Estate of Gordon CA2/3 ( 2014 )

Filed 11/14/14 Estate of Gordon CA2/3
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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 THREE
Estate of KENNETH R. GORDON, B245041
Deceased.
(Los Angeles County
Super. Ct. No. YP011741)
ROSE MARIE GORDON,
Petitioner and Appellant,
v.
HOLLY H. REAMER, as Executor, etc.
Objector and Respondent.
APPEAL from an order of the Superior Court of Los Angeles County,
Douglas G. Carnahan, Commissioner. Affirmed.
Rose Marie Gordon, in pro. per., for Petitioner and Appellant.
Joseph Di Giulio and Howard Posner for Objector and Respondent.
_____________________
1
INTRODUCTION
Rose Marie Gordon appeals from an order denying her petition to receive a
statutory distribution as an omitted spouse from the estate of her late husband, Ken
Gordon.1 In November 2001, Rose and Ken executed a premarital agreement that
contained a mutual waiver of all rights in the other’s estate by reason of the proposed
marriage. In denying Rose’s petition, the trial court made the requisite factual findings
for enforcement of the inheritance waiver under the relevant provisions of the Probate
Code. The court’s findings are supported by substantial evidence. We affirm.
FACTS AND PROCEDURAL BACKGROUND
Ken and Rose Gordon were married December 1, 2001. Ken was 63 and Rose
was 54. Ken had been divorced twice, and Rose was divorced once. Ken was an
attorney, Rose was a real estate broker. Ken had a daughter from a previous marriage,
who is the prime beneficiary of his will. Rose has a son and a daughter. Seven months
before they were married, Rose moved into Ken’s Manhattan Beach residence.
On November 28, 2001, three days before their wedding, Ken presented Rose with
a premarital agreement while they were running errands for the wedding. They had
“chatted” about the agreement before, and Rose understood the agreement was meant to
ensure that she kept “what [she] came in with” and Ken kept “what he had.”
Paragraph 10 of the agreement, entitled “WAIVER OF RIGHTS IN
RESPECTIVE ESTATES,” provides for a mutual waiver and relinquishment of all rights
“in the other’s property, income and estate by reason of the proposed marriage.” Rose
testified that she did not read paragraph 10 before initialing and signing the agreement,
which took only a few minutes. Apart from a provision concerning waiver of spousal
support, Ken did not direct her to read anything in the agreement before signing it. Rose
thought she should see an attorney before signing the agreement, but decided not to
because Ken assured her the agreement could be changed at any time.
1
We refer to Ken and Rose Gordon by their first names for the sake of clarity and
not out of disrespect.
2
In Exhibit A to the premarital agreement, Ken disclosed his existing assets,
including approximately $500,000 of equity in his Manhattan Beach residence, cash
totaling $35,000 in various bank accounts, house furnishings and jewelry valued at
approximately $8,000, and a term life insurance policy for $10,000 with no cash
surrender value. Ken also disclosed his law practice, a 1984 Corvette, a 1972 Mercedes,
a 1976 motor home and two boats made in the mid-1970s, all of which were listed as
“value unknown.”
Rose disclosed her assets in Exhibit B to the premarital agreement. The list
included numerous pieces of furniture and furnishings, signed or numbered art work by
Chagall, Mirò and Dali, three sets of Spode dishes, a fox coat, three mink coats, a 1992
Volvo, and her real estate business, all without stated values. The list also included
jewelry valued at $31,800, a $70,000 deed of trust on a Redondo Beach property, and a
$35,000 certificate of deposit. Rose testified that two other assets listed on Exhibit B—a
401K worth $110,000 and an $250,000 investment plan—were greatly overvalued, and
that a life insurance policy listed at $1,000,000 was actually a term policy with no cash
value.
According to her trial testimony, Rose was “financially comfortable” when she
signed the premarital agreement. She had a successful real estate business, with “some
very high-profile clients at that time,” and an income of approximately $10,000 per
month. Ken reported an annual income of $25,191 on his 2000 taxes and $25,905 on his
2001 taxes.
In accordance with the premarital agreement’s terms, Ken and Rose kept their
finances largely separate during their marriage. They kept their incomes and bank
accounts separate, and they contributed jointly to household expenses. When Rose lent
Ken cash, she had him sign for it. In 2009 and 2010, when Rose’s business suffered, Ken
loaned her money, and Rose documented each advance and kept track of the balance. In
2011, when Rose filed a bankruptcy petition, she alerted her bankruptcy attorney that
Ken was not involved in the bankruptcy case because they had a premarital agreement
and kept their assets separate.
