1028-00001 · Client 1028 · Mediation

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CONFIDENTIAL MEDIATION BRIEF

Submitted to:

Hon. Oscar Pelletreau (Ret.) Bayshore Mediation Services 201 Mission Street, Suite 900 San Francisco, California 94105

In the Matter of:

Estuary Foundation v. The Whitfield-Garner Family Trust

Superior Court of California, County of San Francisco Case No. CGC-22-599481 Department 302 Hon. Patricia R. Wainwright, Presiding

On Behalf of Plaintiff Estuary Foundation, a California Nonprofit Public Benefit Corporation

Prepared by:

CALDERWOOD & HARKNESS LLP One Market Plaza, Suite 3600 San Francisco, California 94105

Douglas Carmichael, Responsible Partner Simone Laroche, Lead Associate Jeffrey Park, Associate

August 26, 2022

Submitted in advance of the mediation session scheduled for September 2, 2022

CONFIDENTIALITY NOTICE: This mediation brief is submitted for settlement purposes only, is confidential and privileged, and is not to be disclosed to any party other than the mediator. Nothing herein shall be deemed an admission of any fact or legal position. Protected under California Evidence Code § 1119. Any unauthorized disclosure, copying, or distribution of this document or the information contained herein is strictly prohibited.

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I. INTRODUCTION AND SUMMARY OF DISPUTE

Estuary Foundation ("EF") is a California nonprofit public benefit corporation, incorporated on April 11, 2009, and headquartered at 1440 Embarcadero Way, Suite 300, San Francisco, California 94107 (EIN 94-3127856). Since its founding, EF has been dedicated to a singular and vital mission: advancing equitable access to quality education through teacher development, school partnerships, and community-based learning initiatives in Northern California. Under the leadership of its Executive Director, Margot Ellison-Yee, who has served in that capacity since 2017, its Board Chair, Dr. Kenneth Oguike, and its General Counsel, Priya Chattopadhyay, EF has grown into one of the region's most respected educational nonprofits.

EF's financial position reflects the strength and credibility of its mission-driven work. In Fiscal Year 2021, EF reported annual revenue of $28.3 million, as audited by Calloway & Auerbach CPAs, LLP. EF holds total net assets of $41.6 million, of which $14.2 million is donor-restricted — a figure that underscores the degree to which EF is entrusted with substantial philanthropic resources and the seriousness with which it approaches its stewardship obligations.

The dispute before the mediator concerns approximately $4.7 million in restricted grant funds that were originally designated for the Bay Area Teacher Residency Initiative ("BATRI"), an innovative teacher development program conceived, launched, and operated by EF in partnership with the San Francisco Unified School District ("SFUSD") and the Oakland Unified School District ("OUSD"). BATRI was a program of considerable ambition and demonstrable success, placing nearly sixty new teachers in high-need Bay Area schools over three cohorts. However, the program has ceased operations — not because of any failure by EF, but because both partner school districts withdrew their participation, driven by the devastating and unanticipated effects of the COVID-19 pandemic and the resulting budgetary and organizational upheaval in public education.

EF now seeks judicial and equitable authorization to redirect the unexpended restricted funds to its broader educational mission, consistent with the donors' general charitable intent. The legal mechanisms for this redirection — the cy pres doctrine and equitable deviation — are well-established features of California trust and nonprofit law. Two of the three donors who contributed restricted BATRI funds have already consented to the proposed reallocation: the Cascabel Education Fund (which contributed $2,000,000) and the Newhall-Sievert Foundation (which contributed $1,000,000). Those donors share EF's view that the original purpose of the restricted gifts has become impracticable and that the funds should continue to serve education rather than sit idle or be returned.

The Whitfield-Garner Family Trust ("WGFT"), a California irrevocable trust established on March 14, 2003, is the sole objecting donor. WGFT contributed a total of $4,000,000 in disbursed funds to BATRI under a Gift Instrument and Grant Agreement dated June 15, 2018 (the "Gift Instrument"), which contemplated total funding of $5,000,000 across four tranches. Of the $4,000,000 disbursed, $3,300,000 was expended on program operations. WGFT contends that the $700,000 in unexpended disbursed funds and the $1,000,000 undisbursed fourth tranche — a total of $1,700,000 — must be returned to it under a reversion clause contained in Section 7.2 of the Gift Instrument. WGFT further claims interest at the rate of 7% per annum from April 28, 2022, the date it asserts the ninety-day contractual demand period expired, amounting to approximately $119,000 per year in claimed interest.

EF filed a Complaint for Declaratory Relief in the Superior Court of California, County of San Francisco, on April 25, 2022. WGFT filed its Answer and Cross-Complaint on June 10, 2022, seeking restitution of the $1,700,000 plus interest. EF filed its Answer to the Cross-Complaint on July 22, 2022. At the initial Case Management Conference held on August 15, 2022, the Honorable Patricia R. Wainwright suggested that the parties explore mediation before proceeding to dispositive motions. Both parties agreed.

EF submits this confidential mediation brief to assist the Honorable Oscar Pelletreau (Ret.) in understanding EF's position, the factual and legal landscape of the dispute, and EF's willingness to explore a fair and equitable resolution. EF approaches this mediation in good faith, with the conviction that a negotiated outcome can honor the legacy of the Whitfield-Garner family's educational philanthropy, preserve charitable resources, and avoid the expense, delay, and uncertainty of continued litigation.

II. THE PARTIES

A. Estuary Foundation (Plaintiff)

Estuary Foundation is a California nonprofit public benefit corporation, incorporated on April 11, 2009, under the California Nonprofit Public Benefit Corporation Law (California Corporations Code §§ 5110–6910). EF is headquartered at 1440 Embarcadero Way, Suite 300, San Francisco, California 94107.

EF's stated mission is to advance equitable access to quality education through teacher development, school partnerships, and community-based learning initiatives in Northern California. Since its founding, EF has served hundreds of schools and tens of thousands of students across the San Francisco Bay Area, the greater Sacramento region, and the North Coast. EF's programs include new teacher mentorship and induction, professional development for experienced educators, community-school liaison services, curriculum development for underserved populations, and — until its discontinuation — the Bay Area Teacher Residency Initiative.

EF's key personnel include:

• Executive Director: Margot Ellison-Yee (serving since 2017), who oversees all aspects of EF's operations and strategic direction.

• Board Chair: Dr. Kenneth Oguike, a distinguished professor of education policy at the University of California, Berkeley, who has served on EF's Board of Directors since 2014 and as Chair since 2020.

• General Counsel: Priya Chattopadhyay, who serves as EF's in-house legal advisor and coordinates with outside counsel on litigation and compliance matters.

EF's financial position reflects the organization's maturity and operational strength. For Fiscal Year 2021, EF reported annual revenue of $28.3 million, as audited by Calloway & Auerbach CPAs, LLP. EF's total net assets as of the close of FY 2021 were $41.6 million, of which $14.2 million was classified as donor-restricted under applicable accounting standards. EF maintains robust financial controls and undergoes an annual independent audit, the results of which are publicly available through its Form 990 filings and its website.

In this proceeding, EF is represented by Calderwood & Harkness LLP, through Douglas Carmichael (Responsible Partner), Simone Laroche (Lead Associate), and Jeffrey Park (Associate), with offices at One Market Plaza, Suite 3600, San Francisco, California 94105.

B. The Whitfield-Garner Family Trust (Defendant / Cross-Complainant)

The Whitfield-Garner Family Trust is a California irrevocable trust, established on March 14, 2003, by the original settlors, the late Herbert R. Whitfield-Garner (who passed away in 2019) and Dorothy M. Garner (who passed away in 2016). The Trust's address is 2785 Pacific Heights Lane, San Francisco, California 94115.

The current Trustee is Roland Whitfield-Garner, the eldest son of the original settlors, who assumed the role of Trustee following his father's death in 2019. The Co-Trustee is Adrienne Garner-Bosch, the daughter of the original settlors. Nathaniel Whitfield-Garner, another son of the original settlors, serves as a Non-Trustee Advisor to the Trust, a role that permits him to participate in discussions regarding the Trust's philanthropic activities but does not confer fiduciary authority or decision-making power.

The WGFT holds an estimated corpus of approximately $62 million in diversified assets, including publicly traded securities, private equity investments, real property, and fixed-income instruments. The Trust has significant charitable commitments across a range of educational, environmental, and cultural causes, reflecting the broad philanthropic vision of the original settlors.

In this proceeding, WGFT is represented by Pratchett, Huang & Solano LLP, through Victoria Huang (lead partner) and Derek Solano Jr. (senior associate), with offices at 555 California Street, 28th Floor, San Francisco, California 94104.

C. Other Donors (Non-Parties Who Have Consented to Reallocation)

In addition to WGFT, two other donors contributed restricted funds to the BATRI program. Both have consented to the reallocation of their restricted contributions to EF's broader educational mission. Neither is a party to this litigation.

Cascabel Education Fund ("CEF") is a California nonprofit public benefit corporation dedicated to supporting innovative models of teacher preparation and retention. In 2019, CEF contributed $2,000,000 in restricted BATRI funds to EF. Following EF's notification that BATRI had been discontinued, CEF's Board of Directors, after due deliberation, executed a written consent to the reallocation of its restricted funds to EF's broader educational programming. CEF's consent letter, dated February 14, 2022, expressly acknowledges the impracticability of the original purpose and affirms CEF's confidence in EF's stewardship of the funds.

Newhall-Sievert Foundation ("NSF") is a California private foundation focused on K–12 education in the Bay Area. In 2020, NSF contributed $1,000,000 in restricted BATRI funds to EF. NSF likewise consented, in writing, to the reallocation of its restricted funds following the discontinuation of BATRI. NSF's consent letter, dated March 10, 2022, similarly recognizes the changed circumstances and endorses the continued use of the funds for educational purposes consistent with EF's mission.

The fact that WGFT is the sole donor that has refused to consent to reallocation is significant. It demonstrates that the broader philanthropic community — including two sophisticated institutional donors with substantial charitable commitments of their own — regards the reallocation as appropriate, responsible, and consistent with the spirit of their original gifts.

III. FACTUAL BACKGROUND

A. The Gift Instrument and Grant Agreement

On June 15, 2018, the Whitfield-Garner Family Trust and the Estuary Foundation executed the "Gift Instrument and Grant Agreement Between the Whitfield-Garner Family Trust and Estuary Foundation for the Bay Area Teacher Residency Initiative" (the "Gift Instrument"). The Gift Instrument was the product of several months of negotiation between the parties and was drafted with the involvement of both parties' legal counsel.

The Gift Instrument provided for a total grant in the amount of $5,000,000.00, to be disbursed in four tranches according to the following schedule:

Tranches 1 through 3 were disbursed on schedule, for a total of $4,000,000 in disbursed funds. Tranche 4, in the amount of $1,000,000, was never disbursed due to the suspension and ultimate discontinuation of the BATRI program, as discussed below. The undisbursed funds remain with WGFT.

The Gift Instrument contains two provisions that are central to the current dispute:

Section 3.1 (Restriction on Use of Grant Funds) provides, in relevant part:

"The Grant Funds shall be used solely and exclusively for the establishment, operation, and support of the Bay Area Teacher Residency Initiative as described in Exhibit A, and for no other purpose."

Section 7.2 (Reversion Upon discontinuation) provides, in relevant part:

"In the event the Program is discontinued prior to the expiration of the Grant Period, any unexpended Grant Funds shall, at the election of Grantor, be returned to Grantor within ninety (90) days of written demand."

The Grant Period was defined as the five-year period from 2018 through 2023. Exhibit A to the Gift Instrument described the BATRI program in detail, including its objectives, structure, partner school districts, and anticipated cohort sizes.

B. The BATRI Program — Launch, Operation, and Wind-Down

The Bay Area Teacher Residency Initiative was conceived as a partnership between EF and the two largest public school districts in the San Francisco Bay Area — SFUSD and OUSD — to recruit, train, and place aspiring teachers in high-need schools through an intensive, yearlong residency model. The program was designed to address chronic teacher shortages in underserved communities and to diversify the teaching workforce in the Bay Area.

