2010 Cal. App. Lexis 1896 (November 5, 2010)

On August 2, 1966, Charles and Serena Papaz created a trust for the benefit of their only child, Christopher. Under the trust terms, Christopher was to receive income from the trust and, in the event Christopher did not survive his parents, Christopher’s “issue” would receive the trust assets. If Christopher died without issue, half of the trust assets would pass to Charles’s heirs at law and half of the assets to Serena’s heirs at law.

In 1984, Christopher met Kathy Carrano, a physical therapist who cared for Christopher while recovering from a gun shot wound. One night in 1984, Christopher drugged Kathy, had sex with her without her knowledge, and conceived a child, Jonathan. At the time, Kathy was married to another man. Jonathan was raised by Kathy and her husband as their child. A few years after Jonathan’s birth, Kathy learned that Jonathan was actually Christopher’s son. Kathy’s husband never legally adopted Jonathan. Christopher acknowledged that Jonathan was his son. Christopher’s parents did not know that Jonathan was Christopher’s child.  

Christopher fathered two other children out of wedlock, and as a result, Charles and Serena amended the trust several times to redefine the term “issue.” In an eighth amendment, the term “then living issue” was defined as “any issue that has been conceived prior to and is born after the time such issue acquires an interest in this trust.” In the ninth and final amendment redefining the term “issue” made in 1991, the definition was modified to expressly exclude “persons adopted into the Trustors’ bloodline and persons adopted out of the Trustors’ bloodline.”

In December 2006, Christopher became paralyzed from the neck down and could no longer speak. In January of 2007, Kathy told Jonathan and Charles that Christopher was Jonathan’s biological father. Christopher died in June 2007, and Charles died in July 2007. Serena had predeceased them both in 1996.  

In February 2008, Citizens Business Bank as trustee of the trust filed suit to determine the proper trust beneficiaries. The trial court found that the trust was not specific concerning the rights of someone in Jonathan’s circumstances, and as a result of this ambiguity the court considered extrinsic evidence to determine intent. The trial court determined that Charles’ and Serena’s intent was to restrict what might be considered Christopher’s issue to children who were biologically related to Christopher and for whom Christopher was legally a parent. The trial court held that because Jonathan was presumed to be the child of another man pursuant to Family Code Section 7540, Jonathan’s biological connection to Christopher was insufficient under the trust to fall within the definition of issue.  

Jonathan appealed. On appeal, the California Court of Appeals reversed the trial court on the following grounds: (1) the trust was unambiguous and the trial court had inappropriately resorted to a consideration of extrinsic evidence; (2) the term “issue” was clearly, simply, and specifically defined by Charles and Serena; (3) the term was not fairly susceptible to more than one interpretation and no latent ambiguity attached to the terms requiring consideration of extrinsic evidence or resort to definitions supplied by the Probate Code or the Family Code; (4) none of the restrictions on the definition of “issue” applied to Jonathan because he had not been adopted by Kathy’s husband; and (5) under the unambiguous definition in the trust, Jonathan was entitled to a distribution of trust assets as Christopher’s issue.