Nelson v. Nelson

Filed 9/30/26 CERTIFIED FOR PUBLICATION IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION THREE JOANNA NELSON, A159271, A160751 Plaintiff and Appellant, v. (Alameda County RONALD NELSON, SR., Super. Ct. No. RP18892294) Defendant and Respondent. Respondent Ronald Nelson, Sr. petitioned to invalidate the trust that appellant Joanna M. Nelson established with her deceased husband. Respondent withdrew his petition after the parties settled a separate lawsuit involving the parties’ entitlement to the decedent’s life insurance proceeds. Appellant then initiated this proceeding, claiming respondent forfeited any right to a distribution from the trust because his petition was a contest within the meaning of the trust’s no contest clause. The probate court disagreed, determining respondent’s petition did not trigger the clause based on application of the so-called “paper contest” exception that originated from dicta in In re Estate of Hite (1909) 155 Cal. 436. The court rendered judgment in favor of respondent and awarded him costs. We conclude the paper contest exception does not apply where, as here, a trust’s no contest clause is subject to enforcement under the current statutory scheme that governs no contest clauses. (Prob. Code, § 21310 et 1 seq.1) We therefore reverse the judgment and assessment of costs and remand the matter so the probate court may determine if respondent’s petition constitutes a contest under section 21310 and, if so, whether the trust’s no contest clause is enforceable under section 21311. FACTUAL AND PROCEDURAL BACKGROUND Underlying Facts Ronald C. Nelson, Jr. (“Ron Jr.”) and Joanna M. Nelson (“Joanna”) 2 married in December 1999 and had two children. Ron Jr. worked as a financial advisor for Morgan Stanley. In 2004, Ron Jr. and Joanna purchased a life insurance policy on Ron Jr.’s life with a face value of approximately $750,000 to $800,000. Ron Jr.’s father, Ronald C. Nelson, Sr. (“Ron”), was named as a beneficiary on this policy. In September 2007, Ron. Jr. and Joanna established a family trust with the help of attorney Lawrence Leung (“Leung”), a longtime friend and business associate of Ron Jr.’s. In June 2013, Leung helped Ron Jr. and Joanna restate the family trust. Under this restatement, Ron and Ron Jr.’s cousin Sandy Ramirez would serve as co-trustees of the trust upon Ron Jr.’s death. At some point during the marriage, Ron Jr. was diagnosed with mesothelioma, a rare form of cancer stemming from asbestos exposure. He subsequently recovered approximately $20 million from a lawsuit related to his mesothelioma. 1 All unlabeled statutory references are to this code. 2 The parties refer to themselves and the decedent by their first names in their briefs. We shall do the same, intending no disrespect. 2  In December 2013, Leung again helped Ron Jr. and Joanna amend and restate their family trust (the “December 2013 Trust”). The December 2013 Trust stated that upon Ron Jr.’s death, Joanna, Leung, and Jason Sherr, an experienced investment advisor who had worked with Ron Jr. for many years, would serve as co-trustees of the trust. The December 2013 Trust included new provisions for a special cash gift of $375,000 to Ron upon Ron Jr.’s death and $375,000 in trust to Ron Jr.’s mother. The trust included a “No-Contest Clause” stating that any beneficiary who, without probable cause, “challenge[d] the validity” of the instrument on grounds including lack of capacity, duress, fraud, or undue influence would forfeit his or her interest in any bequest under the trust document. Around January 2014, Ron Jr.’s condition took a turn for the worse. He was placed on hospice care and passed away on January 21. Subsequently, the December 2013 Trust was fully administered, with Ron receiving $375,000 for himself and $375,000 to hold in trust for Ron Jr.’s mother. Ron did not question, refuse, or return this distribution, nor did he object to the fact that he was not a trustee of the December 2013 Trust. Ron also received proceeds from the life insurance policy. Litigation History Around 2017, Joanna filed a lawsuit against Ron alleging she was entitled to half of the life insurance proceeds because the policy had been paid for with community property funds. A mediation in this life insurance lawsuit was scheduled for February 13, 2018. A week before the mediation, Ron filed a petition challenging the validity of the December 2013 Trust (the “Trust Invalidity Petition”). The Trust Invalidity Petition sought to void the amended trust, alleging, among other things, that it was procured by fraud, duress, and undue influence by 3 Joanna and Leung over Ron Jr., who lacked capacity to execute the document because he