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SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO
Document Scanning Lead Sheet
Oct-20-2009 4:39 pm
Case Number: PTR-09-292385
Filing Date: Oct-20-2009 4:38
Juke Box: 001 Image: 02651468
REQUEST FOR JUDICIAL NOTICE
= MATTER OF THE TRUST AGREEMENT ESTABLISHING THE DAF TRUST DATED MAR‘
001P02651468
Instructions:
Please place this sheet on top of the document to be scanned.=
oO Oo ON OD oO FF WY DN
HANSON BRIDGETT LLP
DAVID W. BAER - 99262
dbaer@hansonbridgett.com
CIARAN O'SULLIVAN - 198970 F
cosullivan@hansonbridgett.com 2 L FE
425 Market Street, 26th Floor aN Freneigen nan D
San Francisco, CA 94105 er CO
Telephone: (415) 777-3200
Facsimile: (415) 541-9366
Attorneys for Respondent
Elliott Steinberg
SUPERIOR COURT OF THE STATE OF CALIFORNIA
CITY AND COUNTY OF SAN FRANCISCO
The Irrevocable Trust Agreement No. PTR-09-292385
Establishing the DAF TRUST dated
March 31, 2003. REQUEST FOR JUDICIAL NOTICE IN
SUPPORT OF MOTION TO DISMISS
PETITION FOR REMOVAL FOR ALL
PURPOSES OF ELLIOT STEINBERG AS
MALI LISE FLYNN GUARDIAN AD LITEM.
Petitioner, Date: JA 7, , MBF Zoo
Time:
v. Dept: Probate
Room: 204
PAUL A. DOWNEY, ROBERT A. Action Filed: May 18, 2009
PODESTA, ELLIOTT STEINBERG,
individually and as trustee, and DOES (C.C.P. § 430.10; Probate Code § 17202)
1-50,
Defendants.
TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD:
Respondent Elliot Steinberg, the Court-appointed guardian ad litem for Alexander
Flynn, requests that the Clerk of the Court deliver to this department before the hearing
on this matter, and that the Court take judicial notice of the same pursuant to Evidence
Code sections 452(d) and 453, the following documents offered in support of his Motion
to Dismiss Petition for Removal for All Purposes of Elliot Steinberg as Guardian ad
Litem. These documents were filed in other cases in this Court. Copies of these
-1-
REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF MOTION TO DISMISS PETITION FOR
REMOVAL FOR ALL PURPOSES OF ELLIOT STEINBERG AS GUARDIAN AD LITEM: NO. 20718114
PTR-09-292385oO DN OD ON F&F WY HY =
=
documents are attached hereto as exhibits.
1. Attached hereto as Exhibit A is Petitioner's Petition in the DAF Trust
proceeding (case no. PTR-09-292385) For (1) Accounting And Report Of Trust
Administration; (2) Breach Of Duty Of Loyalty; (3) Breach Of Duty To Make Trust
Property Productive; (4) Breach Of Duty To Administer The Trust With Reasonable
Care;(5) Appointment of Trustee to Fill Vacancy Based On Refusal To Act; or (6)
Removal of Trustee And Appointment Of Successor Trustee; (7) For Surcharge of the
Co-Trustees; (8) For Declaratory Relief that Alex is the owner of 10% of Flynn Ventures;
(9) for Modification of Trust; (10) for CoTtrustees to pay Petitioner's Legal Fees, (7) For
Order Denying Co-trustees’ Attorneys' Fees From Being Paid From The Trust Or FIl;
and (12) Removal For All Purposes Of Elliot Steinberg As Guardian Ad Litem.
2. Attached hereto as Exhibit B is Petitioner's Petition in the Flynn Trust
proceeding (case no. PTR-09-292386) For (1) Accounting And Report Of Trust
Administration; (2) Breach Of Duty Of Loyalty; (3) Breach Of Duty To Make Trust
Property Productive; (4) Breach Of Duty To Administer The Trust With Reasonable
Care;(5) Appointment of Trustee to Fill Vacancy Based On Refusal To Act; or (6)
Removal of Trustee And Appointment Of Successor Trustee; (7) For Surcharge of the
Co-Trustees; (8) For Declaratory Relief that Alex is the owner of 10% of Flynn Ventures;
(9) for Modification of Trust; (10) for CoTtrustees to pay Petitioner's Legal Fees; (7) For
Order Denying Co-trustees’ Attorneys' Fees From Being Paid From The Trust Or Fl;
and (12) Removal For All Purposes Of Elliot Steinberg As Guardian Ad Litem.
3. Attached hereto as Exhibit C is Petitioner's Petition in the Hope Trust
proceeding (Case no. PTR-09-291426) For (1) Accounting And Report Of Trust
Administration; (2) Breach Of Duty Of Loyalty; (3) Breach Of Duty To Make Trust
Property Productive; (4) Breach Of Duty To Administer The Trust With Reasonable
Care;(5) For Surcharge of Podesta; (6) For Podesta to pay Petitioner's Legal Fees; (7)
For Order Denying Podesta’s Attorneys' Fees From Being Paid From The Trust Or Fil;
-2-
REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF MOTION TO DISMISS PETITION FOR
REMOVAL FOR ALL PURPOSES OF ELLIOT STEINBERG AS GUARDIAN AD LITEM: NO. 2071811.1
PTR-09-292385+
oo ON DH Fk WwW ND
and (8) Removal For All Purposes Of Elliot Steinberg As Guardian Ad Litem.
4. Attached hereto as Exhibit D is a true and correct copy of the Petition for
Appointment of Guardian ad Litem - Probate filed by Petitioner in the Flynn Trust
proceeding (Case no, PTR-09-292386).
5. Attached hereto as Exhibit E is a true and correct copy of the Petition for
Appointment of Guardian ad Litem - Probate filed by Petitioner in the DAF Trust
proceeding (Case no. PTR-09-292285)
6. Attached hereto as Exhibit F is a true and correct copy of the Petition for
Appointment of Guardian ad Litem - Probate filed by Petitioner in the Hope Trust
proceeding (Case no. PTR-09-291426).
7. Attached hereto as Exhibit G is a true and correct copy of the Petition for
Appointment of Elliot Steinberg as Guardian ad Litem - Probate (hereafter “guardian”) of
DAF and Flynn Trusts, filed herein on February 7, 2007
Respondent Elliot Steinberg also requests that the Court take judicial notice
pursuant to Evidence Code sections 452(d) and 453 of the following document offered in
support of his Demurrer to, or in the alternative, Motion to Dismiss, Petition for
Appointment of Guardian ad Litem - Probate. This document was filed in the Federal
District Court of Nevada. Respondent will file a certified copy of this document before
the hearing on this matter.
8. Attached hereto as Exhibit H is a true and correct copy of this Court's
Order dated April 24, 2007 appointing Elliot Steinberg as Guardian Ad Litem of
Alexander Flynn for the DAF Trust and the Donald Alexander Flynn Trust.
9. Attached hereto as Exhibit | is a true and correct copy of the Complaint in
Federal District Court of Nevada Case No. 3:09-CV-00257-ECR-RAM, entitled Mali Lise
Flynn, individually and as Trustee and Beneficiary of the Hope Trust; as Personal
Representative of the Estate of Donald Flynn (deceased); and Flynn Ventures, LLC v.
Flynn Industries, inc., Flynn Land Company, Inc., Reof, inc, Bear Paw Ridge, LLC, Flynn
-3-
REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF MOTION TO DISMISS PETITION FOR
REMOVAL FOR ALL PURPOSES OF ELLIOT STEINBERG AS GUARDIAN AD LITEM: NO. 20718111
PTR-09-292385oo ON DO FF BW NY =
Ny MH HNHNH HDHD B@ Bw SB 2B Be Ba a Aas
aon oOo mo FF Ww HSH = D9 OG DAN DBD HO FF OW DN =
Request for Accounting of What is Owed to Flynn Ventures, LLC.
DATED: October i , 2009 HANSON BRIDGETT LLP
Water Technologies, LLC, Flynn Olympic Restaurant, LLC, Oregon Bulb and Perenial
Farms, Inc, World Wrapps Northwest, Inc, World Wrapps international, LLC, for (1)
Benefits under ERISA and related claims; (2) For Hope Trust Concerning Declaratory
Relief Re (a) Voting Rights; (b) Membership of the Board of Directors, and (c) Request
for Accounting and Request for Specific Performance; (3) For Estate of Donald Flynn
Concerning: Request for Accounting of What is Owed the Estate of Donaid Flynn and
Damages for Non-Payment; and (4) for Flynn Ventures, LLC, Declaratory Relief and
oe Rl.
CIARAN O'SULLIVAN
Attorneys for Respondent
Elliott Steinberg
-4-
REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF MOTION TO DISMISS PETITION FOR
REMOVAL FOR ALL PURPOSES OF ELLIOT STEINBERG AS GUARDIAN AD LITEM: NO.
PTR-09-292385
2071811.1SHIRLEY L. KOVAR, ESQ., SBN 61769
| EDGAR H. HAYDEN, JR., ESQ., SBN 47981
BRANTON & WILSON, APC
701 B Street, Suite 1255
t San Diego, California 92101
fl Tel: 619-236-1891
Fax: 619-236-8005
Attorneys for MALI LISE FLYNN, Petitioner
IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF SAN FRANCISCO
Case No.PIR.-g 9- 292305
PETITION FOR (1) ACCOUNTING AND
REPORT OF TRUST ADMINISTRATION;
(2) BREACH OF DUTY OF LOYALTY; (3)
BREACH OF DUTY TO MAKE TRUST
PROPERTY PRODUCTIVE; (4) BREACH
OF DUTY TO ADMINISTER THE TRUST
WITH REASONABLE CARE;(5)
APPOINTMENT OF TRUSTEE TO FILL
VACANCY BASED ON REFUSAL TO
ACT; OR (6) REMOVAL OF TRUSTEE
}| In the Matter of
The Irrevocable Trust Agreement
Establishing the DAF TRUST
dated March 31, 2003.
H MALI LISE FLYNN, AND APPOINTMENT OF SUCCESSOR
16 TRUSTEE; (7) FORSURCHARGE OF THE
Petitioner CO-TRUSTEES; (8) FOR DECLARATORY
RELIEF THAT ALEX 1S THE OWNER OF
10% OF FLYNN VENTURES; (9)
MODIFICATION OF TRUST; (10) FOR
CO-TRUSTEES TO PAY PETITIONER’S
LEGAL FEES; (11) FOR ORDER
DENYING CO-TRUSTEES’ ATTORNEYS’
Vv.
PAUL A. DOWNEY, ROBERT A.
PODESTA, ELLIOT STEINBERG,
Individually and as Trustee, and
20 DOES 1-50 FEES FROM BEING PAID FROM THE
TRUST OR FIT; AND (12) REMOVAL FOR
214 Defendants ALL PURPOSES OF ELLIOT STEINBERG
AS GUARDIAN AD LITEM
~" (PROB. CODE §§ 17200; 16060;16061;
Leste dat 16040; 15642(b)(1);
a3);
AUB 0 5 2009
Date: .
Time: FPROBATE DEI RTMEN’
: Pi
Dept} 9:00AM, AM obs r
ee Ne te a Nt tt a Nt Nt ttt
PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; ¢t al.
1I.
PARTIES
1. Petitioner, MALI LISE FLYNN, (“MALI”) is the surviving spouse of DONALD
FLYNN (“DONALD”), the Decedent who died on May 19, 2006.
2. PAUL A. DOWNEY isa resident of Healdsburg, California,
3. ROBERT A. PODESTA is a resident of San Francisco, Califomnia.
4, ELLIOTT STEINBERG is a resident of Tesuque, New Mexico.
5, Defendants DOE 1-50, inclusive, are sued herein under fictitious names. Their true
won DAH S&H HY
names and capacities are unknown to Petitioner. When their true names and capacities are
°
ascertained, Petitioner will amend this Complaint by inserting their true names and capacities
herein. Petitioner is informed and believes and thereon alleges, that each of the fictitiously
58
named defendants is responsible in some manner for the occurrences herein alleged, and that
a
Petitioner’s damages and request for relief as herein alleged were proximately caused by those
14 || defendants.
