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Court of Appeal:
Non-Participants in Mediation to Get No Share of Trust
Opinion Says Judge Properly Approved Settlement Benefitting Only Those Who Took Part in ADR
By a MetNews Staff Writer
The Pacific Legal Foundation and nine other charities will take no share of a testamentary trust because they failed to participate in mediation, under a ruling yesterday by the Court of Appeal for this district.
At issue was the division of assets in a trust established by Don F. Kirchner, a retired professor of marketing at California State University, Northridge, who died Nov. 10, 2018. The assets were valued at between $3 million to $4 million.
The trust instrument makes provision for four specific $10,000 gifts, but says that the remainder of the funds were to be distributed in accordance with Exhibit “A.” The problem the trustee, David Breslin, had was that Exhibit “A” was not attached.
However, he did locate a document with the heading, “Estates Charities (6/30/2017).” It listed 24 charities with handwritten notations next to them which were, apparently, percentages.
Ventura Superior Court Judge Robert L. Lund on March 27, 2019, ordered mediation among Kirchner’s only relatives, nieces and nephews—to whom the assets would pass under intestate succession if the document Breslin located were determined not to be Exhibit “A”—and the charities.
Notice Contains Warning
One of those charities, the Thomas More Law Center, sent out notices of the mediation. It contained this warning:
“Non-participating persons or parties who receive notice of the date, time and place of the mediation may be bound by the terms of any agreement reached at mediation without further action by the Court or further hearing….Rights of trust beneficiaries or prospective beneficiaries may be lost by the failure to participate in mediation.”
Representatives of only five of the charities—the Thomas More Law Center among them—participated in mediation. Not represented were, in addition to the Pacific Legal Foundation, Judicial Watch, Save the Redwoods League, Concerned Women of America, Catholics United for Life, Catholic League, Sacred Heart Auto League, National Prolife Action Center dba Liberty Counsel, and Orbis International.
$1.4 Million Split
A settlement was reached among the intestate heirs and the charities, and on July 12, 2019, the Thomas More Law Center filed a petition for approval of that settlement. The proposed settlement divided the assets among the heirs and charities appearing at mediation, with the charities splitting $1,416,257, and lawyers for the participants garnering $67,000 in attorney fees.
Pacific Legal Foundation and Save the Redwoods League filed objections to their exclusion. On Sept. 11, 2019, Lund approved the settlement, holding:
“The Court finds that the objecting parties forfeited their right to object to the approval of the settlement by failing to appear and file responses/objections to the initial trustee’s petition and by failing to participate in the mediation….The objecting parties received notice of the initial petition for instructions and failed to respond, either by a written response or orally at the hearing….They received notices of the continued hearings and of the mediation and chose not to appear or participate. Accordingly, the parties that did appear and participate settled the underlying trust dispute. The Court finds the settlement to be fair and reasonable under these facts.”
The omitted charities appealed. Affirmance came yesterday in an opinion by Court of Appeal Presiding Justice Arthur Gilbert of this district’s Div. Six.
In the mediation notice, there was a citation to Div. Six’s 2019 decision in Smith v. Szeyller. It was held there that a party who “chose not to participate in the trial” in a probate case “cannot now second-guess the resolution.”
The omitted charities in the present case—denominated by Gilbert the “Pacific parties”—argued that Smith is inapposite because there was no trial before Lund. Gilbert responded:
“True, but the mediation ordered by the probate court, like the trial in Smith, was an essential part of the probate proceedings. The Pacific parties may not ignore the probate court’s order to participate in the proceedings and then challenge the result. The probate court’s mediation order would be useless if a party could skip mediation and challenge the resulting settlement agreement.”
The appellants contended that Berlin failed in his duty to notify them of what was going on in the matter. Gilbert disagreed, saying:
“The Pacific parties do not claim they had no notice of the mediation. Had they participated, they would have been fully informed of all the developments, including the trustee’s willingness to sign the settlement agreement.
“The Pacific parties apparently believe the trustee and participating parties should have gone through mediation, reached a settlement, and. before the settlement was signed, notified the Pacific parties so that they could come in and object. That would have made the mediation a waste of time, money, and effort.”
The case is Breslin v. Breslin, 2021 S.O.S. 315.
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