle (1998) 61 Cal.App.4th 51, 73.)

2. The Trial Courts Application of These Principles

In October 2006, when the trial court continued the hearing on respondents petitions, it requested briefing concerning the settlors intent.

As reflected in its order after hearing, the court implicitly determined that section 4.3 was ambiguous on the disputed question of whether Dudleys authority under that section was given in her capacity as trustee or as beneficiary.[3] The court thus said: Although not clearly articulated, the trust appears to provide that Ms. Dudley, as one of the trustees is to be involved in all decision making and acts of the trust. Additionally, the court implicitly determined that the trust was ambiguous in failing to anticipate Dudleys resignation as trustee: Although not evident, in all likelihood there was an expectation that Ms. Dudley would be a co-trustee throughout her lifetime and that, absent incapacity, she would not be resigning. In a similar vein, the court wrote: Ms Dudleys bankruptcy clearly was not anticipated by the settlors. In addition to these written comments, at the January 2007 hearing, the court noted a slight ambiguity created by referring to Constance by her name and not saying by the affirmative vote of Constance as trustee .

As the record makes clear, the trial court considered the parties proffered extrinsic evidence of intent. As it said at the hearing, there has been a lot of paperwork filed, and we made a huge attempt to extensively review it and be prepared for today. In the same vein, the formal order confirmed that the court had reviewed the voluminous pleadings in this matter, and also that it had taken judicial notice of the family law dissolution case that gave rise to the trust. In addition, the formal order referred specifically to Dudleys argument that because she was giving up all right to support, the intent of the Settlors was for her to have control over trust assets, even in an individual capacity, in order for her to retain control over her income.

Although the trial court considered this extrinsic evidence of the settlors intent, it refused to admit opinion evidence, prepared by two trust attorneys and proffered by Dudley, concerning the proper interpretation of section 4.3 of the Lincoln Trust. As noted above, the trial court sustained respondents objections to that evidence, concluding that it was both hearsay and improper opinion. Nevertheless, the court did note that it had read and considered the attorney opinions as additional argument in support of Ms. Dudleys position.

Having reviewed the copious submissions of evidence and argument, the trial court reached its decision. In its formal order, the court stated: Section 4.3 of the Lincoln Trust addresses how decisions and actions of the Trustees are to be determined. After discussing the absence of trust provisions covering Dudleys bankruptcy and resignation as trustee, and the parties disagreement about the effect of the trust language, the court found that by resigning as co-trustee of the Lincoln Trust, [Dudley] relinquished any authority provided to her by the trust to control the course of the trusts administration, vis--vis, any decision making authority granted to the trustees. This authority was given to her only in her capacity as a trustee and does not extend to her in any other capacity.

3. Analysis

As we now explain, we find no basis for reversing the April 2007 order insofar as it interprets the Lincoln Trust. First, addressing the evidentiary issues, we conclude that the trial court acted properly both in excluding the expert opinion evidence proffered by Dudley and in admitting extrinsic evidence in interpreting section 4.3 of the trust. Next, exercising our independent judgment on the substantive issue, we agree with the trial courts interpretation of the trust instrument.

a. The trial courts evidentiary rulings were appropriate.

Two broad categories of evidentiary rulings are relevant here: the exclusion of Dudleys proffered expert opinion evidence and the admission of the extrinsic evidence of the settlors intent. The same review standard applies to both.

Review Standard: Broadly speaking, an appellate court applies the abuse of discretion standard of review to any ruling by a trial court on the admissibility of evidence. (People v. Waidla (2000) 22 Cal.4th 690, 717.) That standard applies with equal force to rulings excluding expert opinion evidence. (Amtower v. Photon Dynamics, Inc. (2008) 158 Cal.App.4th 1582, 1599.)

Expert opinion: Concerning the first category, Dudley asserts that the trial court abused its discretion in excluding her expert opinion evidence. In Dudleys view, the opinions were neither hearsay nor improper opinion, and the court should have considered them.

A party challenging a trial courts evidentiary rulings must demonstrate both an abuse of discretion and a consequent miscarriage of justice. (Hernandez v. Paicius (2003) 109 Cal.App.4th 452, 456.) In this case, Dudley cannot satisfy either prong.

In the first place, the trial court did not err in determining that the attorney declarations were impermissible opinion. As this court recently observed, using lawyers as expert witnesses to give opinions as to the application of the law to particular facts usurps the duty of the trial court to determine the law. (Amtower v. Photon Dynamics, Inc., supra, 158 Cal.App.4th at p. 1598, internal quotation marks omitted.) Applying that principle, we rejected the argument that the trial court had abused its discretion in precluding plaintiffs expert a law professor from testifying about the standards, customs, and general background information pertaining to corporations and the securities industry. (Id. at pp. 1591, 1597-1598.) We concluded that the proffered expert opinion was properly excluded as pertaining to a question of law. (Id. at p. 1599.) A similar situation obtains here. There was no abuse of discretion.

