Kitzman vs. Kitzman: Court Fight Over Family Trust Ends in Settlement

Opposing forces are girding for a fight over Park Station—a proposed mixed-use development downtown with an 18-story building. It will be played out noisily under wide public scrutiny.

By contrast, opposing members of the family trying to develop Park Station at the Crossroads of La Mesa have just ended a fight—quietly and with a judge’s order in a San Diego probate court.

Frank Kitzman of Ramona—the only surviving child of the late plumbing patriarch Andy Kitzman and Hazel Lloyd Kitzman of Mount Helix—won a battle when a settlement agreement was signed April 6 by Judge Jeffrey Bostwick in San Diego Superior Court.

Six months earlier, Kitzman, 54, had sued to nullify a living trust signed by his parents in December 2009, which replaced a 1997 trust that included him, court records show.

Frank Kitzman’s name was removed from the 2009 trust—potentially depriving him of Park Station ownership and a share of the elder Kitzmans’ estate. So suggests a petition filed on his behalf by Melissa Fox of the Costa Mesa law firm Larsen & Risley.

The younger Kitzman, whose formal name is Charles F. Kitzman, said in the petition that his father—suffering Alzheimer’s disease and “significant cognitive impairment”—didn’t even know his relationship to other family members when he signed the revised trust.

According to the son’s petition dated Oct. 4, 2010, Andy Kitzman—a 1934 Grossmont High School graduate who founded a multistate plumbing company based in La Mesa—signed the revised trust when he was “confined in a nursing facility on heavy pain medication due to, among other things, severe bed sores [and] did not have sufficient mental capacity” to understand his actions.

On Dec. 29, 2010—seven days after signing the new trust—Joseph Andrew Kitzman “died peacefully at his home with his family by his side,” said his paid obituary.

Kitzman was 95. He and Hazel Lloyd had been married 71 years.

For several months, trial dates in case 37-2010-00152175-PR-TR-CTL were scheduled and then continued. They would have been held at the Madge Bradley Building on Fourth Avenue in downtown San Diego—and exposed the Kitzman clash to public attention.

But in March, Hazel Lloyd Kitzman and her son agreed to a settlement that struck the 2009 living trust and restored the 1997 trust, similar to a will but not subject to the probate process after death.

It meant Frank Kitzman was back in—and eight friends and relatives of Hazel Lloyd Kitzman were out.

“The 2009 trust [gave] the entirety of its assets to four of Lloyd’s nieces, one nephew-in-law, two family friends and one employee” of the Kitzman plumbing company, said the October 2010 petition.

Why was Frank Kitzman left out of the trust?

The family isn’t saying.

In late February, speaking on behalf of Joseph Kitzman, the 28-year-old son of Frank Kitzman, Park Station spokeswoman Elaine Camuso told La Mesa Patch:

We have had an opportunity to speak with the Kitzman family regarding your questions for the story in La Mesa Patch. Obviously, this is a family matter and they’d prefer to keep it as such. However, rather than not responding, they have offered up this quote in response to your questions.  

“This is a private family matter and the discussion in court has no bearing on the ownership of the proposed Park Station property. Our family owns this property and we are confident the case will be resolved promptly.”

A day later, when La Mesa Patch began seeking a face-to-face interview with Joseph Kitzman, Camuso wrote: “Is it safe to assume that this conversation will solely be related to the Park Station project and not involve questions about the open probate case? As I mentioned in my email yesterday, this is a private family matter and the Kitzmans prefer to keep it so.”

Joseph Kitzman, reportedly a Poway resident and one of two grandsons of Andy Kitzman, is secretary of the La Mesa Chamber of Commerce and the family’s main representative in the Park Station project.

In May 1998, Andy and Hazel Lloyd Kitzman filed articles of incorporation (attached) to create South Baltimore LLC (for limited liability company)—which they described as a “commercial rental” business.

South Baltimore LLC is the formal name of the applicant seeking to develop a 6.5-acre area north of City Hall as Park Station. The Kitzman Family Trust of Grandview Drive and Frank Kitzman of Ramona are listed as managers of South Baltimore LLC.

But in February 2011, the South Baltimore LLC articles on file with the Secretary of State’s Office in Sacramento were amended to add three “members,” labeled Kitzman GRAT I, Kitzman GRAT II and Kitzman GRAT III—all with Hazel Lloyd Kitzman’s home address.

GRAT stands for grantor retained annuity trust.

It’s an “estate planning technique that minimizes the tax liability existing when intergenerational transfers of estate assets occur,” says Investopedia.com.

“Under these plans, an irrevocable trust is created for a certain term or period of time. The individual establishing the trust pays a tax when the trust is established. Assets are placed under the trust and then an annuity is paid out every year. When the trust expires, the beneficiary receives the assets tax free.”

On April 4, Hazel Lloyd Kitzman signed court papers agreeing to a settlement of her son’s case—effectively throwing out the 2009 trust she and her husband signed.

On April 6, at a scheduled 9:30 a.m. hearing before Judge Bostwick, Frank Kitzman attorney Gerald Larson and his mother’s attorney, Dennis Burns, signed papers approving the settlement agreement “executed by the parties on March 21, 2011.”

Among other things, Frank Kitzman and his mother agreed that “Andrew Kitzman shall be deemed to have been legally incompetent as of Dec. 22, 2009,” when he signed the revised trust.

But while Frank Kitzman won the battle over the 2009 trust, he may still lose the war.

According to the “settlement agreement and release” he and his mother signed a month ago: “[Hazel Lloyd Kitzman] reserves all of [her] personal rights under the 1997 Restatement, including but not limited to, her right to revoke, amend or restate said trust instrument.”

In fact, the settlement says, Hazel Lloyd Kitzman has advised her son “of her intent to revoke and hereby revokes the 1997 Restatement.”

The matriach of Kitzman Plumbing and Heating  “intends to forthwith execute a new estate plan which will alter, delete and change beneficiaries, including but not limited to, any and all distributions to all beneficiaries presently named in the 1997 Restatement.”

Whether that will spark another court fight was not made known.

But mother and son agree on one thing:  They’ll try to keep their differences private.

Said the settlement: “The parties shall take reasonable steps as necessary in order to seal the record of this proceeding so as to maintain the confidentiality of the terms of this agreement and the underlying action.”