15 Il.
16 PURPOSE
3
6. DONALD and MALI have a 14-year old son, DONALD ALEXANDER (FLYNN)
(ALEX). ALEX is the primary beneficiary of the DAF TRUST dated March 31, 2003, and the
DONALD ALEXANDER FLYNN TRUST dated January 1, 2001 (ALEX’s Trusts). The subject
of this Petition is the DAF TRUST. Attached hereto, marked Exhibit A, is a true and correct copy
2 8 5 &
of the DAF TRUST. Petitioner is informed and believes and therefore alleges that the defendants
claim that the assets of the DAF TRUST are 652 shares of the common stock of FLYNN
INDUSTRIES INC. The current co-trustees of the Trust are PAUL A. DOWNEY and ROBERT A.
wyoN N
aA UN
PODESTA. The purpose of this Petition is to carry out the intent of the Decedent to provide for
ALEX under the DAF TRUST after the death of the Decedent. The DAF TRUST provides for
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ALEX's support yet the co-trustees of the Trust have not made any support payment to ALEX. The
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Trustees have refused to act for three (3) years, i.e. since May 19, 2006, the date of Decedent’s death.
a
PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; et al.
2
y
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1 | 7. The proper venue for this matter is the principal place of administration of the
2 ‘Trust. Prob. Code §17005. The principal place of administration is the “usual place where the day-
3 to-day activity of the trust is carried on by the trustee...” Prob. Code §17002(a). Accordingly, San
4 || Franciscois the proper venue since such activity takes Plaeet in San Francisco. MALI isa beneficiary
ML
FLYNN INDUSTRIES, INC.
. 8. DONALD and MALI were married on August 12, 1989 in Corfu, Greece. ALEX
9 | was born on December 16, 1994. The Decedent was a citizen of Canada and a resident of
10 \ Mexico at the time of his death. MALI is a citizen of the U.S. and a resident of Canada. ALEX
9. The Decedent and MALI dedicated their lives for the past 20 years to building
FLYNN INDUSTRIES, INC. (“FI”) for their benefit and for their son ALEX. Fil is a Nevada
17 | Corporation, which owns many subsidiaries that own restaurants and real estate on the West
10, DONALD founded FII in 1985 and served as Chairman. PHILLIP A. DEMARIA
served as President and Chief Financial Officer. MALI served as Corporate Secretary and
and CFO, ROBERT PODESTA now serves as President and Chairman of the Board. JIM
1 RICHARDSON’ role in FI! and subsidiaries which was formerly Chief Financial Officer for
restaurant subsidiaries of FII, was expanded to include Chief Financial Officer of FI and
PETITION FOR (3) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; et al.
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Director. MARK ESCAMILLA’s role, formerly Chief Operating Officer for FII restaurant
subsidiaries, was expanded to Director.
11. During the lifetime of Decedent, MALI assisted in the management of FII and FV,
including serving as Corporate Secretary and director of FIl, and President of Auberge des
Fleurs, (subsidiary of FIN). MALI worked closely with her husband, the Decedent, in family
corporate matters since 1986. Soon after the Decedent's death the other managers of FII (“Other
Management”) refused to include MALI in shareholders’ and directors’ meetings and to provide
financial information on FIl to MALI. MALI has negotiated with the Other Management in an
want Aw fF YN
attempt to resolve ownership and management of the Decedent's assets. The negotiations were
not successful. The negotiations were made more difficult by the lack of cooperation of the Other
Management, including failure to provide financial information for Fil. MALI has now retained
trust litigation counsel to resolve ownership and management issues.
12. The Decedent had two primary goals in his estate plan. These were to; (1) provide
for MALI and ALEX; and (2) eventually transfer control of FI to ALEX by naming himas
successor trustee when he became old enough. Article 2 of the DAF TRUST provides that
ALEX could become co-trustee at age 32, then sole trustee at age 35.
Iv.
THE DAF TRUST
13. DONALD's first choice for Trustee of the DAF TRUST was MALI. However, since
MALI resides in Canada, Decedent was concemed there would be adverse tax consequences ifMALI
were Trustee. Attached hereto, marked Exhibit B, is a true and correct copy of a letter from
Decedent to LUCINDA LEE, which states his concer there would be adverse tax consequences if
MALI were Trustee. DONALD then requested JOHN FLYNN to be trustee, and he declined. The
Decedent then requested PAUL A. DOWNEY and ROBERT A, PODESTA to serve as co-trustees,
and they accepted.
14, Petitionerisinformed and believesand therefore alleges that the Defendants’ claim that
the DAF TRUST was funded with common stock of FII. Defendants allege this was accomplished
an
PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; et al.
4ce - C
by gifts of 652 common shares to the DAF TRUST from the adult children of the Decedent from a
prior marriage, namely JULIA FLYNN SILER, JENNIFER FLYNN ISRAEL, and GREGORY
GRANT FLYNN. Accordingly, Petitioner alleges that Defendants’ claim that the Decedent
subsequently transferred 652 shares of the remaining outstanding common stock to the DAF Trust.
According to the Defendants, the DAF TRUST and the DAF Trust would together own all the
outstanding common stock of FII.
v.
DUTY TO REPORT AND ACCOUNT
15, Pursuant to California Probate Code Section 16060, the co-trustees havea duty tokeep
the beneficiaries of the trust reasonably informed of the trust and its administration. The Trustees
have failed to do so. This is a duty imposed by law, separate from any duty to comply with
requests of a beneficiary.
16. Pursvant to California Probate Code Section 16061, Petitioner hereby requests
the trustee to “provide the beneficiary with a report of information about the assets, liabilities,
receipts, and disbursements of the trust, the acts of the trustee, and the particulars relating to the
administration of the trust relevant to the beneficiary’s interest...”
17, Pursuant to Paragraph 8.2.22 of the DAF TRUST, Petitioner requests the Trustee
to render an accounting of the Trust and any subtrusts thereunder and of the financial condition
of the trust to such beneficiary. ,
VIL
BREACH OF DUTY OF LOYALTY
18, California Probate Code Section 16002(a) imposes a duty of loyalty “to administer
the trust solely in the interest of the beneficiaries.” Although Paragraph 8.2.26 of the DAF
TRUST grants broad powers to the co-trustees for management of FIL, such powers must only be
exercised “for the benefit of the Beneficiaries” (Par. 8.2.26) and not for the personal benefit of
PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; et at.Cm Nn DH nH ke BY =
NN YN YN NK KD ee ee meee
anne BN |= SBD WN A Wk WN = &
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the co-trustees. The co-trustees have, on multiple occasions, favored their own self-interest in the
management of trust assets, rather than the interest of ALEX.
VIL.
DUTY TO MAKE TRUST PROPERTY PRODUCTIVE
19, California Probate Code Section 16007 requires the trustee “to make the trust
property productive under the circumstances and in furtherance of the purposes of the trust.” The
co-trustees have breached their fiduciary duty by their refusal to make the trust properly
productive and create a secure income stream for ALEX.
VIN.
DUTY TO ADMINISTER TRUST WITH REASONABLE CARE
20. California Probate Code Section 16040 provides that the trustee “shall administer
the trust with reasonable care, skill, and caution under the circumstances then prevailing that a
prudent person acting in a like capacity would use in the conduct of an enterprise of like
character and with like aims #o accomplish the purposes of the trust as determined from the trust
instrument.” (Emphasis added.)
21, The primary purpose of the Trust is the support of ALEX. According to paragraph
3.1, “The Trustees are authorized to distribute all or as much of the income or principal, or both,
to the beneficiary as the Trustees deem to be necessary for the beneficiary’s support.” ALEX is
the sole beneficiary of the Trust during his lifetime. Trust, Article 1 ALEX, (hereinafter
sometimes referred to as “beneficiary” ) shall be the sole beneficiary of the DAF TRUST during
his lifetime.”
22. Not only is ALEX the sole beneficiary during his lifetime, but the Trust instructs
the co-trustees to place ALEX’s interests ahead of the remaindermen, who become the
distributees of the Trust upon ALEX’s death. Paragraph 6.4. (... “When ALEX is the income
beneficiary, his rights and interests as a beneficiary shall always supersede the rights and interests
of the remainder beneficiaries . . .”).
PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; ct al.
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23. The co-trustees have refused to distribute any income or principal to or for the
benefit of ALEX since May 19, 2006, the date of death of ALEX’s father, DONALD. MALI has
3 || made repeated attempts to obtain a secure stream of income to ALEX from the Trust, but to no
4 | avail. The co-trustees claim they have “negotiated” or have requested negotiations regarding
5 | ALEX's support. However, MALI’s repeated attempts to obtain support for ALEX from the
6 | Trust have been futile. The co-trustees most recent overture for negotiations is not credible.
7 | Three years have passed, and the co-trustees have not made a single payment from the Trust to or
8 J) for the benefit of ALEX,
24. The co-trustees refusal to act is a breach of the standard of care established by
10 | Probate Code Section 16040, That section requires the co-trustees to administer the Trust ina
11 f manner that will accomplish the purpose of the Trust, i.e., support for ALEX. The co-trustees’
12 refusal to pay support to or for the benefit of ALEX is a breach of the standard of care required
. 13 | by California law to “accomplish the purposes of the trust as determined by the trust instrument.”
Xx
FILL VACANCY IN THE OFFICE OF TRUSTEE
25, According to Paragraph 8,9 of the Trust, a vacancy now exists in the office
of Trustee. Paragraph 8.9 of the Trust provides, in pertinent part, that:
“,,, vacancy in the trusteeship shall be deemed to exist in the
event of the. . refusal or failure of any person to act as Trustee or
Co-Trustee of a separate trust. Notice of a vacancy in the trusteeship
shall be effective if given te the next successor Trustee by an instrument
in writing signed by .. . a beneficiary of such separate trust and
delivered to such successor Trustee and any one of the other
then acting Co-Trustees. Immediately upon receipt of such
notice, the recipient shall act as Trustee (or Co-Trustee) or
shall dectine in writing to act. ...” Trust, page 21, par. 8.9.
26. As explained above, the co-trustees have refused to pay any amounts to ALEX to or
|| for his benefit and therefore have failed or refused to carry out the primary purpose of the Trust.
PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; ct al.
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Accordingly, Paragraph 8.9 of the Trust applies, and “a vacancy in the trusteeship shall be
deemed to exist.”
27. The named successor trustees are set forth in Article 2(a)and (b) as follows:
a. CLARK MANDIGO, San Antonio, Texas; ,
b. RALPH M. RICHART, New York, New York;
¢. CHRISTOPHER STEPHAN, Northfield, Illinois.
28. Pursuant to Paragraph 8.9, the Court should authorize Petitioner to notify the named
successor trustees of the Trust and the co-trustees of the existence of such vacancy. Attached
hereto, marked Exhibit C, is the form of notice of vacancy.
29. Petitioner requests the Court to fill the vacancy as set forth in Section XII] below,
“Modification of Trust.”
X.
REMOVAL AND APPOINTMENT OF TRUSTEE
30. Ifthe Court determines that the co-trustees have not failed or refused to act as co-
trustees (which they have), resulting in a vacancy in the office of trustee, then Petitioner, in the
alternative, requests the Court to remove the co-trustees. A trustee may be removed, inter alia
for a breach of fiduciary duty. Prob. Code §15642(b)(1).
31. Asexplained above, the co-trustees have breached their fiduciary duties by breach
of the duty of loyalty, breach of their duty to administer with reasonable care, failure to make the
trust assets productive, and failure to provide accounts and reports to the beneficiary.
32. Petitioner requests the Court to fill the vacancy created by the removal as set forth
in Section XHI below, “Modification of Trust.”
Xi
FOR SURCHARGE OF THE CO-TRUSTEES
33. Petitioner has set forth above the allegations of breaches of fiduciary duties by the
co-trustees. These include breach of duty of loyalty; breach of duty to make trust property
TTT
PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; ct ai.
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productive, and breach of duty to administer trust with reasonable care. One of the remedies for
breach of trust is “to compel the trustee to redress a breach of trust by payment of money or
otherwise.” Prob. Code §16420(a)(3). Petitioner will prove the amount of the surcharge owed by
the co-trustees at trial,
XIL
ALEX IS OWNER OF 10% OF FLYNN VENTURES
34. Petitioner is informed and believes and on that basis alleges that PAUL A.
DOWNEY and ROBERT A. PODESTA claim that the DAF TRUST owns ten (10) percent of
Flynn Ventures. Petitioner claims that DONALD ALEXANDER FLYNN, as an individual,
owns that ten (10) percent. Petitioner requests the Court to determine that ALEX is the owner, as
an individual, of the 10% of Flynn Ventures.
There is no dispute that MALI, as trustee of the Hope Trust, owns the other ninety
(90) percent of Flynn Ventures. The Hope Trust was executed by DONALD on May 15, 2003,
having originally signed the Trust on October 2, 1990.
