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Tentative Ruling
Judge Colleen Sterne
Department 5 SB-Anacapa
1100 Anacapa Street P.O. Box 21107 Santa Barbara, CA 93121-1107

TRUST

Matter of Helge T Grahn Family Trust

Case No: 19PR00160
Hearing Date: Thu Feb 20, 2020 9:00

Nature of Proceedings: (1) Motion to Compel Production of Business Records (2) Petition to Determine Questions of Trust Construction

Matter of Helge T. Grahn Family Trust, #19PR00160, Judge Sterne

 

Hearing Date:                February 20, 2020

Matter:                         

Motion for Order to Compel Production of Business Records

                                 

Attorneys:                     

For Petitioner: Diana B. Mercier (Reetz, Fox & Bartlett)

For Trustee: Jana S. Johnston (Mullen & Henzell)

 

Tentative Ruling: The court grants Petitioner Matthew A. Grahn’s motion to compel production of the requested business records specified in the November 5, 2019 subpoenas to Chase Bank and Wells Fargo Bank.

  

Background and Petition: On April 25, 2019, petitioner Matthew A. Grahn (“Matthew”) filed a Petition for Order Determining Questions of Trust Construction; Title to Property; and for Instructions to Trustee. The trust at issue is the Helge T. Grahn Family Trust (“Trust”) created by Helge T. Grahn (“Helge”) on February 25, 2009. Helge died on June 18, 2018. Linda S. Grahn (“Linda”) is the trustee of the Trust and a beneficiary. Petitioner is also a beneficiary.

 

In the petition, petitioner alleges:

 

As of his death, Helge or the Trust had an interest in 1247 Pistache Ave., Solvang (“Pistache”); 848 Woodland Ave. #22, Ojai (“Woodland”); 25311 Via Brasa, Valencia (“Via Brasa”).

 

In an interspousal transfer grant deed that Linda executed on April 9, 2015, Linda confirmed title to Via Brasa as Helge’s sole and separate property. On that same date, Helge executed a deed selling Via Brasa for $575,000.

 

On or around June 11, 2015, Pistache was acquired in an all cash purchase ($811,500) using Helge’s sole and separate property proceeds from the sale of Via Brasa and sole and separate property funds that Helge had inherited from his mother’s estate. In a quitclaim deed executed May 12, 2017, Helge and Linda vested title to Pistache in the names of their respective trusts, as tenants in common, each as to an undivided one-half interest. Linda, as Trustee, sold Pistache on November 16, 2018.

 

On March 12, 2015, Linda, as Trustee of the Linda S. Grahn Trust, executed a Grant Deed conveying Woodland to Helge and Linda, husband and wife, as community property with right of survivorship. In a quitclaim deed executed May 12, 2017, Helge and Linda vested title to Woodland in the names of their respective trusts, as tenants in common, each as to an undivided one-half interest.

 

It was Helge’s intention to transfer bank accounts to the Trust but, through inadvertence, failed to do so. These include bank accounts at Wells Fargo Bank and Chase Bank.

 

The prayer in the petition asks for confirmation that the bank accounts are Trust assets; instruction of the Trustee to distribute to Matthew the Trust’s entire interest in Woodland, the bank accounts, and proceeds of the sale of Pistache; and attorney’s fees and costs.

 

a. Trust: The Trust provided that, after payment of costs, the balance of the trust Estate would be distributed to Matthew and expressly did not provide for Helge’s other son, Eric. The Trust gave Linda up to one year to vacate the Via Brasa residence. The Transfer of Assets to the Trust included accounts in financial institutions. The Transfer of Assets to the Trust provides: “To the extent that the Settlor owns or hereafter acquires property not in his name as Trustee, this document shall operate as a grant of real property and/or bill of sale of personal property whereby the Settlor assigns and transfers to the [Trust] all of his right, title and interest in and to such property.”

 

b. Memorandum of Agreement Regarding Property Ownership: Helge and Linda executed this memorandum on the same date as the Trust—February 25, 2009. They stated:

In order to avoid confusion and provide a clear record of their mutual understanding and intent with respect to their past, present and future transactions with regard to the forms of property holding, this agreement shall apply to what has been, is, or may in the future be the property acquired during the period of marriage of the parties or the separate property of each of the parties, which property was acquired either prior to marriage or by gift and/or devise during marriage.

