Marriage of Pallanck




Filed 4/18/11 Marriage of Pallanck CA2/6

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

SECOND APPELLATE DISTRICT

DIVISION SIX

In re Marriage of CHRISTOPHER G. and CLEOPATRA CAMERON-PALLANCK.	2d Civil No. B221580 (Super. Ct. No. 1304784) (Santa Barbara County)
CHRISTOPHER G. PALLANCK, Plaintiff and Respondent, v. CLEOPATRA CAMERON PALLANCK, Defendant; BNY MELLON, NATIONAL ASSOCIATION, as Trustee, etc., Defendant and Appellant.

In this dissolution action, BNY Mellon, National Association (BNY), successor and special trustee of the Cleopatra Cameron-Pallanck spendthrift trust, appeals from two orders: (1) a December 1, 2009 order that required it to pay pendente lite attorney's fees directly to Christopher G. Pallanck, who is not a beneficiary of the trust, and (2) a December 22 order setting a hearing which did not go forward.
We reverse the December 1 order to the extent it requires direct payment from the spendthrift trust because BNY did not in bad faith refuse to satisfy a delinquent order. (Prob. Code, §§ 15300, 15305, subd. (c); Ventura County Department of Social Services v. Brown (2004) 117 Cal.App.4th 144.)^[1] We dismiss the appeal from the December 22 order, because that order was a nonappealable interim order and was subsequently vacated.
FACTUAL AND PROCEDURAL BACKGROUND
Christopher and Cleopatra were married in 2005 and had two children, born in 2005 and 2006. Cleopatra also has a child from a previous marriage. Christopher has a modest income as a part time lab technician. Cleopatra and her three children are beneficiaries of a spendthrift trust,^[2] funded by Cleopatra's father. The trust regularly distributes to Cleopatra $40,000 each month. Until 2009, Cleopatra and Wells Fargo Bank (Wells Fargo) were co-trustees of the trust. As a special trustee, Wells Fargo controlled all distributions.
In December 2008, Christopher filed this dissolution action. About a week before the dissolution petition was filed, Cleopatra tendered her resignation as co-trustee. She formally requested that Wells Fargo resign, and she requested that BNY be appointed as successor trustee if the probate court were to accept the co-trustees' resignations. BNY would only agree to take over for Wells Fargo as trustee if Cleopatra resigned.
On January 27, 2009, the family court granted temporary custody solely to Christopher and ordered Cleopatra to pay temporary spousal support ($14,761/mo.), temporary child support ($8,863/mo.), and pendente lite attorney's fees ($40,000). The fees were due by January 30, 2009.
On January 30, Wells Fargo petitioned the probate court to approve its resignation and Cleopatra's resignation and to appoint BNY as trustee. The petition was pending until April, when it was approved.
In February, while Wells Fargo and Cleopatra were still co-trustees, the family court granted an unopposed motion by Christopher to join Wells Fargo as a party in the dissolution case. The basis of the motion was that the trust was Cleopatra's sole source of income and joinder was necessary to ensure prompt and regular payment of support.
By March, Cleopatra had not satisfied the January fee order and had not paid January or February support. The court issued an order to show cause against Cleopatra and Wells Fargo, as co-trustees, regarding nonpayment, and issued an order to show cause why Cleopatra, individually, should not be held in contempt for willfully disobeying the January order.
With respect to the co-trustees, the court found on March 10 that Cleopatra and Wells Fargo had acted in bad faith and abused their discretion when they failed to distribute funds to Cleopatra to satisfy the January 2009 order. The court ordered the co-trustees, and any successor, to pay current and future child support, spousal support, and attorney's fees awards directly from the trust to Christopher: "Mother and the Bank (and it[s] successor) as co-trustees of the Trust will make the Court-ordered payments of child support and spousal support directly to Father" and "attorney fees are ordered in the amount of $10,000 payable by Mother and the Bank as co-trustees from the Trust estate . . . directly to Father's counsel within 10 days."^[3] The order was made over Wells Fargo's objection that the court had no authority to order direct payment from a spendthrift trust to a non-beneficiary. (§ 15300.) Neither Cleopatra nor Wells Fargo Bank appealed the March 10 order. The delinquent support and fee orders were satisfied.
On March 13, the court conducted a contempt hearing as to Cleopatra, individually. Applying the appropriate, heightened standard of proof (beyond a reasonable doubt), the court found that Christopher had not demonstrated Cleopatra willfully and contemptuously refused to obey the January order. The court heard testimony of an attorney about the nature of the trust and heard from Cleopatra about her efforts to obtain a distribution from the trust to satisfy the order. The court found that Cleopatra did not control distributions and that "[a] reasonable delay in the paying the money was required because of the mechanics required to get the money from the Bank." The court noted that, "the better remedy . . . was the OSC against the Bank which the Court heard and decided March 10[.]"
In the probate action, the court accepted the resignation of Cleopatra and Wells Fargo as co-trustees, and appointed BNY as sole trustee of the spendthrift trust on April 8, 2009. In the dissolution action, the court dismissed Wells Fargo with prejudice and substituted BNY in its place after BNY stipulated to be bound by the March 10 order "regarding the payment of child support and spousal support directly to Petitioner." The stipulation did not mention payment of attorney's fees.
