Estate of Sheen

Filed 5/15/08 Estate of Sheen CA2/8

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

APPEALS from a judgment of the Superior Court of Los Angeles County.

Judith C. Chirlin, Judge. Affirmed in part and reversed in part.

Esner, Chang & Ellis, Gregory R. Ellis, Stuart B. Esner; Law Offices of Joseph D. Nichols and Joseph D. Nichols for Objectors and Appellants.

Law Offices of Fritzie Galliani, Fritzie Galliani, Leslie K. Howell; Evan D. Marshall for Petitioners and Appellants.

Dolores Q. Sheen (Dolores), and her children Erin Blunt and Carla Angelino, appeal from a judgment after court trial, which set aside real property deeds, ordered real and personal property restored to the Living Trust of Quinlock K. Sheen (trust), and awarded $100,000 damages to petitioners Charles Sheen, Derek Hersha, and Deryl Gaylord, three grandchildren of Quinlock Sheen (Quinlock).^[1] The judgment was grounded in a determination that Dolores had obtained the property in question by undue influence upon Quinlock, her 93-year-old mother. Appellants contend that petitioners lacked standing to sue, that the petition was barred by limitations, and that the judgment is not supported by substantial evidence of undue influence. Petitioners cross-appeal from the courts declination to award a statutory penalty. We conclude that only petitioners appeal has merit, and we affirm the judgment except with respect to penalty damages.

FACTS

We review the evidence in accordance with established rules. (In re Marriage of Mix (1975) 14 Cal.3d 604, 614.) In 1997 Quinlock established the revocable trust, with herself as trustee. The declaration recited that Quinlock had two sons and four daughters, including Dolores and also Eugenia Ringgold, who would become trustee if Quinlock could not act. Upon Quinlocks death, the trust assets would be distributed equally among her children, or the issue of any such child who predeceased her. Shortly after declaring the trust, Quinlock deeded to herself, as trustee, two adjacent properties on Spaulding Avenue in Los Angeles, a home and a duplex (referred to hereafter as such, and collectively as the properties).

For many years, Quinlock lived with her daughter Eugenia. Dolores did not often visit her mother. However, in November 2000 Quinlocks son Robert died, an event that caused her great distress. Doloress visits increased. She visited later at night, because of her work. On the evening of January 31, 2001, Quinlock, accompanied by Dolores and a notary public whom Dolores had engaged, executed deeds to the properties, from the trust to Dolores. The signing occurred in the kitchen of Eugenias house. When Eugenias niece Tracy Sheen entered the kitchen, the women covered the papers up. Dolores testified that Quinlock had wanted her to have the properties so Dolores could take care of her, at the duplex. According to Dolores, she didnt want or need the properties; but Quinlock wanted her to have them. (The trial court found Doloress disclaimer of desire for the properties incredible.)

Quinlocks grandson Charles, a student, had lived at the house with his father Robert. After Roberts death, Charles remained there with a friend. At the end of 2000, Quinlock agreed with her close adviser, Attorney Edward Sherman, that Charles should be permitted to remain in the house until he graduated. Eugenia and two of Quinlocks other children agreed with this. But around the time she received title to the house, Dolores informed Charles he could no longer live there. She subsequently locked him out. The attendant concern, by certain family members and Sherman, generated suspicion or belief by him, Charles, and petitioner Deryl Gaylord that Dolores now owned the house.

In November 2001, Quinlock moved in with Dolores, who had taken up residence in the lower half of the duplex. Dolores discharged Quinlocks mothers caretaker of 11 years. A few months later, Quinlock broke her hip, and was hospitalized. When Eugenia arrived to visit her, she was told that Dolores had power of attorney, and Eugenia would have to get Doloress approval to visit. Eugenia testified that she was not really offended, Because it just made sense as to all the other things that were happening. On an occasion when Dolores brought Quinlock to Eugenias house, Quinlock remarked that she was at home, and that she didnt live at the duplex.

