Matter of Tribal Capital Management Relations

Case Number

25PR00108

Case Type

Hearing Date / Time

Thu, 07/03/2025 - 09:00

Nature of Proceedings

Petition: Determine Claim to Property

Tentative Ruling

The petition for order and declaratory relief is denied.

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Background:

Petitioner Tribal Capital Management Relations (Petitioner or TCMR) is a tax-exempt religious and apostolic organization. (Petition, ¶ 1.)

Jose A. Maldonado and Rosa E. Amaya were the settlors and co-trustees of the Flor De Luna Family Trust dated March 23, 2011 (Trust). (Petition, ¶ 2.) Maldonado is believed to be the surviving trustee of the Trust (Trustee), which is the sole or partial heir or heir apparent of Amaya’s estate interests. (Ibid.)

Petitioner alleges that Amaya, a founding TCMR member, died having a personal property interest in TCMR for which an interest is claimed to belong to TCMR and its remaining member, Douglas Smith. (Petition, ¶¶ 3, 4.)

The petition asserts the following facts:

TCMR was formed on June 3, 2013, and its principal place of business has always been in Rancho Cucamonga, California. (Petition, ¶ 10.) TCMR’s initial bylaws limit its membership to the founding members, Amaya (president and executive trustee) and Smith (secretary, trustee and general counsel), and both members constituted the governing board of TCMR acting as its governing body. (Id., ¶ 12.)

TCMR’s articles of organization provide that its dissolution and windup are commenced upon resignation of either of the founding members or by vote, and neither of its founding members resigned before, during, or after Amaya’s death on January 17, 2025. (Petition, ¶ 13.) TCMR’s amended articles of association and bylaws do not provide for the termination of its membership and only authorize dissolution upon resignation or vote which has not occurred. (Ibid.)

To date, no proposed external operations have been conducted, no funds have been solicited or donated, no income or revenue has been generated, and no assets or property have been acquired by TCMR. (Petition, ¶ 14.) TCMR’s net assets were negative $618.65, reflecting contingent liabilities for its tax-exempt status application fee to the IRS and related postage. (Id., ¶ 15.) This is set forth in a “Statement of Financial Position” which is attached as part of exhibit C to TCMR’s supplement to petition, filed on April 23, 2025.

Since December 31, 2022, TCMR has incurred a small measure of additional contingent liabilities for additional postal fees related to subsequent IRS transmittals from February 22, 2022, through June 29, 2022, bringing its total net assets to date approximately negative $1,000 in contingent liabilities. (Petition, ¶ 15.)

TCMR’s sole property was, has been and is its legal files, created and maintained contemporaneously throughout its formation and existence as a result of internal operations activities. Those legal files include a legal due diligence library with related legal work product and proprietary development references. (Petition, ¶ 16.)

The instant petition seeks a declaration (1) that TCMR has the right to fill the board vacancy left by Amaya’s death, and that Smith, the sole remaining board member who resides in the County of Santa Barbara, can fill this vacancy, (2) that there is no TCMR income available for distribution, and (3) that there are no TCMR property or personal rights, such as voting, which are subject to distribution or transfer to Amaya’s successors in which she had a interest at the time of her death. (Petition, ¶¶ 5, 6.)

No opposition has been filed.

Analysis:

(1)      Probate Code Section 850

Petitioner brings this proceeding under Probate Code section 850 which governs probate litigation over adverse claims to property. (See Parker v. Walker (1992) 5 Cal.App.4th 1173, 1186.) Section 850 proceedings may be commenced where “decedent died in possession of, or holding title to, real or personal property, and the property or some interest therein is claimed to belong to another” (Prob. Code, § 850, subd. (a)(2)(C)), and where “decedent died having a claim to real or personal property, title to or possession of which is held by another.” (Prob. Code, § 850, subd. (a)(2)(D.)

Under the above circumstances, the personal representative, pursuant to section 850, subdivision (a)(2)(C), or a third-party claimant, pursuant to section 850, subdivision (a)(2)(D), or any other “interested person,” may seek an adjudication of the adverse claims in the probate court, requesting a court order directing the conveyance or transfer of title or possession accordingly. (Prob. Code, § 850(a)(2).)

