Conservatorship of Sims
Filed 7/26/12 Conservatorship of Sims CA2/4
California Rules of Court, rule 8.1115(a), prohibits courts
and parties from citing or relying on opinions not certified for publication or
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR
Conservatorship
of the Person and Estate of ARTHUR JAMES SIMS.
B227813
(Los Angeles County
Super. Ct. No. BP112616)
ANDREA
SIMS-JAMES,
Petitioner and Respondent,
v.
HAZEL
B. SIMS,
Objector and Appellant
ENRIGHT
PREMIER WEALTH ADVISORS, INC., et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior
Court for Los
Angeles County, Reva Goetz, Judge.
Affirmed as modified.
John Guy; Tritt & Tritt and James
F. Tritt for Objector and Appellant.
Law Offices of Paul R. Hammons and
Paul R. Hammons for Petitioner and Respondent.
Stone Rosenblatt Cha and John V.
Tamborelli; Tamborelli Law Group and John V. Tamborelli for Defendant and
Respondent Enright Premier Wealth Advisors, Inc.
Jones, Bell, Abbott, Fleming & Fitzgerald
and William M. Turner for Defendant and Respondent TD Ameritrade, Inc.
Margolis & Tisman and Naki M.
Irvin for Defendant and Respondent Charles Schwab & Co., Inc.
Hazel B. Sims appeals from a judgment
in an action brought on behalf of her husband Arthur James Sims by Andrea
Sims-James, the conservator of Arthur’s estate.
Arthur’s brother, Dillard Sims; after Dillard died, Arthur’s daughter Andrea
was appointed temporary successor conservator.)
The probate court found that Hazel breached her
influence over Arthur, who had been diagnosed with dementia, by having Arthur
sign a quitclaim deed transferring to her his interest in the real property
(their residence) they owned as joint tenants.
The court ruled that (1) the transfer of the property, which was
community property, severed the joint tenancy and that Hazel and Arthur became
tenants in common; (2) for his interest as tenant in common, Arthur was
entitled to half of the proceeds Hazel received when she subsequently sold the
property; and (3) Arthur was also entitled to half of Hazel’s interest as
damages for her breach of fiduciary duty under Family Code section 1101,
subdivision (g). The court also ordered
Hazel to pay Andrea’s attorney fees for her prosecution of the action, as well
as all or some of the attorney fees incurred by Enright Premier Wealth
Advisors, Inc. (Enright), TD Ameritrade, Inc. (Ameritrade), and Charles Schwab
& Co., Inc. (Schwab), who were named as defendants in the action.
We conclude the award of half of
Hazel’s interest in the sale proceeds is not authorized by law. Therefore, we strike that portion of the
damages award. In all other respects, we
affirm the judgment as so modified.
BACKGROUND
Hazel and Arthur married in 1968. At the time of their marriage, Arthur had
three children -- triplets Andrea, Arthur, and Anthony -- who were teenagers
and lived with their mother in Oakland.
Hazel and Arthur bought their residence, a triplex, in October 1972,
holding title as “ARTHUR SIMS and HAZEL B. SIMS, husband and wife AS JOINT
TENANTS.” They lived together in the
triplex until Arthur was moved to an assisted living facility, Westchester
Villa, in late 2005.
In July 1999, Arthur was on a trip
with his brother Dillard when Dillard first noticed that Arthur seemed to have
some problems with his memory. By early
2002, Arthur’s mental health had deteriorated significantly. When Dillard visited him in February of that
year, he observed that Arthur “was in very bad shape both physically and
mentally.” When Dillard took Arthur to a
movie, Arthur did not understand it. At
dinner with Arthur and Hazel, Dillard learned that Arthur had had a stroke.
In early June 2002, Hazel went to a
neighbor, Robert Duitsman, who was a lawyer, and asked if he could help set up
an estate plan for her and Arthur, because she was concerned that Arthur’s
faculties were beginning to fail.
Duitsman met with Arthur and Hazel on June 20,
2002. Hazel, who did most of the talking, told
Duitsman that she wanted to make sure that Arthur’s needs would be met and that
they could stay in their home, because she was concerned that her faculties
would eventually fail as well. Duitsman
took notes about the documents they intended to create: wills, a trust, advanced health care
directives, and general durable powers of attorney. He noted that they wanted standard pour over
wills, where their property would go to the survivor or the trust. The executor of Arthur’s will would be Hazel,
then Patricia Poindexter,
name="_ftnref3" title="">[3]
then a man named Ron Hairston. The
executor of Hazel’s will would be Poindexter, then Hairston. The primary asset of the trust would be the
triplex (which had an estimated value of $475,000 at that time), and the
trustee would be Hazel, then Poindexter, then Hairston. The agent for Hazel’s advanced health care
directive would be Hairston, then Poindexter, and the agent for Arthur’s would
be Hazel, then Hairston. Under the
general durable powers of attorney, Hazel chose Poindexter, then Hairston, and
Arthur chose Hazel, then Poindexter.
