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Law Offices Of John R. Walton, P.C. John R. Walton (Bar No. 130666) Walter W. Moore (Bar No. 115985) 35 N. LAKE AVE., SUITE. 700 PASADENA, CA 91101 TEL: (626) 578-6000 FAX: (626) 578-6012 Attorneys for Plaintiffs James E. Caldwell, Jr. and Hannah C. Sowerwine, individually and as Trustees of the Hannah Locke Carter Trust, and Anne Caldwell and Jonathan A. Caldwell, individually
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SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF LOS
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ANGELES - WEST DISTRICT - SANTA MONICA COURTHOUSE
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JAMES E. CALDWELL, JR. and HANNAH C. SOWERWINE, individually and as Trustees of the Hannah Locke Carter Trust, and ANNE CALDWELL and JONATHAN A. CALDWELL, individually Plaintiffs, vs. REGENTS OF THE UNIVERSITY OF CALIFORNIA, and DOES 1 TO 50, inclusive,
CASE NO. SC 116946 NOTICE OF RULING RE PLAINTIFFS' MOTION FOR PRELIMINARY INJUNCTION Date: 7/27/12 Time: 9:30 a.m. Dept: O Judge: Hon. Lisa Hart Cole Complaint Filed: 5/4/12 Case Mgt. Conf: 8/27/12
Defendants.
20 21 22 23 24 25 26 27 28 Notice of Ruling Re Plaintiffs' Motion for Preliminary Injunction
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TO ALL PARTIES AND ATTORNEYS OF RECORD: PLEASE TAKE NOTICE
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THAT the Court: granted the plaintiffs' motion; adopted the Court's tentative ruling (attached)
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as its final ruling; imposed a temporary restraining order effective immediately through August
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6, 2012; set an undertaking for the preliminary injunction in the amount of $110,000, which
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must be posted on or before August 6, 2012; and directed plaintiffs' counsel to submit a
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proposed order on or before August 3, 2012.
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Dated: July 27, 2012
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Law Offices Of John R. Walton, P.C. By__________________________________ Walter W. Moore Attorneys for Plaintiffs
11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 Notice of Ruling Re Plaintiffs' Motion for Preliminary Injunction
Los Angeles Superior Court - Civil Tentative Ruling - Result
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Civil 路 Tentative Rulings DEPARTMENT O LAW AND MOTION RULINGS (Material re other case deleted)
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(Material re other case deleted)
Case Number: SC116946
Hearing Date: July 27, 2012
Dept: O
SC116946 CALDWELL ET AL v. REGENTS Plaintiffs’ Motion for Preliminary Injunction is GRANTED. Plaintiffs establish a reasonable likelihood of prevailing on the merits of their claim based on their characterization of the Regents’ promise to maintain the gardens in perpetuity as consideration given as part of a bargained for exchange. Plaintiffs also demonstrate irreparable harm if the injunction does not issue. The hardships also balance in Plaintiffs favor. ANALYSIS: Plaintiffs seek an injunction enjoining the Regents from selling the Garden Parcel while this action is pending. According to Plaintiffs, if the injunction does not issue, they will suffer irreparable harm due to the sale and loss of unique piece of real estate. Plaintiffs also claim they will prevail because (1) the Agreement and Amendments clearly require the Regents to retain the Garden Parcel in perpetuity under the name the Hannah Carter Japanese Garden; (2) the Regents have admitted in numerous documents that the Agreement and Amendments so require; (3) the Alameda County action has no bearing on this action, since Plaintiffs were never provided notice of that action and are not bound thereby; and (4) on reply and at the prior hearing, the Alameda County judgment is void for lack of subject matter jurisdiction.
