Levin v. Winston-Levin ( 2019 )

Filed 9/13/19
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
ELIZABETH LEVIN,
Plaintiff and Appellant, G056353
v. (Super. Ct. No. 30-2017-00912251)
DEBRA WINSTON-LEVIN, Individually OPINION
and as Trustee, etc.,
Defendant and Respondent.
Appeal from a judgment of the Superior Court of Orange County, Jacki C.
Brown, Judge. Affirmed.
Lurie, Zepeda, Schmalz, Hogan & Martin and Troy L. Martin for Plaintiff
and Appellant.
Hart | King, William R. Hart, Andrew C. Kienle, and Rhonda H. Mehlman
for Defendant and Respondent.
* * *
In 1986, Robert Levin established a revocable trust named, quite simply,
the Robert Levin Trust (the Levin Trust). The Levin Trust was thereafter amended
several times: in 1993, 2002, 2005, 2006, 2008, 2011 and 2012. After Robert passed
away in 2015, litigation erupted, principally over the 2008 and 2012 amendments to the
Levin Trust. Elizabeth Levin, Robert’s daughter from a prior marriage, sued Robert’s
widow, Debra Winston-Levin, on multiple grounds which, by the time the matter went to
trial, had devolved into causes of action for an order compelling the return of certain
Levin Trust property pursuant to Probate Code section 850, and for double damages
1
pursuant to Probate Code section 859.
The Levin Trust had twice been amended to benefit Robert’s current wife,
Debra, at the expense of his daughter Elizabeth. The first amendment, in 2008, was at the
outset of Robert’s declining mental condition; the second amendment, in 2012, was well
into that decline. The court found Debra had not exerted undue influence as to the 2008
amendment. As to the 2012 amendment, however, the court found a presumption of
undue influence went unrebutted by Debra. As a result, the court voided the entire 2012
amendment and ordered Debra to return property she had obtained pursuant to the 2012
amendment and a related deed.
Debra, however, did not appeal; Elizabeth did. Elizabeth contends the
court erred in three ways. First, she argues the court’s finding of undue influence
compelled a finding that Debra was liable for financial abuse of an elder, which, in turn,
compels an award of double damages under Probate Code section 859. Her argument
raises a close question of statutory interpretation, but we ultimately disagree, concluding
the court correctly interpreted that section to apply only where the undue influence was
exerted in bad faith, which the court declined to find. Second, Elizabeth contends the
1
We will refer to the parties throughout this opinion by their first names to
avoid confusion; all parties involved share the surname Levin in one form or another. No
disrespect is intended.
2
evidence compelled a finding that undue influence tainted the 2008 amendment as well.
We disagree; the court’s ruling was supported by substantial evidence. Finally, Elizabeth
contends the court erred in voiding the entire 2012 amendment rather than carving out
only those portions that benefited Debra. We conclude otherwise, finding that a
reasonable inference from the cumulative changes in the amendment are that they were
intended to be intertwined, such that voiding only those portions benefiting Debra would
not effectuate Robert’s intent. Accordingly, we affirm the judgment.
FACTS
History of the Levin Trust Amendments
Debra was Robert’s wife for the last 20 years of his life. Elizabeth is
Robert’s only child from a prior marriage, an adult whom he supported financially
between 1985 and 2012.
Robert purchased residential property on Balboa Island in 1987, which was
after divorcing Elizabeth’s mother, but before meeting Debra. The court described the
property as “his dream, which he renovated to his taste and specifications.” He married
Debra in 1992. In 1993, Robert quitclaimed the Balboa Island property to another trust
he had established named the Robert Levin Personal Residence Trust (Residential Trust).
Around the same time, he restated the Levin Trust to grant Debra a life estate in the net
income of the trust upon Robert’s death, as well as principal, as needed, to support her
standard of living. Upon Debra’s death, the res of the Levin Trust would flow into a trust
created for Elizabeth.
In 2002, the Levin Trust was amended and restated along similar lines to
the 1993 restatement. However, the 2002 amendment clarified that the trustee could
withhold distributions to Elizabeth if her level of financial responsibility, her mental
3
condition, or any use of drugs would adversely affect her ability to manage the funds to
be distributed.
In 2005, Robert amended the Levin Trust to make Debra the first successor
trustee.
In 2006, Robert executed a codicil to his will in which he elected to
distribute property, which was subject to his power of appointment in the Residential
Trust, to a trust created for Debra upon his death under the terms of the Levin Trust.
Under the 2002 amendment to the Levin Trust, the effect of this election was that Debra
would be free to reside in the Balboa Island house rent free for the remainder of her life.