3
In January 2012, the executor of Ken’s estate petitioned for probate of his will.
The will, which Ken executed in June 1983, made no provision for Rose to receive any
share of Ken’s estate. Rose petitioned for distribution as an omitted spouse pursuant to
Probate Code section 21610.
After a hearing, which included testimony by Rose, Ken’s daughter, and the
executor of Ken’s estate, the probate court issued a written decision and order denying
Rose’s petition.2 Among other things, the court found Rose was intelligent and
sophisticated “in business and legal matters” when she signed the agreement; the
agreement was a “standard sort of pre-nuptial agreement between parties who wish to
become married, but in many respects wish to live separate lives, especially as regards
their financial affairs”; Rose “had, or should have had, an adequate knowledge of [Ken’s]
obligations and property” when she signed the agreement; Ken and Rose followed the
agreement, sometimes accounting to each other for household expenses in “great detail”;
during her 2011 bankruptcy, Rose “clearly indicated that she was still aware of [the
agreement] [and] intended to rely upon it so as not to have her bankruptcy affect
2
In her briefs, Rose repeatedly refers to a stroke she suffered some months before
the hearing to insinuate that the probate court erred by allowing the hearing to go
forward. We find no support for this in the record. Though Rose was represented by
counsel below, there is no record of a request for continuance of the hearing. Indeed, her
stroke was not mentioned until after she completed direct examination and was cross-
examined about the records she and Ken kept to divide their expenses. She remarked that
“my stroke keeps me from not thinking [sic] as quickly as I should[,] [b]ut just bear with
me a little bit.” The stroke was not mentioned again until the second hearing session a
week later, when the probate court asked about it as “a matter of clarifying [its] notes.”
Rose affirmed that she suffered a stroke roughly five months earlier and told the court she
had “a letter from my doctor if you wish to see it.” Apparently not wanting to intrude on
a private medical matter for which neither Rose nor her counsel had requested
accommodation, the probate court responded, “No. That’s all right.” In its statement of
decision, the court accepted Rose’s representation about her stroke, and made a factual
finding that “Petitioner has recently suffered a stroke, but is not noticeably impaired. She
continues to be of sound mind, and is an experienced businesswoman and gave largely
credible testimony.” We find no error, let alone any prejudice to Rose on this record.
4
Kenneth’s credit”; and “[n]o steps were taken by either [Ken or Rose] to revise or attack”
the agreement while Ken was alive.
DISCUSSION
1. The Inheritance Waiver Is Governed by the Probate Code
In this appeal, Rose principally contends the premarital agreement is invalid under
former Family Code section 1615, which, at the time the agreement was executed,
allowed a party to resist enforcement by proving either “(1) that he or she did not enter
into the contract voluntarily, or (2) that the contract was unconscionable when entered
into and that he or she did not have actual or constructive knowledge of the assets and
obligations of the other party and did not voluntarily waive knowledge of such assets and
obligations.”3 (In re Marriage of Bonds (2000) 24 Cal.4th 1, 15 (Bonds).) The estate
3
In Bonds, our Supreme Court held “the circumstance that one of the parties was
not represented by independent counsel is only one of several factors that must be
considered in determining whether a premarital agreement was entered into voluntarily”
under former Family Code section 1615. (Bonds, supra, 24 Cal.4th at p. 6.) After the
decision, the Legislature responded with amendments to Family Code section 1615.
(Stats. 2001, ch. 286, § 2, p. 2317.) Among other matters, the amendments added
subdivision (c), which provides that a premarital agreement shall be deemed “not
executed voluntarily unless the court finds,” inter alia, “(1) The party against whom
enforcement is sought was represented by independent legal counsel at the time of
signing the agreement or, after being advised to seek independent legal counsel, expressly
waived, in a separate writing, representation by independent legal counsel. [¶] (2) The
party against whom enforcement is sought had not less than seven calendar days between
the time that party was first presented with the agreement and advised to seek
independent legal counsel and the time the agreement was signed.” (Fam. Code, § 1615,
subd. (c)(1) & (2).) Subdivision (c) has no bearing upon the enforceability of the
inheritance waiver in this case for two reasons. First, as Rose now apparently recognizes,
the amendments adding subdivision (c) did not become effective until January 1, 2002,
and these amendments do not apply retroactively to the November 2001 premarital
agreement at issue in this case. (Stats. 2001, ch. 286, § 2, pp. 2316-2317; In re Marriage
of Hill & Dittmer (2011) 202 Cal.App.4th 1046, 1057 [because amendments to Family
Code section 1615 “added substantive, not procedural, provisions concerning
representation by independent legal counsel,” the amendments “did not apply
retroactively”].) Second, as we explain here, enforceability of the subject inheritance
waiver is governed independently by Probate Code section 140 et seq., even though the
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responds that Family Code section 1615 does not apply to an inheritance waiver
contained in a premarital agreement, as the enforceability of such waivers is
independently governed by Probate Code section 140 et seq. This same issue was
addressed in Estate of Will (2009) 170 Cal.App.4th 902, and resolved in favor of
enforcement under the Probate Code. We agree with Estate of Will, and adopt its
reasoning in this case.