After that meeting, Duitsman prepared
a quitclaim deed, by which Arthur
would transfer his interest in the triplex to Hazel as her sole and separate
property. As he explained at trial,
“Arthur was in the beginning stages of losing his faculties . . . and
Hazel was in better shape. And so the
idea was Arthur would convey his interest to Hazel and then through Hazel this
trust would be funded . . . under the terms that were included in the draft
that we prepared.” Duitsman met with
Arthur alone for about 20 to 30 minutes, explaining the plan and its
consequences, i.e., that the property would go to Hazel, who would be the
person making decisions for him. When
Duitsman was satisfied that Arthur understood the plan, Arthur signed the deed
and Duitsman notarized it. The quitclaim
deed was dated August 28, 2002.
Duitsman met again with Hazel in
2003. Poindexter, who happened to be
visiting Hazel and Arthur, attended the meeting with Hazel. Following that meeting, Duitsman prepared a
trust agreement and a trust transfer deed.
Both documents were dated October 16, 2003. The trust transfer deed would transfer the
triplex from Hazel to “Hazel B. Sims, as Trustee of the Hazel B. Sims Family
Trust Dated October 16, 2003.” The trust
agreement provided that, upon Hazel’s death, the real property of the trust
estate would be held for the benefit of Arthur during his lifetime, or for as
long as he lived there, and the successor trustee was directed to take any
action to maintain and manage the property to provide for Arthur’s needs. The trust agreement also provided that when
the property was no longer needed to provide for Arthur’s needs, it would be
added to the residue of the estate.
Finally, the trust agreement set forth the distribution of the residue
and remainder of the trust estate; under that provision, each of Arthur’s
children would receive five percent.
Hazel never signed the trust agreement
or trust transfer deed, despite having been contacted many times by Duitsman’s
office. Each time his office contacted
her, Hazel had some excuse for not completing the trust, saying that she was
busy, or had not been feeling well, or had lost it. He testified at trial that he would not have
recommended that Arthur sign the quitclaim deed had he known that the trust was
not going to be completed.
Arthur’s condition continued to
deteriorate. In 2005, he flagged down a
neighbor, Karen Mayo, and asked if she would take him to the airport. As Mayo was talking to him, Hazel came out of
her garage. Mayo, who had seen Arthur in
the neighborhood but did not know him, learned that Arthur was Hazel’s
husband. Mayo and Hazel eventually
exchanged information, and Mayo began calling to check on them every day and
stopping by several times a week. She
often picked up groceries for them, drove Hazel to the doctor’s office, and
accompanied Hazel when she took Arthur to see the doctor. She knew that Arthur had children, but she
never saw them at the triplex.
In early October 2005, Dillard visited
Arthur at Hazel’s request. It was
apparent to Dillard that Arthur had severe dementia, and Hazel told him that
she no longer could care for him on her own.
He told her she had to decide whether to bring in someone to care for
him or place him in a facility that could care for him. On October 24, 2005, she admitted Arthur to
Westchester Villa.
For the next year, Hazel went to
Westchester Villa every day to visit Arthur, and stayed all day. In October 2006, Hazel had
after which she spent three or four months in a rehabilitation facility. When she left that facility, she could not
get around or take care of her personal needs, so Poindexter arranged for her
to have 24-hour care. She continued to
visit Arthur; Mayo, who had been visiting him almost every day, would drive her
there.
Within a few months after Hazel left
the rehabilitation facility, she sold
the triplex. As part of the sale, the buyer
agreed that Hazel could live in one of the units, rent free, for the first
year. At the end of that year, in April
2008, the new owner told Hazel she would have to start paying rent. The cost of 24-hour care and rent was going
to be exorbitant, so Poindexter talked to Hazel (who was beginning to show
signs of dementia) about moving into Westchester Villa to be close to
Arthur. Hazel moved into the same unit
as Arthur’s, which was a locked unit for people with dementia, but she kept
calling Poindexter, asking why she was there and saying that she wanted to
die. Poindexter suggested to Hazel that
she could be moved to Atlanta to be closer to Poindexter. After two months at Westchester Villa, Hazel
agreed, and was moved to Atlanta and placed in an assisted living facility.
Sometime in 2007, Poindexter was given
power of attorney over Hazel’s bank accounts.
She also oversaw Arthur’s care at Westchester Villa and handled his
finances. When Arthur needed anything,
someone at Westchester Villa would call Poindexter and she would take care of
it. If it involved something local,
Poindexter would contact Mayo, and Mayo would take care of it. Poindexter and Mayo also would arrange for
Mayo to call Hazel while she was visiting Arthur, so Arthur could hear Hazel’s
voice.
