Preview
854758
KEKER & VAN NEST LLP
JOHN W. KEKER - # 49092
jkeker@kvn.com
WARREN A. BRAUNIG - # 243884
whraunig@kvn.com
BENJAMIN BERKOWITZ - # 244441
bberkowitz@kvn.com
ABHISHEK BAJORIA - # 255294
abajoria@kyn.com
633 Battery Street
San Francisco, CA 94111-1809
Telephone: 415 391 5400
Facsimile: 415 397 7188
MYERS URBATSCH P.C.
PETER S. MYERS - # 115113
psmyers@myersurbatsch.com
MATTHEW R. MRAULE - # 263433
mmraule@myersurbatsch.com
625 Market Street, 4th Floor
San Francisco, California 94105
Phone: (415) 896-1500
Fax: (415) 979-0761
Attorneys for Petitioners and Respondents
BRUCE H. QVALE, FAMILY TRUSTEE AND
RESPONDENT LAURA HIURA
ELECTRONICALLY
FILED
Superior Court of California,
County of San Francisco
AUG 21 2014
Clerk of the Court
BY: SHIRLEY WU
Deputy Clerk
SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF SAN FRANCISCO
In the Matter of the
Kathryn C. Qvale Exempt Marital Trust,
dated January 31, 2006
Miles Jeffrey Qvale, individually and as
trustee
VS.
Bruce H. Qvale, Laura Hiura, and Does 1-10
Case No. PTR-13-297016
RESPONDENTS’ FURTHER BRIEF RE:
PETITION TO REMOVE OR SUSPEND
Date: August 27, 2014
Time: 2:30 p.m.
Dept.: Probate, Room 204
Judge: Hon, Andrew Y.S, Cheng
RESPONDENTS’ FURTHER BRIEF RE: PETITION TO REMOVE OR SUSPEND
Case No. PTR-13-297016854758
L
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Hi.
TABLE OF CONTENTS
INTRODUCTION 00... cece cece cece cere en eeneeeeeeeeteenenteeneeaceneaseneesasevacsesaeerseversesaneseversenaeens 1
ARGUMENT 0.0. cceee eects neanetes ne reenessesneneaneeseesneicaseeseeseereatetssieescatessesaeessanetaeeneese 1
A,
B.
D.
Jeff does not dispute the key facts supporting Bruce and Laura’s retention
as trustees.
Because there is no imminent threat to trust assets or beneficiaries, the
Court should not—and cannot—suspend Bruce and Laura prior to an
evidentiary hearing on Jeff's removal petition. .......0..0.00....
1. Neither the 2012 redemption, nor Bruce and Laura’s efforts to
defend it, constitutes a conflict of interest with the trust
beneficiaries.
2. The now-withdrawn PFI concerning S-corp election and a potential
merger with ARBM is not a basis for suSpensiON........ i cceeeereeeceerreereens 6
The alleged breaches of duty by Bruce
and do not warrant suspension.........
nd Laura are no breaches at all,
Jeff's various new allegations against Bruce and Laura are completely
irrelevant and do not at all support thier SUSPENSION... cesses ceeeeeeereeeceveneeerees 10
i
RESPONDENTS’ FURTHER BRIEF RE: PETITION TO REMOVE OR SUSPEND
Case No. PTR-13-297016854758
TABLE OF AUTHORITIES
State Cases
Copley v. Copley
136 Cal. App. 3d 248 (L981) cccccssccsssccsssssssssssssvessssesssnessusestusesteneseunestucessenen
Estate of Gump
1 Cal. App. 4th 582 (1991)...
Estate of Hammer
19 Cal. App. 4th 1621 (1993) occ ccccccccesssssesesssssssssensesessennunnessesisinnnnnssseeeneeee
Getty v. Getty
205 Cal. App. 3d 134 (1988) ooo cccccssssssesesssessseesusnsesestieeunnnssstenstutneseseteneeneeea
IFS Indus., Inc. v. Stephens
159 Cal. App. 3d 740 (1984) occ cccccccccsssssssesssssssessnsunnseseeienennnesesiemsuunsesteeueeeeee
In re Estate of Bennett
163 Cal. App. 4th 1303 (2008) occ eee eececeeeee ee neneeeaescenenseneneesecasataneececesesan
In re Estate of Lensch
177 Cal. App. 4th 667 (2009) .
In re Guzzetta’s Estate
97 Cal. App. 2 169 (1950) oo eceeccseeesceeseecsessnseseeseesessessesseneesessessessasseneeseeseessees
Schwartz v. Labow
164 Cal. App. 4th 417 (2008) occ cesescnesssecseseneessesseesseesesseenseessscasaseseeessssnscaseenesssenaesaness
Uzyel v. Kadisha
188 Cal. App. 4th 866 (2010) ..ceeccecsesescnesssecsesenesssssseessessnesseenseessscasssenerssssascnseenessseneesaeess
State Statutes
Probate Code § 15642(€) cece ccseseeresecesessesrenesesesrearensacsecrearansansesssaranvacsesesasaeeasnascirneesneneenraeess
ii
Page(s)
1,3
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Case No. PTR-13-297016854758
L INTRODUCTION
Jeff Qvale’s August 8, 2014 Brief Regarding Suspension of Co-Trustees is yet another
hodge-podge of unsupported allegations, factual misrepresentations, and non-sequiturs that shed
no light on the ability of Bruce Qvale and Laura Hiura to responsibly administer the three trusts at
issue. Jeff's brief all but completely ignores the legal standard that governs a probate court when
asked to take the extraordinary step of suspending a testator’s chosen trustees prior to an
evidentiary hearing: The Court must find that “trust property or the interest of a beneficiary may
suffer loss or injury pending a decision on a petition for removal.” Probate Code § 15642(e)
(emphasis added); sce also Getty v. Getty, 205 Cal. App. 3d 134, 139-140 (1988) (noting that the
purpose of suspension is to “preserve the trust assets”). Jeff has provided the Court with no
evidence that Bruce or Laura’s actions are threatening any loss or injury to trust assets or to
beneficiaries, much less an imminent threat between now and the scheduled March 2015 trial on
Jeffs removal petition. On the contrary, the undisputed evidence demonstrates that Bruce and
Laura have acted faithfully and responsibly as trustees, and have protected and preserved trust
assets, largely for the benefit of Jeff as residual beneficiary. Rather than acknowledge these facts,
Jeffs brief simply recycles supposed conflicts of interest or breaches of duty that have been
shown to be false on their face, while conjuring up new, imagined allegations of misdeeds
regarding the trusts, some dating back more than seven years before Bruce and Laura assumed
the mantle of successor trustee to Kjell’s trusts. But even if these allegations were true (and they
are not), none of the supposed conflicts or breaches of trust poses a current threat to trust assets or
beneficiaries of Kjell’s estate. Given Bruce and Laura’s central role to date in administering the
trusts, and the fact that the administration of the trusts is progressing smoothly, it would be both
contrary to the law, and wholly inefficient, to suspend them as trustees.
Th. ARGUMENT
A. Jeff does not dispute the key facts supporting Bruce and Laura’s retention as
trustees.
In response to Jeff’s petitions seeking their removal, Bruce and Laura provided the Court
with four detailed factual declarations, deposition transcripts, and more than forty exhibits
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Case No. PTR-13-297016854758
refuting and discrediting Jeff's allegations. Yet, while Jeff persists in seeking their removal, he
has offered not a shred of evidence in rebuttal. Before engaging Jeff's latest round of hyperbolic
accusations, it is worth pointing out the many crucial and undisputed facts that now comprise the
factual record on this petition:
. Since taking over as successor trustees, Bruce and Laura have coordinated the
inventory of Kjell’s $100+ million estate; procured appraisals and accounting
professionals; filed all required tax submissions for the trusts: managed and
maintained monthly ledgers, bank reconciliations, securities and brokerage
accounts; and managed numerous real estate and financial investments for the
Survivor’s Trust. Laura Decl. §f] 12, 16 — 20; Bruce Decl. {ff 22, 25.
. Bruce and Laura have consulted Jeff on every substantive decision involving trust
assets, and acted with unanimous consent. Laura Decl. 14: Bruce Decl. q 23.
. itis Jeff who has repeatedly failed to respond to Bruce and Laura’s trust
administration inquiries, slowing down or precluding the trustees from finalizing
decisions. Laura Decl. | 24-26; Bruce Decl. § 23.
. Bruce and Laura, through Kjell’s former counsel Manatt, have provided more than
115,000 pages of documents concerning the administration of the trusts and related
issues, answering each and every informal document inquiry Jeff and his lawyers
have made. Rose Decl. 4 38 — 43; Bruce Decl. { 24.
. The 2012 redemption of QAG stock from the Exempt Marital Trust did not
eliminate or strip shares from Kjell’s grandchildren, in fact, it increased their
ownership stake of QAG. See Rose Decl. {§ 22, 25 & Exs. 16, 17: Bruce Decl. ff
8,9, 11.
. Kjell was the sole trustee of the marital trusts and Survivor’s Trust until summer
2013, when he was found to lack capacity. Rose Decl. § 33.
Nor does Jeff dispute, in his August 8 brief, that he is seeking suspension primarily for purposes
of gaining a tactical litigation advantage, as his counsel candidly admitted at a deposition last
month. See Prelim. Opp. at 1-2.
The evidence is ample that Bruce and Laura are fulfilling their duties as trustees and
acting fairly and honestly in their dealings with Jeff and Ron Malone. Indeed, just this week, Mr.