XI.
MODIFICATION OF TRUST
35, Petitioner requests the Court to modify the Trust in two ways. First, Petitioner
requests the Court to delete the portion of the Trust that names the trustees and the successor
trustees. Second, Petitioner requests the Court to permit MALI LISE FLYNN be allowed to
remove a trustee and name a successor trustee, Attached hereto, marked Exhibit D, and by this
reference made a part hereof, is the proposed modification of the Trust.
36. Petitioner requests the Court to modify the Trust pursuant to Prob. Code Section
15409(a), which provides as follows:
“On petition by a trustee or beneficiary, the court may modify the
it owing te crewnslonces nay vow fo ie elo dot apt
the settlor, the continuation of the trust under its terms would defeat or
substantially impair the accomplishment of the purposes of the trust. In
PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; et al.
9VP end A HW BY N
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this case, if necessary to carry out the purposes of the trust, the court may
order the trustee to do acts that are not authorized or are forbidden by the
trust instrument.”
37. In this case there are circumstances not known to the Decedent, DONALD
FLYNN, and not anticipated by him. As a result of these changed circumstances, “the
continuation of the trust under its terms would defeat or substantially impair the accomplishment
of the purposes of the trust.” Prob. Code §15409. The primary purposes of the Trust are to (1)
provide for ALEX’s “support and maintenance, medical care...education”, Trust, p. 2, par. 3.1,
and (2) to prepare ALEX to take over sole management of the Trust at age 35”, p. 2, Article 2.
38. There are two primary circumstances not known to nor anticipated by the
Decedent that would “defeat or substantially impair the accomplishment” of the two primary
purposes of the Trust. The first circumstance is that while the Decedent was living, he had an
excellent working relationship with the co-trustees. Although Petitioner did not work with the
¢o-tnustees directly, Petitioner had trust and confidence in the co-trustees.. The Decedent
therefore, assumed that after his death, MALI and the co-trustees would have the same kind of
excellent working relationship with the co-trustees that the Decedent had. Instead, the
relationship of Petitioner and the co-trustees has been acrimonious and characterized by a lack of
trust and confidence.
39. This lack of an effective werking relationship between Petitioner and the co-
trustees has interfered with the proper administration of the Trust. The proper administration of
the Trust requires the payment of needed support for ALEX. As indicated above, the co-trustees
have not paid any amount to ALEX to or for his benefit from the Trust. It is essential to carry out
the purpose of the Trust that Petitioner and ALEX have trust and confidence in the Trustee.
Petitioner and ALEX do not have trust and confidence in the co-trustees. The Decedent did not
know nor anticipate that Petitioner and ALEX and the co-trustees would not have an effective
working relationship, and had Decedent known, he would not have selected PAUL A. DOWNEY
and ROBERT A. PODESTA as the co-trustees, nor CLARK MANDIGO, RALPH M.
PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; ct al.
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RICHART, or CHRISTOPHER STEPHAN as successor trustees. None of the named successor
trustees has either (1} a personal or working relationship with ALEX or MALI; or (2) any
professional experience in administering trusts. }t is in ALEX’s best interests that the Court not
appoint any of the named successor trustees as Trustee of ALEX's Trusts,
40. The second circumstance “not known to nor anticipated by” the Decedent, is the
Decedent's vision for the long-term. The Decedent intended for ALEX to become a co-trustee at
age 32 and the sole trustee at age 35. Article 2, last par., p. 2. In order to become an effective
trustee, ALEX will need a general financial education and mentoring in the management of the
Trust. At a minimum, the co-trustees and ALEX will need an effective working relationship in
order to carry out the Decedent’s vision for ALEX to assume control of the Trust,
The Decedent did not know nor anticipate that Petitioner, ALEX and the co-trustees
would not have an effective working relationship, and had Decedent known, he never would
have named the current co-trustees. Further, the Decedent would never have named successor
trustees without the consent of MALI LISE FLYNN at the time the appointment would otherwise
take place. In light of the changed circumstances, Petitioner requests the Court make the
modifications requested in Exhibit D.
XIv.
REQUEST FOR ATTORNEYS’ FEES
41. Petitioner requests an order of the Court that respondent co-trustees shall bear all
costs and attomeys’ fees incurred by Petitioner in this action. An award of costs and attomeys’
fees to the Petitioner is equitable because such fees were incurred to benefit the rights of the
sole minor beneficiary thereunder as intended by the Decedent, DONALD FLYNN.
“
at
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PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; et al.XV.
REQUEST ORDER THAT CO-TRUSTEES MAY NOT USE TRUST FUNDS OR FI
FUNDS FOR THEIR LEGAL REPRESENTATION IN THIS MATTER
42. Petitioner requests an order of the court denying the payment of the co-trustees”
attorneys’ fees from either the Trust or FII. Attomeys’ fees incurred by the co-trustees in this
matter do not qualify as expenses properly incurred in the administration of the Trust nor will
they provide a benefit to the Trust. Rather, such expenses are incurred for the personal benefit
of the co-trustees, not for the preservation of Trust assets. Therefore, the co-trustees are not
entitled to recovery of their attorneys’ fees from the Trust or FI and should be ordered to bear
their own expenses as individuals.
XVI.
REMOVAL FOR ALL PURPOSES OF ELLIOT STEINBERG AS GUARDIAN AD
LITEM
43. ELLIOT STEINBERG we: appointed by this Court as guardian ad litem for ALEX
by order filed on April 24, 2007. The purpose of this appointment as stated in the Petition for
Appointment of guardian ad litem, was as follows:
pownevr ne des OPH DEST a
the DAF TRUST dated January 1, 2001, and the DAF Trust dated
+h 31, 2003] that they [the co-trustees} have the ability to
Calforia Probate Code 16300" Peseoure sumone Py
44. _ ELLIOT STEINBERG owed a fiduciary duty to ALEX to ensure that he use
reasonable care to act in response to any notices of proposed action. ELLIOT STEINBERG did
not use reasonable care in the exercise of his duties and should therefore be removed as GAL for
all purposes. One such failure was not to send a copy of all notices of proposed actions to
ALEX and to his mother, MALI.
PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; et al.
12DO wey AH Rw N
45.
46. Although ELLIOT STEINBERG is not a guardian ad litem in this matter, notice
will be sent to him for his information and as a courtesy.
C
The following persons are entitled to notice of the hearing on this petition:
Paul A. Downey
22200 Puccioni Road
Healdsburg CA 95488
Robert A. Podesta
1100 Sacramento Street
San Francisco CA 94108
Donald Alexander Flynn
109-1581 H.. Hillside Ave
Victoria B.C, V8T2C1
Canada
Phillip A. DeMaria
23 Cove Road
Belvedere CA 94920-2351
Elliot Steinberg
PO Box 804
Tesuque NM 87574
Clark Mandigo
1248 Austin Hwy, Ste 221
San Antonio TX 78209-7867
Ralph M. Richart
630 168" Strect,1 6th Fl, Rm 404
New York NY 10032-3725
Christopher Stephan
175 Old Farm Road
Northfield IL 60093
Connie Guilland
7016 NE 410" Street
La Center WA 98629
WASHINGTON TRUST BANK,
P.O. Box 2127
Spokane, WA 99210-2127
13
Co-trustee
Co-trustee
Beneficiary
Nominal “Settlor”
Guardian ad-litem
in prior matter
Named successor
trustee
Named successor
trustee
Named successor
trustee
Designated successor
trustee
Designated successor
trustee
PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; et al.a7 ney cuus sisgurn ‘€ ye suy4
ow 8 ND AH hw Ne
YERIFICATION
Tam the Petitioner in the above-entitled action, and I have read the foregoing PETITION
ROR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; (2) BREACH
OF DUTY OF LOYALTY; (3) BREACH OF DUTY TO MAKE TRUST PROPERTY
PRODUCTIVE; (4) BREACH OF DUTY TO ADMINISTER THE TRUST WITH.
REASONABLE CARE; (5) APPOINTMENT OF TRUSTEE TO FILL VACANCY BASED
ON REFUSAL TO ACT; OR (6) REMOVAL OF TRUSTEE AND APPOINTMENT OF
SUCCESSOR TRUSTEE; (7) SURCHARGE OF THE CO-TRUSTEES; (8)
DECLARATORY RELIEF THAT ALEX IS THE OWNER OF 10% OF FLYNN
VENTURES; (9) MODIFICATION OF TRUST; (10) CO-TRUSTEES TO PAY
PETITIONER'S LEGAL FEES; (11) ORDER DENYING CO-TRUSTEES’ ATTORNEYS’
FEES FROM BEING PALD FROM THE TRUST OR FIT; AND (12) REMOVAL FOR ALL
PURPOSES OF ELLIOT STEINBERG AS GUARDIAN AD LITEM, and know the contents
thereof, which is true and of my own knowledge, except as to those matters that are stated upon my
information and belief, and as to those matters, I believe them to be true.
I declare under penalty of perjury under the laws of the State of California that the foregoing
is true and correct.
Executed on Hay tH 2009 Victoria, British Columbia, Canada,
MALI LISE FLYNN, Petitioner
529 fay cUUD 3245r ‘€ ve suy4
WHEREFORE, Petitioner requests an order of the Court for:
2 1. Anaccounting and report of Trust administration;
3 2. Breach ofduty of loyalty;
4 3. Breach of duty to make Trust property productive;
5 4. Breach of duty to administer the Trust with reasonable care;
6 5. Appointment of Trustee to fill vacancy based on refusal to.act; or
7 6, Removal of Trustee and sppointment of successor trustec;
8 7. Foe surcharge of the co-trustees;
9 8. For declaratory relief that ALEX is the owner of 10% of Flynn Ventures;
10 9. Modification of Trust;
11 10, Foreo-trastees to pay Petitioner's legal fees;
12 11, Fororder denying co-trustees’ sttomeys’ fees from being peid from the Trust or
13 FIL;
144 12, Removal for ali purposes of Elliot Steinberg as guardian ad titem; and
15 13. Forall other proper orders.
16 I declare under penalty of perjury under the Jaws of the State of California that the
17] foregoing is true and correct.
18 Executed on May/¥, 2009 ot Vicdaeas, Leedtit Columbia, Canada
19
20 woh le Me
21 .
23 For
4 BRANTON & WILSON, APC
25
26
a7
28 PETITION FOR (f) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; et al.
14IRREVOCABLE TRUST AGREEMENT ESTABLISHING ‘THE
DAF TRUST
DATED MARCH 31, 2003
ZR AGREEMENT
PHILLIP A. DEMARIA,
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TABLE oF CONTENTS
Page
DESIGNATION OF BENEFICIARIES ........00.ccceeeceeesed
DESIGNATION OF SUCCESSOR TRUSTEES ......... wane
DISTRIBUTION FROVISTONS + eeesresessseereseceecerer es 2
st- EXEMPT FAMILY TRUSTS... cesserereceees
conrrncinr NON-GST-2xENer FAMILY TRUSTS +e eee eee eees 5
BENEFICIARY POWERS AND RESTRICTIONS .......
POWERS OF APPOINTIONT 6.0. ee ceeeeeseceeseenseeesee 2
TRUSTEE POWERS, RIGHTS AND'DUTIES ............2..5-13
GST PROVISIONS 1.2.2.0... cceeccecersceecussecscsees 32
ACCUMULATIONS AND PERPETUITIES ........000cc000000 37
CHARACTER OF THE TRUSTS ....-...cccccececeeecesees 37.
CONSTRUCTION 2... csccs eee eeeesewereccescensscscacs 3B
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IRREVOCABLE TRUST AGREEMENT “ESTABLISHING THE
. . DAF TRUST
UNDER “AGREEMENT DATED MARCH 31, 2003
PHILLIP A. DEMARIA, SETTLOR
THIS AGREEMENT is made as of March 31, 2003, by and between
PHILLIP A. DEMARIA,. as the Settlor (hereinafter referred to as
“the Settlor” or as “PHILLIP”), and PAUL A. DOWNEY (hereinafter
referred to as “PAUL”) as the .Co-Trustee with ROBERT A. PODESTA
(hereinafter referred to as “ROBERT”) (both PAUL and ROBERT, as
well as their successors, hereinafter collectively referred to
as the “Trustee” or “Trustees” or as the “Co-Trustee”’ or “Co-.
