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A Trust is Not an Entity and Judgment Against it is Unenforceable

The Third District Court of Appeal ruled that a trust is not an entity and cannot hold title to property; thus, it cannot sue or be sued. Any judgment brought against a trust is unenforceable. This was the main contention in Portico Management Group, LLC v. Harrison (202 Cal.App.4th 464 (2011)).

Portico Management Group, LLC (plaintiff and appellant) ("Portico") entered into a contract to purchase an apartment building owned by Alan Harrison and Wei-Jen Harrison, trustees of the Harrison Children's Trust (HCT) and Harrison Family Enterprise II (HFE II), a limited partnership. The HCT owned 87.5% of the apartment building, and the remaining 12.5% was owned by HFE II. When the sale of the apartment building failed to close, Portico brought an action for breach of contract against Alan and Wei-Jen Harrison in their individual capacity and as trustees. The case went to arbitration and the arbitrator found in favor of Portico on the breach of contract claim and ordered an award against HCT and HFE II, in proportion to their ownership interest in the apartment building, damages, attorney fees and costs totaling $1,621,435.80. Portico sought to enforce the judgment. By this time, the Harrison's children became successor trustees and Alan Harrison moved to vacate the award. The trial court ruled that the arbitrator erred in naming HCT as the judgment debtor, rather than the trustees Alan and Wei-Jen Harrison. Accordingly, the award against HCT was not enforceable. The trial court also decided that it had no authority to change the arbitrator's order. Portico appealed.

Stay tuned for more on this topic on our subsequent blog.

*This blog entry was not written by an Attorney and should not be construed as professional legal advice.

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