Malone acknowledged Laura’s exemplary handling of the trust accounting, noting that “you are
on the job, as usual!” See Declaration of Warren Braunig in Support of Respondents’ Further
' Citations to the “Rose Decl.” (Declaration of Jordan Rose), “Bruce Decl.” (Declaration of Bruce
Qvale), “Endo Decl.” (Declaration of Donald Endo), or “Laura Decl.” (Declaration of Laura
Hiura) refer to those declarations filed with Respondents’ Preliminary Opposition to Petition to
Remove, Suspend, and Instruct Co-Trustee, on July 29, 2014.
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Case No. PTR-13-297016854758
Brief re: Petition to Remove or Suspend (“Braunig Decl.”), Ex. A. And there is no evidence at
all—-or even an allegation——-of waste or mismanagement of trust assets; of taking steps that have
adversely affected Jeff as the residual beneficiary; or of failing to cooperate fully in the
administration of the trusts. In short, Bruce and Laura are doing precisely what trustees are
supposed to do.
B. Because there is no imminent threat to trust assets or beneficiaries, the Court
should not—and cannot—suspend Bruce and Laura prior to an evidentiary
hearing on Jeffs removal petition.
Suspension of a testator’s selected trustee without an evidentiary hearing is an
extraordinary remedy. The default rale in probate matters is that any contested petition requires
an evidentiary hearing, unless the parties stipulate otherwise. See Jn re Estate of Lensch, 177 Cal.
App. 4th 667, 676-78 (2009); In re Estate of Bennett, 163 Cal. App. 4th 1303, 1309-10 (2008).
indeed, the failure to grant an evidentiary hearing in a contested dispute can be reversible error.
dd. Only in rare circumstances, where the “trust property or the interests of a beneficiary may
suffer loss or injury pending a decision” on the removal petition, does the Court has the power to
suspend a trustee prior to the evidentiary hearing. See Probate Code § 15642(e); Schwariz v.
Labow, 164 Cal. App. 4th 417, 436 n. 9, 427-28 (2008).
Those cases in which a Probate Court has suspended a trustee without even affording the
trustee an evidentiary hearing are few, and involve extreme abuses of trust, or conflicts of
interests, that pose an immediate threat to the trust. For example, in Schwartz v. Labow, the Court
suspended the trustee only after finding (based on evidence submitted by the trustee) that the
trustee had paid $1.3 million—more than half of the value of the estate—to himself and lawyers
pursuing a legal judgment against one of the beneficiaries that had an “extremely low” prospect
for recovery. 164 Cal. App. 4th at 422, 424-25. The Court found that the trustee had engaged in
a pattern of abusive and reckless spending—for example, he sold the primary asset of the estate
(the decedents’ home) to pay for the fruitless litigation (id. at 422)—and therefore acted “to
protect the trust from perceived and threatened abuse.” See id. at 428. Similarly, in Getty v.
Geity, the trial court partially suspended Gordon Getty as trustee of the J. Paul Getty trust only
after finding “irreconcilable conflicts between Gordon Getty’s personal interests and those of the
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Case No. PTR-13-297016854758
trust estate” relating to an ongoing lawsuit that had been brought against the trust. 205 Cal. App.
3d at 138 (internal quotations omitted). Gordon’s personal interests in that pending lawsuit were
inimical to and at odds with the interests of the beneficiaries, because, due to the structure of
various contracts associated with the Texaco-Getty merger and the Pennzoil litigation that
followed, Gordon would be personally indemnified only if the trust Jost the case. Id. at 140-41.
The Court concluded, in light of that conflict, that suspension was necessary to “preserve the
assets of the trust.” /d. Notably, in Gezty, the trial court did not suspend Gordon entirely, but
only from conducting the litigation that generated the conflict.
Suspension is wholly unwarranted here. Jeff has made no showing that Bruce or Laura
has squandered trust assets or is in irreconcilable conflict with any trust beneficiaries. On the
contrary, the undisputed facts demonstrate that ne pending conflict exists between Bruce or
Laura and the beneficiaries (other than the conflict with Jeff created by his petition, which cannot
itself form the basis for removal). Moreover, Jeff has presented no evidence of an imminent
threat to trust assets, or to the beneficiaries, between now and trial.
1. Neither the 2012 redemption, nor Bruce and Laura’s efforts to defend
it, constitutes a conflict of interest with the trust beneficiaries.
Bruce and Laura’s Preliminary Opposition made a detailed factual and evidentiary
showing that the 2012 redemption of QAG shares from the Exempt Marital Trust simply
converted the assets Bruce stood to receive at Kjell’s death from shares of QAG to promissory
notes, and did not affect the inheritance of Kjell’s grandchildren. See Rose Decl. ff 14-19 &
Exs. 13-17; Bruce Decl. §[ 5-10. Amazingly, Jeffs recent brief persists in alleging that the 2012
redemption of QAG shares from the Exempt Marital Trust involved shares that would have gone
to Kjell’s grandchildren. See Jeffs Br. at 7 (“Chris would have been entitled to 3% of QAG if the
proposed changes to the plan and redemption did not take place.”); id. (“[Bruce] was in the
process of redeeming 21% of the QAG shares from the Exempt Trust of which Chris was a
named beneficiary.”). That is contrary to all the evidence, including the redemption agreements
and trust instruments themselves. As Kjell’s estate planning lawyer Jordan Rose explained:
“Because Kjell had already acted to transfer the QAG/QELLC interests to Bruce upon Kjell’s
death, the primary effect of these redemptions was a tax-saving benefit accruing to the entire
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Case No. PTR-13-297016854758
estate and all beneficiaries.” Rose Decl. 4 22. Bruce’s declaration further elaborates:
Contrary to the allegations in the Removal Petitions, this 2012
redemption did not “eliminate” or “terminate” Kjell’s grandchildren
as beneficiaries of Kjell’s estate. As 1 understand it, based on
exercises of powers of appointment by Kjell in 2011 (which I never
asked Kjell to make), the 21% block of shares in the Exempt
Marital Trust were appointed to me, not to the grandchildren, in
Kjell’s estate plan. Thus, when Kjell redeemed the Marital Trust
shares, that simply meant that I stood to inherit promissory notes
instead of QAG shares. Jeff's repeated allegations that the 2012
redemption benefitted me at the expense of the GST trusts, or
Kjell’s grandchildren, are therefore false.
Bruce Decl, 8. In fact, as both Bruce and Rose confirmed, the 2012 redemption had the indirect
effect of increasing the ownership stake of QAG held by Kjell’s grandchildren, from 24% to 34%.
dd. § 9, Rose Decl. § 22" Therefore, Jeff's challenge to the 2012 redemption is not an effort to
“to recover 5,636 shares of QAG for the grandchildren,” id. at 5, but rather a misguided effort that
would simply provide Brace with QAG shares instead of a promissory note, potentially
increasing overall estate taxes and reducing Jeff's residuary inheritance.
For that reason, Jeffs assertions that Bruce and Laura are in a “zero-sum dispute with
their beneficiaries” and have “admitted their conflicts” with Kjell’s grandchildren, see Jeff Br. at
4, 5, are simply wrong. Bruce and Laura have not “admitted their conflicts” with anyone. On
the contrary, Bruce and Laura’s defense of the trust is aligned with the interests of Kjell’s
grandchildren, for two reasons: 1) undoing the 2012 redemption, as Jeff desires, would dilute the
interest of the grandchildren, from 34% ownership back to 24% ownership; and 2) Bruce and
Laura’s continued profitable management of QAG enhances the value of all shares in QAG,
including those held by the grandchildren. Jeff's suggestion that the 2012 redemption was a
conflicted transaction is similarly wrong. Bruce was not a trustee of the Exempt Marital Trust at
the time of that redemption; Kjell was the sole trustee. See Bruce Decl. § 10; Rose Decl. 4 33.
Nor was Bruce himself a party to that transaction. Bruce Decl. 10; Rose Decl. ۤ 22-23. There
has never been a “conflict,” and nothing about the 2012 redemption poses a current or imminent
* Jeff has not, in any petition, challenged the 2011 exercises by Kjell of his powers of
appointment with respect to the marital trusts—nor could he, given that he was regularly
soliciting and receiving gifts of cash and marketable securities from Kjell throughout 2011 and
2012. See Rose Decl. 421 & Ex. 7.
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threat to any trust assets or beneficiaries.
Furthermore, as Respondents noted in their Preliminary Opposition and Jeff does not
dispute, a beneficiary may not create hostility and a conflict of interest simply by challenging the
trust or demanding the trustee’s resignation. See /FS Indus., Inc. v. Stephens, 159 Cal. App. 3d
740, 754 (1984).
2. The now-withdrawn PFI concerning S-corp election and a potential
merger with ARBM is not a basis for suspension
Jeff appears to now recognize that the once-proposed but abandoned merger between
QAG and ARBM does not support Bruce and Laura’s suspension, given that he dedicates only a
few sentences to this argument that was a centerpiece of his initial Petition, See Jeff Br. at 6-7. In
their opposition papers, Bruce and Laura explained in great detail the circumstances and reasons
why QAG wished to convert to S-corp—including that it would avoid double-taxation and put
more profits in the hands of Kjell’s grandchildren—and why QAG considered a short-form
merger to buy out shareholders who did not want to maximize the long-term profitability of their
investment. Bruce Decl. J] 13-20. Jeff does not respond to that but instead levels a new
accusation, that “Bruce and Hiura admitted that they caused ... QE to distribute QAG shares to
various trusts for the benefit of the grandchildren” (Jeff Br. at 6). However, no one (not even
Jeff) has alleged that transaction was anything but ministerial; in fact, it did not affect any
beneficiary’s interest in QAG. Bruce Decl. | 16.
But even if the S-corp election and ARBM merger could have resulted in a conflict down
the road, it never matured into an actual conflict of interest. Given the disagreement among the
trustees, in an abundance of caution and to avoid even the appearance of impropriety, Bruce and
Laura did the responsible thing: they filed a Petition for Instructions and sought the Court’s
* Prior to making an S-corp election, the corporation must be owned by qualified subchapter S
shareholders. Because QE was not a qualified subchapter S shareholder, QE distributed its QAG
to the QE members on a pro rata basis. This was done purely to enable an eventual S-corp
election.