Furthermore, Dudley can show no prejudice from the courts exclusion of her experts legal opinions, since the court in fact considered them as additional argument supporting her position.

Extrinsic Evidence: Concerning the admission of extrinsic evidence, the trial court acted properly in considering evidence of the circumstances surrounding creation of the Lincoln Trust. (Estate of Powell, supra, 83 Cal.App.4th at p. 1440.) Dudley acknowledges as much. But she disagrees with the courts ultimate construction of the trust, which is based in part on that evidence. As we now explain, the trust properly construed section 4.3 of the trust.

b. The trial courts interpretation of section 4.3 is correct.

As stated above, our paramount duty in construing the trust is to ascertain the settlors intent, if possible. ( 21102, subd. (a); Estate of Gump, supra, 16 Cal.2d at p. 548.) We do so by examining the instrument as a whole, together with the circumstances surrounding its creation. (Newman v. Wells Fargo Bank, supra, 14 Cal.4th at p. 134.)

Review Standard: The interpretation of a will or trust instrument presents a question of law unless interpretation turns on the credibility of extrinsic evidence or a conflict therein. (Burch v. George (1994) 7 Cal.4th 246, 254.) Where extrinsic evidence has been offered and received as an aid to construing a contract or other written instrument the trial court as the finder of fact may, on the basis of substantial evidence, make a binding determination of what facts are established by the extrinsic evidence where there is a conflict in that evidence. (OConnor Bros. Abalone Co. v. Brando (1974) 40 Cal.App.3d 90, 95.) Once the facts are determined, or where there is no conflict in the extrinsic evidence, the interpretation of the [instrument] in the light of those facts is a question of law. (Ibid.)

Ambiguity: According to Dudley, There is no need to look further into the language of the Trust for the meaning of Section 4.3, as the Section is not ambiguous in light of the Trusts clear statement of its intent, which was to create a lifetime beneficiary status for her.

We reject that premise. As the trial court correctly determined, section 4.3 is ambiguous on the question of whether its powers accrue to Dudley as trustee or beneficiary. The very fact that the parties disagree suggests ambiguity; when the parties question the interpretation of critical language in an instrument, the language will generally be held to be ambiguous. (In re Marriage of Williams (1972) 29 Cal.App.3d 368, 378.) In this case, the disputed provision is patently ambiguous, since its language may be applied in more than one way. (Estate of Dye, supra, 92 Cal.App.4th at p. 976.) To resolve that ambiguity, we first look to the trust itself and to the circumstances of its creation.

Trusts language and structure: We begin by examining the language of the disputed portion of section 4.3, which states that all decisions and actions by the trustees shall be made and taken by the affirmative vote of Constance and at least one (1) other trustee.

The reference in section 4.3 to decisions and actions by the trustees implies that the authority given by that section belongs to Dudley in her capacity as trustee. That inference is further bolstered by the sections later use of the modifier other. The logical deduction from the reference to one other trustee is that Dudley is also acting as a trustee in voting on decisions affecting the trust.

Nor is that inference undermined by the use of Dudleys first name in section 4.3, as she argues. That usage is not determinative. Certainly, as the trial court observed, it may create a slight ambiguity. (Cf. In re Estate of Goyette (2004) 123 Cal.App.4th 67, 73 [commenting on the inherent ambiguity of the term money ].) But that identical usage of Dudleys first name is also employed in section 4.1, which provides for the appointment of additional trustees upon her death. And nothing in the reference to Constance in that section appears to relate to her capacity as beneficiary. Moreover, since Dudley was known as Constance Laub at the time of the trusts creation, it is difficult to conceive of any other way to describe her, except as Constance, when discussing her unique decision-making role among the trustees.

In sum, the language of section 4.3 supports its interpretation as referring to Dudleys status as trustee.

Our next analytic step is to look beyond the particular phrase at issue and to consider the necessary implication arising from the language of the instrument as a whole. (Brock v. Hall, supra, 33 Cal.2d at p. 890.) As the Probate Code directs: All parts of an instrument are to be construed in relation to each other and so as, if possible, to form a consistent whole. ( 21121.) We therefore consider the structure of the Lincoln Trust.