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In response, the Regents make two arguments pertaining to Plaintiffs’ probability of prevailing on the merits. First, the Regents argue this action is an improper collateral attack on the Alameda County judgment, which clearly gives the Regents a right to sell the Garden parcel. Second, the Regents maintain Plaintiffs have no standing to enforce the requirements under the Agreement and Amendments because the Properties are held in charitable trust. In addition, Regents argues lack of immediate harm based on the lack of any impending sale. According to Regents, bids on the Garden Parcel are not even due until 8/14/12. The decision to grant a preliminary injunction rests in the sound discretion of the trial Court and will not be reversed unless the trial Court exceeded the bounds of reason or contravened the uncontradicted evidence. The trial Court must consider three interrelated factors when deciding whether to issue preliminary injunctions: (1) balancing of hardships the interim harm the applicant is likely to sustain if the injunction is denied as compared to the harm to the defendant if it issues; (2) likelihood of prevailing on the merits the likelihood the applicant will prevail on the merits at trial; and (3) irreparable harm/inadequacy of legal remedies a real threat of immediate and irreparable injury due to the inadequacy of legal remedies. See CCP § 526(a)(2); see also Choice In Education League v. L.A. School District (1993) 17 Cal.App.4th 415, 422. In deciding whether to issue a preliminary injunction, a court must weigh two interrelated factors: (1) the likelihood that the moving party will ultimately prevail on the merits, and (2) the relative interim harm to the parties from issuance or non-issuance of the injunction. Butt v. State of California, 4 Cal. 4th 668, 677-78 (1992); Alliant Ins. Services, Inc. v. Gaddy, 159 Cal. App. 4th 1292, 1299 (2008). "The trial court's determination must be guided by a ‘mix' of the potential-merit and interim-harm factors; the greater the plaintiff's showing on one, the less must be shown on the other to support an injunction." Butt, 4 Cal. 4th at 678. The general objective in issuing a preliminary injunction is to preserve the status quo. See Continental Baking Co. v. Katz (1968) 68 Cal.2d 512, 528. In addition, it is rarely appropriate to grant a preliminary injunction that not only does not preserve the status quo but also grants the ultimate relief sought in the action, before trial. See Paramount Pictures Corp. v. Davis (1965) 228 Cal.App.2d 827. A preliminary injunction must not issue unless the plaintiff can demonstrate reasonable probability that he will prevail on the merits, regardless of the balancing of the hardships or the irreparable nature of the harm. See San Francisco Newspaper Printing Co. v. Superior Court (1985) 170 Cal.App.3d 438, 442. Although the Regents make arguments regarding the immediacy of the harm, the focus of the parties’ dispute is Plaintiffs’ likelihood of prevailing on the merits. The Regents rely on two arguments based on procedure and standing. http://www.lasuperiorcourt.org/TentativeRuling/UI/Result.aspx?Referer=Index
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Because the nature of the transaction between Edward Carter and UCLA determines both of these arguments, it will be addressed first. I. Likelihood of Prevailing on the Merits A. Nature of Conveyance to UCLA—Bargained for exchange “It is essential to the existence of a contract that there should be: 1. Parties capable of contracting; 2. Their consent; 3. A lawful object; and 4. A sufficient cause or consideration.” C.C. 1550. Consideration may be either (1) a benefit conferred or agreed to be conferred upon the promisor or some other person; or (2) a detriment suffered or agreed to be suffered by the promisee or some other person. See C.C. 1605. “Thus, a benefit need not be given to the promisor, but may be given to a third person.” 1 Witkin, Summary (10th ed. 2005) Contracts , §203, p. 237. Plaintiffs maintain the underlying transfer of the Residential Parcel to UCLA was a bargained for exchange pursuant to written contract, not a donation or gift with restrictions giving rise to a charitable trust. As characterized by Plaintiffs, UCLA’s obligation to maintain the Garden Parcel in perpetuity as a Japanese garden named Hannah Carter Japanese Garden was bargained for consideration, without which no exchange would have occurred. The 1964 Agreement and Amendments support Plaintiffs’ interpretation. Any confusion arises from the 1982 Amendment, which can reasonably be interpreted to be an ordinary real estate transaction between UCLA and Edward Carter. The 1964 Agreement documented Edward’s future promise to “give” the Residential Parcel to UCLA at death or during his lifetime “without consideration” and subject to a