September 2018: BATRI launched its inaugural cohort of 24 teacher residents, placed across six partner schools within SFUSD and OUSD. Residents were paired with experienced mentor teachers and participated in rigorous coursework alongside their classroom placements.

June 2019: The first cohort completed the residency program. Twenty-two of the twenty-four residents were placed in full-time teaching positions in Bay Area schools — a 92% completion and placement rate that exceeded EF's original projections and demonstrated the program's merit and effectiveness. The success of the first cohort generated significant enthusiasm among EF's stakeholders, BATRI's partner districts, and the broader educational community.

September 2019: A second cohort of 30 teacher residents commenced the program, reflecting the expansion that had been contemplated in the Gift Instrument's original program design.

March 2020: The emergence of the COVID-19 pandemic fundamentally disrupted all in-person educational activities across the State of California. Governor Newsom's executive orders and public health directives led to the closure of schools and the cessation of in-person instruction. BATRI was forced to adapt its residency model to remote and hybrid modalities — an adjustment that, while necessary, significantly diminished the clinical, in-classroom experience that was the hallmark of the program.

August 2020: OUSD formally terminated its partnership with BATRI, citing severe budget constraints exacerbated by the pandemic. OUSD's decision was driven by a district-wide reduction in external partnerships and a reallocation of resources to address the immediate crisis in remote learning infrastructure. EF made extensive efforts to persuade OUSD to continue the partnership, but the district's fiscal position made continuation impossible. With OUSD's withdrawal, the third BATRI cohort was reduced from the planned 24 residents to 15, all placed within SFUSD.

March 2021: SFUSD notified EF that it would not renew the BATRI partnership agreement for the 2021–2022 academic year, citing district-wide program consolidation. SFUSD's decision was the culmination of a broader reorganization of the district's external partnerships, again driven by the pandemic's budgetary and operational consequences. The loss of SFUSD — the last remaining partner school district — left BATRI without the institutional infrastructure necessary to operate a teacher residency program.

June 2021: The third and final BATRI cohort graduated. Twelve of the fifteen residents completed the program and were placed in teaching positions — a commendable outcome given the extraordinary circumstances under which the cohort operated.

December 31, 2021: After a thorough assessment of the landscape and extensive deliberation, EF's Board of Directors formally voted to wind down the BATRI program. The Board concluded that no partner school districts remained willing or able to host teacher residents in the foreseeable future, and that the program could not be sustained in any meaningful form. The Board's decision was made with full transparency to EF's donors, including WGFT, which had been kept informed of the program's challenges throughout the relevant period.

Over its three-year lifespan, BATRI enrolled a total of 69 teacher residents across three cohorts. Approximately 58 of those residents completed the program and were placed in full-time teaching positions in Bay Area schools — an overall completion and placement rate of approximately 84%. The program made a meaningful and lasting contribution to the educational landscape of the Bay Area, and its legacy endures in the classrooms where its graduates continue to teach.

C. Financial Summary — Funds at Issue

The financial accounting of the BATRI-restricted funds is straightforward and has been verified by EF's independent auditors.

BATRI program expenditures of $3,300,000 were incurred across the following categories: teacher resident stipends, partner school coordination and liaison services, curriculum development, mentor teacher compensation, program evaluation, and administrative overhead directly attributable to the program. All expenditures were consistent with the terms of the Gift Instrument and Exhibit A, and were documented in EF's annual reports to WGFT.

The remaining restricted BATRI funds from other donors are as follows:

The arithmetic reconciliation is as follows: $700,000 (unexpended WGFT balance) + $1,000,000 (undisbursed WGFT Tranche 4) + $2,000,000 (CEF) + $1,000,000 (NSF) = $4,700,000. This is the total amount subject to EF's Complaint for Declaratory Relief.

D. Pre-Litigation Correspondence and Filing History

The following timeline reflects the key pre-litigation and litigation events:

January 28, 2022: WGFT, through its counsel at Pratchett, Huang & Solano LLP, sent a formal demand letter to EF invoking Section 7.2 of the Gift Instrument and requesting the return of $1,700,000 within ninety (90) days. The demand letter characterized the discontinuation of BATRI as triggering the reversion clause and asserted that EF was contractually obligated to return both the $700,000 unexpended balance and to forgo any claim to the $1,000,000 undisbursed Tranche 4.

March 3, 2022: Calderwood & Harkness LLP responded on behalf of EF with a detailed letter setting forth EF's legal position. The response asserted that the restriction on BATRI funds should be modified under the cy pres doctrine and equitable deviation principles as codified in California Probate Code §§ 15409 and 15403, respectively. The letter explained that the charitable purpose of BATRI had become impracticable due to circumstances entirely beyond EF's control, including the withdrawal of both SFUSD and OUSD. The letter further stated EF's intention to seek judicial guidance on the proper disposition of the restricted funds and declined to return the unexpended balance.

April 15, 2022: Counsel for the parties conducted a final pre-suit meet-and-confer telephone conference. During the call, counsel for WGFT reiterated the Trust's demand for full return of the $1,700,000 and indicated that the Trust would pursue legal remedies, including a claim for interest, if the funds were not returned by the expiration of the ninety-day demand period. Counsel for EF reiterated EF's position that judicial modification was warranted and that EF would file for declaratory relief. No resolution was reached.

April 25, 2022: EF filed its Complaint for Declaratory Relief in the Superior Court of California, County of San Francisco, seeking a judicial declaration that the restriction on the BATRI funds may be modified under the cy pres doctrine and equitable deviation principles, and that EF is authorized to apply the restricted funds to its broader educational mission.

April 28, 2022: The ninety-day demand period under Section 7.2 of the Gift Instrument expired. EF had filed its Complaint three days prior, on April 25, 2022.

June 10, 2022: WGFT filed its Answer to EF's Complaint and a Cross-Complaint. The Cross-Complaint seeks restitution of $1,700,000 and claims interest at a rate of 7% per annum from April 28, 2022, the date the ninety-day demand period expired. At 7% per annum on a principal of $1,700,000, the claimed interest amounts to approximately $119,000 per year.

July 22, 2022: EF filed its Answer to the Cross-Complaint, denying liability and asserting affirmative defenses including cy pres, equitable deviation, impracticability, waiver, equitable estoppel, and the absence of any contractual or statutory basis for the claimed interest rate.

August 15, 2022: At the initial Case Management Conference before the Honorable Patricia R. Wainwright in Department 302, Judge Wainwright recommended that the parties explore mediation before proceeding to dispositive motions. Both parties agreed, and the mediation has been scheduled for September 2, 2022 before the Honorable Oscar Pelletreau (Ret.) at Bayshore Mediation Services.

IV. EF'S LEGAL POSITION

A. The Cy Pres Doctrine Permits Judicial Modification of the Restriction

The cy pres doctrine is a well-established principle of California law, codified at California Probate Code § 15409, which authorizes courts to modify the terms of a charitable trust or gift when the original charitable purpose has become unlawful, impracticable, or impossible to achieve. Under § 15409, where property is given in trust for a specific charitable purpose, and that purpose becomes impracticable or impossible, the court may direct the application of the property or income to a charitable purpose that reasonably approximates the original charitable purpose. The doctrine reflects the longstanding policy of California law to preserve and redirect charitable assets to productive uses rather than allowing them to be diverted from the charitable stream.

The application of cy pres to the present dispute is straightforward and compelling. The specific charitable purpose of the WGFT grant was the establishment, operation, and support of the Bay Area Teacher Residency Initiative — a teacher residency program operated in partnership with SFUSD and OUSD. That purpose has become impracticable because both partner school districts withdrew their participation. Without partner school districts willing and able to host teacher residents, the residency model cannot function. The impracticability is not hypothetical or speculative; it is an accomplished fact. BATRI has been discontinued, and no replacement partner districts could be secured despite EF's diligent efforts.

Critically, the impracticability of BATRI's specific purpose was caused by external forces entirely beyond EF's control. The COVID-19 pandemic — a global catastrophe of unprecedented scale — devastated public school budgets and operations throughout California. OUSD's termination of its partnership in August 2020 was a direct consequence of pandemic-driven budget constraints. SFUSD's decision not to renew the partnership in March 2021 was driven by the same forces, compounded by a district-wide consolidation of external programs. EF could not have foreseen these events in June 2018 when the Gift Instrument was executed, and EF bears no responsibility for the school districts' decisions.

Where cy pres applies, the court looks to the donor's "general charitable intent" to determine the direction of the redirected funds. Here, EF's broader educational mission — advancing equitable access to quality education through teacher development, school partnerships, and community-based learning initiatives — reasonably approximates the charitable intent behind the BATRI grant. The BATRI program was, at its core, a teacher development initiative designed to improve educational outcomes in underserved communities. EF's broader programming serves the same overarching objectives through complementary means.

Moreover, the general charitable intent of the original settlors — Herbert R. Whitfield-Garner and Dorothy M. Garner — is well documented. The Gift Instrument's preamble and recitals reflect the settlors' commitment to educational equity and teacher quality. The WGFT's broader philanthropic portfolio includes significant charitable commitments across the educational spectrum, further evidencing a general intent to support education rather than a narrow intent limited exclusively to a single programmatic vehicle. Under established California precedent, a donor who makes a substantial gift to a specific charitable program is presumed to have a general charitable intent unless the gift instrument contains express language demonstrating that the donor's intent was limited to the specific program and no other purpose. No such limiting language appears in the Gift Instrument here.

B. Equitable Deviation Under California Probate Code § 15403

In the alternative, and as a complementary basis for relief, EF invokes the doctrine of equitable deviation under California Probate Code § 15403. Under § 15403, the court may modify the administrative or dispositive provisions of a trust where, owing to circumstances not known to or anticipated by the settlor, the continuation of the trust under its terms would defeat or substantially impair the purposes of the trust. The doctrine recognizes that rigid adherence to the letter of a trust instrument can, in changed circumstances, undermine the very goals the instrument was designed to achieve.

The circumstances here clearly satisfy the requirements for equitable deviation. At the time the Gift Instrument was executed on June 15, 2018, no party anticipated the COVID-19 pandemic, the resulting closure of schools, the severe budgetary distress of California's public school districts, or the consequent withdrawal of both SFUSD and OUSD from the BATRI partnership. These are precisely the kind of circumstances "not known to or anticipated by the settlor" that § 15403 contemplates.

Strict adherence to Section 3.1's exclusive-use restriction would defeat the educational purpose of the gift by requiring that $4.7 million in charitable funds — including $1.7 million attributable to WGFT — either sit idle in perpetuity or be returned to the Trust's general corpus, where they would no longer serve any charitable purpose at all. This outcome would be antithetical to the settlors' manifest intent to support education. Equitable deviation allows the court to modify the restriction to permit the use of the funds for EF's broader educational programming, thereby preserving the charitable purpose while adapting to the new reality.

EF notes that equitable deviation and cy pres are not mutually exclusive remedies. Courts have applied both doctrines in appropriate cases, recognizing that they serve complementary functions: cy pres redirects the purpose of a charitable gift, while equitable deviation modifies the administrative or dispositive provisions of the instrument to facilitate the charitable purpose. Both doctrines support the relief EF seeks.

C. The Reversion Clause (Section 7.2) Does Not Preclude Judicial Modification

WGFT's principal argument is that Section 7.2 of the Gift Instrument creates a condition subsequent that, upon the discontinuation of BATRI, automatically triggers the reversion of unexpended funds to the Trust upon demand. WGFT contends that this contractual remedy is dispositive and forecloses any judicial modification under cy pres or equitable deviation.

EF respectfully disagrees, for several reasons.

First, the cy pres doctrine and equitable deviation are equitable powers of the court that operate independently of, and supersede, private contractual provisions. A private reversion clause cannot override the court's authority to direct charitable funds to approximate purposes when the original purpose has become impracticable. California law is clear that the power to apply cy pres is inherent in the court's equity jurisdiction and cannot be waived or contracted away by the parties to a charitable gift instrument. To hold otherwise would be to permit donors to immunize their gifts from judicial oversight — a result that would undermine the public interest in the preservation and productive use of charitable assets.

