Preview
1 |) MANATT, PHELPS & PHILLIPS, LLP
BARRY W. LEE (Bar No. CA 088685)
2 | JORDAN P. ROSE (Bar No. CA 054437) ELECTRONICALLY
GARY D. ROTHSTEIN (Bar No. CA 143157) FILED
3 | ANDREW A. BASSAK (Bar No. CA 162440) Superior Court of California,
CHRISTOPHER A, RHEINHEIMER (Bar No, CA 253890) County of San Francisco
4 | One Embarcadero Center, 30th Floor FEB 20 2014
San Francisco, CA 94111 Clerk of the Court
5 | Telephone: (415) 291-7400
Facsimile: (415) 291-7474 eee cane joputy Clerk
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Attorneys for Petitioner
7 | Bruce 1. Qvale, Family Trustee
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SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF SAN FRANCISCO
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Case No. PTR-13-297016
12 in the Matter of the
PETITIONER BRUCE H. QVALE,
13 Kathryn C. Qvale Exempt Marital Trust, FAMILY TRUSTEE’S OPPOSITION TO
dated January 31, 2006 MILES JEFFREY QVALE’S MOTION
14 FOR JUDGMENT ON THE PLEADINGS
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Date: March 5, 2014
16 Time: 2:30 p.m.
Dept.: 204
W7 Judge: Andrew Cheng
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ATTORNEYS A LAW
Saw FRANCIS
MEMORANDUM OF POINTS AND AUTHORITIES
L INTRODUCTION
A motion for judgment on the pleadings, like a general demurrer, must take the
factual allegations and the contractual interpretations pled in the complaint or petition on face
value as true. Miles Jeffrey Qvale, Trustee (“Jeff”), however, ignores this long standing rule of
law, filing the instant motion based on his own (incorrect & unsupported) version of the facts and
his own disputed contractual interpretation. Furthermore, Jeffs motion is based entirely on his
incorrect contention that the remedy pled in the Bruce H. Qvale, Family Trustee’s (“Bruce”)
Petition for Appointment of Successor Independent Trustee to Fill Vacancy is improper. In
addition to being wrong, that is not a proper basis for a motion for judgment on the pleadings.
But even setting aside its fatal procedural defects, Jeff's motion is fundamentally
wrong on the underlying facts. Although this is not the proper time or procedural format to
address the merits, the facts demonstrate that the intent of the settlors was consistent with Bruce’s
Petition to appoint Laura Hiura as the Independent Trustee. Indeed, the settlors specifically stated
that their intent was only to exclude family members from the office of the Independent
Trustee—not those affiliated with the Qvale Auto Group (“QAG”)—and, indeed, jointly
appointed as the first Independent Trustee Don Endo, like Ms. Hiura, an employee of QAG at the
time of his appointment.
For the foregoing reasons and as set forth more fully below, Bruce respectfully
requests that the Court deny Jeff’s procedurally-defective and substantively-inaccurate motion in
its entirety.
u. Facts!
Kjell H. Qvale (“Kjell”) and Kathryn C. Qvale (“Kathryn”), husband and wife, as
Trustors and Trustees (the “Trustee”), created the Kjell and Kathryn Qvale Family Trust by
executing a trust agreement on June 2, 1983, which was last amended in its entirety on December
5, 2002, and further amended by a First Amendment to the 2002 Restatement on February 11,
‘The facts are taken as truthfully pleaded in Bruce’s Petition for Appointment of Successor Independent Trustee to
Fill Vacancy.
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2004, and amended again by a Second Amendment to the 2002 Restatement as of July 2, 2004
(the “Family Trust”). (Petition § 1.) Kathryn died and, pursuant to the terms of the Family Trust,
the Kathryn C, Qvale Exempt Marital Trust (the “Exempt Marital Trust”), the Kathryn C. Qvale
Nonexempt Marital Trust (the “Nonexempt Marital Trust”), and Kjell H. Qvale Survivor's Trust
were established (collectively, the “Three Trusts”). (/d.) Kjell executed an Exercise of Power of
Appointment with respect to the Exempt Marital Trust on January 30, 2013, and an Exercise of
Power of Appointment with respect to the Nonexempt Marital Trust on January 30, 2013
(collectively, the “Exercises of Powers of Appointment”). (/d.) ‘The Family Trust, as amended
and as impacted by the Exercises of Powers of Appointment, is referred to herein as the “Family
Trust Agreement.” The Exempt Marital Trust and the Nonexempt Marital Trust are irrevocable,
and the administration of those trusts is governed by the Family Trust Agreement. (/d.) The
Survivor’s Trust is amendable and revocable by Kjell during his lifetime and capacity. (/d.) The
Survivor’s Trust was last amended and restated in its entirety by Kjell on January 30, 2013 (as
amended and restated, the “Survivor’s Trust”). (/d.)