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RESPONDENTS’ FURTHER BRIEF RE: PETITION TO REMOVE OR SUSPEND
Case No. PTR-13-297016854758
guidance.” And, of course, the PFI was withdrawn, * 50 the allegedly conflicted transaction never
occurred. The lack of a conflict of interest—much less a present conflict-—is fatal to Jeff's
argument for suspension. Where “the settlor of a trust has named a trustee, fully aware of
possible conflicts inherent in his appointment, only rarely will the court remove that trustee, and it
will never remove him for potential conflict of interest but only for demonstrated abuse of
power detrimental to the trust.” Copley v. Copley, 126 Cal. App. 3d 248, 286-87 (1981)
(emphasis added). Kjell was well aware of the conflict between his sons, one of whom would
control QAG, which was 1/3 owned by Kjell’s grandchildren; and he recognized the possibility
that a trustee’s interests might conflict with those of a beneficiary. See Endo Decl. § 12; Rose
Decl. {| 14-16 26; see also Rose Decl. Ex. | § 20.2; Ex. 25 §§ 7.5, 7.7. Nonetheless, Kjell
selected Bruce and Jeff (and Laura, for the Survivor’s Trust) to be successor trustees. See Rose
Decl. Ex. 25 § 6.2. Under Copley, any “potential conflict of interest” inherent in Kjell’s estate
plan is insufficient to remove his designated successor trustees.
In short, neither of these alleged “conflicts,” the 2012 redemption or the PF! concerning
8-corp election—which were not conflicts at all—begins to approach the degree of opposition
between a trustee’s personal interests and the interests of the trust beneficiaries that courts have
required to suspend a trustee, even temporarily. For example, in Estate of Hammer, which is
cited liberally by Jeff in his most recent brief but is easily distinguishable, the executor was
engaged in parallel litigation with the beneficiary of the estate (his soon-to-be-ex-wife) to obtain a
portion of her bequest as “community property.” See Estate of Hammer, 19 Cal. App. 4th 1621,
1640-42 (1993). The executor was in the “‘contradictory and impossible’ position of suing [his
4 Bruce and Laura’s appeal to the Court for guidance, through the use of a PFI, distinguishes this
case from those such as Uzyel v. Kadisha, 188 Cal. App. 4th 866 (2010), cited by Jeff for the
proposition that a fiduciary may not engage in conflicted transactions absent Court approval. See
id. at 905 (“A trustee also is strictly prohibited from engaging in transactions in which the
trustee’s personal interests may conflict with those of the beneficiaries without the express
authorization of either the trust instrument, the court, or the beneficiaries.” (emphasis added)).
Bruce and Laura did not engage in a conflicted transaction at all—and any potential transaction
was properly raised in the PFL
> Jeff appears to suggest that the PF] was merely “[taken] off-calendar’” but not withdrawn,
presumably to imply to the Court the petition is still pending. In fact, Bruce and Laura’s counsel
confirmed to Jeff's counsel as far back as December 20, 2013 that the PFI had been withdrawn.
Braunig Decl. Ex. B. In any event, should there be any remaining ambiguity, Bruce and Laura
confirm once more that they have withdrawn that PFI.
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Case No. PTR-13-297016854758
wife] in another forum while under a fiduciary duty to protect her interests in the probate
proceeding.” Jd. at 1641; see also Getty, 205 Cal. App. 3d at 138-39. Moreover, the record
showed that the executor in Hammer had actually used his powers as executor to take steps that
factually benefitted him in the parallel litigation (Estate of Hammer, 19 Cal App 4th at 1638,
1642); and had delayed in filing an inventory, which had “caused the estate to suffer losses” (id.
at 1637). Unlike here, the conflict and negligent conduct in Estate of Hammer posed an ongoing
threat to the trust assets. Indeed, the very premise on which Estate of Hammer is based—that a
trustee or executor may not attack or undermine an instrument he is bound as fiduciary to uphold
(see In re Guzzetta’'s Estate, 97 Cal. App. 2d 169, 171-72 (1950))——actually supports the removal
of Jeff Qvale, who has petitioned to dissolve the trust instruments that he has is duty-bound, as
trustee, to defend.
Cc. The alleged breaches of duty by Bruce and Laura are no breaches at all, and
do not warrant suspension.
Jeffs claims that Bruce and Laura breached duties to Kjell’s grandchildren, as the
beneficiaries of Generation Skipping Transfer Tax (GST) trusts created in 2006 for their benefit,
suffer the same flaws as the supposed conflicts of interest. For starters, none of these supposed
breaches involve breaches of Bruce and Laura’s duties as trustees of the Survivor’s Trust, Exempt
Marital Trust, or Nonexempt Marital Trust, the trusts for which their removal is sought.” And
Jeff is not seeking to remove Bruce and Laura as trustees of the GST trusts. This gap between the
supposed conflicts and the challenged trusts is further fatal to Jeff’s request for suspension.
But even so, Bruce and Laura have breached no duties to the GST beneficiaries, as
established by the undisputed facts set forth in their Preliminary Opposition papers. For example,
while Jeff alleges that Bruce breached a duty in 2012 because he “did not disclose that he was in
the process of redeeming 21% of the QAG shares from the Exempt Trust of which Chris was a
named beneficiary,” Jeff. Br. at 7, the undisputed evidence is that Chris and the other
grandchildren of Kjell were not the named beneficiaries of those shares in 2012. See Rose Decl.
° The GST trusts stand to receive about $3.2 million total from the assets in the Survivor’s Trust,
but Jeff has not alleged any impropriety in the calculation of that amount, or that any acts by
Bruce or Laura threaten the ability of those trusts to receive the amount bequeathed by Kjell.
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49 14-19, 22-23 & Exs. 13-17; Bruce Decl. 9[ 5-9. Obviously, then, Bruce had no duty to
disclose a transaction that did not implicate his nephew Chris. Likewise, the filing of a Petition
for Instructions concerning S-corp election and a potential merger with ARBM did not breach a
duty to anyone, because Bruce and Laura were seeking a transaction that stood to benefit the
shareholders of QAG, including the GST trusts; because they sought Court approval before
acting; and because they withdrew the PFI. Jeff does not refute these facts set forth in the
Preliminary Opposition; he instead pretends they do not exist and reiterates his initial allegations.
Jeffs citation to general case law principles that a trustee owes a duty of disclosure to his
or her beneficiaries, see Jeff Br. at 8-9, is non sequitur. The transactions Jeff claims Bruce and
Laura failed to communicate to the GST trust beneficiaries were transactions that either did not
implicate those beneficiaries (the 2012 redemption) or were disclosed to all trustees of those
trusts in court filings (the PFI concerning S-corp election).’ The alleged voice message left by
Bruce for his nephew Chris, in which Bruce said that Chris’s efforts to convince Kjell to gift Jeff
and Chris an auto dealership for which Jeff’s share had already been redeemed by QAG for cash
would be a declaration of “World War III,” is nothing like the “threat” that constituted a breach of
loyalty in Estate of Gump, | Cal. App. 4th 582, 596 (1991). Whereas Wells Fargo, acting as
trustee, threatened to unilaterally impose costs on beneficiaries in order fo pressure them to drop a
trust contest in Gump, see id., the voice mail left by Bruce did not pertain to Bruce’s role as
trustee for the GST trusts but instead to an effort by Chris to remove assets from QAG. Even
read most favorably to Chris, this voice mail at most might support a petition to remove Bruce as
a trustee of the GST trusts, which petition has never been brought. But it has no bearing
whatsoever on a petition to remove Bruce as a trustee of the marital and survivor’s trusts, for
which Bruce was not even a trustee in September 2012. This is especially so, given that removal
and suspension are intended to be forward-looking remedies. As the Court of Appeal has
explained, “[t]he purpose of removing a trustee is not to inflict a penalty for past action, but to
preserve the trust assets.” Getty, 205 Cal. App. 3d at 139-140.
7 While Jeff suggests that Bruce and Laura should have served a copy of the PFI on the
grandchildren/beneficiaries themselves, and not merely on their trustees, there is no suggestion
that Bruce and Laura’s service caused any prejudice to anyone.
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Case No. PTR-13-297016854758
D. Jeffs various new allegations against Bruce and Laura are completely
irrelevant and do not at all support their suspension.
Ina last-ditch effort at getting Bruce and Laura suspended as trustees, Jeff generates a
half-dozen or so new arguments why he believes they should be suspended. All are baseless.
First, Jeff suggests that Bruce and Laura should be removed because the Manatt firm
produced documents “with redactions and blacked out pages.” Jeff Br. at 6. Yet Jeff only
initiated a meet-and-confer with Manatt on this issue two days ago, and the parties have not yet
had a chance to address this, See Braunig Decl. Ex. C. Bruce and Laura understand that Manatt
redacted pages that included work product correspondence between Manatt attorneys or the
handwritten notes of Manatt attorneys. On one occasion last month where Jeff's counsel inquired
about redactions on two-dozen or so documents, Manatt confirmed that work product was the
basis for its redactions. See Braunig Decl. Ex. D. Manatt, not Bruce and Laura, is the holder of
this privilege. If Jeff wishes to address this issue to the Court, the proper vehicle is a motion to
compel (preceded by a fulsome meet-and-confer process), not the suspension of Bruce and Laura
as trustees.