Second, the language of Section 7.2 is, on its face, permissive rather than mandatory. The clause provides that unexpended funds "shall, at the election of Grantor, be returned to Grantor within ninety (90) days of written demand" (emphasis added). The phrase "at the election of Grantor" suggests that the reversion is an option available to the grantor, not an irrevocable condition that automatically divests EF of the funds and removes all judicial discretion. This permissive framing is consistent with an administrative mechanism — providing the grantor with a contractual remedy in the event of discontinuation — rather than an absolute bar to any alternative disposition.

Third, the equities weigh against mechanical enforcement of the reversion clause. Both original settlors — Herbert R. Whitfield-Garner and Dorothy M. Garner — are deceased. Herbert passed away in 2019, and Dorothy passed away in 2016, before the Gift Instrument was even executed. The current trustees, Roland Whitfield-Garner and Adrienne Garner-Bosch, are administering the Trust consistent with their fiduciary duties, but they were not the original donors whose charitable intent is the touchstone of the cy pres analysis. While EF respects the trustees' stewardship role, the subjective intent that matters for purposes of cy pres is that of the original settlors, whose broad educational philanthropy is well documented.

Fourth, California courts have recognized that where a donor's general charitable intent can be established, cy pres modification is appropriate even in the presence of reverter language. The existence of a reversion clause does not, without more, defeat the application of cy pres; rather, it is one factor to be considered in the court's overall analysis. Where, as here, the donor's general charitable intent is evident from the gift instrument, the donor's broader philanthropic record, and the surrounding circumstances, a reversion clause does not constitute an insuperable barrier to judicial modification.

D. Consent of Other Donors Supports Reallocation

The positions of the other BATRI donors are instructive. Both the Cascabel Education Fund and the Newhall-Sievert Foundation — sophisticated institutional donors with their own fiduciary obligations — have consented in writing to the reallocation of their respective restricted BATRI funds to EF's broader educational mission. CEF consented to the reallocation of $2,000,000, and NSF consented to the reallocation of $1,000,000, for a combined total of $3,000,000.

These consents are significant for several reasons. They demonstrate that the charitable community — those most familiar with the BATRI program and its objectives — recognizes the impracticability of the original purpose and supports the proposed modification. They confirm that the reallocation of BATRI funds to EF's broader educational programming is regarded, by knowledgeable donors, as consistent with the spirit and intent of the original gifts. And they underscore that WGFT is the sole objecting party, and that its objection relates to $1,700,000 of the total $4,700,000 in restricted BATRI funds — just over one-third of the total amount at issue.

While WGFT's objection is entitled to respectful consideration, the unanimity of the other donors' support for reallocation provides important context for the mediator's assessment of the equities.

V. WGFT'S CROSS-COMPLAINT AND EF'S DEFENSES

A. Summary of WGFT's Cross-Complaint

On June 10, 2022, WGFT filed a Cross-Complaint against EF, asserting claims for restitution and breach of the Gift Instrument. The Cross-Complaint seeks the following relief:

(a) Restitution of $1,700,000, comprising the $700,000 in unexpended disbursed funds currently held by EF and the $1,000,000 undisbursed Tranche 4 (which, WGFT acknowledges, was never disbursed and remains in WGFT's custody);

(b) Interest at the rate of 7% per annum from April 28, 2022 — the date on which WGFT contends the ninety-day demand period under Section 7.2 expired — amounting to approximately $119,000 per year; and

WGFT's theory is that Section 7.2 of the Gift Instrument creates a condition subsequent that is automatically triggered upon EF's discontinuation of BATRI, and that EF's failure to return the funds within ninety days of WGFT's January 28, 2022 demand letter constitutes a breach of the Gift Instrument. WGFT further asserts that EF's refusal to return the funds entitles it to prejudgment interest at a rate of 7% per annum, although the source of this particular rate is not identified in the Cross-Complaint or in the Gift Instrument itself.

B. EF's Affirmative Defenses

EF has asserted the following affirmative defenses in its Answer to the Cross-Complaint:

Cy Pres. As discussed at length in Section IV.A above, the court has equitable authority under California Probate Code § 15409 to modify the restriction on the BATRI funds rather than require reversion. The specific charitable purpose has become impracticable, and the funds should be redirected to EF's broader educational mission, which reasonably approximates the original purpose.

Equitable Deviation. As discussed in Section IV.B above, the court may modify the dispositive provisions of the Gift Instrument under California Probate Code § 15403, where circumstances not anticipated at the time of the gift — specifically, the COVID-19 pandemic and the withdrawal of both partner school districts — would cause strict adherence to the instrument's terms to defeat or substantially impair the charitable purpose.

Impracticability. The charitable purpose of the BATRI program is impracticable, not merely inconvenient. The fundamental predicate of the program — the existence of partner school districts willing and able to host teacher residents — no longer exists. This is not a case where the program could be modified or adjusted to continue in a different form; the very foundation of the residency model has been removed. The impracticability is complete and was caused by forces beyond EF's control.

Waiver and Equitable Estoppel. During the period from 2020 through 2021, as the BATRI program faced mounting challenges and ultimately wound down, EF kept WGFT informed of the program's status through regular communications, including written reports and direct discussions between EF's leadership and the WGFT trustees. At no point during this period did WGFT object to EF's continued use of funds, demand the return of unexpended funds, or indicate that it would invoke the reversion clause. WGFT's demand letter was not sent until January 28, 2022 — nearly a full month after the Board's December 31, 2021 vote to formally wind down the program, and well after the program had, as a practical matter, ceased operations. EF submits that WGFT's silence and inaction during the critical period of the program's decline, combined with EF's reasonable reliance on that silence in continuing to manage the restricted funds, gives rise to defenses of waiver and equitable estoppel.

The Interest Claim Is Unsupported. WGFT's claim for interest at 7% per annum lacks any contractual or statutory foundation. The Gift Instrument does not specify an interest rate applicable to any return of funds under Section 7.2. WGFT has cited no provision of the Gift Instrument, no statute, and no other legal basis for the 7% rate it claims. Moreover, EF's filing of the Complaint for Declaratory Relief on April 25, 2022 — three days before the expiration of the ninety-day demand period — demonstrates that EF acted in good faith and sought judicial guidance in a timely manner. EF did not ignore or defy WGFT's demand; it responded through appropriate legal channels and placed the dispute before the court for resolution. Under these circumstances, no interest should accrue.

VI. MEDIATION OBJECTIVES AND SETTLEMENT PROPOSALS

A. EF's Mediation Objectives

EF approaches this mediation with the following objectives:

1. Preserve Charitable Resources. EF's primary objective is to obtain an agreed resolution that permits it to apply the restricted BATRI funds — or a substantial portion thereof — to its broader educational mission, consistent with the donors' general charitable intent. These funds were given to advance education, and EF believes they should continue to do so.

2. Avoid Protracted Litigation. Continued litigation will consume charitable resources on both sides. EF estimates that its legal fees through summary judgment could amount to an additional $175,000 to $250,000. WGFT's costs are likely comparable. These are resources that could — and should — be directed toward educational programming rather than courtroom disputes.

3. Maintain Institutional Reputation and Donor Relationships. EF's reputation as a responsible steward of charitable funds is among its most valuable assets. A protracted public dispute with a prominent donor family could undermine donor confidence and impair EF's ability to attract future philanthropic support. EF is keenly aware of this risk and wishes to resolve the matter in a manner that maintains the respect and goodwill of all stakeholders.

4. Establish a Framework for the Full $4.7 Million. While the dispute with WGFT concerns $1,700,000, the broader declaratory relief action encompasses the full $4,700,000 in restricted BATRI funds, including the contributions of the consenting donors. A resolution with WGFT would provide a comprehensive framework for the disposition of all restricted funds and enable EF to move forward with confidence.

B. Proposed Settlement Frameworks

EF presents the following settlement frameworks for the mediator's consideration. These proposals are offered in a spirit of good faith and flexibility. EF recognizes that the mediator may identify additional options or modifications, and EF is open to creative solutions that address both parties' legitimate interests.

Option 1: Full Reallocation with Enhanced Reporting and Naming Rights. Under this framework, WGFT would consent to the reallocation of the full $1,700,000 — comprising both the $700,000 in unexpended disbursed funds and the $1,000,000 undisbursed Tranche 4 — to EF's general educational programming. In exchange, EF would provide the following:

(a) Enhanced Annual Reporting. EF would provide WGFT with detailed annual reports for the remaining Grant Period (through 2023) and for an additional two years (through 2025), describing how the reallocated funds are being used, the educational outcomes achieved, and the populations served. These reports would be prepared to a standard comparable to the reporting EF currently provides to its largest institutional donors and would be subject to review by EF's independent auditors.

(b) Naming Recognition. EF would name a specific teacher development initiative or program component after Herbert R. Whitfield-Garner and Dorothy M. Garner, or in the name of the Whitfield-Garner Family Trust, at WGFT's election. The naming recognition would be prominently featured in EF's publications, website, and public communications for a period of no less than five years.

(c) Programmatic Commitment. EF would commit to using the reallocated funds solely for teacher development and school partnership activities — a broader but still education-focused restriction that aligns with both EF's mission and the spirit of the original BATRI grant. The funds would not be used for general administrative overhead or purposes unrelated to teacher development and school partnerships.

In consideration of the foregoing, WGFT would withdraw its Cross-Complaint, including any claim for interest. EF would dismiss its Complaint for Declaratory Relief. The parties would execute mutual releases and a settlement agreement memorializing the terms.

EF regards Option 1 as the optimal outcome. It preserves the full value of the charitable gift for educational purposes, honors the settlors' legacy through naming recognition, provides meaningful accountability through enhanced reporting, and resolves the litigation entirely.

Option 2: Partial Reallocation with Partial Return. Under this framework, WGFT would consent to the reallocation of the $700,000 in unexpended disbursed funds to EF's broader educational mission. EF would agree to forgo any claim to the $1,000,000 undisbursed Tranche 4, which would remain with WGFT and would not be disbursed.

(a) WGFT would withdraw its Cross-Complaint and waive any claim for interest.

(b) EF would provide WGFT with reporting on the use of the $700,000 for education-related purposes, consistent with the enhanced reporting described in Option 1.

The net effect of this framework is that EF retains $700,000 for educational programming; WGFT retains $1,000,000 that was never disbursed; neither party pays interest; and the litigation is fully resolved as between EF and WGFT.

EF regards Option 2 as an acceptable compromise, though less favorable than Option 1. It would preserve a significant portion of the charitable gift for educational use while acknowledging WGFT's concern about the undisbursed tranche. EF notes that the $1,000,000 Tranche 4 was never disbursed and remains in WGFT's custody, making its return a less contentious point. The more significant dispute concerns the $700,000 that EF holds and that WGFT seeks to reclaim.

Option 3: Structured Compromise with Third-Party Oversight. Under this framework, the parties would agree to the reallocation of the full $1,700,000 — or a mutually agreed portion thereof — subject to oversight by an independent educational consultant or advisory committee mutually agreed upon by the parties.

(a) Independent Oversight. An independent educational consultant or advisory committee, to be selected by mutual agreement of the parties, would oversee the reallocation of the funds to specific EF programs that most closely approximate BATRI's teacher residency model. The advisor would have access to EF's financial records pertaining to the reallocated funds and would provide periodic reports directly to WGFT.

(b) Successor Program. EF would commit to launching a successor teacher development program within eighteen (18) months of the execution of the settlement agreement. The successor program need not replicate the residency model precisely but would focus on teacher preparation, mentorship, or placement in high-need schools — activities that fall within the spirit of the original BATRI concept.

(c) Staged Disbursement of Tranche 4. The $1,000,000 undisbursed Tranche 4 would be released by WGFT upon EF's demonstration, verified by the independent advisor, that the successor program is operational and has commenced activities.

(d) Naming Rights. Naming rights for the successor program would be offered to WGFT, in recognition of the Whitfield-Garner family's foundational contribution to teacher development at EF.

