What court should hear a dispute over a California trust? I briefed this question last month when a judge questioned if a case should instead be adjudicated in neighboring states. Such jurisdiction issues come up occasionally given the mobility of family members with interests in trusts.
A recent appellate case, Van Buskirk v. Van Buskirk (2020) 53 Cal.App.5th 523, shows the “long arm” jurisdictional reach of California courts in trust litigation. California courts may leap, catch and decide disputes even when nonresident parties would prefer to litigate elsewhere.
Conflict in the Van Buskirk Family
Walter Van Buskirk, Jr., and Ellen Van Buskirk lived in Santa Monica and had three children. They signed a revocable living trust in which they designated California as the governing law.
After Walter died in 2005, Ellen became the sole trustee.
According to son Walter Van Buskirk III, he was the only child to work in the family real estate business and he spent more time caring for Ellen than his two sisters. He alleged that in September 2016 his sisters conspired to move Ellen from a rehabilitation facility to Idaho, where they lived. When Walter III tried to see Ellen there, the daughters blocked his visits. Walter alleged that that Ellen sold some of the Trust’s California real estate at “fire sale prices.”
Ellen and her daughters painted a different picture. They claimed that Walter III was a never-do-well who lived on the family’s wealth. They asserted that Ellen left California of her own free will to escape Walter III and that she could make independent financial decisions, including to disinherit her son.
After moving to Idaho, Ellen filed four lawsuits in California, including an action to evict Walter III from the former family home in Santa Monica.
Walter III was unhappy with his Ellen’s actions and filed his own suit in the probate department of Los Angeles County Superior Court, claiming that her recent real estate transactions breached her duties as trustee. He contended that his sisters and his uncle (a Nevada resident) had participated in the wrongful transactions. He requested an accounting and the removal of Ellen as trustee.
Trustee Asserts Lack of Personal Jurisdiction
A court generally must have “personal jurisdiction” over parties to adjudicate claims against them. In California, personal jurisdiction stretches to the limits set by federal due process law. Probate Code section 17004, by reference to the Code of Civil Procedure, confirms the broad reach of personal jurisdiction in trust proceedings.
Under U.S. Supreme Court cases, personal jurisdiction is proper where a defendant has “minimum contacts” with the state such that the lawsuit “does not offend traditional notions of fair play and substantial justice.”
A probate judge in Los Angeles County Superior found that Ellen and her daughters lacked sufficient contacts with California to be subject to Walter III’s suit, indicating instead that they could be sued in Idaho. The judge thus dismissed the action.
Court of Appeal Finds Ample Basis for Personal Jurisdiction
The Court of Appeal reversed the dismissal, finding that Ellen, her daughters and her brother “have been deeply involved with this Trust, which is a stronghold of this family’s wealth.”
The Trust originated in California, was administered there (at least until 2016), and held interests in California real estate. Even though Ellen had moved to Idaho and reduced the Trust’s California real property holdings, the actions of which Walter III complained could still be adjudicated by a California court.
The appellate court considered three factors with respect to personal jurisdiction.
First, the court reviewed whether Ellen and her family members had purposefully availed themselves of the benefits of the California forum such that they could reasonably expect to be subject to jurisdiction in the state. The court found that all respondents had connected with California for their own benefit.
For example, Ellen was a lifelong Californian who established the Trust in California in 2005 and who continued to hold California real estate through the Trust. She filed multiple lawsuits in California state courts after moving to Idaho and she engaged in transactions with respect to the California real estate. Ellen could not “undo her lifelong California contacts” simply by moving to Idaho before selling the California property.
Likewise the daughters were successor trustees of the Trust who participated in trust transactions. The daughters or their agents came to California to move Ellen to Idaho.
While the court found a “blazing family dispute” about what had occurred, the merits of that dispute did not affect the jurisdictional analysis.
Walter III’s verified petition, as filed in probate court, was sufficient to show that the responding parties purposefully availed themselves of California jurisdiction. Ellen did not object to the core allegations in that petition such that the court could consider them when analyzing the jurisdictional question.
Second, the court found that Walter III’s claims related to Ellen and her daughters’ contacts with California. Walter III, for example, complained about California land deals at below-market values.
Third, the court considered whether the exercise of jurisdiction would be fair. Ellen, and her daughters and brother, did not make a compelling case that a California court’s exercise of jurisdiction over them would be unfair.
Walter III, as a resident of California, had a valid interest in obtaining relief in California courts for harm he claimed from the sale of California real estate. Ellen had lived in California for 89 years before she moved to Idaho and continued thereafter to litigate in California. Although Ellen was elderly and one of her daughters had cancer, the judge could manage the case with sensitivity to the health concerns of all involved. A California professional fiduciary, as nominated by Walter III to take over as trustee, potentially could manage the Idaho and California real estate.
The Van Buskirk case confirms that California probate judges can decide claims against nonresident parties involving trust administration as long as there are sufficient hooks to California. The case will be helpful to beneficiaries who remain in California when other key parties, including the trustee, have left the Golden State.
For trustees, if the trust instrument calls for the application of California law, the trust includes California assets, and the trust at least historically was administered in the state, the trustee should be prepared to defend litigation in California.