In January 2008, Robert underwent an MRI brain scan because he was
experiencing memory loss. A doctor found “mild atrophy” in the brain, but noted Robert
was “alert and oriented. Memory and abstracting ability were normal.” In September
2008, Robert underwent a major surgical operation on his back.
Robert amended the Levin Trust again in December 2008—this amendment
is a focus of the present appeal. The most significant change was that, upon Robert’s
death, the residence was to be distributed to Debra “outright and free of trust.” Debra
was present at the meeting between Robert and his attorney that led to this amendment.
In April 2009, Robert’s doctor wrote a letter indicating Robert’s mental
condition was beginning to deteriorate. After summarizing Robert’s recent history, the
doctor stated, “[Robert’s] wife is now complaining that he is becoming progressively
more forgetful and he is losing executive function and can’t make decisions, and is
sometimes irritable. He is excessively drowsy and sleeps 12 hours or more a day.” The
doctor examined Robert and found him to have “normal speech. He is cooperative and
alert. He is able to name objects and repeat phrases. On the Mini Mental Status
Examination he scored 29 out of 30, short-term memory being a bit poor.” The doctor
concluded Robert had “mild cognitive impairment.”
4
In November 2011, Robert amended the Levin Trust again to name Debra
as co-trustee of the trust. Debra testified he did this because he was thinking of the future
and cognizant of his advancing age and declining physical condition. Prior to amending
his trust, his attorney urged him to obtain a letter from his doctor affirming Robert’s
capacity to make financial decisions. In response, Robert’s neurologist penned the
following letter: “Robert Levin has been a friend of mine for 20 years plus and I have
advised him occasionally on medical issues. Based on my frequent interaction with him,
it is my opinion that he is capable of taking care of his own affairs including financial
decisions.” Another doctor who was treating Robert “for a mild stage of probable
Alzheimer’s disease” wrote, “In considering Mr. Levin’s current capacity of executive
functioning, it is clear that he still has the ability to handle his own estate planning
decisions and affairs. Moreover, he maintains the ability to conduct and manage his own
finances at the present time.”
In February 2012, Robert’s mental condition was assessed by a different
doctor. He had been referred by Debra “in order to evaluate changes in cognitive and
mood symptoms.” Robert had “reported lapses in short-term memory and mood
symptoms, which he described as ‘stubbornness.’” Debra further reported that she was
having to take over certain daily tasks for Robert. For example, she managed his
medications, selected his clothes and reminded him when to change them. Debra
reported that if Robert’s meal was interrupted with a phone call, afterward he would
forget that he had been eating. Debra also complained that Robert had recently started
making impulsive financial decisions, such as opening and closing bank accounts, and
that his driving was becoming dangerous. Both Debra and Robert said his mental
condition declined after his back surgery. Debra also noted that he was “unofficially
diagnosed with dementia of the Alzheimer’s type by a research assistant but no formal
assessment was done.” That resulted in Robert taking an experimental drug for dementia.
As part of the assessment, Robert described his family relations. He described his
5
relationship to Elizabeth as “strained with minimal communication.” “He also reported
that his daughter has caused some emotional strain in his marriage.” After performing a
series of tests, the doctor concluded his condition was “most consistent with a diagnosis
of mild Vascular Dementia.”
Approximately three months later, in May 2012, Robert resigned as trustee
of the Levin Trust, leaving Debra as the sole trustee.
In July 2012, Robert again restated and amended the Levin Trust. This is
2
the amendment the court ultimately voided. This amendment contained four changes
relevant here. First, upon Robert’s death, Debra was to receive a lump sum payment of
$2 million, together with lifetime support from the net income of the trust and partial
distributions of the principal. Also, the restated trust no longer would give the residence
to Debra outright and free of trust. Instead, 11 days later, Robert simply quitclaimed the
residence to Debra. Third, the residue of the estate, following the death of Debra, would
go 90 percent to Elizabeth. This differed from the 2008 amendment, in which, following
the death of Debra, Elizabeth was given a life estate in the income of the trust, but in
which the entire residue after Elizabeth’s death was given to Shriners Temples of North
America. Finally, Debra was to continue as trustee during Robert’s lifetime, but after his
death another person was nominated as trustee.
The attorney who drafted the 2012 amendment testified at trial that Robert
seemed “as competent as any client that I have ever talked to.” The attorney explained
Robert’s reasoning for the change: “Mr. Levin was very concerned about Debra being,
basically, harassed and dragged into court by his daughter, Elizabeth, after Robert had
passed away. And so what he wanted to do was change his trust around a little bit so that
2
In response to Elizabeth’s objections to the statement of decision, the court
replaced the word “voided” with “disregarded.” It is not clear to us why the court made
that change, or that there is any relevant legal distinction to be drawn between “voided”
and “disregarded.”