For context, we begin with an overview of the relevant Probate Code provisions.4
Under section 21610, if a decedent fails to provide by will for the decedent’s surviving
spouse who married the decedent after the execution of the will, the omitted spouse shall
receive a prescribed share of the decedent’s estate. Section 21611, subdivision (c)
provides that this right can be waived by “a valid agreement waiving the right to share in
the decedent’s estate.” Sections 140 through 147 concern a surviving spouse’s waiver of
inheritance rights. Section 147, subdivision (c) provides for enforcement of such a
waiver “by a person intending to marry.”
Section 142, subdivision (a) requires a waiver of inheritance rights to be in writing
and signed by the surviving spouse. Subdivision (b) states a waiver also must comply
with the enforceability requirements of “either Section 143 or Section 144.”5 (§ 142,
waiver is included in a premarital agreement that is otherwise governed by Family Code
section 1615. (See Estate of Will (2009) 170 Cal.App.4th 902, 908.)
4
Future statutory references are to the Probate Code unless otherwise indicated.
5
Section 143 provides an inheritance waiver is enforceable unless the surviving
spouse proves (1) A fair and reasonable disclosure of the property or financial obligations
of the decedent was not provided to the surviving spouse prior to the signing, unless the
surviving spouse waived disclosure after advice by independent legal counsel; or (2) the
surviving spouse was not represented by independent legal counsel at the time of signing
of the waiver. Because it is undisputed that Rose was not represented by independent
counsel, the probate court correctly concluded the waiver could be enforced only if it met
the requirements of section 144. (See Cal. Law Revision Com. com., Deering’s Ann.
Prob. Code (2004 ed.) foll. § 144, p. 75 [“Under subdivision (a), a waiver that is not
enforceable pursuant to Section 143 may be enforceable if it is shown that the waiver at
the time of execution made a fair and reasonable disposition of the rights of the surviving
spouse or the surviving spouse had, or reasonably should have had, an adequate
6
subd. (b).) As we discuss post, the probate court determined the subject inheritance
waiver met the requirements of section 144, which states a waiver is enforceable if the
probate court determines either (1) that the waiver at the time of signing made a fair and
reasonable disposition of the rights of the surviving spouse; or (2) that the surviving
spouse had, or reasonably should have had, adequate knowledge of the decedent’s
property and the decedent did not violate any fiduciary duty to the surviving spouse.
Under section 144, the probate court also has discretion to refuse or limit enforcement of
the waiver if, after considering all relevant facts and circumstances, it finds enforcement
would be unconscionable under the circumstances. (§ 144, subd. (b).)
In Estate of Will, the court considered whether an inheritance waiver that met the
requirements of section 142, but which was contained in a premarital agreement that
would be deemed involuntarily executed under Family Code section 1615, could
nevertheless be enforced against an omitted spouse in a probate proceeding.6 Beginning
with the “presumption against a repeal by implication,” the Estate of Will court concluded
that the more recently enacted provisions of Family Code section 1615 did not override
the Probate Code provisions regarding inheritance waivers. (Estate of Will, supra,
170 Cal.App.4th at p. 907.) The court explained: “In enacting Family Code section
1615, the Legislature did not mention Probate Code section 140 et seq. regarding
premarital inheritance waivers by surviving spouses. This omission implies that the
Legislature intended that omitted spouse waivers continue to be governed independently
knowledge of the property and the financial obligations of the other spouse”]; see also
§ 142 [a waiver is enforceable if it is in writing, signed by the surviving spouse, and
meets the requirements of “either Section 143 or Section 144”].)
6
In Estate of Will, the decedent and his omitted wife executed a premarital
agreement one day before they were married. (Estate of Will, supra, 170 Cal.App.4th at
pp. 905-906.) Because the omitted wife executed the agreement less than seven days
after it was presented to her and without representation by independent counsel, the
agreement would have been deemed “not executed voluntarily” under Family Code
section 1615 as the statute existed in 2003 when the agreement was executed. (See fn. 3,
ante.)