In April 2008, just before Hazel moved
into Westchester Villa, Dillard came to Los Angeles to visit Arthur and learned
that the triplex had been sold. Several
months later, on September 11, 2008, Dillard filed petitions for appointment of
himself as temporary conservator and as probate conservator of Arthur’s
estate. The petitions alleged that
Dillard had learned that the family residence (which was alleged to be
community property) had been sold, that the proceeds from the sale were placed
with Enright, and that Enright would not provide any information to him about
those proceeds. The petitions also
alleged that both Arthur and Hazel had Alzheimer’s disease. Despite the requirement in Probate Code
section 1821, subdivision (b), that the petitioner list the names and addresses
of the proposed conservatee’s spouse and relatives within the second degree,
the petitions provided the names and addresses only of Arthur’s children and
Dillard. Similarly, notice of the
hearings on the petitions was given only to Dillard and the children, despite
the requirement in section 1822 to give notice to the spouse of a proposed
conservatee.
In the Probate Investigator’s Petition
Report dated September 18, 2008, the probate investigator reported that Dillard
told him that Poindexter had a power of attorney for Hazel and that he had
spoken to her, although he did not discuss “the issues” with her. The investigator also reported that he did
not attempt to contact Poindexter himself, “based on the concern voiced by the
proposed conservator.”
stated the conservatorship was not necessary at that time because Arthur was
receiving adequate care.
Dillard was appointed temporary
conservator on September 19, 2008, and letters of temporary conservatorship
were issued on September 24, 2008. On
October 27, 2008, Dillard, as conservator of Arthur’s estate, filed a petition
under sections 3023, 3057, and 3087, alleging six causes of action: (1) to determine the community property
characterization of proceeds received by Hazel from the sale of the family
residence; (2) breach of fiduciary duty; (3) constructive trust; (4)
accounting; (5) money had and received; and (6) set aside. The petition named Hazel, Enright, and Ameritrade
as defendants.
The petition alleged that Arthur had
executed a quitclaim deed, transferring the community property family residence
to Hazel, as part of a plan to give Hazel more control over the couple’s
finances. It alleged that the plan contemplated
that the property would be transferred to a trust, but that was not done, and
that Hazel sold the property and preserved the proceeds from the sale (alleged
to be $900,000) in assets held by Enright and Ameritrade in Hazel’s name. It alleged that Hazel improperly
characterized the proceeds from the sale as her separate property, and it asked
that they be re-characterized as community property and that Arthur recover
damages resulting from Hazel’s breach of fiduciary duty. Both Hazel and Poindexter, as holder of power
of attorney for Hazel, were personally served with the petition and summons on
November 13, 2008 and November 9, 2008, respectively,
and Hazel filed verified objections to the petition on January 20, 2009.
Dillard died on March 9, 2009. Prior to his death, he had filed a motion for
leave to file a first amended petition to add Schwab as a defendant. The motion was granted on March 11, and the
amended petition was filed on March 17.
On March 19, Dillard’s attorney reported to the court that Dillard had
died. A few weeks later, the same
attorney filed a petition to appoint Andrea as temporary conservator and
another petition to appoint her as successor conservator.
attorney noted that Hazel had not been served with copies of the petition or
notice of the hearing. When asked how he
came to be at the hearing, he said that he was listed on the proof of service,
but his client was not. Andrea was
appointed temporary conservator, and the court continued the hearing on the
appointment of a permanent successor conservator.
At the continued hearing, Hazel’s
attorney objected to the appointment of Andrea as successor conservator; he
subsequently filed a petition on behalf of Hazel, seeking appointment of
Poindexter as successor conservator of Arthur’s estate. The probate investigator interviewed Arthur,
and asked him if he wanted Andrea, Poindexter, or someone else to be his
conservator. Arthur responded, “I only
want Patricia [Poindexter]. I trust her
with money.” Andrea opposed Hazel’s
petition, and the hearing on that petition and Andrea’s petition was continued,
to be heard in conjunction with an evidentiary
hearing on the breach of fiduciary duty petition.
Arthur died on November 9, 2009,
before that evidentiary hearing was held.
Two weeks later, Hazel filed a petition for termination of the
conservatorship due to the death of the conservatee, and a motion to dismiss the
petition against her on the ground that the conservatorship was terminated by
Arthur’s death. Those petitions, along
with the other petitions, were set for trial in May 2010.
The first witness at trial was Dr.