6
there would be a third-party trustee, not Debra, dealing with the trust after Robert’s death,
number 1, and he wanted to, number two, make sure that Debra at least had secured the
home that they lived in with a minimum of conflict and contact with his daughter.”
As a result of Robert’s declining mental and physical condition, he was
moved into an assisted living home in June 2013. He ultimately passed away in 2015.
Trial and Ruling
Elizabeth filed the underlying petition in April 2017. Her first amended
petition asserted causes of action for an order compelling the return of trust property
pursuant to Probate Code section 850, double damages pursuant to Probate Code section
859, breach of contract or trust, “intentional interference with expected inheritance”,
breach of fiduciary duty, and financial elder abuse. By the time the parties went to trial,
Elizabeth was asserting only the first two claims.
The testimony at trial devolved into a tit-for-tat matchup between Debra
and Elizabeth. Both attempted to beautify themselves and vilify the other. And both
brought in third-party witnesses to corroborate their version of the story. As the court
summarized in its statement of decision, “Both Elizabeth and Debra testified, as did
Cheryl Campbell-Lane [the family masseuse] and Dr. Trader [an expert testifying about
Robert’s mental state] for Elizabeth, and Judy Craighton, Daniel Montano [long-time
friends of Robert’s] and Brian Mandel [an estate planning attorney] for Debra. From
these two, diametrically opposed sets of witnesses, two descriptions of Robert Levin
emerged: (1) A man who intentionally defrauded his only child of her inheritance from
her grandfather, but who adored that daughter and always intended to fully provide for
her, in part because he had robbed her of his father’s legacy. This man then remarried a
woman who hated Elizabeth from the very start, requiring him to ‘sneak around’ behind
his new wife’s back to visit with his daughter. This characterization was supported by
Campbell-Lane, a masseuse who testified as to statements by both Robert and Debra
7
displaying exactly the picture Elizabeth portrayed, including that Debra intended or
threatened to divorce Robert if he did not transfer the Balboa Island home into her name;
and (2) A very successful and generous man with the proverbial ‘albatross around his
neck’ in the form of a whining, demanding daughter who was never able to support
herself. He was totally in love with Debra, with whom he had a perfectly happy
marriage, except for the drain caused by Elizabeth’s constant harangues for more money.
This characterization was supported by Judy Craighton and Daniel Montano.”
The court was, to say the least, not impressed with either side: “Both
Elizabeth and Debra lacked credibility as witnesses; both made denials clearly refuted by
other evidence in the record. Both were difficult personalities, yet they shared one
common characteristic: They preferred to manipulate the man who held the purse-strings
instead of standing on their own two feet, financially and psychologically. Individually,
each understood Levin to be loving and generous with her, while depicting him as
distanced from, and distrusting of the other. The reality undoubtedly was that Robert
loved them both, and, preferring to minimize conflict, pursued his relationship with each
one of them separately, as best he could.” (Fn. omitted.)
The court ultimately hewed a middle ground between Debra’s and
Elizabeth’s positions. It found that the circumstances of the 2012 amendment triggered a
presumption of undue influence, which Debra failed to rebut. However, the court found
that the mild cognitive decline Robert was suffering in 2008, and the less drastic changes
to his estate, were insufficient to trigger the same presumption as to the 2008 amendment.
The court ordered that the residence be returned to the Levin Trust as restated and
amended in 2008 and disregarded the 2011 and 2012 amendments to the trust.
The court also rejected Elizabeth’s claim for double damages under Probate
Code section 859. The court reasoned that section 859 “provides for extreme
compensation when the negative conduct is greater than that which is necessary to
8
accomplish the bad act. It is the egregiousness of the conduct that triggers the penalty.
The Court does not find it in this scenario.” Elizabeth appealed. Debra did not.
DISCUSSION
Elizabeth raises three issues on appeal. First, she contends the court’s
finding of undue influence as to the 2012 amendment compelled a finding that Debra
committed financial elder abuse, which, in turn, compelled an award of double damages
(i.e., return of the residence, plus a payment of $4 million (the value of the residence))
3
under Probate Code section 859. Second, she contends the evidence compelled a finding
of undue influence as to the 2008 amendment. Finally, she contends the court’s order
disregarding the entire 2012 amendment was overbroad; the court should have simply
excised the provisions resulting from undue influence.
