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Jeffrey A. Dennis-Strathmeyer
Attorney at Law
Lafayette, California
oe NY DA HW BF wWN
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JEFFREY A. DENNIS-STRATHMEYER
SB No. 56871
strathj@gmail.com
3620 Happy Valley Rd STE 210 ELECTRONICALLY
Lafayette, CA 94549 FILED
(925) 219-2433 Superior Court of Caltfornia,
County of San Francisco
Attorney for Robert A. Davis Petitioner 02/22/2017
Clerk of the Court
BY-MICHAEL RAYRAY
Deputy Clerk
SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO
In Re the matter of No. PTR-16-300298
ROBERT A. DAVIS' MEMORANDUM
OF POINTS AND AUTHORITIES RE:
ORDERS TO BE REQUESTED AT
FEBRUARY 27, 2017 HEARING
MURIEL E. WATKIN REVOCABLE TRUST | Dept: Probate - Room 204
Date: February 27, 2017
Time: 9 a.m.
Judge: Paul Alvarado
Petitioner Robert A. Davis by his attorney Jeffrey A. Dennis-Strathmeyer submits the
following Points and Authorities.
1.
Summary of Case to Date
1. Decedent and Her Trust. Muriel Watkin ("Decedent") died August 19, 2005. She
was an avid supporter of the arts in general and Pacifica Spindrift Players (PSP) in particular.
According to the PSP website she was President of the PSP Board of Directors in both 2001
and 2002. Her successor trustee, Richard Plato ("Trustee"), was President of the Board in
2007 and 2008. The relevant features of the trust document provided that the PSP was to
Case No. PTR 16--300298 Robert A. Davis' Points and Authorities -1-Jeffrey A. Dennis-Strathmeyer
Attorney at Law
Lafayette, California
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receive her condominium. Seven charities and a friend were to receive 5 percent shares of her
securities account and Petitioner Robert Davis were to receive the residue of the trust estate.
2. Early breaches of duty--false denial of assets. Following Decedent's death the
beneficiaries mentioned above, other than PSP, were not notified of their interests in the trust.
Apparently only American Red Cross followed up on a notice of a court hearing of a Heggstad
petition. When they inquired about the trust Trustee wrote them a letter claiming the trust was
insolvent. At the time the letter was written, the Trustee was holding Schwab Trust account
9152-6466, which then had a balance of approximately $60,000. During the period from date
of death to present, Trustee never filed accounts and never made distributions of the Schwab
account to the entitled beneficiaries.
3. The Demand for Distribution 10 years later. Petitioner Robert Davis was a friend
of Decedent and also her investment advisor. After Decedent's death, Trustee continued to
retain him as investment advisor--not only for the Decedent's securities account (later rolled
over into new account 9152-6466), but also of an account created in June 2006 for PSP using a
portion of the proceeds of sale of the condominium. In early 2016 Robert Davis realized that
his investment advisor files included a copy of the trust document that was apparently
forwarded to him by the drafting attorney in 2001. Discovering that the trust contained
provisions for distribution of Decedent's securities account as described above. He demanded
that the trustee distribute the account.
This Proceeding. Trustee's failure to comply eventually resulted in the pending
proceeding. Prior to hearing Trustee filed a declaration that did little to controvert the
allegations of the petition, but instead attempted to claim that at the time he lied to the Red
Cross he believed what he told them was true--a claim ridiculed in documents filed in response
Case No. PTR 16--300298 Robert A. Davis' Points and Authorities -2-Jeffrey A. Dennis-Strathmeyer
Attorney at Law
Lafayette, California
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by the Petitioner that pointed out the actions taken by Trustee with respect to the account. A
hearing on the Petition was held on December 19, 2016. The mini minutes state, "The Petition
to compel and accounting, etc. was continued to January 30, 2017 at 9 a.m., in Dept. 204 and
the Court expects an accounting petition to be filed by that time.” Hearing was continued to
February 27, 2017 per a stipulation of counsel.
Subsequent Financial Statement Disclosures
Trustee has not filed an account but has provided sufficient financial account
statements to focus some of the issues.