Trustees”),
It is the intention of the.Settlor to create an irrevocable
trust, for the benefit of DONALD ALEXANDER FLYNN: born Decenber
16, 1994 (hereinafter referred to as ALEX”), which trust shall
be known ‘as the DAF TRUST (hereinafter sometimes referred to as
the “Trust”}; and, for that purpose, the Settlor makes an
absolute and irrevocable initial gift. In consideration of the
Premises and by the execution of this Agreement, the Settlor
declares and establishes the Trust, to be held by the Trustees
in trust for the purposes. and subject to all the terms,
conditions and provisions of this Agreement. By execution of
this Agreement, the Trustee acknowledges receipt from the
Settlor of the gift. and agrees to hold and administer it,
together with any other property of any kind which the Trustee
may at any time hereafter receive from the:Settlor or from any ©
other person or which the Trustee may at any time hold or
acquire pursuant to any of the provisions of -this Agreement, for
the uses and purposes and subject to all of the terms,
conditions and provisions of this Agreement -
ARTICLE 1: DESIGNATION oF BENEFICIARIES
ALEX (hereinafter sometimes ‘referred to as “beneficiary”)
shall be the sole beneficiary of the DAF TRUST during his
lifetime.
(CW Documenas Trost & WIRADAF Treat dosDRE REED ES Se Hee ee
ARTICLE 2: DESIGNATION OF SUCCESSOR TRUSTEES
The non-corporate Trustees shall have the power to
designate successor Trustees or Co-Trustees while serving as
Trustees. Upon PAUL'S or ROBERT’s inability to serve as
Trustee, then ‘the following, one at a time and in the order
named, shall serve as successor Trustees:
(a) CLARK MANDIGO (hereinafter referred to as “CLARK”),
15050 Jones-Maltsberger, Suite 2, San Antonio, Texas
78247 (telephone: 210-495-3911); then
{b) RALPH M. RICHART (hereinafter referred to as “RALPH”),
16™ Floor, Room 404, 630 168 Street, New York, New
York 10032 (telephone: 212-489-0414); then
{c) CHRISTOPHER STEPHAN (hereinafter referred to as
“CHRIS”) of 175 Gld Farm Road, Northfield, Illinois
60093 (telephone: 847-446-0433).
Upon ALEX attaining age thirty-two (32), ALEX may become a Co-
Trustee. . Upon ALEX attaining age thirty-five (35), ALEX may
become the sole Trustee if that is approved of in writing by.
ALEX’s ‘father, DONALD FLYNN, if his father is alive and mentally
competent, and if not, then by ALEX’s mother, MALI LISE FLYNN,
if she is alive and mentally competent, and if not, then ALEX
shall become sole Trustee automatically, and the former -Co-
Trustee shall -be deemed to have-resigned. _If ALEX is unable or
unwilling to serve, then the designated successor Trustees he
has designated shall serve, or if no’ such successors have been
naned,- then the named successors in this Section shall serve.
The non-corporate Trustees or Co-Trustees may name successor
- Trustees or Co-Trustees in writing.
ARTICLE 3: DISTRIBUTION PROVISIONS
3.1 Distribution Of Income’ And Principal. The Trustees are
authorized to distribute all or as much of the net income or
principal, or both, to the beneficiary as the Trustees deems to
be necessary for the beneficiary’s support.
3.2 Limited. Power Of Appointment. Subject to Section 7.4, the
beneficiary’ shall have the right upon his or her death to
appoint all or part of the trust estate of such trust to or for
the benefit of any one or more of a class consisting of ALEX’ s
City DecumapatTuaay k WENDAF Tra doe 27
HmahhaMmiReaeR eR ER
descendants, or to the FLYNN FOUNDATION, or to its successor
organization; ALEX may appoint up to half of the trust estate to
or for the benefit of ALEX’s wife, or to or for the benefit of
ALEX’s siblings who are his half brother and his half sisters
and their descendants. For a woman to qualify as “ALEX’s wife,”
she and ALEX must have been legally married to each other and
living together as husband and wife at ALEX’s death.
3.3 Division of Trust. Upon ALEX’s death, the ‘Trustee shall
-divide the then remaining unappointed trust estate in separate
shares as follows:
(a) one-third (1/3) to ALEX’ s wife, but if she is not then
". living, then this allocation shall lapses and the
balance . coe
(b>) per ‘stirpes to ALEX’s descendants; but if there is no
then-living descendant, then
(¢) outright and not in trust to the FLYNN FOUNDATION, or
to its successor organization, but if there is none,
then to. HABITAT FOR HUMANITY INTERNATIONAL and/or one
or more other charitable organizations constructing
homes, for poor families.
3.4 General Retention In Trust. Unless otherwise directed, no
share divided ‘pursuant to the provisions of Section 3.3{a) and
{b) ‘shall be distributed outright, but shall be retained in
trust as follows: ae ‘
3.4.2 Allocation Of Generation Skip Tax Exemption.
The amount of the share, if any, equal to the Settlor’s or
deemed Settlor’s exemption from the federal generation-skipping
transfer tax (hereinafter referred to as the “GST tax”) that has
been effectively allocated to a GST-Exempt Family Trust for the
benefit of the next beneficiary (and any property that is exempt
from the GST'tax) shall be distributed to the Trustee of that
GST-Exempt Family Trust to be held for the benefit of that
beneficiary pursuant to the terms of Article 4; provided,
however, that if either the wife or mother of ALEX is a
beneficiary, then the trust for that beneficiary shall be held
and administered pursuant to Article 3.
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3.4.2. Allocation Of Balance Of frust Assets. All
other property distributable to the beneficiary shall be
allocated to a separate trust designated a Contingent Non-GST-
Exempt Family Trust, of which the beneficiary shall be the sole
beneficiary, and which shall be held, . administered and
distributed pursuant to Article 5.
ARTICLE 4: GST-EXEMPT FAMILY TRUSTS
Each GST-Exempt Family Trust shall be held, administered:
and distributed as follows:
4.1 Distribution Of Income And principal. The Trustee is
‘ authorized to. distribute all or as much of the net income or
principal or both .of each GST-Exempt Family Trust. to the
beneficiary of such trust 2s thé Trustee deems to be necessary
for the support of the beneficiary.
4.2 Limited Power Of Appointment, Subject to Section 7.4 and
after attaining age fifty (50), the beneficiary shall have the
right, "at any time and from time to time during the
beneficiary’ s lifetime or upon the beneficiary’s death, ‘to
‘appoint all or part of the trust estate of such trust to or for
the benefit of any one or more of a class consisting of the
beneficiary's descendants or heirs, other than the beneficiary.
4.3 Distribution Upon Death. Upon the death of the beneficiary
ef a GST-Exempt Family Trust, the Trustee ‘shall distribute any
unappointed portion of the then remaining ‘trust estate of such
trust in separate shares as follows: .
da) per stirpes to the descendants of such beneficiary;
but if there is no descendant of such beneficlary then
: living, then
(b) pursuant to Sections 3.3(b} and 3.3(c}.
4.4 General Retention In Trust. Unless otherwise directed, no
share distributed pursuant: to the provisions of Section 4.3
shall be distributed outright, but shall be retained in trust by
the Trustee as a separate trust of which the person for whom
such share shall have been allocated shall be the beneficiary
and each such trust shall be designated as a “GST-Exempt Family
Trust” and shall be held, administered and distributed pursuant
to the provisions of Article 4 hereof,
Cy DocemasTrvee & WED AP Trust dat 4ARTICLE 5: CONTINGENT NON-GST-EXEMPT FAMILY TRUSTS
S.1 Distribution Of Incoms And Principal. The Trustee is
authorized to distribute to the beneficiary of the Contingent
Non-GST-Exempt Family Trust, ‘at any time and from time to time
during’ the beneficiary’s lifetime, all or as much of the.
principal or net’ income or both of such trust as the Trustee
deems to be in the best interests of the beneficiary.
5.2. Limited Power Of Appointment. Subject to Section 7.4 and
after attaining age thirty (30), the beneficiary shall have the
right, at any time ‘and from time to time during the
beneficiary’s lifetime or upon the beneficiary's death, to
appoint .all or part of the trust estate of such trust to or for
the benefit of -any ‘one or more persons or charities, or
combinations thereof. + .
5.3 Testamentary General Power Of Appointment. Notwithstanding
the restrictions in Section 7.4, upon the death of the
beneficiary of a Contingent Non-GST-Exempt Family Trust, the
Trustee shall distribute free of all trusts created hereunder
all or any portion of the trust estate of such Contingent Non-
GST-Exempt Family Trust that, but for the provisions of this
Section: would be subject to a GST tax at the beneficiary's
death, as the beneficiary may appoint to any one or more of the
creditors of the beneficiam'’s estate, in such proportions and
amounts and upon such terms, estates, conditions and trusts as
the beneficiary may designate in the beneficiary’s valid Will,
making specific reference to the testamentary general: power of
appointment granted. herein. This testamentary general power of
appointment shall be exercisable by the beneficiary exclusively
and in all -events, notwithstanding that at the date of the
beneficiary’s death the assets of the Contingent Non-GST-Exempt
Family Trust may not have been received by the Trustee.
5,4 Distribution In Default Of Exercise of Power. Upon the
death of the beneficiary of. a Contingent Non-GST-Exerpt Family
Trust, the Trustee shall distribute any unappointed portion of
the then remaining trust estate of such trust in separate shares
as follows:
(a) per stirpes to the then living descendants of such’
beneficiary; but if there is no descendant of such
beneficiary then living, then
5
CiMty DemsmenetTrasn & WRADAY Tras booUeno oT
i
(bp) “pursuant to Sections 3.3 (b) and 3.3{c).
5.5. General Retention’ In Trust. " -No share distributable
pursuant to the provisions of Section 5.4 shall be distributed
outright, but shall be retained dn trust as follows:-
5.8.1 Allocation Of Deceased Beneficiary’s Exemption.
The amount of the share, if any, equal to the deceased
beneficiary’s exemption from the. GST tax that has been
effectively allocated to a GST-Exempt Family Trust for the
benefit of the beneficiary to whom the share was allocated shall
be ‘distributed to the Trustee of that GST-Exempt Family Trust to
be held for the benefit cf that beneficiary pursuant to the
terms of Article 4.
§.5.2 Allocation Of Balance Of Trust Assets, All other
property distributable to the beneficiary shall be allocated to
a separate trust designated a Contingent Non-GST-Exempt Family
Trust, of which the beneficiary shall be the sole beneficiary,
and which shall be held, administered arid distributed pursuant
to Article 5. : .
ARTICLE 6:. BENEFICIARY POWERS AND RESTRICTIONS ©
6.1 Meaning Of Beneficiary. Unless otherwise expressly’
identified herein, wherever reference is made herein to a
“beneficiary”, , such reference shall be ‘deemed to mean a person
to whom the Trustee of a separate trust is then directed or
authorized to distribute net income or’ principal,.or both, from
the trust estate of such trust, and wherever the facts and
context require such‘ construction, the term “beneficiary” shall
be deemed to mean the ‘Plural form thereof.
6.2. Acts On Behalf Of Beneficiaries Under Disabilities. In the
event that income or principal shall become distributable free
ef any trust to a minor beneficiary, to a beneficiary under
other legal disability or to a beneficiary not adjudicated
incompetent, but who, by reason of illness or mental or physical
disability, is, in the sole discretion of the Trustee, unable
properly to administer such amounts, then such amounts may be
used by the Trustee directly for the best interests of said
beneficiary or distributed by the Trustee for the benefit of
said beneficiary to such one or more of the following
distributees" whom the Trustee shall in the Trustee’s sole
meee . be )+
j
discretion deem best under the circumstances: directly to said
beneficiary; to the legally appointed guardian or conservator of
said beneficiary; to a parent or a relative or a friend of said
beneficiary; or to those dependent for support upon said
beneficiary; and, in the case of a minor beneficiary, to a
custodian under the Uniform Transfers to Minors Act (“Act”) of
any applicable jurisdiction (but if there shall not then be a
_eustodian for said minor. under such Act, then the Trustee may
designate a custodian from among those eligible and willing to
serve). The receipt by any such distributee shall constitute a
full release and’ discharge to the Trustee upon making such
distribution and such Trustee shall not be obligated to see to
the application of any money or property so distributed. All
statements, accounts, written instruments, releases, notices or
ether documents required to be delivered to or executed by a
_ beneficiary. may be delivered to, executed by or exercised by the
legally appointed conservator of an incompetent beneficiary or
the legal guardian of the estate of a minor beneficiary, or if
there 4s no guardian of the estate, by a‘parent of the minor?
when so delivered, executed or exercised, they shall be binding
upon said incompetent or minor beneficiary and the beneficiary’s
heirs, personal representatives of the beneficiary’s estate and
assigns, and shall be of the same force and effect as if
delivered to, executed by or exercised by a beneficiary acting
under no legal disability.