David Trader, who testified as an expert witness on Arthur’s mental capacity at
the time he executed the quitclaim deed in August 2002. Based upon Arthur’s medical records,
Dillard’s declaration reporting his observations during his visits with Arthur,
and Duitsman’s deposition testimony regarding his meetings with Hazel and
Arthur, Dr. Trader opined that, to a reasonable degree of medical certainty,
Arthur met the psychiatric criteria for dementia in August 2002 and had several
significant mental function deficits, and that he lacked the mental capacity to
execute the quitclaim deed. He also
opined that Arthur was susceptible to undue influence in August 2002 and
beyond, and that he “lacked sufficient mental capacity to understand and
appreciate that he did not execute trust documents after 2002.”
Mayo, Poindexter, and Andrea.
In his closing argument, Hazel’s
attorney argued that Andrea did not have standing to bring the petition for
breach of fiduciary duty because she was not the personal representative of
Arthur’s estate. He contended that,
because Arthur was deceased, the correct procedure for bringing such a claim
would have been to file a petition as the personal representative under section
850. He also argued that there were no
damages because Arthur died intestate, and therefore had the triplex remained
community property, it would have become Hazel’s separate property upon
Arthur’s death. Finally, counsel argued
the court lacked jurisdiction because no notice was given to Hazel of the
initial conservatorship proceedings. The
court rejected the final argument, saying that Hazel had submitted to the
court’s jurisdiction.
The court issued a statement of
decision on August 20, 2010. It began
its analysis by noting that the petition for breach of fiduciary duty was
brought before Arthur died, under sections 3023, 3057, and 3087. It found that the petition could have been
brought under section 850, subdivision (a)(1)(D), requesting essentially
identical relief under sections 855 and 859; under section 858, such petitions
are not subject to dismissal on account of the death of the conservatee and can
be maintained by the personal representative of the deceased. Therefore, the court amended the petition to
add the allegations already asserted by Andrea, under sections 850, subdivision
(a)(1)(D), 855, and 858. The court
ordered Andrea to file a petition for appointment as administrator of the
Estate of Arthur Sims; once she was appointed, her temporary letters as
temporary conservator would expire.
Addressing the merits of the petition,
the court found that Arthur did not have the capacity to sign the quitclaim
deed on August 28, 2002, and that he did not receive any benefit by signing
it. The court also found that the property
was community property held in joint tenancy up to the time it was transferred
to Hazel, but the transfer severed the joint tenancy and Hazel and Arthur
became tenants-in-common. The court
observed that, even though there was no evidence of what Arthur intended would
happen with his estate, he would not have transferred his property to Hazel
without an understanding that the property would be placed in their trust. The court concluded that Arthur was unduly
influenced by Hazel within the meaning of Family Code section 721. It found that the transfer of Arthur’s
interest was not made with full knowledge of the facts because there was no
evidence that Arthur knew the property would not be transferred into the trust,
and there was no evidence that Arthur intended to disinherit his children. The court awarded damages under Family Code
section 1101, subdivision (g), as follows:
(1) Hazel is liable to Arthur for 50 percent of the proceeds from the
sale of the triplex (net of encumbrances, selling expenses, and PVP attorney
fees) for his interest as tenant-in-common; (2) Hazel is liable to Arthur for
50 percent of her interest in the
proceeds from the sale (net of encumbrances, selling expenses, and PVP attorney
fees); and (3) Hazel is liable to Andrea for her attorney fees incurred in
prosecuting the petition for breach of fiduciary duty.
Further hearings were held to address
various issues, including petitions filed by Enright, Ameritrade, and Schwab to
liquidate the holdings at issue and interplead those funds, and for their
attorney fees. Ultimately, the court
awarded attorney fees as follows: (1)
$84,532.36 in attorney fees and costs to Andrea, to be paid by Hazel; (2)
$24,088 to Schwab, to be paid by the parties equally from the holdings in the
Schwab account; (3) $21,400.17 to Ameritrade, to be paid by the parties equally
from the holdings in the Ameritrade account; (4) $12,000 to Enright, to be paid
by Hazel; and (5) $9,127 to the PVP attorney, to be paid by the parties
equally. Judgment was entered on
December 21, 2010, from which Hazel now appeals.
DISCUSSION
On appeal, Hazel challenges the
jurisdiction of the court and Andrea’s standing based upon several procedural
irregularities. She also contends there
was insufficient evidence to support the probate court’s finding that Arthur lacked
the mental capacity to execute the quitclaim deed or that he was subject to
undue influence, and that the court’s award of damages was improper because
Hazel was entitled to all of the proceeds from the sale of the triplex under
intestacy laws. Finally, she asserts
that attorney fees should not have been assessed against her.
