Forum Non Conveniens

Whenever a client states that they have assets outside of California or abroad, it is standard to tell the client that administration of such assets will take place in that jurisdiction. For example, if the client is an heir to an Iowa farm, the courts of Iowa provide the judicial avenue for redress. Similarly, if the client is an heir to a Texas cattle ranch, the courts of Texas will be the place for adjudication. However, just like almost every law, there are exceptions. This brings up a recent appellate decision involving a California lawsuit centered around real estate transactions in Iran. Yes Iran.  

Aghaian v. Minassian, ___ Cal.App.4th ___ (2015) 

The plaintiffs were the children and heirs of Iranian land owners, Gagik Galstian and Knarik Galstian, who had executed powers of attorney in favor of the defendants to reclaim their land in Iran.  The couple had fled Iran in 1978 as the Iranian Revolution was gaining momentum. Unable to divest themselves of all their Iranian assets prior to their departure, their properties fell into limbo. Years later, the couple learned from the Iranian government that they could return to Iran and reclaim all of their property.

To facilitate the reclamation, the couple executed powers of attorney in favor of the defendants, Iranian nationals. Inexplicably, the defendants transferred the properties to themselves for little or no consideration, per the opinion. Naturally, the couple sought legal redress in Iran but the success of such endeavors was unknown given that the opinion did not address it.

The couple died in 2012 and their children brought the instant suit in Los Angeles County Superior Court in 2013. The defendants moved to dismiss the case, inter alia, on the grounds of forum non conveniens. This legal doctrine permits courts to "exercise their discretionary power to decline to proceed in those causes of action which they conclude, on satisfactory evidence, may be more appropriately and justly tried elsewhere." Price v. Atchison, T. & S. F. Ry. Co. (1954) 42 Cal.2d 577, 584. Here, the defendants argued that Iran, not Los Angeles County Superior Court, was the proper venue for litigation.

The trial court agreed and dismissed the case on the grounds of forum non conveniens. On appeal, this decision was reversed by the California Court of Appeal. 

It found that the courts of Iran did not provide an adequate alternative forum. The opinion noted that "the evidence is overwhelming that Iranian courts discriminate against women and non-Muslims." For example, "the testimony of a woman counts for half the value of that of a man." (Author's comment: I have no idea how you quantify that). Furthermore, Iranian courts unequally treat Muslims over non-Muslims. The three litigants in this case involved 2 women and all the plaintiffs were not Muslim. Hmmm. Suffice to say, I was not surprised by the decision. 

Heggstad Petition

A Heggstad petition is a tool used to judicially transfer real estate into a revocable trust when the settlor failed to do so during their lifetime. That is, the settlor created a trust but never formally transferred their real estate into the trust via a deed.  

A Heggstad petition is a common procedure for a number of reasons. 

First, many people engage in do-it-yourself estate planning and fail to appreciate the finer details of funding their trust. Simply because you declare real estate to be a trust asset does not formally make it a trust asset. Instead one must transfer title from themselves to themselves as trustee of their trust to do so. 

Second, many lenders will not do a re-finance if title is held in the name of the trust. The lender will insist that the borrowers transfer title out of their trust and into their own names before the lender will extend credit. The problem is that borrowers occasionally forget to transfer their home back into the trust once the re-finance is complete. The borrowers then pass away with title being in their names instead of the trust's name.    

The Heggstad petition needs to be filed in the county where the principal place of administration of the trust is located. Prob C § 17005. For instance, if the trustee lists Campbell, CA as the principal place of administration, Santa Clara County Superior Court is the appropriate court. A common practice is for attorneys to put down their office address as the principal place of administration. This allows the attorney to file a Heggstad petition in their "home" county. By filing in the attorney's home county, it is more convenient for the attorney because of reduced travel time and the probate judge is arguably more familiar with the attorney if they appear in their courtroom regularly. I always utilize this practice given the benefits of doing so and wonder why all attorneys do not.
 
In order to file a Heggstad petition, the petitioner must cite the relevant probate code section that authorizes the probate court to have jurisdiction over the matter. The relevant probate code section is Prob C § 850(a)(3)(B). It reads in relevant part:

(a) The following persons may file a petition requesting that the court make an order under this part:
(3) The trustee or any interested person in any of the following cases:
(B) Where the trustee has a claim to real or personal property, title to or possession of which is held by another. 

Once the petition is filed and the order granted, the attorney has a certified copy of the order recorded in the county where the real estate sits. The recorded order serves as proof of the transfer of title to the settlor's trust.

Filing a Probate Petition - Venue

When filing a lawsuit against the trustee of a revocable trust, such needs to be done in the appropriate venue. That is, the petition has to be filed in the appropriate superior court. Otherwise the lawsuit cannot be heard because the court does not have jurisdiction to hear the case. For instance, a disgruntled beneficiary in San Francisco cannot file a petition to have the trustee removed in San Francisco County Superior simply because they live there. The petitioner needs to comply with the venue requirement when filing the petition. 

California law dictates that the appropriate venue is the county where the trust’s principal place of administration is located.
Probate Code §17005(a)(1). In practice, this is often the trustee's home address or their attorney's office address. Also, when a beneficiary has received a Probate Code §16061.7 notice, such is required to list the principal place of administration of the trust. Probate Code §16061.7(g)(3). 

For example, assume that Bobby Beneficiary, a resident of Los Gatos, CA, is a residual beneficiary of the trust estate of Samuel Settlor. The successor trustee is Thomas Trustee, a resident of Oakland, CA. Samuel's trust estate solely consists of a home in Bolinas, CA. From the facts given, a petition by Bobby against Thomas as trustee would need to be filed  in Alameda County Superior Court rather than Santa Clara or Marin County Superior Court. The reason being is that Thomas' home would be the location for the trust's principal place of administration.

While venue might seem like an afterthought, the superior court in which the petition is filed can be relevant. First, certain probate courts have smaller dockets than others. One county might be able to hear the petition in 6-8 weeks while another county might take 12 weeks. Second, the probate judge in a particular county might be more or less receptive to certain petitions than other counties. For instance, some judges are apt to routinely grant Heggstad petitions, while other judges are much more demanding. Third, there is the time and expense of having to travel to a particular courthouse to file the petition. From the above example, it would be much more convenient for Bobby to file the petition in Santa Clara County than in Alameda County. It is about 15 minutes from downtown Los Gatos to the probate court in Santa Clara County, 191 N 1st Street, San Jose. Whereas it is about 1 hour, without traffic, from downtown Los Gatos to the probate court in Alameda County, 2120 Martin Luther King Jr Way, Berkeley.  This travel time is compounded if Bobby has to attend multiple hearings. Fourth, the written (and unwritten) local rules of each particular probate court differ. Hence if Bobby hires an attorney based in Los Gatos, he or she might be very familiar with the local rules of Santa Clara County but maybe not the local rules of Alameda County.