Absent a Finding of Bad Faith, Double Damages Under Probate Code Section 859 May
Not be Awarded Based on an Undue Influence Theory of Elder Abuse
Elizabeth contends the court erred in interpreting Probate Code section 859
to require some form of egregious conduct to warrant double damages. Her argument
that Debra is liable for double damages traces a route through three different statutes:
Probate Code section 859, Welfare and Institutions Code sections 15610.30, and
15610.70. We interpret them de novo. (Estate of Stoddart (2004) 115 Cal.App.4th 1118,
1126-1127.)
Probate Code section 859 provides for an award of double damages under
three circumstances: “If a court finds that a person has in bad faith wrongfully taken . . .
property belonging to a conservatee, a minor, an elder, a dependent adult, a trust, or the
3
The evidence of the value of the residence was Debra’s testimony that her
“general idea” was that the residence was worth “probably 4 million.”
9
estate of a decedent, or has taken . . . the property by the use of undue influence in bad
faith or through the commission of elder or dependent adult financial abuse, as defined in
Section 15610.30 of the Welfare and Institutions Code, the person shall be liable for
twice the value of the property recovered by an action under this part.” (Italics and bold
added for clarity.)
Elizabeth relies on the third prong in Probate Code section 859, contending
Debra committed financial abuse of an elder as defined in Welfare and Institutions Code
section 15610.30. That section describes three types of financial abuse of an elder: (1)
taking real or personal property of an elder “for a wrongful use or with intent to defraud”;
(2) assisting in the same; and (3) taking “real or personal property of an elder . . . by
undue influence, as defined in [Welfare and Institutions Code] Section 15610.70.”
(Id., subd. (a)(1)-(3).) Elizabeth contends she proved the third type of financial elder
abuse.
Welfare and Institutions Code section 15610.70, in turn, defines undue
influence as “excessive persuasion that causes another person to act or refrain from acting
by overcoming that person’s free will and results in inequity.” (Id., subd. (a).) In
determining whether undue influence was used, the statute directs a court to consider four
factors: (1) the vulnerability of the victim (Id., subd. (a)(1)); (2) the influencer’s apparent
authority, which may be evidenced by a fiduciary or family relationship (Id., subd.
(a)(2)); (3) the actions or tactics used by the influencer, which may include controlling
the victim’s life, use of affection or coercion, or initiating changes in an estate plan,
particularly where haste or secrecy is used (Id., subd. (a)(3)); and (4) the equity of the
result, which accounts for economic consequences to the victim, divergence from prior
estate plans, and “the appropriateness of the change in light of the length and nature of
the relationship” (id., subd. (a)(4)).
In its statement of decision, the court made findings on each of these four
factors: (1) “[T]he evidence of his medical and cognitive decline paints a picture of a
10
dependent personality . . . .” “By 2012, he was completely dependent on Debra and
fearful that she might leave him which would directly affect his survival possibilities”;
(2) Debra “was a family member and the primary confidante, advisor and medication
supervisor to [Robert], at least after 2008”; (3) “According to Campbell-Lane, Debra
actually talked about leaving [Robert] if he failed to turn over the house to her, a tactic
that would have been overwhelmingly devastating to a man whose life and self-
sufficiency was draining away”; and (4) “[T]he equity of the estate changes and title
transfers of July 2012 was entirely of a substantial benefit to Debra.”
From these findings, Elizabeth draws a straight line to double damages: the
findings equate to undue influence (Welf. & Inst. Code, § 15610.70); undue influence is a
form of elder financial abuse (Welf. & Inst. Code, § 15610.30, subd. (a)(3)); proving
financial elder abuse entitles her to double damages (Probate Code, § 859). No bad faith
or egregiousness is required.
While there is certainly appeal in Elizabeth’s straightforward reading of the
statutes, the result—double damages for undue influence even without bad faith—is at
odds with the text of Probate Code section 859. That section provides double damages in
three scenarios: (1) “wrongfully” taking property “in bad faith”; (2) taking property
through undue influence “in bad faith”; or (3) financial abuse of an elder/dependent adult.
(Italics added.) Here, the type of financial abuse of an elder relied upon by Debra to
satisfy the third scenario for an award of double damages was the type specified in
Welfare and Institutions Code section 15610.30, subdivision (a)(3). But that provision
mirrors the second scenario for the award of double damages under Probate Code section
859—i.e., the taking of property through undue influence. If we were to interpret the
third scenario under Probate Code section 859 as allowing for double damages any time
undue influence is proved, even without bad faith, the second scenario would essentially
become surplusage—the requirement of bad faith would be read out of the statute. We
do not believe the Legislature intended that result.