A. Procedural
Irregularities
Hazel complains of several procedural
irregularities in this case. First, she
argues that the probate court did not have jurisdiction from the outset of the
conservatorship because no notice was given to Hazel, as required under
sections 1821 and 1822. Second, she
argues that the first amended petition for breach of fiduciary duty was void
because it was filed after Dillard’s death and before the appointment of a
successor conservator, and it was not verified, as required by section
1021. Third, she argues that the probate
court had no jurisdiction to conduct the trial on the petition for breach of
fiduciary duty because under section 1860, the conservatorship terminated upon
Arthur’s death. Finally, she argues that
the probate court’s sua sponte post-trial amendment of the petition deprived
her of due process and that, in any event, Andrea did not have standing to
prosecute the amended petition because she was not the personal representative
of Arthur’s estate. While we acknowledge
there were significant procedural irregularities in this case, we conclude that
none requires reversal of the judgment.
1.
to Hazel
Hazel contends the probate court did
not have jurisdiction to grant any relief because the entire conservatorship
proceeding was void due to Dillard’s failure to comply with the statutory
mandate to name and give notice to her as the prospective conservatee’s
spouse. (§§ 1821, subd. (b)(1),
1822, subd. (b)(1).) She is
incorrect. Failure to comply with the
notice provisions in a conservatorship proceeding does not render the orders
issued in the proceeding void, but merely voidable. (Conservatorship
of O’Connor (1996) 48 Cal.App.4th 1076, 1091-1092, citing
671, 676, and Abelleira v. District Court
of Appeal (1941) 17 Cal.2d 280, 288.)
Here, despite not receiving notice at the outset, Hazel participated in
the conservatorship proceedings, including by filing objections to the petition
for breach of fiduciary duty that did not include any objection to the probate
court’s jurisdiction. Thus, she
effectively waived the procedural error.
(Conservatorship of O’Connor,
2.
Hazel contends the judgment against
her is void because the first amended petition was filed after Dillard died and
before a temporary conservator was appointed, and it was not verified. There is no question that, as Hazel asserts,
if a plaintiff bringing an action was deceased before the action was filed, the
judgment is void because the court never acquired jurisdiction over the
plaintiff. (See Walter v. National Indem. Co. (1970) 3 Cal.App.3d 630, 634.) But here, Dillard was alive when the original
verified petition for breach of fiduciary duty was filed. Therefore, the probate court had properly
acquired jurisdiction, and the court retained jurisdiction after Dillard’s
death. (See 14 Witkin, Summary of Cal.
Law (10th ed. 2005) Wills and Probate, § 951, pp. 1060-1061 [noting that
“‘death of the conservator merely terminates the relationship of conservator
and conservatee but does not terminate the conservatorship proceeding’”],
quoting Cal. Law Revision Com. com to Prob. Code, § 1860.)
While it is no doubt unusual for an
amended petition to be filed after the petitioner has died, we note that in
this case, Dillard had filed a motion to file an amended petition (which
attached the proposed amended petition) before his death. The purpose of the amendment was simply to
add Schwab as a defendant and add allegations related to Schwab. Schwab responded to the petition and did not
object. Although Hazel objected on the
ground that Dillard was deceased and no successor conservator had been
appointed, the probate court subsequently appointed Andrea as temporary
successor conservator and authorized her to continue prosecuting the action
Dillard had commenced. Therefore, to the
extent there was error in allowing the amended petition to be filed before the
successor conservator was appointed, the error was harmless.
3.
Death
Hazel contends the conservatorship
terminated upon Arthur’s death, and therefore Andrea as conservator lost her
power to prosecute the petition for breach of fiduciary duty when Arthur
died. She is correct, but the issue is
moot.
Section 1860 provides that “[a]
conservatorship continues until terminated by the death of the conservatee or
by order of the court.” (§ 1860,
subd. (a); see also Quiroz v. Seventy
Ave. Center (2006) 140 Cal.App.4th 1256, 1269, fn. 11.) However, the probate court’s jurisdiction
over the conservatee’s estate does not immediately terminate upon the
conservatee’s death; the court retains jurisdiction over the proceeding “for
the purpose of settling the accounts of the guardian or conservator or for any
other purpose incident to the enforcement of the judgments and orders of the
court upon such accounts.”
(§ 2630.) Although “the
scope of the court’s jurisdiction should be construed broadly to accomplish
these goals” (Conservatorship of O’Connor,
supra, 48 Cal.App.4th at p. 1089), in
this case the probate court in its statement of decision found there were no
assets subject to supervision under the conservatorship of Arthur’s
estate. Therefore, there does not appear
to be any basis for the probate court’s continuing jurisdiction over the
conservatorship.
The probate court seems to have
recognized that section 2630 did not provide any grounds for continuing
jurisdiction over the conservatorship, and thus amended the petition for breach
of fiduciary duty after trial to make it an action brought under section 850,
subdivision (a)(1)(D), which action may be brought by a conservator on behalf
of a conservatee and maintained by the personal representative of the estate
after the death of the conservatee.
