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City National Invited Me to File My Petition

Why do I say “treachery”?

City National invited me to file my probate court petition for division of trust.  However, after I did so (in propria persona, in 1994) City National's trust manager (Peggy Ornelas) hired a team of expensive lawyers (the fees for whom came out of my trust income) to attack me as a "vexatious litigant" and to have me and my petition thrown out of court.

As early as 1992, I was invited by City National to file my probate court petition for  division of trust.  And I was told by City National that there would be no opposition to it.

Incidentally, each of City National's quarterly account statements invites the beneficiaries to  "...file a petition pursuant to Probate Code section 17200 ...".

CAL.PROB.CODE §17200 states that a "...beneficiary of a trust may petition the court under this chapter concerning the internal affairs of the trust ...".

I discussed division of trust with City National, emphasizing that:

" . . . this should be done as amicably as possible, and with the least expense for all concerned." (See my November 7,1991 letter).

In February 1992, William Schacht, City National's trust officer wrote to all the beneficiaries about my interest in dividing the trust, stating the following:

". . . perhaps among yourselves an agreement might be struck that would be acceptable to all. I am willing to serve as an intermediary for communication purposes, ... "(See his February 25, 1992 letter).

In December of 1992, C. Scott Boone, Senior Vice President of City National wrote to me (click here to see entire  letter)  - inviting me to file my petition for division of trust:

"We also discussed your desire to divide the Borun Trust into separate beneficial shares pursuant to California Probate Code Section 15412. While bringing such a petition before the court is certainly within your rights as a beneficiary, you should consider the language of Article VII of the trust instrument which, in our opinion, would require the appointment of a corporate fiduciary as trustee of any trust which might result from such a petition. From a strictly practical standpoint, multiple trusts and trustees would mean a great deal of additional expense, not to mention the complication in the management of the Spring Street property. Nevertheless, the decision whether or not to petition the court pursuant to this code section is entirely yours and I would not anticipate that the bank would object to such a petition were you to pursue such with the court. Having said this, please also understand that City National would not consent to act as trustee of any separate trust for your benefit which might result from such a petition to the court." (Emphasis added - See the 2nd & 3rd pages of City National's letter to me) . . .

Not only was I invited by City National to file my petition, I was given a deadline date (May 31, 1994) by which I needed to do so.

See City National's April 4, 1994 letter to me regarding the question of how to distribute overcharged trustee's fees (I argued they should go back to the trust but City National argued they should go to estate of a deceased beneficiary).

"You have indicated that you may choose to file a Petition with the Probate Court regarding this matter.  You are, of course, free to do so.  City National Bank, as Trustee, will carry out whatever decision the Court renders. . . .

Unless Notice of your action is received, I intend to distribute the refund of Trustee's fees and interest, less attorney's fees, to the Special Administrator of the Estate of [xxxxx] on May 31st."

City National’s actions were even more treacherous considering their fiduciary obligations to the trust beneficiaries.  

This was a Trustee-to-Beneficiary relationship (not a bank-to-customer relationship).   

" (a) The trustee has a duty to administer the trust solely in the interest of the beneficiaries. " (California Probate Code Sec. 16002).  

"The most fundamental duty owed by the trustee to the beneficiaries of the trust is the duty of loyalty. . . .  A trustee is in a fiduciary relation to the beneficiaries of the trust. There are other fiduciaries, such as guardians, executors or administrators, receivers, agents, attorneys, corporate directors or officers, partners, and joint adventurers. In some relations the fiduciary element is more intense than in others; it is peculiarly intense in the case of a trust. It is the duty of a trustee to administer the trust solely in the interest of the beneficiaries." (IIA SCOTT, The Law of Trusts, 4th ed. Sec.170).