On June 16, the family court awarded to Christopher additional pendente lite fees in the amount of $100,000, to be paid by "Mother and/or the Trust." BNY had objected that the court had no authority to order direct payment of fees from the spendthrift trust. (§§ 15300, 15301 & 15303.) BNY did not appeal the June 16 order. It paid the $100,000 fees, as ordered. BNY's counsel later explained that, notwithstanding its jurisdictional objection, "quite frankly, at that point we thought we were going to be in trial fairly soon, and we complied with that as the Court ordered."
The case had been initially set for trial in June but it was continued to September 2009 upon Cleopatra's request, when she substituted counsel. It was further continued to December 2009, again on Cleopatra's request, when she entered a 90-day treatment program.
In October, Christopher requested additional pendente lite fees to prepare for trial. BNY again objected that the court had no authority to order direct payment of fees from the spendthrift trust. (§§ 15300, 15301 & 15303.) At oral argument, before the trial court, counsel for BNY acknowledged that it had previously acquiesced to direct payment but argued that it should not be bound by the prior orders and the court should consider the jurisdictional issue anew. The court questioned whether counsel had disclosed Wells Fargo's direct payment obligations to the probate court before obtaining its approval to the trustee substitution.
On December 1, the court awarded $100,000 in further pendente lite fees to be paid to Christopher "by Mother and/or the Trusts." The court also set the matter for a special hearing on an order to show cause why it should not order the probate action related, assign it to itself, and vacate the April 8 probate order that approved trustee substitution.
On December 22, the court ordered the cases related, reassigned the probate case to itself, but did not vacate the April 8 probate court order. Instead, it set the matter for further hearing on January 19 regarding its intention to vacate the order. Before that hearing, the probate case was subsequently reassigned to the original probate judge due to "a disqualification," and the January 19 hearing was vacated.
BNY filed a notice of appeal from both the December 1 and December 22 orders, but clarified in its briefs that it appeals only from the $100,000 pendente lite fee order made on December 1.
Christopher moved to dismiss the appeal, primarily on the ground that it is barred by prior adjudication of the direct payment issue on March 10 (against Wells Fargo and Cleopatra as co-trustees) and on June 16 (against BNY) and because BNY stipulated to be bound by the March 10 order. We deferred ruling on the motion to dismiss pending completion of briefing on appeal.
DISCUSSION
The Bad- Faith Exception to Section 15305, Subdivision (c)
Generally, a beneficiary's interest in a spendthrift trust is not subject to enforcement of a money judgment against the beneficiary until funds are distributed to the beneficiary. (§§ 15300 & 15301.) In a dissolution action, the court may order the trustee of a party's spendthrift trust to use distributions to satisfy support obligations, but the decision whether to make such distributions in the first instance remains a matter of trustee discretion. (§ 15305, subd.(c).)
Under a narrow exception to this rule, if there is an enforceable child support judgment that the trustee has in bad faith refused to satisfy, the court may overcome the trustee's discretion and order direct payment from the trust to the support creditor. (Ventura County Department of Social Services v. Brown, supra, 117 Cal.App.4th at p. 155.) In Ventura County Department of Social Services, a spendthrift trustee refused, in bad faith, to distribute funds to satisfy a delinquent and enforceable $140,000 child support judgment that had accumulated against the trusts' beneficiary over a period of years. In the present case, the March 10 order was supported by the trial court's finding that Wells Fargo and Cleopatra, as co-trustees, refused in bad faith to distribute funds to satisfy the delinquent January support and fee orders. The former co-trustees did not appeal the court's application of the bad-faith exception, and that determination is now beyond review.
There were no delinquent orders after March 10. Neither the June 16 nor December 1 direct payment orders were supported by a finding that BNY had refused in bad faith to pay an order. The June 16 order was not appealed, was satisfied, and is beyond our review. The December 1 order was timely appealed and we conclude that it does not fall within the bad-faith exception. The exception is available only "under the narrow circumstances present . . . when there is an enforceable child support judgment that the trustee refuses to satisfy." (Ventura County Department of Social Services v. Brown, supra, 117 Cal.App.4th at p. 155.) From March 10 forward, Cleopatra used trust distributions to timely satisfy all support and fee orders. The December 1 fee order against BNY was not based on refusal to satisfy a delinquent order; it was based on Christopher's prospective need to prepare for trial. Unless and until BNY refuses in bad faith to satisfy a delinquent order, the bad-faith exception does not apply.
Prior Adjudication
Christopher contends that, because neither BNY nor its predecessor co-trustees appealed the earlier direct payment orders, BNY is irrevocably bound to make direct payments. We disagree.
An award of pendente lite fees, while temporary, is immediately appealable. (In re Marriage of Skelley (1976) 18 Cal.3d 365, 368.) Christopher cites no authority for his contention that failure to appeal a temporary family court order bars a party from subsequent litigation of the issues resolved therein. Appellant cites In re Matthew C. (1993) 6 Cal.4th 386, but that case is inapposite because it concerned termination of parental rights. Appellant also relies on Law Offices of Stanley J. Bell v. Shine, Browne & Diamond (1995) 36 Cal.App.4th 1011, but that case involved a law firm's attempt to seek fees in one trial court after another court had decided it was not entitled to those fees. BNY is not challenging the fees ordered on March 10 and June 16; it challenges only the $100,000 ordered on December 1.