life estate in Carter and a lease estate in Carter’s surviving spouse. See Plaintiffs’ RJN, Ex. A. Other promises by UCLA pertained to its use and disposition of the Residential Parcel and did not in any way restrict its rights as to the Garden Parcel, which it fully owned. The 1964 Agreement characterized Carter’s future transfer as a gift without consideration. On 2/8/71, Carter conveyed full title to the Residential Property by grant deed without consideration as contemplated in the 1964 Agreement. The gift was subject to certain use restrictions and interests as enumerated in the 1964 Agreement. Even if the 1964 Agreement and 1971 conveyance gave rise to a charitable trust, the 1982 Amendment changed the nature Edward’s 1971 conveyance. While the 1964 Agreement contemplated Edward’s gifting of the Residential Parcel without consideration, the 1982 Amendment required UCLA to provide consideration to Edward for conveyance of the Residential Parcel and his agreement to change the restrictions set forth under the 1964 Agreement. Pursuant to the 1964 Agreement, if the University no longer desires to use the residence for the stated purpose, it agrees to sell the residence and garden together. In the 1982 Amendment, the University gave up its right to sell the garden with the residence in exchange for the option to sell the house alone and keep the garden according to the revised terms. The consideration provided http://www.lasuperiorcourt.org/TentativeRuling/UI/Result.aspx?Referer=Index
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to Edward by UCLA was UCLA’s contractual promise that it “retain the garden portion in perpetuity” and to name the gardens the Hannah Carter Japanese Gardens. By requiring UCLA to give him something belonging to them in exchange for his transfer, Carter’s transfer was no longer the “gift” “without consideration” as described in the 1964 Agreement. See e.g. Gonzales & Co. v. Department of Alcoholic Bev. Control (1984) 151 Cal.App.3d 172, 175 (“gift” “commonly defined as “something that is voluntarily transferred by one person to another without compensation”); see also § 1146 (“gift is a transfer of personal property, made voluntarily, and without consideration”). Plaintiffs sufficiently establish a reasonable probability of prevailing on the merits of this action based on their characterization of the transaction as an enforceable contractual exchange of consideration between UCLA and Edward Carter. In exchange for conveyance of the residential parcel, Carter accepted UCLA’s promise to keep the Garden Parcel as the Hannah Carter Japanese Gardens in perpetuity. Plaintiffs also establish that UCLA has breached the 1982 Amendment by selling and dismantling the Gardens and taking steps to sell the Garden Parcel entirely, including obtaining a probate court judgment allowing them to sell the Garden Parcel. In addition, the Regents’ own conduct in connection with the post-1964 amendments supports Plaintiffs’ position that the 1971 conveyance did not give rise to a charitable trust. If the parcels were held in a charitable trust after the residential parcel was conveyed in 1971, all of the formalities required to change or alter the terms and obligations under the trust would have applied to the 1982 Amendments and the 1999 Amendment. However, there was no such adherence to these formalities. The Regents went to Edward Carter directly to change the purported trust instructions and for governance of the trust. The Regents did not file a petition with the Alameda Probate Court, as they did in 2010. Despite this, the Regents maintains the conveyance of the Residential Property was a gift which gave rise to a charitable trust subject to the requirement that the Gardens be maintained as the Hannah Carter Japanese Gardens. “A charitable trust is a fiduciary relationship with respect to property arising as a result of a manifestation of an intention to create it, and subjecting the person by whom the property is held to equitable duties to deal with the property for a charitable purpose. The elements essential to its creation are a proper manifestation by the settlor of an intention to create a trust, a trust res, and a charitable purpose promoting the welfare of mankind or the public at large, of a community, or of some other class of persons which is indefinite as to numbers and individual identities.” City of Palm Springs v. Living Desert Reserve (1999)70 Cal.App.4th 613, 620. A donation or gift to public or government entity may give rise to a charitable trust. Id. at fn 3. The Regents cites a plethora of cases involving donors who gifted funds or property to an organization for charitable purposes subject to restrictions regarding the use of the funds or property. See e.g. Patton v. Sherwood (2007) 152 Cal.App.4th 339, 346-347; L.B. Research and Educ. Foundation v. UCLA Foundation (2005) 130 Cal.App.4th 171; City of Palm Springs v. Living Desert http://www.lasuperiorcourt.org/TentativeRuling/UI/Result.aspx?Referer=Index