Kjell was the sole beneficiary of the Exempt Marital Trust during his lifetime.
(Ud) In accordance with the Exercise of Power of Appointment with respect to the Exempt
Marital Trust, following Kjell’s death, all of the assets of the Exempt Marital Trust are to be
distributed between Kjell’s two sons, namely Bruce and Jeff, subject to allocation provisions
affecting particular assets. (/d.)
Kjell had been serving as the sole trustee of cach of the Three Trusts since their
inception, but now no longer is serving as such. (Jd. § 2.) With respect to the succession of
trustees for the Exempt Marital Trust, the Family Trust Agreement provides as follows:
17.3. Successor Trustees.
(a) If Kjell H. Qvale Ceases to Serve. If Kjell H. Qvale shall be
unwilling or unable to act or to continue to act as Trustee or Co-
Trustee, the other Co-Trustee or Co-Trustees, if any, appointed
pursuant to Section 17.2 shall continue to serve as sole Trustee or
Co-Trustee(s), as the case may be.
(b) If No Appointment Pursuant to Section 17.1. If Kjell J.
Qvale shall be unwilling or unable to act as Trustee, and no Trustee
or Co-Trustee(s) shall have been appointed pursuant to Section
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17.1, or all such Trustees so appointed shall fail or cease to serve
for any reason, there shall be three Co-Trustees of each of trust
created under this Trust Agreement; consisting of two “Family
Trustees” and one “Independent Trustee.” The Trustors designate
Miles Jeffrey Qvale and Bruce Hammond Qvale as the initial
Family Trustees, and Don Endo as the initial Independent Trustee.
If any of Miles Jeffrey Qvale, Bruce Hammond Qvale or Don Endo
should be unwilling or unable to act or to continue to act, such
Family Trustee or Independent Trustee may designate his, her, or
its successor trustee. Any designation of successor trustee as
contemplated by this Section 17.3(b) shall be by a written
instrument, which instrument may be executed before or after the
date on which the incumbent trustee shall cease to act as such. Ifa
vacancy in either office of Family Trustee, or in the office of the
Independent Trustee, is not filled as otherwise provided in this
Section 17.3(b), a successor Trustee shall be appointed by a court of
competent jurisdiction. It iy the Trustors’ intent that the office of
Independent Trustee shall not be occupied by the issue of the
Trustors, or by the spouse of any such issue,
(Ud. 43.) (emphasis added.)
In June, 2012, (at or about the same time that he ceased to be employed by QAG),
Don Endo, at Kjell’s request, irrevocably declined to serve as the Independent Trustee of the
Exempt Marital Trust upon Kjell’s unwillingness or inability to serve as Trustee. Ud. | 4.)
Because the Family Trust Agreement does not provide for a successor Independent Trustee
subsequent to Don Endo, there currently is a vacancy in the office of Independent Trustee of the
Exempt Marital Trust. (/d. § 5.)
With respect to filling the vacancy in the office of Independent Trustee resulting
from the declination of Don Endo to serve, Kjell, also in June, 2012, executed a Statement of
Intention with Respect to Successor Independent Trustee for the Kathryn C. Qvale Exempt
Marital Trust dated January 31, 2006 and the Kathryn C. Qvale Nonexempt Marital Trust dated
January 31, 2006 (the “Statement of Intention”). (/d at 46, Ex. 2.) The Statement of Intention
acknowledged that a court of competent jurisdiction will appoint an Independent Trustee to fill
the vacancy in the office of Independent Trustee that resulted from Don Endo’s declination to
serve as Independent Trustee, and that Kjell had designated Laura Hiura as the Independent
‘Trustee of the Survivor’s Trust. (Id 96.) The Statement of Intention provides:
To promote efficient administration of the Exempt Marital Trust,
the Nonexempt Marital Trust, and the Survivor's Trust, it is
important for the same individuals to serve as Trustees of the
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Exempt Marital Trust, the Nonexempt Marital Trust, and the
Survivor’s Trust. Therefore, it is my wish and intention that the
court appoint Laura Hiura as the successor Independent Trustee of
the Exempt Marital Trust and the Nonexempt Marital Trust, so that
the same individuals serve as Trustees of the Exempt Marital Trust,
the Nonexempt Marital Trust, and the Survivor’s Trust.