was heavily medicated for his pain at the time. The day before the mediation, the Trust Invalidity Petition was served on Joanna. She immediately contacted her counsel to discuss its impact on her pending lawsuit against Ron. The petition was also discussed at the mediation on February 13, 2018. The mediation ultimately resulted in a settlement of the life insurance lawsuit, which included Ron’s agreement to pay Joanna $175,000 of the policy proceeds. Both parties reserved their right to maintain any cross-claims and petitions related to the Trust Invalidity Petition. Ron dismissed the Trust Invalidity Petition shortly thereafter. Joanna then filed the instant petition (the “No Contest Petition”) with the probate court, contending Ron’s petition had constituted a direct contest to the December 2013 Trust because it challenged the trust’s validity without probable cause. As such, she contended the trust’s no contest clause was enforceable against Ron under Probate Code sections 21310 and 21311, and required him to return the $375,000 bequest he had received under the trust. No Contest Trial and Probate Court Ruling The evidence at the trial of the No Contest Petition included testimony from Joanna, co-trustee Leung, and Ron. Joanna produced evidence to show Ron filed the Trust Invalidity Petition without probable cause, while Ron focused on countering Joanna’s case. At the conclusion of the trial, the probate court denied the No Contest Petition and Joanna’s request that Ron return the $375,000 he received under the December 2013 Trust. In so ruling, the court discussed Schwartz v. Schwartz (2008) 167 Cal.App.4th 733 (Schwartz), which relied on In re Estate of Hite (1909) 155 Cal. 436 (Hite) for the proposition that the enforceability of a no contest clause turns on whether an action is the type of 4 contest that would trigger the clause as opposed to a mere “paper contest,” which would not. The court concluded the Trust Invalidity Petition was “ ‘abandoned without action’ ” and was “much more of a ‘paper contest’ ” than the particular action that had been deemed a contest to the trust instrument in Schwartz. The court acknowledged Joanna’s argument that section 21310 did not allow for a finding of a “paper contest,” but concluded the statute “d[id] not purport to overrule the ability of the court to determine whether the facts supported a finding that the contest was a ‘paper contest’ under Schwartz.” The court denied Joanna’s petition, stating it was unable to conclude the Trust Invalidity Petition amounted to a contest requiring enforcement of the December 2013 Trust’s no contest clause. Thereafter, Ron successfully moved to assess costs against Joanna. Joanna filed appeals from the probate court’s denial of her No Contest Petition, as well as its assessment of costs against her. We consolidated the two appeals. DISCUSSION Joanna asserts the probate court erred when it invoked the nonstatutory, common law based “paper contest” exception to determine that the Trust Invalidity Petition was not a contest requiring application of the December 2013 Trust’s no contest clause. We agree. A. Applicable Law and Standard of Review The Supreme Court’s decision in Donkin v. Donkin (2013) 58 Cal.4th 412 (Donkin) provides helpful background explaining the jurisprudence around no contest clauses. A no contest clause in a trust instrument “ ‘acts as a disinheritance device, i.e., if a beneficiary contests or seeks to impair or invalidate the trust instrument or its provisions, the beneficiary will be 5 disinherited and thus may not take the gift or devise provided under the instrument.’ ” (Donkin, at p. 422.) Such clauses have long been held valid in California as they “promote the public policies of honoring the intent of the donor and discouraging litigation by persons whose expectations are frustrated by the donative scheme of the instrument.” (Ibid.) However, these clauses are also in tension with other policy interests such as “avoiding forfeitures and promoting full access of the courts to all relevant information concerning the validity and effect of a will, trust, or other instrument.” (Ibid.) To balance these competing policy interests, the common law historically required the strict construction of no contest clauses and allowed their enforcement “ ‘so long as the condition was not prohibited by some law or opposed to public policy.’ ” (Ibid.) In 1989, the California Law Revision Commission (the “Commission”) recommended a partial codification of California’s common law rules regarding the enforcement of no contest clauses. (Donkin, supra, 58 Cal.4th at p. 422.) In response, the Legislature enacted a series of statutes to govern such clauses and continued to amend these statutes over the next decade. (Id. at p. 423.) Among other things, the Legislature attempted to define “direct” as opposed to “indirect” contests and created a declaratory relief procedure that would allow beneficiaries to ascertain if a particular legal action was a contest that would trigger application of a particular no contest clause. (Sen. Floor Analyses, 3d reading analysis of Sen. Bill No. 1264 (2007– 2008 Reg. Sess.) as amended June 18, 2008.) Much litigation followed the enactment and subsequent amendments, indicating the Legislature’s effort “to clarify the law was not . . . entirely successful.” (Donkin, supra, 58 Cal.4th at p. 424.) As Donkin observed, the “complexity of the statutory scheme actually promoted further uncertainty as 6 to the scope of application of a no contest clause, which in turn led to widespread use of the safe harbor declaratory relief procedure” to determine if a particular motion, petition, or other act by a beneficiary would be a contest within the terms of a particular no contest clause. (Id. at pp. 423, fn. 6, 424.) This resulted in an additional layer of probate litigation that “undermined the goal of a no contest clause in reducing litigation by beneficiaries.” (Id. at p. 424.) Consequently, in 2005, the Legislature requested that the Commission again study the advantages and disadvantages of enforcing no contest clauses in estate planning instruments. (Donkin, supra, 58 Cal.4th at p. 424.) In January 2008, the Commission issued a report finding “significant problems” with California’s existing statutory scheme, including “[u]ncertainty about whether a particular action would violate a no contest clause” and “[e]xcessive pre-contest litigation” through declaratory relief actions that would be routinely filed due to the uncertainty in the existing law. (Sen. Floor Analyses, 3d reading analysis of Sen. Bill No. 1264 (2007–2008 Reg. Sess.) as amended June 18, 2008.) The Commission therefore recommended that the statutory scheme be “revise[d] and simplifie[d].” (Ibid.) “In response to the Commission’s report, the Legislature repealed the existing statutes and replaced them with a new set of statutes governing no contest clauses.” (Donkin, supra, 58 Cal.4th at p. 426.) Importantly, the Legislature sought to “reduce[] the confusion” by defining which proceedings a no contest clause would be enforceable against. (Sen. Floor Analyses, 3d reading analysis of Sen. Bill No. 1264 (2007–2008 Reg. Sess.) as amended June 18, 2008; see also Sen. Jud. Com., Analysis of Sen. Bill No. 1264 (2007– 2008 Reg. Sess.) as amended Apr. 8, 2008.) The Legislature also eliminated the declaratory relief procedure that had increased litigation under the prior 7 statutory scheme. (Donkin, at p. 427.) These changes reflected a “careful[] balance” of conflicting public policy interests. (Sen. Jud. Com., Analysis of Sen. Bill No. 1264 (2007–2008 Reg. Sess.) as amended Apr. 8, 2008.) The new statutory scheme was codified at sections 21310 et seq. as “Part 3. No Contest Clause” (“Part 3”) and became operative on January 1, 2010. (Donkin, supra, 58 Cal.4th at p. 426.) This part provides that no contest clauses “shall only” be enforced against “(1) A direct contest that is brought without probable cause. (2) A pleading to challenge a transfer of property on the grounds that it was not the transferor’s property at the time of the transfer [if the no contest clause expressly provides for that application]. (3) The filing of a creditor’s claim or prosecution of an action based on it [if the no contest clause expressly provides for that application].” (§ 21311, subd. (a).) Part 3 defines a “contest” as a “pleading filed with the court by a beneficiary that would result in a penalty under a no contest clause, if the no contest clause is enforced.” (§ 21310, subd. (a).) A “direct contest” means a “contest that alleges the invalidity of a protected instrument or one or more of its terms” based on one or more of six statutorily enumerated grounds, including forgery, lack of due execution, lack of capacity, and menace, duress, fraud, or undue influence. (§ 21310, subd. (b).) Finally, a “pleading” is defined as a “petition, complaint, cross-complaint, objection, answer, response, or claim.” (§ 21310, subd. (d).) By its terms, the revised statutory scheme contemplates the following analytical steps for evaluating the enforceability of a no contest clause. First, a court must determine if a particular action is a “contest” within the meaning of section 21310, that is, “a pleading filed with the court by a beneficiary that would result in a penalty under a no contest clause, if the no 8 contest clause is enforced.” (§ 