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Reserve (1999)70 Cal.App.4th 613, 620; Holt v. College of Osteopathic Physicians and Surgeons (1964) 61 Cal.2d 750, 753. However, these cases all involve a donor or the donor’s successors-in-interest attempting to enforce a restriction imposed on the gifted property. Here, Plaintiffs are attempting to enforce a promise the Regents made as to its own property, the Garden Parcel, in exchange for the donation or conveyance of the Residential Parcel. This is a significant factual distinction. When a donor imposes restrictions on a gift, the source of that power is the bundle of rights he possesses as owner of the property to be gift. The restriction itself is not part of an exchange under those circumstances. However, here, the alleged donation was the Residential Parcel, not the Garden Parcel. At the time of the 1982 Amendment, Edward Carter had no legal right to impose any restrictions on the Garden Parcel. As such, the 1982 Amendment’s requirement that UCLA retain the Garden Parcel in perpetuity as the Hannah Carter Japanese Gardens was not a “condition,” “limitation” or “restriction” rooted in Edward Carter’s rights in his own property, the Residential Parcel. It was instead a benefit Edward Carter bargained for and extracted from UCLA’s bundle of rights in the Garden Parcel. If the Garden Parcel was held as a charitable trust from the time of its acquisition, why didn’t the Regents need to seek court approval to enter into the 1982 Amendment? In supplemental briefing, Regents argues that if construed as a contractual obligation, the requirement that the Regents retain the property in perpetuity is an unenforceable restriction on alienation. This is a new argument that Plaintiffs have not had the opportunity to respond to. However, it does not detract from Plaintiffs’ showing that they have a reasonable likelihood of prevailing. Civil Code section 711 provides: “Conditions restraining alienation, when repugnant to the interest created, are void.” “Although at one time this section was construed to prohibit all restraints on alienation regardless of degree or duration, it is now settled that only unreasonable restraints are invalid. In determining whether a restraint is unreasonable, the court must balance the justification for the restriction against the quantum of the restraint. The greater the restraint, the stronger the justification must be to support it.” Taormina Theosophical Community, Inc. v. Silver (1983) 140 Cal.App.3d 964, 973. Thus, the determination of the restraint’s reasonableness is a fact intense inquiry. Plaintiffs persuasively argue that the restraint was part of a bargained for exchange, that it is not inimical to any public policy and serves the public by preserving a unique garden. There is a reasonable possibility that the restraint will not be considered void. B. Collateral Attack on the Alameda County Judgment Plaintiffs’ action would defeat the rights acquired by Defendant Regents in the Alameda County judgment. See 8 Witkin, Cal. Proc., Attack on Judgment in Trial Court, §7(3). As such, it qualifies as a collateral attack on the Alameda County Judgment. Collateral attacks on an existing judgment are permissible in only three situations, where the court (1) lacked subject matter jurisdiction; (2) lacked personal jurisdiction; and (3) acted in excess of her jurisdiction. Id. at §6, p. 590. http://www.lasuperiorcourt.org/TentativeRuling/UI/Result.aspx?Referer=Index
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Based on the discussion above, Plaintiffs establish a likelihood that they will succeed in collaterally attacking the probate court judgment on jurisdictional grounds. First, the probate court’s jurisdiction was based entirely on the Regents claim that the Residential and Garden Parcels were held in a charitable trust and the restriction regarding the Garden Parcel was a restriction on the trust res. As discussed above, Plaintiffs sufficiently establish the exchange was not a gift, it did not give rise to a charitable trust and even if there were a charitable trust, it would only apply to the donated property, which is the Residential Parcel. The probate court therefore had no subject matter jurisdiction to release the Regents from its contractual obligation under the 1982 Amendment. Second, under Plaintiffs’ theory of the case, the probate court proceeding was also void because it acted in excess of jurisdiction for lack of due process. Under Probate Code §17203, certain parties must receive notice of a petition brought under Probate Code §17200. Defendant Regents incorrectly states that section 17203 only requires that the trustees and beneficiaries of the trust receive notice of a 17200 petition