As an examination of the trusts structure makes clear, the authority referred to section 4.3 belongs to the trustees in that capacity. Even disregarding the instruments captions as section 5.2 of the trust directs the content of Article Four demonstrates that it concerns trustees, not beneficiaries. In addition to section 4.3, whose meaning is disputed here, Article Four contains these provisions: section 4.1, which provides for successor trustees; section 4.2, which defines trustees; section 4.4, which waives any individual trustees bond; section 4.5 through section 4.13, which describe the trustees powers; section 4.14, which limits the trustees liability; and section 4.15, which provides for trustee compensation. In short, Article Four in its entirety relates only to trustees. By contrast, the references to Dudley as a beneficiary exist elsewhere in the trust, in Article One, section 1.3, which describes the trust purpose, and in Article Three, section 3.1.1, which concerns payments and distributions to Dudley. As part of Article Four, which focuses exclusively on trustees, section 4.3 is logically construed as describing Dudleys role as a trustee.

Surrounding circumstances: An examination of the circumstances surrounding creation of the trust further supports the conclusion that section 4.3 applies to Dudley in her capacity as trustee.

As stated in section 1.3 of the trust, it was established pursuant to the parties marital settlement agreement. According to the marital settlement agreement, the parties explicit intent in placing Linoc in trust for the children was to satisfy any child support obligation of either party. In addition, the marital settlement agreement provided that both Laub and Dudley would permanently waive all spousal support.

Other extrinsic evidence submitted to the court bolsters that statement of intent, including Laubs September 2006 declaration that he and Dudley intended that the property and its income were to be used primarily for the benefit of our two sons. At the time of our divorce settlement, Avram and Barak were minors. We anticipated that funds would be needed for their maintenance, education and support, including college expenses after graduation from high school. It was intended that after our deaths, the property would eventually go to them outright. Constance has affirmed this mutual intention on several occasions, most recently in her declarations filed in the Bankruptcy Court portions of which he quoted verbatim. The quoted declarations by Dudley include her statement that the Trust was established for the benefit and support of my children, and not for me personally. I was granted title to Trust property only as trustee and not in my individual capacity.

According to Dudley, these circumstances specifically, the need to protect her income source as a substitute for support make it plain that the authority given her by section 4.3 was meant to attend her status as life income beneficiary.

We disagree. As we see it, the surrounding circumstances are at least equally consistent with the view that Dudley was intended to exercise voting power only in her role as a trustee, with attendant fiduciary duties to protect trust income for her childrens support, while also guarding their remainder interests. In Dudleys own words, uttered under penalty of perjury in May 2005, the Trust was established for the benefit and support of my children, and not for me personally.

Based on these conclusions about the trustors intent, we necessarily reject Dudleys claims that the trusts purposes are defeated by this construction or by the courts purported reformation of section 4.3. As longstanding authority recognizes, the court, under certain circumstances, may modify the terms of the trust, increase or reduce the trustees powers, and direct advances of income or principal to the beneficiaries. (Moxley v. Title Ins. & Trust Co., supra, 27 Cal.2d at p. 466; see 15409.) Typically, this judicial power is exercised only in exceptional situations and where the modification serves to carry out, rather than to defeat, the primary purpose of the trustor as expressed in the trust instrument. (Moxley v. Title Ins. & Trust Co.,at p. 468.) In such cases, the court is only doing what the trustors would have done had they had the same facts before them then that were before this court at the trial of this action. (Adams v. Cook. (1940) 15 Cal.2d 352, 360.) Exigencies often arise not contemplated by the party creating the trust, and which, had they been anticipated, would undoubtedly have been provided for, where the aid of the court of chancery must be invoked to carry out the trust purposes. (Id. at pp. 360-361.) Such a situation is presented here. As the trial court determined, neither Dudleys bankruptcy nor her resignation as trustee was anticipated. To the extent that the trial court reformed section 4.3 of the trust to remove any reference to Dudley, its actions were consistent with the trusts purposes.

Nor are we persuaded by Dudleys argument that this construction of section 4.3 leaves her unprotected. If any trustee commits a breach of trust that affects her rights as a beneficiary, Dudley may petition for redress by the payment of money or otherwise, or for removal of the offending trustee. ( 17200, subd. (b)(12); 16420, subd. (a).) The probate court may make any orders and take any other action necessary or proper to resolve the issues presented by a beneficiarys petition. ( 17206.)

Other rules of construction: Dudley also asserts two other trial court errors in interpreting the trust: misapplication of one rule of construction and failure to apply another.