7
by the Probate Code. Moreover, the two statutory schemes are not so inconsistent or
irreconcilable that they cannot have concurrent operation. [Citation.] Each scheme
primarily concerns fair and reasonable disclosure of property at the time the premarital
agreement or inheritance waiver was executed. The statutory framework of the Family
Code and the Probate Code concerning inheritance waivers seeks to safeguard the rights
of surviving spouses by similar disclosures and protections.” (Estate of Will, at p. 908.)
Like the Estate of Will court, we too are mindful of the presumption against a
repeal by implication. As our Supreme Court explained, “[t]he presumption against
implied repeal is so strong that, ‘[t]o overcome the presumption the two acts must be
irreconcilable, clearly repugnant, and so inconsistent that the two cannot have concurrent
operation. The courts are bound, if possible, to maintain the integrity of both statutes if
the two may stand together.’ ” (Western Oil & Gas Assn. v. Monterey Bay Unified Air
Pollution Control Dist. (1989) 49 Cal.3d 408, 419-420.) Here, the two acts, each of
which “seeks to safeguard the rights of surviving spouses by similar disclosures and
protections” (Estate of Will, supra, 170 Cal.App.4th at p. 908), can plainly stand together.
Had the enforceability of the premarital agreement arisen in the context of a marital
dissolution proceeding, clearly the Family Code would govern. However, because the
enforceability of an inheritance waiver will arise only in a probate proceeding, and can be
assessed independently from other provisions of the premarital agreement in that context,
we agree with Estate of Will that it is appropriate to evaluate the waiver’s enforceability
under the Probate Code. Accordingly, we reject Rose’s contention that the Family Code
governs in this case.
2. The Inheritance Waiver Is Enforceable Under Section 144
We turn now to the lower court’s findings under the Probate Code. As noted, the
probate court determined the subject inheritance waiver was enforceable under both
prongs of section 144, finding the waiver made a fair and reasonable disposition of the
parties’ assets (§ 144, subd. (a)(1)), and that Rose had adequate knowledge of Ken’s
finances when the agreement was signed (§ 144, subd. (a)(2)). The court also found the
8
agreement was not unconscionable at inception or the time of enforcement. (See § 142,
subd. (a); § 144, subd. (b).)
“The rules of evidence, the weight to be accorded to the evidence, and the
province of a reviewing court, are the same in a will contest as in any other civil case.
[Citations.] . . . ‘In reviewing the evidence . . . all conflicts must be resolved in favor of
the respondent, and all legitimate and reasonable inferences indulged in to uphold the
verdict if possible. It is an elementary . . . principle of law, that when a verdict is
attacked as being unsupported, the power of the appellate court begins and ends with a
determination as to whether there is any substantial evidence, contradicted or
uncontradicted, which will support the conclusion reached by the [trial court]. When two
or more inferences can be reasonably deduced from the facts, the reviewing court is
without power to substitute its deductions for those of the trial court.’ ” (Estate of Bristol
(1943) 23 Cal.2d 221, 223.)
Substantial evidence supports the probate court’s findings under section 144.
First, with respect to whether the waiver made a fair and reasonable disposition of the
parties’ rights (§ 144, subd. (a)(1)), the evidence shows the waiver was mutual in both
form and substance when it was signed. As Rose testified, she was “financially
comfortable” when the parties executed the waiver in 2001. She had a successful real
estate business and an income of approximately $10,000 per month, while Ken’s tax
returns showed an annual income of only $25,191 in 2000 and $25,905 in 2001. The
parties’ mutual waiver of all rights and interests in the other’s estate did not result in Ken
retaining all the couples’ combined wealth on his side of the transaction. On the
contrary, the evidence suggests Rose potentially had more to protect when the waiver was
signed.
9
The evidence also supports the probate court’s finding that Rose had, or
reasonably should have had, adequate knowledge of Ken’s property and financial
obligations when she executed the agreement. (§ 144, subd. (a)(2).) In Exhibit A to the
premarital agreement, Ken disclosed his existing assets, while cautioning that the values
listed were “mere estimates only,” “done without the benefit of an audit.” Testimony by
the executor for the estate confirmed that Exhibit A disclosed Ken’s two largest assets—a
personal residence in Manhattan Beach and a 20-foot Skipjack boat. For her part, Rose,
who lived with Ken for seven months before signing the agreement and 10 years
thereafter, did not testify or present any evidence to suggest that Ken failed to disclose
any assets on Exhibit A. Rather, Rose acknowledged her late husband was “a great, great
man” who “always kept his promises to me.”
