Dawes v. Rich

60 Cal. App. 4th 24 (1997)

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Nature of the Case

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Facts

Rancho Carlsbad mobile home park was owned by Western Land & Development Company (Western), a general partnership consisting of David F. Dawes (H) and Ronald S. Schwab. The tenants sued with respect to rent increases. In 1983, many years prior to any final resolution of the tenants' litigation, H and Dorothy (W), transferred their community property to an inter vivos trust. This was to minimize the amount of federal gift and estate tax, which might be payable upon the death of either spouse. During the lifetimes of the settlors, the community property would remain community property, and the trust would be revocable. Upon death, the community property would be divided into three subsidiary trusts. The A trust would be funded with the survivor's one-half share of the community property and would be revocable by the survivor. The B trust would be in the maximum amount allowable under the federal gift and estate tax marital deduction and would be funded from the decedent's one-half share of the community property. The C trust would contain any residue from the decedent's one-half of the community property. The B and C trusts would be irrevocable. The surviving spouse was entitled to the income from the B and C trusts during his or her lifetime, and upon his or her death the corpus of the trust would pass to the children and the children of their deceased daughter. The trustees of the trust were the Dawes’' two surviving children, David Alan Dawes and Stuart E. Dawes. W died in January 1990, and the terms of the trust instrument became operative. On November 17, 1992, a judgment in favor of the tenants and against H was entered. H filed bankruptcy petitions on his own behalf and behalf of Western. The bankruptcy court determined that it did not have jurisdiction over the B and C trusts. The tenants levied writs of execution on David Alan Dawes and Stuart E. Dawes as trustees of the B and C trusts. The trustees sought a determination trust assets were not subject to execution on the tenants' judgment. The tenants filed two complaints against the trustees seeking a declaration the assets in the B, and C trusts were subject to the judgment entered in the tenants' favor. The trustees demurred to the complaints. The court sustained the demurrers; the complaints were untimely. Rich, the tenants, appealed.