Ud) In executing the Statement of Intention, Kjell recognized that his estate planning and asset
holdings are complex; that there are numerous assets that are co-owned by more than one of the
Three Trusts; and, therefore, that the administration of the Three Trusts would best be served by
having the same three individuals serving as the trustees of each of the Three Trusts. (/d.)
Thus, based on the Family Trust Agreement, the Exercise of Power of
Appointment with respect to the Exempt Marital Trust, and the Statement of Intention, Bruce
filed the Petition for Appointment of Successor Independent Trustee to Fill Vacancy on August
14, 2013 (“Petition”). In the Petition, Bruce sought as relief the appointment of Laura Hiura as
Independent Trustee of the Exempt Marital Trust. The hearing on that Petition is scheduled for
March 10, 2014.
Tl. ARGUMENT
A. Legal Standard
A motion for judgment on the pleadings has essentially the same function and
procedures as a demurrer but is made after the time for a demurrer has lapsed. (Cloud v.
Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 999.) The grounds for the motion must
appear on the face of the challenged pleading or be based on facts which the Court may take
judicial notice. (Code Civ. Proc. § 438(d).) Furthermore, the motion “admits not only the
contents of the instrument but also any pleaded meaning to which the instrument is reasonably
susceptible,” (Aragon-Haas v. Family Security Ins, Services, Inc. (1991) 231 Cal.App.3d 232,
239: SC Manufactured Homes, Inc. v. Liebert (2008) 162 Cal.App.4th 68, 83 [if exhibit to
complaint can be construed in manner stated in complaint, court must accept plaintiff's
construction].)
Here, Jeff's Motion fails first because he challenges only the remedy sought by the
Petition—-an improper use of a motion for judgment on the pleadings. Jeff's Motion also fails
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because it does not treat the factual allegation of the Petition as true. Instead, Jeff disputes the
facts as alleged in the Petition and argues that Bruce has the facts wrong—but a motion for
judgment on the pleadings is the not the proper vehicle for such arguments. In any event, even
setting aside the Motion’s fatal procedural defects, Jeff's version of the facts is contradicted by
the evidence. For all of these reasons, the Motion should be denied in its entirety.
B. Jeff’s Motion is F ‘acially Defective Because It Improperly Seeks to Challenge
the Remedy Sought by the Petition’s Cause of Action
A motion for judgment on the pleadings Gust like a demurrer) challenges only the
sufficiency of a cause of action as a whole—it is not a permissible vehicle to challenge an alleged
demand for improper relief. (See Venice Town Council, Inc. v. City of Los Angeles (1996) 47
Cal.App.4th 1547, 1561-1562; Caliber Bodyworks, Inc. v. Superior Court (2005) 134
Cal.App.4th 365, 385.) Here, Jeff's entire Motion is based on the contention that the Petition’s
demand for relief (the appointment of Laura Hiura as Independent Trustec) is improper. Beyond
the demand for relief, Jeff never once disputes that Bruce meets the elements of the cause of
action alleged in Petition: the request for an appointment of a trustee for the Exempt Marital
‘Trust. Thus, even assuming Jeff's contentions had any merit—they do not—the motion for
judgment on the pleadings is an impermissible vehicle to bring this challenge.
For this reason alone, and with nothing further, the Motion should be denied in its
entirety,
cC Jeff’s Motion is Procedurally and Substantively Defective Because It Does Not
Accept As True the Petition’s Factual Contentions and Accurate
Interpretation of the Trust Documents
Jeff claims that his Motion takes the facts from Bruce’s pleadings. Not true. The
facts that must be accepted as true for the purposes of a motion for judgment on the pleadings,
include both the underlying facts and “any pleaded meaning to which [an attached] instrument is
reasonably susceptible.” (dragon-Hass, 231 Cal.App.3d at 239.) Here, Jeff ignores both the true
facts as pled by Bruce and the accurate meaning that Bruce supplies to the trust documents. Jeffs
failure is also fatal to his claim.
First, Jeff repeatedly asserts as a fact that “the whole purpose of the Independent
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Trustee is to break deadlocks between the Family Trustees.” (Mot. at 6.) Based in part on this
unsupported guess as to the intent of Kjell and Kathryn when creating the trusts, Jeff claims that
the Independent Trustee must be independent of any relationship with the Family Trustees. But
no evidence supports Jeffs argument that this is the purpose of the Independent Trustee, and the
“fact” was certainly not pled in the Petition. Indeed, the Independent Trustee was intended to be
someone who was intimatcly familiar with and knowledgeable about all of Kjell’s business and
financial affairs, including QAG, from the very beginning—as evidenced by the fact that Kjell
and Kathryn appointed Don Endo to be the original Independent Trustee—-an individual who was
then an employee of QAG and who performed substantially the same functions for Kjell
respecting his business and financial affairs as Ms. Hiura performed subsequent to Mr. Endo
ceasing to be an employee of QAG. (Pet. 43.)