6.3 Discretionary Distributions. Whenever the Trustee shall be
herein authorized to ‘distribute all or any part of either the
net income or the principal, or both, of a separate trust, such
authority may be exercised in the sole and absolute discretion
of the Trustee, by distributions in cash or kind, at any time
and from time to time, but the existence of such authority shall
not require the Trustee to make-any distribution to any person?
such authority shall permit the Trustee to terminate such trust
by such distributions. The determination of the amount of
income or principal of .a ‘separate trust which is in the best
interests of the beneficiary or. beneficiaries of such. trust
shall be in the
Preview
WOU SUPERIOR COURT OF CALIFORNIA COUNTY OF SAN FRANCISCO Document Scanning Lead Sheet Oct-20-2009 4:39 pm Case Number: PTR-09-292385 Filing Date: Oct-20-2009 4:38 Juke Box: 001 Image: 02651468 REQUEST FOR JUDICIAL NOTICE = MATTER OF THE TRUST AGREEMENT ESTABLISHING THE DAF TRUST DATED MAR‘ 001P02651468 Instructions: Please place this sheet on top of the document to be scanned.= oO Oo ON OD oO FF WY DN HANSON BRIDGETT LLP DAVID W. BAER - 99262 dbaer@hansonbridgett.com CIARAN O'SULLIVAN - 198970 F cosullivan@hansonbridgett.com 2 L FE 425 Market Street, 26th Floor aN Freneigen nan D San Francisco, CA 94105 er CO Telephone: (415) 777-3200 Facsimile: (415) 541-9366 Attorneys for Respondent Elliott Steinberg SUPERIOR COURT OF THE STATE OF CALIFORNIA CITY AND COUNTY OF SAN FRANCISCO The Irrevocable Trust Agreement No. PTR-09-292385 Establishing the DAF TRUST dated March 31, 2003. REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF MOTION TO DISMISS PETITION FOR REMOVAL FOR ALL PURPOSES OF ELLIOT STEINBERG AS MALI LISE FLYNN GUARDIAN AD LITEM. Petitioner, Date: JA 7, , MBF Zoo Time: v. Dept: Probate Room: 204 PAUL A. DOWNEY, ROBERT A. Action Filed: May 18, 2009 PODESTA, ELLIOTT STEINBERG, individually and as trustee, and DOES (C.C.P. § 430.10; Probate Code § 17202) 1-50, Defendants. TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: Respondent Elliot Steinberg, the Court-appointed guardian ad litem for Alexander Flynn, requests that the Clerk of the Court deliver to this department before the hearing on this matter, and that the Court take judicial notice of the same pursuant to Evidence Code sections 452(d) and 453, the following documents offered in support of his Motion to Dismiss Petition for Removal for All Purposes of Elliot Steinberg as Guardian ad Litem. These documents were filed in other cases in this Court. Copies of these -1- REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF MOTION TO DISMISS PETITION FOR REMOVAL FOR ALL PURPOSES OF ELLIOT STEINBERG AS GUARDIAN AD LITEM: NO. 20718114 PTR-09-292385oO DN OD ON F&F WY HY = = documents are attached hereto as exhibits. 1. Attached hereto as Exhibit A is Petitioner's Petition in the DAF Trust proceeding (case no. PTR-09-292385) For (1) Accounting And Report Of Trust Administration; (2) Breach Of Duty Of Loyalty; (3) Breach Of Duty To Make Trust Property Productive; (4) Breach Of Duty To Administer The Trust With Reasonable Care;(5) Appointment of Trustee to Fill Vacancy Based On Refusal To Act; or (6) Removal of Trustee And Appointment Of Successor Trustee; (7) For Surcharge of the Co-Trustees; (8) For Declaratory Relief that Alex is the owner of 10% of Flynn Ventures; (9) for Modification of Trust; (10) for CoTtrustees to pay Petitioner's Legal Fees, (7) For Order Denying Co-trustees’ Attorneys' Fees From Being Paid From The Trust Or FIl; and (12) Removal For All Purposes Of Elliot Steinberg As Guardian Ad Litem. 2. Attached hereto as Exhibit B is Petitioner's Petition in the Flynn Trust proceeding (case no. PTR-09-292386) For (1) Accounting And Report Of Trust Administration; (2) Breach Of Duty Of Loyalty; (3) Breach Of Duty To Make Trust Property Productive; (4) Breach Of Duty To Administer The Trust With Reasonable Care;(5) Appointment of Trustee to Fill Vacancy Based On Refusal To Act; or (6) Removal of Trustee And Appointment Of Successor Trustee; (7) For Surcharge of the Co-Trustees; (8) For Declaratory Relief that Alex is the owner of 10% of Flynn Ventures; (9) for Modification of Trust; (10) for CoTtrustees to pay Petitioner's Legal Fees; (7) For Order Denying Co-trustees’ Attorneys' Fees From Being Paid From The Trust Or Fl; and (12) Removal For All Purposes Of Elliot Steinberg As Guardian Ad Litem. 3. Attached hereto as Exhibit C is Petitioner's Petition in the Hope Trust proceeding (Case no. PTR-09-291426) For (1) Accounting And Report Of Trust Administration; (2) Breach Of Duty Of Loyalty; (3) Breach Of Duty To Make Trust Property Productive; (4) Breach Of Duty To Administer The Trust With Reasonable Care;(5) For Surcharge of Podesta; (6) For Podesta to pay Petitioner's Legal Fees; (7) For Order Denying Podesta’s Attorneys' Fees From Being Paid From The Trust Or Fil; -2- REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF MOTION TO DISMISS PETITION FOR REMOVAL FOR ALL PURPOSES OF ELLIOT STEINBERG AS GUARDIAN AD LITEM: NO. 2071811.1 PTR-09-292385+ oo ON DH Fk WwW ND and (8) Removal For All Purposes Of Elliot Steinberg As Guardian Ad Litem. 4. Attached hereto as Exhibit D is a true and correct copy of the Petition for Appointment of Guardian ad Litem - Probate filed by Petitioner in the Flynn Trust proceeding (Case no, PTR-09-292386). 5. Attached hereto as Exhibit E is a true and correct copy of the Petition for Appointment of Guardian ad Litem - Probate filed by Petitioner in the DAF Trust proceeding (Case no. PTR-09-292285) 6. Attached hereto as Exhibit F is a true and correct copy of the Petition for Appointment of Guardian ad Litem - Probate filed by Petitioner in the Hope Trust proceeding (Case no. PTR-09-291426). 7. Attached hereto as Exhibit G is a true and correct copy of the Petition for Appointment of Elliot Steinberg as Guardian ad Litem - Probate (hereafter “guardian”) of DAF and Flynn Trusts, filed herein on February 7, 2007 Respondent Elliot Steinberg also requests that the Court take judicial notice pursuant to Evidence Code sections 452(d) and 453 of the following document offered in support of his Demurrer to, or in the alternative, Motion to Dismiss, Petition for Appointment of Guardian ad Litem - Probate. This document was filed in the Federal District Court of Nevada. Respondent will file a certified copy of this document before the hearing on this matter. 8. Attached hereto as Exhibit H is a true and correct copy of this Court's Order dated April 24, 2007 appointing Elliot Steinberg as Guardian Ad Litem of Alexander Flynn for the DAF Trust and the Donald Alexander Flynn Trust. 9. Attached hereto as Exhibit | is a true and correct copy of the Complaint in Federal District Court of Nevada Case No. 3:09-CV-00257-ECR-RAM, entitled Mali Lise Flynn, individually and as Trustee and Beneficiary of the Hope Trust; as Personal Representative of the Estate of Donald Flynn (deceased); and Flynn Ventures, LLC v. Flynn Industries, inc., Flynn Land Company, Inc., Reof, inc, Bear Paw Ridge, LLC, Flynn -3- REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF MOTION TO DISMISS PETITION FOR REMOVAL FOR ALL PURPOSES OF ELLIOT STEINBERG AS GUARDIAN AD LITEM: NO. 20718111 PTR-09-292385oo ON DO FF BW NY = Ny MH HNHNH HDHD B@ Bw SB 2B Be Ba a Aas aon oOo mo FF Ww HSH = D9 OG DAN DBD HO FF OW DN = Request for Accounting of What is Owed to Flynn Ventures, LLC. DATED: October i , 2009 HANSON BRIDGETT LLP Water Technologies, LLC, Flynn Olympic Restaurant, LLC, Oregon Bulb and Perenial Farms, Inc, World Wrapps Northwest, Inc, World Wrapps international, LLC, for (1) Benefits under ERISA and related claims; (2) For Hope Trust Concerning Declaratory Relief Re (a) Voting Rights; (b) Membership of the Board of Directors, and (c) Request for Accounting and Request for Specific Performance; (3) For Estate of Donald Flynn Concerning: Request for Accounting of What is Owed the Estate of Donaid Flynn and Damages for Non-Payment; and (4) for Flynn Ventures, LLC, Declaratory Relief and oe Rl. CIARAN O'SULLIVAN Attorneys for Respondent Elliott Steinberg -4- REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF MOTION TO DISMISS PETITION FOR REMOVAL FOR ALL PURPOSES OF ELLIOT STEINBERG AS GUARDIAN AD LITEM: NO. PTR-09-292385 2071811.1SHIRLEY L. KOVAR, ESQ., SBN 61769 | EDGAR H. HAYDEN, JR., ESQ., SBN 47981 BRANTON & WILSON, APC 701 B Street, Suite 1255 t San Diego, California 92101 fl Tel: 619-236-1891 Fax: 619-236-8005 Attorneys for MALI LISE FLYNN, Petitioner IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SAN FRANCISCO Case No.PIR.-g 9- 292305 PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; (2) BREACH OF DUTY OF LOYALTY; (3) BREACH OF DUTY TO MAKE TRUST PROPERTY PRODUCTIVE; (4) BREACH OF DUTY TO ADMINISTER THE TRUST WITH REASONABLE CARE;(5) APPOINTMENT OF TRUSTEE TO FILL VACANCY BASED ON REFUSAL TO ACT; OR (6) REMOVAL OF TRUSTEE }| In the Matter of The Irrevocable Trust Agreement Establishing the DAF TRUST dated March 31, 2003. H MALI LISE FLYNN, AND APPOINTMENT OF SUCCESSOR 16 TRUSTEE; (7) FORSURCHARGE OF THE Petitioner CO-TRUSTEES; (8) FOR DECLARATORY RELIEF THAT ALEX 1S THE OWNER OF 10% OF FLYNN VENTURES; (9) MODIFICATION OF TRUST; (10) FOR CO-TRUSTEES TO PAY PETITIONER’S LEGAL FEES; (11) FOR ORDER DENYING CO-TRUSTEES’ ATTORNEYS’ Vv. PAUL A. DOWNEY, ROBERT A. PODESTA, ELLIOT STEINBERG, Individually and as Trustee, and 20 DOES 1-50 FEES FROM BEING PAID FROM THE TRUST OR FIT; AND (12) REMOVAL FOR 214 Defendants ALL PURPOSES OF ELLIOT STEINBERG AS GUARDIAN AD LITEM ~" (PROB. CODE §§ 17200; 16060;16061; Leste dat 16040; 15642(b)(1); a3); AUB 0 5 2009 Date: . Time: FPROBATE DEI RTMEN’ : Pi Dept} 9:00AM, AM obs r ee Ne te a Nt tt a Nt Nt ttt PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; ¢t al. 1I. PARTIES 1. Petitioner, MALI LISE FLYNN, (“MALI”) is the surviving spouse of DONALD FLYNN (“DONALD”), the Decedent who died on May 19, 2006. 2. PAUL A. DOWNEY isa resident of Healdsburg, California, 3. ROBERT A. PODESTA is a resident of San Francisco, Califomnia. 4, ELLIOTT STEINBERG is a resident of Tesuque, New Mexico. 5, Defendants DOE 1-50, inclusive, are sued herein under fictitious names. Their true won DAH S&H HY names and capacities are unknown to Petitioner. When their true names and capacities are ° ascertained, Petitioner will amend this Complaint by inserting their true names and capacities herein. Petitioner is informed and believes and thereon alleges, that each of the fictitiously 58 named defendants is responsible in some manner for the occurrences herein alleged, and that a Petitioner’s damages and request for relief as herein alleged were proximately caused by those 14 || defendants. 15 Il. 16 PURPOSE 3 6. DONALD and MALI have a 14-year old son, DONALD ALEXANDER (FLYNN) (ALEX). ALEX is the primary beneficiary of the DAF TRUST dated March 31, 2003, and the DONALD ALEXANDER FLYNN TRUST dated January 1, 2001 (ALEX’s Trusts). The subject of this Petition is the DAF TRUST. Attached hereto, marked Exhibit A, is a true and correct copy 2 8 5 & of the DAF TRUST. Petitioner is informed and believes and therefore alleges that the defendants claim that the assets of the DAF TRUST are 652 shares of the common stock of FLYNN INDUSTRIES INC. The current co-trustees of the Trust are PAUL A. DOWNEY and ROBERT A. wyoN N aA UN PODESTA. The purpose of this Petition is to carry out the intent of the Decedent to provide for ALEX under the DAF TRUST after the death of the Decedent. The DAF TRUST provides for yon aA vw ALEX's support yet the co-trustees of the Trust have not made any support payment to ALEX. The N x Trustees have refused to act for three (3) years, i.e. since May 19, 2006, the date of Decedent’s death. a PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; et al. 2 y oOt C 1 | 7. The proper venue for this matter is the principal place of administration of the 2 ‘Trust. Prob. Code §17005. The principal place of administration is the “usual place where the day- 3 to-day activity of the trust is carried on by the trustee...” Prob. Code §17002(a). Accordingly, San 4 || Franciscois the proper venue since such activity takes Plaeet in San Francisco. MALI isa beneficiary ML FLYNN INDUSTRIES, INC. . 