Section 850 proceedings may be brought by or against “strangers” to the estate or parties who are in “privity” with (i.e., “interested” or claiming through) the estate. (Estate of Myers (2006) 139 Cal.App.4th 434, 440-441 [creditor of estate presumptively qualifies to initiate section 850 proceeding].)

After a full evidentiary hearing, if the court is “satisfied” that a conveyance or transfer pursuant to the section 850 petition is warranted, it “shall” authorize and direct the person with title or possession (personal representative or other person, as the case may be) to execute a conveyance or transfer to the person entitled to the disputed property or grant “other appropriate relief.” (Prob. Code, § 856.)

Section 850 is not a proper basis for the instant petition. The Legislature intended section 850 to provide a mechanism for probate courts to resolve ownership disputes with respect to property constituting assets of an estate. (Parker v. Schwarz (2022) 84 Cal.App.4th 418, 426.) As the court in Parker, supra, at page 429 observed, the statutory scheme’s purpose is to effect a conveyance or transfer of property belonging to a decedent or a trust or another person under specified circumstances, to grant any appropriate relief to carry out the decedent’s or settlor’s intent, and to prevent the looting of estates. It provides the probate court with a mechanism to determine rights in property belonging to a decedent or to someone else. “[T]he statutory scheme was designed to allow conveyances or transfers of real and personal property into or out of an estate, trust, conservatorship, or guardianship estate as part of an expedited court proceeding. Its aim was to allow probate courts to resolve controversies surrounding title to property” and to determine property rights involving estates. (Id., at p. 430.)

Thus, section 850 provides a way for estates to resolve ownership disputes with respect to property constituting assets of an estate, allowing an estate’s personal representative to recover assets for the estate, or a claimant to recover from the estate an asset that rightfully belonged to the claimant. (Parker, supra, 84 Cal.App.4th at p. 430.)

The petition here fails to demonstrate that Amaya’s personal property interest in TCMR had any inherent value. To the contrary, the petition alleges that TCMR has no net assets. The petition also alleges that Amaya’s death terminated her membership and that it could not pass on to her heirs. (Petition, ¶ 54.) Finally, the petition fails to allege that the Trustee, Maldonado, disputes TCMR’s claim, or that the Trust or the Trustee hold any assets which belong to TCMR. Section 850 is not an appropriate vehicle to determine the absence of a controversy.

As such, the petition does not simply seek to resolve an ownership dispute with respect to personal property constituting assets of an estate. Rather, it seeks an order or sanction from this Court concerning the right of TCMR’s remaining member, Smith, to fill the vacancy left by Amaya, as well as the manner in which the filling of this vacancy may be made (such as a single vote and quorum of one). (Petition, pp. 19-20.)

In light of the above, section 850 is not a proper basis for the instant petition.

(2)      Declaratory Relief

Apart from section 850, petitioner seeks declaratory relief. A declaratory relief action may be brought under Code of Civil Procedure section 1060:

“Any person ... who desires a declaration of his or her rights or duties with respect to another, ... may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action ... in the superior court for a declaration of his or her rights and duties ... including a determination of any question of construction or validity arising under the instrument or contract.... The declaration may be had before there has been any breach of the obligation in respect to which said declaration is sought.”

However, “[t]he court may refuse to exercise [its] power [to] grant [declaratory relief] in any case where its declaration or determination is not necessary or proper at the time under all the circumstances.” (Code Civ. Proc., § 1061.)

Declaratory relief includes a threshold issue of justiciability which “involves the intertwined criteria of ripeness and standing.” (California Water & Telephone Co. v. Los Angeles County (1967) 253 Cal.App.2d 16, 22.) “Standing” derives from the principle that “[e]very action must be prosecuted in the name of the real party in interest.” (Code Civ. Proc, § 367.) A party lacks standing if it does not have an actual and substantial interest in, or would not be benefited or harmed by, the ultimate outcome of an action. (California Water & Telephone Co., supra, 253 Cal.App.2d at p. 23.)

“Ripeness” refers to the requirements of a current controversy. According to the Supreme Court, “an action not founded upon an actual controversy between the parties to it, and brought for the purpose of securing a determination of a point of law ... will not be entertained.” (Golden Gate Bridge etc. Dist. v. Felt (1931) 214 Cal. 308, 316.) A controversy becomes “ripe” once it reaches, “but has not passed, the point that the facts have sufficiently congealed to permit an intelligent and useful decision to be made.” (California Water & Telephone Co., supra, 253 Cal.App.2d at p. 22.)