Second, Jeff argues that Bruce and Laura should be removed because they are defending
this case with “enormous vigor.” Jeff Br. at 5-6. While there is no doubt both parties are
litigating this case actively, it is Jeff who is depleting trust assets by insisting that Bruce, Laura
and Manatt identify and produce to them effectively every document that has ever been generated
in connection with the survivor’s and marital trusts, or Kjell’s estate planning. As detailed in the
Preliminary Opposition, Manatt, on behalf of Bruce and Laura, have produced to Jeff's counsel
more than 115,000 pages of documents demanded by Jeff's counsel; dozens of attorney-hours,
not to mention Laura’s time, have been spent addressing Jeff's increasingly bizarre and pointless
document demands. Jeff’s renewed claim that “access to the full documents has been restricted,”
id, at 10, is squarely refuted by the evidence submitted on this record. See Rose Decl. {§ 35-43;
Bruce Decl. § 24 & Ex. C. Indeed, Jeff’s wasteful approach of demanding everything under the
sun, regardless of cost or relevance, continues to this day. Despite being given all estate planning
documents going back to 2002, when Kjell and Kathryn’s family trust was re-stated, and trust
administration and estate planning documents dating back to the creation of the three trusts at
10
RESPONDENTS’ FURTHER BRIEF RE: PETITION TO REMOVE OR SUSPEND
Case No. PTR-13-297016854758
issue in 2005, Jeff's counsel is now demanding “documents showing the terms of the trust as it
existed before the 2002 restatement,” Braunig Decl., Ex. E, which will require searching storage
facilities and archives for documents dating back to the 1980s. Jeff’s oppressive requests are just
another attempt to manufacture disputes, particularly where, as here, the parties’ actual dispute
focuses on acts during the last few years.
Third, Jeff points out that Kjell (while alive and serving as the trustee of the marital trusts)
did not distribute income to himself, Jeff Br. at 6, though what that has to do with Bruce and
Laura’s ability to serve as trustees is never explained. Whether the money was distributed to
Kjell (and therefore part of the Survivor’s Trust) or kept in one of the marital trusts, the money is
inside Kjell’s taxable estate and goes to Jeff as the residuary beneficiary. This is not a basis for
suspension.
Fourth, Jeff suggests there are a “large number of problems” it has discovered in Kathryn
Qvale’s 2006 706 Estate Tax Return, which was finalized seven years before Bruce and Laura
became successor trustees for the trusts at issue here. Jeff Br. at 10, Again, what that has to do
with Bruce and Laura’s ability to function as trustees is a mystery. As far as Bruce and Laura are
aware, the only potential issue Jeff has identified with that return is a potential under-funding of
the GST trusts (by less than $250,000) in 2006, perhaps due to an accounting error. Braunig
Decl. Ex. F. Bruce and Laura have sought to work cooperatively to determine whether those
trusts were in fact under-funded and, if so, how best to remedy the issue. See id. Exs. G-I. There
is currently no dispute between the parties about this, and if there ever is, it could be resolved
with a Petition for Instructions. It is grasping at straws though for Jeff to suggest this is a basis
for Bruce and Laura’s suspension as trustees.
Finally, Jeff suggests that Bruce and Laura be removed because they “are unwilling and
unable to seek redress from Manatt for tax and estate planning errors.” Jeff Br. at 6. It is not
even clear what “errors” Jeff is referring to here, but the primary “error” alleged in Jeffs petitions
is the false accusation that Manatt was somehow involved in unduly influencing Kjell. And the
law is clear that Bruce and Laura’s mere defense of the trust against the petitions cannot create a
II
RESPONDENTS’ FURTHER BRIEF RE: PETITION TO REMOVE OR SUSPEND
Case No. PTR-13-297016854758
conflict or breach that warrants their removal. See [FS Indus., 159 Cal. App. 3d at 754°
Jeffs litany of unsubstantiated allegations do not, individually or collectively, justify the
extraordinary remedy of suspending Bruce and Laura in the middle of a functioning and effective
trust administration process. Bruce, Jeff, and independent trustees Laura Hiura and Ron Malone
may have different perspectives on Jeff’s undue influence petition challenging Kjell’s estate plan.
But, as trustees, they are successfully marshaling trust assets, paying bills, ensuring proper
payment of estimated taxes, and otherwise managing the trusts properly. Given the absence of
any evidence of wrongdoing by Bruce or Laura, the Court should not interfere with the trust
administration by suspending two capable and diligent trustees who were hand-picked by Kjell
for that role.
TEL, CONCLUSION
The question for the Court is quite simple: “Does Bruce and Laura’s continuing as
trustees pose an imminent threat to the trust assets or beneficiaries of the Survivor’s Trust or
on
marital trusts between now and the March 2015 trial?” The undisputed evidence before the
Court, as opposed to mere allegations, confirms that the answer, plainly, is “no.” The Court
should deny Jeff's tactically-driven petition to suspend, and encourage the parties to continue
preparing the case for trial.
Dated: August 21, 2014 KEKER & VAN NEST LLP
By: _/s/ Warren A. Braunig
WARREN A. BRAUNIG
Attorneys for Petitioners and Respondents
BRUCE H. QVALE, FAMILY TRUSTEE
and RESPONDENT LAURA HIURA
* Nor does the co-trustees” engagement of the Manatt firm, which is already very familiar with
the details of Kjell’s property and estate, to prepare the 706 estate tax return present a disabling
conflict for Bruce and Laura. Jeff has been regularly consulted on the details of the 706, and was
provided with both a draft 706 tax return, and all supporting information underlying that draft,
seven months in advance of when the 706 will be due. See Rose Decl. 4 44.
12
RESPONDENTS’ FURTHER BRIEF RE: PETITION TO REMOVE OR SUSPEND
Case No. PTR-13-29701682773302
PROOF OF SERVICE BY ELECTRONIC TRANSMISSION,
EMAIL VIA PDF FILE AND UNITED STATES MAIL
Lam employed in the City and County of San Francisco, State of California in the office of a
member of the bar of this court at whose direction the following service was made. I am over the
age of eighteen years and not a party to the within action. My business address is Keker & Van
Nest LLP, 633 Battery Street, San Francisco, CA 94111-1809.
On August 21, 2014, I-served the following documents described as:
RESPONDENTS’ FURTHER BRIEF RE: PETITION TO REMOVE OR SUSPEND AND
DECLARATION OF WARREN BRAUNIG IN SUPPORT OF RESPONDENTS’
FURTHER BRIEF TO REMOVE OR SUSPEND
by serving a true copy of the above-described documents in the following manner:
BY LEXIS NEXIS® FILE & SERVE
On the date executed below, | electronically served the documents described above via
Lexis Nexis® File & Serve on the recipients designated on the Transaction Receipt
located on the via Lexis Nexis® File & Serve website.
BY E-MAIL VIA PDF FILE
complete and without error.
Edward Koplowitz
MaclInnis, Donner & Koplowitz
465 California Street, Suite 222
San Francisco, CA 94104
eakatt@aol.com
Ronald Hayes Malone
9098 Mustang Court
Petaluma, CA 94954
ron@circleoakequine.com
@ by E-MAIL VIA PDF FILE, by transmitting on this date via e-mail a true and correct copy
scanned into an electronic file in Adobe “pdf” format. The transmission was reported as
George Montgomery
Friedman, McCubbin, Spalding,
Bilter Roosevelt & Montgomery
425 California Street, 25th Floor
San Francisco, CA 94104
george@fomlaw.com
Peter L. Muhs
Richard J. Collier
Coeper, White & Cooper LLP
201 California Street, 17th Floor
San Francisco, CA 94111-5002
pmuhs@ewclaw.com
reollier@cwclaw.com
PROOF OF SERVICE
Case No. PTR-13-297016827733.02
O- OW Hw RB WwW
Dominic J. Campisi
Andrew Zabronsky
Evans, Latham & Campisi
One Post Street, Suite 600
San Francisco, CA 94104
dcampisi@elc-law.com
AZabronsky @ele-law.com
BY UNITED STATES MAIL
M by regular UNITED STATES MAIL by placing Copy in a sealed envelope addressed as
shown below. I am readily familiar with the practice of Keker & Van Nest LLP for
collection and processing of correspondence for mailing, According to that practice, items
are deposited with the United States Postal Service at San Francisco, California on that same
day with postage thereon fully prepaid. I am aware that, on motion of the party served,
service is presumed invalid if the postal cancellation date or the postage meter date is more
Monica Dell’Osso
Burnham Brown
A Professional Corporation
P.O, Box 119
Oakland, CA 94604
madellosso@bumhambrown.com
than one day after the date of deposit for mailing stated in this affidavit.
Nancy Bong
23 Kingston Place
Walnut Creek, CA 94596
Karen Duarteau
2600 Nicasio Valley Road
Nicasio, CA 94946
Rita Jelincic
25385 Palomares Road
Castro Valley, CA 94552
Hubert Gely :
3532 Sacramento St., #2
San Francisco, CA 94118
Caroline Paige Qvale
461 ~2" Street, C227
San Francisco, CA 94107
Connor Hammond Qvale
98 Via Poinciana Lane
Boca Raton, FL 33487
Blake Henry Qvale
336 E, 18th St, Apt. E-2
New York, NY 10003
Lillian Fredriksson
1318 Hale Drive
Concord, CA 94518
Don Endo
21000 Glenwood Drive
Castro Valley, CA 94552
Raymonde Gely
3532 Sacramento St., #2
San Francisco, CA 94118
Kendel Hailey Qvale
3500 Scott St.
San Francisco, CA 94123
Norma Hepworth
P.O. Box 871
Hailey, ID 83333
Roger Hansen
868 East 2830 South
Hagerman, ID 83332
PROOF OF SERVICE
Case No. PER-13-2970161)| Executed on August 21, 2014, at San Francisco, California.