8. DONALD and MALI were married on August 12, 1989 in Corfu, Greece. ALEX 9 | was born on December 16, 1994. The Decedent was a citizen of Canada and a resident of 10 \ Mexico at the time of his death. MALI is a citizen of the U.S. and a resident of Canada. ALEX 9. The Decedent and MALI dedicated their lives for the past 20 years to building FLYNN INDUSTRIES, INC. (“FI”) for their benefit and for their son ALEX. Fil is a Nevada 17 | Corporation, which owns many subsidiaries that own restaurants and real estate on the West 10, DONALD founded FII in 1985 and served as Chairman. PHILLIP A. DEMARIA served as President and Chief Financial Officer. MALI served as Corporate Secretary and and CFO, ROBERT PODESTA now serves as President and Chairman of the Board. JIM 1 RICHARDSON’ role in FI! and subsidiaries which was formerly Chief Financial Officer for restaurant subsidiaries of FII, was expanded to include Chief Financial Officer of FI and PETITION FOR (3) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; et al. 3t C Director. MARK ESCAMILLA’s role, formerly Chief Operating Officer for FII restaurant subsidiaries, was expanded to Director. 11. During the lifetime of Decedent, MALI assisted in the management of FII and FV, including serving as Corporate Secretary and director of FIl, and President of Auberge des Fleurs, (subsidiary of FIN). MALI worked closely with her husband, the Decedent, in family corporate matters since 1986. Soon after the Decedent's death the other managers of FII (“Other Management”) refused to include MALI in shareholders’ and directors’ meetings and to provide financial information on FIl to MALI. MALI has negotiated with the Other Management in an want Aw fF YN attempt to resolve ownership and management of the Decedent's assets. The negotiations were not successful. The negotiations were made more difficult by the lack of cooperation of the Other Management, including failure to provide financial information for Fil. MALI has now retained trust litigation counsel to resolve ownership and management issues. 12. The Decedent had two primary goals in his estate plan. These were to; (1) provide for MALI and ALEX; and (2) eventually transfer control of FI to ALEX by naming himas successor trustee when he became old enough. Article 2 of the DAF TRUST provides that ALEX could become co-trustee at age 32, then sole trustee at age 35. Iv. THE DAF TRUST 13. DONALD's first choice for Trustee of the DAF TRUST was MALI. However, since MALI resides in Canada, Decedent was concemed there would be adverse tax consequences ifMALI were Trustee. Attached hereto, marked Exhibit B, is a true and correct copy of a letter from Decedent to LUCINDA LEE, which states his concer there would be adverse tax consequences if MALI were Trustee. DONALD then requested JOHN FLYNN to be trustee, and he declined. The Decedent then requested PAUL A. DOWNEY and ROBERT A, PODESTA to serve as co-trustees, and they accepted. 14, Petitionerisinformed and believesand therefore alleges that the Defendants’ claim that the DAF TRUST was funded with common stock of FII. Defendants allege this was accomplished an PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; et al. 4ce - C by gifts of 652 common shares to the DAF TRUST from the adult children of the Decedent from a prior marriage, namely JULIA FLYNN SILER, JENNIFER FLYNN ISRAEL, and GREGORY GRANT FLYNN. Accordingly, Petitioner alleges that Defendants’ claim that the Decedent subsequently transferred 652 shares of the remaining outstanding common stock to the DAF Trust. According to the Defendants, the DAF TRUST and the DAF Trust would together own all the outstanding common stock of FII. v. DUTY TO REPORT AND ACCOUNT 15, Pursuant to California Probate Code Section 16060, the co-trustees havea duty tokeep the beneficiaries of the trust reasonably informed of the trust and its administration. The Trustees have failed to do so. This is a duty imposed by law, separate from any duty to comply with requests of a beneficiary. 16. Pursvant to California Probate Code Section 16061, Petitioner hereby requests the trustee to “provide the beneficiary with a report of information about the assets, liabilities, receipts, and disbursements of the trust, the acts of the trustee, and the particulars relating to the administration of the trust relevant to the beneficiary’s interest...” 17, Pursuant to Paragraph 8.2.22 of the DAF TRUST, Petitioner requests the Trustee to render an accounting of the Trust and any subtrusts thereunder and of the financial condition of the trust to such beneficiary. , VIL BREACH OF DUTY OF LOYALTY 18, California Probate Code Section 16002(a) imposes a duty of loyalty “to administer the trust solely in the interest of the beneficiaries.” Although Paragraph 8.2.26 of the DAF TRUST grants broad powers to the co-trustees for management of FIL, such powers must only be exercised “for the benefit of the Beneficiaries” (Par. 8.2.26) and not for the personal benefit of PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; et at.Cm Nn DH nH ke BY = NN YN YN NK KD ee ee meee anne BN |= SBD WN A Wk WN = & - c the co-trustees. The co-trustees have, on multiple occasions, favored their own self-interest in the management of trust assets, rather than the interest of ALEX. VIL. DUTY TO MAKE TRUST PROPERTY PRODUCTIVE 19, California Probate Code Section 16007 requires the trustee “to make the trust property productive under the circumstances and in furtherance of the purposes of the trust.” The co-trustees have breached their fiduciary duty by their refusal to make the trust properly productive and create a secure income stream for ALEX. VIN. DUTY TO ADMINISTER TRUST WITH REASONABLE CARE 20. California Probate Code Section 16040 provides that the trustee “shall administer the trust with reasonable care, skill, and caution under the circumstances then prevailing that a prudent person acting in a like capacity would use in the conduct of an enterprise of like character and with like aims #o accomplish the purposes of the trust as determined from the trust instrument.” (Emphasis added.) 21, The primary purpose of the Trust is the support of ALEX. According to paragraph 3.1, “The Trustees are authorized to distribute all or as much of the income or principal, or both, to the beneficiary as the Trustees deem to be necessary for the beneficiary’s support.” ALEX is the sole beneficiary of the Trust during his lifetime. Trust, Article 1 ALEX, (hereinafter sometimes referred to as “beneficiary” ) shall be the sole beneficiary of the DAF TRUST during his lifetime.” 22. Not only is ALEX the sole beneficiary during his lifetime, but the Trust instructs the co-trustees to place ALEX’s interests ahead of the remaindermen, who become the distributees of the Trust upon ALEX’s death. Paragraph 6.4. (... “When ALEX is the income beneficiary, his rights and interests as a beneficiary shall always supersede the rights and interests of the remainder beneficiaries . . .”). PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; ct al. 6. C 23. The co-trustees have refused to distribute any income or principal to or for the benefit of ALEX since May 19, 2006, the date of death of ALEX’s father, DONALD. MALI has 3 || made repeated attempts to obtain a secure stream of income to ALEX from the Trust, but to no 4 | avail. The co-trustees claim they have “negotiated” or have requested negotiations regarding 5 | ALEX's support. However, MALI’s repeated attempts to obtain support for ALEX from the 6 | Trust have been futile. The co-trustees most recent overture for negotiations is not credible. 7 | Three years have passed, and the co-trustees have not made a single payment from the Trust to or 8 J) for the benefit of ALEX, 24. The co-trustees refusal to act is a breach of the standard of care established by 10 | Probate Code Section 16040, That section requires the co-trustees to administer the Trust ina 11 f manner that will accomplish the purpose of the Trust, i.e., support for ALEX. The co-trustees’ 12 refusal to pay support to or for the benefit of ALEX is a breach of the standard of care required . 13 | by California law to “accomplish the purposes of the trust as determined by the trust instrument.” Xx FILL VACANCY IN THE OFFICE OF TRUSTEE 25, According to Paragraph 8,9 of the Trust, a vacancy now exists in the office of Trustee. Paragraph 8.9 of the Trust provides, in pertinent part, that: “,,, vacancy in the trusteeship shall be deemed to exist in the event of the. . refusal or failure of any person to act as Trustee or Co-Trustee of a separate trust. Notice of a vacancy in the trusteeship shall be effective if given te the next successor Trustee by an instrument in writing signed by .. . a beneficiary of such separate trust and delivered to such successor Trustee and any one of the other then acting Co-Trustees. Immediately upon receipt of such notice, the recipient shall act as Trustee (or Co-Trustee) or shall dectine in writing to act. ...” Trust, page 21, par. 8.9. 26. As explained above, the co-trustees have refused to pay any amounts to ALEX to or || for his benefit and therefore have failed or refused to carry out the primary purpose of the Trust. PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; ct al. 7. C Accordingly, Paragraph 8.9 of the Trust applies, and “a vacancy in the trusteeship shall be deemed to exist.” 27. The named successor trustees are set forth in Article 2(a)and (b) as follows: a. CLARK MANDIGO, San Antonio, Texas; , b. RALPH M. RICHART, New York, New York; ¢. CHRISTOPHER STEPHAN, Northfield, Illinois. 28. Pursuant to Paragraph 8.9, the Court should authorize Petitioner to notify the named successor trustees of the Trust and the co-trustees of the existence of such vacancy. Attached hereto, marked Exhibit C, is the form of notice of vacancy. 29. Petitioner requests the Court to fill the vacancy as set forth in Section XII] below, “Modification of Trust.” X. REMOVAL AND APPOINTMENT OF TRUSTEE 30. Ifthe Court determines that the co-trustees have not failed or refused to act as co- trustees (which they have), resulting in a vacancy in the office of trustee, then Petitioner, in the alternative, requests the Court to remove the co-trustees. A trustee may be removed, inter alia for a breach of fiduciary duty. Prob. Code §15642(b)(1). 31. Asexplained above, the co-trustees have breached their fiduciary duties by breach of the duty of loyalty, breach of their duty to administer with reasonable care, failure to make the trust assets productive, and failure to provide accounts and reports to the beneficiary. 32. Petitioner requests the Court to fill the vacancy created by the removal as set forth in Section XHI below, “Modification of Trust.” Xi FOR SURCHARGE OF THE CO-TRUSTEES 33. Petitioner has set forth above the allegations of breaches of fiduciary duties by the co-trustees. These include breach of duty of loyalty; breach of duty to make trust property TTT PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; ct ai. 8. C productive, and breach of duty to administer trust with reasonable care. One of the remedies for breach of trust is “to compel the trustee to redress a breach of trust by payment of money or otherwise.” Prob. Code §16420(a)(3). Petitioner will prove the amount of the surcharge owed by the co-trustees at trial, XIL ALEX IS OWNER OF 10% OF FLYNN VENTURES 34. Petitioner is informed and believes and on that basis alleges that PAUL A. DOWNEY and ROBERT A. PODESTA claim that the DAF TRUST owns ten (10) percent of Flynn Ventures. Petitioner claims that DONALD ALEXANDER FLYNN, as an individual, owns that ten (10) percent. Petitioner requests the Court to determine that ALEX is the owner, as an individual, of the 10% of Flynn Ventures. There is no dispute that MALI, as trustee of the Hope Trust, owns the other ninety (90) percent of Flynn Ventures. The Hope Trust was executed by DONALD on May 15, 2003, having originally signed the Trust on October 2, 1990. XI. MODIFICATION OF TRUST 35, Petitioner requests the Court to modify the Trust in two ways. First, Petitioner requests the Court to delete the portion of the Trust that names the trustees and the successor trustees. Second, Petitioner requests the Court to permit MALI LISE FLYNN be allowed to remove a trustee and name a successor trustee, Attached hereto, marked Exhibit D, and by this reference made a part hereof, is the proposed modification of the Trust. 36. Petitioner requests the Court to modify the Trust pursuant to Prob. Code Section 15409(a), which provides as follows: “On petition by a trustee or beneficiary, the court may modify the it owing te crewnslonces nay vow fo ie elo dot apt the settlor, the continuation of the trust under its terms would defeat or substantially impair the accomplishment of the purposes of the trust. In PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; et al. 9VP end A HW BY N C this case, if necessary to carry out the purposes of the trust, the court may order the trustee to do acts that are not authorized or are forbidden by the trust instrument.” 