21310, subd. (a).) This requires examination and interpretation of the specific language of the clause at issue. (See, e.g., Key v. Tyler (2019) 34 Cal.App.5th 505, 523.) If the action constitutes a contest within the meaning of section 21310, the court must then determine if the action falls within one of the three categories of contests against which a no contest clause must be enforced under section 21311. (§ 21311, subd. (a).) In the absence of disputed facts, we apply a de novo standard of review to a probate court’s ruling that a beneficiary’s action does not violate a no contest clause. (Giammarrusco v. Simon (2009) 171 Cal.App.4th 1586, 1600; see also Meiri v. Shamtoubi (2022) 81 Cal.App.5th 606, 614 (Meiri)). De novo review also applies where, as here, a question of statutory interpretation must be resolved. (Siskiyou Hospital Inc. v. County of Siskiyou (2025) 109 Cal.App.5th 14, 38.) B. Analysis As the record reflects, the probate court’s ruling on the No Contest Petition sidestepped any analysis of the enforceability of the clause under Part 3. The court did not determine whether the Trust Invalidity Petition was a contest within the meaning of section 21310 and the December 2013 Trust’s no contest clause. Nor did it assess whether the petition was the type of contest mandating enforcement of a no contest clause under section 21311. Instead, the court devoted the entirety of its analysis to evaluating whether the Trust Invalidity Petition was a mere “paper contest” that was exempt from enforcement of a no contest clause, as that concept had been explained in case law predating the enactment of Part 3. We must decide whether the probate court erred in relying on this so- called paper contest exception to insulate the Trust Invalidity Petition from 9 application of the December 2013 Trust’s no contest clause. We conclude it did. The nonstatutory paper contest exception originated from language appearing in Hite, supra, 155 Cal. 436, a 1909 California Supreme Court decision. In Hite, two beneficiaries of a will contested its validity on the ground of nonexecution, mental capacity, and undue influence. (Hite, at p. 438.) The chief beneficiary of the will, which contained a no contest clause, settled with the two beneficiaries, agreeing to allocate some of her financial bequest in exchange for the beneficiaries’ withdrawals of their challenges. (Id. at p. 439.) The two beneficiaries dismissed their contests, and one of them subsequently applied for distribution of her bequest under the will. (Ibid.) Another devisee objected to the beneficiary’s petition, but the trial court sustained a demurrer to these objections. (Ibid.) That devisee then appealed, arguing the distribution-seeking beneficiary had violated the will’s no contest clause. (Ibid.) Hite articulated the rule that whenever one “uses the appropriate machinery of the law to the thwarting of the testator’s expressed wishes, whether he succeed or fail, his action is a contest.” (Hite, supra, 155 Cal. at p. 444.) Thus, even though the distribution-seeking beneficiary had withdrawn her contest to the will, Hite held the will’s no contest clause was enforceable against her because she had “used the machinery of the law, by methods competent and designed to work an overthrow of the testator’s expressed wishes,” and essentially strongarmed another beneficiary into giving up some of her bequest. (Id. at pp. 442–443.) Hite explained, though, that each case “must be controlled by its facts,” and commented that “the mere filing of a paper contest, which has been abandoned without action, and has not been employed to thwart the testator’s expressed wishes” need not be 10 judicially declared a contest. (Id. at p. 444, italics added.) It did not say anything further on this issue. (Ibid.) As is evident, the distinction Hite drew between a mere paper contest and a contest that would trigger a no contest clause was clearly dicta (Jacobs- Zorne v. Superior Ct. (1996) 46 Cal.App.4th 1064, 1076) and provided no guidance for determining what proceedings qualified as a paper contest. Nonetheless, a small number of cases, including Schwartz, supra, 167 Cal.App.4th 733, have referenced this exception in determining if a no contest clause should be enforced in response to a particular action. Here, the probate court relied heavily on Schwartz in its ruling. In Schwartz, the Court of Appeal understood Hite as requiring that a court decide whether an action is a contest that would trigger a no contest clause or a mere paper contest that would not. (Schwartz, supra, 167 Cal.App.4th at pp. 744–745.) There, the beneficiary had filed an action to invalidate the codicil to a will, the trustee had responded, and the