Edward Masry, the Southern California trial lawyer who made headlines in life, continues to shape the law -- albeit probate law -- in death.
The 2nd District Court of Appeal on Thursday validated a trust that Masry created in 2005 just weeks before his death, a trust that left control of his assets to two of his children, not his wife of 13 years. Masry's widow, Joette Masry, contends that her husband improperly shifted assets, including an interest in the Westlake Village, Calif., law firm made famous in the film "Erin Brockovich," from their jointly controlled trust to the new trust without telling her.
But a three-justice panel, led by Justice Arthur Gilbert, said that while the Masrys' trust required each trustee to notify the other if one party decided to back out of the agreement, the trust didn't explicitly say that was the only revocation method they could use. In fact, Gilbert wrote, state law allows either party to act unilaterally as long as the trust doesn't specifically limit how a trust is revoked.
"Joette argues that such an interpretation ... is not good public policy, because it allows a 'secret' revocation and represents one spouse taking advantage of the other," Gilbert wrote. "It is true that had Joette been given notice of the revocation as provided in the family trust, she could have tried to persuade Edward to change his mind or could have made changes in the disposition of her community share of the trust property.
"But married parties are permitted to dispose of their share of the community without the consent of the other spouse."
Joette Masry's attorney, Mitchell Silberberg & Knupp partner Peter Gelblum, said an appeal is likely. Gelblum said he wasn't at liberty to say how much the 2005 trust, which he said includes more than Masry's interest in the law firm, is worth. But the assets likely total in the millions of dollars; Masry's firm was paid roughly $40 million as part of a 1997 toxic water settlement with Pacific Gas & Electric Co., a case that was chronicled in the movie about his legal assistant, Erin Brockovich.
"We think the court is clearly wrong," Gelblum said. "To say one spouse can pull half his assets out of this trust without telling the spouse is ridiculous ... It's called a trust for a reason."
Gelblum said that Edward Masry signed documents creating the new trust in the hospital two weeks before his death.
J. Mark Rochefort, the attorney representing Masry's children, said Edward Masry had started working with his estate planning lawyer on the changes months before his death. Masry was not trying to shift money away from his wife, Rochefort said, but rather provide for his three children from a previous marriage as well as Joette Masry's two sons with the new trust.
"This was not an unfair maneuver by Edward Masry," said Rochefort, a partner at Alston & Bird.
While Gelblum said the 2nd District's decision broke new ground in probate law, Rochefort said it reflected a plain reading of California statutes.
"It simply confirms the statutory language that says a trust may be revoked either by the manner provided in the trust instrument or by the manner provided in Probate Code," Rochefort said.
James Vititoe, a former associate in Masry's law firm who joined him as a name partner in 1982, did not return a phone call Thursday.