2)| I declare under penalty of perjury under the laws of the State of California that the above is true
3 and correct. lu
Joanne Winars
» PROOF OF SERVICE
Case No. PTR-13-297016
827733.02
Preview
854758 KEKER & VAN NEST LLP JOHN W. KEKER - # 49092 jkeker@kvn.com WARREN A. BRAUNIG - # 243884 whraunig@kvn.com BENJAMIN BERKOWITZ - # 244441 bberkowitz@kvn.com ABHISHEK BAJORIA - # 255294 abajoria@kyn.com 633 Battery Street San Francisco, CA 94111-1809 Telephone: 415 391 5400 Facsimile: 415 397 7188 MYERS URBATSCH P.C. PETER S. MYERS - # 115113 psmyers@myersurbatsch.com MATTHEW R. MRAULE - # 263433 mmraule@myersurbatsch.com 625 Market Street, 4th Floor San Francisco, California 94105 Phone: (415) 896-1500 Fax: (415) 979-0761 Attorneys for Petitioners and Respondents BRUCE H. QVALE, FAMILY TRUSTEE AND RESPONDENT LAURA HIURA ELECTRONICALLY FILED Superior Court of California, County of San Francisco AUG 21 2014 Clerk of the Court BY: SHIRLEY WU Deputy Clerk SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SAN FRANCISCO In the Matter of the Kathryn C. Qvale Exempt Marital Trust, dated January 31, 2006 Miles Jeffrey Qvale, individually and as trustee VS. Bruce H. Qvale, Laura Hiura, and Does 1-10 Case No. PTR-13-297016 RESPONDENTS’ FURTHER BRIEF RE: PETITION TO REMOVE OR SUSPEND Date: August 27, 2014 Time: 2:30 p.m. Dept.: Probate, Room 204 Judge: Hon, Andrew Y.S, Cheng RESPONDENTS’ FURTHER BRIEF RE: PETITION TO REMOVE OR SUSPEND Case No. PTR-13-297016854758 L iL. Hi. TABLE OF CONTENTS INTRODUCTION 00... cece cece cece cere en eeneeeeeeeeteenenteeneeaceneaseneesasevacsesaeerseversesaneseversenaeens 1 ARGUMENT 0.0. cceee eects neanetes ne reenessesneneaneeseesneicaseeseeseereatetssieescatessesaeessanetaeeneese 1 A, B. D. Jeff does not dispute the key facts supporting Bruce and Laura’s retention as trustees. Because there is no imminent threat to trust assets or beneficiaries, the Court should not—and cannot—suspend Bruce and Laura prior to an evidentiary hearing on Jeff's removal petition. .......0..0.00.... 1. Neither the 2012 redemption, nor Bruce and Laura’s efforts to defend it, constitutes a conflict of interest with the trust beneficiaries. 2. The now-withdrawn PFI concerning S-corp election and a potential merger with ARBM is not a basis for suSpensiON........ i cceeeereeeceerreereens 6 The alleged breaches of duty by Bruce and do not warrant suspension......... nd Laura are no breaches at all, Jeff's various new allegations against Bruce and Laura are completely irrelevant and do not at all support thier SUSPENSION... cesses ceeeeeeereeeceveneeerees 10 i RESPONDENTS’ FURTHER BRIEF RE: PETITION TO REMOVE OR SUSPEND Case No. PTR-13-297016854758 TABLE OF AUTHORITIES State Cases Copley v. Copley 136 Cal. App. 3d 248 (L981) cccccssccsssccsssssssssssssvessssesssnessusestusesteneseunestucessenen Estate of Gump 1 Cal. App. 4th 582 (1991)... Estate of Hammer 19 Cal. App. 4th 1621 (1993) occ ccccccccesssssesesssssssssensesessennunnessesisinnnnnssseeeneeee Getty v. Getty 205 Cal. App. 3d 134 (1988) ooo cccccssssssesesssessseesusnsesestieeunnnssstenstutneseseteneeneeea IFS Indus., Inc. v. Stephens 159 Cal. App. 3d 740 (1984) occ cccccccccsssssssesssssssessnsunnseseeienennnesesiemsuunsesteeueeeeee In re Estate of Bennett 163 Cal. App. 4th 1303 (2008) occ eee eececeeeee ee neneeeaescenenseneneesecasataneececesesan In re Estate of Lensch 177 Cal. App. 4th 667 (2009) . In re Guzzetta’s Estate 97 Cal. App. 2 169 (1950) oo eceeccseeesceeseecsessnseseeseesessessesseneesessessessasseneeseeseessees Schwartz v. Labow 164 Cal. App. 4th 417 (2008) occ cesescnesssecseseneessesseesseesesseenseessscasaseseeessssnscaseenesssenaesaness Uzyel v. Kadisha 188 Cal. App. 4th 866 (2010) ..ceeccecsesescnesssecsesenesssssseessessnesseenseessscasssenerssssascnseenessseneesaeess State Statutes Probate Code § 15642(€) cece ccseseeresecesessesrenesesesrearensacsecrearansansesssaranvacsesesasaeeasnascirneesneneenraeess ii Page(s) 1,3 RESPONDENTS’ FURTHER BRIEF RE: PETITION TO REMOVE OR SUSPEND Case No. PTR-13-297016854758 L INTRODUCTION Jeff Qvale’s August 8, 2014 Brief Regarding Suspension of Co-Trustees is yet another hodge-podge of unsupported allegations, factual misrepresentations, and non-sequiturs that shed no light on the ability of Bruce Qvale and Laura Hiura to responsibly administer the three trusts at issue. Jeff's brief all but completely ignores the legal standard that governs a probate court when asked to take the extraordinary step of suspending a testator’s chosen trustees prior to an evidentiary hearing: The Court must find that “trust property or the interest of a beneficiary may suffer loss or injury pending a decision on a petition for removal.” Probate Code § 15642(e) (emphasis added); sce also Getty v. Getty, 205 Cal. App. 3d 134, 139-140 (1988) (noting that the purpose of suspension is to “preserve the trust assets”). Jeff has provided the Court with no evidence that Bruce or Laura’s actions are threatening any loss or injury to trust assets or to beneficiaries, much less an imminent threat between now and the scheduled March 2015 trial on Jeffs removal petition. On the contrary, the undisputed evidence demonstrates that Bruce and Laura have acted faithfully and responsibly as trustees, and have protected and preserved trust assets, largely for the benefit of Jeff as residual beneficiary. Rather than acknowledge these facts, Jeffs brief simply recycles supposed conflicts of interest or breaches of duty that have been shown to be false on their face, while conjuring up new, imagined allegations of misdeeds regarding the trusts, some dating back more than seven years before Bruce and Laura assumed the mantle of successor trustee to Kjell’s trusts. But even if these allegations were true (and they are not), none of the supposed conflicts or breaches of trust poses a current threat to trust assets or beneficiaries of Kjell’s estate. Given Bruce and Laura’s central role to date in administering the trusts, and the fact that the administration of the trusts is progressing smoothly, it would be both contrary to the law, and wholly inefficient, to suspend them as trustees. Th. ARGUMENT A. Jeff does not dispute the key facts supporting Bruce and Laura’s retention as trustees. In response to Jeff’s petitions seeking their removal, Bruce and Laura provided the Court with four detailed factual declarations, deposition transcripts, and more than forty exhibits 1 RESPONDENTS’ FURTHER BRIEF RE: PETITION TO REMOVE OR SUSPEND Case No. PTR-13-297016854758 refuting and discrediting Jeff's allegations. Yet, while Jeff persists in seeking their removal, he has offered not a shred of evidence in rebuttal. Before engaging Jeff's latest round of hyperbolic accusations, it is worth pointing out the many crucial and undisputed facts that now comprise the factual record on this petition: . Since taking over as successor trustees, Bruce and Laura have coordinated the inventory of Kjell’s $100+ million estate; procured appraisals and accounting professionals; filed all required tax submissions for the trusts: managed and maintained monthly ledgers, bank reconciliations, securities and brokerage accounts; and managed numerous real estate and financial investments for the Survivor’s Trust. Laura Decl. §f] 12, 16 — 20; Bruce Decl. {ff 22, 25. . Bruce and Laura have consulted Jeff on every substantive decision involving trust assets, and acted with unanimous consent. Laura Decl. 14: Bruce Decl. q 23. . itis Jeff who has repeatedly failed to respond to Bruce and Laura’s trust administration inquiries, slowing down or precluding the trustees from finalizing decisions. Laura Decl. | 24-26; Bruce Decl. § 23. . Bruce and Laura, through Kjell’s former counsel Manatt, have provided more than 115,000 pages of documents concerning the administration of the trusts and related issues, answering each and every informal document inquiry Jeff and his lawyers have made. Rose Decl. 4 38 — 43; Bruce Decl. { 24. . The 2012 redemption of QAG stock from the Exempt Marital Trust did not eliminate or strip shares from Kjell’s grandchildren, in fact, it increased their ownership stake of QAG. See Rose Decl. {§ 22, 25 & Exs. 16, 17: Bruce Decl. ff 8,9, 11. . Kjell was the sole trustee of the marital trusts and Survivor’s Trust until summer 2013, when he was found to lack capacity. Rose Decl. § 33. Nor does Jeff dispute, in his August 8 brief, that he is seeking suspension primarily for purposes of gaining a tactical litigation advantage, as his counsel candidly admitted at a deposition last month. See Prelim. Opp. at 1-2. The evidence is ample that Bruce and Laura are fulfilling their duties as trustees and acting fairly and honestly in their dealings with Jeff and Ron Malone. Indeed, just this week, Mr. Malone acknowledged Laura’s exemplary handling of the trust accounting, noting that “you are on the job, as usual!” See Declaration of Warren Braunig in Support of Respondents’ Further ' Citations to the “Rose Decl.” (Declaration of Jordan Rose), “Bruce Decl.” (Declaration of Bruce Qvale), “Endo Decl.” (Declaration of Donald Endo), or “Laura Decl.” (Declaration of Laura Hiura) refer to those declarations filed with Respondents’ Preliminary Opposition to Petition to Remove, Suspend, and Instruct Co-Trustee, on July 29, 2014. 