Under ordinary principles of collateral estoppel, BNY is not barred from litigating the direct payment issue. Collateral estoppel prevents a party or that party's privy from relitigating in a second proceeding an issue that was already fully and fairly litigated against it to a final adjudication on the merits in a prior proceeding. (Vandenberg v. Superior Court (1999) 21 Cal.4th 815, 828.) The doctrine applies only if the issues are identical. (Lucido v. Superior Court (1990) 51 Cal.3d 335, 341.) The question whether BNY refused in bad faith to pay a delinquent order was not fully and fairly adjudicated to a final resolution on the merits on March 10 or on June 16, and could not have been adjudicated against it because there were no delinquent orders while BNY was trustee.
Disentitlement Doctrine
Christopher also argues that the disentitlement doctrine supports equitable dismissal of BNY's appeal because BNY used the substitution of trustees to avoid the trust's responsibility for direct payment of fees under the March 10 order, and obtained court approval for the substitution without disclosing its intention to do so. We disagree.
First, it does not appear from the record that the purpose of BNY's substitution was to avoid direct payment. The parties initiated the substitution before the court had ordered direct payment. The court did later express suspicion that the purpose of the substitution was to avoid direct payment, but the hearing on its order to show cause on this subject was vacated and the court made no finding on the issue.
The disentitlement doctrine only applies to a party who is in contempt of court. Under the disentitlement doctrine, "[a] party to an action cannot, with right or reason, ask the aid and assistance of a court in hearing his demands while he stands in an attitude of contempt to legal orders and processes of the courts of this state. [Citations.]" (MacPherson v. MacPherson (1939) 13 Cal.2d 271, 277.) BNY is not in contempt and the disentitlement doctrine does not apply.
Waiver By Stipulation
Christopher also argues that BNY is bound by the March 10 direct payment order pursuant to stipulation. The stipulation did not include direct payment of fees.
When BNY replaced Wells Fargo, BNY stipulated to be bound by the March 10 "child support and spousal support" order. The family court approved Wells Fargo's dismissal with prejudice based upon that stipulation. The March 10 order required Wells Fargo and its successors to directly pay support and fees: "the Bank, and its successor, and Mother to pay child support, spousal support, and attorney fees from Mother's Trust including any other ordered awards in this action until further order of Court. Wells Fargo Bank and any successor are joined in this action until further order of Court." The BNY stipulation refers only to direct payment of support and does not mention fees. In the stipulation's preamble, the parties recited that: "On March [10], 2009 . . . the Court ordered . . . Wells Fargo to make directly to Petitioner child support and spousal support payments as set forth in the tentative decision which the Court adopted as its order at the March [10]th hearing." The parties then stipulated that, with the court's approval, Wells Fargo would be dismissed with prejudice and BNY would "be bound by and comply with the Court's March [10], 2009 order regarding the payment of child support and spousal support directly to Petitioner." Under the rule of expressio unius est exclusio alterius, the stipulation impliedly excluded the fee order because it expressly included the child support order and the spousal support order. (Dover Village Assn. v. Jennison (2010) 191 Cal.App.4th 123, 128.)
Judicial Estoppel
Finally, Christopher argues that BNY should be judicially estopped from challenging the direct payment order. We disagree.
Judicial estoppel prevents a party from asserting a position in a legal proceeding that is contrary to a position previously taken in the same or some earlier proceeding. (Levin v. Ligon (2006) 140 Cal.App.4th 1456, 1468.) It is an extraordinary remedy to be invoked when a party's inconsistent behavior will otherwise result in a miscarriage of justice. (Ibid.) Here, there are no delinquent orders and no miscarriage of justice will result. Cleopatra's support obligations will either be satisfied under the ordinary provisions of Probate Court section 15305, subdivision (c), or, if as a result of bad faith refusal they are not, a remedy is available. (Ventura County Department of Social Services v. Brown, supra, 117 Cal.App.4th 144.)
DISPOSITION
The motion to dismiss the appeal is granted as to the appeal from the December 22, 2009 order and denied as to the December 1, 2009 order. The December 1, 2009, order is reversed only to the extent that it requires direct payment by the trustee of the spendthrift trust to Christopher and is otherwise affirmed. Each party shall bear its own costs on appeal.
NOT TO BE PUBLISHED.




COFFEE, J.


We concur:



GILBERT, P.J.



YEGAN, J.

Thomas P. Anderle, Judge

Superior Court County of Santa Barbara
______________________________


Trope and Trope, Thomas Paine Dunlap, Kaplan & Simon, Mark Vincent Kaplan, for Defendant and Appellant BNY Mellon, National Association.
Griffith & Thornburgh, John R. Rydell, II, The Law Office of Paul Capritto, Paul A. Capritto, for Plaintiff and Respondent.
No appearance for Defendant Cleopatra Cameron Pallanck.

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