1) Tracing Decedent's Investment Account. \t is now clear that Schwab Account 9152-
6466 was funded with a rollover from Decedent's Schwab account and that there were no
contributions from other sources. We have invited stipulations that would permit Trustee to
submit some form of general summary with respect to the period beginning when the account
was established and ending when it was liquidated and concealed in June 2016. Long listings
of every dividend received over a decade will not help determine the contested issues.
2) Exclusion of the PSP account. It also appears that it will not be helpful to have a
formal accounting for Schwab account 1157-5918--at least assuming PSP is willing to waive
it. Even though the account was held in Mr. Plato's name as trustee of the Watkin Trust, it
was not created pursuant to the Watkin Trust, but rather an agreement between PSP and Mr.
Plato. Further all of its assets came from the sale of the condominium that Trustee should be
distributed to PSP in kind.
3) Documents Still Needed. No documents have been provided for the first 12 months
following Decedent's death. No bank statements. No bills. No tax returns.
Case No. PTR 16--300298 Robert A. Davis' Points and Authorities -3-Jeffrey A. Dennis-Strathmeyer
Attorney at Law
Lafayette, California
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4) Income Tax Returns, There is no evidence that the trustee has ever filed an income
tax return for the trust or a final return for the Decedent.
An Immediate Concern: Taxes
As noted above, Trustee liquidated Schwab account 9152-6466. As a consequence the
trust has received more than enough income to trigger a requirement to file California and
Federal income tax returns for 2016. There is a significant possibility that the liquidation had
adverse tax consequences that Trustee had a duty to avoid--particularly with respect to the
charity beneficiaries. Also, because the liquidation was a nonroutine action that might be
detrimental to the interests of the beneficiaries, the trustee had a duty to disclose the
anticipated liquidation in advance. The most expeditious way to determine the actual tax
consequences of the ill considered liquidation is to require the trustee to promptly file the
returns he is required to file in any event. We request that he be required to complete the filing
within 45 days. Probate Code §16420(a)(1), quoted hereafter.
An Immediate Concern: The Misappropriation
As shown in a declaration filed concurrently with these Points and Authorities, Trustee
first commingled the trust assets with PSP assets and then delivered to PSP assets equal in
value to what had been taken from Schwab account that is the subject of this case. Given the
close relationship between the Trustee and PSP, I assume he has the capacity to recover the
Case No. PTR 16--300298 Robert A. Davis’ Points and Authorities -4-funds without the court order compelling PSP to turn over the funds. We ask that the court
Jeffrey A. Dennis-Strathmeyer
Attorney at Law
Lafayette, California
2
order Trustee to either recover the funds and deposit them in a blocked account or post bond in
3
4 the sum of $150,000.
5 AUTHORITIES
6 Failure to Maintian Records.
7 Per Estate of McCabe (1950) 98 CA2d 503, 505:
"Trustees are also under an obligation to render to beneficiaries a full account of
8 all their dealings with the trust property, and where there has been a negligent
failure to keep true accounts all presumptions are against them upon a
9 settlement. (Purdy v. Johnson, 174 Cal. 521 [163 P, 893].) Trustees are also
under the duty to prove every item of their account by "satisfactory evidence";
10 the burden of proof is on them and not on the beneficiary; and any doubt arising
from their failure to keep proper records, or from the nature of the proof they
u produce, must be resolved against them. (Purdy v. Johnson, supra.)"
(2 Duty of Disclosure.
13 Per Trust and Probate Litigation (CEB) §21.19
14 "It is the trustee’s duty to keep the beneficiaries of the trust reason-ably
informed of the trust and its administration. Prob C §16060. The trustee is also
15 under the common-law duty to fully disclose all material facts. Van de Kamp v
Bank of America (1988) 204 CA3d 819, 835, 251 CR 530. The trustee must
16 furnish to each beneficiary all material information necessary to protect the
beneficiary’s interests in the trust. Werschkuil v United Cal. Bank (1978) 85
\7 CA3d 981, 1001,149 CR 829. When there is a material, nonroutine transaction,
the trustee may have a duty of prior disclosure. Allard v Pacific Nat’! Bank
18 (Wash 1983) 663 P2d 104... .