2 RESPONDENTS’ FURTHER BRIEF RE: PETITION TO REMOVE OR SUSPEND Case No. PTR-13-297016854758 Brief re: Petition to Remove or Suspend (“Braunig Decl.”), Ex. A. And there is no evidence at all—-or even an allegation——-of waste or mismanagement of trust assets; of taking steps that have adversely affected Jeff as the residual beneficiary; or of failing to cooperate fully in the administration of the trusts. In short, Bruce and Laura are doing precisely what trustees are supposed to do. B. Because there is no imminent threat to trust assets or beneficiaries, the Court should not—and cannot—suspend Bruce and Laura prior to an evidentiary hearing on Jeffs removal petition. Suspension of a testator’s selected trustee without an evidentiary hearing is an extraordinary remedy. The default rale in probate matters is that any contested petition requires an evidentiary hearing, unless the parties stipulate otherwise. See Jn re Estate of Lensch, 177 Cal. App. 4th 667, 676-78 (2009); In re Estate of Bennett, 163 Cal. App. 4th 1303, 1309-10 (2008). indeed, the failure to grant an evidentiary hearing in a contested dispute can be reversible error. dd. Only in rare circumstances, where the “trust property or the interests of a beneficiary may suffer loss or injury pending a decision” on the removal petition, does the Court has the power to suspend a trustee prior to the evidentiary hearing. See Probate Code § 15642(e); Schwariz v. Labow, 164 Cal. App. 4th 417, 436 n. 9, 427-28 (2008). Those cases in which a Probate Court has suspended a trustee without even affording the trustee an evidentiary hearing are few, and involve extreme abuses of trust, or conflicts of interests, that pose an immediate threat to the trust. For example, in Schwartz v. Labow, the Court suspended the trustee only after finding (based on evidence submitted by the trustee) that the trustee had paid $1.3 million—more than half of the value of the estate—to himself and lawyers pursuing a legal judgment against one of the beneficiaries that had an “extremely low” prospect for recovery. 164 Cal. App. 4th at 422, 424-25. The Court found that the trustee had engaged in a pattern of abusive and reckless spending—for example, he sold the primary asset of the estate (the decedents’ home) to pay for the fruitless litigation (id. at 422)—and therefore acted “to protect the trust from perceived and threatened abuse.” See id. at 428. Similarly, in Getty v. Geity, the trial court partially suspended Gordon Getty as trustee of the J. Paul Getty trust only after finding “irreconcilable conflicts between Gordon Getty’s personal interests and those of the 3 RESPONDENTS’ FURTHER BRIEF RE: PETITION TO REMOVE OR SUSPEND Case No. PTR-13-297016854758 trust estate” relating to an ongoing lawsuit that had been brought against the trust. 205 Cal. App. 3d at 138 (internal quotations omitted). Gordon’s personal interests in that pending lawsuit were inimical to and at odds with the interests of the beneficiaries, because, due to the structure of various contracts associated with the Texaco-Getty merger and the Pennzoil litigation that followed, Gordon would be personally indemnified only if the trust Jost the case. Id. at 140-41. The Court concluded, in light of that conflict, that suspension was necessary to “preserve the assets of the trust.” /d. Notably, in Gezty, the trial court did not suspend Gordon entirely, but only from conducting the litigation that generated the conflict. Suspension is wholly unwarranted here. Jeff has made no showing that Bruce or Laura has squandered trust assets or is in irreconcilable conflict with any trust beneficiaries. On the contrary, the undisputed facts demonstrate that ne pending conflict exists between Bruce or Laura and the beneficiaries (other than the conflict with Jeff created by his petition, which cannot itself form the basis for removal). Moreover, Jeff has presented no evidence of an imminent threat to trust assets, or to the beneficiaries, between now and trial. 1. Neither the 2012 redemption, nor Bruce and Laura’s efforts to defend it, constitutes a conflict of interest with the trust beneficiaries. Bruce and Laura’s Preliminary Opposition made a detailed factual and evidentiary showing that the 2012 redemption of QAG shares from the Exempt Marital Trust simply converted the assets Bruce stood to receive at Kjell’s death from shares of QAG to promissory notes, and did not affect the inheritance of Kjell’s grandchildren. See Rose Decl. ff 14-19 & Exs. 13-17; Bruce Decl. §[ 5-10. Amazingly, Jeffs recent brief persists in alleging that the 2012 redemption of QAG shares from the Exempt Marital Trust involved shares that would have gone to Kjell’s grandchildren. See Jeffs Br. at 7 (“Chris would have been entitled to 3% of QAG if the proposed changes to the plan and redemption did not take place.”); id. (“[Bruce] was in the process of redeeming 21% of the QAG shares from the Exempt Trust of which Chris was a named beneficiary.”). That is contrary to all the evidence, including the redemption agreements and trust instruments themselves. As Kjell’s estate planning lawyer Jordan Rose explained: “Because Kjell had already acted to transfer the QAG/QELLC interests to Bruce upon Kjell’s death, the primary effect of these redemptions was a tax-saving benefit accruing to the entire 4 RESPONDENTS’ FURTHER BRIEF RE: PETITION TO REMOVE OR SUSPEND Case No. PTR-13-297016854758 estate and all beneficiaries.” Rose Decl. 4 22. Bruce’s declaration further elaborates: Contrary to the allegations in the Removal Petitions, this 2012 redemption did not “eliminate” or “terminate” Kjell’s grandchildren as beneficiaries of Kjell’s estate. As 1 understand it, based on exercises of powers of appointment by Kjell in 2011 (which I never asked Kjell to make), the 21% block of shares in the Exempt Marital Trust were appointed to me, not to the grandchildren, in Kjell’s estate plan. Thus, when Kjell redeemed the Marital Trust shares, that simply meant that I stood to inherit promissory notes instead of QAG shares. Jeff's repeated allegations that the 2012 redemption benefitted me at the expense of the GST trusts, or Kjell’s grandchildren, are therefore false. Bruce Decl, 8. In fact, as both Bruce and Rose confirmed, the 2012 redemption had the indirect effect of increasing the ownership stake of QAG held by Kjell’s grandchildren, from 24% to 34%. dd. § 9, Rose Decl. § 22" Therefore, Jeff's challenge to the 2012 redemption is not an effort to “to recover 5,636 shares of QAG for the grandchildren,” id. at 5, but rather a misguided effort that would simply provide Brace with QAG shares instead of a promissory note, potentially increasing overall estate taxes and reducing Jeff's residuary inheritance. For that reason, Jeffs assertions that Bruce and Laura are in a “zero-sum dispute with their beneficiaries” and have “admitted their conflicts” with Kjell’s grandchildren, see Jeff Br. at 4, 5, are simply wrong. Bruce and Laura have not “admitted their conflicts” with anyone. On the contrary, Bruce and Laura’s defense of the trust is aligned with the interests of Kjell’s grandchildren, for two reasons: 1) undoing the 2012 redemption, as Jeff desires, would dilute the interest of the grandchildren, from 34% ownership back to 24% ownership; and 2) Bruce and Laura’s continued profitable management of QAG enhances the value of all shares in QAG, including those held by the grandchildren. Jeff's suggestion that the 2012 redemption was a conflicted transaction is similarly wrong. Bruce was not a trustee of the Exempt Marital Trust at the time of that redemption; Kjell was the sole trustee. See Bruce Decl. § 10; Rose Decl. 4 33. Nor was Bruce himself a party to that transaction. Bruce Decl. 10; Rose Decl. €§ 22-23. There has never been a “conflict,” and nothing about the 2012 redemption poses a current or imminent * Jeff has not, in any petition, challenged the 2011 exercises by Kjell of his powers of appointment with respect to the marital trusts—nor could he, given that he was regularly soliciting and receiving gifts of cash and marketable securities from Kjell throughout 2011 and 2012. See Rose Decl. 421 & Ex. 7. 5 RESPONDENTS’ FURTHER BRIEF RE: PETITION TO REMOVE OR SUSPEND Case No. PTR-13-297016854758 threat to any trust assets or beneficiaries. Furthermore, as Respondents noted in their Preliminary Opposition and Jeff does not dispute, a beneficiary may not create hostility and a conflict of interest simply by challenging the trust or demanding the trustee’s resignation. See /FS Indus., Inc. v. Stephens, 159 Cal. App. 3d 740, 754 (1984). 2. The now-withdrawn PFI concerning S-corp election and a potential merger with ARBM is not a basis for suspension Jeff appears to now recognize that the once-proposed but abandoned merger between QAG and ARBM does not support Bruce and Laura’s suspension, given that he dedicates only a few sentences to this argument that was a centerpiece of his initial Petition, See Jeff Br. at 6-7. In their opposition papers, Bruce and Laura explained in great detail the circumstances and reasons why QAG wished to convert to S-corp—including that it would avoid double-taxation and put more profits in the hands of Kjell’s grandchildren—and why QAG considered a short-form merger to buy out shareholders who did not want to maximize the long-term profitability of their investment. Bruce Decl. J] 13-20. Jeff does not respond to that but instead levels a new accusation, that “Bruce and Hiura admitted that they caused ... QE to distribute QAG shares to various trusts for the benefit of the grandchildren” (Jeff Br. at 6). However, no one (not even Jeff) has alleged that transaction was anything but ministerial; in fact, it did not affect any beneficiary’s interest in QAG. Bruce Decl. | 16. But even if the S-corp election and ARBM merger could have resulted in a conflict down the road, it never matured into an actual conflict of interest. Given the disagreement among the trustees, in an abundance of caution and to avoid even the appearance of impropriety, Bruce and Laura did the responsible thing: they filed a Petition for Instructions and sought the Court’s * Prior to making an S-corp election, the corporation must be owned by qualified subchapter S shareholders. Because QE was not a qualified subchapter S shareholder, QE distributed its QAG to the QE members on a pro rata basis. This was done purely to enable an eventual S-corp election. 