Case Number: G063394_markdown
Court: California Court of Appeal, Fourth Appellate District, Division Three
Date Filed: August 31, 2025
Holding
The court held that Linda Clark, as the sole trustee of the Donald B. Clark and Linda Clark Trust, possessed standing to sue on the promissory notes transferred into the trust, and that no probate‑court authorization was required for a trustee to enforce trust assets.
Linda Clark’s appeal turned on a textbook question of trust law: whether a trustee may sue to collect on notes that were transferred into a revocable inter‑vivos trust and, if so, whether any court permission is needed to do so. The Fourth Appellate District reversed the trial court’s nonsuit judgment and sent the case back for further proceedings, emphasizing that the trustee’s statutory powers and the trust’s own language gave her both the authority and the duty to enforce the notes.
The dispute began in December 2012 when Donald B. Clark sold his business, Precision Airparts Support Services, Inc. (PASS), to Tony Ordaz and Ira Smith. The buyers signed two promissory notes—a $50,000 “Equipment Note” and a $920,000 “Stock Note”—both bearing a 2 % annual interest rate and repayment schedules beginning January 2018. In mid‑2014 the Clarks restated their family trust, expressly transferring “all our real, personal, tangible, and intangible property…whether separate or community” into the trust, with the exception of a limited list of assets that did not include the notes.
Donald died in August 2015, leaving Linda as sole trustee. When Ordaz and Smith failed to make the first payments in January 2018, Linda demanded performance in July 2018 and later filed a suit in November 2018 to collect on the notes. The case was consolidated with a counter‑claim by PASS alleging fraud and breach of contract. After a trial that stretched from May to June 2023, the respondents moved for nonsuit on the ground that Linda lacked standing because she was not a holder in due course and, allegedly, because the notes were Donald’s separate property. The trial court, after supplemental briefing, concluded that Linda indeed lacked standing and entered judgment for the respondents.
On appeal, the court addressed three intertwined issues.
1. Whether the complaint was properly amended to allege trustee status.
The respondents argued that the oral order allowing amendment was never reduced to writing, rendering the amendment ineffective. The appellate court rejected that theory, noting that the trial judge both orally and in two subsequent written minute orders expressly confirmed that the amendment was filed, accepted, and operative. The record shows the complaint was amended to name Linda “as trustee” and to assert a community‑property interest, satisfying procedural requirements.
2. Whether Linda, as trustee, had standing to sue on the notes.
The court focused on the effect of the 2014 general assignment. Under Probate Code §§ 15200(a)–(c) and Colorado Rev. Stat. § 15‑5‑401, a trust may be created by a declaration or by a transfer of property during the settlor’s lifetime. The Clarks’ assignment of “all…property…whether separate or community” is a classic general assignment, sufficient to convey both real and personal property—including the promissory notes—into the trust. Once the notes became trust assets, California Probate Code § 16249(a) and Colorado Rev. Stat. § 15‑5‑816(x) gave Linda the power, and §§ 16007, 16010 imposed a duty, to protect and enforce those assets. The court reiterated that a trustee sues in his or her own name; the trust is not a separate juridical person (see Moeller v. Superior Court (1997) 16 Cal.4th 1124). Accordingly, Linda possessed both the authority and the requisite standing.
3. Whether probate‑court approval was required to bring the action.
Respondents invoked the Estate of Heggstad doctrine, suggesting a petition was needed to perfect the transfer of the notes. The appellate court clarified that Heggstad concerns real‑property transfers and the statute of fraud; the notes are personal property transferred by a valid general assignment, rendering a Heggstad petition irrelevant. Moreover, the purpose of a revocable inter‑vivos trust is to avoid probate, and neither California Probate Code § 16200(b) nor Colorado Rev. Stat. § 15‑5‑815(1)(b)(III) obligates a trustee to seek court authorization before enforcing trust claims. The trust instrument itself expressly permitted the trustee to act without prior court approval, reinforcing the statutory rule.
Having resolved the standing question in Linda’s favor, the appellate court reversed the nonsuit judgment and remanded for further proceedings consistent with its opinion, ordering that Linda recover appellate costs.
Impact and unresolved questions
The decision reinforces the broad reach of general assignments in trust funding and underscores that a trustee’s standing to enforce trust assets does not hinge on the settlor’s original ownership classification. Practitioners should note the court’s willingness to treat oral amendment approvals as effective when corroborated by contemporaneous written orders—an important procedural safeguard in fast‑moving trials. The opinion also leaves open the question of how courts will treat partial trust funding where assets are omitted from the assignment schedule; while the Clarks’ trust listed specific exclusions, the court did not address whether a trustee could later assert standing over assets inadvertently omitted. Future litigation may test the limits of “all property” language, especially where intangible assets such as securities or intellectual property are involved.
Overall, Clark v. Smith clarifies that trustees of fully funded revocable trusts may pursue collection actions without additional probate filings, a point that will likely shape trust‑litigation strategy across California and Colorado jurisdictions.
Referenced Statutes and Doctrines
- California Probate Code §§ 15200, 16007, 16010, 16200, 16249 – creation of trusts, trustee duties, and powers.
- California Code of Civil Procedure § 631.8 – treatment of nonsuit motions as judgments.
- California Probate Code § 62 – definition of “property.”
- Colorado Revised Statutes §§ 15‑5‑401, 15‑5‑816(x), 15‑5‑809, 15‑5‑811, 15‑5‑815(1)(b)(III) – trust creation, trustee powers, and duties.
- Colorado Rev. Stat. § 15‑10‑201 – definition of “property.”
Major Cases Cited
- Ukkestad v. RBS Asset Finance, Inc. (2015) 235 Cal.App.4th 156 – validity of general assignments.
- Kucker v. Kucker (2011) 192 Cal.App.4th 90 – transfer of stock to a trust via general assignment.
- Moeller v. Superior Court (1997) 16 Cal.4th 1124 – trustee sues in own name; trust not a separate entity.
- Purdy v. Johnson (1917) 174 Cal 521 – trustee duty to collect promissory notes.
- Heggstad (1993) 16 Cal.App.4th 943 – transfer of real property into a trust without deed.
- People v. Rogers (2013) 57 Cal.4th 296 – trustee may proceed without mentioning the trust.
- Estate of Heggstad (1993) – cited for contrast; not applicable to personal property.
- Pacific Home v. County of Los Angeles (1953) 41 Cal.2d 855 – oral vs. written orders (distinguished).
- Diaz v. Professional Community Management, Inc. (2017) 16 Cal.App.5th 1190 – oral order effect (distinguished).