EF regards Option 3 as a creative and potentially attractive framework, particularly if WGFT's concerns center on ensuring that the funds are used for purposes closely aligned with the original BATRI concept. The third-party oversight mechanism provides an additional layer of accountability and may address any trust deficit that exists between the parties.

C. EF's Assessment of WGFT's Likely Positions and Responses to Each Proposal

EF acknowledges that it can only speculate as to WGFT's negotiating posture, and it offers the following assessment with appropriate humility.

WGFT's primary concern, as EF understands it, is honoring the intent of the original settlors — Herbert R. Whitfield-Garner and Dorothy M. Garner — and ensuring that charitable funds are used for the purposes they designated. This is a legitimate and understandable concern, and EF shares the goal of honoring the settlors' legacy.

The current trustees, Roland Whitfield-Garner and Adrienne Garner-Bosch, and the non-trustee advisor, Nathaniel Whitfield-Garner, are the children of the original settlors. They may have a personal and emotional attachment to the BATRI concept and to their parents' philanthropic vision. The loss of BATRI may feel, to the family, like the loss of a tangible expression of their parents' values — a feeling that transcends the legal merits of the dispute.

EF believes that the proposals outlined above — particularly the enhanced reporting, naming rights, and the possibility of a successor program — can meaningfully address these concerns. By naming a program component after the settlors, EF would create a lasting tribute to their legacy. By committing to teacher development and school partnership activities, EF would ensure that the funds continue to serve the educational mission that animated the original gift. And by providing enhanced reporting and, in Option 3, independent oversight, EF would demonstrate its commitment to transparency and accountability.

If WGFT insists on the full reversion of $1,700,000, EF will, with regret, continue to litigate the matter. EF believes it has strong legal arguments under the cy pres doctrine and equitable deviation, and it is prepared to present those arguments to the court if necessary. However, EF strongly prefers a negotiated resolution that avoids the expenditure of additional legal fees and preserves the parties' ability to collaborate on educational philanthropy in the future.

VII. RISK ASSESSMENT FOR MEDIATION PURPOSES

EF presents the following candid assessment of the litigation risks facing both parties. This assessment is offered to assist the mediator in facilitating productive negotiations and in evaluating the parties' respective settlement positions.

A. EF's Litigation Strengths

EF's litigation position rests on several significant strengths:

1. Strong Cy Pres and Equitable Deviation Arguments. California law provides well-established mechanisms for the judicial modification of charitable restrictions when the original purpose has become impracticable. EF's legal arguments are grounded in the express provisions of the California Probate Code and are supported by a substantial body of case law.

2. Well-Documented Impracticability. The impracticability of the BATRI program is not a matter of dispute. Both SFUSD and OUSD withdrew from the partnership, and the program has been formally discontinued. The cause of the impracticability — the COVID-19 pandemic and its cascading effects on public education — is a matter of public record and would be sympathetically received by any court.

3. Consent of Other Donors. The fact that both Cascabel Education Fund and Newhall-Sievert Foundation have consented to the reallocation of their restricted funds provides powerful evidence that the charitable community regards the proposed modification as appropriate and consistent with the donors' intent.

4. General Charitable Intent. The original settlors' general charitable intent to support education is documented in the Gift Instrument's preamble and recitals, in the Trust's broader philanthropic record, and in the settlors' lifelong commitment to educational causes. This evidence supports the application of cy pres.

5. Good Faith Throughout. EF acted in good faith at every stage: it kept WGFT informed of BATRI's challenges, it responded to WGFT's demand letter through counsel, it filed a Complaint for Declaratory Relief before the ninety-day demand period expired, and it agreed to mediation at the court's suggestion. EF's conduct has been that of a responsible fiduciary seeking judicial guidance on a complex legal question, not a party seeking to evade its obligations.

B. EF's Litigation Risks

EF also candidly acknowledges the following litigation risks:

1. The Reversion Clause Is Express and Facially Unambiguous. Section 7.2 of the Gift Instrument is a clearly drafted provision that, on its face, provides a specific remedy for the discontinuation of BATRI. A court may give significant weight to this language and may be reluctant to override it through equitable doctrines, particularly if the court views the clause as evidence that the original donors contemplated and provided for the very circumstance that has occurred.

2. The Condition Subsequent Question Is a Close Legal Issue. The distinction between a "condition subsequent" (which triggers automatic reversion and may limit the applicability of cy pres) and a "restrictive covenant" (which is subject to cy pres modification) is a nuanced and unsettled area of California law. Reasonable jurists could disagree on the characterization of Section 7.2. If the court characterizes the clause as a condition subsequent, it may conclude that the reversion is automatic and that cy pres does not apply.

3. The Settlors' Subjective Intent Cannot Be Directly Established. Both Herbert R. Whitfield-Garner and Dorothy M. Garner are deceased. Their subjective intent — the cornerstone of the cy pres analysis — cannot be established through their testimony. EF will be limited to the documentary record, including the Gift Instrument, the Trust's philanthropic history, and the surrounding circumstances. While EF believes this record supports a finding of general charitable intent, the absence of live testimony is a limitation.

4. The Timing of the Complaint May Be Scrutinized. EF filed its Complaint for Declaratory Relief on April 25, 2022 — just three days before the expiration of the ninety-day demand period on April 28, 2022. A court may find that EF's failure to return the funds within the contractual period, even by three days, constitutes a technical breach. While EF contends that the filing of the declaratory judgment action demonstrates good faith, the timing may be characterized less favorably by WGFT.

5. Litigation Costs Will Consume Charitable Resources. Calderwood & Harkness LLP's fees through the completion of the declaratory judgment process — including dispositive motions, potential trial, and any appeal — are estimated at an additional $175,000 to $250,000. These costs would be borne by EF and would reduce the charitable resources available for educational programming. The prospect of consuming this magnitude of fees in a dispute over $1,700,000 — approximately 10% to 15% of the disputed amount — counsels strongly in favor of a negotiated resolution.

6. Reputational Risk. If EF is perceived as a nonprofit that retains restricted funds against a donor family's wishes, the resulting publicity could damage EF's reputation and impair its ability to attract future philanthropic support. While EF believes its legal position is sound, the court of public opinion does not always track the court of law.

C. WGFT's Litigation Risks

EF respectfully submits that WGFT also faces significant litigation risks, which may inform the Trust's approach to settlement:

1. Cy Pres May Be Applied Over WGFT's Objection. If the court agrees with EF's cy pres analysis, it may direct the application of the $1,700,000 to EF's broader educational mission regardless of WGFT's objection. In that scenario, WGFT would have incurred substantial legal fees to litigate a dispute it ultimately lost, and it would have no control over the specific uses to which the funds are directed — a worse outcome than a negotiated settlement that includes reporting and naming rights.

2. The Interest Claim Lacks a Contractual Basis. WGFT's claim for interest at 7% per annum has no foundation in the Gift Instrument, which does not specify an interest rate applicable to any return of funds under Section 7.2. WGFT has cited no statute authorizing this rate. The court may deny the interest claim in its entirety, particularly if it finds that EF's filing of the declaratory judgment action was timely and in good faith.

3. Public Scrutiny of the Trust. Continued public litigation could attract scrutiny of the Trust's stewardship and charitable giving practices. While the Trust's administration is undoubtedly competent, any public proceeding involves the risk of unflattering narratives — particularly in a dispute where a wealthy family trust is seeking to reclaim funds from a nonprofit serving underserved communities.

4. Financial Immateriality to the Trust. The $1,700,000 at issue represents approximately 2.7% of the Trust's estimated $62 million corpus. While EF does not suggest that financial immateriality should determine the legal outcome, it is relevant to the mediation calculus. The amount in dispute is financially inconsequential to WGFT but highly consequential to EF's educational programming. This asymmetry may influence the mediator's assessment of the equities.

5. Precedential Risk. If the court rules in EF's favor on the cy pres issue, the resulting decision could establish a precedent that affects the Trust's other charitable commitments. A ruling that reversion clauses in charitable gift instruments are subject to judicial modification under cy pres could limit the Trust's ability to enforce similar provisions in future gift agreements. A negotiated resolution, by contrast, would not create binding precedent.

VIII. CONCLUSION

Estuary Foundation respectfully submits this Confidential Mediation Brief in the hope that it will assist the Honorable Oscar Pelletreau (Ret.) in facilitating a productive and fair resolution of this dispute.

At its core, this case is about what happens when a good program — one that produced real results for real students and real teachers — becomes impossible to sustain because of forces beyond anyone's control. The Bay Area Teacher Residency Initiative was a success by any reasonable measure: 69 residents enrolled, 58 completed the program and entered the classroom, and countless students benefited from their work. The program's discontinuation was a loss — for EF, for the teaching profession, and for the communities it served. But the charitable dollars that made BATRI possible need not be lost as well.

EF seeks a resolution that honors the educational philanthropy of Herbert R. Whitfield-Garner and Dorothy M. Garner — two donors whose commitment to educational equity was evidently deep and genuine. EF shares that commitment, and it wishes to ensure that the funds the Whitfield-Garner family entrusted to it continue to serve the educational mission that both parties hold dear.

A mediated settlement avoids the expense, delay, and uncertainty of continued litigation for both parties. EF estimates that the combined legal fees of both parties through trial could approach or exceed $500,000 — a figure that represents a substantial fraction of the disputed amount and that, if spent on legal fees, would serve no charitable purpose whatsoever. A settlement preserves those resources for education.

EF is prepared to offer meaningful concessions to address WGFT's legitimate concerns about donor intent and charitable accountability. Enhanced reporting, naming recognition honoring the original settlors, programmatic commitments to teacher development, and independent third-party oversight are all on the table. EF approaches this mediation not as an adversary, but as a partner in the shared project of educational philanthropy.

EF respectfully requests that the mediator assist the parties in finding common ground — a resolution that preserves the charitable purpose, honors the Whitfield-Garner legacy, and avoids the further consumption of resources that could otherwise serve the educational mission both parties share.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Douglas Carmichael Responsible Partner One Market Plaza, Suite 3600 San Francisco, California 94105 Telephone: (415) 555-7200

Email: dcarmichael@calderwoodharkness.com

Attorneys for Plaintiff Estuary Foundation

Prepared by Simone Laroche and Jeffrey Park; reviewed and approved by Douglas Carmichael.

Dated: August 26, 2022

CONFIDENTIALITY NOTICE

This Mediation Brief is submitted solely for purposes of the mediation scheduled for September 2, 2022 before Hon. Oscar Pelletreau (Ret.) at Bayshore Mediation Services, 201 Mission Street, Suite 900, San Francisco, California 94105. It is confidential and privileged under California Evidence Code § 1119 and may not be disclosed, referenced, or used in any subsequent proceeding. Nothing contained herein shall be construed as an admission of any fact, liability, or legal position by any party. This document is protected from disclosure under the mediation confidentiality provisions of the California Evidence Code, Sections 1115–1128, and under the terms of the parties' mediation agreement. Any unauthorized disclosure, reproduction, or distribution of this document is strictly prohibited and may subject the disclosing party to sanctions and other remedies available under applicable law.