parties had participated in two hearings and conducted settlement negotiations before the beneficiary withdrew the challenge a few months after he filed it. (Id. at p. 745.) On these facts, Schwartz held the paper contest exception did not apply because the beneficiary had “used the mechanisms of the court” to “defeat [the testator’s] testamentary and donative intent.” (Ibid.) In ruling on Joanna’s petition, the probate court compared and contrasted the facts of Schwartz with those in this case. Starting with the similarities, the court observed that here, as in Schwartz, Ron filed his petition to defeat Ron Jr.’s testamentary and donative intent, and used “ ‘the mechanisms of the court in attempting to achieve this goal.’ ” But the court found this case was significantly different from Schwartz because Ron had maintained his petition for only eight days. Further, Joanna never 11 responded to the petition or attended any hearings but merely spoke with her attorney about the petition before the mediation in the life insurance lawsuit. Because the Trust Invalidity Petition was “ ‘abandoned without action,’ ” the court deemed it “much more of a ‘paper contest’ ” than the action in Schwartz. Then without discussing or analyzing the statutes in Part 3 that govern application of no contest clauses, the court concluded “section 21310 does not purport to overrule the ability of the court to determine whether the facts supported a finding that the contest was a ‘paper contest’ under Schwartz.” The probate court’s reliance on Schwartz was misplaced. For starters, the Schwartz opinion came out in October 2008, a few months before Part 3 became effective and more than a year before it became operative. Consequently, Schwartz had no occasion to consider Part 3’s statutory definition of “contest” or any of the other statutory provisions that sought to reduce the confusion stemming from the complexity of the prior statutory scheme. (See Sen. Floor Analyses, 3d reading analysis of Sen. Bill No. 1264 (2007–2008 Reg. Sess.) as amended June 18, 2008.) As we explain below, Part 3’s enactment marked a significant development in the law governing no contest clauses. Looking to the plain meaning of the statutory language, we take section 21310, subdivision (a), to mean just what it says—namely, that a contest occurs upon a beneficiary’s filing of a pleading that falls within the scope of the no contest clause, regardless of whether and to what extent the beneficiary has availed himself or herself of the machinery of the court to move that pleading through litigation. (See Voices of the Wetlands v. State Water Resources Control Bd. (2011) 52 Cal.4th 499, 519 [“we begin with the plain, commonsense meaning of the language used by the Legislature” and where the language is unambiguous “the plain meaning controls”].) 12  Other provisions in the statutory scheme reinforce our conclusion. Section 21310, subdivision (c), defines a “no contest clause” as a provision in an instrument that, if enforced, would penalize a beneficiary for “filing a pleading” in any court. (Italics added.) Section 21311, which identifies the types of contests that mandate enforcement of a no contest clause, similarly utilizes the terms “pleading” and “filing” to describe two types of contests without any mention of the contesting party’s continued use of court processes to advance the contest. (See § 21311, subd. (a)(2)–(3) [a “pleading” to challenge the transfer of property and the “filing” of a creditor’s claim are contests subject to a no contest clause].) And notably, section 21311, subdivision (a)(3), specifies that, in addition to the “filing” of a creditor’s claim, the “prosecution” of an action based on a creditor’s claim is also a contest subject to a no contest clause. (§ 21311, subd. (a)(3).) That this statutory provision uses the term “prosecution” in specifying an alternate type of contest involving a creditor’s claim suggests the Legislature knew how to define a contest in terms that connote advancement of litigation beyond the mere filing of a pleading, and yet chose not to do so for situations outside the creditor’s claim context. (See In re Jennings (2004) 34 Cal.4th 254, 273.) The probate court seemed to be of the view that section 21310’s enactment did not purport to “overrule” a court’s ability to “determine whether the facts supported a finding that the contest was a ‘paper contest’ under Schwartz.” We see no legal or logical basis for that view. As explained, the language in section 21310, subdivision (a), defines a contest as “a pleading filed with the court,” without regard to how long or extensively the pleading is pursued. Giving effect to the plain terms of the statute would