In re Dylan Apple Trust

Dylan Apple suffered severe and permanent injuries at the time of his birth in 1995. Dylan’s parents, Heidi Hutchinson Apple and Jeffrey Apple, attributed the injuries to medical malpractice, and a lawsuit against the attending physician and the hospital was filed by Dylan (for his injuries), and by Heidi and Jeffrey (for negligent infliction of emotional distress), with Heidi designated as Dylan’s guardian ad litem. In June 1999, the malpractice suit was resolved by a court-approved settlement in the amount of $ 4.75 million, which was allocated $ 250,000 to Heidi, $ 250,000 to Jeffrey, and $ 4.25 million to Dylan, with a reimbursement to Jeffrey from Dylan’s share of $ 191,026 for the medical expenses Jeffrey had paid between the time of Dylan’s birth and the settlement. A trust was created for Dylan’s benefit, and (as requested by Heidi as Dylan’s guardian ad litem) Northern Trust Bank of California, N.A., was appointed Trustee of the Dylan Apple Trust. Among other things, the Trustee has the power to “commence or defend, at the expense of the trust, any litigation with respect to the trust that the Trustee deems advisable . . . .” More than three years later, in August 2002 — by which time Heidi and Jeffrey were embroiled in a bitter divorce — Heidi, purportedly acting as Dylan’s guardian ad litem, initiated the present proceedings by filing a petition in probate in which she asked for orders requiring Jeffrey to account for the $ 191,026 reimbursed to him at the time the medical malpractice action was settled. The gist of Heidi’s petition was that Jeffrey had not incurred the expenses for which he was reimbursed, and that Jeffrey knew his claim “was grossly inflated, fraudulent, and incorrect when he made it.” Jeffrey demurred to the petition on numerous grounds, including a challenge to Heidi’s standing. Over Heidi’s opposition, the demurrer was sustained without leave to amend, and Heidi’s petition was dismissed. Heidi’s appeal is from the order of dismissal. The dismissal was affirmed. [Mr. Horwitz represented Jeffrey Apple]