Tranche	Disbursement Date	Amount
Tranche 1	Upon execution (June 2018)	$1,500,000
Tranche 2	July 2019	$1,250,000
Tranche 3	July 2020	$1,250,000
Tranche 4	July 2021	$1,000,000
Total	$5,000,000
Category	Amount
Total WGFT funds disbursed (Tranches 1–3)	$4,000,000
Less: BATRI program expenditures (2018–2021)	($3,300,000)
Unexpended balance of WGFT disbursed funds	$700,000
Undisbursed Tranche 4 (held by WGFT)	$1,000,000
Total WGFT funds in dispute	$1,700,000
Donor	Restricted BATRI Funds	Status
Cascabel Education Fund	$2,000,000	Consented to reallocation
Newhall-Sievert Foundation	$1,000,000	Consented to reallocation
Subtotal (consenting donors)	$3,000,000
Whitfield-Garner Family Trust	$1,700,000	Objecting; subject of this dispute
Total restricted BATRI funds at issue	$4,700,000

CONFIDENTIAL MEDIATION BRIEF
Submitted to:
Hon. Oscar Pelletreau (Ret.) Bayshore Mediation Services 201 Mission Street, Suite 900 San Francisco, California 94105
In the Matter of:
Estuary Foundation v. The Whitfield-Garner Family Trust
Superior Court of California, County of San Francisco Case No. CGC-22-599481 Department 302 Hon. Patricia R. Wainwright, Presiding
On Behalf of Plaintiff Estuary Foundation, a California Nonprofit Public Benefit Corporation
Prepared by:
CALDERWOOD & HARKNESS LLP One Market Plaza, Suite 3600 San Francisco, California 94105
Douglas Carmichael, Responsible Partner Simone Laroche, Lead Associate Jeffrey Park, Associate
August 26, 2022
Submitted in advance of the mediation session scheduled for September 2, 2022
CONFIDENTIALITY NOTICE: This mediation brief is submitted for settlement purposes only, is confidential and privileged, and is not to be disclosed to any party other than the mediator. Nothing herein shall be deemed an admission of any fact or legal position. Protected under California Evidence Code § 1119. Any unauthorized disclosure, copying, or distribution of this document or the information contained herein is strictly prohibited.
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I. INTRODUCTION AND SUMMARY OF DISPUTE
Estuary Foundation ("EF") is a California nonprofit public benefit corporation, incorporated on April 11, 2009, and headquartered at 1440 Embarcadero Way, Suite 300, San Francisco, California 94107 (EIN 94-3127856). Since its founding, EF has been dedicated to a singular and vital mission: advancing equitable access to quality education through teacher development, school partnerships, and community-based learning initiatives in Northern California. Under the leadership of its Executive Director, Margot Ellison-Yee, who has served in that capacity since 2017, its Board Chair, Dr. Kenneth Oguike, and its General Counsel, Priya Chattopadhyay, EF has grown into one of the region's most respected educational nonprofits.
EF's financial position reflects the strength and credibility of its mission-driven work. In Fiscal Year 2021, EF reported annual revenue of $28.3 million, as audited by Calloway & Auerbach CPAs, LLP. EF holds total net assets of $41.6 million, of which $14.2 million is donor-restricted — a figure that underscores the degree to which EF is entrusted with substantial philanthropic resources and the seriousness with which it approaches its stewardship obligations.
The dispute before the mediator concerns approximately $4.7 million in restricted grant funds that were originally designated for the Bay Area Teacher Residency Initiative ("BATRI"), an innovative teacher development program conceived, launched, and operated by EF in partnership with the San Francisco Unified School District ("SFUSD") and the Oakland Unified School District ("OUSD"). BATRI was a program of considerable ambition and demonstrable success, placing nearly sixty new teachers in high-need Bay Area schools over three cohorts. However, the program has ceased operations — not because of any failure by EF, but because both partner school districts withdrew their participation, driven by the devastating and unanticipated effects of the COVID-19 pandemic and the resulting budgetary and organizational upheaval in public education.
EF now seeks judicial and equitable authorization to redirect the unexpended restricted funds to its broader educational mission, consistent with the donors' general charitable intent. The legal mechanisms for this redirection — the cy pres doctrine and equitable deviation — are well-established features of California trust and nonprofit law. Two of the three donors who contributed restricted BATRI funds have already consented to the proposed reallocation: the Cascabel Education Fund (which contributed $2,000,000) and the Newhall-Sievert Foundation (which contributed $1,000,000). Those donors share EF's view that the original purpose of the restricted gifts has become impracticable and that the funds should continue to serve education rather than sit idle or be returned.
The Whitfield-Garner Family Trust ("WGFT"), a California irrevocable trust established on March 14, 2003, is the sole objecting donor. WGFT contributed a total of $4,000,000 in disbursed funds to BATRI under a Gift Instrument and Grant Agreement dated June 15, 2018 (the "Gift Instrument"), which contemplated total funding of $5,000,000 across four tranches. Of the $4,000,000 disbursed, $3,300,000 was expended on program operations. WGFT contends that the $700,000 in unexpended disbursed funds and the $1,000,000 undisbursed fourth tranche — a total of $1,700,000 — must be returned to it under a reversion clause contained in Section 7.2 of the Gift Instrument. WGFT further claims interest at the rate of 7% per annum from April 28, 2022, the date it asserts the ninety-day contractual demand period expired, amounting to approximately $119,000 per year in claimed interest.
EF filed a Complaint for Declaratory Relief in the Superior Court of California, County of San Francisco, on April 25, 2022. WGFT filed its Answer and Cross-Complaint on June 10, 2022, seeking restitution of the $1,700,000 plus interest. EF filed its Answer to the Cross-Complaint on July 22, 2022. At the initial Case Management Conference held on August 15, 2022, the Honorable Patricia R. Wainwright suggested that the parties explore mediation before proceeding to dispositive motions. Both parties agreed.
EF submits this confidential mediation brief to assist the Honorable Oscar Pelletreau (Ret.) in understanding EF's position, the factual and legal landscape of the dispute, and EF's willingness to explore a fair and equitable resolution. EF approaches this mediation in good faith, with the conviction that a negotiated outcome can honor the legacy of the Whitfield-Garner family's educational philanthropy, preserve charitable resources, and avoid the expense, delay, and uncertainty of continued litigation.
II. THE PARTIES
A. Estuary Foundation (Plaintiff)
Estuary Foundation is a California nonprofit public benefit corporation, incorporated on April 11, 2009, under the California Nonprofit Public Benefit Corporation Law (California Corporations Code §§ 5110–6910). EF is headquartered at 1440 Embarcadero Way, Suite 300, San Francisco, California 94107.
EF's stated mission is to advance equitable access to quality education through teacher development, school partnerships, and community-based learning initiatives in Northern California. Since its founding, EF has served hundreds of schools and tens of thousands of students across the San Francisco Bay Area, the greater Sacramento region, and the North Coast. EF's programs include new teacher mentorship and induction, professional development for experienced educators, community-school liaison services, curriculum development for underserved populations, and — until its discontinuation — the Bay Area Teacher Residency Initiative.
EF's key personnel include:
• Executive Director: Margot Ellison-Yee (serving since 2017), who oversees all aspects of EF's operations and strategic direction.
• Board Chair: Dr. Kenneth Oguike, a distinguished professor of education policy at the University of California, Berkeley, who has served on EF's Board of Directors since 2014 and as Chair since 2020.
• General Counsel: Priya Chattopadhyay, who serves as EF's in-house legal advisor and coordinates with outside counsel on litigation and compliance matters.
EF's financial position reflects the organization's maturity and operational strength. For Fiscal Year 2021, EF reported annual revenue of $28.3 million, as audited by Calloway & Auerbach CPAs, LLP. EF's total net assets as of the close of FY 2021 were $41.6 million, of which $14.2 million was classified as donor-restricted under applicable accounting standards. EF maintains robust financial controls and undergoes an annual independent audit, the results of which are publicly available through its Form 990 filings and its website.
In this proceeding, EF is represented by Calderwood & Harkness LLP, through Douglas Carmichael (Responsible Partner), Simone Laroche (Lead Associate), and Jeffrey Park (Associate), with offices at One Market Plaza, Suite 3600, San Francisco, California 94105.
B. The Whitfield-Garner Family Trust (Defendant / Cross-Complainant)
The Whitfield-Garner Family Trust is a California irrevocable trust, established on March 14, 2003, by the original settlors, the late Herbert R. Whitfield-Garner (who passed away in 2019) and Dorothy M. Garner (who passed away in 2016). The Trust's address is 2785 Pacific Heights Lane, San Francisco, California 94115.
The current Trustee is Roland Whitfield-Garner, the eldest son of the original settlors, who assumed the role of Trustee following his father's death in 2019. The Co-Trustee is Adrienne Garner-Bosch, the daughter of the original settlors. Nathaniel Whitfield-Garner, another son of the original settlors, serves as a Non-Trustee Advisor to the Trust, a role that permits him to participate in discussions regarding the Trust's philanthropic activities but does not confer fiduciary authority or decision-making power.
The WGFT holds an estimated corpus of approximately $62 million in diversified assets, including publicly traded securities, private equity investments, real property, and fixed-income instruments. The Trust has significant charitable commitments across a range of educational, environmental, and cultural causes, reflecting the broad philanthropic vision of the original settlors.
In this proceeding, WGFT is represented by Pratchett, Huang & Solano LLP, through Victoria Huang (lead partner) and Derek Solano Jr. (senior associate), with offices at 555 California Street, 28th Floor, San Francisco, California 94104.
C. Other Donors (Non-Parties Who Have Consented to Reallocation)
In addition to WGFT, two other donors contributed restricted funds to the BATRI program. Both have consented to the reallocation of their restricted contributions to EF's broader educational mission. Neither is a party to this litigation.
Cascabel Education Fund ("CEF") is a California nonprofit public benefit corporation dedicated to supporting innovative models of teacher preparation and retention. In 2019, CEF contributed $2,000,000 in restricted BATRI funds to EF. Following EF's notification that BATRI had been discontinued, CEF's Board of Directors, after due deliberation, executed a written consent to the reallocation of its restricted funds to EF's broader educational programming. CEF's consent letter, dated February 14, 2022, expressly acknowledges the impracticability of the original purpose and affirms CEF's confidence in EF's stewardship of the funds.
Newhall-Sievert Foundation ("NSF") is a California private foundation focused on K–12 education in the Bay Area. In 2020, NSF contributed $1,000,000 in restricted BATRI funds to EF. NSF likewise consented, in writing, to the reallocation of its restricted funds following the discontinuation of BATRI. NSF's consent letter, dated March 10, 2022, similarly recognizes the changed circumstances and endorses the continued use of the funds for educational purposes consistent with EF's mission.
The fact that WGFT is the sole donor that has refused to consent to reallocation is significant. It demonstrates that the broader philanthropic community — including two sophisticated institutional donors with substantial charitable commitments of their own — regards the reallocation as appropriate, responsible, and consistent with the spirit of their original gifts.
III. FACTUAL BACKGROUND
A. The Gift Instrument and Grant Agreement
On June 15, 2018, the Whitfield-Garner Family Trust and the Estuary Foundation executed the "Gift Instrument and Grant Agreement Between the Whitfield-Garner Family Trust and Estuary Foundation for the Bay Area Teacher Residency Initiative" (the "Gift Instrument"). The Gift Instrument was the product of several months of negotiation between the parties and was drafted with the involvement of both parties' legal counsel.
The Gift Instrument provided for a total grant in the amount of $5,000,000.00, to be disbursed in four tranches according to the following schedule:
Tranches 1 through 3 were disbursed on schedule, for a total of $4,000,000 in disbursed funds. Tranche 4, in the amount of $1,000,000, was never disbursed due to the suspension and ultimate discontinuation of the BATRI program, as discussed below. The undisbursed funds remain with WGFT.
The Gift Instrument contains two provisions that are central to the current dispute:
Section 3.1 (Restriction on Use of Grant Funds) provides, in relevant part:
"The Grant Funds shall be used solely and exclusively for the establishment, operation, and support of the Bay Area Teacher Residency Initiative as described in Exhibit A, and for no other purpose."
Section 7.2 (Reversion Upon discontinuation) provides, in relevant part:
"In the event the Program is discontinued prior to the expiration of the Grant Period, any unexpended Grant Funds shall, at the election of Grantor, be returned to Grantor within ninety (90) days of written demand."
The Grant Period was defined as the five-year period from 2018 through 2023. Exhibit A to the Gift Instrument described the BATRI program in detail, including its objectives, structure, partner school districts, and anticipated cohort sizes.
B. The BATRI Program — Launch, Operation, and Wind-Down
The Bay Area Teacher Residency Initiative was conceived as a partnership between EF and the two largest public school districts in the San Francisco Bay Area — SFUSD and OUSD — to recruit, train, and place aspiring teachers in high-need schools through an intensive, yearlong residency model. The program was designed to address chronic teacher shortages in underserved communities and to diversify the teaching workforce in the Bay Area.
September 2018: BATRI launched its inaugural cohort of 24 teacher residents, placed across six partner schools within SFUSD and OUSD. Residents were paired with experienced mentor teachers and participated in rigorous coursework alongside their classroom placements.