Second, Jeff asserts that the Statement of Intention, in which Kjell expressed his
intention that Ms. Hiura be appointed the successor Independent Trustee consistent with the
original intention of the trusts, was signed three months before Kjell was found incompetent. Jeff
naturally cites no evidence—in the Petition or otherwise—in support of this contention because it
is flat out false. The Statement of Intention was executed on June 20, 2012. (Pet., Ex. 3.) It was
not until June 6, 2013 that Kjell was determined by his primary physician to be unable to give the
proper consideration to the financial and administrative matters affecting the trusts for which he
served as trustee, clearly more than three months after the Statement of Intention was executed.
Jeff's insistence on maintaining this clear falsehood without evidentiary basis (especially when he
is required to accept the Petition’s factual contentions as true) is both offensive and utterly
confounding. ,
Third, Jeff ignores the Petition’s “pleaded meaning to which the [trust] instrument
is reasonably susceptible.” (Aragon-Haas, 231 Cal.App.3d at 239; SC Manufactured Homes,
Inc., 162 Cal. App.4th at 83 [if exhibit to complaint can be construed in manner stated in
complaint, court must accept plaintiff's construction].) Instead, Jeff proffers his own
interpretation of the disputed trust provisions and asks the Court to adopt it as true. Leaving aside
that Jeff's proffered construction is unreasonable and factually unsupported, it is also contrary to
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the legal rules applicable to a motion for judgment on the pleadings.
Jeff cites Article 27 of the 2002 Restatement of the Trust Agreement for the Kjell
and Kathryn Qvale Family Trust Dated june 2, 1983, which provides a general definition of
Independent Trustee not in the specific context of the Exempt Marital Trust and Kjell and
Kathryn’s intentions. It is the language of section 17,3(b), however, that provides Kjell and
Kathryn’s specific intent as to the nature of the “Independent Trustee”: “It is the Trustors’ intent
that the office of Independent Trustee shall not be occupied by any issue of the Trustors, or by the
spouse of any such issue.” In other words, the Independent Trustee should be construed as
nothing more than a non-family trustee. (See Code Civ. Proc. § 1859 [“particular intent will
control a general one that is inconsistent with it”].)
Indeed, the contemporaneous evidence demonstrates that Kjell and Kathryn did
not intend that the Independent Trustee be independent in the sense that Jeff is now arguing, as
section 17,3(b) and section 17.4 designated the initial Independent Trustee for a number of trusts:
Don Endo, an employee of QAG who was in substantially the same position then that Ms. Hiura
is in now. (See Civ. Code § 1636 [*contract must be so interpreted as to give effect to the mutual
intention of the parties as it existed at the time of contracting”}; Civ. Code § 1647 [“contract may
be explained by reference to the circumstances under which it was made”); Southern Cal. Edison
Co. v. Superior Court (1995) 37 Cal.App.4th 839, 851 [construction of document given to it by
the acts of the parties with knowledge of its terms is admissible on the issue of the parties’
intent].)
The Article 27 definition of Independent Trustee is a boilerplate provision that is
included solely to avoid potential estate tax problems that can arise in certain contexts, but which
do not actually arise in the context of the Exempt Marital Trust. Thus, the general, boilerplate
provision cannot override the specific and unequivocal intent of Kjell and Kathryn as expressed
in the applicable sections dealing with the appointment of the Independent Trustee for the Exempt
Marital Trust and Kjell and Kathryn’s contemporaneous selection of the initial Independent
Trustee, an employee of QAG in substantially the same position as Ms. Hiura. Instead, it was
Kjell and Kathryn’s intention that the specific provisions of Section 17.3(b), which do no more
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than require the Independent Trustee to not be a Qvale family member, should override the more
general boilerplate language of the Article 27 definition.
D, If the Court Entertains Jeff’s Motion, Bruce Must Be Granted Leave to
Amend
“Where a demurrer is sustained or a motion for judgment on the pleadings is
granted as to the original complaint, denial of leave to amend constitutes an abuse of discretion if
the pleading does not show on its face that it is incapable of amendment.” (Virginia G. v. ABC
Unified Schooi Dist. (1993) 15 Cal.App.4th 1848, 1852; see also Maclssae v. Pozzo (1945) 26
Cal.2d 809, 815.) Here, there is substantial evidence that Kjell and Kathryn intended that the
Independent Trustee be affiliated with QAG. Indeed, the first Independent Trustee, appointed by
Kjell and Kathryn, was Don Endo, who was employed by QAG at the time of his service as
trustee. Thus, to the extent additional pleading of these and other related facts is necessary to
demonstrate the intent of the Independent Trustee provision (Bruce contends that it should not
be), Bruce is capable of doing so in an amended Petition and must be granted leave to amend.
iv. CONCLUSION
Therefore, for the foregoing reasons Bruce respectfully requests that the Court
deny Jeffs Motion for Judgment on the Pleadings in its entirety.