11
In interpreting a statute, we begin with its words. “If the language is clear
and unambiguous there is no need for construction, nor is it necessary to resort to indicia
of the intent of the Legislature . . . .” (Lungren v. Deukmejian (1988) 45 Cal.3d 727,
735.) “But the ‘plain meaning’ rule does not prohibit a court from determining whether
the literal meaning of a statute comports with its purpose or whether such a construction
of one provision is consistent with other provisions of the statute. The meaning of a
statute may not be determined from a single word or sentence; the words must be
construed in context, and provisions relating to the same subject matter must be
harmonized to the extent possible. [Citation.] Literal construction should not prevail if it
is contrary to the legislative intent apparent in the statute. The intent prevails over the
letter, and the letter will, if possible, be so read as to conform to the spirit of the act.”
(Ibid.) Our high court has repeatedly stressed that “interpretations that render statutory
terms meaningless as surplusage are to be avoided.” (People v. Hudson (2006) 38
Cal.4th 1002, 1010.)
We do not believe the Legislature intended to provide double damages for
undue influence without bad faith for several reasons. First, it said so: “by the use of
undue influence in bad faith.” (Prob. Code, § 859, italics added.)
Second, there is nothing in the legislative history of Probate Code section
859 to suggest the Legislature intended to create two different standards for penalizing
undue influence. Prior to 2012, section 859 did not explicitly apply to either undue
influence or elder abuse; it simply stated, “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.” (Stats. 2001, ch. 49, § 1.) The 2012
amendment added the language about undue influence in bad faith or elder/dependent
adult financial abuse. What motivated the amendment was an unpublished Court of
Appeal decision that refused to apply former Probate Code section 859 to a case of undue
12
influence with bad faith on an elder. As the author of the bill explained, “Although there
are no reported cases interpreting this provision, there has been at least one unpublished
appellate opinion . . . that holds that the bad faith action of an individual, using undue
influence on an elderly parent, is not sufficient to allow a trial court to award double
damages. [¶] If the appellate court’s view is embraced in other cases, it would threaten
to undercut the broad protections the Legislature has consistently intended by enacting a
series of statutes dating back to 1851 to put potential wrongdoers on notice of their
exposure to double liability for bad faith taking of estate property in all trust,
guardianship, and conservatorship cases.” (Sen. Com. on Judiciary, Analysis of Assem.
Bill No. 354 (2011-2012 Reg. Sess.) at p. 2.) The point of the amendment, therefore, was
not to create a penalty for undue influence without bad faith, but instead to ensure that
instances of undue influence with bad faith on an elder were appropriately punished.
Third, a double standard makes little sense in the context of the statute.
Probate Code section 859 applies to property taken from “a conservatee, a minor, an
elder, a dependent adult, a trust, or the estate of a decedent.” Most of these categories are
encompassed in the categories of “elder” or “dependent adult”; only minors would be
4
categorically excluded. If there were truly a double standard, therefore, the vast majority
of applications of Probate Code section 859 would be governed not by the undue
influence standard explicitly set forth in the statute, but instead by a watered down
version buried under three statutes, each of which contains multiple branching paths. We
cannot believe the Legislature intended the statute to be read that way.
4
“‘Dependent adult’ means a person, regardless of whether the person lives
independently, between the ages of 18 and 64 years who resides in this state and who has
physical or mental limitations that restrict his or her ability to carry out normal activities
or to protect his or her rights, including, but not limited to, persons who have physical or
developmental disabilities, or whose physical or mental abilities have diminished because
of age.” (Welf. & Inst. Code, § 15610.23, subd. (a).)
13
Also on the topic of context: this is a penalty statute with a common theme
of bad faith. The first two branches of Probate Code section 859 explicitly require a
finding of bad faith. And financial elder abuse, which itself connotes a sense of bad faith,
likewise has three branches, the first two of which have a form of bad faith requirement
(“for a wrongful use or with intent to defraud”). (Welf. & Inst. Code, § 15610.30, subds.
(a)(1), (2).) It would be out of step with the gestalt of the statute to impose a penalty in a
case where there was no bad faith.
And not all instances of undue influence entail bad faith. Undue influence
is defined in terms of “excessive persuasion” (Welf. & Inst. Code, § 15610.70, subd. (a)),
but what is excessive under the circumstances may not always be obvious. A loved one’s
slow, inexorable mental decline toward incompetency has no obvious signpost to
delineate the exact point where negotiations about the disposition of assets become
overbearing. Courts often make determinations of undue influence with the benefit of
hindsight and expert testimony. But as the tragedy of a loved one’s deterioration is
unfolding, it may not be clear. Here, for example, the evidence supporting the court’s
finding of no bad faith showed that, at the time of the 2012 trust amendment, Debra had
recently obtained two medical opinions affirming Robert’s competency, the attorney who
performed the estate planning perceived no mental incompetence, and the actual changes
were on a trajectory consistent with Robert’s prior estate plan changes—more for his
wife of 20 years, Debra, and less for Elizabeth. This was a close case, not a case
warranting a $4 million punishment.
