Donald Sterling loses landmark trust appeal.
Los Angeles – November 16, 2015.
The court of appeal has confirmed due process in the ruling by the probate court for the sale of the Los Angeles Clippers, formerly owned by the Sterling Family Trust. The appeal was against Rochelle Sterling who as sole trustee of the Sterling Family Trust authorized the sale in June of 2014 with full approval of the Probate Court. Donald Sterling was threatening the value of the trust assets and was found to be properly removed to protect the assets of the trust.
The professional basketball team was purchased from the Sterling Family Trust by Steven Ballmer on August 12, 2014 for an above market price of $2 billion. The offer made by Ballmer was four hundred million dollars more than the next highest bid.
Prior to the sale, Donald Sterling was properly removed as trustee of the Sterling Family Trust after credited evidence overwhelmingly supported the probate court’s conclusion. The probate court then warranted the sale of the Clippers to avoid substantial loss from the trust.
Evidence presented to the court implicates Donald Sterling initially agreeing to the sale of the Los Angeles Clippers. The sale was also sanctioned by the National Basketball Association.
In April 2014, the National Basketball Association (NBA) noted the tape recording of Donald Sterling containing offensive views of African Americans, Latinos, and minority groups in general and imposed a $2.5 million fine, a lifetime ban against Donald Sterling participating in NBA, and began proceedings to terminate Sterling’s ownership of the Clippers. The NBA were also intending to auction the team if a sale was not completed by a certain date.
Fans and sponsors of the team began to remove financial support by not purchasing season tickets and cancelling sponsorship contracts while Donald Sterling continued his ownership. The value of the team as an asset began to diminish rapidly.
By May 2014, a letter written by Donald Sterling’s attorney confirmed that the team was available for sale. The letter confirmed that Donald Sterling authorized Rochelle Sterling, his wife and trustee of the Sterling Family Trust, to sell the team. By May 28th, the substantial offer made by Ballmer was agreed to by Donald and Rochelle Sterling with the binding terms being drafted on May 29, 2015.
Soon after, Donald Sterling refused to sign the Binding Term Sheet and when Rochelle Sterling asked Donald to sign the sheet, he promised to sue. Rochelle proceeded to have Donald removed as trustee when two physicians certified that Donald was not fit to remain. This was in accordance with the provisions of the trust.
On June 11, 2014, an ex parte petition was lodged by Rochelle Sterling to seek a court order to confirm the sale of the Clippers and direct the trustee under section 1310, subdivision (b) (section 1310(b)). She argued that she was the sole trustee due to Donald’s diagnosed lack of capacity.
After an eight-day hearing the probate court issued numerous credibility determinations and rejected Donald Sterling’s arguments. The court approved the sale of the Los Angeles Clippers to Ballmer noting the high value of the sale price. The court rejected any accusation of ‘secret plans’ to have Donald removed from the trust. The court found that Donald Sterling participated in various medical examinations without any resistance, and that the medical observations were credible. The probate court concluded that Donald was properly removed as trustee, and Rochelle Sterling had authority to commit the Sterling Family Trust with the Binding Term Sheet of May 29, 2014. The court instructed Rochelle to complete the sale.
After this probate court finding, Donald filed two writ petitions. He argued that the previous court’s order must be stayed because if the Clippers were finally sold he would be unable to recover his original ownership of the team. The court denied the writ petitions and his request for a stay, and the appeal followed.
In the appeal, Donald contends that he was improperly removed from the trust as trustee and the trial court abused its discretion by ordering Rochelle to sell the Clippers. Donald sought reversal of the trial court’s order and that the sale of the Clippers be undone. Rochelle Sterling argues that his appeal has numerous deficiencies.
This case emphasizes the importance of clearly defined estate trusts and how events will change the attitudes of people involved in disputes. The case also reveals the efficacy of estate trusts when assessed by the probate court. Without a clearly defined trust, this case would have taken many years to resolve. The Clippers may have been dissolved or auctioned by the NBA at a much lower value. The probate court overwhelmingly shows that Rochelle Sterling acted in the beneficiaries interest, including Donald Sterling’s, when she sold the Clippers for an amount higher than advisors had previously thought possible.
Only engage an experienced attorney at law who specializes in probate, estate planning, and litigation. Byron Husted has experience with large scale cases and often may assist settlement with mediation. Call Byron Husted today at Morris Law Firm, APC – Tel: 619-826-8060
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