Thus, although Hazel is correct that Andrea did not have the power to
prosecute the action as conservator, we find the issue is moot in light of the
probate court’s ruling, discussed in section A.4., post, amending the petition and its appointment of Andrea as
personal representative of Arthur’s estate.
4. Post-trial
Amendment of the Petition
As noted, the probate court sua sponte
amended the petition for breach of fiduciary duty after trial, converting the
claims that had been brought under sections 3023, 3057, and 3087 -- which are
claims that may be resolved only in conservatorship proceedings -- into claims
brought under sections 850, subdivision (a)(1)(D), 855, and 859, based upon the
same allegations and seeking the same relief.
Under section 858, claims brought by a conservator under sections 850,
855, and 859 “shall not be dismissed on account of the death of the
conservatee” and may continue to be prosecuted by the personal representative
of the conservatee’s estate. On appeal,
Hazel contends the probate court’s action deprived her of due process and was
ineffective to confer standing upon Andrea because she was not the personal
representative at the time of the trial.
Hazel is correct that due process
requires that the defendant be given notice of the relief sought and an
opportunity to defend. (
(2004) 114 Cal.App.4th 1308, 1321.) But
here, Hazel was given notice of the relief sought. As the probate court explained, the original
petition was brought under statutes applicable in conservatorship proceedings,
and sought relief under Family Code sections 721 and 1101. The post-trial amendment simply changed the
statutes under which the same claims were brought, seeking the same relief
under the Family Code. While Hazel
asserts in her appellant’s opening brief that sections 850, 855, and 859
provide “different rights of recovery and [are] subject to different defenses,”
she fails to show that there were any differences in the kinds of recovery
sought or defenses available in this case.
In other words, she does not demonstrate how the outcome might have been
different had the petition been amended before trial. Thus, to the extent the probate court erred
by failing to give Hazel notice of its intent to amend the petition, the error
was harmless. (In re James F. (2008) 42 Cal.4th 901, 918 [“If the outcome of a
proceeding has not been affected, denial of a right to notice and a hearing may
be deemed harmless and reversal is not required”].)
Turning to Hazel’s second contention
-- that regardless of the probate court’s post-trial amendment, Andrea lacked
standing to prosecute the action under section 850 because she was not the
personal representative of Arthur’s estate -- we conclude that any error in
this respect also was harmless in light of Andrea’s subsequent appointment as
personal representative (which occurred before judgment was entered). In some ways, the circumstances in this case
are similar to cases in which a corporation’s corporate status is suspended
during the pendency of an action, but the corporate powers are later
revived. In those cases, the corporate
reviver retroactively validates the corporation’s actions taken in the
litigation during the suspension. (See,
e.g., Cahill v. San Diego Gas &
Electric Co. (2011) 194 Cal.App.4th 939, 959.) Here, Andrea’s authority to prosecute the
petition was technically suspended when Arthur died because his death
terminated the conservatorship. But
section 858 specifically provides that an action under section 850 may not be
dismissed due to the death of the conservatee, and that the personal
representative may proceed with the matter.
All actions that Andrea took after Arthur’s death could have been taken
by her as the personal representative.
Therefore, there is no prejudice to Hazel by holding that her
appointment as personal representative retroactively validated her prosecution.
In short, while the court’s action in
amending the petition post-trial and ordering Andrea to apply for appointment
as the personal representative of Arthur’s estate was highly unusual, there was
no prejudicial deprivation of due process and Andrea’s lack of standing was
cured before entry of judgment. Thus,
reversal of the judgment is not warranted.
B. Sufficiency
of the Evidence to Establish Lack of Capacity and Undue Influence
Hazel contends there was insufficient
evidence to support the probate court’s findings that Arthur lacked the
capacity to sign the quitclaim deed and that he was unduly influenced by Hazel
within the meaning of Family Code section 721.
She asserts that the court based its findings entirely on the testimony
of Dr. Trader, and argues that Dr. Trader’s testimony was inadmissible because
he relied upon medical records that were not authenticated. We agree that Dr. Trader’s testimony was
inadmissible to the extent it relied upon unauthenticated medical records, and
therefore the probate court’s finding that Arthur lacked the capacity to sign
the quitclaim deed is not supported, but we conclude there was sufficient
evidence, other than Dr. Trader’s testimony, to support the court’s finding
that Arthur was unduly influenced by Hazel.
We begin with the admissibility of Dr.
Trader’s testimony and report. When Dr.
Trader was called to testify on the first day of trial, Hazel’s counsel
objected, saying that he did not receive Dr. Trader’s report, with its
attachments that included portions of medical records, until 10:30 that
morning. The court agreed that counsel
needed some time to digest the report before having to cross-examine Dr.
Trader, and gave counsel two choices:
have Dr. Trader testify the following day, or allow him to testify on
direct that day and come back sometime in the future for
cross-examination. Hazel’s counsel chose
the second option.