These considerations highlight a fourth reason to reject Elizabeth’s position
that all undue influence compels double damages: such a rule could create a chilling
effect on the willingness of trial courts to find undue influence. Welfare and Institutions
Code section 15610.70 explicitly requires courts to take “[t]he equity of the result” into
account in analyzing an undue influence claim. (Id., subd. (a)(4).) In close cases, a court
may conclude that an equitable result becomes decidedly inequitable once double
14
damages are accounted for, and thereby decline to find undue influence where it
otherwise would have. It would be a perversely ironic outcome if the statute meant to
punish undue influence resulted in undue influence going unchecked. We deem it
important that trial courts maintain the flexibility to assess undue influence without being
compelled to impose double damages in every case.
Accordingly, we hold that under Probate Code section 859 a party seeking
double damages on a theory of undue influence must prove bad faith. In reaching this
result, we distinguish two cases that contain language seemingly at odds with our
conclusion.
The first is Hill v. Superior Court (2016) 244 Cal.App.4th 1281 (Hill).
There, the petitioners alleged their stepfather had wrongfully concealed property in their
mother’s estate, entitling them to double damages under Probate Code section 859. The
stepfather died, and his son was substituted as his successor. The son then asserted a
defense under Code of Civil Procedure section 377.42, which allows for all damages
against a successor that would have been available against a predecessor except for
punitive or exemplary damages. The son argued that Probate Code section 859 was a
form of punitive damages and thus unavailable against him. (Hill, at pp. 1283-1284.)
The Hill court rejected that argument for several persuasive reasons,
concluding that statutory penalties are distinct from punitive damages. Amidst its
analysis, the court highlighted some differences between Civil Code section 3294
(punitive damages) and Probate Code section 859 (Hill, supra, 244 Cal.App.4th at pp.
1286-1287), including the following: “As quoted above, Civil Code section 3294 always
requires proof of some form of aggravated misconduct. As also quoted above, Probate
Code section 859 provides for double damages if a person has in ‘bad faith’ done certain
things and also if the wrongdoer has ‘taken, concealed, or disposed of the property by the
use of undue influence in bad faith or through the commission of elder or dependent
adult financial abuse, as defined in Section 15610.30 of the Welfare and Institutions
15
Code . . . .’ (Italics added.) So, the last alternative of section 859 allows for double
damages without any requirement that petitioners show any aggravated misconduct—
only financial elder abuse.” (Id. at p. 1287.)
To an extent, we agree with this comment. Probate Code section 859 does
not require a finding of bad faith in analyzing financial elder abuse in general. And as we
have already pointed out, the first two branches of financial elder abuse (Welf. & Inst.
Code, § 15610.30, subds. (a)(1), (2)) require a finding of “wrongful use or intent to
defraud,” which is tantamount to bad faith. However, Hill was not an undue influence
case, and thus the court did not have occasion to analyze how Probate Code section 859’s
requirement of undue influence with bad faith would impact the analysis of an undue
influence theory of financial elder abuse without bad faith. Cases are not authority for
propositions not considered. (State Farm Fire & Casualty Co. v. Pietak (2001) 90
Cal.App.4th 600, 614.) Our holding applies only to undue influence cases.
The second case is Kerley v. Weber (2018) 27 Cal.App.5th 1187 (Kerley).
In Kerley the defendant (Weber) had been convicted of theft from an elder under Penal
Code section 368, subdivision (d), which prohibits “theft, embezzlement, forgery, or
fraud” against an elder. (See Kerley, at p. 1191.) In the criminal action, Weber had
stipulated that she owed $700,000 in restitution. (Id. at p. 1192.) Meanwhile, a probate
action had been pending in which the victim’s conservator (and later administrator of the
victim’s estate) sought double damages under Probate Code section 859. (Kerley, at p.
1193.) Prior to the trial in the probate action, the court ruled that Weber’s stipulation in
the criminal action resolved all outstanding issues in the probate case. Weber’s
conviction established the elements of elder financial abuse, which she was collaterally
estopped from disputing in the probate action, and she had stipulated to the amount
wrongfully taken. (Ibid.) Accordingly, the court doubled that amount and entered a
judgment of $1.4 million. (Ibid.)