June 2019: The first cohort completed the residency program. Twenty-two of the twenty-four residents were placed in full-time teaching positions in Bay Area schools — a 92% completion and placement rate that exceeded EF's original projections and demonstrated the program's merit and effectiveness. The success of the first cohort generated significant enthusiasm among EF's stakeholders, BATRI's partner districts, and the broader educational community.
September 2019: A second cohort of 30 teacher residents commenced the program, reflecting the expansion that had been contemplated in the Gift Instrument's original program design.
March 2020: The emergence of the COVID-19 pandemic fundamentally disrupted all in-person educational activities across the State of California. Governor Newsom's executive orders and public health directives led to the closure of schools and the cessation of in-person instruction. BATRI was forced to adapt its residency model to remote and hybrid modalities — an adjustment that, while necessary, significantly diminished the clinical, in-classroom experience that was the hallmark of the program.
August 2020: OUSD formally terminated its partnership with BATRI, citing severe budget constraints exacerbated by the pandemic. OUSD's decision was driven by a district-wide reduction in external partnerships and a reallocation of resources to address the immediate crisis in remote learning infrastructure. EF made extensive efforts to persuade OUSD to continue the partnership, but the district's fiscal position made continuation impossible. With OUSD's withdrawal, the third BATRI cohort was reduced from the planned 24 residents to 15, all placed within SFUSD.
March 2021: SFUSD notified EF that it would not renew the BATRI partnership agreement for the 2021–2022 academic year, citing district-wide program consolidation. SFUSD's decision was the culmination of a broader reorganization of the district's external partnerships, again driven by the pandemic's budgetary and operational consequences. The loss of SFUSD — the last remaining partner school district — left BATRI without the institutional infrastructure necessary to operate a teacher residency program.
June 2021: The third and final BATRI cohort graduated. Twelve of the fifteen residents completed the program and were placed in teaching positions — a commendable outcome given the extraordinary circumstances under which the cohort operated.
December 31, 2021: After a thorough assessment of the landscape and extensive deliberation, EF's Board of Directors formally voted to wind down the BATRI program. The Board concluded that no partner school districts remained willing or able to host teacher residents in the foreseeable future, and that the program could not be sustained in any meaningful form. The Board's decision was made with full transparency to EF's donors, including WGFT, which had been kept informed of the program's challenges throughout the relevant period.
Over its three-year lifespan, BATRI enrolled a total of 69 teacher residents across three cohorts. Approximately 58 of those residents completed the program and were placed in full-time teaching positions in Bay Area schools — an overall completion and placement rate of approximately 84%. The program made a meaningful and lasting contribution to the educational landscape of the Bay Area, and its legacy endures in the classrooms where its graduates continue to teach.
C. Financial Summary — Funds at Issue
The financial accounting of the BATRI-restricted funds is straightforward and has been verified by EF's independent auditors.
BATRI program expenditures of $3,300,000 were incurred across the following categories: teacher resident stipends, partner school coordination and liaison services, curriculum development, mentor teacher compensation, program evaluation, and administrative overhead directly attributable to the program. All expenditures were consistent with the terms of the Gift Instrument and Exhibit A, and were documented in EF's annual reports to WGFT.
The remaining restricted BATRI funds from other donors are as follows:
The arithmetic reconciliation is as follows: $700,000 (unexpended WGFT balance) + $1,000,000 (undisbursed WGFT Tranche 4) + $2,000,000 (CEF) + $1,000,000 (NSF) = $4,700,000. This is the total amount subject to EF's Complaint for Declaratory Relief.
D. Pre-Litigation Correspondence and Filing History
The following timeline reflects the key pre-litigation and litigation events:
January 28, 2022: WGFT, through its counsel at Pratchett, Huang & Solano LLP, sent a formal demand letter to EF invoking Section 7.2 of the Gift Instrument and requesting the return of $1,700,000 within ninety (90) days. The demand letter characterized the discontinuation of BATRI as triggering the reversion clause and asserted that EF was contractually obligated to return both the $700,000 unexpended balance and to forgo any claim to the $1,000,000 undisbursed Tranche 4.
March 3, 2022: Calderwood & Harkness LLP responded on behalf of EF with a detailed letter setting forth EF's legal position. The response asserted that the restriction on BATRI funds should be modified under the cy pres doctrine and equitable deviation principles as codified in California Probate Code §§ 15409 and 15403, respectively. The letter explained that the charitable purpose of BATRI had become impracticable due to circumstances entirely beyond EF's control, including the withdrawal of both SFUSD and OUSD. The letter further stated EF's intention to seek judicial guidance on the proper disposition of the restricted funds and declined to return the unexpended balance.
April 15, 2022: Counsel for the parties conducted a final pre-suit meet-and-confer telephone conference. During the call, counsel for WGFT reiterated the Trust's demand for full return of the $1,700,000 and indicated that the Trust would pursue legal remedies, including a claim for interest, if the funds were not returned by the expiration of the ninety-day demand period. Counsel for EF reiterated EF's position that judicial modification was warranted and that EF would file for declaratory relief. No resolution was reached.
April 25, 2022: EF filed its Complaint for Declaratory Relief in the Superior Court of California, County of San Francisco, seeking a judicial declaration that the restriction on the BATRI funds may be modified under the cy pres doctrine and equitable deviation principles, and that EF is authorized to apply the restricted funds to its broader educational mission.
April 28, 2022: The ninety-day demand period under Section 7.2 of the Gift Instrument expired. EF had filed its Complaint three days prior, on April 25, 2022.
June 10, 2022: WGFT filed its Answer to EF's Complaint and a Cross-Complaint. The Cross-Complaint seeks restitution of $1,700,000 and claims interest at a rate of 7% per annum from April 28, 2022, the date the ninety-day demand period expired. At 7% per annum on a principal of $1,700,000, the claimed interest amounts to approximately $119,000 per year.
July 22, 2022: EF filed its Answer to the Cross-Complaint, denying liability and asserting affirmative defenses including cy pres, equitable deviation, impracticability, waiver, equitable estoppel, and the absence of any contractual or statutory basis for the claimed interest rate.
August 15, 2022: At the initial Case Management Conference before the Honorable Patricia R. Wainwright in Department 302, Judge Wainwright recommended that the parties explore mediation before proceeding to dispositive motions. Both parties agreed, and the mediation has been scheduled for September 2, 2022 before the Honorable Oscar Pelletreau (Ret.) at Bayshore Mediation Services.
IV. EF'S LEGAL POSITION
A. The Cy Pres Doctrine Permits Judicial Modification of the Restriction
The cy pres doctrine is a well-established principle of California law, codified at California Probate Code § 15409, which authorizes courts to modify the terms of a charitable trust or gift when the original charitable purpose has become unlawful, impracticable, or impossible to achieve. Under § 15409, where property is given in trust for a specific charitable purpose, and that purpose becomes impracticable or impossible, the court may direct the application of the property or income to a charitable purpose that reasonably approximates the original charitable purpose. The doctrine reflects the longstanding policy of California law to preserve and redirect charitable assets to productive uses rather than allowing them to be diverted from the charitable stream.
The application of cy pres to the present dispute is straightforward and compelling. The specific charitable purpose of the WGFT grant was the establishment, operation, and support of the Bay Area Teacher Residency Initiative — a teacher residency program operated in partnership with SFUSD and OUSD. That purpose has become impracticable because both partner school districts withdrew their participation. Without partner school districts willing and able to host teacher residents, the residency model cannot function. The impracticability is not hypothetical or speculative; it is an accomplished fact. BATRI has been discontinued, and no replacement partner districts could be secured despite EF's diligent efforts.
Critically, the impracticability of BATRI's specific purpose was caused by external forces entirely beyond EF's control. The COVID-19 pandemic — a global catastrophe of unprecedented scale — devastated public school budgets and operations throughout California. OUSD's termination of its partnership in August 2020 was a direct consequence of pandemic-driven budget constraints. SFUSD's decision not to renew the partnership in March 2021 was driven by the same forces, compounded by a district-wide consolidation of external programs. EF could not have foreseen these events in June 2018 when the Gift Instrument was executed, and EF bears no responsibility for the school districts' decisions.
Where cy pres applies, the court looks to the donor's "general charitable intent" to determine the direction of the redirected funds. Here, EF's broader educational mission — advancing equitable access to quality education through teacher development, school partnerships, and community-based learning initiatives — reasonably approximates the charitable intent behind the BATRI grant. The BATRI program was, at its core, a teacher development initiative designed to improve educational outcomes in underserved communities. EF's broader programming serves the same overarching objectives through complementary means.
Moreover, the general charitable intent of the original settlors — Herbert R. Whitfield-Garner and Dorothy M. Garner — is well documented. The Gift Instrument's preamble and recitals reflect the settlors' commitment to educational equity and teacher quality. The WGFT's broader philanthropic portfolio includes significant charitable commitments across the educational spectrum, further evidencing a general intent to support education rather than a narrow intent limited exclusively to a single programmatic vehicle. Under established California precedent, a donor who makes a substantial gift to a specific charitable program is presumed to have a general charitable intent unless the gift instrument contains express language demonstrating that the donor's intent was limited to the specific program and no other purpose. No such limiting language appears in the Gift Instrument here.
B. Equitable Deviation Under California Probate Code § 15403
In the alternative, and as a complementary basis for relief, EF invokes the doctrine of equitable deviation under California Probate Code § 15403. Under § 15403, the court may modify the administrative or dispositive provisions of a trust where, owing to circumstances not known to or anticipated by the settlor, the continuation of the trust under its terms would defeat or substantially impair the purposes of the trust. The doctrine recognizes that rigid adherence to the letter of a trust instrument can, in changed circumstances, undermine the very goals the instrument was designed to achieve.
The circumstances here clearly satisfy the requirements for equitable deviation. At the time the Gift Instrument was executed on June 15, 2018, no party anticipated the COVID-19 pandemic, the resulting closure of schools, the severe budgetary distress of California's public school districts, or the consequent withdrawal of both SFUSD and OUSD from the BATRI partnership. These are precisely the kind of circumstances "not known to or anticipated by the settlor" that § 15403 contemplates.
Strict adherence to Section 3.1's exclusive-use restriction would defeat the educational purpose of the gift by requiring that $4.7 million in charitable funds — including $1.7 million attributable to WGFT — either sit idle in perpetuity or be returned to the Trust's general corpus, where they would no longer serve any charitable purpose at all. This outcome would be antithetical to the settlors' manifest intent to support education. Equitable deviation allows the court to modify the restriction to permit the use of the funds for EF's broader educational programming, thereby preserving the charitable purpose while adapting to the new reality.
EF notes that equitable deviation and cy pres are not mutually exclusive remedies. Courts have applied both doctrines in appropriate cases, recognizing that they serve complementary functions: cy pres redirects the purpose of a charitable gift, while equitable deviation modifies the administrative or dispositive provisions of the instrument to facilitate the charitable purpose. Both doctrines support the relief EF seeks.
C. The Reversion Clause (Section 7.2) Does Not Preclude Judicial Modification
WGFT's principal argument is that Section 7.2 of the Gift Instrument creates a condition subsequent that, upon the discontinuation of BATRI, automatically triggers the reversion of unexpended funds to the Trust upon demand. WGFT contends that this contractual remedy is dispositive and forecloses any judicial modification under cy pres or equitable deviation.
EF respectfully disagrees, for several reasons.
First, the cy pres doctrine and equitable deviation are equitable powers of the court that operate independently of, and supersede, private contractual provisions. A private reversion clause cannot override the court's authority to direct charitable funds to approximate purposes when the original purpose has become impracticable. California law is clear that the power to apply cy pres is inherent in the court's equity jurisdiction and cannot be waived or contracted away by the parties to a charitable gift instrument. To hold otherwise would be to permit donors to immunize their gifts from judicial oversight — a result that would undermine the public interest in the preservation and productive use of charitable assets.
