L.B. Research & Education Foundation v. UCLA Foundation

In L.B. Research & Education Foundation v. UCLA Foundation (2005) 130 Cal.App.4th 171, a donor gifted $1 million to the UCLA Foundation (Foundation) to establish an endowed chair at the UCLA School of Medicine. The donor and Foundation executed a contract providing that the money would be used by qualified chairholders to support basic science research activities. (Id., at p. 175.) The contract provided that if the funds were not used for the designated purpose, the gift would revert to a contingent donee, the University of California, San Francisco, School of Medicine. (Id., at pp. 175-176.) The donor sued for specific performance, declaratory relief, and breach of contract alleging that Foundation had failed to provide an accounting or employ personnel meeting the criteria for the chair endowment. Foundation defended on the theory that the donor had created a charitable trust which only the Attorney General had standing to enforce. The trial court found that the donor lacked standing to sue and granted judgment on the pleadings. The Court of Appeal reversed on the theory that the donor was suing on a contract subject to a condition subsequent and had standing to sue. (L.B. Research & Education Foundation v. UCLA Foundation, supra, 130 Cal.App.4th at p. 175.) In dicta, the court stated that the result would be the same had the donor created a charitable trust. (Id., at p. 180.) It cited Holt v. College of Osteopathic Physicians & Surgeons (1964) 61 Cal.2d 750 for the principle that "the 'prevailing view of other jurisdictions is that the Attorney General does not have exclusive power to enforce a charitable trust and that a trustee or other person having a sufficient special interest may also bring an action for this purpose. This position is adopted by the American Law Institute (Rest.2d Trusts, 391) and is supported by many legal scholars. ' " (L.B. Research & Education Foundation v. UCLA Foundation, supra, 130 Cal.App.4th at p. 180.) The court in L.B. Research & Education Foundation v. UCLA Foundation acknowledged that statutes authorizing the Attorney General to enforce charitable trusts were enacted to provide adequate supervision and enforcement of charitable trusts. (L.B. Research & Education Foundation v. UCLA Foundation, supra, 130 Cal.App.4th at p. 181.) " 'The Attorney General has been empowered to oversee charities as the representative of the public, a practice having its origin in the early common law. In addition to the general public interest, however, there is the interest of donors who have directed that their contributions be used for certain charitable purposes. Although the public in general may benefit from any number of charitable purposes, charitable contributions must be used only for the purposes for which they were received in trust. Moreover, part of the problem of enforcement is to bring to light conduct detrimental to a charitable trust so that remedial action may be taken.' " (Ibid.)