16
Weber appealed, contending the criminal action did not establish bad faith,
a required finding under Probate Code section 859. The court rejected that argument,
concluding bad faith is not a required finding where double damages are based on
financial elder abuse. (Kerley, supra, 27 Cal.App.5th at p. 1197.) The court reasoned,
“Thus, section 859 uses three different clauses separated by the conjunction ‘or’ to
describe three different categories of conduct that can support double damages: (1) taking
property in bad faith; (2) taking property by the use of undue influence in bad faith; and
(3) taking property through elder or dependent adult abuse as defined in Welfare and
Institutions Code section 15610.30. Because the third clause applied here, no separate
finding of bad faith was necessary.” (Id. at pp. 1197-1198 [citing Hill, supra, 244
Cal.App.4th 1281].)
As was the case with Hill, we generally agree with both the result and the
reasoning in Kerley. However, once again, Kerley was not an undue influence case.
Instead, the court found the criminal conviction had established the elements of Welfare
and Institutions Code section 15610.30, subdivision (a)(1), which prohibits taking
property “‘for a wrongful use or with intent to defraud.’” (Kerley, supra, 27 Cal.App.5th
at p. 1194.) No additional finding of bad faith is required in that context. Accordingly,
as in Hill, the court had no occasion to consider what findings would be required to
5
establish double damages for financial elder abuse based on a theory of undue influence.
5
On the topic of elder abuse, Debra argues that Elizabeth did not have
standing to bring a claim for elder abuse under Welfare and Institutions Code section
15657.3, subdivision (d)(1), which is part of the Elder Abuse and Dependent Adult Civil
Protection Act (the Elder Abuse Act). In her reply brief, Elizabeth claims she did have
standing. We find the whole discussion puzzling because, while Elizabeth pleaded a
claim under the Elder Abuse Act, the trial court never ruled on it. Rather, the claim the
court ruled on arose under Probate Code section 850. The elder abuse claim had
relevance only as to the claimed foundation for a double damage remedy under Probate
Code section 859. Accordingly, we need not address whether Elizabeth would have
standing to bring a claim under the Elder Abuse Act.
17
Substantial Evidence Supports the Finding the 2008 Amendment Was Free of Debra’s
Undue Influence
Elizabeth’s next argues the court erred in failing to apply a presumption of
undue influence to the 2008 amendment, which, had the court applied it, would have
gone unrebutted by Debra.
“In property-related transactions between spouses, Family Code section
721, subdivision (b) ‘imposes a duty of the highest good faith and fair dealing on each
spouse . . . .’ This duty stems from the ‘general rules governing fiduciary relationships
which control the actions of persons occupying confidential relations with each other,’
prohibiting each spouse from taking ‘any unfair advantage of the other.’ [Citation.]
Thus, ‘“[i]f one spouse secures an advantage from the transaction, a statutory
presumption arises under section 721 that the advantaged spouse exercised undue
influence and the transaction will be set aside.”’ [Citation.] An advantage results to one
spouse when that spouse gains or when the other spouse is hurt by the transaction.”
(Lintz v. Lintz (2014) 222 Cal.App.4th 1346, 1353.) “The presumption is rebuttable; the
spouse advantaged by the transaction must establish that the disadvantaged spouse acted
freely and voluntarily, with ‘“‘“full knowledge of all the facts, and with a complete
understanding of the effect of” the transaction.’”’” (Ibid.)
The parties have argued at some length over whether the transaction here
qualified as the sort of inter-spousal transaction that could trigger a presumption of undue
influence. In our view, however, that issue has no effect on the outcome. Assuming the
presumption is triggered, it is a presumption affecting the burden of proof (Evid. Code,
§ 605), and “‘[t]he question “whether the spouse gaining an advantage has overcome the
presumption of undue influence is a question for the trier of fact, whose decision will not
be reversed on appeal if supported by substantial evidence.”’” (In re Marriage of Lund
(2009) 174 Cal.App.4th 40, 45.) So if the court’s ruling (that the 2008 amendment was
18
free of undue influence) is supported by substantial evidence, we need not analyze
whether the presumption was triggered by the trust amendment.
Substantial evidence does indeed support the court’s finding. In July 2008,
Robert’s neurologist and long-time friend reported that Robert “was alert and oriented”
and his “[m]emory and abstracting ability were normal.” In April 2009 the same
neurologist noted Robert’s history and examination suggested only “mild cognitive
impairment.” The same neurologist opined in November 2011, three years later, that
Robert was still “capable of taking care of his own affairs including financial decisions.”
Around the same time, another doctor offered a similar opinion. Even Elizabeth’s expert
noted that in February of 2012, “compared to earlier records . . . from at least 2009 and
2008, that there was a significant decline in [Robert’s] cognitive functioning,” suggesting
Robert’s mental decline was far less pronounced at the time of the 2008 amendment.