Dr. Trader came back several weeks
later to be cross-examined. After
conducting the cross-examination, and before closing arguments, Hazel’s counsel
moved to strike all of Dr. Trader’s testimony on the ground, among others, that
his testimony was based upon hearsay medical records that were not
authenticated. The court turned to Andrea’s
counsel, who said that he had the medical records with an authentication from
the custodian of records. The court
asked whether the records had been produced pursuant to a subpoena, and upon
Andrea’s counsel’s affirmative response, the court denied the motion to strike,
stating that “as an expert, [Dr. Trader] is entitled to rely on written and
documentary evidence. And he testified
what he was relying on, on what documents assisted him to form the basis for his
opinion.”
Hazel contends on appeal that the
probate court erred by denying her motion to strike. In her respondent’s brief, Andrea asserts
there was no error because her counsel provided testimony to authenticate the
documents. She states: “The court solicited testimony from Attorney
Hammons whether the Kaiser Medical records were subpoenaed and he explained
that he had the Kaiser Reports and that they met all foundational requirements
as they were subpoenaed from Kaiser’s and authenticated by the custodian of
records.” In fact, Hammons did not
been made under oath, it would be insufficient to satisfy the requirement that
business records be authenticated by the custodian of records or other
qualified witness. (Evid. Code,
§ 1562.) It simply was an offer of
proof, and the medical records were never authenticated and admitted into
evidence.
Because Dr. Trader’s testimony was
based in large part on the contents of the unauthenticated medical records, his
expert opinions had no evidentiary value.
(See Garibay v. Hemmat (2008)
161 Cal.App.4th 735, 742-743 [the opinion of a medical expert based upon
medical records that have not been authenticated and admitted into evidence has
no evidentiary value].) Therefore, Hazel
is correct that there was insufficient evidence to support the probate court’s
findings as to Arthur’s capacity to understand and execute the quitclaim
deed.
This does not mean, however, that the
judgment must be reversed. The probate
court’s ruling that Hazel breached her fiduciary duty also was based upon the
court’s finding that Arthur executed the quitclaim deed as part of a plan in
which the property would be placed in the family trust, and there was no
evidence that he would have signed it had he known that Hazel was not going to
follow through with the plan. Under
Cal.App.4th 277, that finding, if supported by
to support the court’s ruling that Hazel breached her fiduciary duty to Arthur
under Family Code section 721.
In Starr,
the appellate court examined a series of Supreme Court cases involving findings
of undue influence where one spouse conveyed property to the other spouse based
on the latter’s unfulfilled promise to reconvey. (In re
Marriage of Starr, supra, 189
Cal.App.4th at pp. 284-286.) The
appellate court concluded that the conveyee’s failure to fulfill the promise he
made when the other spouse agreed to quitclaim her interest in their property
to him was constructive fraud and undue influence, which breached the first
spouse’s fiduciary duty to the other. (
Here, Duitsman testified that he
drafted the quitclaim deed as part of the estate plan he created for Arthur and
Hazel, that he explained to Arthur that the purpose of the deed was to allow
Hazel to transfer the property into a trust, and that he would not have
recommended that Arthur sign the deed if he had known that Hazel would not transfer
the property into the trust. That
evidence is sufficient to support the probate court’s finding of undue
influence and breach of fiduciary duty.
C. Damages
Hazel challenges the probate court’s
award of damages against her, arguing that if the quitclaim deed is deemed
void, the property would remain community property, which would have passed to
Hazel under the laws of intestacy. She
is correct that, in the absence of the quitclaim deed, Arthur’s share of the
property held as community property would have passed to her upon Arthur’s
death. (See 11 Witkin, Summary of Cal.
Law (10th ed. 2005) Community Property, § 251, p. 870.) But Hazel’s argument fails to take into
account that the probate court found that she breached her fiduciary duty. Under Family Code section 1101, the remedies
for the breach “shall include, but not be limited to, an award to the other
spouse of 50 percent, or an amount equal to 50 percent, of any asset
undisclosed or transferred in breach of the fiduciary duty plus attorney’s fees
and court costs. The value of the asset
shall be determined to be its highest value at the date of the breach of
fiduciary duty, the date of the sale or disposition of the asset, or the date
of the award by the court.” (Fam. Code,
§ 1101, subd. (g).) Therefore,
Arthur’s estate was entitled to recover 50 percent of the proceeds from the
sale of the triplex.
name="_ftnref11" title="">[11]
The probate court’s award, however,
appears to go far beyond the remedies provided in the statute. Family Code section 1101 provides that, upon
a finding of breach of fiduciary duty resulting in impairment to the injured
spouse’s community property interest, in addition to awarding monetary damages
under subdivisions (g) or (h), the court may determine the injured spouse’s
rights of ownership in the community property (Fam. Code, § 1101, subd.