While residing with her mother, Dolores was a signatory on Quinlocks bank accounts. Dolores considered the accounts to belong to both of them, and made payments from the accounts for such expenses as her auto lease. Dolores also secured a $100,000 loan with the duplex. After Quinlocks death, Dolores refinanced the loan for $133,000. She deposited the excess in the account of the Sheenway School, the South Los Angeles school she ran, as a volunteer, and which her father had started. Dolores did the same with the proceeds of a small parcel in Missouri, which Quinlock deeded to her in 2002, and which Dolores sold. In addition, Dolores paid certain expenses of the school from her mothers account. Although Dolores testified that Quinlock wanted to support the school, other witnesses recounted that she had not been interested it, at least in part because it was a project of her former husband, who had left her.

According to Attorney Sherman, for decades before settling her trust Quinlock had expressed to him her intent to divide her estate, either among all of her children or among all except Eugenia, who was independently well off. Quinlock had never spoken of giving the properties to Dolores.

When she deeded the properties to Dolores, Quinlock was a few months shy of 94. Quinlocks former physician testified he had treated her for Parkinsons disease, and her chart also reflected dementia, stemming from that illness and her age. In 1998 she displayed poor memory, and in 2002 she fed breakfast cereal to her dog. Sherman and several close relatives also testified to their impressions of Quinlocks dementia, including loss of memory, confusion, and occasional inability to recognize relatives. A close friend, Evans, described deterioration similar to that of her own mother, who had suffered from dementia. Evans testified that during her last two and one-half years, Quinlock had undergone losses of memory, judgment, and ability to manage her financial affairs. The condition increased after Roberts death in November 2000.

Dolores agreed that her mothers memory had deteriorated, but she also recounted that in her last year Quinlock had taught a parenting class for the school, in Big Bear. A social worker cousin of Quinlocks, who had spent time at the duplex during 2002, found Quinlock lucid and aware. The same description came from a notary public, Hamilton, who prepared several documents for Quinlock in 2002. These included a revocation of the trust.^[2]

Petitioners initiated this proceeding on July 6, 2005, filing their petition to return property to the trust. They alleged that Dolores had used undue influence to compel Quinlock to transfer the properties, and that she had been incompetent because of dementia when she signed the deeds. Petitioners sought an order transferring the properties back to the trust, along with Quinlocks personal property, so that all could be distributed to the beneficiaries. Because of Doloress egregious conduct, petitioners also sought to recover twice the value of the properties, under Probate Code section 859.^[3]

In February 2006, petitioners filed an amended petition, alleging the 2002 transfer of the Missouri property to Dolores, and that petitioners had discovered it after filing the original petition. Appellants filed a motion for judgment on the pleadings, based on the statute of limitations. The matter proceeded to trial the same month.

In its intended decision, the court found that Quinlocks mental faculties had diminished over the years, and that her condition had taken a significant turn for the worse after Roberts death in November 2000. The court found significant the evidence that Quinlocks intent had long been to divide her properties equally among her children, as the trust also reflected. The court also stressed evidence, including Doloress own testimony, of her estrangement from her siblings, her treatment of Charles Sheen, and her isolation of Quinlock in the hospital. The court directed that the real and personal property be returned to the trust, and that Dolores pay damages of $100,000, approximating the proceeds of the Missouri realty, the loans on the property, and the bank accounts. The court declined to award punitive damages, stating that although there was evidence upon which the Court could determine that Dolores acted with malice and oppression, there was no evidence presented of Doloress net worth upon which the Court could base an assessment of punitive damages.

The trial court also denied the motion for judgment on the pleadings. Neither party requested a statement of decision, but appellants renewed their limitations argument on motion for new trial, which also was denied. The judgment and an amended judgment entered following a motion to tax costs set aside the deeds to the properties, and ordered their return to the trust, along with personal property. The judgment also restated the courts rulings on compensatory and punitive damages. Both sides filed notices of appeal.

DISCUSSION

1. Trust Revocation.

Appellants first contend that because Quinlock executed a revocation of her trust in March 2002, petitioners no longer were beneficiaries, and lacked standing to sue under Probate Code section 850, subdivision (a)(3)(B). The question implicated by the trust revocation is not really one of standing, but rather of sufficiency of the evidence to establish the allegations of the petition and support the judgment.