Moreover, the evidence showed Robert made a reasoned decision in
deciding upon the allocation of property reflected in the 2008 amendment. Robert’s
long-time friend, Judy Creighton, testified that on multiple occasions Robert discussed
with her that he was upset about Elizabeth constantly asking for money. She testified
about one visit in particular where, in her presence, Robert received a phone call from
Elizabeth and answered it on speaker phone so she could hear. Elizabeth said to Robert,
“Dad, we need to talk about the Balboa house without [Debra] and the attorney.” Robert
responded, “Liz, I have talked to you about this before. I told you, we are not speaking
about it again. The house goes to [Debra].” Afterwards, Robert commented, “This is
what I put up with all the time on a daily basis.” Robert explained to Creighton that he
had decided to give the residence to Debra and instead provide a sizeable life insurance
policy for Elizabeth. In fact, Elizabeth ultimately received $1.3 million from that policy.
19
Finally, there was evidence that Debra did not play any role in the 2008
amendment. Debra testified that she never discussed the estate plan with Robert, and the
disposition of the residence in particular, prior to 2008.
Collectively, this evidence was sufficient to support a finding that the 2008
amendment was a rational decision made by Robert, uninfluenced by Debra, at a time
when his mental health was still adequate for the task. Accordingly, the court’s finding
that Debra did not exert undue influence in 2008 was supported by substantial evidence.
The Court Did Not Err in Invalidating the Entire 2012 Amendment and Related Deed
Elizabeth’s final contention is that the court erred in voiding the entire 2012
amendment, as opposed solely to those portions tainted by undue influence (i.e., the $2
million gift and the separate transfer of the residence). “It is the general rule that if the
whole will is the result of the presence of undue influence, the will is totally invalidated;
but if only a part of the will was thus procured, that part may be rejected as void, but the
remainder, which is the outcome of the testator’s free will, is valid if it is not inconsistent
with and can be separated from the part which is invalid.” (Estate of Molera (1972) 23
Cal.App.3d 993, 1001; see Burkett v. Capovilla (2003) 112 Cal.App.4th 1444, 1449
[“The California Probate Code applies the same general rules of interpretation to ‘a will,
trust, deed and any other instrument’”].) In general, a court’s finding of undue influence
is reviewed for substantial evidence (In re Marriage of Bonds (2000) 24 Cal.4th 1, 31),
and since the question here is the extent to which undue influence affected the 2012
amendment, the same standard applies.
Here is what is at stake on this issue. First, under the 2012 amendment,
after Debra dies 90 percent of the residue of the estate is granted to Elizabeth free of trust.
The 2008 amendment granted Elizabeth a life estate in the income of the trust following
the death of Debra, but upon Elizabeth’s death the residue was to be given to Shriner’s
Hospital. Second, the 2012 amendment does not specifically address the residence. The
20
court addressed this omission by effectively setting aside the 2012 deed to Debra and
ordering the property returned to the Levin Trust. Under the 2008 amendment, the
residence goes to Debra free and clear of trust upon Robert’s death. Thus, setting aside
the 2012 amendment and deed results in Debra ultimately receiving the residence free of
trust and Elizabeth enjoying a life estate in the trust income following Debra’s death
instead of 90 percent of the residue free of the trust.
We conclude that substantial evidence supports the court’s implied finding
that undue influence tainted the entire 2012 amendment. The history of Robert’s estate
planning reveals a calculated attempt to balance the disposition of his assets between his
wife and his daughter. In attempting to strike that balance, the residence always played a
significant role. When Robert decided to leave the residence to Debra in 2008, he offset
that bequest with a life insurance policy in favor of Elizabeth. And for many years
Robert evidenced an intent to safeguard the trust assets by granting a lifetime of support
from the trust income to Elizabeth, but not grating her the trust assets free and clear of the
trust. Were the 2012 amendment to apply without the provisions benefiting Debra, the
balance that Robert always carefully struck would be upended. Ultimately, a court’s role
in interpreting a trust is to effect the intention of the trustor. (Citizens Business Bank v.
Carrano (2010) 189 Cal.App.4th 1200, 1205.) In light of Robert’s estate planning
history, the trial court drew a reasonable inference that the 2012 amendment, without the
provisions benefiting Debra, would not represent Robert’s intended disposition.
Accordingly, there was no error in voiding the entire 2012 amendment.
21
DISPOSITION
The judgment is affirmed. Debra shall recover her costs incurred on
appeal.
IKOLA, J.
WE CONCUR:
O’LEARY, P. J.
MOORE, J.
22