6 RESPONDENTS’ FURTHER BRIEF RE: PETITION TO REMOVE OR SUSPEND Case No. PTR-13-297016854758 guidance.” And, of course, the PFI was withdrawn, * 50 the allegedly conflicted transaction never occurred. The lack of a conflict of interest—much less a present conflict-—is fatal to Jeff's argument for suspension. Where “the settlor of a trust has named a trustee, fully aware of possible conflicts inherent in his appointment, only rarely will the court remove that trustee, and it will never remove him for potential conflict of interest but only for demonstrated abuse of power detrimental to the trust.” Copley v. Copley, 126 Cal. App. 3d 248, 286-87 (1981) (emphasis added). Kjell was well aware of the conflict between his sons, one of whom would control QAG, which was 1/3 owned by Kjell’s grandchildren; and he recognized the possibility that a trustee’s interests might conflict with those of a beneficiary. See Endo Decl. § 12; Rose Decl. {| 14-16 26; see also Rose Decl. Ex. | § 20.2; Ex. 25 §§ 7.5, 7.7. Nonetheless, Kjell selected Bruce and Jeff (and Laura, for the Survivor’s Trust) to be successor trustees. See Rose Decl. Ex. 25 § 6.2. Under Copley, any “potential conflict of interest” inherent in Kjell’s estate plan is insufficient to remove his designated successor trustees. In short, neither of these alleged “conflicts,” the 2012 redemption or the PF! concerning 8-corp election—which were not conflicts at all—begins to approach the degree of opposition between a trustee’s personal interests and the interests of the trust beneficiaries that courts have required to suspend a trustee, even temporarily. For example, in Estate of Hammer, which is cited liberally by Jeff in his most recent brief but is easily distinguishable, the executor was engaged in parallel litigation with the beneficiary of the estate (his soon-to-be-ex-wife) to obtain a portion of her bequest as “community property.” See Estate of Hammer, 19 Cal. App. 4th 1621, 1640-42 (1993). The executor was in the “‘contradictory and impossible’ position of suing [his 4 Bruce and Laura’s appeal to the Court for guidance, through the use of a PFI, distinguishes this case from those such as Uzyel v. Kadisha, 188 Cal. App. 4th 866 (2010), cited by Jeff for the proposition that a fiduciary may not engage in conflicted transactions absent Court approval. See id. at 905 (“A trustee also is strictly prohibited from engaging in transactions in which the trustee’s personal interests may conflict with those of the beneficiaries without the express authorization of either the trust instrument, the court, or the beneficiaries.” (emphasis added)). Bruce and Laura did not engage in a conflicted transaction at all—and any potential transaction was properly raised in the PFL > Jeff appears to suggest that the PF] was merely “[taken] off-calendar’” but not withdrawn, presumably to imply to the Court the petition is still pending. In fact, Bruce and Laura’s counsel confirmed to Jeff's counsel as far back as December 20, 2013 that the PFI had been withdrawn. Braunig Decl. Ex. B. In any event, should there be any remaining ambiguity, Bruce and Laura confirm once more that they have withdrawn that PFI. 7 RESPONDENTS’ FURTHER BRIEF RE: PETITION TO REMOVE OR SUSPEND Case No. PTR-13-297016854758 wife] in another forum while under a fiduciary duty to protect her interests in the probate proceeding.” Jd. at 1641; see also Getty, 205 Cal. App. 3d at 138-39. Moreover, the record showed that the executor in Hammer had actually used his powers as executor to take steps that factually benefitted him in the parallel litigation (Estate of Hammer, 19 Cal App 4th at 1638, 1642); and had delayed in filing an inventory, which had “caused the estate to suffer losses” (id. at 1637). Unlike here, the conflict and negligent conduct in Estate of Hammer posed an ongoing threat to the trust assets. Indeed, the very premise on which Estate of Hammer is based—that a trustee or executor may not attack or undermine an instrument he is bound as fiduciary to uphold (see In re Guzzetta’'s Estate, 97 Cal. App. 2d 169, 171-72 (1950))——actually supports the removal of Jeff Qvale, who has petitioned to dissolve the trust instruments that he has is duty-bound, as trustee, to defend. Cc. The alleged breaches of duty by Bruce and Laura are no breaches at all, and do not warrant suspension. Jeffs claims that Bruce and Laura breached duties to Kjell’s grandchildren, as the beneficiaries of Generation Skipping Transfer Tax (GST) trusts created in 2006 for their benefit, suffer the same flaws as the supposed conflicts of interest. For starters, none of these supposed breaches involve breaches of Bruce and Laura’s duties as trustees of the Survivor’s Trust, Exempt Marital Trust, or Nonexempt Marital Trust, the trusts for which their removal is sought.” And Jeff is not seeking to remove Bruce and Laura as trustees of the GST trusts. This gap between the supposed conflicts and the challenged trusts is further fatal to Jeff’s request for suspension. But even so, Bruce and Laura have breached no duties to the GST beneficiaries, as established by the undisputed facts set forth in their Preliminary Opposition papers. For example, while Jeff alleges that Bruce breached a duty in 2012 because he “did not disclose that he was in the process of redeeming 21% of the QAG shares from the Exempt Trust of which Chris was a named beneficiary,” Jeff. Br. at 7, the undisputed evidence is that Chris and the other grandchildren of Kjell were not the named beneficiaries of those shares in 2012. See Rose Decl. ° The GST trusts stand to receive about $3.2 million total from the assets in the Survivor’s Trust, but Jeff has not alleged any impropriety in the calculation of that amount, or that any acts by Bruce or Laura threaten the ability of those trusts to receive the amount bequeathed by Kjell. 8 RESPONDENTS’ FURTHER BRIEF RE: PETITION TO REMOVE OR SUSPEND Case No. PTR-13-297016854758 49 14-19, 22-23 & Exs. 13-17; Bruce Decl. 9[ 5-9. Obviously, then, Bruce had no duty to disclose a transaction that did not implicate his nephew Chris. Likewise, the filing of a Petition for Instructions concerning S-corp election and a potential merger with ARBM did not breach a duty to anyone, because Bruce and Laura were seeking a transaction that stood to benefit the shareholders of QAG, including the GST trusts; because they sought Court approval before acting; and because they withdrew the PFI. Jeff does not refute these facts set forth in the Preliminary Opposition; he instead pretends they do not exist and reiterates his initial allegations. Jeffs citation to general case law principles that a trustee owes a duty of disclosure to his or her beneficiaries, see Jeff Br. at 8-9, is non sequitur. The transactions Jeff claims Bruce and Laura failed to communicate to the GST trust beneficiaries were transactions that either did not implicate those beneficiaries (the 2012 redemption) or were disclosed to all trustees of those trusts in court filings (the PFI concerning S-corp election).’ The alleged voice message left by Bruce for his nephew Chris, in which Bruce said that Chris’s efforts to convince Kjell to gift Jeff and Chris an auto dealership for which Jeff’s share had already been redeemed by QAG for cash would be a declaration of “World War III,” is nothing like the “threat” that constituted a breach of loyalty in Estate of Gump, | Cal. App. 4th 582, 596 (1991). Whereas Wells Fargo, acting as trustee, threatened to unilaterally impose costs on beneficiaries in order fo pressure them to drop a trust contest in Gump, see id., the voice mail left by Bruce did not pertain to Bruce’s role as trustee for the GST trusts but instead to an effort by Chris to remove assets from QAG. Even read most favorably to Chris, this voice mail at most might support a petition to remove Bruce as a trustee of the GST trusts, which petition has never been brought. But it has no bearing whatsoever on a petition to remove Bruce as a trustee of the marital and survivor’s trusts, for which Bruce was not even a trustee in September 2012. This is especially so, given that removal and suspension are intended to be forward-looking remedies. As the Court of Appeal has explained, “[t]he purpose of removing a trustee is not to inflict a penalty for past action, but to preserve the trust assets.” Getty, 205 Cal. App. 3d at 139-140. 7 While Jeff suggests that Bruce and Laura should have served a copy of the PFI on the grandchildren/beneficiaries themselves, and not merely on their trustees, there is no suggestion that Bruce and Laura’s service caused any prejudice to anyone. 