Although the evidence showed execution of a trust revocation, the judgment imports and implies a determination that the trust subsists, and therefore that the revocation was not effective. The court most likely viewed the revocation as yet another void or voidable instrument, induced by Doloress undue influence. As discussed hereafter with respect to undue influence generally, substantial evidence would support that finding.

Appellants agree that, lacking a statement of decision, we may presume the court found in favor of the prevailing party on all disputed factual issues. (Responsible Citizens v. Superior Court (1993) 16 Cal.App.4th 1717, 1734; see Ellena v. State of California (1977) 69 Cal.App.3d 245, 254.) They assert, however, that the trust revocation was not in issue. It was. Answering the petitions allegations that petitioner Ringgold was trustee of the trust, after Quinlocks death, appellants denied them and alleged that the revoked trust no longer existed. The trial court ultimately rejected this claim.

2. Statute of Limitations.

Appellants contend that the petition was barred by the statute of limitations. They argue that (1) the governing statute was the three-years-from-discovery provision of Code of Civil Procedure section 338, subdivision (d), relating to fraud or mistake, and (2) petitioners were at least on inquiry notice of the unduly influenced transfers almost immediately after Quinlock deeded the properties to Dolores in January 2001.

At the outset, this limitations claim cannot extend to petitioners pursuit and award of relief because of the Missouri property transfer. The amended petition alleged that petitioners did not discover this transfer until after they had commenced the proceedings, and there is no evidence that they did.

Petitioners argue that the applicable statute of limitations is Code of Civil Procedure section 318, which addresses actions for recovery of real property, rather than section 338, subdivision (d). Section 318 allows suit within five years after previous ownership, a period within which the present petition was filed. However, the modern view is that actions to recover real property based on fraud or mistake are governed by section 338, subdivision (d). (3 Witkin, Cal. Procedure (4th ed. 1996) Actions  601, pp. 771-772.) In this regard, undue influence is considered a form of fraud or mistake. (E.g., Triplett v. Williams (1969) 269 Cal.App.2d 135, 137.)

Appellants have not shown, however, that the statute ran before the petition was filed. Appellants cite testimony indicating that two of the petitioners, Charles Sheen and Deryl Gaylord, suspected early in 2001 that the properties had been transferred to Dolores. But even assuming this amounted to the suspicion of wrongdoing requisite to commence the statute (Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1110), the evidence was more ambiguous with regard to petitioner Eugenia Ringgold. And there was no evidence that petitioner Derek Hersha harbored, or was chargeable with, any knowledge or belief about the propertys changed ownership within three years of suit. Hersha testified that he grew up in Arizona and lived there until 2004. Following the death of his mother Carol Sheen in 1992, he made one trip to Los Angeles and saw Quinlock, in 1997. Since being transferred to Los Angeles in 2004, petitioner Hersha had not had much contact with his maternal family. By no means could the statute, predicated on discovery, be found to have run as to Hersha. Accordingly, without reference to the other arguments petitioners propound, appellants limitations contention is unavailing.

3. Substantial Evidence.

Appellants final contention is that substantial evidence does not support the judgment, in particular the finding of undue influence. The statutory type of undue influence that was found involved taking an unfair advantage of anothers weakness of mind. (Civ. Code,  1575, subd. 2.) Appellants argue there was insufficient evidence, on the whole record, to show Quinlocks weakness of mind and Doloress exploitation of it in obtaining the properties. (See generally Rodenberry v. Rodenberry (1996) 44 Cal.App.4th 634, 651-652.)

There clearly was substantial evidence establishing Quinlocks mental impairment, in respect of not only memory but also other elements such as judgment, contemporaneous with the transfer to Dolores. Persons long close to Quinlock testified to these deficits and to dementia, which increased following Roberts death, two months before the transfer. Medical records and testimony were in accord.