Second, the language of Section 7.2 is, on its face, permissive rather than mandatory. The clause provides that unexpended funds "shall, at the election of Grantor, be returned to Grantor within ninety (90) days of written demand" (emphasis added). The phrase "at the election of Grantor" suggests that the reversion is an option available to the grantor, not an irrevocable condition that automatically divests EF of the funds and removes all judicial discretion. This permissive framing is consistent with an administrative mechanism — providing the grantor with a contractual remedy in the event of discontinuation — rather than an absolute bar to any alternative disposition.
Third, the equities weigh against mechanical enforcement of the reversion clause. Both original settlors — Herbert R. Whitfield-Garner and Dorothy M. Garner — are deceased. Herbert passed away in 2019, and Dorothy passed away in 2016, before the Gift Instrument was even executed. The current trustees, Roland Whitfield-Garner and Adrienne Garner-Bosch, are administering the Trust consistent with their fiduciary duties, but they were not the original donors whose charitable intent is the touchstone of the cy pres analysis. While EF respects the trustees' stewardship role, the subjective intent that matters for purposes of cy pres is that of the original settlors, whose broad educational philanthropy is well documented.
Fourth, California courts have recognized that where a donor's general charitable intent can be established, cy pres modification is appropriate even in the presence of reverter language. The existence of a reversion clause does not, without more, defeat the application of cy pres; rather, it is one factor to be considered in the court's overall analysis. Where, as here, the donor's general charitable intent is evident from the gift instrument, the donor's broader philanthropic record, and the surrounding circumstances, a reversion clause does not constitute an insuperable barrier to judicial modification.
D. Consent of Other Donors Supports Reallocation
The positions of the other BATRI donors are instructive. Both the Cascabel Education Fund and the Newhall-Sievert Foundation — sophisticated institutional donors with their own fiduciary obligations — have consented in writing to the reallocation of their respective restricted BATRI funds to EF's broader educational mission. CEF consented to the reallocation of $2,000,000, and NSF consented to the reallocation of $1,000,000, for a combined total of $3,000,000.
These consents are significant for several reasons. They demonstrate that the charitable community — those most familiar with the BATRI program and its objectives — recognizes the impracticability of the original purpose and supports the proposed modification. They confirm that the reallocation of BATRI funds to EF's broader educational programming is regarded, by knowledgeable donors, as consistent with the spirit and intent of the original gifts. And they underscore that WGFT is the sole objecting party, and that its objection relates to $1,700,000 of the total $4,700,000 in restricted BATRI funds — just over one-third of the total amount at issue.
While WGFT's objection is entitled to respectful consideration, the unanimity of the other donors' support for reallocation provides important context for the mediator's assessment of the equities.
V. WGFT'S CROSS-COMPLAINT AND EF'S DEFENSES
A. Summary of WGFT's Cross-Complaint
On June 10, 2022, WGFT filed a Cross-Complaint against EF, asserting claims for restitution and breach of the Gift Instrument. The Cross-Complaint seeks the following relief:
(a) Restitution of $1,700,000, comprising the $700,000 in unexpended disbursed funds currently held by EF and the $1,000,000 undisbursed Tranche 4 (which, WGFT acknowledges, was never disbursed and remains in WGFT's custody);
(b) Interest at the rate of 7% per annum from April 28, 2022 — the date on which WGFT contends the ninety-day demand period under Section 7.2 expired — amounting to approximately $119,000 per year; and
(c) Costs of suit and such other relief as the court deems just and proper.
WGFT's theory is that Section 7.2 of the Gift Instrument creates a condition subsequent that is automatically triggered upon EF's discontinuation of BATRI, and that EF's failure to return the funds within ninety days of WGFT's January 28, 2022 demand letter constitutes a breach of the Gift Instrument. WGFT further asserts that EF's refusal to return the funds entitles it to prejudgment interest at a rate of 7% per annum, although the source of this particular rate is not identified in the Cross-Complaint or in the Gift Instrument itself.
B. EF's Affirmative Defenses
EF has asserted the following affirmative defenses in its Answer to the Cross-Complaint:
Cy Pres. As discussed at length in Section IV.A above, the court has equitable authority under California Probate Code § 15409 to modify the restriction on the BATRI funds rather than require reversion. The specific charitable purpose has become impracticable, and the funds should be redirected to EF's broader educational mission, which reasonably approximates the original purpose.
Equitable Deviation. As discussed in Section IV.B above, the court may modify the dispositive provisions of the Gift Instrument under California Probate Code § 15403, where circumstances not anticipated at the time of the gift — specifically, the COVID-19 pandemic and the withdrawal of both partner school districts — would cause strict adherence to the instrument's terms to defeat or substantially impair the charitable purpose.
Impracticability. The charitable purpose of the BATRI program is impracticable, not merely inconvenient. The fundamental predicate of the program — the existence of partner school districts willing and able to host teacher residents — no longer exists. This is not a case where the program could be modified or adjusted to continue in a different form; the very foundation of the residency model has been removed. The impracticability is complete and was caused by forces beyond EF's control.
Waiver and Equitable Estoppel. During the period from 2020 through 2021, as the BATRI program faced mounting challenges and ultimately wound down, EF kept WGFT informed of the program's status through regular communications, including written reports and direct discussions between EF's leadership and the WGFT trustees. At no point during this period did WGFT object to EF's continued use of funds, demand the return of unexpended funds, or indicate that it would invoke the reversion clause. WGFT's demand letter was not sent until January 28, 2022 — nearly a full month after the Board's December 31, 2021 vote to formally wind down the program, and well after the program had, as a practical matter, ceased operations. EF submits that WGFT's silence and inaction during the critical period of the program's decline, combined with EF's reasonable reliance on that silence in continuing to manage the restricted funds, gives rise to defenses of waiver and equitable estoppel.
The Interest Claim Is Unsupported. WGFT's claim for interest at 7% per annum lacks any contractual or statutory foundation. The Gift Instrument does not specify an interest rate applicable to any return of funds under Section 7.2. WGFT has cited no provision of the Gift Instrument, no statute, and no other legal basis for the 7% rate it claims. Moreover, EF's filing of the Complaint for Declaratory Relief on April 25, 2022 — three days before the expiration of the ninety-day demand period — demonstrates that EF acted in good faith and sought judicial guidance in a timely manner. EF did not ignore or defy WGFT's demand; it responded through appropriate legal channels and placed the dispute before the court for resolution. Under these circumstances, no interest should accrue.
VI. MEDIATION OBJECTIVES AND SETTLEMENT PROPOSALS
A. EF's Mediation Objectives
EF approaches this mediation with the following objectives:
1. Preserve Charitable Resources. EF's primary objective is to obtain an agreed resolution that permits it to apply the restricted BATRI funds — or a substantial portion thereof — to its broader educational mission, consistent with the donors' general charitable intent. These funds were given to advance education, and EF believes they should continue to do so.
2. Avoid Protracted Litigation. Continued litigation will consume charitable resources on both sides. EF estimates that its legal fees through summary judgment could amount to an additional $175,000 to $250,000. WGFT's costs are likely comparable. These are resources that could — and should — be directed toward educational programming rather than courtroom disputes.
3. Maintain Institutional Reputation and Donor Relationships. EF's reputation as a responsible steward of charitable funds is among its most valuable assets. A protracted public dispute with a prominent donor family could undermine donor confidence and impair EF's ability to attract future philanthropic support. EF is keenly aware of this risk and wishes to resolve the matter in a manner that maintains the respect and goodwill of all stakeholders.
4. Establish a Framework for the Full $4.7 Million. While the dispute with WGFT concerns $1,700,000, the broader declaratory relief action encompasses the full $4,700,000 in restricted BATRI funds, including the contributions of the consenting donors. A resolution with WGFT would provide a comprehensive framework for the disposition of all restricted funds and enable EF to move forward with confidence.
B. Proposed Settlement Frameworks
EF presents the following settlement frameworks for the mediator's consideration. These proposals are offered in a spirit of good faith and flexibility. EF recognizes that the mediator may identify additional options or modifications, and EF is open to creative solutions that address both parties' legitimate interests.
Option 1: Full Reallocation with Enhanced Reporting and Naming Rights. Under this framework, WGFT would consent to the reallocation of the full $1,700,000 — comprising both the $700,000 in unexpended disbursed funds and the $1,000,000 undisbursed Tranche 4 — to EF's general educational programming. In exchange, EF would provide the following:
(a) Enhanced Annual Reporting. EF would provide WGFT with detailed annual reports for the remaining Grant Period (through 2023) and for an additional two years (through 2025), describing how the reallocated funds are being used, the educational outcomes achieved, and the populations served. These reports would be prepared to a standard comparable to the reporting EF currently provides to its largest institutional donors and would be subject to review by EF's independent auditors.
(b) Naming Recognition. EF would name a specific teacher development initiative or program component after Herbert R. Whitfield-Garner and Dorothy M. Garner, or in the name of the Whitfield-Garner Family Trust, at WGFT's election. The naming recognition would be prominently featured in EF's publications, website, and public communications for a period of no less than five years.
(c) Programmatic Commitment. EF would commit to using the reallocated funds solely for teacher development and school partnership activities — a broader but still education-focused restriction that aligns with both EF's mission and the spirit of the original BATRI grant. The funds would not be used for general administrative overhead or purposes unrelated to teacher development and school partnerships.
In consideration of the foregoing, WGFT would withdraw its Cross-Complaint, including any claim for interest. EF would dismiss its Complaint for Declaratory Relief. The parties would execute mutual releases and a settlement agreement memorializing the terms.
EF regards Option 1 as the optimal outcome. It preserves the full value of the charitable gift for educational purposes, honors the settlors' legacy through naming recognition, provides meaningful accountability through enhanced reporting, and resolves the litigation entirely.
Option 2: Partial Reallocation with Partial Return. Under this framework, WGFT would consent to the reallocation of the $700,000 in unexpended disbursed funds to EF's broader educational mission. EF would agree to forgo any claim to the $1,000,000 undisbursed Tranche 4, which would remain with WGFT and would not be disbursed.
(a) WGFT would withdraw its Cross-Complaint and waive any claim for interest.
(b) EF would provide WGFT with reporting on the use of the $700,000 for education-related purposes, consistent with the enhanced reporting described in Option 1.
(c) EF would dismiss its Complaint for Declaratory Relief insofar as it relates to WGFT.
The net effect of this framework is that EF retains $700,000 for educational programming; WGFT retains $1,000,000 that was never disbursed; neither party pays interest; and the litigation is fully resolved as between EF and WGFT.
EF regards Option 2 as an acceptable compromise, though less favorable than Option 1. It would preserve a significant portion of the charitable gift for educational use while acknowledging WGFT's concern about the undisbursed tranche. EF notes that the $1,000,000 Tranche 4 was never disbursed and remains in WGFT's custody, making its return a less contentious point. The more significant dispute concerns the $700,000 that EF holds and that WGFT seeks to reclaim.
Option 3: Structured Compromise with Third-Party Oversight. Under this framework, the parties would agree to the reallocation of the full $1,700,000 — or a mutually agreed portion thereof — subject to oversight by an independent educational consultant or advisory committee mutually agreed upon by the parties.
(a) Independent Oversight. An independent educational consultant or advisory committee, to be selected by mutual agreement of the parties, would oversee the reallocation of the funds to specific EF programs that most closely approximate BATRI's teacher residency model. The advisor would have access to EF's financial records pertaining to the reallocated funds and would provide periodic reports directly to WGFT.
(b) Successor Program. EF would commit to launching a successor teacher development program within eighteen (18) months of the execution of the settlement agreement. The successor program need not replicate the residency model precisely but would focus on teacher preparation, mentorship, or placement in high-need schools — activities that fall within the spirit of the original BATRI concept.
(c) Staged Disbursement of Tranche 4. The $1,000,000 undisbursed Tranche 4 would be released by WGFT upon EF's demonstration, verified by the independent advisor, that the successor program is operational and has commenced activities.