9 RESPONDENTS’ FURTHER BRIEF RE: PETITION TO REMOVE OR SUSPEND Case No. PTR-13-297016854758 D. Jeffs various new allegations against Bruce and Laura are completely irrelevant and do not at all support their suspension. Ina last-ditch effort at getting Bruce and Laura suspended as trustees, Jeff generates a half-dozen or so new arguments why he believes they should be suspended. All are baseless. First, Jeff suggests that Bruce and Laura should be removed because the Manatt firm produced documents “with redactions and blacked out pages.” Jeff Br. at 6. Yet Jeff only initiated a meet-and-confer with Manatt on this issue two days ago, and the parties have not yet had a chance to address this, See Braunig Decl. Ex. C. Bruce and Laura understand that Manatt redacted pages that included work product correspondence between Manatt attorneys or the handwritten notes of Manatt attorneys. On one occasion last month where Jeff's counsel inquired about redactions on two-dozen or so documents, Manatt confirmed that work product was the basis for its redactions. See Braunig Decl. Ex. D. Manatt, not Bruce and Laura, is the holder of this privilege. If Jeff wishes to address this issue to the Court, the proper vehicle is a motion to compel (preceded by a fulsome meet-and-confer process), not the suspension of Bruce and Laura as trustees. Second, Jeff argues that Bruce and Laura should be removed because they are defending this case with “enormous vigor.” Jeff Br. at 5-6. While there is no doubt both parties are litigating this case actively, it is Jeff who is depleting trust assets by insisting that Bruce, Laura and Manatt identify and produce to them effectively every document that has ever been generated in connection with the survivor’s and marital trusts, or Kjell’s estate planning. As detailed in the Preliminary Opposition, Manatt, on behalf of Bruce and Laura, have produced to Jeff's counsel more than 115,000 pages of documents demanded by Jeff's counsel; dozens of attorney-hours, not to mention Laura’s time, have been spent addressing Jeff's increasingly bizarre and pointless document demands. Jeff’s renewed claim that “access to the full documents has been restricted,” id, at 10, is squarely refuted by the evidence submitted on this record. See Rose Decl. {§ 35-43; Bruce Decl. § 24 & Ex. C. Indeed, Jeff’s wasteful approach of demanding everything under the sun, regardless of cost or relevance, continues to this day. Despite being given all estate planning documents going back to 2002, when Kjell and Kathryn’s family trust was re-stated, and trust administration and estate planning documents dating back to the creation of the three trusts at 10 RESPONDENTS’ FURTHER BRIEF RE: PETITION TO REMOVE OR SUSPEND Case No. PTR-13-297016854758 issue in 2005, Jeff's counsel is now demanding “documents showing the terms of the trust as it existed before the 2002 restatement,” Braunig Decl., Ex. E, which will require searching storage facilities and archives for documents dating back to the 1980s. Jeff’s oppressive requests are just another attempt to manufacture disputes, particularly where, as here, the parties’ actual dispute focuses on acts during the last few years. Third, Jeff points out that Kjell (while alive and serving as the trustee of the marital trusts) did not distribute income to himself, Jeff Br. at 6, though what that has to do with Bruce and Laura’s ability to serve as trustees is never explained. Whether the money was distributed to Kjell (and therefore part of the Survivor’s Trust) or kept in one of the marital trusts, the money is inside Kjell’s taxable estate and goes to Jeff as the residuary beneficiary. This is not a basis for suspension. Fourth, Jeff suggests there are a “large number of problems” it has discovered in Kathryn Qvale’s 2006 706 Estate Tax Return, which was finalized seven years before Bruce and Laura became successor trustees for the trusts at issue here. Jeff Br. at 10, Again, what that has to do with Bruce and Laura’s ability to function as trustees is a mystery. As far as Bruce and Laura are aware, the only potential issue Jeff has identified with that return is a potential under-funding of the GST trusts (by less than $250,000) in 2006, perhaps due to an accounting error. Braunig Decl. Ex. F. Bruce and Laura have sought to work cooperatively to determine whether those trusts were in fact under-funded and, if so, how best to remedy the issue. See id. Exs. G-I. There is currently no dispute between the parties about this, and if there ever is, it could be resolved with a Petition for Instructions. It is grasping at straws though for Jeff to suggest this is a basis for Bruce and Laura’s suspension as trustees. Finally, Jeff suggests that Bruce and Laura be removed because they “are unwilling and unable to seek redress from Manatt for tax and estate planning errors.” Jeff Br. at 6. It is not even clear what “errors” Jeff is referring to here, but the primary “error” alleged in Jeffs petitions is the false accusation that Manatt was somehow involved in unduly influencing Kjell. And the law is clear that Bruce and Laura’s mere defense of the trust against the petitions cannot create a II RESPONDENTS’ FURTHER BRIEF RE: PETITION TO REMOVE OR SUSPEND Case No. PTR-13-297016854758 conflict or breach that warrants their removal. See [FS Indus., 159 Cal. App. 3d at 754° Jeffs litany of unsubstantiated allegations do not, individually or collectively, justify the extraordinary remedy of suspending Bruce and Laura in the middle of a functioning and effective trust administration process. Bruce, Jeff, and independent trustees Laura Hiura and Ron Malone may have different perspectives on Jeff’s undue influence petition challenging Kjell’s estate plan. But, as trustees, they are successfully marshaling trust assets, paying bills, ensuring proper payment of estimated taxes, and otherwise managing the trusts properly. Given the absence of any evidence of wrongdoing by Bruce or Laura, the Court should not interfere with the trust administration by suspending two capable and diligent trustees who were hand-picked by Kjell for that role. TEL, CONCLUSION The question for the Court is quite simple: “Does Bruce and Laura’s continuing as trustees pose an imminent threat to the trust assets or beneficiaries of the Survivor’s Trust or on marital trusts between now and the March 2015 trial?” The undisputed evidence before the Court, as opposed to mere allegations, confirms that the answer, plainly, is “no.” The Court should deny Jeff's tactically-driven petition to suspend, and encourage the parties to continue preparing the case for trial. Dated: August 21, 2014 KEKER & VAN NEST LLP By: _/s/ Warren A. Braunig WARREN A. BRAUNIG Attorneys for Petitioners and Respondents BRUCE H. QVALE, FAMILY TRUSTEE and RESPONDENT LAURA HIURA * Nor does the co-trustees” engagement of the Manatt firm, which is already very familiar with the details of Kjell’s property and estate, to prepare the 706 estate tax return present a disabling conflict for Bruce and Laura. Jeff has been regularly consulted on the details of the 706, and was provided with both a draft 706 tax return, and all supporting information underlying that draft, seven months in advance of when the 706 will be due. See Rose Decl. 4 44. 12 RESPONDENTS’ FURTHER BRIEF RE: PETITION TO REMOVE OR SUSPEND Case No. PTR-13-29701682773302 PROOF OF SERVICE BY ELECTRONIC TRANSMISSION, EMAIL VIA PDF FILE AND UNITED STATES MAIL Lam employed in the City and County of San Francisco, State of California in the office of a member of the bar of this court at whose direction the following service was made. I am over the age of eighteen years and not a party to the within action. My business address is Keker & Van Nest LLP, 633 Battery Street, San Francisco, CA 94111-1809. On August 21, 2014, I-served the following documents described as: RESPONDENTS’ FURTHER BRIEF RE: PETITION TO REMOVE OR SUSPEND AND DECLARATION OF WARREN BRAUNIG IN SUPPORT OF RESPONDENTS’ FURTHER BRIEF TO REMOVE OR SUSPEND by serving a true copy of the above-described documents in the following manner: BY LEXIS NEXIS® FILE & SERVE On the date executed below, | electronically served the documents described above via Lexis Nexis® File & Serve on the recipients designated on the Transaction Receipt located on the via Lexis Nexis® File & Serve website. BY E-MAIL VIA PDF FILE complete and without error. Edward Koplowitz MaclInnis, Donner & Koplowitz 465 California Street, Suite 222 San Francisco, CA 94104 eakatt@aol.com Ronald Hayes Malone 9098 Mustang Court Petaluma, CA 94954 ron@circleoakequine.com @ by E-MAIL VIA PDF FILE, by transmitting on this date via e-mail a true and correct copy scanned into an electronic file in Adobe “pdf” format. The transmission was reported as George Montgomery Friedman, McCubbin, Spalding, Bilter Roosevelt & Montgomery 425 California Street, 25th Floor San Francisco, CA 94104 george@fomlaw.com Peter L. Muhs Richard J. Collier Coeper, White & Cooper LLP 201 California Street, 17th Floor San Francisco, CA 94111-5002 pmuhs@ewclaw.com reollier@cwclaw.com PROOF OF SERVICE Case No. PTR-13-297016827733.02 O- OW Hw RB WwW Dominic J. Campisi Andrew Zabronsky Evans, Latham & Campisi One Post Street, Suite 600 San Francisco, CA 94104 dcampisi@elc-law.com AZabronsky @ele-law.com BY UNITED STATES MAIL M by regular UNITED STATES MAIL by placing Copy in a sealed envelope addressed as shown below. I am readily familiar with the practice of Keker & Van Nest LLP for collection and processing of correspondence for mailing, According to that practice, items are deposited with the United States Postal Service at San Francisco, California on that same day with postage thereon fully prepaid. I am aware that, on motion of the party served, service is presumed invalid if the postal cancellation date or the postage meter date is more Monica Dell’Osso Burnham Brown A Professional Corporation P.O, Box 119 Oakland, CA 94604 madellosso@bumhambrown.com than one day after the date of deposit for mailing stated in this affidavit. Nancy Bong 23 Kingston Place Walnut Creek, CA 94596 Karen Duarteau 2600 Nicasio Valley Road Nicasio, CA 94946 Rita Jelincic 25385 Palomares Road Castro Valley, CA 94552 Hubert Gely : 3532 Sacramento St., #2 San Francisco, CA 94118 Caroline Paige Qvale 461 ~2" Street, C227 San Francisco, CA 94107 Connor Hammond Qvale 98 Via Poinciana Lane Boca Raton, FL 33487 Blake Henry Qvale 336 E, 18th St, Apt. E-2 New York, NY 10003 Lillian Fredriksson 1318 Hale Drive Concord, CA 94518 Don Endo 21000 Glenwood Drive Castro Valley, CA 94552 Raymonde Gely 3532 Sacramento St., #2 San Francisco, CA 94118 Kendel Hailey Qvale 3500 Scott St. San Francisco, CA 94123 Norma Hepworth P.O. Box 871 Hailey, ID 83333 Roger Hansen 868 East 2830 South Hagerman, ID 83332 PROOF OF SERVICE Case No. PER-13-2970161)| Executed on August 21, 2014, at San Francisco, California. 2)| I declare under penalty of perjury under the laws of the State of California that the above is true 3 and correct. lu Joanne Winars » PROOF OF SERVICE Case No. PTR-13-297016 827733.02