37. In this case there are circumstances not known to the Decedent, DONALD FLYNN, and not anticipated by him. As a result of these changed circumstances, “the continuation of the trust under its terms would defeat or substantially impair the accomplishment of the purposes of the trust.” Prob. Code §15409. The primary purposes of the Trust are to (1) provide for ALEX’s “support and maintenance, medical care...education”, Trust, p. 2, par. 3.1, and (2) to prepare ALEX to take over sole management of the Trust at age 35”, p. 2, Article 2. 38. There are two primary circumstances not known to nor anticipated by the Decedent that would “defeat or substantially impair the accomplishment” of the two primary purposes of the Trust. The first circumstance is that while the Decedent was living, he had an excellent working relationship with the co-trustees. Although Petitioner did not work with the ¢o-tnustees directly, Petitioner had trust and confidence in the co-trustees.. The Decedent therefore, assumed that after his death, MALI and the co-trustees would have the same kind of excellent working relationship with the co-trustees that the Decedent had. Instead, the relationship of Petitioner and the co-trustees has been acrimonious and characterized by a lack of trust and confidence. 39. This lack of an effective werking relationship between Petitioner and the co- trustees has interfered with the proper administration of the Trust. The proper administration of the Trust requires the payment of needed support for ALEX. As indicated above, the co-trustees have not paid any amount to ALEX to or for his benefit from the Trust. It is essential to carry out the purpose of the Trust that Petitioner and ALEX have trust and confidence in the Trustee. Petitioner and ALEX do not have trust and confidence in the co-trustees. The Decedent did not know nor anticipate that Petitioner and ALEX and the co-trustees would not have an effective working relationship, and had Decedent known, he would not have selected PAUL A. DOWNEY and ROBERT A. PODESTA as the co-trustees, nor CLARK MANDIGO, RALPH M. PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; ct al. 10oe NY AH RB WN tt ee - wn = & 1S C RICHART, or CHRISTOPHER STEPHAN as successor trustees. None of the named successor trustees has either (1} a personal or working relationship with ALEX or MALI; or (2) any professional experience in administering trusts. }t is in ALEX’s best interests that the Court not appoint any of the named successor trustees as Trustee of ALEX's Trusts, 40. The second circumstance “not known to nor anticipated by” the Decedent, is the Decedent's vision for the long-term. The Decedent intended for ALEX to become a co-trustee at age 32 and the sole trustee at age 35. Article 2, last par., p. 2. In order to become an effective trustee, ALEX will need a general financial education and mentoring in the management of the Trust. At a minimum, the co-trustees and ALEX will need an effective working relationship in order to carry out the Decedent’s vision for ALEX to assume control of the Trust, The Decedent did not know nor anticipate that Petitioner, ALEX and the co-trustees would not have an effective working relationship, and had Decedent known, he never would have named the current co-trustees. Further, the Decedent would never have named successor trustees without the consent of MALI LISE FLYNN at the time the appointment would otherwise take place. In light of the changed circumstances, Petitioner requests the Court make the modifications requested in Exhibit D. XIv. REQUEST FOR ATTORNEYS’ FEES 41. Petitioner requests an order of the Court that respondent co-trustees shall bear all costs and attomeys’ fees incurred by Petitioner in this action. An award of costs and attomeys’ fees to the Petitioner is equitable because such fees were incurred to benefit the rights of the sole minor beneficiary thereunder as intended by the Decedent, DONALD FLYNN. “ at “ a“ PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; et al.XV. REQUEST ORDER THAT CO-TRUSTEES MAY NOT USE TRUST FUNDS OR FI FUNDS FOR THEIR LEGAL REPRESENTATION IN THIS MATTER 42. Petitioner requests an order of the court denying the payment of the co-trustees” attorneys’ fees from either the Trust or FII. Attomeys’ fees incurred by the co-trustees in this matter do not qualify as expenses properly incurred in the administration of the Trust nor will they provide a benefit to the Trust. Rather, such expenses are incurred for the personal benefit of the co-trustees, not for the preservation of Trust assets. Therefore, the co-trustees are not entitled to recovery of their attorneys’ fees from the Trust or FI and should be ordered to bear their own expenses as individuals. XVI. REMOVAL FOR ALL PURPOSES OF ELLIOT STEINBERG AS GUARDIAN AD LITEM 43. ELLIOT STEINBERG we: appointed by this Court as guardian ad litem for ALEX by order filed on April 24, 2007. The purpose of this appointment as stated in the Petition for Appointment of guardian ad litem, was as follows: pownevr ne des OPH DEST a the DAF TRUST dated January 1, 2001, and the DAF Trust dated +h 31, 2003] that they [the co-trustees} have the ability to Calforia Probate Code 16300" Peseoure sumone Py 44. _ ELLIOT STEINBERG owed a fiduciary duty to ALEX to ensure that he use reasonable care to act in response to any notices of proposed action. ELLIOT STEINBERG did not use reasonable care in the exercise of his duties and should therefore be removed as GAL for all purposes. One such failure was not to send a copy of all notices of proposed actions to ALEX and to his mother, MALI. PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; et al. 12DO wey AH Rw N 45. 46. Although ELLIOT STEINBERG is not a guardian ad litem in this matter, notice will be sent to him for his information and as a courtesy. C The following persons are entitled to notice of the hearing on this petition: Paul A. Downey 22200 Puccioni Road Healdsburg CA 95488 Robert A. Podesta 1100 Sacramento Street San Francisco CA 94108 Donald Alexander Flynn 109-1581 H.. Hillside Ave Victoria B.C, V8T2C1 Canada Phillip A. DeMaria 23 Cove Road Belvedere CA 94920-2351 Elliot Steinberg PO Box 804 Tesuque NM 87574 Clark Mandigo 1248 Austin Hwy, Ste 221 San Antonio TX 78209-7867 Ralph M. Richart 630 168" Strect,1 6th Fl, Rm 404 New York NY 10032-3725 Christopher Stephan 175 Old Farm Road Northfield IL 60093 Connie Guilland 7016 NE 410" Street La Center WA 98629 WASHINGTON TRUST BANK, P.O. Box 2127 Spokane, WA 99210-2127 13 Co-trustee Co-trustee Beneficiary Nominal “Settlor” Guardian ad-litem in prior matter Named successor trustee Named successor trustee Named successor trustee Designated successor trustee Designated successor trustee PETITION FOR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; et al.a7 ney cuus sisgurn ‘€ ye suy4 ow 8 ND AH hw Ne YERIFICATION Tam the Petitioner in the above-entitled action, and I have read the foregoing PETITION ROR (1) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; (2) BREACH OF DUTY OF LOYALTY; (3) BREACH OF DUTY TO MAKE TRUST PROPERTY PRODUCTIVE; (4) BREACH OF DUTY TO ADMINISTER THE TRUST WITH. REASONABLE CARE; (5) APPOINTMENT OF TRUSTEE TO FILL VACANCY BASED ON REFUSAL TO ACT; OR (6) REMOVAL OF TRUSTEE AND APPOINTMENT OF SUCCESSOR TRUSTEE; (7) SURCHARGE OF THE CO-TRUSTEES; (8) DECLARATORY RELIEF THAT ALEX IS THE OWNER OF 10% OF FLYNN VENTURES; (9) MODIFICATION OF TRUST; (10) CO-TRUSTEES TO PAY PETITIONER'S LEGAL FEES; (11) ORDER DENYING CO-TRUSTEES’ ATTORNEYS’ FEES FROM BEING PALD FROM THE TRUST OR FIT; AND (12) REMOVAL FOR ALL PURPOSES OF ELLIOT STEINBERG AS GUARDIAN AD LITEM, and know the contents thereof, which is true and of my own knowledge, except as to those matters that are stated upon my information and belief, and as to those matters, I believe them to be true. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on Hay tH 2009 Victoria, British Columbia, Canada, MALI LISE FLYNN, Petitioner 529 fay cUUD 3245r ‘€ ve suy4 WHEREFORE, Petitioner requests an order of the Court for: 2 1. Anaccounting and report of Trust administration; 3 2. Breach ofduty of loyalty; 4 3. Breach of duty to make Trust property productive; 5 4. Breach of duty to administer the Trust with reasonable care; 6 5. Appointment of Trustee to fill vacancy based on refusal to.act; or 7 6, Removal of Trustee and sppointment of successor trustec; 8 7. Foe surcharge of the co-trustees; 9 8. For declaratory relief that ALEX is the owner of 10% of Flynn Ventures; 10 9. Modification of Trust; 11 10, Foreo-trastees to pay Petitioner's legal fees; 12 11, Fororder denying co-trustees’ sttomeys’ fees from being peid from the Trust or 13 FIL; 144 12, Removal for ali purposes of Elliot Steinberg as guardian ad titem; and 15 13. Forall other proper orders. 16 I declare under penalty of perjury under the Jaws of the State of California that the 17] foregoing is true and correct. 18 Executed on May/¥, 2009 ot Vicdaeas, Leedtit Columbia, Canada 19 20 woh le Me 21 . 23 For 4 BRANTON & WILSON, APC 25 26 a7 28 PETITION FOR (f) ACCOUNTING AND REPORT OF TRUST ADMINISTRATION; et al. 14IRREVOCABLE TRUST AGREEMENT ESTABLISHING ‘THE DAF TRUST DATED MARCH 31, 2003 ZR AGREEMENT PHILLIP A. DEMARIA, = mo eS . : . . rDRE RRR EER ERE RE BB eS Rl: 12: TABLE oF CONTENTS Page DESIGNATION OF BENEFICIARIES ........00.ccceeeceeesed DESIGNATION OF SUCCESSOR TRUSTEES ......... wane DISTRIBUTION FROVISTONS + eeesresessseereseceecerer es 2 st- EXEMPT FAMILY TRUSTS... cesserereceees conrrncinr NON-GST-2xENer FAMILY TRUSTS +e eee eee eees 5 BENEFICIARY POWERS AND RESTRICTIONS ....... POWERS OF APPOINTIONT 6.0. ee ceeeeeseceeseenseeesee 2 TRUSTEE POWERS, RIGHTS AND'DUTIES ............2..5-13 GST PROVISIONS 1.2.2.0... cceeccecersceecussecscsees 32 ACCUMULATIONS AND PERPETUITIES ........000cc000000 37 CHARACTER OF THE TRUSTS ....-...cccccececeeecesees 37. CONSTRUCTION 2... csccs eee eeeesewereccescensscscacs 3B 6> aon oo ho IRREVOCABLE TRUST AGREEMENT “ESTABLISHING THE . . DAF TRUST UNDER “AGREEMENT DATED MARCH 31, 2003 PHILLIP A. DEMARIA, SETTLOR THIS AGREEMENT is made as of March 31, 2003, by and between PHILLIP A. DEMARIA,. as the Settlor (hereinafter referred to as “the Settlor” or as “PHILLIP”), and PAUL A. DOWNEY (hereinafter referred to as “PAUL”) as the .Co-Trustee with ROBERT A. PODESTA (hereinafter referred to as “ROBERT”) (both PAUL and ROBERT, as well as their successors, hereinafter collectively referred to as the “Trustee” or “Trustees” or as the “Co-Trustee”’ or “Co-. Trustees”), It is the intention of the.Settlor to create an irrevocable trust, for the benefit of DONALD ALEXANDER FLYNN: born Decenber 16, 1994 (hereinafter referred to as ALEX”), which trust shall be known ‘as the DAF TRUST (hereinafter sometimes referred to as the “Trust”}; and, for that purpose, the Settlor makes an absolute and irrevocable initial gift. In consideration of the Premises and by the execution of this Agreement, the Settlor declares and establishes the Trust, to be held by the Trustees in trust for the purposes. and subject to all the terms, conditions and provisions of this Agreement. By execution of this Agreement, the Trustee acknowledges receipt from the Settlor of the gift. and agrees to hold and administer it, together with any other property of any kind which the Trustee may at any time hereafter receive from the:Settlor or from any © other person or which the Trustee may at any time hold or acquire pursuant to any of the provisions of -this Agreement, for the uses and purposes and subject to all of the terms, conditions and provisions of this Agreement - ARTICLE 1: DESIGNATION oF BENEFICIARIES ALEX (hereinafter sometimes ‘referred to as “beneficiary”) shall be the sole beneficiary of the DAF TRUST during his lifetime. (CW Documenas Trost & WIRADAF Treat dosDRE REED ES Se Hee ee ARTICLE 2: DESIGNATION OF SUCCESSOR TRUSTEES The non-corporate Trustees shall have the power to designate successor Trustees or Co-Trustees while serving as Trustees. Upon PAUL'S or ROBERT’s inability to serve as Trustee, then ‘the following, one at a time and in the order named, shall serve as successor Trustees: (a) CLARK MANDIGO (hereinafter referred to as “CLARK”), 15050 Jones-Maltsberger, Suite 2, San Antonio, Texas 78247 (telephone: 210-495-3911); then {b) RALPH M. RICHART (hereinafter referred to as “RALPH”), 16™ Floor, Room 404, 630 168 Street, New York, New York 10032 (telephone: 212-489-0414); then {c) CHRISTOPHER STEPHAN (hereinafter referred to as “CHRIS”) of 175 Gld Farm Road, Northfield, Illinois 60093 (telephone: 847-446-0433). Upon ALEX attaining age thirty-two (32), ALEX may become a Co- Trustee. . Upon ALEX attaining age thirty-five (35), ALEX may become the sole Trustee if that is approved of in writing by. ALEX’s ‘father, DONALD FLYNN, if his father is alive and mentally competent, and if not, then by ALEX’s mother, MALI LISE FLYNN, if she is alive and mentally competent, and if not, then ALEX shall become sole Trustee automatically, and the former -Co- Trustee shall -be deemed to have-resigned. _If ALEX is unable or unwilling to serve, then the designated successor Trustees he has designated shall serve, or if no’ such successors have been naned,- then the named successors in this Section shall serve. The non-corporate Trustees or Co-Trustees may name successor - Trustees or Co-Trustees in writing. ARTICLE 3: DISTRIBUTION PROVISIONS 3.1 Distribution Of Income’ And Principal. The Trustees are authorized to distribute all or as much of the net income or principal, or both, to the beneficiary as the Trustees deems to be necessary for the beneficiary’s support. 