 

The parties hereby acknowledge that all property itemized on Schedule A attached hereto and incorporated herein by reference is the community property of the parties. The parties acknowledge that since the date of marriage for reasons of convenience in managing and handling the properties without an intent to transfer interest therein between one another, the parties have taken in the past, and may take in the future, record title in one or both of their names or in the name of a nominee, or in the name of a trust agreement or declaration of trust which may be either revocable or irrevocable, and in some cases may hold such property in joint tenancy form, all of such activity being conducted without any intent of destroying any original character of the property as of the date of acquisition as provided under this agreement.

 

. . .

 

Any property not listed on Schedule A is acknowledged to be the separate property of the parties.

 

Schedule A lists the community property as “None.”

 

c. Helge’s Will: Helge executed his will on February 25, 2009. The will refers to the Memorandum of Agreement Regarding Property Ownership specifying Helge and Linda’s intent as to characterization of property. The will was to dispose of Helge’s separate property and his one-half interest in community property. Under the will, Helge gave his entire estate to the Trust.

 

d. First Amendment to Trust: On April 16, 2009, Helge executed the First Amendment to the Trust adding: “The Settlor is currently married to Linda S. Grahn. The Settlor specifically and intentionally has failed to make any provisions for his wife, Linda S. Grahn, under the Helge T. Grahn Family Trust dated Feberuary (sic) 25, 2009 as he has provided for her outside of the Trust Instrument.”

 

e. Second “First Amendment” to Trust: On May 12, 2017, Helge executed a second “First Amendment” to the Trust. The amendment provided for a $20,000 gift to Eric. After payment of costs and the $20,000 to Eric, the Trust estate was to be distributed to Linda as follows:

 

4. Thereafter, the remaining Trust Estate, including any failed gifts, shall be distributed to Settlor’s spouse, Linda S. Grahn, as set forth hereinbelow:

 

a. Settlor’s interest in the 1247 Pistache Avenue, Solvang, CA, shall be held in trust for the benefit of Linda.

 

i. Linda shall be entitled to all of the net income of the trust, payable in quarterly or more frequent installments.

 

  ii. The trust shall terminate on the one year anniversary of Settlor’s death, upon Linda’s decision to sell the property or, on Linda’s death, whichever occurs first. On termination, Settlor’s interest, either in the property or in the sale proceeds, shall be distributed to Matthew A. Grahn. If Matthew is deceased that which he would have received shall pass to his then surviving issue by right of representation.

 

b. The balance of the Trust Estate shall be distributed to Matthew A. Grahn, outright and free of trust. If Matthew is deceased, that which he would have otherwise received shall pass to his then living issue by right of representation.

 

In a declaration submitted with the response to the petition, Dana Longo, Helge’s estate planning attorney, stated that the original draft of the second “First Amendment” provided in 4.b. that the balance of the Trust estate was to be distributed to Linda. Because of Helge’s and counsel’s confusion over the provisions in 4.a.ii. and 4.b., the distribution in 4.b. was changed to Matthew, creating an ambiguity in the document. Helge had thought that 4.b. related to distribution of Pistache instead of the balance of the Trust estate. Counsel says the intent was to have the balance of the Trust estate go to Linda, consistent with the general grant stated in ¶4 before the subparagraphs.

 

Counsel also says that he discussed with Helge the joint tenancy accounts Helge owned with Linda. Helge told him that he intended the joint tenancy status of the bank account. Counsel took this to mean that Helge understood the accounts were not in the Trust.

 

f. Subpoenas: On November 5, 2019, petitioner issued deposition subpoenas for the production of business records to Chase Bank and Wells Fargo Bank seeking all documents for a 12-year period (May 1, 2006 to June 18, 2018) for specific accounts and “Named Parties,” including all signature cards, account agreements, statements, customer correspondence files, wire transfer documents, and documents related to certificates of deposit. The “Named Parties” are “Helge T. Grahn (SSN ending XXXX); Helge Terry Grahn; Helge T. Grahn and Linda S. Grahn; Helge T. Grahn or Linda S. Grahn; Helga T. Grahn, Trustee of the Helge T. Grahn Family Trust: and/or Linda S. Grahn, Trustee of the Helge T. Grahn Family Trust.” Excluded from this list are accounts held solely by Linda S. Grahn in her individual capacity. Linda Grahn objected to the subpoenas and the banks have indicated they will not comply without a court order.