19 When there is a duty to disclose, the disclosure must be full and complete, and
any material concealment or misrepresentation will amount to fraud sufficient
20 to entitle the injured party to bring an action. Werschkuil v United Cal. Bank,
supra. It is not necessary that the trustee intended to profit by the
21 misrepresentation. See Brown v Critchfield (1980) 100 CA3d 858, 869, 161 CR
342. See also Di Grazia v Anderlini (1994) 22 CA4th 1337, 28 CR2d 37. Of
22 course, any nondisclosure used to gain an advantage over the beneficiary would
be a breach of the duty of loyalty as well. Estate of Vokal (1953) 121 CA2d 252,
23 257, 263 P2d 64. See §§21.7-21.9.
24 Duty of Administer Trust According to the Trust Instrument
25 Probate Code §16000:
On acceptance of the trust, the trustee has a duty to administer the trust
26 according to the trust instrument and, except to the extent the trust instrument
provides otherwise, according to this division.
27
Trustee Notification
28
Case No. PTR 16--300298 Robert A. Davis' Points and Authorities -5-Jeffrey A. Dennis-Strathmeyer
Attorney at Law
Lafayette, California
No
Probate Code 16061.7:
(a) A trustee shall serve a notification by the trustee as described in this section
in the following events:
(1) When a revocable trust or any portion thereof becomes irrevocable because
of the death of one or more of the settlors of the trust, . . .
(4) The duty to serve the notification by the trustee pursuant to this subdivision
is the duty of the continuing or successor trustee, and any one cotrustee may
serve the notification.
(b) The notification by the trustee required by subdivision (a) shall be served on
each of the following:
(1) Each beneficiary of the irrevocable trust or irrevocable portion of the trust,
subject to the limitations of Section 15804...
(3) If the trust is a charitable trust subject to the supervision of the Attorney
General, to the Attorney General. . . .
(e) The notification by trustee shall be served by mail to the last known address,
pursuant to Section 1215, or by personal delivery.
(f) The notification by trustee shall be served not later than 60 days following
the occurrence of the event requiring service. . .
(g) The notification by trustee shall contain the following information:
(1) The identity of the settlor or settlors of the trust and the date of execution of
the trust instrument.
(2) The name, mailing address and telephone number of each trustee of the
trust.
(3) The address of the physical location where the principal place of
administration of the trust is located, pursuant to Section 17002.
(4) Any additional information that may be expressly required by the terms of
the trust instrument.
(5) A notification that the recipient is entitled, upon reasonable request to the
trustee, to receive from the trustee a true and complete copy of the terms of the
trust....
16061.9. [Failure to serve the notification]
(a) A trustee who fails to serve the notification by trustee as required by
Section 16061.7 on a beneficiary shall be responsible for all damages,
attorney’s fees, and costs caused by the failure unless the trustee makes a
reasonably diligent effort to comply with that section . . .
16062. [Duty to Account]
(a) Except as otherwise provided in this section and in Section 16064, the
trustee shall account at least annually, at the termination of the trust, and upon a
change of trustee, to each beneficiary to whom income or principal is required
or authorized in the trustee’s discretion to be currently distributed. . . .
Case No. PTR 16--300298 Robert A. Davis' Points and Authorities -6-Jeffrey A. Dennis-Strathmeyer
Attorney at Law
Lafayette, California
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16420. [Remedies for Breach of Trust]
(a) If a trustee commits a breach of trust, or threatens to commit a breach of
trust, a beneficiary or cotrustee of the trust may commence a proceeding for any
of the following purposes that is appropriate:
(1) To compel the trustee to perform the trustee’s duties.
(2) To enjoin the trustee from committing a breach of trust.
(3) To compel the trustee to redress a breach of trust by payment of money or
otherwise.
(4) To appoint a receiver or temporary trustee to take possession of the trust
property and administer the trust.
(5) To remove the trustee.
(6) Subject to Section 18100, to set aside acts of the trustee.
(7) To reduce or deny compensation of the trustee.
(8) Subject to Section 18100, to impose an equitable lien or a constructive trust
on trust property.
(9) Subject to Section 18100, to trace trust property that has been wrongfully
disposed of and recover the property or its proceeds.
(b) The provision of remedies for breach of trust in subdivision (a) does not
prevent resort to any other appropriate remedy provided by statute or the
common law.