At trial, Rose’s counsel did argue that Exhibit A “understated” Ken’s assets by
listing certain items, such as Ken’s law practice and the boats, with “[v]alue unknown.”
The probate court rejected this contention, stating “[t]he court cannot find these
assertions to be true.” On appeal, Rose has failed to identify anything in the record that
compels a different conclusion. The disclosure in Exhibit A, coupled with Rose’s time
living with Ken and the sincere relationship they apparently shared, supports the court’s
finding that she had, or reasonably should have had, adequate knowledge of Ken’s assets
when she executed the waiver.
10
Finally, the court concluded the waiver was not unconscionable. On appeal, Rose
argues the evidence compelled a finding of procedural unconscionability, based on the
timing and circumstances under which Ken presented her with the waiver.7 Procedural
unconscionability includes “(1) ‘oppression,’ which refers to an inequality of bargaining
power resulting in no real negotiation and the absence of meaningful choice; and
(2) ‘surprise,’ which occurs when ‘the supposedly agreed-upon terms of the bargain are
hidden in a prolix printed form drafted by the party seeking to enforce the disputed
terms.’ ” (Dean Witter Reynolds, Inc. v. Superior Court (1989) 211 Cal.App.3d 758, 767
(Dean Witter Reynolds).) Rose contends both oppression and surprise were established,
insofar as Ken was a family law attorney with expertise in this area and he presented her
with the premarital agreement only three days before they were to be wed. The probate
court rejected these contentions. Its findings are supported by substantial evidence.
On the issue of oppression, the court acknowledged Ken was a family law
attorney, but it found “[b]oth parties were of sound mind and were not unsophisticated.”
In that regard, the court cited evidence that Rose “was an experienced real estate
professional” and “savvy” enough to consider consulting with independent counsel,
though she ultimately “declined to do so.” This evidence is sufficient to support the
court’s finding that, despite Ken’s greater familiarity with premarital agreements, the
7
Rose’s argument is directed at unconscionability in the inception of the agreement
(see § 142, subd. (c)), and does not challenge the probate court’s finding that enforcing
the waiver would not be unconscionable under the present circumstances (§ 144, subd.
(b)). In any event, the court’s finding concerning unconscionability in the enforcement is
supported by substantial evidence. As the court noted in its statement of decision, the
evidence established that Rose knew about the agreement, largely abided by its terms,
and even invoked it in connection with her bankruptcy. Though the court acknowledged
Rose had suffered some health and financial troubles since the agreement was executed,
it found she remained “an experienced businesswoman” “of sound mind,” and there were
not extraordinary changed circumstances that would warrant voiding the agreement. (See
Cal. Law Revision Com. com., Deering’s Ann. Prob. Code (2004 ed.) foll. § 144, p. 75
[emphasizing that “safety valve” from unconscionable enforcement provided by
subdivision (b) “is not intended to apply in any but the extraordinary case”].)
11
parties’ bargaining power was not so unequal as to prevent Rose from making a
meaningful choice about the inheritance waiver.
As for surprise, the court found the premarital agreement was “not particularly
prolix and the elements of its waiver language stand out from the text in obvious ways.”
We reach the same conclusion on our independent review of the agreement. Further,
although the probate court accepted Rose’s testimony that she had not seen the agreement
prior to signing it, the court also emphasized her testimony concerning discussions with
Ken about the agreement “as long as a few months before the wedding.”
Notwithstanding the impending wedding date, this evidence is sufficient to support the
court’s finding concerning the absence of procedural unconscionability. 8
8
Additionally, as the Dean Witter Reynolds court explained, the concept of
unconscionability has both a procedural and substantive element, and “both procedural
and substantive unconscionability must be present before a contract will be held
unenforceable.” (Dean Witter Reynolds, supra, 211 Cal.App.3d at p. 768.)
“ ‘Substantive’ unconscionability consists of an allocation of risks or costs which is
overly harsh or one-sided and is not justified by the circumstances in which the contract
was made.” (Ibid.) Here, the probate court found the inheritance waiver was not
substantively unconscionable for the same reasons cited with respect to section 144,
subdivision (a)(1)—that is, the mutual waiver made a fair and reasonable disposition of
the parties’ rights and obligations when signed. As discussed with regard to section 144,
this finding is supported by substantial evidence. Thus, even if procedural
unconscionability had been established, without a finding of substantive
unconscionability, we still would not deem the waiver unenforceable. (Dean Witter
Reynolds, at p. 768.)
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DISPOSITION
The order is affirmed. Respondent is entitled to her costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
KITCHING, J.
We concur:
KLEIN, P. J.
ALDRICH, J.
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