 

Motion: Matthew moves to compel Wells Fargo and Chase to comply with the deposition subpoenas. Matthew contends: “Some of Helge’s bank accounts were his separate property when he married Linda, and Helge’s estate planning documents evidence an intent that the accounts remain his separate property and be transferred to the Trust Estate. Additionally, during his marriage to Linda, Helge received a separate property inheritance from his mother and sold two real properties that were his separate property; the Subpoenas will help ascertain the location of the proceeds of Helge’s separate property. The information sought will also help confirm, as stated in the Trust, that Helge provided for Linda outside of the Trust Estate. The information sought is both directly relevant and essential to the fair resolution of this matter.”

 

Linda opposes the motion, contending: The motion is not properly served on Chase and Wells Fargo. There is no showing of good cause for production of the documents. The origin and character of the bank accounts is immaterial to the two issues in this case: the proper interpretation of the Trust in light of the conflict created by the drafting error and whether the joint bank accounts should be treated as Trust assets. There is no connection between the request for over 12 years of financial transactions and the claim that Helge provided for Linda outside the Trust estate. Matthew has already received signature cards for joint tenancy accounts, statements showing balances as of Helge’s death, a bank statement reflecting a Social Security direct deposit for the month after Helge’s death and a charge back, and records reflecting annuity payments and surrender value. Linda has offered to request production by the banks of all documents confirming title to the joint tenancy accounts.

 

1. Service of Motion: This matter was originally set for hearing on January 16, 2019. The court continued the hearing on the motion to February 13, 2019, at 9:30 a.m., to provide Matthew the opportunity to submit proper proof of service on Chase Bank and Wells Fargo Bank, N.A. Matthew provided that proof of service on January 15.

 

2. Analysis: “For discovery purposes, information is relevant if it ‘might reasonably assist a party in evaluating the case, preparing for trial, or facilitating settlement.’ [Citation]” Lipton v. Superior Court, 48 Cal.App.4th 1599, 1611-1612 (1996). Admissibility is not the test and information, unless privileged, is discoverable if it might reasonably lead to admissible evidence. CCP § 2017.010. In light of “the liberal policies underlying the discovery procedures, doubts as to relevance should generally be resolved in favor of permitting discovery.” Colonial Life & Accident Ins. Co. v. Superior Court, 31 Cal.3d 785, 790 (1982). Doubts as to relevance should generally be resolved in favor of permitting discovery. Williams v. Superior Court, 3 Cal.5th 531, 542 (2017).

 

At issue here is the nature of joint bank accounts. Linda takes the position that, upon Helge’s death, these accounts became hers by right of survivorship. Matthew stresses that pursuant to the February 25, 2009 Memorandum of Agreement Regarding Property Ownership, Helge and Linda expressed an intent that joint accounts were held in that manner as a matter of convenience and the joint tenancy nature of the accounts was “without any intent of destroying any original character of the property as of the date of acquisition….”

 

Probate Code § 5302(a) “provides that a joint account entails a right of survivorship ‘unless there is clear and convincing evidence of a different intent.’” Placencia v. Strazicich, 42 Cal.App.5th 730, 733 (2019). Probate Code § 5303 “provides that ‘rights of survivorship are determined by the form of the account at the death of a party.’” Id. The court in Placencia harmonized these two provisions by holding that § 5303 provides a safe harbor for the financial institution and § 5302 “recognizes that the beneficial interests in the funds may differ from its express terms.” Id. at 734.

 

Linda contends that the information sought is irrelevant based on her assessment of the merits of the underlying petition. Eventually, entitlement to the funds in the joint accounts will depend on the ultimate disposition of the petition in this case. The court will have to construe the various documents, the expressions of intent within and without the documents, and the effect of earlier and later documents. But the purpose of discovery is to assist the parties and the court in assessing the case.

 

The Memorandum of Agreement governs property held during the marriage. The date of that marriage is May 2006. The subpoenas cover the period of the marriage up to the date of Helge’s death. This is a substantial period of time but it appears appropriate given the purpose of the discovery. The court grants Petitioner Matthew A. Grahn’s motion to compel production of the requested business records specified in the November 5, 2019 subpoenas to Chase Bank and Wells Fargo Bank.

 
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