Appellants argue that the testimony also showed alertness and awareness, so that There was no claim made that [Quinlock] was permanently incompetent to agree to do anything. But complete incapacity was not the condition that petitioners asserted or the law required. Nor do the impressions of notaries public, who did not know Quinlock and were procured by Dolores, supplant or even necessarily contradict the perceptions of those who did know her. The question was whether Quinlock had undergone a diminution of her faculties, such as to render her susceptible to influence aimed at changing her dispositive plan for the properties. There was sufficient evidence that she had.

Doloress application of influence is also supported by substantial evidence, albeit circumstantial. Contrary to appellants argument, that Quinlock suddenly changed her long-held intent to leave her properties to all of her children indeed constitutes evidence that Dolores influenced that action, which came close to the blow of Roberts death and after Dolores had begun visiting frequently. Doloress direct involvement in the transfer from her 93-year-old mother to herself also supports the finding that she was instrumental in it. The same is true of the control Dolores exercised, contemporaneous with the transfer, in overriding Quinlocks commitment to allow Charles to remain in the house.

The appropriate resolution of this issue is stated in Beckmann v. Beckmann (1959) 174 Cal.App.2d 717, 721-722. The question of what constitutes sufficient proof of undue influence depends upon the facts and circumstances of each particular case. . . .  []  . . .  [] In this case the grantee was respondents daughter in whom respondent had confidence. At the time the deed was executed appellant was nearly 80 years of age and in a weak mental condition due to advanced senility. There was some activity on the part of the appellant in securing the deed. There was no valuable consideration for the deed. These facts and circumstances amply support the findings and the judgment that the deed was the result of undue influence.

4. Penalty Damages.

Petitioners cross-appeal concerns the judgments denial of punitive damages, on grounds there was no evidence of Doloress net worth on which to base them. Petitioners contend that this disposition was reversibly erroneous, because petitioners did not seek punitive damages under Civil Code section 3294, but rather a penalty under Probate Code section 859 (see ante, fn. 3), which did not require proof of net worth. Petitioners further argue that they did produce evidence of Doloress net worth.

Petitioners complaint appears well founded. In cases of statutory penalties, with amounts or ranges legislatively fixed, the precondition of showing the defendants financial condition (Adams v. Murakami (1991) 54 Cal.3d 105) does not apply although the defendant may raise financial condition as a fact in mitigation of the penalty or its amount. (E.g., Rich v. Schwab (1998) 63 Cal.App.4th 803, 814-817.) The trial court here overlooked this distinction, or misconstrued petitioners prayer for a penalty as one for conventional punitive damages. The result was that petitioners were denied their claim for a penalty for a legally inapposite reason.

Appellants respond that petitioners should be barred from contesting the courts disposition because they invited the error, by referring to punitive damages in closing argument. Counsel did so, but she also itemized the statutory penalty, as what she was seeking. Counsel cannot be said to have intended, by her colloquial usage, to claim an element of damages entirely different from those the petition sought. There was no invited error. (People v. Lara (2001) 86 Cal.App.4th 139, 164-165.) Nor did petitioners failure to seek relief from the trial court waive the issue for consideration here.

Accordingly, the question of penalty under Probate Code section 859 must be remanded for reconsideration, in light of all relevant factors.

DISPOSITION

Paragraph 5 of the amended judgment is reversed. The amended judgment is otherwise affirmed. Petitioners shall recover costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

COOPER, P. J.

WE CONCUR:

RUBIN, J.

EGERTON, J.^*

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^[1] Another petitioner, Quinlocks daughter Eugenia Ringgold, died after the judgment was entered. We use first names herein for clarity and simplicity.

^[2] In 2003, Dolores deeded the properties to herself and her two children.

^[3] Probate Code section 859 provides: If a court finds that a person has in bad faith wrongfully taken, concealed, or disposed of property belonging to the estate of a decedent, conservatee, minor, or trust, the person shall be liable for twice the value of the property recovered by an action under this part. The remedy provided in this section shall be in addition to any other remedies available in law to a trustee, guardian or conservator, or personal representative or other successor in interest of a decedent.

^* Judge of the Superior Court of Los Angeles County, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.