(b)), or may order that injured spouse’s name be added to the title of the
property (Fam. Code, § 1101, subd. (c)).
Here, the court determined that the quitclaim deed (which it found was
executed by Arthur as a result of Hazel’s undue influence) severed the joint
tenancy and made them tenants in common, and each party’s interest was that
party’s separate property. It then
awarded Arthur’s estate 50 percent of the entire property plus 50 percent of Hazel’s
interest, for a total of 75 percent.
Because the parties had not addressed the statutory authority for such
an award, we requested and received supplemental briefs on the issue.
In her supplemental brief, Hazel
argues there was no basis under the statute or the facts for the award of 50
percent of Hazel’s interest, and that the trial court’s comments concerning the
amount of proceeds that would be available to Hazel after the award indicate
that the court intended Hazel to retain half of the sale proceeds, less certain
amounts for attorney fees and costs.
Andrea, on the other hand, argues in her
court’s award was proper. She asserts
that Arthur was entitled to 50 percent of the total proceeds of the sale based
upon the court’s finding that the quitclaim deed severed the joint tenancy,
giving Arthur a separate property interest as tenant in common, and that he was
also entitled to 50 percent of Hazel’s interest under Family Code section 1101,
subdivision (g), as a penalty for her subsequent sale of Arthur’s separate
property interest.
The problem with Andrea’s argument is
that it presumes there were two breaches of fiduciary duty -- the first
occurring when Hazel unduly influenced Arthur to execute the quitclaim deed,
and the second when Hazel sold the triplex.
But the case was tried upon the theory that the breach occurred when
Hazel had Arthur quitclaim the property to her based upon the understanding
that she would transfer the property into a family trust, and then failed to
complete the estate plan. Andrea did not
ask the trial court to find -- and the court did not find -- that there was a
further breach of fiduciary duty when Hazel sold the triplex. Based upon the theory of trial and the trial
court’s findings, therefore, Arthur’s estate was entitled to a monetary
recovery under Family Code section 1101 only for the transfer to Hazel of
Arthur’s interest in the triplex by means of the quitclaim deed. There is no support in the statute for an
additional award of damages for Hazel’s subsequent sale of the triplex.
Moreover, the remedy here seems
excessive. Had Hazel not gone to
Duitsman and asked him to set up an estate plan for her and Arthur, she would
have been entitled to all of the proceeds from the sale of the triplex upon
Arthur’s death (assuming she followed the appropriate procedure for the sale,
in light of Arthur’s diminished capacity) because Arthur did not have a will,
and his ability to make a will at that point is somewhat questionable in light
of his advancing dementia. Had Hazel
executed the trust that was presented at trial, each of Arthur’s children would
have received five percent of the remainder of the trust after Hazel’s death,
or a total of 15 percent. With the
proper measure of damages under Family Code section 1101, subdivision (g), the
50 percent share of the sale proceeds would be Arthur’s separate property;
under the intestacy laws, his children will split two-thirds of that, which is
33 percent of the total proceeds from the sale.
Because we conclude the award of 50
percent of Hazel’s share of the sale proceeds is not authorized, we strike that
portion of the award from the judgment.
D.
Hazel devoted a total of six sentences
to her argument that attorney fees should not be assessed against her, two of
which relate to her assertion that the fees awarded to Andrea should be
reversed upon reversal of the judgment on the merits. As to the awards to the financial entities,
she notes that the award of fees is discretionary, but makes no real attempt to
show an abuse of discretion; she merely states, without citation to the record
or any analysis, that it was the conservator’s decision to name the entities as
defendants, and that their motions for interpleader were withdrawn. Hazel’s discussion on this issue is
comparable to the appellant’s brief in People
v. Dougherty (1982) 138 Cal.App.3d 278, about which the court
observed: “‘“Instead of a fair and
sincere effort to show that the trial court was wrong, appellant’s brief is a
mere challenge to respondents to prove that the court was right. And it is an attempt to place upon the court
the burden of discovering without assistance from appellant any weakness in the
arguments of the respondents. An
appellant is not permitted to evade or shift [her] responsibility in this
manner.”’” (Id. at p. 283.) We conclude
that Hazel has forfeited the issue.
DISPOSITION
The judgment is modified to
strike the damages award to the extent it awards Arthur 50 percent of Hazel’s
interest in the proceeds from the sale of the triplex. As modified, the judgment is affirmed. Each side to bear their own costs.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
WILLHITE,
J.
We concur:
EPSTEIN, P. J.
SUZUKAWA, J.
of reference, we will refer to members of the Sims family by their first names.
proceeds from the sale of the residence were held in accounts in Hazel’s name at, or managed by, Enright, Ameritrade,
and Schwab.