February 22, 2017
Respectfully submitted,
Case No. PTR 16--300298 Robert A. Davis' Points and Authorities -7-
Preview
Jeffrey A. Dennis-Strathmeyer Attorney at Law Lafayette, California oe NY DA HW BF wWN 10 JEFFREY A. DENNIS-STRATHMEYER SB No. 56871 strathj@gmail.com 3620 Happy Valley Rd STE 210 ELECTRONICALLY Lafayette, CA 94549 FILED (925) 219-2433 Superior Court of Caltfornia, County of San Francisco Attorney for Robert A. Davis Petitioner 02/22/2017 Clerk of the Court BY-MICHAEL RAYRAY Deputy Clerk SUPERIOR COURT OF CALIFORNIA COUNTY OF SAN FRANCISCO In Re the matter of No. PTR-16-300298 ROBERT A. DAVIS' MEMORANDUM OF POINTS AND AUTHORITIES RE: ORDERS TO BE REQUESTED AT FEBRUARY 27, 2017 HEARING MURIEL E. WATKIN REVOCABLE TRUST | Dept: Probate - Room 204 Date: February 27, 2017 Time: 9 a.m. Judge: Paul Alvarado Petitioner Robert A. Davis by his attorney Jeffrey A. Dennis-Strathmeyer submits the following Points and Authorities. 1. Summary of Case to Date 1. Decedent and Her Trust. Muriel Watkin ("Decedent") died August 19, 2005. She was an avid supporter of the arts in general and Pacifica Spindrift Players (PSP) in particular. According to the PSP website she was President of the PSP Board of Directors in both 2001 and 2002. Her successor trustee, Richard Plato ("Trustee"), was President of the Board in 2007 and 2008. The relevant features of the trust document provided that the PSP was to Case No. PTR 16--300298 Robert A. Davis' Points and Authorities -1-Jeffrey A. Dennis-Strathmeyer Attorney at Law Lafayette, California oe NY DW BF WN 10 receive her condominium. Seven charities and a friend were to receive 5 percent shares of her securities account and Petitioner Robert Davis were to receive the residue of the trust estate. 2. Early breaches of duty--false denial of assets. Following Decedent's death the beneficiaries mentioned above, other than PSP, were not notified of their interests in the trust. Apparently only American Red Cross followed up on a notice of a court hearing of a Heggstad petition. When they inquired about the trust Trustee wrote them a letter claiming the trust was insolvent. At the time the letter was written, the Trustee was holding Schwab Trust account 9152-6466, which then had a balance of approximately $60,000. During the period from date of death to present, Trustee never filed accounts and never made distributions of the Schwab account to the entitled beneficiaries. 3. The Demand for Distribution 10 years later. Petitioner Robert Davis was a friend of Decedent and also her investment advisor. After Decedent's death, Trustee continued to retain him as investment advisor--not only for the Decedent's securities account (later rolled over into new account 9152-6466), but also of an account created in June 2006 for PSP using a portion of the proceeds of sale of the condominium. In early 2016 Robert Davis realized that his investment advisor files included a copy of the trust document that was apparently forwarded to him by the drafting attorney in 2001. Discovering that the trust contained provisions for distribution of Decedent's securities account as described above. He demanded that the trustee distribute the account. This Proceeding. Trustee's failure to comply eventually resulted in the pending proceeding. Prior to hearing Trustee filed a declaration that did little to controvert the allegations of the petition, but instead attempted to claim that at the time he lied to the Red Cross he believed what he told them was true--a claim ridiculed in documents filed in response Case No. PTR 16--300298 Robert A. Davis' Points and Authorities -2-Jeffrey A. Dennis-Strathmeyer Attorney at Law Lafayette, California Cm NN DH PF YN 10 by the Petitioner that pointed out the actions taken by Trustee with respect to the account. A hearing on the Petition was held on December 19, 2016. The mini minutes state, "The Petition to compel and accounting, etc. was continued to January 30, 2017 at 9 a.m., in Dept. 204 and the Court expects an accounting petition to be filed by that time.” Hearing was continued to February 27, 2017 per a stipulation of counsel. Subsequent Financial Statement Disclosures Trustee has not filed an account but has provided sufficient financial account statements to focus some of the issues. 1) Tracing Decedent's Investment Account. \t is now clear that Schwab Account 9152- 6466 was funded with a rollover from Decedent's Schwab account and that there were no contributions from other sources. We have invited stipulations that would permit Trustee to submit some form of general summary with respect to the period beginning when the account was established and ending when it was liquidated and concealed in June 2016. Long listings of every dividend received over a decade will not help determine the contested issues. 