not result in absurd consequences the Legislature did not intend. (Sunflower Alliance v. Department of Conservation (2026) 20 Cal.5th 13 22, 43.) Rather, it promotes the Legislature’s goal of reducing confusion and uncertainty over what would or would not constitute a contest. (Sen. Floor Analyses, 3d reading analysis of Sen. Bill No. 1264 (2007–2008 Reg. Sess.) as amended June 18, 2008.) Conversely, implying a paper contest exception into the statutory scheme would maintain the uncertainty of the law that predated Part 3’s enactment, contrary to the Legislature’s intent. Indeed, preserving the exception would necessitate ongoing judicial determinations regarding what constitutes a contest, even though the Legislature acted to repeal the safe harbor declaratory relief procedure. (Donkin, supra, 58 Cal.4th at p. 427.) In seeking affirmance of the probate court’s ruling, Ron points to section 21313, which states in full: “This part is not intended as a complete codification of the law governing enforcement of a no contest clause. The common law governs enforcement of a no contest clause to the extent this part does not apply.” Ron’s reliance on this provision is misplaced. To begin, Part 3 does apply to the December 2013 Trust because the instrument post- dates the law’s date of effectiveness. (See § 21315, subd. (a).) More to the point, the language of section 21310 defines a contest in terms that reach the situation here. That is, subdivision (a) of the section states a “contest” refers to the filing of a pleading that would result in a penalty “if the no contest clause is enforced,” while subdivision (c) defines a “no contest clause” as a “provision . . . that, if enforced, would penalize a beneficiary for filing a pleading in any court.” Taken together, the statutory language leaves no wiggle room for pleadings, like Ron’s, that are filed but then withdrawn before they cause a trust to engage in protracted litigation. Lastly, Ron asserts holding that a contest can be triggered by the mere filing of a pleading would result in “automatic liability” for a beneficiary once 14 an action is filed. This, he claims, would produce various undesired results including unjustified forfeitures. The argument is not well taken. Section 21310, subdivision (a) does not define a contest as any pleading filed with a court. Rather, the pleading must be one “filed with the court by a beneficiary that would result in a penalty under a no contest clause.” (Italics added.) This provision reinforces the principle that it is the testator’s intentions that control. (Meiri, supra, 81 Cal.App.5th at pp. 613–614.) In this regard, we note a testator could choose to protect beneficiaries who file paper contests by exempting such contests from enforcement of a trust instrument’s no contest clause. Finally, and in any event, the concern Ron voices is a policy matter that should be directed to the Legislature, which is better suited to consider and respond to it. (See Regents of University of California v. Superior Ct. (2018) 29 Cal.App.5th 890, 907.) In sum, the probate court erred when it ruled the Trust Invalidity Petition was a paper contest that did not trigger the December 2013 Trust’s no contest clause. We therefore reverse the judgment and remand so the court may determine if the Trust Invalidity Petition constitutes a contest under section 21310 and, if so, whether the no contest clause is enforceable under section 21311.3 DISPOSITION The judgment is reversed and remanded for proceedings consistent with this opinion. The order awarding costs to Ron is also reversed. (Merced Cnty. Taxpayers’ Assn. v. Cardella (1990) 218 Cal.App.3d 396, 402 [an award of costs 3 The parties dispute whether the Trust Invalidity Petition was a direct contest brought without probable cause under section 21311, with Ron asserting that probable cause supported his petition. We express no view on this issue, as it is better addressed by the probate court on remand. (See Haworth v. Superior Ct. (2010) 50 Cal.4th 372, 385 [trial courts are generally in a better position to make factual findings].) 15 “falls with a reversal of the judgment on which it is based”].) Joanna is entitled to recover her costs on appeal. (Cal. Rules of Court, rule 8.278(a)(3).) _________________________ Fujisaki, J. WE CONCUR: _________________________ Tucher, P.J. _________________________ Rodríguez, J. 16 Trial Court: Alameda County Superior Court Trial Judge: Hon. Delbert C. Gee Counsel: Haskett Law Firm, P.C., Amber C. Haskett; Buchalter a Professional Corporation, Robert Collings Little for Petitioner and Appellant. Njelita Law Offices, Maxwell Nnamdi Njelita for Respondent. Nelson v. Nelson (A159271/A160751) 17