and in the case of charitable trusts, the Attorney General. However, Probate Code §17203(b) also requires notice be given to “any person, other than the trustee or beneficiary, whose right, title or interest would be affected by the petition and who does not receive notice pursuant to subdivision (a).” Section 17203(c) also provides for notice to the heir or devisee of such a person if that person has been dead at least 40 days and no personal representative has been appointed for the estate of that person and that person’s right, title or interest has not passed to any other person under Division 8, §13000 of the Probate Code. Plaintiffs’ evidence establishes they had a legally enforceable contractual right or interest in the Garden Parcel by virtue of the 1982 Amendment. Specifically, they had a legal or contractual right to have UCLA retain and maintain the Garden Parcel as the Hannah Carter Japanese Gardens in perpetuity. Given that the Regents’ probate petition in Alameda County was specifically seeking an order allowing them to sell the Garden Parcel, Plaintiffs’ right and interest in the Garden Parcel would have been affected thereby and they were entitled to notice under PC §17203(b) and/or (c). C. Standing With regard to standing, Plaintiffs establish standing as successors in interest Hannah Carter and as Trustees of the Hannah Locke Carter Trust. Under the 1982 and 1999 amendments, Hannah Carter held a contractual right to require that UCLA retain the Garden Parcel as the Hannah Carter Japanese Gardens in perpetuity. Defendant Regents argue that Plaintiffs do not have standing to enforce the promise, because the promise is merely a condition placed upon a gift that gave rise to a charitable trust. For the reasons discussed above, Plaintiffs have established the likelihood of prevailing on their claim that the conveyance was a bargained for exchange and not a gift. http://www.lasuperiorcourt.org/TentativeRuling/UI/Result.aspx?Referer=Index
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II. Irreparable Harm and Balancing of the Equities Plaintiffs sufficiently establish irreparable harm if the Regents are not enjoined from selling the Garden Parcel. The Regents do not dispute this. In cases of ordinary real property, monetary damages are considered inadequate. Real property is usually deemed “unique,” so that injury or loss cannot be compensated in damages, and injunctive relief is therefore readily granted. See Civ.C. § 3387—damages presumed inadequate for breach of agreement to convey real property. Monetary damages are certainly inadequate based on Plaintiffs’ evidence that the Hannah Carter Japanese Gardens is of unique historical and cultural significance. See Declaration of C. Birnbaum. For these same reasons, the equities also balance in Plaintiffs’ favor. The Regents fail to provide any satisfactory argument on these issues in its favor. At best they claim that the sale will not happen within the next few months. The harm is sufficiently immediate given the Regents’ statement that they will be taking bids next month, nor would it make sense to wait until a buyer is located and a full sale in process to issue the injunction. Generally, the purpose of an injunction is to maintain the status quo. See Continental Baking Co. v. Katz (1968) 68 Cal.2d 512, 528. The Regents do not persuasively establish that this case is one that should depart from this general rule. Plaintiffs’ Request for Preliminary Injunction is GRANTED.
Evidentiary Objections: Defendant’s Objections 1-3. SUSTAIN 4. OVERRULE 5-8. SUSTAIN 9-10. SUSTAIN Plaintiffs’ Objections 1. OVERRULE 2. OVERRULE 3. OVERRULE 4-5. SUSTAIN 6. OVERRULE
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PROOF OF SERVICE BY EMAIL
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State of California County of Los Angeles
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I am employed in the County of Los Angeles, State of California. I am over the age of 18 and not a party to the within action. My business address is 35 N. Lake Ave., Suite 700, Pasadena, California 91101.
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On July 27, 2012, I served the foregoing document(s), entitled, "NOTICE OF RULING
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RE PLAINTIFFS' MOTION FOR PRELIMINARY INJUNCTION" on the interested parties in
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this action by email, per a written stipulation of the parties by counsel, to the following person(s): David Moran, Esq. Manatt Phelps & Phillips LLP 11355 W Olympic Blvd Los Angeles, CA 90064 dmoran@manatt.com I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on July 27, 2012 in Pasadena, California.
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___________________________________ Walter W. Moore
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