2) Exclusion of the PSP account. It also appears that it will not be helpful to have a formal accounting for Schwab account 1157-5918--at least assuming PSP is willing to waive it. Even though the account was held in Mr. Plato's name as trustee of the Watkin Trust, it was not created pursuant to the Watkin Trust, but rather an agreement between PSP and Mr. Plato. Further all of its assets came from the sale of the condominium that Trustee should be distributed to PSP in kind. 3) Documents Still Needed. No documents have been provided for the first 12 months following Decedent's death. No bank statements. No bills. No tax returns. Case No. PTR 16--300298 Robert A. Davis' Points and Authorities -3-Jeffrey A. Dennis-Strathmeyer Attorney at Law Lafayette, California yD WF WN 4) Income Tax Returns, There is no evidence that the trustee has ever filed an income tax return for the trust or a final return for the Decedent. An Immediate Concern: Taxes As noted above, Trustee liquidated Schwab account 9152-6466. As a consequence the trust has received more than enough income to trigger a requirement to file California and Federal income tax returns for 2016. There is a significant possibility that the liquidation had adverse tax consequences that Trustee had a duty to avoid--particularly with respect to the charity beneficiaries. Also, because the liquidation was a nonroutine action that might be detrimental to the interests of the beneficiaries, the trustee had a duty to disclose the anticipated liquidation in advance. The most expeditious way to determine the actual tax consequences of the ill considered liquidation is to require the trustee to promptly file the returns he is required to file in any event. We request that he be required to complete the filing within 45 days. Probate Code §16420(a)(1), quoted hereafter. An Immediate Concern: The Misappropriation As shown in a declaration filed concurrently with these Points and Authorities, Trustee first commingled the trust assets with PSP assets and then delivered to PSP assets equal in value to what had been taken from Schwab account that is the subject of this case. Given the close relationship between the Trustee and PSP, I assume he has the capacity to recover the Case No. PTR 16--300298 Robert A. Davis’ Points and Authorities -4-funds without the court order compelling PSP to turn over the funds. We ask that the court Jeffrey A. Dennis-Strathmeyer Attorney at Law Lafayette, California 2 order Trustee to either recover the funds and deposit them in a blocked account or post bond in 3 4 the sum of $150,000. 5 AUTHORITIES 6 Failure to Maintian Records. 7 Per Estate of McCabe (1950) 98 CA2d 503, 505: "Trustees are also under an obligation to render to beneficiaries a full account of 8 all their dealings with the trust property, and where there has been a negligent failure to keep true accounts all presumptions are against them upon a 9 settlement. (Purdy v. Johnson, 174 Cal. 521 [163 P, 893].) Trustees are also under the duty to prove every item of their account by "satisfactory evidence"; 10 the burden of proof is on them and not on the beneficiary; and any doubt arising from their failure to keep proper records, or from the nature of the proof they u produce, must be resolved against them. (Purdy v. Johnson, supra.)" (2 Duty of Disclosure. 13 Per Trust and Probate Litigation (CEB) §21.19 14 "It is the trustee’s duty to keep the beneficiaries of the trust reason-ably informed of the trust and its administration. Prob C §16060. The trustee is also 15 under the common-law duty to fully disclose all material facts. Van de Kamp v Bank of America (1988) 204 CA3d 819, 835, 251 CR 530. The trustee must 16 furnish to each beneficiary all material information necessary to protect the beneficiary’s interests in the trust. Werschkuil v United Cal. Bank (1978) 85 \7 CA3d 981, 1001,149 CR 829. When there is a material, nonroutine transaction, the trustee may have a duty of prior disclosure. Allard v Pacific Nat’! Bank 18 (Wash 1983) 663 P2d 104... . 