“The ‘actual controversy’ language in Code of Civil Procedure section 1060 encompasses a probable future controversy relating to the legal rights and duties of the parties. [Citation.]” (Environmental Defense Project of Sierra County v. County of Sierra (2008) 158 Cal.App.4th 877, 885.) It does not embrace controversies that are “conjectural, anticipated to occur in the future, or an attempt to obtain an advisory opinion from the court.” (Brownfield v. Daniel Freeman Marina Hospital (1989) 208 Cal.App.3d 405, 410.) Thus, while a party may seek declaratory judgment before an actual invasion of rights has occurred, it must still demonstrate that the controversy is justiciable. (Burke v. City etc. of San Francisco (1968) 258 Cal.App.2d 32, 34.)

TCMR’s request for declaratory relief fails the justiciability requirement. The petition, as noted above, does not allege that the Trust disputes TCMR’s claims, or that the Trust actually holds any assets which belong to TCMR. In fact, the petition alleges that since there has been “no gross or net income, proceeds, funds, assets or property existing of [TCMR] available . . . to pass to a decedent’s estate or trust succeeding to such interests in financial assets to Amaya, any such issue is therefore moot and non-existent.” (Petition, ¶ 57.) Further, and as noted above, there is no indication that the Trust asserts any property rights which are adverse to TCMR.

TCMR also seeks a declaration that its sole remaining governing board member, Smith, is authorized to fill governing board vacancies (in this case, the one vacancy left by Amaya) under former Corporations Code section 5902 (now section 9224). (Petition, ¶ 5, capitalization altered.) Corporations Code section 9224 states:

“Unless otherwise provided in the articles or bylaws and except for a vacancy created by the removal of a director by the members, vacancies on the board may be filled by approval of the board (Section 5032) or, if the number of directors then in office is less than a quorum, by (1) the unanimous written consent of the directors then in office, (2) the affirmative vote of a majority of the directors then in office at a meeting held pursuant to notice or waivers of notice complying with Section 9211, or (3) a sole remaining director.”

To the extent TCMR seeks a declaration concerning Corporations Code section 9224’s meaning and applicability in a possible future dispute between itself and the Trustee, such action is not ripe. Absent any need for court determination of section 9224’s applicability in a specific factual scenario in an actual dispute, issues involving interpretation of the statute’s meaning are not appropriate for immediate judicial resolution. (Newland v. Kizer (1989) 209 Cal.App.3d 647, 658.)

TCMR’s petition runs afoul of the rule that courts may not render advisory opinions on disputes which the parties anticipate might arise but which do not presently exist. (Teachers' Retirement Bd. v. Genest (2007) 154 Cal.App.4th 1012, 1043–1044.) “This policy is driven largely by a recognition that courts are unable properly to adjudicate issues when only hypothetical facts are involved.” (City of Santa Monica v. Stewart (2005) 126 Cal.App.4th 43, 70.) Yet, this is what is involved here. As petitioner states in seeking declaratory relief here: “[TCMR’s] [u]ncertainty of standing as to membership status poses unreasonable risks of adverse tax incidence and a host of similar prejudicial issues for [its] proposed projects and project participants subjecting either or both to unfair, unjust and acrimonious results contrary to good faith and fair dealing.”  (Petition, ¶ 67.)

The Court therefore declines to issue an advisory opinion to forestall hypothetical events that may never occur. The petition is denied.

(3)      Venue

Finally, the Court notes that Santa Barbara County appears to be the wrong venue for an action such as this. A section 850 petition is governed by Probate Code section 17005. Pursuant to that section, a trust petition should generally be filed in the county where the principal place of administration of the trust is located. The principal place of administration is typically the residence or usual place of business of the trustee. (Prob. Code, § 17002.)

The petition here alleges that the trustee resides in Los Angeles County. (Petition, ¶ 2.) Further, it alleges that TCMR has its principal place of business in San Bernardino County. The only connection to Santa Barbara County is that the current sole board member resides here. (Petition, ¶¶ 4, 9.)