Han v. Hallberg

247 Cal. Rptr. 3d 526, 35 Cal. App. 5th 621
CourtCalifornia Court of Appeal, 5th District
DecidedMay 21, 2019
DocketB268380
StatusPublished
Cited by3 cases

This text of 247 Cal. Rptr. 3d 526 (Han v. Hallberg) is published on Counsel Stack Legal Research, covering California Court of Appeal, 5th District primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Han v. Hallberg, 247 Cal. Rptr. 3d 526, 35 Cal. App. 5th 621 (Cal. Ct. App. 2019).

Opinion

GRIMES, Acting P. J.

*624SUMMARY

In 1975, four dentists formed a partnership to acquire and maintain a dental office building. In 1994, the then-partners amended their agreement to allow one of the partners, Dr. Richard Hallberg, to assign his partnership interest to his living trust, and to substitute the trustee (then Dr. Hallberg) as a general partner in place *528of Dr. Hallberg individually. When Dr. Hallberg died 15 years later, litigation ensued over whether, despite the substitution, Dr. Hallberg was still a partner at the time of his death, triggering certain buyout provisions that applied in the event of a partner's death.

The trial court concluded the trust was not a separate legal entity, and that Dr. Hallberg was a partner at the time of his death. The court stated it was required to follow Presta v. Tepper (2009) 179 Cal.App.4th 909, 918, 102 Cal.Rptr.3d 12 ( Presta ) ("when a trustee of an ordinary express trust enters into a partnership relationship in his capacity as trustee, it is he, and not 'the trust' which is the party to that agreement").

We conclude Dr. Hallberg was not a partner when he died. His trust, or the trustee of his trust, was the partner. While a trust cannot act in its own name and must always act through its trustee, a trust is a "person" that may *625associate in a partnership under the Uniform Partnership Act of 1994 (UPA; Corp. Code, § 16100 et seq. ), based on the plain language of the UPA's definition of "person." The clear statutory language is reinforced by other provisions of the statute, as well as by its legislative history. We see no contradiction between the terms of the UPA and California trust law, and to the extent Presta suggests otherwise, we disagree. Accordingly, we reverse the trial court's judgment.

FACTS

1. The Background

In 1975, four dentists formed a general partnership called SM-Ensley Dental Group, for the purpose of "acquiring, operating and maintaining a dental office building." The 1975 partnership agreement required partners to be practicing dentists.

In 1989, the partners amended the agreement's provisions on withdrawal, retirement or death of a partner. These amendments allowed the estate of a deceased partner to retain the interest of the deceased partner and to continue operation of the partnership. This could be done by notifying the surviving partners in writing, by first-class mail, "within not more than 90 days from the date of death ...."1 If the estate failed to exercise this option within 90 days, the surviving partners could opt to purchase the interest of the deceased partner by notifying the estate, "within 60 additional days," by a writing sent "by first-class mail, to the representative of the deceased partner ...."2 The 1989 amendments also provided for the valuation of the deceased partner's interest *529"by the appointed California Probate Referee in any probate proceedings ...."3 If the remaining partners elected not to purchase the interest of *626the deceased partner, the partnership assets were to be "distributed in kind to each of the partners or to their respective personal representatives or trustees according to their respective interests," and governed by the law relating to tenants in common.

In 1990, Eric L. Loberg became a partner. In 1994, the general partners were John Schrillo (26 percent), Richard W. Hallberg (26 percent), John F. Griffee (24 percent), and Eric L. Loberg (24 percent).

On September 12, 1994, the four partners again amended the partnership agreement, this time to allow a substitution for one of the general partners, Dr. Hallberg. The amendment recited that the partnership agreement "contain[ed] no provisions dealing with the assignment of partnership interests or the effect upon the Partnership in the event of a substitution of a general partner." The parties then agreed to the assignment of Dr. Hallberg's partnership interest to Dr. Hallberg as trustee of The Richard W. Hallberg Trust (the Hallberg Trust), as follows:

"The assignment of RICHARD W. HALLBERG's partnership interest to RICHARD W. HALLBERG, as Trustee of THE RICHARD W. HALLBERG TRUST, shall not cause a dissolution of the partnership. Upon the consent of all general partners, RICHARD W. HALLBERG, as Trustee of THE RICHARD W. HALLBERG TRUST, shall be substituted as a general partner in place of RICHARD W. HALLBERG, individually, provided that such Trustee agrees in writing to be bound by the terms and conditions of the Partnership Agreement and that such Trustee accepts and assumes the rights, benefits, responsibilities, and liabilities of the assignor general partner."

All four general partners consented to "the substitution of RICHARD W. HALLBERG as Trustee of THE RICHARD W. HALLBERT TRUST, under Declaration of Trust dated August 4, 1994, as general partner in place of RICHARD W. HALLBERG, individually." And Dr. Hallberg, "as trustee of THE RICHARD W. HALLBERG TRUST," agreed "to be bound by the terms and conditions" of the partnership agreement, and "accept[ed] and assume[d] the rights, benefits, responsibilities, and liabilities of RICHARD W. HALLBERG, individually, as a general partner in said partnership."

In 2002, Dr. Loberg acquired Dr. Griffee's 24 percent partnership interest.

*627In 2003, Dr. Hallberg appointed his son, Richard Hallberg Jr. (Hallberg Jr.) to serve as a cotrustee of the Hallberg Trust.

In 2009, Hallberg Jr. became the sole trustee of the Hallberg Trust. (Hallberg Jr. apparently did not realize he was the sole trustee until after the first phase of the court trial in this case.)

On March 16, 2010, Dr. Hallberg died.

If Dr. Hallberg were still a partner when he died, then the partnership agreement *530would give his estate 90 days (until June 14, 2010) to notify the surviving partners "of the election of the estate to retain" the deceased partner's interest and to continue operation of the partnership "on behalf of the estate or its distributees." No such notification was made, by June 14 or any later time.

On June 16, 2010, Dr. Schrillo sent Hallberg Jr. various partnership documents and information he had requested, including the partnership agreement and amendments and information on rentals, bank accounts, the mortgage, and so on, also stating that copies of the documents "should be among your father's papers."

If Dr.

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Cite This Page — Counsel Stack

Bluebook (online)
247 Cal. Rptr. 3d 526, 35 Cal. App. 5th 621, Counsel Stack Legal Research, https://law.counselstack.com/opinion/han-v-hallberg-calctapp5d-2019.