3.2 Limited. Power Of Appointment. Subject to Section 7.4, the beneficiary’ shall have the right upon his or her death to appoint all or part of the trust estate of such trust to or for the benefit of any one or more of a class consisting of ALEX’ s City DecumapatTuaay k WENDAF Tra doe 27 HmahhaMmiReaeR eR ER descendants, or to the FLYNN FOUNDATION, or to its successor organization; ALEX may appoint up to half of the trust estate to or for the benefit of ALEX’s wife, or to or for the benefit of ALEX’s siblings who are his half brother and his half sisters and their descendants. For a woman to qualify as “ALEX’s wife,” she and ALEX must have been legally married to each other and living together as husband and wife at ALEX’s death. 3.3 Division of Trust. Upon ALEX’s death, the ‘Trustee shall -divide the then remaining unappointed trust estate in separate shares as follows: (a) one-third (1/3) to ALEX’ s wife, but if she is not then ". living, then this allocation shall lapses and the balance . coe (b>) per ‘stirpes to ALEX’s descendants; but if there is no then-living descendant, then (¢) outright and not in trust to the FLYNN FOUNDATION, or to its successor organization, but if there is none, then to. HABITAT FOR HUMANITY INTERNATIONAL and/or one or more other charitable organizations constructing homes, for poor families. 3.4 General Retention In Trust. Unless otherwise directed, no share divided ‘pursuant to the provisions of Section 3.3{a) and {b) ‘shall be distributed outright, but shall be retained in trust as follows: ae ‘ 3.4.2 Allocation Of Generation Skip Tax Exemption. The amount of the share, if any, equal to the Settlor’s or deemed Settlor’s exemption from the federal generation-skipping transfer tax (hereinafter referred to as the “GST tax”) that has been effectively allocated to a GST-Exempt Family Trust for the benefit of the next beneficiary (and any property that is exempt from the GST'tax) shall be distributed to the Trustee of that GST-Exempt Family Trust to be held for the benefit of that beneficiary pursuant to the terms of Article 4; provided, however, that if either the wife or mother of ALEX is a beneficiary, then the trust for that beneficiary shall be held and administered pursuant to Article 3. Cy Docerpera Trae: WBADAF Trt dosre 6 a a a . a . ” a a a q a g Z a a 3.4.2. Allocation Of Balance Of frust Assets. All other property distributable to the beneficiary shall be allocated to a separate trust designated a Contingent Non-GST- Exempt Family Trust, of which the beneficiary shall be the sole beneficiary, and which shall be held, . administered and distributed pursuant to Article 5. ARTICLE 4: GST-EXEMPT FAMILY TRUSTS Each GST-Exempt Family Trust shall be held, administered: and distributed as follows: 4.1 Distribution Of Income And principal. The Trustee is ‘ authorized to. distribute all or as much of the net income or principal or both .of each GST-Exempt Family Trust. to the beneficiary of such trust 2s thé Trustee deems to be necessary for the support of the beneficiary. 4.2 Limited Power Of Appointment, Subject to Section 7.4 and after attaining age fifty (50), the beneficiary shall have the right, "at any time and from time to time during the beneficiary’ s lifetime or upon the beneficiary’s death, ‘to ‘appoint all or part of the trust estate of such trust to or for the benefit of any one or more of a class consisting of the beneficiary's descendants or heirs, other than the beneficiary. 4.3 Distribution Upon Death. Upon the death of the beneficiary ef a GST-Exempt Family Trust, the Trustee ‘shall distribute any unappointed portion of the then remaining ‘trust estate of such trust in separate shares as follows: . da) per stirpes to the descendants of such beneficiary; but if there is no descendant of such beneficlary then : living, then (b) pursuant to Sections 3.3(b} and 3.3(c}. 4.4 General Retention In Trust. Unless otherwise directed, no share distributed pursuant: to the provisions of Section 4.3 shall be distributed outright, but shall be retained in trust by the Trustee as a separate trust of which the person for whom such share shall have been allocated shall be the beneficiary and each such trust shall be designated as a “GST-Exempt Family Trust” and shall be held, administered and distributed pursuant to the provisions of Article 4 hereof, Cy DocemasTrvee & WED AP Trust dat 4ARTICLE 5: CONTINGENT NON-GST-EXEMPT FAMILY TRUSTS S.1 Distribution Of Incoms And Principal. The Trustee is authorized to distribute to the beneficiary of the Contingent Non-GST-Exempt Family Trust, ‘at any time and from time to time during’ the beneficiary’s lifetime, all or as much of the. principal or net’ income or both of such trust as the Trustee deems to be in the best interests of the beneficiary. 5.2. Limited Power Of Appointment. Subject to Section 7.4 and after attaining age thirty (30), the beneficiary shall have the right, at any time ‘and from time to time during the beneficiary’s lifetime or upon the beneficiary's death, to appoint .all or part of the trust estate of such trust to or for the benefit of -any ‘one or more persons or charities, or combinations thereof. + . 5.3 Testamentary General Power Of Appointment. Notwithstanding the restrictions in Section 7.4, upon the death of the beneficiary of a Contingent Non-GST-Exempt Family Trust, the Trustee shall distribute free of all trusts created hereunder all or any portion of the trust estate of such Contingent Non- GST-Exempt Family Trust that, but for the provisions of this Section: would be subject to a GST tax at the beneficiary's death, as the beneficiary may appoint to any one or more of the creditors of the beneficiam'’s estate, in such proportions and amounts and upon such terms, estates, conditions and trusts as the beneficiary may designate in the beneficiary’s valid Will, making specific reference to the testamentary general: power of appointment granted. herein. This testamentary general power of appointment shall be exercisable by the beneficiary exclusively and in all -events, notwithstanding that at the date of the beneficiary’s death the assets of the Contingent Non-GST-Exempt Family Trust may not have been received by the Trustee. 5,4 Distribution In Default Of Exercise of Power. Upon the death of the beneficiary of. a Contingent Non-GST-Exerpt Family Trust, the Trustee shall distribute any unappointed portion of the then remaining trust estate of such trust in separate shares as follows: (a) per stirpes to the then living descendants of such’ beneficiary; but if there is no descendant of such beneficiary then living, then 5 CiMty DemsmenetTrasn & WRADAY Tras booUeno oT i (bp) “pursuant to Sections 3.3 (b) and 3.3{c). 5.5. General Retention’ In Trust. " -No share distributable pursuant to the provisions of Section 5.4 shall be distributed outright, but shall be retained dn trust as follows:- 5.8.1 Allocation Of Deceased Beneficiary’s Exemption. The amount of the share, if any, equal to the deceased beneficiary’s exemption from the. GST tax that has been effectively allocated to a GST-Exempt Family Trust for the benefit of the beneficiary to whom the share was allocated shall be ‘distributed to the Trustee of that GST-Exempt Family Trust to be held for the benefit cf that beneficiary pursuant to the terms of Article 4. §.5.2 Allocation Of Balance Of Trust Assets, All other property distributable to the beneficiary shall be allocated to a separate trust designated a Contingent Non-GST-Exempt Family Trust, of which the beneficiary shall be the sole beneficiary, and which shall be held, administered arid distributed pursuant to Article 5. : . ARTICLE 6:. BENEFICIARY POWERS AND RESTRICTIONS © 6.1 Meaning Of Beneficiary. Unless otherwise expressly’ identified herein, wherever reference is made herein to a “beneficiary”, , such reference shall be ‘deemed to mean a person to whom the Trustee of a separate trust is then directed or authorized to distribute net income or’ principal,.or both, from the trust estate of such trust, and wherever the facts and context require such‘ construction, the term “beneficiary” shall be deemed to mean the ‘Plural form thereof. 6.2. Acts On Behalf Of Beneficiaries Under Disabilities. In the event that income or principal shall become distributable free ef any trust to a minor beneficiary, to a beneficiary under other legal disability or to a beneficiary not adjudicated incompetent, but who, by reason of illness or mental or physical disability, is, in the sole discretion of the Trustee, unable properly to administer such amounts, then such amounts may be used by the Trustee directly for the best interests of said beneficiary or distributed by the Trustee for the benefit of said beneficiary to such one or more of the following distributees" whom the Trustee shall in the Trustee’s sole meee . be )+ j discretion deem best under the circumstances: directly to said beneficiary; to the legally appointed guardian or conservator of said beneficiary; to a parent or a relative or a friend of said beneficiary; or to those dependent for support upon said beneficiary; and, in the case of a minor beneficiary, to a custodian under the Uniform Transfers to Minors Act (“Act”) of any applicable jurisdiction (but if there shall not then be a _eustodian for said minor. under such Act, then the Trustee may designate a custodian from among those eligible and willing to serve). The receipt by any such distributee shall constitute a full release and’ discharge to the Trustee upon making such distribution and such Trustee shall not be obligated to see to the application of any money or property so distributed. All statements, accounts, written instruments, releases, notices or ether documents required to be delivered to or executed by a _ beneficiary. may be delivered to, executed by or exercised by the legally appointed conservator of an incompetent beneficiary or the legal guardian of the estate of a minor beneficiary, or if there 4s no guardian of the estate, by a‘parent of the minor? when so delivered, executed or exercised, they shall be binding upon said incompetent or minor beneficiary and the beneficiary’s heirs, personal representatives of the beneficiary’s estate and assigns, and shall be of the same force and effect as if delivered to, executed by or exercised by a beneficiary acting under no legal disability. 6.3 Discretionary Distributions. Whenever the Trustee shall be herein authorized to ‘distribute all or any part of either the net income or the principal, or both, of a separate trust, such authority may be exercised in the sole and absolute discretion of the Trustee, by distributions in cash or kind, at any time and from time to time, but the existence of such authority shall not require the Trustee to make-any distribution to any person? such authority shall permit the Trustee to terminate such trust by such distributions. The determination of the amount of income or principal of .a ‘separate trust which is in the best interests of the beneficiary or. beneficiaries of such. trust shall be in the