(d) Naming Rights. Naming rights for the successor program would be offered to WGFT, in recognition of the Whitfield-Garner family's foundational contribution to teacher development at EF.
EF regards Option 3 as a creative and potentially attractive framework, particularly if WGFT's concerns center on ensuring that the funds are used for purposes closely aligned with the original BATRI concept. The third-party oversight mechanism provides an additional layer of accountability and may address any trust deficit that exists between the parties.
C. EF's Assessment of WGFT's Likely Positions and Responses to Each Proposal
EF acknowledges that it can only speculate as to WGFT's negotiating posture, and it offers the following assessment with appropriate humility.
WGFT's primary concern, as EF understands it, is honoring the intent of the original settlors — Herbert R. Whitfield-Garner and Dorothy M. Garner — and ensuring that charitable funds are used for the purposes they designated. This is a legitimate and understandable concern, and EF shares the goal of honoring the settlors' legacy.
The current trustees, Roland Whitfield-Garner and Adrienne Garner-Bosch, and the non-trustee advisor, Nathaniel Whitfield-Garner, are the children of the original settlors. They may have a personal and emotional attachment to the BATRI concept and to their parents' philanthropic vision. The loss of BATRI may feel, to the family, like the loss of a tangible expression of their parents' values — a feeling that transcends the legal merits of the dispute.
EF believes that the proposals outlined above — particularly the enhanced reporting, naming rights, and the possibility of a successor program — can meaningfully address these concerns. By naming a program component after the settlors, EF would create a lasting tribute to their legacy. By committing to teacher development and school partnership activities, EF would ensure that the funds continue to serve the educational mission that animated the original gift. And by providing enhanced reporting and, in Option 3, independent oversight, EF would demonstrate its commitment to transparency and accountability.
If WGFT insists on the full reversion of $1,700,000, EF will, with regret, continue to litigate the matter. EF believes it has strong legal arguments under the cy pres doctrine and equitable deviation, and it is prepared to present those arguments to the court if necessary. However, EF strongly prefers a negotiated resolution that avoids the expenditure of additional legal fees and preserves the parties' ability to collaborate on educational philanthropy in the future.
VII. RISK ASSESSMENT FOR MEDIATION PURPOSES
EF presents the following candid assessment of the litigation risks facing both parties. This assessment is offered to assist the mediator in facilitating productive negotiations and in evaluating the parties' respective settlement positions.
A. EF's Litigation Strengths
EF's litigation position rests on several significant strengths:
1. Strong Cy Pres and Equitable Deviation Arguments. California law provides well-established mechanisms for the judicial modification of charitable restrictions when the original purpose has become impracticable. EF's legal arguments are grounded in the express provisions of the California Probate Code and are supported by a substantial body of case law.
2. Well-Documented Impracticability. The impracticability of the BATRI program is not a matter of dispute. Both SFUSD and OUSD withdrew from the partnership, and the program has been formally discontinued. The cause of the impracticability — the COVID-19 pandemic and its cascading effects on public education — is a matter of public record and would be sympathetically received by any court.
3. Consent of Other Donors. The fact that both Cascabel Education Fund and Newhall-Sievert Foundation have consented to the reallocation of their restricted funds provides powerful evidence that the charitable community regards the proposed modification as appropriate and consistent with the donors' intent.
4. General Charitable Intent. The original settlors' general charitable intent to support education is documented in the Gift Instrument's preamble and recitals, in the Trust's broader philanthropic record, and in the settlors' lifelong commitment to educational causes. This evidence supports the application of cy pres.
5. Good Faith Throughout. EF acted in good faith at every stage: it kept WGFT informed of BATRI's challenges, it responded to WGFT's demand letter through counsel, it filed a Complaint for Declaratory Relief before the ninety-day demand period expired, and it agreed to mediation at the court's suggestion. EF's conduct has been that of a responsible fiduciary seeking judicial guidance on a complex legal question, not a party seeking to evade its obligations.
B. EF's Litigation Risks
EF also candidly acknowledges the following litigation risks:
1. The Reversion Clause Is Express and Facially Unambiguous. Section 7.2 of the Gift Instrument is a clearly drafted provision that, on its face, provides a specific remedy for the discontinuation of BATRI. A court may give significant weight to this language and may be reluctant to override it through equitable doctrines, particularly if the court views the clause as evidence that the original donors contemplated and provided for the very circumstance that has occurred.
2. The Condition Subsequent Question Is a Close Legal Issue. The distinction between a "condition subsequent" (which triggers automatic reversion and may limit the applicability of cy pres) and a "restrictive covenant" (which is subject to cy pres modification) is a nuanced and unsettled area of California law. Reasonable jurists could disagree on the characterization of Section 7.2. If the court characterizes the clause as a condition subsequent, it may conclude that the reversion is automatic and that cy pres does not apply.
3. The Settlors' Subjective Intent Cannot Be Directly Established. Both Herbert R. Whitfield-Garner and Dorothy M. Garner are deceased. Their subjective intent — the cornerstone of the cy pres analysis — cannot be established through their testimony. EF will be limited to the documentary record, including the Gift Instrument, the Trust's philanthropic history, and the surrounding circumstances. While EF believes this record supports a finding of general charitable intent, the absence of live testimony is a limitation.
4. The Timing of the Complaint May Be Scrutinized. EF filed its Complaint for Declaratory Relief on April 25, 2022 — just three days before the expiration of the ninety-day demand period on April 28, 2022. A court may find that EF's failure to return the funds within the contractual period, even by three days, constitutes a technical breach. While EF contends that the filing of the declaratory judgment action demonstrates good faith, the timing may be characterized less favorably by WGFT.
5. Litigation Costs Will Consume Charitable Resources. Calderwood & Harkness LLP's fees through the completion of the declaratory judgment process — including dispositive motions, potential trial, and any appeal — are estimated at an additional $175,000 to $250,000. These costs would be borne by EF and would reduce the charitable resources available for educational programming. The prospect of consuming this magnitude of fees in a dispute over $1,700,000 — approximately 10% to 15% of the disputed amount — counsels strongly in favor of a negotiated resolution.
6. Reputational Risk. If EF is perceived as a nonprofit that retains restricted funds against a donor family's wishes, the resulting publicity could damage EF's reputation and impair its ability to attract future philanthropic support. While EF believes its legal position is sound, the court of public opinion does not always track the court of law.
C. WGFT's Litigation Risks
EF respectfully submits that WGFT also faces significant litigation risks, which may inform the Trust's approach to settlement:
1. Cy Pres May Be Applied Over WGFT's Objection. If the court agrees with EF's cy pres analysis, it may direct the application of the $1,700,000 to EF's broader educational mission regardless of WGFT's objection. In that scenario, WGFT would have incurred substantial legal fees to litigate a dispute it ultimately lost, and it would have no control over the specific uses to which the funds are directed — a worse outcome than a negotiated settlement that includes reporting and naming rights.
2. The Interest Claim Lacks a Contractual Basis. WGFT's claim for interest at 7% per annum has no foundation in the Gift Instrument, which does not specify an interest rate applicable to any return of funds under Section 7.2. WGFT has cited no statute authorizing this rate. The court may deny the interest claim in its entirety, particularly if it finds that EF's filing of the declaratory judgment action was timely and in good faith.
3. Public Scrutiny of the Trust. Continued public litigation could attract scrutiny of the Trust's stewardship and charitable giving practices. While the Trust's administration is undoubtedly competent, any public proceeding involves the risk of unflattering narratives — particularly in a dispute where a wealthy family trust is seeking to reclaim funds from a nonprofit serving underserved communities.
4. Financial Immateriality to the Trust. The $1,700,000 at issue represents approximately 2.7% of the Trust's estimated $62 million corpus. While EF does not suggest that financial immateriality should determine the legal outcome, it is relevant to the mediation calculus. The amount in dispute is financially inconsequential to WGFT but highly consequential to EF's educational programming. This asymmetry may influence the mediator's assessment of the equities.
5. Precedential Risk. If the court rules in EF's favor on the cy pres issue, the resulting decision could establish a precedent that affects the Trust's other charitable commitments. A ruling that reversion clauses in charitable gift instruments are subject to judicial modification under cy pres could limit the Trust's ability to enforce similar provisions in future gift agreements. A negotiated resolution, by contrast, would not create binding precedent.
VIII. CONCLUSION
Estuary Foundation respectfully submits this Confidential Mediation Brief in the hope that it will assist the Honorable Oscar Pelletreau (Ret.) in facilitating a productive and fair resolution of this dispute.
At its core, this case is about what happens when a good program — one that produced real results for real students and real teachers — becomes impossible to sustain because of forces beyond anyone's control. The Bay Area Teacher Residency Initiative was a success by any reasonable measure: 69 residents enrolled, 58 completed the program and entered the classroom, and countless students benefited from their work. The program's discontinuation was a loss — for EF, for the teaching profession, and for the communities it served. But the charitable dollars that made BATRI possible need not be lost as well.
EF seeks a resolution that honors the educational philanthropy of Herbert R. Whitfield-Garner and Dorothy M. Garner — two donors whose commitment to educational equity was evidently deep and genuine. EF shares that commitment, and it wishes to ensure that the funds the Whitfield-Garner family entrusted to it continue to serve the educational mission that both parties hold dear.
A mediated settlement avoids the expense, delay, and uncertainty of continued litigation for both parties. EF estimates that the combined legal fees of both parties through trial could approach or exceed $500,000 — a figure that represents a substantial fraction of the disputed amount and that, if spent on legal fees, would serve no charitable purpose whatsoever. A settlement preserves those resources for education.
EF is prepared to offer meaningful concessions to address WGFT's legitimate concerns about donor intent and charitable accountability. Enhanced reporting, naming recognition honoring the original settlors, programmatic commitments to teacher development, and independent third-party oversight are all on the table. EF approaches this mediation not as an adversary, but as a partner in the shared project of educational philanthropy.
EF respectfully requests that the mediator assist the parties in finding common ground — a resolution that preserves the charitable purpose, honors the Whitfield-Garner legacy, and avoids the further consumption of resources that could otherwise serve the educational mission both parties share.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Douglas Carmichael Responsible Partner One Market Plaza, Suite 3600 San Francisco, California 94105 Telephone: (415) 555-7200
Email: dcarmichael@calderwoodharkness.com
Attorneys for Plaintiff Estuary Foundation
Prepared by Simone Laroche and Jeffrey Park; reviewed and approved by Douglas Carmichael.
Dated: August 26, 2022
CONFIDENTIALITY NOTICE
This Mediation Brief is submitted solely for purposes of the mediation scheduled for September 2, 2022 before Hon. Oscar Pelletreau (Ret.) at Bayshore Mediation Services, 201 Mission Street, Suite 900, San Francisco, California 94105. It is confidential and privileged under California Evidence Code § 1119 and may not be disclosed, referenced, or used in any subsequent proceeding. Nothing contained herein shall be construed as an admission of any fact, liability, or legal position by any party. This document is protected from disclosure under the mediation confidentiality provisions of the California Evidence Code, Sections 1115–1128, and under the terms of the parties' mediation agreement. Any unauthorized disclosure, reproduction, or distribution of this document is strictly prohibited and may subject the disclosing party to sanctions and other remedies available under applicable law.
Tranche | Disbursement Date | Amount
Tranche 1 | Upon execution (June 2018) | $1,500,000
Tranche 2 | July 2019 | $1,250,000
Tranche 3 | July 2020 | $1,250,000
Tranche 4 | July 2021 | $1,000,000
Total | $5,000,000
Category | Amount
Total WGFT funds disbursed (Tranches 1–3) | $4,000,000
Less: BATRI program expenditures (2018–2021) | ($3,300,000)
Unexpended balance of WGFT disbursed funds | $700,000
Undisbursed Tranche 4 (held by WGFT) | $1,000,000
Total WGFT funds in dispute | $1,700,000
Donor | Restricted BATRI Funds | Status
Cascabel Education Fund | $2,000,000 | Consented to reallocation
Newhall-Sievert Foundation | $1,000,000 | Consented to reallocation
Subtotal (consenting donors) | $3,000,000
Whitfield-Garner Family Trust | $1,700,000 | Objecting; subject of this dispute
Total restricted BATRI funds at issue | $4,700,000