C.B. v. Sonora School District, et al.

Filing 241

ORDER DENYING Matthew Banks', guardian ad litem for plaintiff, petition for an order permitting him to withdraw $4,000.00 from plaintiff's blocked account, document #236 , for the purchase of a truck. Order signed by Magistrate Judge Sandra M. Snyder on 3/8/2013. (Rooney, M)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA
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C.B., a minor,

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CASE NO. 1:12-cv-00111-LJO-SMS
Plaintiff,

ORDER DENYING MOTION TO
WITHDRAW FUNDS FROM THE MINOR
PLAINTIFF’S BLOCKED ACCOUNT

v.
SONORA SCHOOL DISTRICT, et al.,

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Defendants.
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(Doc. 236)
/

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On February 11, 2013, Matthew D. Banks, guardian ad litem for Plaintiff C.B., a minor,
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has petitioned this Court for an order permitting him to withdraw $4000.00 from Plaintiff’s
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blocked account. The blocked account includes a total of $12,516.21. The withdrawal’s purpose
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is to reimburse Plaintiff’s grandmother, Theela Butcher, for funds she advanced to Plaintiff to
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allow him to purchase a 1987 Ford Ranger truck for his own use. Plaintiff first borrowed the
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money from his grandmother “because he wanted to purchase the truck before it sold to someone
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else.” Doc. 240. Plaintiff did not secure a driver’s license until February 19, 2013.
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As a derivative of Federal Rule of Civil Procedure 17(c), district courts bear the
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responsibility of safeguarding the interests of minor litigants. When the parties propose to settle
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a lawsuit brought on behalf of a minor, the district court must “conduct its own inquiry to
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determine whether the settlement serves the best interests of the minor.” Robidoux v. Rosengren,
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638 F.3d 1177, 1181 (9th Cir. 2011), quoting Dacanay v. Mendoza, 573 F.2d 1075, 1080 (9th Cir.

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1978). The Ninth Circuit Court of Appeals “has not provided district courts with specific
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guidance on how to conduct this independent inquiry, nor dictated whether district courts should

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consult state law and local rules in making such determinations. Robidoux, 638 F.3d at 1181.

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Typically, district courts in the Ninth Circuit evaluate whether a settlement serves the minor’s

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best interests using state and local procedures. Id.

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California law permits a parent or guardian to compromise a minor’s legal claim and

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permits the Court to disburse funds for payment of medical expenses and legal fees, among other

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things. California Probate Code § 3600 et seq. Any remaining balance must be paid, delivered,

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deposited, or invested in accordance with statutory requirements. California Probate Code §

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3610. Among the options that a Court may elect is the one used in this case: “That the remaining

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balance of any money paid or to be paid be deposited in an insured account in a financial

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institution in this state . . . subject to withdrawal only upon authorization of the court.”

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California Probate Code § 3611(b). Whichever option the Court chooses, it is directed to make

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its determination regarding the balance of a minor’s funds “in the best interest of the minor.”

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California Probate Code § 3611. The Court retains continuing jurisdiction over the funds until

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the minor reaches maturity at eighteen years of age. California Probate Code § 3612(a).

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The Court has been unable to identify a standard for evaluating a proposed withdrawal

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from a minor’s blocked account other than that of the minor’s best interests. Case law regarding

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equitable modifications of trusts is helpful in evaluating the pending request here.

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In cases involving trust law, courts should exercise their equitable power to modify trust

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terms only sparingly and in the clearest of cases, when necessary to fulfill the trust’s main

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purpose. Stanton v. Wells Fargo Bank & Union Trust Co., 150 Cal.App.2d 763, 770 (1957).

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California courts have power in equity to modify a trust’s terms to preserve it or to preserve the

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trustor’s original intent. Getty v. Getty, 205 Cal.App.3d 134, 142 (1988).

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Modifications are appropriate when the court can step into the grantor’s shoes and further

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the trustor’s purpose by making such changes as the trustor would have made in response to the

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modification petition. Stanton, 150 Cal.App.2d at 770. “[T]he court should not permit a

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deviation simply because the beneficiaries request it where the main purpose of the trust is not

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threatened and no emergency exists or is threatened.” Id. See also Shelton v. King, 229 U.S. 90,
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101 (1913) (denying modification since “nothing has happened since the will which was not

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anticipated by the testatrix”). Where a trust directs accumulations of income for a fixed time

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before distributions may be made to the beneficiary, the court ordinarily cannot terminate the

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trust, even when all the beneficiaries request termination. Moxley v. Title Insurance & Trust Co.,

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27 Cal.2d 457, 462 (1946).

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Suitable situations for court modification have included removal of restrictions on the

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sale of real property held in trust where the trustor could not have anticipated the discovery of

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valuable gas, oil, and minerals on the property (Adams v. Cook, 15 Cal.2d 352 (1940));

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accelerated payment of a trust balance to a beneficiary who, although young and healthy when

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the trust was made, had become chronically ill and required a series of operations (Whittingham

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v. California Trust Co., 214 Cal. 128 (1931); and periodic payment of the income of a trust

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scheduled to paid to the beneficiary at age twenty-five to enable the beneficiary, a minor “of

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intellectual promise,” to complete her education (Bennett v. Nashville Trust Co., 127 Tenn. 126

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(1913)). In contrast, a beneficiary who was entitled to receive an amount in trust when she

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reached the age of thirty-five years petitioned the Court to modify the trust to provide for an

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earlier pay-out so that she could purchase a home for which she otherwise lacked the financial

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means. See Moxley, 27 Cal.2d 457. The court denied her request, finding that the situation was

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neither an emergency nor peculiar circumstances that the trustor would not have considered when

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establishing the trust’s terms. Id.

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A blocked account created to protect the net settlement proceeds of a lawsuit brought on

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behalf of a minor is akin to a trust created to preserve a minor’s asset until he or she reaches the

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age of majority. Permitting arbitrary withdrawals that are not required by an emergency or

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unanticipated circumstances would circumvent the public policy of preserving the child’s assets

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until his or her majority and would not be in the child’s best interests. Just as the grantor of Mrs.

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Moxley’s trust would reasonably have considered that Mrs. Moxley might want to buy a house

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before her trust pay-out was due, the legislature can reasonably be presumably to have recognized

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that a youthful former plaintiff might want to buy a car upon reaching sixteen. Public policy

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nonetheless was structured to protect his or her net settlement proceeds until the age of majority.
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The request for authorization to withdraw funds from Plaintiff’s blocked account for the
purchase of a truck is DENIED.

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IT IS SO ORDERED.

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Dated:
icido3

March 8, 2013

/s/ Sandra M. Snyder
UNITED STATES MAGISTRATE JUDGE

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