Rudnick v. Rudnick

102 Ca.Rptr.3d 493 (2009)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

The Rudnick Estates Trust (RET) was created in 1965 by the beneficiaries of 11 separate trusts. The purpose of the RET was to liquidate the trusts' assets and distribute the proceeds to the beneficiaries. Under the RET agreement, any sale or disposition of a particular trust asset, once negotiated by the trustee, had to be approved by a majority of the beneficial shares in order to become effective. In January 2007, P began the process of selling the Onyx Ranch. The beneficiaries were given drafts of an agreement for the sale of the Onyx Ranch to CIM Acquisition Group (CIM) for $48 million. Ds made it known to all beneficiaries that they opposed this sale. The beneficiaries voted to accept the CIM offer, with 60 percent in favor and 40 percent opposed. The beneficiaries voted 100 percent against approving the proposed Padoma lease. Despite the beneficiary vote, D did not withdraw their application for an ex parte appointment of a temporary trustee and petition to enjoin the Onyx Ranch sale until February 22, 2008. P filed a petition in the probate court to obtain instructions to consummate the Onyx Ranch sale to CIM as required by the purchase and sales agreement and to approve a distribution of proceeds in accordance with the accounting. The purchase and sales agreement provided that if it was not approved by the court on or before May 4, 2008, the agreement would terminate. The hearing on this petition was set for April 3, 2008. Ds filed an ex parte application to vacate the April 3 date. Ds then filed objections to the petition for instructions. According to Ds, the RET assets were worth substantially in excess of $48 million, the transaction violated P's fiduciary duty, and the transaction violated the terms of the RET. On May 2, 2008, the court ruled in P's favor and instructed him to consummate the sale. On May 2, 2008, the court ruled in P's favor and instructed him to consummate the sale. Ds appealed.