Wednesday, June 15, 2005
C.A. Reinstates Foundation’s Suit Against UCLA for Misuse of Gift
Standing to Enforce Terms of Charitable Trust Not Limited to Attorney General, Justices Conclude
By Kenneth Ofgang, Staff Writer/Appellate Courts
A foundation that claims its $1 million gift to endow a chair at UCLA’s medical school has been misused has standing to sue, the Court of Appeal for this district ruled yesterday.
Overturning a contrary ruling by Los Angeles Superior Court Judge Robert L. Hess, Div. One revived a suit by the Woodland Hills-based L.B. Research and Education Foundation. The foundation claims that the money it gave to create the Julien I.E. Hoffman, M.D. Chair in Cardiothoracic Surgery has not been adequately accounted for and that an unqualified person was chosen to occupy the chair.
Hess ruled that the gift created a charitable trust, and that only the attorney general has standing to sue to enforce the terms of a charitable trust. But Justice Miriam Vogel, writing for the Court of Appeal, said that the foundation adequately pled its claim that it had made a conditional gift rather than created a charitable trust, and that it had standing in either event.
The foundation sued two years ago, claiming UCLA had breached the terms of its agreement regarding the endowment, created in honor of Julien I.E. Hoffman, professor emeritus of pediatrics and a senior member of the Cardiovascular Research Institute at UC San Francisco.
The 2000 agreement, signed by representatives of the donor and the UCLA Foundation, established criteria for the chair, requires an accounting for the funds, and declares that “if the Cardiothoracic Surgery program shall cease to exist at UCLA, or in the event that UCLA does not meet the terms and conditions of this agreement,” the funds shall be transferred to UCSF’s medical school.
The foundation alleges that when it advised UCLA that it was in violation of the terms of the gift, the school did not respond. In answer to the complaint, the university and its fundraising arm alleged among other things that the gift created a charitable trust that only the attorney general could enforce.
Hess agreed and granted judgment on the pleadings.
Vogel, however, said that for purposes of judgment on the pleadings, the trial court should have construed the document in the light most favorable to the non-moving party. While the court might, at a later stage, conclude on the basis of extrinsic evidence that a charitable trust was created, the defendants “are bound by the rules governing our review of the motion they made” and the plaintiff must be given the benefit of any ambiguity, the justice said.
Vogel rejected the argument that the lack of an absolute forfeiture provision requires that the agreement be construed to create a charitable trust.
“Although it is true that UCLA’s failure to abide by the conditions imposed by the agreement would not accomplish a forfeiture vis-à-vis the entire University of California system, it would nonetheless be a forfeiture for the medical school at UCLA, which was plainly viewed by L.B. Research as a specific donee,” the justice wrote. “....Because UCLA’s loss will be UC San Francisco’s gain, the nature of this forfeiture supports rather than defeats L.B. Research’s position and does not require adoption of a view antagonistic to the donor’s charitable intent.”
The jurist went on to conclude that even if a charitable trust was created, the donor could sue because it has a reversionary interest in the funds. While the California attorney general has primary responsibility for the enforcement of charitable trusts, his standing to sue in order to do so is not exclusive, she said.
The case is L.B. Research And Education Foundation v. UCLA Foundation, B176151.
The plaintiff was represented on appeal by Raul M. Montes of Greenwald, Hoffman, Meyer & Montes; David C. Hinshaw; and David M. Axelrad and John A. Taylor Jr. of Horvitz & Levy. The defendants were represented by James E. Holst and Eric K. Behrens of the UC general counsel’s office and Marc J. Poster of Greines, Martin, Stein & Richland.
Copyright 2005, Metropolitan News Company