Dated: February 20, 2014 MANATT, PHELPS & PHILLIPS, LLP
By: Low Wh dae Bak.
Barry W. Lee
Attorneys for Petitioner
Bruce H. Qvale, Family Trustee
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PROOF OF SERVICE
I, Julie McGuire, declare as follows:
I am employed in San Francisco County, San Francisco, California. [am over the
age of eighteen years and not a party to this action. My business address is MANATT, PHELPS
& PHILLIPS, LLP, One Embarcadero Center, 30th Floor, San Francisco, California 94111. On
February 20, 2014, I served the within:
PETITIONER BRUCE H. QVALE, FAMILY TRUSTEE’S OPPOSITION TO MILES
JEFFREY QVALE’S MOTION FOR JUDGMENT ON THE PLEADINGS
on the interested parties in this action addressed as follows:
Please see attached Service List.
(BY ELECTRONIC MAIL) By transmitting such document(s) electronically from my e-
mail! address, jmcguire@manatt.com at Manatt, Phelps & Phillips, LLP, San Francisco,
California, to the person(s) at the electronic mail addresses listed above. The transmission
was reported as complete and without error.
ix (BY MAIL) By placing such document(s) in a scaled envelope, with postage thereon fully
prepaid for first class mail, for collection and mailing at Manatt, Phelps & Phillips, LLP,
San Francisco, California following ordinary business practice. | am readily familiar with
the practice at Manatt, Phelps & Phillips, LLP for collection and processing of
correspondence for mailing with the United States Postal Service, said practice being that
in the ordinary course of business, correspondence is deposited in the United States Postal
Service the same day as it is placed for collection.
1 declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct and that this declaration was executed on February 20, 2014, at
San Francisco, California.
Salie ire
3114602623 9
BRUCE QVALE, FAMILY TRUSTEE’S OPPOSITION TO MOTION FOR JUDGMENT ON THE PLEADINGSNorma Hepworth
P.O. Box 871
Hailey, ID 83333
Nancy Bong
23 Kingston Place
Walnut Creek, CA 94596
Roger Hansen
868 East 2830 South
Hagerman, 1D 83332
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
Connor Hammond Qvale
98 Via Poinciana Lane
Boca Raton, FL 33487
Caroline Paige Qvale
461 - 2™ Street, C227
San Francisco, CA 94107
Max Keaton Qvale
147 Lagunitas Road
Ross, CA 94957
Peter L. Muhs
(Counsel for Miles Jeffrey Qvale)
Cooper, White & Cooper, LLP
201 California Street, 17th Floor
San Francisco, CA 94111-5002
email; pmuhs@cwclaw.com
Dominic J, Campisi
(Counsel for Miles Jeffrey Qvale)
Evans, Latham & Campisi
One Post Street, Suite 600
San Francisco, CA 94104
email: dcampisi@ele-law.com
311057624.1
Service List
PTR-13-297016
Lillian Fredriksson
1318 Hale Drive
Concord, CA 94518
Laura Hiura
901 Van Ness Ave.
San Francisco, CA 94109
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
Blake Henry Qvale
336 E. 18th St., Apt. E-2
New York, NY 10003
Christopher Kjell Qvale
2945 Pacific Ave., Unit 6
San Francisco, CA 94115
Miles Colin Qvale
147 Lagunitas Road
Ross, CA 94957
Miles Jeffrey Qvale
P.O, Box 667
Ross, CA 94957
Richard J. Collier
(Counsel for Miles Jefirey Qvale)
Cooper, White & Cooper, LLP
201 California Street, 17th Floor
San Francisco, CA 94111-5002
email: rcollier@cwclaw.com
Andrew Zabronsky
(Counsel for Miles Jeffrey Qvale)
Evans, Latham & Campisi
One Post Street, Suite 600
San Francisco, CA 94104
email: azabronsky@elc-law.comService List
PTR-13-297016
Monica Dell’Osso
(Guardian Ad Litem for Minors Miles Colin
Qvale and Max Keaton Qvale)
Burnham Brown
A Professional Corporation
P.O, Box 119
Oakland, CA 94604
email: mdellosso@burnhambrown.com
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