19 When there is a duty to disclose, the disclosure must be full and complete, and any material concealment or misrepresentation will amount to fraud sufficient 20 to entitle the injured party to bring an action. Werschkuil v United Cal. Bank, supra. It is not necessary that the trustee intended to profit by the 21 misrepresentation. See Brown v Critchfield (1980) 100 CA3d 858, 869, 161 CR 342. See also Di Grazia v Anderlini (1994) 22 CA4th 1337, 28 CR2d 37. Of 22 course, any nondisclosure used to gain an advantage over the beneficiary would be a breach of the duty of loyalty as well. Estate of Vokal (1953) 121 CA2d 252, 23 257, 263 P2d 64. See §§21.7-21.9. 24 Duty of Administer Trust According to the Trust Instrument 25 Probate Code §16000: On acceptance of the trust, the trustee has a duty to administer the trust 26 according to the trust instrument and, except to the extent the trust instrument provides otherwise, according to this division. 27 Trustee Notification 28 Case No. PTR 16--300298 Robert A. Davis' Points and Authorities -5-Jeffrey A. Dennis-Strathmeyer Attorney at Law Lafayette, California No Probate Code 16061.7: (a) A trustee shall serve a notification by the trustee as described in this section in the following events: (1) When a revocable trust or any portion thereof becomes irrevocable because of the death of one or more of the settlors of the trust, . . . (4) The duty to serve the notification by the trustee pursuant to this subdivision is the duty of the continuing or successor trustee, and any one cotrustee may serve the notification. (b) The notification by the trustee required by subdivision (a) shall be served on each of the following: (1) Each beneficiary of the irrevocable trust or irrevocable portion of the trust, subject to the limitations of Section 15804... (3) If the trust is a charitable trust subject to the supervision of the Attorney General, to the Attorney General. . . . (e) The notification by trustee shall be served by mail to the last known address, pursuant to Section 1215, or by personal delivery. (f) The notification by trustee shall be served not later than 60 days following the occurrence of the event requiring service. . . (g) The notification by trustee shall contain the following information: (1) The identity of the settlor or settlors of the trust and the date of execution of the trust instrument. (2) The name, mailing address and telephone number of each trustee of the trust. (3) The address of the physical location where the principal place of administration of the trust is located, pursuant to Section 17002. (4) Any additional information that may be expressly required by the terms of the trust instrument. (5) A notification that the recipient is entitled, upon reasonable request to the trustee, to receive from the trustee a true and complete copy of the terms of the trust.... 16061.9. [Failure to serve the notification] (a) A trustee who fails to serve the notification by trustee as required by Section 16061.7 on a beneficiary shall be responsible for all damages, attorney’s fees, and costs caused by the failure unless the trustee makes a reasonably diligent effort to comply with that section . . . 16062. [Duty to Account] (a) Except as otherwise provided in this section and in Section 16064, the trustee shall account at least annually, at the termination of the trust, and upon a change of trustee, to each beneficiary to whom income or principal is required or authorized in the trustee’s discretion to be currently distributed. . . . Case No. PTR 16--300298 Robert A. Davis' Points and Authorities -6-Jeffrey A. Dennis-Strathmeyer Attorney at Law Lafayette, California co Oo YN DH BF YW DN 10 16420. [Remedies for Breach of Trust] (a) If a trustee commits a breach of trust, or threatens to commit a breach of trust, a beneficiary or cotrustee of the trust may commence a proceeding for any of the following purposes that is appropriate: (1) To compel the trustee to perform the trustee’s duties. (2) To enjoin the trustee from committing a breach of trust. (3) To compel the trustee to redress a breach of trust by payment of money or otherwise. (4) To appoint a receiver or temporary trustee to take possession of the trust property and administer the trust. (5) To remove the trustee. (6) Subject to Section 18100, to set aside acts of the trustee. (7) To reduce or deny compensation of the trustee. (8) Subject to Section 18100, to impose an equitable lien or a constructive trust on trust property. (9) Subject to Section 18100, to trace trust property that has been wrongfully disposed of and recover the property or its proceeds. (b) The provision of remedies for breach of trust in subdivision (a) does not prevent resort to any other appropriate remedy provided by statute or the common law. February 22, 2017 Respectfully submitted, Case No. PTR 16--300298 Robert A. Davis' Points and Authorities -7-