First, Dudley cites statements by the court at the January 2007 hearing, indicating that it resolved ambiguities against Dudley, as drafter of the trust instrument. Dudley assigns this as error, given the lack of evidence that she was the drafter. But as the hearing transcript makes clear, the court after hearing all the arguments, accepted a clarification [of] who drafted it, stating: Its just unknown at this point to me. A combined effort. That does take away from that factor of the decision, but I think it still remains that 4.3 by its language, I find, it is not logical to give her the personal right to control the trust after resignation as trustee. Thus, it does not appear that the trial court relied on that rule of construction, which applies only as a last resort in any event. (Civ. Code, 1654; In re Marriage of Williams, supra, 29 Cal.App.3d at p. 378.)

Second, Dudley argues that the trial court should have applied this principle of construction: If there be any doubt or uncertainty in the language of the trust it will be construed, if possible, in favor of the beneficiary and against the trustee. (Title Ins. & Trust Co. v. Duffill (1923) 191 Cal. 629, 642.) But that argument rests on the inaccurate premise that Dudley is the sole trust beneficiary; in effect, it ignores the childrens status as remainder beneficiaries and Laubs status as a contingent income beneficiary. Furthermore, as explained above, the court will resort to general rules of construction only if the makers intent cannot be ascertained by examining the [instrument] as a whole and the circumstances at the time of its execution. (Newman v. Wells Fargo Bank, supra, 14 Cal.4th at p. 134; see Title Ins. & Trust Co. v. Duffill, at p. 642 [court first considers the general purpose and scope of the agreement in determining intent].) Here, resort to a rule of construction favoring Dudley as beneficiary is both factually unwarranted and legally unnecessary.

Consistency with trust law: Finally, if further evidence of intent is needed, we may look to the law at the time of the trusts creation. (Newman v. Wells Fargo Bank, supra, 14 Cal.4th at p. 136.) The trustors intent is presumably informed by the law in effect at the time. (Id. at p. 138.) This is particularly true when an attorney has drafted the instrument. (Id. at p. 136.)

Our construction of section 4.3 of the Lincoln Trust is consistent with long-standing general principles of trust law. The Probate Code obligates and empowers trustees to act on the trusts behalf. ( 16000 et seq.) The powers of a trustee are not personal to any particular trustee but, rather, are inherent in the office of trustee. (Moeller v. Superior Court, supra, 16 Cal.4th at p. 1131.) Under the law, the trustee has all the powers needed for effective transaction of business on behalf of the trust. (Id. at p. 1132.) As a general precept of trust law, it is the trustee, not the trustor or the beneficiaries, who is placed under the duty of carrying out [the trusts] purpose. (Ralph C. Sutro Co. v. Paramount Plastering, Inc. (1963) 216 Cal.App.2d 433, 436.)

In sum, for all of the foregoing reasons, we conclude that the reference in section 4.3 to the affirmative vote of Constance and at least one (1) other trustee signifies Dudley in her capacity as trustee, not as beneficiary.

B. Requirement to Turn Over Trust Property

In her second challenge to the April 2007 order, Dudley attacks the courts directive requiring her to turn over trust property, including bank accounts, and to relinquish control over management of the Lincoln Building. The sole basis for this challenge is Dudleys claim that the directive contravenes her asserted life estate in the property. For their part, respondents argue that Dudley is estopped from claiming a life estate in the trust property, based on alternate grounds of judicial estoppel, collateral estoppel, and forfeiture.

To provide context, we summarize both the pertinent trust law principles and the trial courts determinations on this point. That preliminary discussion will be brief, given our ultimate conclusion that Dudley forfeited the claim that she makes here.

1. Trust Law Principles

Former trustees are required by statute to turn over any trust property in their hands: When a vacancy has occurred in the office of trustee, the former trustee who holds property of the trust shall deliver the trust property to the successor trustee or a person appointed by the court to receive the property and remains responsible for the trust property until it is delivered. ( 15644.)

2. The Trial Courts Decision

In its written order, the trial court noted a conflict as to whether or not all trust assets have been delivered by Dudley to the current trustees. The court also stated that it cannot determine from the evidence offered whether any assets remain under the control of Dudley. Nevertheless, based on Dudleys resignation as trustee, the court ordered her both to turn over title and possession of any assets of the Lincoln Trust, including but not limited to accounts held by Fremont Bank, and to relinquish control over the collection of all rents and any other management of the Lincoln Trust Building.

3. Analysis

Dudley argues that the trial court did not have the power to make the challenged directive, relying entirely on her assertion that the marital settlement agreement and the dissolution judgment gave her a life estate in the Lincoln Building. An unstated corollary is the implicit contention that this asserted real property interest gave Dudley the right to retain the property and the accompanying incidents of ownership.

As respondents point out, however, Dudley never made this argument below. In the trial court, Dudleys arguments and evidence focused on her right to lifetime income under the trust. Dudley never asserted that the marital settlement agreement and dissolution judgment gave her different or superior rights in the trust property.

Because this theory was never